Mitek Systems Inc: Form 10-Q for the period ended Jun 30, 2026

This Quarterly Report on Form 10-Q (this “Form 10-Q”), contains “forward-looking statements” that involve risks and uncertainties, as well as assumptions that, if they never materialize or they prove incorrect, could cause our results to differ materially and adversely from those expressed or implied by such forward-looking statements. The forward-looking statements are contained principally in this Item 2—“Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Part II, Item 1A—“Risk Factors,” but appear throughout this Form 10-Q. Forward-looking statements may include, but are not limited to, statements relating to our outlook or expectations for earnings, revenues, expenses, asset quality, volatility of our common stock, financial condition or other future financial or business performance, strategies, expectations, or business prospects, our customers, and markets generally, or the impact of legal, regulatory, or supervisory matters on our business, results of operations, or financial condition.

Forward-looking statements can be identified by the use of words such as “estimate,” “plan,” “project,” “forecast,” “intend,” “expect,” “anticipate,” “believe,” “seek,” “target”, “will,” “would,” “could,” “can,” “may”, or similar expressions. Forward-looking statements reflect our judgment based on currently available information and involve a number of risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in Part II, Item 1A—“Risk Factors” in this Form 10-Q and in our other filings with the U.S. Securities and Exchange Commission (the “SEC”), including our Annual Report on Form 10-K for the fiscal year ended September 30, 2025, filed with the SEC on December 11, 2025 (“2025 Annual Report”). Additionally, there may be other factors that could preclude us from realizing the predictions made in the forward-looking statements. We operate in a continually changing business environment and new factors emerge from time to time. We cannot predict such factors or assess the impact, if any, of such factors on our financial position or results of operations. All forward-looking statements included in this Form 10-Q speak only as of the date of this Form 10-Q and you are cautioned not to place undue reliance on any such forward-looking statements. Except as required by law, we undertake no obligation to publicly update or release any revisions to these forward-looking statements to reflect any events or circumstances after the date of this Form 10-Q or to reflect the occurrence of unanticipated events.

In this Form 10-Q, unless the context indicates otherwise, the terms “Mitek,” “the Company,” “we,” “us,” and “our” refer to Mitek Systems, Inc., a Delaware corporation and its subsidiaries.

Overview

Mitek Systems, Inc. (“Mitek” or the “Company”) is a global provider of digital identity verification and fraud prevention solutions. Our technologies help organizations verify identities, mitigate fraud risk, and enable secure digital interactions in response to increasingly complex and evolving threats, including those driven by artificial intelligence (“AI”).

Our platform addresses key use cases across digital interactions and customer lifecycle, including new account openings, account access, and mobile check deposit. Core capabilities include AI, machine learning, computer vision, proprietary biometric liveness, and deepfake detection technologies that support identity verification, authentication, detect manipulation, and help prevent digital impersonation.

Our mobile check deposit product enables approximately 1.2 billion transactions annually and is widely used by financial institutions to provide consumers with fast, accurate, and secure remote deposit functionality. Our identity verification technologies are embedded within mobile and web applications, delivering real-time, automated identity validation across critical digital interactions.

As of the date of this filing, we serve more than 7,000 organizations globally, including financial institutions, financial technology (“fintech”) companies, telecommunications providers, and digital marketplaces. Our solutions assist customers in addressing fraud risk, complying with Know Your Customer (“KYC”) and anti-money laundering (“AML”) regulations, and improving operational efficiency and user experience.

Third Quarter Fiscal 2026 Highlights

• Revenue for the three months ended June 30, 2026 was $54.0 million, an increase of 18% compared to revenue of $45.7 million in the three months ended June 30, 2025.
• Net income was $8.4 million, or $0.17 per diluted share, during the three months ended June 30, 2026, compared to net income of $2.4 million, or $0.05 per diluted share, during the three months ended June 30, 2025.
• Cash provided by operating activities was $34.2 million for the nine months ended June 30, 2026, compared to cash provided by operating activities of $35.9 million for the nine months ended June 30, 2025.
• We added a new patent to our portfolio during the three months ended June 30, 2026, bringing our total number of issued patents to 112 as of June 30, 2026. In addition, we had 26 patent applications outstanding as of June 30, 2026.

Market Opportunities, Challenges & Risks

See Item 1 “Business” in our 2025 Annual Report for details regarding our market opportunities, challenges and risks.

