Mitek Systems Inc: Form 10-Q for the period ended Dec 31, 2025

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. The Company’s 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”).

Mitek’s 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, detect manipulation, and help prevent digital impersonation.

The Company’s 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. Mitek’s 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, Mitek serves more than 7,000 organizations globally, including financial institutions, financial technology (“fintech”) companies, telecommunications providers, and digital marketplaces. The Company’s 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.

First Quarter Fiscal 2026 Highlights

• Revenue for the three months ended December 31, 2025 was $44.2 million, an increase of 19% compared to revenue of $37.3 million in the three months ended December 31, 2024.
• Net income was $2.8 million, or $0.06 per diluted share, during the three months ended December 31, 2025, compared to net loss of $4.6 million, or $0.10 per diluted share, during the three months ended December 31, 2024.
• Cash provided by operating activities was $8.0 million for the three months ended December 31, 2025, compared to cash provided by operating activities of $0.6 million for the three months ended December 31, 2024.
• We added new patents to our portfolio during the three months ended December 31, 2025, bringing our total number of issued patents to 111 as of December 31, 2025. In addition, we had 26 patent applications outstanding as of December 31, 2025.

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 December 31, 2025 and 2024

The following table summarizes certain aspects of our results of operations for the three months ended December 31, 2025 and 2024 (amounts in thousands, except percentages):

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Revenue

Total revenue increased $7.0 million, or 19%, to $44.2 million in the three months ended December 31, 2025 compared to $37.3 million in the three months ended December 31, 2024. Software license revenue increased $1.9 million, or 16%, to $13.9 million in the three months ended December 31, 2025 compared to $12.0 million in the three months ended December 31, 2024. This increase is primarily due to an increase in revenue from our standalone biometrics ID Live products in the three months ended December 31, 2025 compared to the same period in 2024. SaaS, maintenance and other revenue increased $5.1 million, or 20%, to $30.3 million in the three months ended December 31, 2025 compared to $25.3 million in the three months ended December 31, 2024. This increase is primarily due to an increase in transaction volume from our MiVIP and Check Fraud Defender products in the three months ended December 31, 2025 compared to the same period in 2024.

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 $2.5 million, or 41%, to $8.4 million in the three months ended December 31, 2025 compared to $5.9 million in the three months ended December 31, 2024. 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 December 31, 2025 compared to the same period in 2024.

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 $1.5 million, or 16%, to $8.1 million in the three months ended December 31, 2025 compared to $9.7 million in the three months ended December 31, 2024. The decrease in selling and marketing expense is primarily due to a re-allocation of headcount to focus on service intensive customer work and lower stock-based compensation expense associated with roles that have exited the organization in the three months ended December 31, 2025 compared to the same period in 2024.

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 mobile capture science. Research and development expenses decreased $0.9 million, or 11%, to $7.4 million in the three months ended December 31, 2025 compared to $8.3 million in the three months ended December 31, 2024. The decrease in research and development expenses is primarily due to lower stock-based compensation expense due to continued realignment of headcount toward platform-level capabilities including reversal of expense for roles that exited the organization as part of this realignment and increases in capitalized software development costs commensurate with the realignment of priorities to these platform-level capabilities in the three months ended December 31, 2025 compared to the same period in 2024.

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 decreased $0.8 million, or 7%, to $11.1 million in the three months ended December 31, 2025 compared to $11.9 million in the three months ended December 31, 2024. The decrease in general and administrative expenses is primarily due to lower bad debt expense, lower executive transition costs, lower audit and accounting fees, and lower third-party and professional fees, partially offset by higher personnel-related costs during the three months ended December 31, 2025 compared to the same period in 2024.

