"I think 6-8 cents is a pretty good estimate of blended average price per transaction."
Again, when one attempts to balance the revenues using the stated usage figures you do not obtain 8 cents per check. The Federal Reserve estimates 18.3 B checks written annually in US. The Company (Mitek) estimates 11% have deposited (a) check using their mobile device. 11% of 18.3B is approx. 2B checks. Mitek earnings for last 4 reported Qtrs totals approx. 16M. That places the revenue per check at .8 cents per check. Unfortunately, less than a penny per check.
Now, the SA article indicates that the usage is at 5% of all checks. Using that figure one gets about 1.7 cents per transaction.
Bank of America indicates the number of checks deposited using Mobile Deposit grew to nearly 100k per day after in its first year and nearly 150k per day in its second year. According to Bank of America, Mobile Deposits now represent more than 10 percent of deposit transactions at the bank. BoA is probably representative of the other major players and that places the number of checks probably around 8-10%. Again, the revenue per check is less than 2 cents. And those numbers include total revenue including maintenance.
How can folks say that the average or even the moving average revenue per check is anywhere near 8 cents per check. A basic material balance applied to this business shows that 8 cent average is false. Less
Third try replying to this...maybe it will post this time...
This math just doesn't yield useful info. The 18.3 bil check total includes not only consumer checks, but commercial and not-for-profit checks as well. Yet DeBello stated that "10% of consumers nationwide have tried it." He does NOT say that 10% of consumers use it on a regular basis. And he does not address commercial transactions at all. Further BAC's CEO Moynihan has said 10% of deposits by consumers take place on the mobile channel; he says nothing of commercial transactions, which are a large percentage of total check transactions. There simply isn't enough information to derive transaction totals or pricing from aggregate data, but blindly applying 10% to total annual checks is clearly mixing apples with oranges. At any rate, MITK has stated that the sliding scale starts at 12 cents per transaction for 1 million transactions, so a blended total of 2 cents sounds pretty far-fetched.
A better way is to assume BAC is around 1/3 of all mobile deposits and is running around 165k per day. This would suggest a run rate of around 180k industry transactions per year (165k x 3x 365), and would yield $3.16 mil quarterly revs at 7 cents per transaction. This is consistent with recent quarterly license revs, so I am quite comfortable with it.
Sentiment: Strong Buy
yes, I can live with most of your assumptions. however, i do think the 1/3 number for BoA is to large and would probably be less than 20% or 1/5. the four banks listed in the SA article (which included BoA) totaled 395K per day. i would assume that the major 10-15 banks would push that total up to at least 750K per day. your assumptions fit the revenue numbers being reported if you want to achieve 7 cents per transaction.. if you use 1/5 in your estimates the price per transaction is closer to 4 cents per transaction. unfortunately, we do not get much data from the company on pricing. the pricing seems very low considering the amount of money Miteks partners are making and the banks are saving. also, the growth factor has to kick in somewhere.
the other thing to take into account is that many banks have not made it available for their commercial accounts, and many checks are excluded because the amount is too high. All of this will ultimately get worked out.
I think the first important assumption to recognize is that they do receive a per transaction fee. We would all love to know what that is. Whatever it is however, if it remains constant, implies that revenues will grow consistent with the number of transactions. That's a significant fact. Still and all, the number or transactions has grown, significantly it appears, yet revenue remains static. This little disconnect remains troubling.
First, It's not 11% of all checks deposited (18.3B). It's 11% of Mobile Banking Users.
Next, Here's how a blended average price per transaction works.
These are not the numbers -- This is just an example.
Let's say you have 5 price points $.06 , $.08, $.10 $.12, $.14.
The blended average price point would be $.10.
Then let's say you have 10M transactions at $.06 and 1 transaction at each of the other price points.
While the blended average price that they sell transactions at is $.10,
the average price per transaction is $.06.
Blended average is a distorted way for Mitek to say they are getting more than they are getting.
I agree they are getting way less that $.10 or even $.08
The best way to figure growth is their current annual revenue of $18M and how much better they do a year later. They haven't and will not give guidance. Anyone in this stock should know that by now.
Jorlev, You should not be so quick to defend Mitek it might make you overlook some important information.
It does not matter if we look at the "blended average" number or the "average" number, they should arrive at the same number. And, I estimate that it is not 6-8 cents per transaction. JMO
And, I do think that Mitek was referring to 11% of Mobile Bank Users.
There is a published Federal Reserve Report (March 2103) stating that 21 percent of mobile banking users have deposited a check using their mobile phone—double the incidence in December 2011
The report is titled (Consumers and Mobile Financial Services, March 2013). I am sure you have seen it and must have missed this survey results.