Revenue Increases 89% to $8.3 Million with
Strong Margin Expansion and Positive Cash Flow from Operating
Activities
Red Violet, Inc. (NASDAQ: RDVT), a leading analytics and
information solutions provider, today announced financial results
for the quarter ended September 30, 2019.
“Since our spin-off in March of 2018, we have reported seven
consecutive quarters of record revenue and adjusted gross margin.
Adjusted EBITDA increased over 200% from second quarter 2019 and we
incurred our smallest quarterly net loss to date,” stated Derek
Dubner, red violet’s CEO. “I am very proud of our team’s execution
year-to-date, seizing upon immediate opportunities while continuing
to lay the groundwork for expected future growth. We are
experiencing increasing adoption of idiCORE™ by and among larger
customers and FOREWARN® is fast becoming the go-to solution for
proactive realtor safety. While fourth quarter traditionally
presents seasonal headwinds affecting our transactional customers
in the way of less business days and year-end budget recasting, we
have experienced a strong start to the fourth quarter and are
excited to close out a terrific 2019.”
Third Quarter Financial Results
For the three months ended September 30, 2019 as compared to the
three months ended September 30, 2018:
- Total revenue increased 89% to $8.3 million.
- Net loss was $1.0 million (including share-based compensation
expense of $1.4 million) as compared to $1.3 million (including
share-based compensation expense of $0.2 million).
- Loss per share was $0.09 as compared to $0.12.
- Adjusted gross profit increased 141% to $5.1 million.
- Adjusted gross margin increased to 62% from 49%.
- Adjusted EBITDA was $1.1 million as compared to a negative $0.8
million.
Third Quarter and Recent Business Highlights
- Leveraging the power of CORE™, red violet’s cloud-based,
next-generation technology platform, idiCORE delivered over 400 new
customers in the third quarter.
- Recognized as a leading innovative technology in the real
estate industry, our subscription app-based solution, FOREWARN,
added over 4,100 users in the third quarter.
- Broad-based revenue growth from both new customer adoption and
existing customer expansion. New customer revenue grew 67% and
growth revenue from existing customers grew 118% over prior
year.
- Cash and cash equivalents were $13.3 million as of September
30, 2019. To meet demand and accelerate growth, we raised $7.5
million during the quarter in strategic growth financing from
existing and new investors through the sale of 681,000 shares of
common stock in a registered direct offering.
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, net, 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.
Conference Call
In conjunction with this release, red violet will host a
conference call and webcast today a 4:30pm ET to discuss its
quarterly results and provide a business update. To listen to the
call, please dial (877) 665-6635 for domestic callers or (602)
563-8608 for international callers, using the passcode 1075407. To
access the live audio webcast, visit the Investors section of the
red violet website at www.redviolet.com. Please login at least 15
minutes prior to the start of the call to ensure adequate time for
any downloads that may be required. Following the completion of the
conference call, a replay will be available for approximately one
week by dialing (855) 859-2056 or (404) 537-3406 with the replay
passcode 1075407. An archived webcast of the conference call will
be available on the Investors section of the red violet website at
www.redviolet.com.
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 red violet
will experience future growth, and whether FOREWARN will become the
go-to solution for proactive realtor safety. 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)
September 30, 2019
December 31, 2018
ASSETS:
Current assets:
Cash and cash equivalents
$
13,337
$
9,950
Accounts receivable, net of allowance for
doubtful accounts of $30 and $77 as of September 30, 2019 and
December 31, 2018, respectively
3,325
2,265
Prepaid expenses and other current
assets
894
934
Total current assets
17,556
13,149
Property and equipment, net
704
852
Intangible assets, net
23,050
19,971
Goodwill
5,227
5,227
Right-of-use assets
2,729
-
Other noncurrent assets
374
628
Total assets
$
49,640
$
39,827
LIABILITIES AND SHAREHOLDERS'
EQUITY:
Current liabilities:
Accounts payable
$
2,481
$
2,246
Accrued expenses and other current
liabilities
2,004
1,277
Current portion of operating lease
liabilities
477
-
Deferred revenue
35
26
Total current liabilities
4,997
3,549
Noncurrent operating lease liabilities
2,588
-
Total liabilities
7,585
3,549
Shareholders' equity:
Preferred stock—$0.001 par value,
10,000,000 shares authorized, and 0 shares issued and outstanding,
as of September 30, 2019 and December 31, 2018
-
-
Common stock—$0.001 par value, 200,000,000
shares authorized, 11,633,662 and 10,266,613 shares issued,
11,530,515 and 10,266,613 shares outstanding, as of September 30,
2019 and December 31, 2018
12
10
Treasury stock, at cost, 103,147 and 0
shares as of September 30, 2019 and
December 31, 2018
(1,255
)
-
Additional paid-in capital
54,302
41,052
Accumulated deficit
(11,004
)
(4,784
)
Total shareholders' equity
42,055
36,278
Total liabilities and shareholders'
equity
$
49,640
$
39,827
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,
2019
2018
2019
2018
Revenue
$
8,257
$
4,360
$
21,236
$
11,594
Costs and expenses:
Cost of revenue (exclusive of depreciation
and amortization)
3,122
2,233
8,843
6,334
Sales and marketing expenses
1,925
1,126
5,428
3,443
General and administrative expenses
3,498
2,182
11,259
5,776
Depreciation and amortization
750
508
2,049
1,437
Total costs and expenses
9,295
6,049
27,579
16,990
Loss from operations
(1,038
)
(1,689
)
(6,343
)
(5,396
)
Interest income, net
46
31
123
31
Other income, net
-
406
-
535
Loss before income taxes
(992
)
(1,252
)
(6,220
)
(4,830
)
Income taxes
-
-
-
-
Net loss
$
(992
)
$
(1,252
)
$
(6,220
)
$
(4,830
)
Loss per share:
Basic and diluted
$
(0.09
)
$
(0.12
)
$
(0.59
)
$
(0.47
)
Weighted average number of shares
outstanding:
Basic and diluted
10,917,673
10,266,613
10,497,036
10,266,613
RED VIOLET, INC. CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in thousands)
(unaudited)
Nine Months Ended September
30,
2019
2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss
$
(6,220
)
$
(4,830
)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:
Depreciation and amortization
2,049
1,437
Share-based compensation expense
5,290
432
Write-off of long-lived assets
30
63
Provision for bad debts
398
246
Allocation of expenses from Fluent,
Inc.