Amortization of Acquired Intangibles and Acquisition-related costs

Amortization of acquired intangibles and acquisition-related costs include amortization of intangible assets, adjustments recorded due to changes in the fair value of contingent consideration, and other costs associated with acquisitions. Amortization and acquisition-related costs decreased $0.4 million, or 10%, to $3.3 million in the three months ended December 31, 2025 compared to $3.7 million in the three months ended December 31, 2024. The decrease in amortization and acquisition-related costs 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 December 31, 2025 compared to the same period in 2024.

Restructuring Costs

Restructuring costs consist of employee severance obligations and other related costs. Restructuring costs were $0.5 million in the three months ended December 31, 2025 and related to a restructuring that occurred in the first quarter of fiscal 2026. Restructuring costs were $0.8 million in the three months ended December 31, 2024 and related to a restructuring that occurred in the first quarter of fiscal 2025.

Interest Expense

Interest expense includes the amortization of debt discount and issuance costs and coupon interest accrued on our 0.75% convertible senior notes due 2026 (the “2026 Notes”) and Amended Credit Agreement (as defined below). Interest expense was $2.5 million for the three months ended December 31, 2025 and consisted of $2.2 million of amortization of debt discount and issuance costs and $0.3 million of interest incurred. Interest expense was $2.4 million for the three months ended December 31, 2024 and consisted of $2.1 million of amortization of debt discount and issuance costs and $0.3 million of interest incurred. As we amortize the debt discount and issuance costs using the effective interest method, amortization expense increases over the term of the agreement.

Other Income (Expense), Net

Other income (expense), 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 (expense), net increased $0.9 million, or 166%, to $1.5 million of income in the three months ended December 31, 2025 compared to $0.6 million of income in the three months ended December 31, 2024. The increase was primarily due to lower foreign currency exchange transactional losses and higher other income in the three months ended December 31, 2025 as compared to the same period in 2024.

Income Tax Benefit (Provision)

For the three months ended December 31, 2025, we recorded an income tax provision of $1.6 million which yielded an effective tax rate of 37%. For the three months ended December 31, 2024, we recorded an income tax benefit of $0.3 million which yielded an effective tax rate of 6%. The difference between the U.S. federal statutory tax rate and our effective tax rate for the three months ended December 31, 2025 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.

Liquidity and Capital Resources

Cash generated from operations and proceeds from the issuance of the 2026 Notes (as defined below) have historically been our primary sources of liquidity to fund operations and investments to grow our business. Our additional sources of liquidity include available cash balances and the Amended Credit Agreement (as defined below). On December 31, 2025, we had $191.8 million in cash and cash equivalents and investments compared to $196.5 million on September 30, 2025, a decrease of $4.7 million, or 2%. In summary, our cash flows from continuing operations were as follows (amounts in thousands):

Cash Flows from Operating Activities

Cash flows related to operating activities are dependent on net income, adjustments to net income and changes in working capital. Net cash provided by operating activities during the three months ended December 31, 2025 was $8.0 million and resulted primarily from net non-cash charges of $9.3 million and net income of $2.8 million, partially offset by unfavorable changes in operating assets and liabilities of $4.0 million. Net cash provided by operating activities during the three months ended December 31, 2024 was $0.6 million and resulted primarily from net non-cash charges of $10.5 million, partially offset by a net loss of $4.6 million and by unfavorable changes in operating assets and liabilities of $5.4 million. The increase in cash inflows from operating activities of $7.5 million during the three months ended December 31, 2025 compared to three months ended December 31, 2024 was primarily due to the increase in net income.

Cash Flows from Investing Activities

Net cash provided by investing activities was $24.4 million during the three months ended December 31, 2025, which consisted primarily of net maturities of investments of $25.8 million, partially offset by capital expenditures of $1.4 million. Net cash provided by investing activities was $0.8 million during the three months ended December 31, 2024, which consisted primarily of net sales and maturities of investments of $1.2 million, partially offset by capital expenditures of $0.3 million. The increase in cash inflows from investing activities of $23.6 million during the three months ended December 31, 2025 compared to three months ended December 31, 2024 was primarily due to an increase in net maturities of investments in anticipation of the payment of our 2026 Notes in the second fiscal quarter of 2026.

