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Mitek Systems, Inc. Message Board

  • douglasstein72 douglasstein72 Feb 3, 2013 11:01 AM Flag

    Seeking Alpha

    New article on Mitek

    Sentiment: Strong Buy

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    • I bet somebody from this board wrote that article...

    • Nice article. And as one who has been involved with MITK for several years, I agree that the stock should easily return to double digits. It's even better than you think, however. First, on their call Jan 31, management raised the total to 708 signed banks, including all of the top 10 retail banks and 32 of the top 50. A total of 318 have launched the service compared with 205 last quarter, representing a 55% increase.

      The revenues for Mobile Check Deposit (MCD) have indeed been lumpy, and since revenues are booked up front, they are dependent upon reorders for follow-on revenues. But the 6-12 month systems integration prior to launch is past for most of the largest banks, and the service is wildly popular with end users. Management has said that sequential transaction growth has exceeded 25% for each of the past 3 quarters. MITK gets an average of about 10 cents per transaction, and over time, transaction growth and revenue growth must converge. Importantly, the advantage to their revenue model is that it provides much better leverage to the ultimate success of the service with end users.

      I agree that Mobile Photo Bill Pay (MPBP) is a game-changer. The TAM is even larger than MCD, and their per-transaction fee is higher. Moreover, revenues are billed ratably rather than up front. They already have three signed deals for MPBP including USBank, channel partner and bill payment processor Allied Payment Network, and one unnamed bank which is thought to be JPMorgan Chase. Online bill payments have not grown in the past few years, because entering the data is a pain in the butt. But MPBP eliminates the hassle of entering data manually for customers. And the cost-per-transaction is MUCH lower than that of check processing for banks. So once this product starts to launch, the ramp in adoption will likely be very fast.

      I agree the USAA litigation presents somewhat of a binary risk, but much less at $4.00 than it did at $9.00. If MITK loses, it will have to share some past revenues. But if MITK wins, it will likely win sizable punitive damages filed under the Lanham Act for unfair business practices. In the meantime, USAA appears to be running its mobile deposit system on a first-generation platform, which is inferior to later generations. And since there does not yet seem to be a competing MPBP platform on the market, USAA will likely be shut out of this important market until it settles. In brief, I like my odds on a favorable settlement.

      Bottom line, I'm glad you wrote this excellent article, and I agree that this could be a big stock in the next year or so. Thanks! 3 Feb, 10:31 AMReply! Report AbuseLike0

      Posted from (1 comment) on article.

      Sentiment: Strong Buy

      • 1 Reply to ef_nutting
      • What I'd like to know is how many of the 4 reorders we got 6 months ago were part of the 4 reorders we got this Q? Where they different channel partners or were some the same. We only have 13 channel partners. If 9 ordered in the last 6 months, we only have 4 that aren't topped up. I how that CPs are finding they are running out of transactions quickly and reordering sooner than expected. The contracts are supposed to be for 2-3 years and only end after they expire or if they run out of transactions. If these CPs bought enough transactions to last for 2-3 years, we would be in big trouble.

        FYI, Mitek doesn't get an average of $.10 per transaction. The $.10 is blended average of price points at which CPs sell transaction. For instance a few CPs may sell at $.12 but their vol could be light and other could sell at $.08 and their vol is heavy making the average transaction price really closer to $.08 than $.10 even if the average price point is $.10.

 
MITK
4.27-0.02(-0.47%)Feb 11 4:00 PMEST