Results of Operations

Comparison of the Three Months Ended June 30, 2026 and 2025

The following table summarizes certain aspects of our results of operations for the three months ended June 30, 2026 and 2025 (amounts in thousands, except percentages):

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Revenue

Total revenue increased $8.3 million, or 18%, to $54.0 million in the three months ended June 30, 2026 compared to $45.7 million in the three months ended June 30, 2025. Software license revenue increased $1.2 million, or 6%, to $20.7 million in the three months ended June 30, 2026, compared to $19.5 million in the three months ended June 30, 2025. This increase is primarily due to the timing of large check verification renewals, offset by decreases due to customers transitioning to our Check Fraud Defender (“CFD”) Software as a service (“SaaS”) offering in the three months ended June 30, 2026 compared to the same period in 2025. SaaS, maintenance, and other revenue increased $7.1 million, or 27%, to $33.3 million in the three months ended June 30, 2026, compared to $26.2 million in the three months ended June 30, 2025. This increase is primarily due to increased adoption and volume usage of our fraud and identity solutions products in the three months ended June 30, 2026 compared to the same period in 2025.

Cost of Revenue

Cost of revenue includes personnel costs related to billable services and software support, hosting costs, and the costs of royalties for third party products embedded in our products. Cost of revenue increased $1.2 million, or 16%, to $8.2 million in the three months ended June 30, 2026, compared to $7.0 million in the three months ended June 30, 2025. The increase in cost of revenue is primarily due to an increase in SaaS revenue as well as increased investment in our SaaS products, and increases in service intensive customer work with more personnel costs directly supporting our customers during the three months ended June 30, 2026 compared to the same period in 2025.

Selling and Marketing Expenses

Selling and marketing expenses include payroll, employee benefits, stock-based compensation, and other headcount-related costs associated with sales and marketing personnel. Selling and marketing expenses also include non-billable costs of professional services personnel, advertising expenses, product promotion costs, trade shows, and other brand awareness programs. Selling and marketing expenses decreased $1.1 million, or 10%, to $10.0 million in the three months ended June 30, 2026, compared to $11.1 million in the three months ended June 30, 2025. The decrease in selling and marketing expense is primarily due to a re-allocation of headcount to focus on service intensive customer work and $1.0 million increase in deferred contract costs in the three months ended June 30, 2026 compared to the same period in 2025.

Research and Development Expenses

Research and development expenses include payroll, employee benefits, stock-based compensation, third party contractor expenses, and other headcount-related costs associated with software engineering and product development. Research and development expenses decreased $0.9 million, or 10%, to $8.1 million in the three months ended June 30, 2026, compared to $9.0 million in the three months ended June 30, 2025. The decrease in research and development expenses is primarily due to increased capitalization of costs for internal-use software of $1.7 million commensurate with alignment of priorities and resources to focus on platform-level capabilities, partially offset by an additional $1.2 million in personnel-related costs excluding stock-based compensation expense. The decrease in research and development expenses is also driven by lower stock-based compensation expense of $0.7 million, reflecting ongoing optimization of our cost structure and strategic realignment of resources toward platform-level capabilities in the three months ended June 30, 2026 compared to the same period in 2025.

General and Administrative Expenses

General and administrative expenses include payroll, employee benefits, stock-based compensation, and other headcount-related costs associated with finance, legal, administration, and information technology functions, as well as third party legal, accounting, and other administrative costs. General and administrative expenses increased $1.7 million, or 15%, to $12.9 million in the three months ended June 30, 2026, compared to $11.3 million in the three months ended June 30, 2025. The increase in general and administrative expenses is primarily due to higher personnel-related costs including higher stock-based compensation expense, higher bonus expense, and higher severance costs, partially offset by lower audit, accounting and tax fees, and lower bad debt expense during the three months ended June 30, 2026 compared to the same period in 2025.

Amortization of Acquired Intangibles and Acquisition-related costs

Amortization of acquired intangibles and acquisition-related costs include amortization of intangible assets and other costs associated with acquisitions. Amortization of acquired intangibles and acquisition-related costs decreased $0.3 million, or 7%, to $3.3 million in the three months ended June 30, 2026, compared to $3.6 million in the three months ended June 30, 2025. The decrease is primarily due to a decrease in amortization expense of intangible assets from previous acquisitions that were fully amortized prior to the three months ended June 30, 2026 compared to the same period in 2025.