Cash Flows from Financing Activities

Net cash used in financing activities was $11.5 million during the three months ended December 31, 2025, primarily due to repurchases and retirements of Common Stock of $10.0 million and payment of tax withholding obligations related to net share settlements of equity awards of $2.0 million, partially offset by proceeds on other borrowings of $0.4 million. Net cash used in financing activities was $3.1 million during the three months ended December 31, 2024, primarily due to repurchases and retirements of Common Stock of $3.3 million, partially offset by $0.2 million of net proceeds from the issuance of equity plan Common Stock. The increase in cash outflows from financing activities during the three months ended December 31, 2025 was primarily due to higher repurchases and retirements of Common Stock and the payment of tax withholding obligations related to net share settlements of equity awards in the three months ended December 31, 2025.

0.75% Convertible Senior Notes due 2026

In February 2021, the Company issued $155.3 million aggregate principal amount of the 2026 Notes (including the Additional Notes, as defined below). The 2026 Notes were issued pursuant to an Indenture, dated February 5, 2021 (the “Indenture”), between the Company and UMB Bank, National Association, as trustee. The Indenture included customary covenants and sets forth certain events of default after which the 2026 Notes could be declared immediately due and payable and sets forth certain types of bankruptcy or insolvency events of default involving the Company after which the 2026 Notes became automatically due and payable. The Company granted the initial purchasers of the 2026 Notes (collectively, the “Initial Purchasers”) a 13-day option to purchase up to an additional $20.3 million aggregate principal amount of the 2026 Notes (the “Additional Notes”), which was exercised in full. As of December 31, 2025, the Company was in compliance with the covenants in the Indenture.

After August 1, 2025, the 2026 Notes were convertible at the option of the holders at any time prior to the close of business on the maturity date. The net proceeds from this offering were approximately $149.7 million, after deducting the Initial Purchasers’ discounts and commissions and the Company’s estimated offering expenses related to the offering. The Company used a portion of the net proceeds from the offering to pay the cost of the Notes Hedge (as defined below), after such cost was partially offset by the proceeds from the Warrant Transactions (as defined below).

In accounting for the issuance of the 2026 Notes, the conversion option of the 2026 Notes was deemed an embedded derivative requiring bifurcation from the 2026 Notes (“host contract”) and separate accounting as an embedded derivative liability, that was subsequently reclassified to additional paid-in capital when the stockholders of the Company approved an increase to the number of authorized shares of Common Stock, to an amount sufficient to settle the conversion of the 2026 Notes. The proceeds from the 2026 Notes were first allocated to the embedded derivative liability and the remaining proceeds were then allocated to the host contract. On February 5, 2021, the fair value of the embedded derivative liability representing the conversion option was $33.2 million and the remaining $116.5 million was allocated to the host contract. The difference between the principal amount of the 2026 Notes and the fair value of the host contract (the “debt discount”) is amortized to interest expense using the effective interest method over the term of the 2026 Notes.

The Company repaid the 2026 Notes in full in the second quarter of fiscal 2026.

In connection with the issuance of the 2026 Notes, the Company entered into transactions for convertible notes hedge (the “Notes Hedge”) with Bank of America, N.A., Jefferies International Limited and Goldman Sachs & Co. LLC (the “Option Counterparties”). The Notes Hedge provided the Company with the option to acquire, on a net settlement basis, approximately 7.4 million shares of Common Stock at a strike price of $20.85, which is equal to the number of shares of Common Stock that notionally underlie and correspond to the conversion price of the 2026 Notes. The Company also entered into Warrant Transactions with the Option Counterparties relating to the same number of shares of the Common Stock, subject to customary anti-dilution adjustments. The strike price of the Warrant Transactions is $26.53 per share, which represents a 75.0% premium to the last reported sale price of the Common Stock on the Nasdaq Capital Market on February 2, 2021, and is subject to certain adjustments under the terms of the Warrant Transactions.

