Revenue Increases 72% to $5.7 Million
Driving Significant Progress Toward Profitability
Red Violet, Inc. (NASDAQ: RDVT), a leading analytics and
information solutions provider, today announced financial results
for the quarter ended March 31, 2019 and posted a letter to
shareholders on the investor relations section of the Company’s
website at http://redviolet.com/shareholderletter.
“We started the year off strong and are extremely pleased with
our results for the first quarter. With another quarter of
sequential record revenue and a significantly improved bottom line,
we fully expect 2019 to be a breakout year for red violet,” stated
Derek Dubner, red violet’s CEO. “Our team continues to enhance the
functionality and performance of our solutions and, as a result, we
are winning head-to-head challenges against the competition and
driving new use cases for our customers. We added over 390 new
idiCORE™ customers in the first quarter and continue to see strong
growth in revenue from existing customers.”
First Quarter Financial Results
For the three months ended March 31, 2019, as compared to the
three months ended March 31, 2018:
- Total revenue increased 72% to $5.7
million.
- Net loss improved by $0.7 million to
$1.4 million.
- Loss per share improved by $0.07 to
$0.13.
- Adjusted gross profit increased 134% to
$3.1 million.
- Adjusted gross margin increased to 53%
from 39%.
- Adjusted EBITDA improved by $1.0
million to negative $0.4 million.
First Quarter and Recent Business Highlights
- Customer adoption of idiCORE has been
strong with over 1,000 new customers added in the past year.
- Recurring revenue continues to expand
with 67% of monthly revenue attributable to customer contracts
versus transactional usage. Contracts are generally annual
contracts or longer, with auto renewal.
- FOREWARN®, our subscription app-based
solution for the real estate industry, powered by CORE™, continues
to scale with over 13,000 users added in the past year.
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 analytics and information 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, recovering debt, identifying fraud and abuse, and
ensuring legislative compliance, to identifying and acquiring
customers. 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 expect
2019 to be a breakout year for red violet. 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 Form 10-K for the year ended
December 31, 2018 filed on March 7, 2019, as may be supplemented or
amended by the Company's 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) March 31, 2019 December
31, 2018
ASSETS:
Current assets: Cash and cash equivalents $ 7,319 $ 9,950 Accounts
receivable, net of allowance for doubtful accounts of $25 and $77
as of March 31, 2019 and December 31, 2018, respectively 2,788
2,265 Prepaid expenses and other current assets 1,293
934 Total current assets 11,400 13,149 Property and equipment, net
773 852 Intangible assets, net 20,997 19,971 Goodwill 5,227 5,227
Right-of-use assets 2,939 - Other noncurrent assets 543
628
Total assets $ 41,879 $ 39,827
LIABILITIES AND
SHAREHOLDERS' EQUITY:
Current liabilities: Accounts payable $ 2,149 $ 2,246 Accrued
expenses and other current liabilities 1,075 1,277 Current portion
of operating lease liabilities 449 - Deferred revenue 49
26 Total current liabilities 3,722 3,549 Noncurrent
operating lease liabilities 2,833 -
Total
liabilities 6,555 3,549 Shareholders' equity: Preferred
stock—$0.001 par value, 10,000,000 shares authorized, and 0 shares
issued and outstanding, as of March 31, 2019 and December 31, 2018
- - Common stock—$0.001 par value, 200,000,000 shares authorized,
10,286,613 and 10,266,613 shares issued and outstanding, as of
March 31, 2019 and December 31, 2018 10 10 Additional paid-in
capital 41,476 41,052 Accumulated deficit (6,162 )
(4,784 )
Total shareholders' equity 35,324
36,278
Total liabilities and shareholders' equity $ 41,879 $
39,827
RED VIOLET, INC. CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (Amounts in thousands, except share data)
(unaudited) Three Months Ended March 31,
2019 2018 Revenue $ 5,734 $ 3,325
Costs and expenses: Cost of revenue (exclusive of
depreciation and amortization) 2,669 2,017 Sales and marketing
expenses 1,500 1,089 General and administrative expenses 2,365
1,852 Depreciation and amortization 618 451
Total
costs and expenses 7,152 5,409
Loss from
operations (1,418 ) (2,084 ) Interest income, net 40
-
Loss before income taxes (1,378 ) (2,084 ) Income
taxes - -
Net loss $ (1,378 ) $ (2,084 )
Loss per share: Basic and diluted $ (0.13 ) $ (0.20 )
Weighted average number of shares outstanding: Basic and
diluted 10,267,680 10,266,613
RED VIOLET, INC. CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS (Amounts in thousands) (unaudited)
Three Months Ended March 31, 2019
2018 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (1,378
) $ (2,084 ) Adjustments to reconcile net loss to net cash used in
operating activities: Depreciation and amortization 618 451
Share-based compensation expense 274 165 Write-off of long-lived
assets 30 55 Provision for (recovery of) bad debts 154 (56 )
Allocation of expenses from Fluent, Inc. - 325 Noncash lease
expenses 103 - Changes in assets and liabilities: Accounts
receivable (677 ) (326 ) Prepaid expenses and other current assets
(359 ) (237 ) Other noncurrent assets 85 (2 ) Accounts payable (97
) (123 ) Accrued expenses and other current liabilities 143 (981 )
Deferred revenue 23 (12 ) Operating lease liabilities (105 )
- Net cash used in operating activities (1,186 )
(2,825 ) CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of
property and equipment (15 ) (16 ) Capitalized costs included in
intangible assets (1,430 ) (1,370 ) Net cash used in
investing activities (1,445 ) (1,386 ) CASH FLOWS
FROM FINANCING ACTIVITIES: Capital contributed by Fluent, Inc.
