Revenue Increases 112% to $3.3 Million with
Continued Improvement in Key Financial Indicators on Path to
Profitability
Red Violet, Inc. (NASDAQ:RDVT), a leading information solutions
provider, today announced financial results for the quarter ended
March 31, 2018.
“We are pleased to report a strong start to 2018,” stated Derek
Dubner, red violet’s CEO. “With our R&D phase behind us and a
robust pipeline of new business and products to bring to market, we
believe that we have more than ample cash to achieve profitability,
which we expect to occur in the next several quarters. Given the
improvement in various financial metrics and the outlook for our
business, we are very optimistic about the remainder of 2018 and
beyond.”
First Quarter Financial Results
For the three months ended March 31, 2018, as compared to the
three months ended March 31, 2017:
- Total revenue increased 112% to $3.3
million.
- Net loss improved by $0.8 million to
$2.1 million.
- Loss per share improved by $0.08 to
$0.20.
- Adjusted gross profit increased 665% to
$1.3 million.
- Adjusted gross margin increased to 39%
from 11%.
- Adjusted EBITDA improved by $0.3
million to negative $1.4 million.
First Quarter and Recent Business Highlights
- Successfully completed the spin-off of
our business on March 26, 2018, with red violet operating as a
NASDAQ-listed emerging growth company.
- Well-capitalized balance sheet, with
approximately $20 million in cash as of March 31, 2018 and no debt,
allowing the Company to intently focus on driving the business to
profitability.
- With our early-stage development
completed, including our proprietary, cloud-based technology
platform, CORE™, and our initial suite of products released into
the marketplace, monthly sales increased at a CAGR of 126% from a
$5.8 million annual run-rate for the month ended January 31, 2017,
to a $15.1 million annual run-rate for the month ended March 31,
2018.
- FOREWARN™, our subscription app-based
solution for the real estate industry, powered by CORE, grew
revenue at a CAGR of 660% in the first quarter 2018, representing
an annual run-rate of $0.3 million for the month ended March 31,
2018, with no incremental cost of revenue.
- Fixed cost of revenue model allows for
continued scaling of the business with exponential growth in
adjusted gross profit, as reflected in the 28 percentage point
increase in adjusted gross margin to 39%, over prior year
quarter.
Adjusted gross profit, adjusted gross margin and adjusted EBITDA
are non-GAAP financial measures. Reconciliation of these non-GAAP
measures are provided in the attached tables.
About red violet™
At red violet, we believe that time is your most valuable asset.
Through powerful analytics, we transform data into intelligence, in
a fast and efficient manner, so that our clients can spend their
time on what matters most - running their organizations with
confidence. Through leading-edge, proprietary technology and a
massive data repository, our data and analytical solutions harness
the power of data fusion, uncovering the relevance of disparate
data points and converting them into comprehensive and insightful
views of people, businesses, assets and their interrelationships.
We empower clients across markets and industries to better execute
all aspects of their business, from managing risk, conducting
investigations, identifying fraud and abuse, and collecting debts.
At red violet, we are dedicated to making the world a safer place
and reducing the cost of doing business. For more information,
please visit www.redviolet.com.
FORWARD-LOOKING STATEMENTS
This press release contains "forward-looking statements," as
that term is defined under the Private Securities Litigation Reform
Act of 1995 (PSLRA), which statements may be identified by words
such as "expects," "plans," "projects," "will," "may,"
"anticipate," "believes," "should," "intends," "estimates," and
other words of similar meaning. Such forward looking statements are
subject to risks and uncertainties that are often difficult to
predict, are beyond our control and which may cause results to
differ materially from expectations, including whether red violet’s
fixed cost of revenue model allows for continued scaling of the
business with exponential growth in adjusted gross profit; whether
red violet has more than ample cash to achieve profitability, which
is expected to occur in the next several quarters and whether given
the improvement in various financial metrics, red violet is very
optimistic about the remainder of 2018 and beyond. Readers are
cautioned not to place undue reliance on these forward-looking
statements, which are based on our expectations as of the date of
this press release and speak only as of the date of this press
release and are advised to consider the factors listed above
together with the additional factors under the heading
"Forward-Looking Statements" and "Risk Factors" in red violet’s
Information Statement filed as Exhibit 99.1 to the Company’s
Current Report on Form 8-K filed with the SEC on March 27, 2018, as
may be supplemented or amended by the Company’s Quarterly Reports
on Form 10-Q and other SEC filings. We undertake no obligation to
publicly update or revise any forward-looking statement, whether as
a result of new information, future events or otherwise, except as
required by law.