As of December 31, 2025, the Notes Hedge of $33.2 million is included in additional paid-in capital in the condensed consolidated balance sheet and will not be remeasured provided the requirements to qualify for the scope exception in ASC 815-10-15-74(a) continue to be met and the Company had not purchased any shares under the Notes Hedge. The Notes Hedge expired on February 1, 2026, without the Company exercising any option to acquire Common Stock.

As a result of the Warrant Transactions, the Company is required to recognize incremental dilution of earnings per share to the extent the average share price is over $26.53 for any fiscal quarter. During the three months ended December 31, 2025, there was no dilution of earnings per share. The Warrant Transactions expire over a period of 80 trading days commencing on May 1, 2026 and may be settled in net shares of Common Stock or net cash at the Company’s election. Upon initial sale, the Warrant Transactions were recorded as an increase in additional paid-in capital within stockholders’ equity of $23.9 million. As of December 31, 2025, the Warrant Transactions had not been exercised and remained outstanding.

Amended Credit Agreement - Revolving Credit Line and Term Loan

On May 7, 2025, the Company, together with its subsidiaries, A2iA Corp. and ID R&D, Inc., entered into the First Amendment to Loan and Security Agreement (the “Amendment”), amending the Credit Agreement, and as amended by the Amendment (the “Amended Credit Agreement”), by and among the Company and the Bank.

The Amended Credit Agreement provides for, among other things, (i) the establishment of a delayed draw term loan (the “Term Loan”) in an aggregate principal amount of up to $75.0 million that may be drawn prior to February 28, 2026 for the sole purpose of paying amounts outstanding under the 2026 Notes due February 1, 2026 and customary fees and expenses in connection therewith, (ii) a revolving line of credit (the “Revolving Line”) whereby the Company may borrow up to $25.0 million with an additional $15.0 million to be advanced under the Revolving Line at the sole discretion of the Bank. On January 21, 2026, the Company borrowed $50.0 million under its Term Loan. The Term Loan and Revolving Line are secured on a first priority basis by the Company’s assets.

In connection with the Amended Credit Agreement, the Company incurred issuance costs of $0.2 million which were recorded to Other income (expense), net. The Term Loan and the Revolving Line both mature on May 1, 2030. Commencing on April 1, 2026, the Borrower must make amortization payments on any advances under the Term Loan at the percentages set forth in the Amendment.

Borrowings under the Amended Credit Agreement generally bear interest at a variable rate equal to (a) term SOFR plus a specified margin or (b) WSJ prime plus a specified margin, in each case which will be adjusted based on the Company’s net leverage ratio at the time of borrowing. Borrower must also pay the Bank (i) a commitment fee of $125,000 and (ii) an “Unused Revolving Line Facility Fee” of 0.25% per annum of the average unused portion of the Revolving Line.

The Amended Credit Agreement contains representations, warranties, and negative and affirmative covenants customary for transactions of this type. These include covenants limiting the ability of Borrower and any of their subsidiaries, subject to certain exceptions and baskets, to, among other things, (i) incur indebtedness, (ii) incur liens on their assets, (iii) enter into any merger or consolidation with, or acquire all or substantially all of the equity or property of, another person, (iv) dispose of any of their business or property, (v) make or permit any payment on subordinated debt, or (vi) pay any dividend, make any other distribution, or redeem any equity.

The Amended Credit Agreement contains customary events of default and also provides that an event of default includes any default resulting in a right by third parties to accelerate maturity of indebtedness in excess of $500,000. If any event of default occurs and is not cured within applicable grace periods set forth in the Amended Credit Agreement or waived, all loans and other obligations could become due and immediately payable and the facility could be terminated. In addition, Borrower may be required to deposit cash with the Bank in an amount equal to 1.05 of any undrawn letters of credit denominated in U.S. Dollars or 1.15

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 December 31, 2025, the Company was in compliance with the net leverage ratio covenant of the Amended Credit Agreement. There are no outstanding borrowings under the Amended Credit Agreement as of December 31, 2025.