Interest Expense

Interest expense decreased $1.7 million, or 71%, to $0.7 million for the three months ended June 30, 2026, compared to $2.5 million for the three months ended June 30, 2025. The current quarter consisted of $0.7 million of cash interest, compared to $2.2 million of amortization and $0.3 million of cash interest in the prior year quarter. The decrease was primarily attributable to lower amortization of debt discount and issuance costs following repayment of the 2026 Notes (as defined under Liquidity and Capital Resources herein) in February 2026, partially offset by interest expense on the Term Loan (as defined under Liquidity and Capital Resources herein) drawn in January 2026.

Other Income, Net

Other income, net includes interest income net of amortization and net realized gains or losses on our marketable securities portfolio, and foreign currency transactional gains and losses. Other income, net decreased $1.5 million, or 81%, to $0.3 million of income in the three months ended June 30, 2026, compared to $1.8 million of income in the three months ended June 30, 2025. The decrease was primarily due to an increase in foreign currency exchange losses from changes in foreign currency rates and decreased investment income as a result of reduced average cash and investment balances following repayment of the 2026 Notes in February 2026.

Income Tax Provision

For the three months ended June 30, 2026, we recorded an income tax provision of $2.8 million which yielded an effective tax rate of 25%. For the three months ended June 30, 2025, we recorded an income tax provision of $0.7 million which yielded an effective tax rate of 24%. The difference between the U.S. federal statutory tax rate and our effective tax rate for the three months ended June 30, 2026 was primarily due to a mix of worldwide income, the impact of non-deductible executive compensation, as well as the impact of the global intangible low-taxed income inclusion and federal, state and foreign research and development credits on the tax provision. The difference between the U.S. federal statutory tax rate and our effective tax rate for the three months ended June 30, 2025 was primarily due to a mix of worldwide income, the impact of non-deductible executive compensation, and the impact of stock-based compensation, and federal, state and foreign research and development credits on the tax provision.

Comparison of the Nine Months Ended June 30, 2026 and 2025

The following table summarizes certain aspects of our results of operations for the nine months ended June 30, 2026 and 2025 (amounts in thousands, except percentages):

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Revenue

Total revenue increased $18.2 million, or 13%, to $153.1 million in the nine months ended June 30, 2026, compared to $134.9 million in the nine months ended June 30, 2025. Software license revenue increased $2.4 million, or 4%, to $60.6 million in the nine months ended June 30, 2026, compared to $58.2 million in the nine months ended June 30, 2025. This increase is primarily due to increasing demand for our biometrics fraud and identity offerings where customers are expanding deployment through multi-year commitments and timing of renewals for our check verification solutions, partially offset by decreases due to customers transitioning to our CFD SaaS offering in the nine months ended June 30, 2026, compared to the same period in 2025. SaaS, maintenance, and other revenue increased $15.8 million, or 21%, to $92.6 million in the nine months ended June 30, 2026, compared to $76.7 million in the nine months ended June 30, 2025. This increase is primarily due to increased adoption and volume usage of our fraud and identity solutions products in the nine months ended June 30, 2026, compared to the same period in 2025.

Cost of Revenue

Cost of revenue includes personnel costs related to billable services and software support, hosting costs, and the costs of royalties for third party products embedded in our products. Cost of revenue increased $5.6 million, or 29%, to $25.1 million in the nine months ended June 30, 2026, compared to $19.5 million in the nine months ended June 30, 2025. The increase in cost of revenue is primarily due to an increase in SaaS revenue as well as increased investment in our SaaS products and increases in service intensive customer work with more personnel costs directly supporting our customers during the nine months ended June 30, 2026, compared to the same period in 2025.

Selling and Marketing Expenses

Selling and marketing expenses include payroll, employee benefits, stock-based compensation, and other headcount-related costs associated with sales, marketing, and customer success personnel. Selling and marketing expenses also include non-billable costs of professional services personnel, advertising expenses, product promotion costs, trade shows, and other brand awareness programs. Selling and marketing expenses decreased $3.6 million, or 11%, to $27.8 million in the nine months ended June 30, 2026, compared to $31.4 million in the nine months ended June 30, 2025. The decrease in selling and marketing expense is primarily due to a re-allocation of headcount to focus on service intensive customer work, a $3.1 million increase in deferred contract costs, and lower stock-based compensation expense associated with roles that have exited the organization in the nine months ended June 30, 2026 compared to the same period in 2025.

