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Mitek Rolls Out Mobile Photo Account Opening

Mitek said in its most recent 10-Q filing on Aug. 6 that "The Company does not believe that the results of USAA's claims will have a material adverse effect on its financial condition or results of operations."

Mitek reported a net loss of $2.01 million, or eight cents a share for its fiscal third quarter ended June 30, compared to a loss of $2.00, or eight cents a share, a year earlier. Total revenue increased to $3.88 million in the fiscal third quarter, from $3.16 million in the year-earlier period.

The company raised $17 million through a common share offering during the fiscal third quarter.

From its customer growth, Mitek clearly has momentum for its business. DeBello says the company is "well poised financially to take advantage of the market opportunity before us," adding, "we have a strong customer base and we are unique in the offerings we have." The CEO also touts the company's lack of debt. Cash and equivalents totaled $22.9 million as of June 30.

PiperJaffray analyst Michael Grondahl rates Mitek's shares "neutral," with a $5.30 price target. In a note to clients on July 25, Grondahl called the company's third-quarter revenue "solid," but also wrote "We have low confidence in future quarterly revenue but current demand is strong."

Grohndahl estimates Mitek's revenue for fiscal 2013 will total $13.8 million, increasing to $18.4 million in fiscal 2014. He estimates the company will lose 30 cents a share during fiscal 2013, with the losses totaling 32 cents a share in fiscal 2014.

William Blair analyst Bhavan Suri has a more positive outlook for Mitek, with an "outperform" rating. Suri in a note on July 26 wrote that "given the strong mobile banking and mobile check deposit statistics from the largest U.S. retail banks, notably [Bank of America (BAC)], as well as the fact that this was Mitek's second sequential quarter with five reorders, we have increased confidence that revenue volatility is beginning to subside."

"The company now has a maintenance stream of just over $1 million per quarter that should add to this stability," Suri added.

"[W]e understand investors' reluctance to get involved until the lawsuit has been resolved and there is more predictable revenue growth," Suri wrote. "Still, for those with a 12- to 24-month or longer horizon, the secular trends around smartphone usage and mobile application adoption suggest that the company should be able to deliver material top-line growth and outperform current expectations. We remain buyers of the stock," he wrote.

-- Written by Philip van Doorn in Jupiter, Fla.

>Contact by Email.

Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for TheStreet.com Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.
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