Revenue Increases 96% to $3.9 Million with
Continued Margin Expansion as Key Financial Indicators Show Strong
Path to Profitability
Red Violet, Inc. (NASDAQ: RDVT), a leading information solutions
provider, today announced financial results for the quarter ended
June 30, 2018.
“With continued strong growth in all of our key financial
indicators, we are as confident as ever in our path to
profitability,” stated Derek Dubner, red violet’s CEO. “As our cost
of revenue remains relatively fixed, we are intently focused on
driving revenue with nearly 100% of each incremental dollar in
revenue growth flowing through to the bottom line as evidenced by
our $0.6 million increase in revenue resulting in a $0.6 million
reduction in our net loss over first quarter 2018.”
Second Quarter Financial Results
For the three months ended June 30, 2018, as compared to the
three months ended June 30, 2017:
- Total revenue increased 96% to $3.9
million.
- Net loss improved by $10.6 million to
$1.5 million.
- Loss per share improved by $1.03 to
$0.15.
- Adjusted gross profit increased 1,117%
to $1.8 million.
- Adjusted gross margin increased to 47%
from 8%.
- Adjusted EBITDA improved by $1.3
million to negative $1.1 million.
Second Quarter and Recent Business Highlights
- Monthly revenue increased at a CAGR of
126% over the first six months of 2018 with an annual revenue run
rate of $17.2 million for the month ended June 30, 2018.
- Recurring revenue continues to expand
with 60% of monthly revenue attributable to customer contracts
versus transactional usage. Contracts are generally annual
contracts with auto renewal.
- Business continues to scale towards
profitability as adjusted gross profit grew at a CAGR of 532% over
the first six months of 2018, resulting in an annual adjusted gross
profit run rate of $9.2 million for the month ended June 30,
2018.
- FOREWARN®, our subscription app-based
solution for the real estate industry, powered by CORE™, grew
revenue at a CAGR of 642% over the first six months of 2018, with
an annual run rate of $0.5 million for the month ended June 30,
2018.
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, due to
strong growth in red violet’s key financial indicators, red violet
will become profitable. 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 BALANCE
SHEETS
(Amounts in thousands, except share
data)
(unaudited) June 30, 2018 December 31,
2017
ASSETS:
Current assets: Cash and cash equivalents $ 15,837 $ 65 Accounts
receivable, net of allowance for doubtful accounts of $115 and
$228 at June 30, 2018 and December 31,
2017, respectively
2,031 1,650 Prepaid expenses and other current assets 843
559 Total current assets 18,711 2,274 Property and
equipment, net 928 1,091 Intangible assets, net 17,632 15,353
Goodwill 5,227 5,227 Other non-current assets 1,098
1,180
Total assets $ 43,596 $ 25,125
LIABILITIES AND
SHAREHOLDERS' EQUITY:
Current liabilities: Trade accounts payable $ 1,390 $ 919 Accrued
expenses and other current liabilities 3,144 6,437 Deferred revenue
56 33 Total current liabilities 4,590 7,389 Other
non-current liabilities 189 -
Total
liabilities 4,779 7,389 Shareholders' equity: Preferred
stock—$0.001 par value, 10,000,000 and 0 authorized, and 0 shares
issued and outstanding, at June 30, 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 June 30, 2018 and
December 31, 2017, respectively
10 - Additional paid-in capital 40,301 - Accumulated deficit (1,494
) - Member's capital - 17,736
Total shareholders'
equity 38,817 17,736
Total liabilities and
shareholders' equity $ 43,596 $ 25,125
RED VIOLET, INC.
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
(Amounts in thousands, except share
data)
(unaudited)
Three Months Ended June 30, Six Months Ended June
30, 2018 2017 2018
2017 Revenue $ 3,909 $ 1,993 $ 7,234 $ 3,565
Costs
and expenses: Cost of revenue (exclusive of depreciation and
amortization) 2,084 1,843 4,101 3,244 Sales and marketing expenses
1,228 1,165 2,317 1,983 General and administrative expenses 1,742
10,898 3,594 12,928 Depreciation and amortization 478
220 929 436
Total costs and expenses
5,532 14,126 10,941 18,591
Loss from
operations (1,623 ) (12,133 ) (3,707 ) (15,026 ) Other income,
net 129 - 129 -
Loss before income
taxes (1,494 ) (12,133 ) (3,578 ) (15,026 ) Income taxes
- - - -
Net loss $ (1,494 ) $ (12,133 )
$ (3,578 ) $ (15,026 )
Loss per share: Basic and diluted $
(0.15 ) $ (1.18 ) $ (0.35 ) $ (1.46 )
Weighted average number of
shares outstanding: Basic and diluted 10,266,613
10,266,613 10,266,613 10,266,613
RED VIOLET, INC.
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
(Amounts in thousands)
(unaudited)
Six Months Ended June 30, 2018
2017 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (3,578
) $ (15,026 ) Adjustments to reconcile net loss to net cash used in
operating activities: Depreciation and amortization 929 436
Share-based compensation expense 214 1,683 Write-off of long-lived
assets 61 - Provision for bad debts 155 94 Allocation of expenses
from Fluent, Inc. 325 1,888 Changes in assets and liabilities: -
Accounts receivable (536 ) (311 ) Prepaid expenses and other
current assets (284 ) (50 ) Other non-current assets 82 93 Trade
accounts payable 471 50 Accrued expenses and other current
liabilities (3,293 ) 6,837 Deferred revenue 23 (30 ) Other
non-current liabilities 189 500 Net cash used in
operating activities (5,242 ) (3,836 ) CASH FLOWS
FROM INVESTING ACTIVITIES: Purchase of property and equipment (37 )
(289 ) Capitalized costs included in intangible assets
(2,888 ) (3,281 ) Net cash used in investing activities
(2,925 ) (3,570 ) CASH FLOWS FROM FINANCING
ACTIVITIES: Capital contributed by Fluent, Inc. 23,939
7,354 Net cash provided by financing activities
23,939 7,354
Net increase (decrease) in cash and
cash equivalents $ 15,772 $ (52 ) Cash and cash equivalents at
beginning of period 65 226
Cash and cash
equivalents at end of period $ 15,837 $ 174 SUPPLEMENTAL
DISCLOSURE INFORMATION Cash paid for interest $ - $ - Cash paid for
income taxes $ - $ - Share-based compensation capitalized in
intangible assets $ 181 $ 393
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, excluding
income tax, depreciation and amortization, share-based compensation
expense, litigation costs, transition service income, write-off of
long-lived assets and others, 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 June 30, Six Months
Ended June 30, (In thousands) 2018
2017 2018 2017 Net loss $ (1,494
) $ (12,133 ) $ (3,578 ) $ (15,026 ) Depreciation and amortization
478 220 929 436 Share-based compensation expense 49 1,225 214 1,683
Litigation costs - 8,325 - 8,829 Transition service income (158 ) -
(158 ) - Write-off of long-lived assets and others 44
- 99 -
Adjusted EBITDA $ (1,081 ) $ (2,363 ) $
(2,494 ) $ (4,078 )
Three Months Ended June
30, Six Months Ended June 30, (In thousands)
2018 2017 2018 2017
Revenue $ 3,909 $ 1,993 $ 7,234 $ 3,565 Cost of revenue (exclusive
of depreciation and amortization) 2,084 1,843
4,101 3,244
Adjusted gross profit $ 1,825 $ 150 $
3,133 $ 321
Adjusted gross margin 47 % 8 %
43 % 9 %
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 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/20180808005081/en/
Red Violet, Inc.Investors Relations Contact:Camilo Ramirez,
561-757-4500ir@redviolet.com
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