- 23,939 Net cash provided by financing activities
- 23,939
Net (decrease) increase in cash and cash
equivalents $ (2,631 ) $ 19,728 Cash and cash equivalents at
beginning of period 9,950 65
Cash and cash
equivalents at end of period $ 7,319 $ 19,793 SUPPLEMENTAL
DISCLOSURE INFORMATION Cash paid for interest $ - $ - Cash paid for
income taxes $ - $ - Share-based compensation capitalized in
intangible assets $ 150 $ 181 Right-of-use assets obtained in
exchange of operating lease liabilities $ 3,042 $ - Operating lease
liabilities arising from obtaining right-of-use assets $ 3,387 $ -
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 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)
2019 2018 Net loss $ (1,378 ) $ (2,084
) Interest income, net (40 ) - Depreciation and amortization 618
451 Share-based compensation expense 274 165 Litigation costs 94 -
Write-off of long-lived assets 30 55
Adjusted
EBITDA $ (402 ) $ (1,413 )
Three Months Ended March
31, (In thousands) 2019 2018 Revenue $
5,734 $ 3,325 Cost of revenue (exclusive of depreciation and
amortization) 2,669 2,017
Adjusted gross
profit $ 3,065 $ 1,308
Adjusted gross margin 53 %
39 %
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.
SUPPLEMENTAL METRICS
The following metrics are intended as a supplement to the
financial statements found in this release and other information
furnished or filed with the SEC. These supplemental metrics are not
necessarily derived from any underlying financial statement
amounts. We believe these supplemental metrics help investors
understand trends within our business and evaluate the performance
of such trends quickly and effectively. In the event of
discrepancies between amounts in these tables and the Company's
historical disclosures or financial statements, readers should rely
on the Company's filings with the SEC and financial statements in
the Company's most recent earnings release.
We intend to periodically review and refine the definition,
methodology and appropriateness of each of these supplemental
metrics. As a result, metrics are subject to removal and/or
changes, and such changes could be material.
(Unaudited) (Dollars in thousands)
Q1'18 Q2'18 Q3'18
Q4'18 Q1'19 Customer metrics
idiCORE - billable customers(1) 2,941 3,302
3,438 3,627 4,020 FOREWARN - users(2) 2,427 5,095 7,872 11,397
15,444
Revenue metrics Contractual revenue %(3) 44 % 52 % 64
% 66 % 67 % Net revenue attrition %(4) 10 % 10 % 6 % 5 % 5 %
Revenue from new customers(5) $ 756 $ 802 $ 842 $ 1,096 $ 1,285
Base revenue from existing customers(6) $ 1,952 $ 2,472 $ 2,934 $
3,127 $ 3,593 Growth revenue from existing customers(7) $ 617 $ 635
$ 584 $ 485 $ 856
Other metrics Employees - sales and
marketing 35 33 37 46 47 Employees - support 7 7 5 6 6 Employees -
infrastructure 11 11 9 11 12 Employees - engineering 18 20 22 21 20
Employees - administration 13 14 14 14 14 (1) We define a
billable customer of idiCORE as a single entity that generated
revenue in the last month of the period. Billable customers are
typically corporate organizations. In most cases, corporate
organizations will have multiple users and/or departments
purchasing our solutions, however, we count the entire organization
as a discrete customer. (2) We define a user of FOREWARN as a
unique individual that has an active user account and is able to
log into FOREWARN. (3) Contractual revenue % represents revenue
generated from customers pursuant to pricing contracts containing a
monthly fee and any additional overage divided by total revenue.
Pricing contracts are generally annual contracts or longer, with
auto renewal. (4) Net revenue attrition is defined as the revenue
lost as a result of customer attrition, net of reinstated customer
revenue, excluding FOREWARN revenue. Revenue is measured once a
customer has generated revenue for six consecutive months. Revenue
is considered lost when all revenue from a customer ceases for
three consecutive months; revenue generated by a customer after the
three-month loss period is defined as reinstated revenue. Net
revenue attrition percentage is calculated on a trailing
twelve-month basis, the numerator of which is the revenue lost
during the period due to attrition, net of reinstated revenue, and
the denominator of which is total revenue based on an average of
total revenue at the beginning of each month during the period. (5)
Revenue from new customers represents the total monthly revenue
generated from new customers in a given period. A customer is
defined as a new customer during the first six months of revenue
generation. (6) Base revenue from existing customers represents the
total monthly revenue generated from existing customers in a given
period that does not exceed the customers' trailing six-month
average revenue. A customer is defined as an existing customer six
months after their initial month of revenue. (7) Growth revenue
from existing customers represents the total monthly revenue
generated from existing customers in a given period in excess of
the customers' trailing six-month average revenue.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190507005960/en/
Investor Relations Contact:Camilo RamirezRed Violet,
Inc.561-757-4500ir@redviolet.com
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