Research and Development Expenses

Research and development expenses include payroll, employee benefits, stock-based compensation, third party contractor expenses, and other headcount-related costs associated with software engineering and product development. Research and development expenses decreased $4.1 million, or 15%, to $23.0 million in the nine months ended June 30, 2026, compared to $27.0 million in the nine months ended June 30, 2025. The decrease in research and development expenses is primarily due to increased capitalization of costs for internal-use software of $4.1 million commensurate with alignment of priorities and resources to focus on platform-level capabilities, partially offset by an increase of $2.3 million in personnel-related costs excluding stock-based compensation expense. The decrease in research and development expenses is also driven by lower stock-based compensation expense of $2.9 million, reflecting ongoing optimization of our cost structure and strategic realignment of resources toward platform-level capabilities including reversal of expense for roles that exited the organization as part of this realignment in the nine months ended June 30, 2026 compared to the same period in 2025.

General and Administrative Expenses

General and administrative expenses include payroll, employee benefits, stock-based compensation, and other headcount-related costs associated with finance, legal, administration, and information technology functions, as well as third party legal, accounting, and other administrative costs. General and administrative expenses increased $3.0 million, or 9%, to $36.2 million in the nine months ended June 30, 2026, compared to $33.3 million in the nine months ended June 30, 2025. The increase was primarily due to higher personnel-related costs, including higher stock-based compensation expense, higher bonus and higher severance costs, partially offset by lower audit, accounting and tax fees, lower legal expense, lower bad debt expense, and lower executive transition costs.

Amortization of acquired intangibles and acquisition-related costs

Amortization of acquired intangibles and acquisition-related costs include amortization of intangible assets and other costs associated with acquisitions. Amortization of acquired intangibles and acquisition-related costs decreased $0.9 million, or 8%, to $9.9 million in the nine months ended June 30, 2026, compared to $10.8 million in the nine months ended June 30, 2025. This decrease is primarily due to a decrease in amortization expense of intangible assets from previous acquisitions that had been fully amortized during the nine months ended June 30, 2026, compared to the same period in 2025.

Restructuring Costs

Restructuring costs consist of employee severance obligations and other related costs. Restructuring costs were $0.5 million in the nine months ended June 30, 2026 related to a restructuring that occurred in the first quarter of fiscal 2026. Restructuring costs were $0.8 million in the nine months ended June 30, 2025 and related to a restructuring that occurred in the first quarter of fiscal 2025.

Interest Expense

Interest expense decreased $2.6 million, or 35%, to $4.7 million for the nine months ended June 30, 2026, compared to $7.3 million for the nine months ended June 30, 2025. The current period consisted of $3.0 million of amortization of debt discount and issuance costs and $1.7 million of cash interest, compared to $6.4 million of amortization and $0.9 million of cash interest in the prior year period. The decrease in amortization following repayment of the 2026 Notes in February 2026 was partially offset by approximately five months of cash interest on the Term Loan drawn in January 2026.

Other Income, Net

Other income, net includes interest income net of amortization and net realized gains or losses on our marketable securities portfolio and foreign currency transactional gains or losses. Other income, net decreased $1.0 million, or 29%, to $2.5 million income in the nine months ended June 30, 2026, compared to $3.5 million income in the nine months ended June 30, 2025. The decrease was primarily due to decreased investment income as a result of reduced average cash and investment balances following repayment of the 2026 Notes in February 2026.

Income Tax Provision

For the nine months ended June 30, 2026, we recorded an income tax provision of $7.6 million which yielded an effective tax rate of 27%. For the nine months ended June 30, 2025, we recorded an income tax provision of $1.4 million which yielded an effective tax rate of 16%. The difference between the U.S. federal statutory tax rate and our effective tax rate for the nine months ended June 30, 2026 was primarily due to a mix of worldwide income, the impact of non-deductible executive compensation, as well as the impact of the global intangible low-taxed income inclusion and federal, state and foreign research and development credits on the tax provision. The difference between the U.S. federal statutory tax rate and our effective tax rate for the nine months ended June 30, 2025 was primarily due to a mix of worldwide income, the impact of non-deductible executive compensation, release of valuation allowances relating to one of the Company's operations in a foreign jurisdiction, as well as the impact of stock-based compensation, and federal, state and foreign research and development credits on the tax provision.