-
325
Noncash lease expenses
313
-
Changes in assets and liabilities:
Accounts receivable
(1,458
)
(781
)
Prepaid expenses and other current
assets
40
(177
)
Other noncurrent assets
254
167
Accounts payable
235
(55
)
Accrued expenses and other current
liabilities
(183
)
(3,619
)
Deferred revenue
9
(18
)
Operating lease liabilities
(322
)
-
Net cash provided by (used in) operating
activities
435
(6,810
)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment
(71
)
(51
)
Capitalized costs included in intangible
assets
(4,413
)
(4,497
)
Net cash used in investing activities
(4,484
)
(4,548
)
CASH FLOWS FROM FINANCING ACTIVITIES:
Capital contributed by Fluent, Inc.
-
23,939
Proceeds from issuance of shares, net of
issuance costs
7,436
-
Net cash provided by financing
activities
7,436
23,939
Net increase in cash and cash
equivalents
$
3,387
$
12,581
Cash and cash equivalents at beginning of
period
9,950
65
Cash and cash equivalents at end of
period
$
13,337
$
12,646
SUPPLEMENTAL DISCLOSURE INFORMATION
Cash paid for interest
$
-
$
-
Cash paid for income taxes
$
-
$
-
Share-based compensation capitalized in
intangible assets
$
526
$
316
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, net, 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 September
30,
Three Months Ended
Nine Months Ended September
30,
(In thousands)
2019
2018
June 30, 2019
2019
2018
Net loss
$
(992
)
$
(1,252
)
$
(3,850
)
$
(6,220
)
$
(4,830
)
Interest income, net
(46
)
(31
)
(37
)
(123
)
(31
)
Depreciation and amortization
750
508
681
2,049
1,437
Share-based compensation expense
1,407
218
3,609
5,290
432
Litigation costs, net
7
125
(47
)
54
134
Insurance proceeds in relation to settled
litigation
-
(350
)
-
-
(350
)
Transition service income
-
(56
)
-
-
(214
)
Write-off of long-lived assets and
others
11
2
-
41
92
Adjusted EBITDA
$
1,137
$
(836
)
$
356
$
1,091
$
(3,330
)
Three Months Ended September
30,
Three Months Ended
Nine Months Ended September
30,
(In thousands)
2019
2018
June 30, 2019
2019
2018
Revenue
$
8,257
$
4,360
$
7,245
$
21,236
$
11,594
Cost of revenue (exclusive of depreciation
and amortization)
3,122
2,233
3,052
8,843
6,334
Adjusted gross profit
$
5,135
$
2,127
$
4,193
$
12,393
$
5,260
Adjusted gross margin
62
%
49
%
58
%
58
%
45
%
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
Q2'19
Q3'19
Customer metrics
idiCORE - billable customers(1)
2,941
3,302
3,438
3,627
4,020
4,370
4,781
FOREWARN - users(2)
2,427
5,095
7,872
11,397
15,444
19,721
23,853
Revenue metrics
Contractual revenue %(3)
44
%
52
%
64
%
66
%
67
%
62
%
66
%
Net revenue attrition %(4)
10
%
10
%
6
%
5
%
5
%
5
%
6
%
Revenue from new customers(5)
$
756
$
802
$
842
$
1,096
$
1,285
$
1,596
$
1,406
Base revenue from existing
customers(6)
$
1,952
$
2,472
$
2,934
$
3,127
$
3,593
$
4,480
$
5,578
Growth revenue from existing
customers(7)
$
617
$
635
$
584
$
485
$
856
$
1,169
$
1,273
Other metrics
Employees - sales and marketing
35
33
37
46
47
48
48
Employees - support
7
7
5
6
6
7
8
Employees - infrastructure
11
11
9
11
12
12
13
Employees - engineering
18
20
22
21
20
20
25
Employees - administration
13
14
14
14
14
14
13
(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/20191107005270/en/
Investor Relations Contact: Camilo Ramirez Red Violet,
Inc. 561-757-4500 ir@redviolet.com
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