03 Feb Mitek Achieved Record Revenue Growth, Beats Analyst Estimates, What in Store Next?
Mitek Systems, Inc. (NASDAQ: MITK), a leading digital identification solutions provider, reported an 18% revenue increase in Q1, 2021, a record growth fueled by a 40% growth in its identity verification revenue. The changing dynamics of the banking and financial services, necessitated by the pandemic forcing more and more people to resort to digital transactions is driving the demand for its mobile deposit and identity verification solutions.
Max Carnecchia CEO of Mitek, commented,
“We are very pleased with our strong start to fiscal 2021, with 40% growth in our identity verification revenue in the first quarter driven by expansion of existing customer relationships and new business. Our deposit solutions also continue to see increasing consumer adoption as transacting online is becoming imperative in today’s world. Mitek’s strong financial performance reflects the team’s commitment to helping our customers and partners accelerate their digital transformation.”
The revenue figures have beat market expectation by 2.8% to reach US$26m, and statutory earnings per share (EPS) of US$0.05, which beat the analyst forecasts by nearly 67%. The positive results have led analysts to revise their estimates for the Company, with the latest consensus putting the revenues for 2021 at US$115.5m, an increase of 9.8% over the past 12 months. However, the Company’s growth expectations have historically been at 27 percent per annum growth over the last five years. Another point to consider is that the same analysts have predicted that the revenues of other companies in the industry are likely to grow at 13 percent. This indicates that the Company’s growth rate is likely to slow down and the Company may face some challenges ahead.
Analysts have also revised their earnings per share estimates and are expecting a 4.4% decrease to US$0.21 from the earlier estimate of US$0.25. The price target for the Company has been revised upwards to US$19.75 and points to the long-term potential of the business.
Mitek Systems Inc (NASDAQ: MITK)
Market Cap: $647.14M; Current Share Price: 15.16 USD
Data by YCharts
The COVID-19 Pandemic has brought a shift in the consumption habits of consumers around the globe. Owing to widespread lockdown and safety concerns, more customers are choosing digital and e-commerce route to procure essentials goods and carry out imperative services. Companies are now looking for digital achieved by using cutting-edge technology like artificial intelligence and machine learning to collect, analyze and interpret consumer data to create a more personalized and meaningful experience.
The advent of smartphones, the impact of the pandemic and increasing adoption of cloud storage solutions are compelling organizations to digitalize their services, to cater to new-age customers, who rely greatly on online platforms for their needs. According to a report by IDC, the worldwide spending on digital transformation products and services is likely to reach $2.3 trillion in 2023, growing at a CAGR of 17.1% from 2019 to 2023. This calls for a robust and reliable consumer identity and access management solution that can ensure that only those authorized to access and use specific services are authenticated diligently to prevent fraud. This is especially true for organizations that offer banking and financial services as they deal with financially critical and sensitive information that is vulnerable to cyber attacks.
Digital verification is extremely crucial as more and more devices use the internet to stay connected and store information online. According to an estimate by 2020, there would be over 20 million IoT devices and this poses significant opportunity for cyber criminals seeking to misuse data. Cyberattacks can be carried out in the form of hacking, data breaches, malware attacks and DDoS and have more become challenging to defend against.
According to a report by Markets and Markets, the Global Consumer Identification and Management market is expected to reach USD 15.3 billion by 2025, growing at a CAGR of 15.1% from USD 7.6 billion in 2020. However the lack of standardized identity parameters, budgetary constraints, the evolving complexities of cyber attacks and high implementation costs can hamper the growth of the market.
Mitek develops and markets digital identity verification solutions that help prevent fraudulent transactions and provide quick and efficient authentication. The Company’s technology offerings aim to improve customer experiences through intuitive interfaces, proactively detect and prevent identity fraud, simplify regulatory compliance and offer easy integration with legacy systems.
The technology can be applied to numerous areas such as loan processing, financial institutions, document verification and authentication and identity verification for travelling or online transactions. Mobile Verify® is an AI-based analytics, algorithms and biometric facial comparison service that is being used by premier organization such as Moneygram (NASDAQ: MGI), instacart, Caixa Bank to securely carry identity verifications.
The Company’s Mobile Deposit is a mobile remote deposit capture (mRDC) solution, based on Mitek’s patented, award-winning technology, and is intended for use by retail financial institutions, brokerages and prepaid card providers. The technology offers scalability and risk mitigation and has been licensed to over 6,400 financial institutions and is trusted by 99 OF THE TOP 100 US BANKS as per the Company. Mobile Deposit® provides customers the ability to capture an image of a check through its MiSnap™ capture, which is then combined with its proprietary technology to simplify check deposits.
- Mitek’s pioneering Mobile Deposit solution is trusted by 99 out of 100 US banks and has enables nearly 4 billion mobile deposits with an accumulated check value totaling $1.5 trillion. The Company’s services are used by over 80 million consumers and more than 7500 customers. The technology and services offered by the Company are highly scalable as they rely on cloud-based architecture and are using cutting-edge AI and machine learning capabilities.
- The Company’s is leveraging its AI and machine learning capabilities built by experts with an in-depth understanding of computer vision, data science, and deep learning. In addition, the Company’s test algorithms are put to test by using real-time data generated by processing millions of transactions, which are then evaluated by ID Document experts to provide human intelligence and set quality metrics for its algorithms.
- The Company’s target markets are financial services, telecom, insurance, healthcare and government services and its services are being used by leading organizations such as Alliance Data (NYSE: ADS), DocuSign (NASDAQ: DOCU), artilium, mastercard (NYSE: MA), varo, Morgan Stanley (NYSE: MS), paypal (NASDAQ: PYPL) and Ameritrade to name a few. The Company has a robust intellectual property rights portfolio built over many years that gives it a competitive edge.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
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