HOUSTON - A group of significant shareholders of Mitek Systems , Inc. (NASDAQ: NASDAQ:MITK), known as the Concerned Stockholder Group, which includes Hammana Partners LP, Bradley L. Radoff, and Joshua E. Schechter, have publicly expressed their discontent with the company's current board of directors. In a recent statement, they urged fellow stockholders to vote against the re-election of all six Mitek directors at the upcoming Annual Meeting on September 10, 2024.
The Concerned Stockholder Group criticized the board for what they describe as a "significant destruction of stockholder value" and mismanagement. They highlighted the company's poor performance in mergers and acquisitions (M&A) and the failed tenure of former CEO Max Carnecchia. The group also expressed doubts about the capabilities of interim CEO Scott Carter, citing his lack of a track record in value creation and minimal investment in the company.
The group's statement included comparisons of Mitek Systems' total stockholder return (TSR) over one, three, and five years to broader market indexes, revealing underperformance against the Nasdaq Composite Index, S&P 500 Index, Russell 2000 Index, and Russell 3000 Index. According to Bloomberg data, Mitek's TSR was -24.89% for one year, -62.98% for three years, and -14.15% for five years, as of September 4, 2024.
In their call to action, the Concerned Stockholder Group also referenced the recent sale of 16,839 shares by director Donna Wells on June 7, suggesting that the current directors are not aligned with the best interests of stockholders. They have voted against the incumbent directors and are encouraging other stockholders to do the same to hold the board accountable.
The statement from the Concerned Stockholder Group is based on a press release and reflects their position ahead of Mitek Systems' Annual Meeting. The group's actions highlight ongoing tensions within the company's governance structure and raise questions about the future direction of Mitek Systems.
In other recent news, Mitek Systems, a digital identity and fraud prevention company, reported mixed Q3 results, with a 4% year-over-year increase in revenue to $45 million. This growth was primarily driven by its Mobile Deposit franchise and Check Fraud Defender product. However, the company adjusted its fiscal 2024 revenue outlook to a range of $169 million to $173 million due to challenges in the Identity product segment.
Mitek Systems also announced an expansion of its partnership with Alogent, a banking and payment solutions provider. This collaboration aims to integrate Mitek's Check Fraud Defender into Alogent's Unify platform to improve check fraud detection for banks and credit unions, a response to the growing sophistication of fraud tactics.
In light of these developments, H.C. Wainwright revised its price target for Mitek Systems to $11 from $19, while maintaining a Buy rating. The adjustment followed Mitek's lower-than-expected financial guidance and the downward revision of the full-year revenue forecast.
Finally, the company is actively searching for a new CEO and anticipates revenue growth will resume in fiscal Q2 2025, led by its diverse product offerings. More details on revenue and operating targets for fiscal 2025 will be introduced in the next earnings call. These are the recent developments for Mitek Systems.
InvestingPro Insights
As Mitek Systems, Inc. (NASDAQ: MITK) faces scrutiny from the Concerned Stockholder Group ahead of its Annual Meeting, real-time data and analysis from InvestingPro provide additional context to the company's current financial health and market performance. With a market capitalization of $395.97 million, Mitek’s financial metrics reflect a challenging period. The company's gross profit margin remains impressive at 85.28% for the last twelve months as of Q3 2024, highlighting the efficiency of its operations despite revenue challenges.
However, Mitek’s Price/Earnings (P/E) Ratio stands at a negative -58.97, with an adjusted P/E Ratio for the same period at -78.65, indicating investor concerns over profitability. The Price to Book (P/B) ratio of 1.89 suggests that the market values the company near its book value, which could be a point of interest for value-oriented investors. These figures are particularly relevant considering the Concerned Stockholder Group's criticism of the company's performance and management decisions.
InvestingPro Tips shed light on several aspects of Mitek’s operational and financial status. The company is expected to grow its net income this year, which may signal a potential turnaround from its current unprofitable status over the last twelve months. Additionally, Mitek operates with a moderate level of debt and its liquid assets exceed short-term obligations, providing some financial stability in the short term. However, analysts have revised their earnings downwards for the upcoming period, reflecting a cautious outlook.
Shareholders considering the Concerned Stockholder Group's advice may find these insights valuable when assessing the company's prospects. For those looking for a deeper dive into Mitek's financials and future predictions, InvestingPro offers additional tips and metrics, currently listing 11 more InvestingPro Tips at https://www.investing.com/pro/MITK.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.