Mitek Systems (NASDAQ:MITK) is a software company that specializes in artificial intelligence-based digital identity verification solutions and develops mobile image capture software.
Let us take a look at the company’s financials and understand the changes in key risk factors that investors should know.
Risk Factors
According to the new Tipranks Risk Factors tool, Mitek’s main risk category is Finance & Corporate, which accounts for 55% of the total 38 risks identified. The next two major MITK risks fall under the Tech & Innovation and Macro & Political categories, which stand at 13% each.
Under the Finance & Corporate category, the organization has added two new risks. Both risks are associated with Mitek’s acquisition of ID R&D, a voice and face biometrics detection firm based on artificial intelligence (AI), in June of this year.
The first risk identified by Mitek Systems is that the business discovered a big accounting error when compiling the financial statements for Fiscal 2021. The default was discovered in the contingent consideration liability, which was accounted for as part of the consideration for the ID R&D acquisition.
The company warns investors that any failure to maintain an effective system of disclosure controls over financial reporting might impair the business’s operational performance. It may also cause investors to lose trust in the company’s financial statements, resulting in a stock price decrease. It is also possible that the company could be delisted from the NASDAQ.
Secondly, the company informs investors that it expects to incur additional costs as a result of the ID R&D integration. Furthermore, Mitek Systems points out that many of the costs that will be incurred are now difficult to forecast precisely.
Further, the overall sector average for the Finance & Corporate risk factor is 39.9%, lower than the average risks in that category for Mitek, which is 55.3%.
Q4 Financial Results
Sales climbed 9% year-over-year to $33.3 million. Meanwhile, the business reported earnings of $0.22 per share, down 15.4% on a year-over-year.
Mitek Systems had $227.4 million in cash and investments at the end of Q4, with $12.3 million in cash flow from operations.
The company’s upcoming earnings report is expected to be released on January 27.
Wall Street’s Take
Turning to Wall Street, the stock has a Strong Buy consensus rating based on 2 unanimous Buys. The average MITK Health price target of $28.00 implies 66.6% upside potential to current levels.
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