Have these been discussed at all on this board as starter stocks?
MITK growth rate the last 2 quarters: 37% and 63%
Market cap $430 million
TWOU growth rate the last 2 quarters: 50% and 52%
Market cap $3.3 billion.
Both appear to have multiple years of growth ahead. MITK would be a great buyout candidate for a bank or FinTech.
Thoughts??
I tried to do a review of TWOU but was not very successful.
Still learning.
I also sold what I had, can’t remember why.
MITK has beend discussed on these boards several years ago, when the price seemed to be around $8. Saul held it for a time then sold it.
5
I held MITK a few years ago, and I have used it to trade (with modest and inconsistent success) as it is thinly traded and a $1 trade range can be exploited. The problem (for me) with MITK was that its sales and R&D expenses were growing as fast or faster than revenues. They had something like 99 of the top 100 banks as customers but seemed to have, or management felt they had, no pricing power. This was as to the then primary revenue source which was the check deposit by taking cell phone picture. The newer business was customer identification using same image capture of identity documents as well as an extensive data base of government forms, data on fraud methods, and some AI/ML ability to process all the above.
It would be interesting to see if they ever got a handle on SG&A and R&D expenses. They did change top management recently which I was happy to see. I quick check of the last 4 annual reports and the last few 10Q’s would tell me all I needed to know.
KC
Isn’t Mitek under offer? I would think it is a bit late to be considering this one given the offer has already been raised (I think).
Ant
The unsolicited buyout offer from ASG was rejected in November and new management was installed about the same time. I was not following MITK at the time and was unaware of the offer. I guess the two events were related, that the board felt the opportunity for Mitek growth was not being exploited.
There is an investors’ presentation with a few questions in the Q/A followup, accessible at the Mitek customer relations website (Mitek, by the way, is so small that they have CRaaS [customer relations as a service, they sub it out to another company]). When I had a question about why their sales costs were so high considering there near monopoly on digital check cashing, I never received a reply.
anyway, I did look at the last few annuals (last was for FY 18 ending Sept 30). In '17 the revenue grew 31% and sales expense grew 32%, r&D 34% and G&A 32%. Then for ‘18, revenue was +40% but sales expense was up 50%, R&D up 50%, and G&A up 51%. Same ol’ MITK. But, I love the business opportunity and I think they have the best identity verification product and they bought out what they claim to be their only mobile deposit competition (a small French company) and they do have new management. Worth watching but, for me, not worth buying. It is a security play for onboarding new customers.
KC
!@&$$!!$(@)*!
I meant IRaaS, not CRaaS, although I think of myself as a customer of IR… That’s what happens when one tries to inject a(very little) humor and the proof reader fails.
KC
MITK reported yesterday. They’ve gone through A LOT of change. New CEO. Same - even though he was going to leave but now he is back - CFO. New Marketing officer.
And they are mulling a buyout offer from ASG rumored to be at $12/share.
Bear made the comment about SaaS growth, and I thought I’d highlight from their conference call.
“First quarter of fiscal 2019, Mitek generated revenue of $17.7 million, a 46% increase year-over-year”
“Services and other revenue, which includes transactional SaaS revenue, maintenance and consulting services, was $7.7 million for the quarter, an increase of 56% over revenue of $4.9 million in Q1 last year. This increase is primarily due to strong growth in transactional SaaS revenue, which increased 67% year-over-year to $4.4 million”
The back of the napkin math tells me that SaaS makes up ~25% of all revenue now, and is growing at 67% compared to 39% for all else.
Their growth is good, but lumpy, as is the case in small caps. From their conference call, they are in the Identify as a Service business to verify identities versus mobile check deposits.
Revenues (their FY ends Sept 30)
Q1 18: 12.14M - 31%
Q2 18: 14.28M - 25%
Q3 18: 16.11M - 37%
Q4 18: 21.01M - 63%
Q1 19: 17.7M - 46$
Q2 Guide: High side 19.5M - 37%
FY19 Guide: High side 86M - 35%
This is such a tiny company - even given its market share in mobile check deposit - there seems to be very little exertion of pricing power or realization of the large market they claim in this space. The only advantage I see of mobile check deposit at this point is that they have a strong base of customers to upsell.
The real future of this company could be in the identify verification, however, with such tiny sales growth - lumps truly stand out - although they reported 67% growth in this space in the FY and quarter - which should be mentioned - is a SaaS play with 92% margins: http://investors.miteksystems.com/static-files/65a20007-923b…
Just a Fool
Exited my position when the C-suite exited
Continue to follow and monitor due to high growth and high margins