Liquidity and Capital Resources

Cash generated from operations, proceeds from the issuance of the 2026 Notes (as defined above), and proceeds from the Term Loan (as defined below) have historically been our primary sources of liquidity to fund operations and investments to grow our business. Our current sources of liquidity include available cash balances and the Revolving Line (as defined below). On June 30, 2026, we had $100.2 million in cash and cash equivalents and investments compared to $196.5 million on September 30, 2025, a decrease of $96.3 million, or 49%. This decrease was primarily driven by the repayment of $155.3 million for the 2026 Notes and share repurchases of $19.8 million, partially offset by $50.0 million in borrowings under the Term Loan and cash generated from operations. In summary, our cash flows from continuing operations were as follows (amounts in thousands):

Cash Flows from Operating Activities

Net cash provided by operating activities was $34.2 million for the nine months ended June 30, 2026, compared to $35.9 million for the nine months ended June 30, 2025, a decrease of $1.7 million. The decrease was driven by a $19.1 million unfavorable change in operating assets and liabilities, substantially offset by a $13.7 million increase in net income and a $3.8 million increase in non-cash charges added back to net income.

Net income increased to $20.7 million from $6.9 million, reflecting revenue growth and lower operating expenses. Non-cash adjustments totaled $28.9 million compared to $25.1 million, with the increase attributable primarily to a $7.9 million favorable change in deferred taxes, partially offset by a $3.4 million decrease in accretion and amortization on convertible senior notes due to repayment of the 2026 Notes, a $0.9 million decrease in amortization of intangible assets and a $0.7 million decrease in stock-based compensation expense.

Changes in operating assets and liabilities used $15.3 million of cash in the current period compared to providing $3.8 million in the prior-year period. The principal drivers were:

• Accounts receivable used $15.9 million, compared to $8.9 million in the prior-year period, an unfavorable change of $7.0 million, reflecting the timing and concentration of billings within the period, including a significant volume of invoicing in the third fiscal quarter;
• Accrued payroll and related taxes used $2.1 million, compared to providing $3.9 million, an unfavorable change of $(6.1) million, primarily due to the timing of annual incentive compensation and payroll tax payments;
• Other assets used $5.0 million, compared to $0.8 million, an unfavorable change of $4.3 million;
• Contract assets provided $3.2 million, compared to $6.0 million, an unfavorable change of $2.8 million;
• Other liabilities used $2.2 million, compared to providing $0.6 million, an unfavorable change of $2.7 million; and
• Income taxes payable provided $0.4 million, compared to $2.0 million, an unfavorable change of $1.6 million.

These unfavorable changes were partially offset by accounts payable, which provided $0.1 million compared to a use of $3.7 million, a favorable change of $3.8 million, and deferred revenue, which provided $6.1 million compared to $4.6 million, a favorable change of $1.5 million, reflecting growth in multi-year and annual subscription arrangements billed in advance.

Cash Flows from Investing Activities

Net cash provided by investing activities was $27.7 million during the nine months ended June 30, 2026, which consisted primarily of net sales and maturities of investments of $32.5 million, partially offset by capital expenditures of $4.8 million. Net cash used in investing activities was $0.2 million during the nine months ended June 30, 2025, which consisted primarily of capital expenditures of $0.9 million, partially offset by net maturities of investments of $0.7 million. The increase in cash inflows from investing activities of $27.8 million during the nine months ended June 30, 2026, compared to the nine months ended June 30, 2025 was primarily due to an increase in net sales and maturities of investments in anticipation of the repayment of our 2026 Notes in the second fiscal quarter of 2026 partially offset by an increase in capital expenditures for capitalized costs associated with our internal use software.

