Mitek - My Mid Quarter Review
Who is Mitek?
Mitek was founded in 1983 and is headquartered in San Diego. It develops, markets, and sells mobile capture and identity verification software solutions for enterprise customers in the United States, and mostly other English-speaking countries. The company’s products allow customers to verify their identity, remotely deposit checks, pay bills, transfer credit card balances, open accounts, and get insurance quotes by taking pictures of documents with the camera-equipped smartphones and tablets.
Where they started out, their legacy product, and their cash cow is Mobile Deposit, a software that allows customers to remotely deposit a check using their camera-equipped smartphones or tablets. They already have 5,000 banks including most of the biggest signed up for this. They are the dominant player. Their growth in this field will come from encouraging more customers to use mobile deposit. In fact the banks themselves do this for Mitek as mobile deposits save the banks a lot of cost.
It’s newer products with an even bigger potential, are:
Mobile Verify, which helps in preventing the use of forged, tampered, or fake licenses. They also recently acquired facial recognition and are rolling that out as a second level of identity verification;
and Mobile Fill, a mobile identity capture solution that enables the mobile customer to use their camera as a keyboard for data pre-filling of various forms requiring personal data. Filling out forms on your mobile device is frustrating and well over 50% of customers who begin the process abandon before finishing. This causes a waste of advertising dollars for the companies and loses them customers. They find that they cut the abandon rate by as much as 80% if they have Mobile Fill.
Mitek also provides software maintenance and support services. The company markets and sells Mobile Deposit product in the financial services industry; and other mobile capture solutions, such as Mobile Fill and Mobile Verify, primarily to enterprise customers in the financial services, m-commerce (mobile commerce), telecom, and healthcare markets.
What is your history with them?
I’ve been a stockholder for just a few months. I found out about them when Neil introduced them to the board in December, and, as I’ve incorporated his notes into my own, I hope he’ll forgive me if I use some of his information. They are my next to smallest position at about 2.7% of my portfolio.
Why have you kept them so small?
This is a very small company, about $200 million in market cap.
What about competition?
They are dominant in check deposit and they have never lost a banking client. They have about 20 approved patents and 20 pending.
In addition, their experience in mobile deposit makes banks, and then other customers, more likely to trust them with mobile verify and mobile fill.
How’s their balance sheet?
Over $25 million in Cash, and no long term Debt
Are they still growing?
Revenue up 37% last quarter. They are plowing it back into grabbing territory right now so earnings didn’t grow, but they are profitable each quarter. They also had positive cash flow. Their current PE is about 24.
How does this benefit their customers?
As I said above, mobile deposit saves the banks money and mobile fill helps their clients in that new customers who respond to their ads, and start to fill out an application for an account, don’t quit. Mobile verify assures their client that the person with the mobile phone is who they say they are.
Any new announcements?
In Jan they announced an agreement with the premier check manufacturer in the US so that checks printed by them now include new features recognized only by the advanced computer vision embedded in Mitek’s Mobile Deposit software. These features increase the integrity and security of checks deposited through the mobile channel.
In Feb they announced that a Fortune 500 private retail card provider behind many of America’s favorite retail-branded credit cards has selected Mobile Fill. What it does for them is it speeds the credit card application process by enabling the store employees to take a photo of a driver license or ID card with a tablet to quickly capture and pre-fill the personal information into the application form. This eliminates the need for a customer to fill out lengthy paper application forms. It also significantly improves data accuracy, which positively impacts credit card application approval rates.
Also in Feb they announced a partnership with IdentityMind Global, a provider of risk management for digital commerce, to add Mitek’s Mobile Verify™ to IdentityMind’s Fraud Prevention and Risk Management platform.
“The ability to verify physical documents is an important tool for validating the identity of unbanked, underbanked or international customers. We are excited to partner with Mitek to provide this fully integrated service within the platform so our customers will have certainty their users are presenting genuine, unaltered ID documents digital financial services.”
And in Feb they announced that a Fortune 50 healthcare company has selected Mitek’s Mobile Fill identity capture solution to significantly improve its customer onboarding experience by reducing the time it takes to sign up for services via its mobile app. The healthcare company plans to use Mobile Fill in multiple lines of business.
In Mar they announced that a top five U.S. bank has selected its Mobile Deposit for multi-check capture to enable business customers to make batch deposits with a mobile device, reducing the need for scanners and eliminating trips to the ATM or the branch. Note that multi-check capture is a new product!
In Mar, they announced that they won the Innovation Showcase Award at the BAI Payments Connect 2016 event for the Mobile Verify™ solution. BAI is among the financial services industry’s most prestigious advocates for excellence in bank operations, and this award recognizes Mitek’s Mobile Verify as the most cutting edge new technology within the payments landscape at this year’s event.
You get the idea……
To summarize, this company is very small, this company is therefore quite risky, but this company seems to have a lot of promise and it seems worth a small investment.
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please go to Post #15056.
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