Revenue Increases 89% to $4.4 Million with
Continued Margin Expansion and Key Customer Wins Driving Growth and
Path to Profitability
Red Violet, Inc. (NASDAQ: RDVT), a leading information solutions
provider, today announced financial results for the quarter ended
September 30, 2018.
“We have delivered another consecutive quarter of solid growth
in revenue, adjusted gross margin and adjusted EBITDA in 2018,”
stated Derek Dubner, red violet’s CEO. “With a healthy balance
sheet, increasing adoption of our solutions at a higher customer
tier and across multiple verticals, and a robust product roadmap,
we are poised to accelerate our capture of market share. With
several key customer wins at the end of the third quarter, which we
expect to drive revenue growth with high contribution margin over
the next several quarters, we are well positioned for the remainder
of 2018 and beyond.”
Third Quarter Financial Results
For the three months ended September 30, 2018, as compared to
the three months ended September 30, 2017:
- Total revenue increased 89% to $4.4
million.
- Net loss improved by $2.1 million to
$1.3 million.
- Loss per share improved by $0.20 to
$0.12.
- Adjusted gross profit increased 506% to
$2.1 million.
- Adjusted gross margin increased to 49%
from 15%.
- Adjusted EBITDA improved by $1.3
million to negative $0.8 million.
Third Quarter and Recent Business Highlights
- Monthly revenue increased at a CAGR of
91% over the first nine months of 2018 with an annual revenue run
rate of $18.6 million for the month ended September 30, 2018.
- Recurring revenue continues to expand
with 64% of monthly revenue attributable to customer contracts
versus transactional usage. Contracts are generally annual
contracts or longer, with auto renewal.
- Business continues to scale towards
profitability as adjusted gross profit grew at a CAGR of 274% over
the first nine months of 2018, resulting in an annual adjusted
gross profit run rate of $9.9 million for the month ended September
30, 2018.
- FOREWARN®, our subscription app-based
solution for the real estate industry, powered by CORE™, grew
revenue at a CAGR of 464% over the first nine months of 2018, with
an annual run rate of $0.7 million for the month ended September
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 we are
poised to accelerate our capture of market share, whether the key
customer wins at the end of the 2018 third quarter will drive
revenue growth with high contribution margin over the next several
quarters and whether we are well positioned for 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 BALANCE
SHEETS (Amounts in thousands, except share data)
(unaudited) September 30, 2018 December 31,
2017
ASSETS:
Current assets: Cash and cash equivalents $ 12,646 $ 65 Accounts
receivable, net of allowance for doubtful accounts of $125 and
$228 at September 30, 2018 and December
31, 2017, respectively
2,185 1,650 Prepaid expenses and other current assets 736
559 Total current assets 15,567 2,274 Property and
equipment, net 877 1,091 Intangible assets, net 18,931 15,353
Goodwill 5,227 5,227 Other non-current assets 1,013
1,180
Total assets $ 41,615 $ 25,125
LIABILITIES AND
SHAREHOLDERS' EQUITY:
Current liabilities: Trade accounts payable $ 1,503 $ 919 Accrued
expenses and other current liabilities 2,179 6,437 Deferred revenue
15 33
Total liabilities 3,697 7,389
Shareholders' equity: Preferred stock—$0.001 par value, 10,000,000
and 0 authorized, and 0 shares
issued and outstanding, at September 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 September 30, 2018 and
December 31, 2017, respectively
10 - Additional paid-in capital 40,654 - Accumulated deficit (2,746
) - Member's capital - 17,736
Total shareholders'
equity 37,918 17,736
Total liabilities and
shareholders' equity $ 41,615 $ 25,125
RED VIOLET, INC. CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (Amounts in thousands, except share data)
(unaudited) Three Months Ended September
30, Nine Months Ended September 30, 2018
2017 2018 2017 Revenue $ 4,360 $
2,306 $ 11,594 $ 5,871
Costs and expenses: Cost of revenue
(exclusive of depreciation and amortization) 2,233 1,955 6,334
5,199 Sales and marketing expenses 1,126 1,175 3,443 3,158 General
and administrative expenses 2,182 2,222 5,776 15,150 Depreciation
and amortization 508 288 1,437 724
Total costs and expenses 6,049 5,640
16,990 24,231
Loss from operations (1,689 ) (3,334 )
(5,396 ) (18,360 ) Interest income, net 31 - 31 - Other income, net
406 - 535 -
Loss before income
taxes (1,252 ) (3,334 ) (4,830 ) (18,360 ) Income taxes
- - - -
Net loss $ (1,252 ) $ (3,334 )
$ (4,830 ) $ (18,360 )
Loss per share: Basic and diluted $
(0.12 ) $ (0.32 ) $ (0.47 ) $ (1.79 )
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)
Nine Months Ended September 30, 2018
2017 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (4,830
) $ (18,360 ) Adjustments to reconcile net loss to net cash used in
operating activities: Depreciation and amortization 1,437 724
Share-based compensation expense 432 2,246 Write-off of long-lived
assets 63 - Provision for bad debts 246 177 Allocation of expenses
from Fluent, Inc. 325 2,849 Changes in assets and liabilities:
Accounts receivable (781 ) (834 ) Prepaid expenses and other
current assets (177 ) 266 Other non-current assets 167 178 Trade
accounts payable 584 96 Accrued expenses and other current
liabilities (4,258 ) 4,784 Deferred revenue (18 ) (28
) Net cash used in operating activities (6,810 )
(7,902 ) CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property
and equipment (51 ) (476 ) Capitalized costs included in intangible
assets (4,497 ) (4,818 ) Net cash used in investing
activities (4,548 ) (5,294 ) CASH FLOWS FROM
FINANCING ACTIVITIES: Capital contributed by Fluent, Inc.
23,939 13,222 Net cash provided by financing
activities 23,939 13,222
Net increase in cash and
cash equivalents $ 12,581 $ 26 Cash and cash equivalents at
beginning of period 65 226
Cash and cash
equivalents at end of period $ 12,646 $ 252 SUPPLEMENTAL
DISCLOSURE INFORMATION Cash paid for interest $ - $ - Cash paid for
income taxes $ - $ - Share-based compensation capitalized in
intangible assets $ 316 $ 629
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
interest income, depreciation and amortization, share-based
compensation expense, litigation costs, insurance proceeds in
relation to settled litigation, 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 September 30, Nine
Months Ended September 30, (In thousands) 2018
2017 2018 2017 Net loss $
(1,252 ) $ (3,334 ) $ (4,830 ) $ (18,360 ) Interest income, net (31
) - (31 ) - Depreciation and amortization 508 288 1,437 724
Share-based compensation expense 218 563 432 2,246 Litigation costs
125 337 134 9,166 Insurance proceeds in relation to settled
litigation (350 ) - (350 ) - Transition service income (56 ) - (214
) - Write-off of long-lived assets and others 2 -
92 -
Adjusted EBITDA $ (836 ) $ (2,146 ) $
(3,330 ) $ (6,224 )
Three Months Ended September
30,
Nine Months Ended September 30, (In thousands)
2018 2017 2018 2017 Revenue $ 4,360 $
2,306 $ 11,594 $ 5,871 Cost of revenue (exclusive of depreciation
and amortization) 2,233 1,955 6,334
5,199
Adjusted gross profit $ 2,127 $ 351 $ 5,260 $ 672
Adjusted gross margin 49 % 15 % 45 %
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 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/20181107005132/en/
Red Violet, Inc.Investors Relations Contact:Camilo
Ramirez, 561-757-4500ir@redviolet.com
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