Mitek - Bear's bullish thoughts

Thank you JAFbrblev for bringing this (back) to the board:…

As Dreamer pointed out, Saul sold out because of the mediocre growth – he had better companies to invest in. This agreed with the reasons I sold: I think most people don’t buy into a company with less than 10M in revenue per quarter hoping for slow, steady growth. You want huge potential. You want the potential to be paid for the risk you take investing in a tiny company. We were hoping for growth to beat guidance – to continue at 2015 rates…heck, maybe even increase! But in 2016 MITK’s growth has slowed to a point I find…uninspiring.

Cut to the present. Even though revenue grew only 25% overall in the March quarter, it looks like the picture may be getting better very soon.

  1. Guidance is up for the rest of the year. The most recent quarterly release said 59-60m in revenue for the year, but the most recent investor presentation says 62-63m. So that’s somewhere between 32.6m and 36.6m they expect in the next two quarters combined. That’s somewhere between a 32% to 48% increase over the 24.7m that came in during those quarters last year. And if they come in above that range…woah, now we’re talking!

  2. They now have some SaaS revenue (3.3m of their 14.3m total in the March quarter) – and it was up 91% YoY!

  3. As Robert said, a P/S of 6 is a good value. I concur.

I could see this one dragging until the SaaS revenue becomes a larger part of the picture, but I could also see it taking off if they grow ~35% or more in the June quarter. I wouldn’t take a large position just yet, but I dipped my toe in with call options today.

NOTE: This is a tiny company – less than 20% the market cap of Talend, which itself is small at under 2 billion. Liquidity could be an issue. Daily volume is usually just a couple hundred thousand shares.

But I’m interested!