Cash Flows from Financing Activities

Net cash used in financing activities was $125.3 million during the nine months ended June 30, 2026, primarily due to a $155.3 million repayment of our 2026 Notes in the second fiscal quarter of 2026, repurchases and retirements of Common Stock of $19.8 million and payment of tax withholding obligations related to net share settlements of equity awards of $2.1 million, partially offset by a Term Loan draw of $50.0 million, net proceeds from the issuance of equity plan Common Stock of $2.3 million, and proceeds on other borrowings of $0.3 million. Net cash used in financing activities was $3.1 million during the nine months ended June 30, 2025, primarily due to repurchases and retirements of Common Stock of $3.3 million, partially offset by $0.5 million of net proceeds from the issuance of equity plan Common Stock. The increase in cash outflows from financing activities during the nine months ended June 30, 2026 was primarily due to the repayment of our 2026 Notes and higher repurchases and retirements of Common Stock, partially offset by the draw on our Term Loan in the nine months ended June 30, 2026.

0.75% Convertible Senior Notes due 2026

In February 2026, we repaid the $155.3 million in aggregate principal of our 0.75% senior notes due 2026 (the “2026 Notes”) at maturity. We funded the repayment through a combination of cash on hand, net sales and maturities of investments, and the $50.0 million Term Loan draw described below.

Amended Credit Agreement - Revolving Credit Line and Term Loan

In January 2026, we borrowed $50.0 million under the Term Loan provided for in our Amended Credit Agreement, dated May 7, 2025. The Term Loan matures in May 2030, bears interest at a variable rate (term SOFR or WSJ prime, plus a margin tied to our net leverage ratio), and is secured on a first priority basis by substantially all of our assets. Quarterly amortization payments commenced on April 1, 2026. As of June 30, 2026, $49.4 million was outstanding under the Term Loan and the Revolving Line was undrawn. See Note 8, "Debt," for additional information regarding the terms of the Amended Credit Agreement, including covenants and events of default.

The Amended Credit Agreement requires the Company to maintain a net leverage ratio of no more than 2.50 to 1.00 and if the Company consummates a permitted acquisition during the trailing twelve-month period, the net leverage ratio may not exceed 2.75 to 1.00. As of June 30, 2026, the Company was in compliance with the net leverage ratio covenant of the Amended Credit Agreement.

Other Borrowings

The Company also has certain loan agreements with Spanish government agencies with $4.5 million outstanding as of June 30, 2026 and $4.3 million outstanding as of September 30, 2025 under these agreements as further described in Note 8, “Debt”.

Share Repurchase Program

During the three and nine months ended June 30, 2026, we repurchased 123,956 shares for $2.0 million (average price of $16.31 per share) and 1,962,527 shares for $19.8 million (average price of $10.09 per share), respectively, under our 2024 and 2026 Share Repurchase Programs. The 123,956 shares repurchased during the three months ended June 30, 2026 were held as treasury stock as of June 30, 2026 and were subsequently retired in July 2026. As of June 30, 2026, the 2024 Share Repurchase Program expired, and $48.0 million remained available under the 2026 Share Repurchase Program, which became effective in May 2026 at the completion of the 2024 Share Repurchase Program and will remain in effect for two years. We have not made any repurchases from July 1, 2026 through August 5, 2026. See Note 6, “Stockholders’ Equity” for additional information.

Other Liquidity Matters

At June 30, 2026, we had investments of $10.1 million, designated as available-for-sale debt securities, which consisted of commercial paper, corporate issuances, and government securities, carried at fair value as determined by quoted market prices for identical or similar assets, with unrealized gains and losses, net of tax, and reported as a separate component of stockholders’ equity. All securities for which maturity or sale is expected within one year are classified as “current” on the condensed consolidated balance sheets. All other securities are classified as “long-term” on the condensed consolidated balance sheets. At June 30, 2026, we had $9.7 million of our available-for-sale securities classified as current and $0.5 million of our available-for-sale securities classified as long-term. At September 30, 2025, we had $38.9 million of our available-for-sale securities classified as current and $3.5 million of our available-for-sale securities classified as long-term.

We had working capital of $106.7 million at June 30, 2026, compared to $39.5 million at September 30, 2025. Our material cash requirements include repayment of the Term Loan as well as those related to leases as described in Note 10. “Leases” of the notes to the condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q. Based on our current operating plan we believe the current cash and cash equivalents, cash available under the Revolving Line, and cash expected to be generated from operations will be adequate to satisfy our material cash requirements as well as our working capital needs for at least the next twelve months from the date the financial statements are filed and for the foreseeable future.