RED VIOLET, INC. CONDENSED CONSOLIDATED AND COMBINED
BALANCE SHEETS (Amounts in thousands, except share data)
(unaudited)
March 31, 2018 December 31, 2017
ASSETS:
Current assets: Cash and cash equivalents $ 19,793 $ 65 Accounts
receivable, net of allowance for doubtful accounts of $153 and $228
at March 31, 2018 and December 31, 2017,
respectively
2,032 1,650 Prepaid expenses and other current assets 796
559 Total current assets 22,621 2,274 Property and
equipment, net 974 1,091 Intangible assets, net 16,531 15,353
Goodwill 5,227 5,227 Other non-current assets 1,182
1,180
Total assets $ 46,535 $ 25,125
LIABILITIES AND
SHAREHOLDERS' EQUITY:
Current liabilities: Trade accounts payable $ 1,063 $ 919 Accrued
expenses and other current liabilities 5,189 6,437 Deferred revenue
21 33
Total liabilities 6,273 7,389
Shareholders' equity: Preferred stock—$0.001 par value, 10,000,000
and 0 authorized, and 0 shares issued and
outstanding, at March 31, 2018 and
December 31, 2017, respectively
- - Common stock—$0.001 par value, 200,000,000 and 5,000 shares
authorized, and
10,266,613 and 1,000 shares issued and
outstanding, at March 31, 2018 and
December 31, 2017, respectively
10 - Additional paid-in capital 40,252 - Member's capital -
17,736
Total shareholders' equity 40,262
17,736
Total liabilities and shareholders' equity $
46,535 $ 25,125
RED VIOLET, INC. CONDENSED
CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS (Amounts
in thousands, except share data) (unaudited)
Three Months Ended March 31,
2018 2017 Revenue $ 3,325 $ 1,572
Costs and expenses: Cost of revenue (exclusive of
depreciation and amortization) 2,017 1,401 Sales and marketing
expenses 1,089 818 General and administrative expenses 1,852 2,030
Depreciation and amortization 451 216
Total costs
and expenses 5,409 4,465
Loss before income
taxes (2,084 ) (2,893 ) Income taxes - -
Net
loss $ (2,084 ) $ (2,893 )
Loss per share: Basic and
diluted $ (0.20 ) $ (0.28 )
Weighted average number of shares
outstanding: Basic and diluted 10,266,613
10,266,613
RED VIOLET, INC. CONDENSED CONSOLIDATED
AND COMBINED STATEMENTS OF CASH FLOWS (Amounts in
thousands) (unaudited)
Three Months Ended March 31, 2018
2017 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (2,084
) $ (2,893 ) Adjustments to reconcile net loss to net cash used in
operating activities: Depreciation and amortization 451 216
Share-based compensation expense 165 458 Write-off of long-lived
assets 55 - Provision for (recovery of) bad debts (56 ) 6
Allocation of expenses from Fluent, Inc. 325 840 Changes in assets
and liabilities: Accounts receivable (326 ) (202 ) Prepaid expenses
and other current assets (237 ) (12 ) Other non-current assets (2 )
85 Trade accounts payable 144 (29 ) Accrued expenses and other
current liabilities (1,248 ) (14 ) Deferred revenue (12 )
(17 ) Net cash used in operating activities (2,825 )
(1,562 ) CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of
property and equipment (16 ) (225 ) Capitalized costs included in
intangible assets (1,370 ) (1,702 ) Net cash used in
investing activities (1,386 ) (1,927 ) CASH FLOWS
FROM FINANCING ACTIVITIES: Capital contributed by Fluent, Inc.
23,939 3,263 Net cash provided by financing
activities 23,939 3,263
Net increase (decrease) in
cash and cash equivalents $ 19,728 $ (226 ) Cash and cash
equivalents at beginning of period 65 226
Cash and
cash equivalents at end of period $ 19,793 $ - SUPPLEMENTAL
DISCLOSURE INFORMATION Cash paid for interest $ - $ - Cash paid for
income taxes $ - $ - Share-based compensation capitalized in
intangible assets $ 181 $ 191
Use and Reconciliation of Non-GAAP Financial Measures
Management evaluates the financial performance of our business
on a variety of key indicators, including non-GAAP metrics of
adjusted EBITDA, adjusted gross profit and adjusted gross margin.
Adjusted EBITDA is a financial measure equal to net loss, the most
directly comparable financial measure based on US GAAP, adding back
income tax, depreciation and amortization, share-based compensation
expense, litigation costs, and write-off of long-lived assets, as
noted in the tables below. We define adjusted gross profit as
revenue less cost of revenue (exclusive of depreciation and
amortization), and adjusted gross margin as adjusted gross profit
as a percentage of revenue.
Three Months Ended March 31,
(In thousands) 2018 2017 Net
loss $ (2,084 ) $ (2,893 ) Depreciation and amortization 451
216 Share-based compensation expense 165 458 Litigation costs - 504
Write-off of long-lived assets 55 -
Adjusted
EBITDA $ (1,413 ) $ (1,715 )
Three Months Ended March 31, (In thousands)
2018 2017 Revenue $ 3,325 $ 1,572 Cost of
revenue (exclusive of depreciation and amortization) 2,017
1,401
Adjusted gross profit $ 1,308 $ 171
Adjusted
gross margin 39 % 11 %
We present adjusted EBITDA, adjusted gross profit and adjusted
gross margin as supplemental measures of our operating performance
because we believe they provide useful information to our investors
as they eliminate the impact of certain items that we do not
consider indicative of our cash operations and ongoing operating
performance. In addition, we use them as an integral part of our
internal reporting to measure the performance of our business,
evaluate the performance of our senior management and measure the
operating strength of our business.
Adjusted EBITDA, adjusted gross profit and adjusted gross margin
are measures frequently used by securities analysts, investors and
other interested parties in their evaluation of the operating
performance of companies similar to ours and are indicators of the
operational strength of our business. Adjusted EBITDA eliminates
the uneven effect of considerable amounts of non-cash depreciation
and amortization, share-based compensation expense and write-off of
long-lived assets, and the impact of other items. Adjusted gross
profit and adjusted gross margin are calculated by using cost of
revenue (exclusive of depreciation and amortization).
Adjusted EBITDA, adjusted gross profit and adjusted gross margin
are not intended to be performance measures that should be regarded
as an alternative to, or more meaningful than, either loss before
income taxes or net loss as indicators of operating performance or
to cash flows from operating activities as a measure of liquidity.
The way we measure adjusted EBITDA, adjusted gross profit and
adjusted gross margin may not be comparable to similarly titled
measures presented by other companies, and may not be identical to
corresponding measures used in our various agreements.
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version on businesswire.com: https://www.businesswire.com/news/home/20180514006174/en/
Red Violet, Inc.Investors Relations:Camilo Ramirez,
561-757-4500ir@redviolet.com
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