Other Borrowings

The Company has certain loan agreements with Spanish government agencies. These agreements have repayment periods of five to twelve years and bear interest rates ranging from 0% to 3.72%. As of December 31, 2025, $4.8 million was outstanding under these agreements and $0.3 million and $4.5 million are recorded in other current liabilities and other non-current liabilities, respectively, in the condensed consolidated balance sheets. As of September 30, 2025, $4.3 million was outstanding under these agreements and approximately $0.3 million and $4.0 million is recorded in other current liabilities and other non-current liabilities, respectively, in the condensed consolidated balance sheets.

Share Repurchase Program

On May 13, 2024, the Board authorized and approved a share repurchase program for up to $50.0 million of the currently outstanding shares of our Common Stock. The share repurchase program was effective as of May 16, 2024 and will expire on May 16, 2026. The timing, price and actual number of shares of Common Stock repurchased will depend on a variety of factors including price, market conditions and corporate and regulatory requirements. The repurchases may be made from time (i) through open market purchases, block trades, privately negotiated transactions, one or more trading plans adopted in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or any combination of the foregoing, in each case in accordance with applicable laws, rules and regulations or (ii) in such other manner as will comply with the provisions of the Exchange Act. The share repurchase program does not require the Company to repurchase shares of its Common Stock and it may be discontinued, suspended or amended at any time.

The Company made purchases of $10.0 million, or 1,078,333 shares, during the three months ended December 31, 2025 at an average price of $9.27 per share and subsequently retired the shares. The Company made purchases of $3.3 million, or 363,378 shares, during the three months ended December 31, 2024 at an average price of $8.99 per share and subsequently retired the shares. Total purchases made under the share repurchase program since inception were $39.0 million as of December 31, 2025, and the repurchased shares were retired.

During the period beginning January 1, 2026 through February 4, 2026, the Company made purchases of $7.2 million, or 705,638 shares at an average price of $10.26 per share. On February 5, 2026, the Board of Directors of the Company approved a new share repurchase program, authorizing the Company to repurchase up to $50.0 million of its Common Stock. The new share repurchase program will become effective at the completion of the Company’s 2024 share repurchase program and will remain effective for a period of up to two years.

Other Liquidity Matters

At December 31, 2025, we had investments of $16.7 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 December 31, 2025, we had $15.0 million of our available-for-sale securities classified as current and $1.7 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 $36.0 million at December 31, 2025 compared to $39.5 million at September 30, 2025. Our material cash requirements include repayment of the 2026 Notes 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 received from proceeds under the Amended Credit Agreement, 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 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 on-going 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 December 31, 2025.

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 December 31, 2025, our marketable securities had remaining maturities between approximately one and 12 months and a fair market value of $16.7 million, representing 4% 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.

Foreign Currency Risk

We have operations in the United Kingdom, France, the Netherlands, and Spain that are exposed to fluctuations in the foreign currency exchange rate between the U.S. dollar, the Euro, and the British pound sterling. The functional currency of our French, Dutch, and Spanish operations is the Euro and the functional currency of our United Kingdom operations is the British pound sterling. Our results of operations and cash flows are subject to fluctuations due to changes in foreign currency exchange rates. Translation adjustments resulting from translating the functional currency financial statements into U.S. dollar equivalents are reported separately in the condensed consolidated statements of operations and comprehensive income (loss).

Inflation

We do not believe that inflation had a material effect on our business, financial condition or results of operations during either of the three months ended December 31, 2025 or 2024. If our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases. Our inability or failure to do so could harm our business, financial condition and results of operations.

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 are designed to, and are effective to, provide assurance at a reasonable level, 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 December 31, 2025 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.