What's in the Cards for Mitek Systems' (MITK) Q3 Earnings?

Mitek Systems, Inc. MITK is set to report third-quarter fiscal 2020 results on Jul 30.

The Zacks Consensus Estimate for fiscal third-quarter revenues is pegged at $23.4 million, which indicates growth of 6.8% from the year-ago quarter’s reported figure.

The consensus mark for earnings has been stable at 11 cents in the past 30 days, which indicates year-over-year decline of 8.3%.

Notably, the company has a trailing four-quarter positive earnings surprise of 26.2%, on average.

Let’s see how things have shaped up prior to this announcement.

Mitek Systems, Inc. Price and EPS Surprise

Mitek Systems, Inc. Price and EPS Surprise

Mitek Systems, Inc. price-eps-surprise | Mitek Systems, Inc. Quote

Factors Likely to Have Impacted Q3 Results

Mitek’s fiscal third-quarter performance is likely to have benefited from strong momentum in the identity verification market, especially in the financial services and gig economy segments.

Increasing popularity of the company's products boosts investors’ optimism in the stock. Notably, shares of Mitek have returned 24.5% in the year-to-date period compared with the industry’s rally of 22.8%.

Notably, shelter-in-place orders owing to the global COVID-19 pandemic have increased demand for digital transactions and strong identity verification in banks as well as other institutions. This is expected to have driven adoption of the company’s identity verification solutions, which in turn is likely to have boosted transaction SaaS revenues in the to-be-reported quarter.

Notably, the Zacks Consensus Estimate for Services and other revenues, which include transactional SaaS revenues, is currently pegged at $11.5 million. The projection indicates growth of 14.5% from the previous quarter’s reported figure.

Moreover, solid traction for the company’s mobile deposits solutions is likely to have contributed to the top line during the quarter under review. Markedly, mobile deposits are witnessing growth trend as people are now unwilling to visit banks or ATMs to deposit their checks amid the pandemic.

Further, Mitek anticipates the usage of mobile deposits to have increased as governments around the world are now issuing COVID-19 relief checks to support their citizens during this time of crisis. This is likely to have benefited fiscal third-quarter results.

However, COVID-19 induced uncertainties prevailing in the market are expected to have had a negative impact on the company’s performance in the quarter to be reported. Notably, Mitek witnessed a declining trend in travel and hospitality segments in fiscal second quarter, which is likely to have continued in the to-be reported quarter due to government mandated restrictions on travel that are still in place.

Also, increasing investments on sales and marketing is expected to have exerted pressure on margins during the quarter under review.

What Our Model Says

Our proven model doesn’t conclusively predict an earnings beat for Mitek this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.

Mitek has an Earnings ESP of 0.00% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks to Consider

Here are some stocks you may consider as our proven model shows that these also have the right mix of elements to beat estimates this time:
Microchip Technology Incorporated MCHP has an Earnings ESP of +3.09% and a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Fastly, Inc. FSLY has an Earnings ESP of +27.27% and a Zacks Rank of 2.

Synaptics Incorporated SYNA has an Earnings ESP of +10.60% and a Zacks Rank of 2.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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