It is a market we are evaluating, where we have already seen the success of a single player with a single mobile banking product. We know banks are looking for another vendor to displace the current monopoly in this segment, to have negotiating power on price. We offer a competing product, with arguably better artificial intelligence recognition engines. Moreover, the value of our end-to-end Banking Platform incorporating mobile banking applications far exceeds that of a one-function mobile banking product.
Clearly banks are not happy with MITK fees. This lawsuit could make collecting fees difficult going forward for MITK with other banks and institutions.
MITK has a monopoly and they can charge whatever they wish. Banks now the option of not doing business with them and 256 have signed up. They will have no issues with collecting revenues. Even if they have some infringement on USAA, which I doubt based in the USAA filings, they will pay a small royalty. In the meantime, revs are growing 100% Q/Q for the next 3 years. In 2014, they can be earning $.90/shr and the patent suit will be resolved and the stock will be $30.
I think MITK has a better legal position than the blogger suggests. The interesting part relates to rev per deposit. If MITK is only getting half or less in revs per deposit, all revenue projections going forward are going to be slashed by analysts and investors.Their ability to enforce pricing terms will erode if 1 bank is paying less than others.
The blogger has no clue when it comes to MITK. The fees USAA has been paying are NOT for it's mobile deposit, but for deposits via a scanner and PC. MITK has decided USAA needs to start paying for it's software in it's own mobile deposit, which it currently is paying zero. MITK is now suing USAA for disclosing fees and is seeking an injunction for USAA using it's software without a license.
As a side note, MITK trades a multiples above TISA simply because of growth rates. One grow at 20% and one grows at 150%. Now you can make the argument thing will change, but until they do that's where they stand.
One other thing you guys should know, MITK dominates mobile deposits and all the banks sign up with them because they simply have the best character recognition software on the planet...it can correctly read the worse handwriting imaginable. My guess is they will not dominate mobile bill pay simply because bills are not written out but printed out. Many vendors (including TISA) has software that sorts out character and puts them in the proper format equally as well. So if TISA wants to get in the bill pay business MITK will be the least of their worries.
I'd actually be more positive on MITK if they were already getting only half or less of the $0.10/deposit that rumor says they are getting. I think $0.10 cannot hold in the face of competition, not even close. And that MITK revenue and margin estimates don't reflect the inevitable plunge, so MITK is probably still overvalued.
It reminds me of the late 1990s, when half a dozen business to business e-commerce sites listed on Nasdaq, each with plans to save some industry vertical billions of dollars and keep 50% of the savings themselves. A few years later, the industries were saving billions of dollars and keeping 99.99% of it for themselves.
Of course, TISA and all the other new competitors will also be getting only 1 or 2 cents per deposit too, but then TISA's business model and valuation are not built on 10 cents.