Continued Growth in Revenue and Key
Financial Indicators Drives Path to Profitability
Red Violet, Inc. (NASDAQ:RDVT), a leading information solutions
provider, today announced financial results for the quarter and
full year ended December 31, 2018.
“2018 proved to be a transformative year for us, with strong
financial performance including 90% year-over-year revenue growth
and substantial progress towards profitability,” stated Derek
Dubner, red violet’s CEO. “Our solutions are enabling our customers
to grow their businesses, which in turn is resulting in increased
spend with us. We are seeing greater new customer adoption across
all verticals and the first two months of this year indicate that
2019 will be a monumental year for red violet. We are as confident
as ever in our path to positive cash flow and profitability.”
Fourth Quarter Financial Results
For the three months ended December 31, 2018, as compared to the
three months ended December 31, 2017:
- Total revenue increased 74% to $4.7
million.
- Net loss improved by $1.1 million to
$2.0 million.
- Loss per share improved by $0.11 to
$0.20.
- Adjusted gross profit increased 186% to
$2.4 million.
- Adjusted gross margin increased to 51%
from 31%.
- Adjusted EBITDA improved by $1.1
million to negative $1.0 million.
Full Year Financial Results
For the year ended December 31, 2018, as compared to the year
ended December 31, 2017:
- Total revenue increased 90% to $16.3
million.
- Net loss improved by $14.6 million to
$6.9 million.
- Loss per share improved by $1.42 to
$0.67.
- Adjusted gross profit increased 407% to
$7.7 million.
- Adjusted gross margin increased to 47%
from 18%.
- Adjusted EBITDA improved by $4.0
million to negative $4.3 million.
Use 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, net, depreciation and amortization, share-based
compensation expense, litigation costs, insurance proceeds in
relation to settled litigation, transition service income, and
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.
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 2019 will be
a monumental year for red violet and whether red violet will
achieve positive cash flow and profitability. 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,
including the Form 10-K for the year ended December 31, 2018
expected to be filed prior to its deadline. 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. CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share
data)
December 31, 2018 December 31, 2017
ASSETS:
Current assets: Cash and cash equivalents $ 9,950 $ 65 Accounts
receivable, net 2,265 1,650 Prepaid expenses and other current
assets 934 559 Total current assets 13,149 2,274
Property and equipment, net 852 1,091 Intangible assets, net 19,971
15,353 Goodwill 5,227 5,227 Other non-current assets 628
1,180
Total assets $ 39,827 $ 25,125
LIABILITIES AND
SHAREHOLDERS' EQUITY:
Current liabilities: Accounts payable $ 2,246 $ 2,578
Accrued expenses and other current liabilities 1,277 4,778 Deferred
revenue 26 33
Total liabilities 3,549 7,389
Shareholders' equity: Preferred stock—$0.001 par value, 10,000,000
and 0 authorized, and 0 shares
issued and outstanding, at December 31,
2018 and 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 December 31, 2018 and
2017, respectively
10 - Additional paid-in capital 41,052 - Accumulated deficit (4,784
) - Member's capital - 17,736
Total shareholders'
equity 36,278 17,736
Total liabilities and
shareholders' equity $ 39,827 $ 25,125
RED VIOLET, INC. CONSOLIDATED STATEMENTS OF
OPERATIONS
(Amounts in thousands, except share
data)
Year Ended December 31, 2018
2017 Revenue $ 16,302 $ 8,578
Costs and
expenses: Cost of revenue (exclusive of depreciation and
amortization) 8,638 7,066 Sales and marketing expenses 4,754 4,394
General and administrative expenses 8,405 17,480 Depreciation and
amortization 1,996 1,138
Total costs and
expenses 23,793 30,078
Loss from
operations (7,491 ) (21,500 ) Interest income, net 84 - Other
income, net 539 -
Loss before income taxes
(6,868 ) (21,500 ) Income taxes - -
Net loss $
(6,868 ) $ (21,500 )
Loss per share: Basic and diluted $
(0.67 ) $ (2.09 )
Weighted average number of shares
outstanding: Basic and diluted 10,266,613
10,266,613
RED VIOLET, INC. CONSOLIDATED STATEMENTS OF CASH
FLOWS
(Amounts in thousands, except share
data)
Year Ended December 31, 2018
2017 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (6,868
) $ (21,500 ) Adjustments to reconcile net loss to net cash used in
operating activities: Depreciation and amortization 1,996 1,138
Share-based compensation expense 709 2,871 Write-off of long-lived
assets 63 - Provision for bad debts 294 287 Allocation of expenses
from Fluent, Inc. 325 3,646 Changes in assets and liabilities:
Accounts receivable (909 ) (1,243 ) Prepaid expenses and other
current assets (375 ) 222 Other non-current assets 552 270 Accounts
payable (332 ) 106 Accrued expenses and other current liabilities
(3,501 ) 3,839 Deferred revenue (7 ) (47 ) Net cash
used in operating activities (8,053 ) (10,411 ) CASH
FLOWS FROM INVESTING ACTIVITIES: Purchase of property and equipment
(90 ) (515 ) Capitalized costs included in intangible assets
(5,911 ) (5,953 ) Net cash used in investing activities
(6,001 ) (6,468 ) CASH FLOWS FROM FINANCING
ACTIVITIES: Capital contributed by Fluent, Inc. 23,939
16,718 Net cash provided by financing activities
23,939 16,718
Net increase (decrease) in cash and
cash equivalents $ 9,885 $ (161 ) Cash and cash equivalents at
beginning of period 65 226
Cash and cash
equivalents at end of period $ 9,950 $ 65 SUPPLEMENTAL
DISCLOSURE INFORMATION Cash paid for interest $ - $ - Cash paid for
income taxes $ - $ - Share-based compensation capitalized in
intangible assets $ 437 $ 784
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, net, depreciation and amortization, share-based
compensation expense, litigation costs, insurance proceeds in
relation to settled litigation, transition service income, and
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 December 31, Year Ended
December 31, (In thousands) 2018
2017 2018 2017 Net loss $ (2,038
) $ (3,140 ) $ (6,868 ) $ (21,500 ) Interest income, net (53 ) -
(84 ) - Depreciation and amortization 559 414 1,996 1,138
Share-based compensation expense 277 625 709 2,871 Litigation costs
248 25 382 9,191 Insurance proceeds in relation to settled
litigation - - (350 ) - Transition service income (4 ) - (218 ) -
Write-off of long-lived assets and others - -
92 -
Adjusted EBITDA $ (1,011 ) $ (2,076 ) $ (4,341 )
$ (8,300 )
Three Months Ended December 31, Year
Ended December 31, (In thousands) 2018
2017 2018 2017 Revenue $ 4,708 $ 2,707 $
16,302 $ 8,578 Cost of revenue (exclusive of depreciation and
amortization) 2,304 1,867 8,638 7,066
Adjusted gross profit $ 2,404 $ 840 $ 7,664 $ 1,512
Adjusted gross margin 51 % 31 % 47 %
18 %
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/20190307005222/en/
Investors Relations Contact:Camilo RamirezRed Violet,
Inc.561-757-4500ir@redviolet.com
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