Mitek Systems Acquires HooYu for £98 Million

Digital identity verification and fraud prevention solutions provider Mitek Systems, Inc. (MITK) has acquired U.K.-based HooYu for a consideration of £98 million. HooYu is a customer onboarding platform, and offers UI and UX tools to provide customized mobile or desktop KYC processes.

The transaction enables organizations to know the true customer identities by bringing together biometric verification with KYC and identity verification tools. This solution serves a key need in the modern world, where the U.N., “estimates that up to *3% of the world’s GDP – or about two trillion dollars- is money laundered annually.”

Management Weighs In

CEO of Mitek, Max Carnecchia, commented, “Our current geopolitical, commercial and technological environment represents a perfect storm for bad actors. Mitek is leading the fight against fraud by providing the technology that businesses need to stamp out digital money launderers and sanctioned individuals. The only way to combat this scourge is to use artificial intelligence (AI) and stop bad transactions before they happen.”

HooYu CEO, Keith Marsden, added, “Bringing together Mitek’s lead in identity, liveness, and biometrics, with our orchestration, configuration, and journey services simplifies identity management for financial institutions.”

Factors such as increased identity-associated frauds, data breaches, and compliance requirements are expected to propel the global digital identity solutions market to $49.5 billion in 2026 from the 2021 figure of $23.3 billion.

Hedge Fund Activity

According to TipRanks data, Wall Street’s top hedge funds have increased holdings in Mitek Systems by 4,900 shares in the last quarter, indicating a neutral hedge fund confidence signal in the stock based on activities of two hedge funds.

Valuation Speaks

Let us consider some of the key metrics for Mitek and how it fares against the broader industry.

It has an earnings before interest, taxes, depreciation and amortization (EBITDA) margin of 29%, against the industry median of 13.8%, indicating that the company has optimized its costs better than its peers. Notably, the company generates $22,210 in net income per employee, whereas the median industry figure is $9,957, indicating that Mitek is far superior in utilizing its workforce.

Further, the forward non-GAAP price- to-earnings (P/E) multiple for Mitek is at 15.45, while the median figure for the industry is 19.46 indicating the company’s current share price level is cheaper versus its industry peers. That’s after a 20.1% slide in share prices so far this year.

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