Changes in Critical Accounting Estimates

Our discussion and analysis of our financial condition and results of operations are based on our condensed consolidated financial statements and accompanying notes, which have been prepared in accordance with accounting principles generally accepted in the U.S. The preparation of the condensed consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and the related disclosure of contingent assets and liabilities. We review our estimates on an ongoing basis, including those related to revenue recognition, stock-based compensation, income taxes and the valuation of goodwill, intangibles and other long-lived assets. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions. The critical accounting policies and estimates used in the preparation of our condensed consolidated financial statements are described in Item 7—“Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in our 2025 Annual Report.

There have been no material changes to our critical accounting estimates from those disclosed in our 2025 Annual Report.

For a complete discussion of the Company’s quantitative and qualitative disclosures about market risks, see the section titled Quantitative and Qualitative Disclosures About Market Risks in our 2025 Annual Report. Except as described below, there has been no material change in this information as of June 30, 2026.

Interest Rates

The primary objective of our investment activities is to preserve principal while at the same time maximizing after-tax yields without significantly increasing risk. To achieve this objective, we maintain our investment portfolio of cash equivalents and marketable securities in a variety of securities, including government securities, corporate debt securities, and commercial paper. We have not used derivative financial instruments in our investment portfolio, and none of our investments are held for trading or speculative purposes. Short-term and long-term debt securities are generally classified as available-for-sale and consequently are recorded on the condensed consolidated balance sheets at fair value with unrealized gains or losses reported as a separate component of accumulated other comprehensive income, net of estimated tax. As of June 30, 2026, our marketable securities had remaining maturities between approximately one and 13 months and a fair market value of $10.1 million, representing 3% of our total assets.

The fair value of our cash equivalents and debt securities is subject to change as a result of changes in market interest rates and investment risk related to the issuers’ credit worthiness. We do not utilize financial contracts to manage our investment portfolio’s exposure to changes in market interest rates. A hypothetical 100 basis point increase or decrease in market interest rates would not have a material impact on the fair value of our cash equivalents and debt securities due to the relatively short maturities of these investments. While changes in market interest rates may affect the fair value of our investment portfolio, any gains or losses will not be recognized in our results of operations unless the investment is sold prior to maturity or if the reduction in fair value was determined to be an other-than-temporary impairment.

We are also exposed to interest rate risk on our Term Loan under the Amended Credit Agreement, which bears interest at a variable rate tied to term SOFR or the WSJ prime rate. As of June 30, 2026, $49.4 million was outstanding under the Term Loan. A hypothetical 100 basis point increase in the applicable variable rate would increase annual interest expense by approximately $0.5 million, based on the outstanding principal balance as of June 30, 2026. A hypothetical 100 basis point decrease would reduce annual interest expense by a corresponding amount, subject to any applicable interest rate floor under the Amended Credit Agreement.

Foreign Currency Risk

There have been no material changes to our foreign currency exchange rate risk from that described in Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” in the 2025 Annual Report. The Company continues to have operations in the United Kingdom, France, the Netherlands, and Spain, exposed to fluctuations between the U.S. dollar and the Euro and the British pound sterling, and translation adjustments continue to be reported separately in the condensed consolidated statements of operations and comprehensive income (loss).

Inflation

There have been no material changes to our exposure to inflation risk from that described in the 2025 Annual Report. Inflation did not have a material effect on our business, financial condition or results of operations during either of the nine months ended June 30, 2026 or 2025.

Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the period covered by this report.

In designing and evaluating our disclosure controls and procedures, management recognizes that any disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

Based on management’s evaluation, our principal executive officer and principal financial officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective to provide reasonable assurance that the information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission (“SEC”) rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosures.

Changes in Internal Control over Financial Reporting

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of any changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during our most recently completed fiscal quarter. Based on that evaluation, our principal executive officer and principal financial officer concluded that there have been no changes in the Company’s internal control over financial reporting during the quarter ended June 30, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II

OTHER INFORMATION

While we attempt to identify, manage, and mitigate risks and uncertainties associated with our business to the extent practical under the circumstances, some level of risk and uncertainty will always be present. Item 1A—“Risk Factors” in our 2025 Annual Report describes some of the risks and uncertainties associated with our business, which we strongly encourage you to review. These risks and uncertainties have the potential to materially affect our business, financial condition, results of operations, cash flows, projected results, and future prospects. There have been no material changes in our risk factors from those disclosed in our 2025 Annual Report.