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Mobile remote deposit capture software provider Mitek Systems Inc. posted a profitable last quarter of fiscal 2010 as more resellers and financial institutions adopted its products for taking pictures of checks from smart phones. And while San Diego-based Mitek has big expectations for its flagship Mobile Deposit application, the company also is looking for growth from its new mobile bill-pay application and from the imaging of documents other than checks through mobile devices.
“We’re seeing an unprecedented level of interest in our products,” company president and chief executive James B. DeBello said at an investor conference call.
Mitek traditionally is guarded about identifying its remote capture customers—they include PayPal Inc.—but on Tuesday said that most of the leading processors and value-added resellers serving banks and credit unions are now offering its products. They include Fiserv, NCR, Fidelity National Information Systems (FIS), Jack Henry & Associates, Wausau Financial Systems, BankServ, J&B Software, Bluepoint, Cachet Financial and RDM. Mitek also is working with other mobile-banking software companies, including mFoundry, Clairmail, Kony Solutions, and Monetise Americas, to distribute its applications through their channels. “The company anticipates announcing significantly increased adoption and use in the near future by large financial institutions and payment-management organizations,” Mitek’s release for the fourth quarter and fiscal year ended Sept. 30 said.
Asked by a caller during the conference call about prospective customers’ concerns regarding the risks of mobile remote capture, DeBello said, “Banks have been ultra-cautious historically, and acutely in the past year and a half.” Remote capture’s risks include the possibility that a user might try to deposit a check twice, a risk banks try to control through per-deposit and monthly limits. DeBello, however, said the scale “has been tipped in our favor” as financial institutions learn how to manage the risks.
Citing a recent study by a research firm, DeBello said that even with check volumes declining, 1.5 billion checks annually could be diverted to mobile capture using Mitek software, and he called that estimate conservative. He also said the global market for the company’s new Mobile Photo Bill Pay product (Digital Transactions News, Oct. 21) has the potential “of being even bigger than mobile deposit.” Mitek hasn’t yet announced any customers for the bill-pay application but said it talking with banks, technology integrators, and other prospective customers.
Besides bank deposits and bill payment, Mitek is looking at the market for imaging other documents from mobile devices, including insurance forms.
Mitek’s original product line of back-office software for financial institutions processes 10 billion checks and other documents a year, and its customers include the top five banks, according to DeBello. But Mitek is betting its future on mobile remote capture, bill pay, and related products, and it finally is reaping some financial rewards after years of investment. As of June 30, the company had an accumulated deficit of $15.7 million as it sustained losses developing mobile remote capture products. But after posting a tiny profit in the second quarter of fiscal 2010 and a loss of nearly $647,000 in the third, Mitek reported a fourth-quarter profit of $180,000 compared with a loss of $328,000 a year earlier. Net sales more than doubled to $1.62 million from $804,000 in fiscal 2009’s fourth quarter.
For all of fiscal 2010, Mitek posted revenues of $5.12 million, up 41% from $3.62 million in 2009. The net loss of $680,000 was down from fiscal 2009’s net loss of $1.32 million.
Mitek said it further stabilized its balance sheet in October by raising $750,000 in private-equity financing. The new money could mean that its future financial statements won’t need to carry the “going concern” warning its auditor included in recent reports. Last December, Mitek raised $922,000 from a private placement of debentures and warrants and in June raised another $345,000 through a private stock placement. In late Tuesday afternoon trading, Mitek’s shares were up more than 11% from Monday’s close.
