Revenue Increases 92% to $9.1 Million
Generating $1.2 Million in Cash from Operating Activities in the
Fourth Quarter
Red Violet, Inc. (NASDAQ: RDVT), a leading analytics and
information solutions provider, today announced financial results
for the quarter and full year ended December 31, 2019.
“Bucking the trend in what is historically a seasonally slower
quarter for our business, we capped off a spectacular year,
generating record revenue and cash from operations,” stated Derek
Dubner, red violet’s CEO. “Leveraging our cloud-native platform, we
continue to see larger customers take advantage of the platform’s
speed, flexibility and efficiency to grow their businesses, as
demonstrated by our 100% increase in revenue from existing
customers in 2019. We are winning head-to-head against the
competition, led by innovation, next-generation technology, and our
relentless focus on driving customer-centric solutions into the
marketplace, which continues to fuel our growth. We kicked off 2020
in strong fashion, with solid revenue growth and adjusted EBITDA
pacing towards $2 million for Q1 of 2020, which would exceed our
adjusted EBITDA for the entire year of 2019. We have never been
better positioned for the future than we are today.”
Fourth Quarter Financial Results
For the three months ended December 31, 2019 as compared to the
three months ended December 31, 2018:
- Total revenue increased 92% to $9.1 million.
- Net loss was $4.9 million (including share-based compensation
expense of $4.6 million, which includes a one-time $2.3 million) as
compared to $2.0 million (including share-based compensation
expense of $0.3 million).
- Adjusted EBITDA was $0.8 million as compared to a negative $1.0
million.
- Gross profit increased 155% to $4.9 million. Gross margin
increased to 54% from 41%.
- Adjusted gross profit increased 134% to $5.6 million. Adjusted
gross margin increased to 62% from 51%.
Full Year Financial Results
For the year ended December 31, 2019 as compared to the year
ended December 31, 2018:
- Total revenue increased 86% to $30.3 million.
- Net loss was $11.1 million (including share-based compensation
expense of $9.9 million) as compared to $6.9 million (including
share-based compensation expense of $0.7 million).
- Adjusted EBITDA was $1.9 million as compared to a negative $4.3
million.
- Gross profit increased 159% to $15.4 million. Gross margin
increased to 51% from 36%.
- Adjusted gross profit increased 135% to $18.0 million. Adjusted
gross margin increased to 60% from 47%.
Fourth Quarter and Recent Business Highlights
- Leveraging the power of CORE™, red violet’s cloud-based,
next-generation technology platform, idiCORE delivered over 280 new
customers in the fourth quarter.
- Recognized as a leading innovative technology in the real
estate industry, our subscription app-based solution, FOREWARN,
added over 6,700 users in the fourth quarter.
- Announced partnership with our first statewide MLS, Maine
Listings, and our first statewide association, Connecticut
REALTORS®, to provide FOREWARN as a proactive safety and identity
verification tool to their members.
- Strong revenue growth from existing customer expansion. Growth
revenue from existing customers grew 177% over the fourth quarter
of the prior 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, net, sales and use tax
expense, insurance proceeds in relation to settled litigation,
transition service income, and write-off of long-lived assets and
others. 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 at 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 2095739. 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 2095739. 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 our
relentless focus on driving customer-centric solutions into the
marketplace will continue to fuel our growth, whether adjusted
EBITDA is pacing towards $2 million for the 2020 first quarter and
whether we have never been better positioned for the future than we
are today. 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, including the Form 10-K for year ended December
31, 2019 expected to be filed today. 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, 2019
December 31, 2018
ASSETS:
Current assets:
Cash and cash equivalents
$
11,776
$
9,950
Accounts receivable, net of allowance for
doubtful accounts of $40 and $77
as of December 31, 2019 and 2018,
respectively
3,543
2,265
Prepaid expenses and other current
assets
722
934
Total current assets
16,041
13,149
Property and equipment, net
660
852
Intangible assets, net
24,034
19,971
Goodwill
5,227
5,227
Right-of-use assets
2,620
-
Other noncurrent assets
289
628
Total assets
$
48,871
$
39,827
LIABILITIES AND
SHAREHOLDERS' EQUITY:
Current liabilities:
Accounts payable
$
2,138
$
2,246
Accrued expenses and other current
liabilities
1,571
1,277
Current portion of operating
lease liabilities
491
-
Deferred revenue
128
26
Total current liabilities
4,328
3,549
Noncurrent operating lease liabilities
2,459
-
Total liabilities
6,787
3,549
Shareholders' equity:
Preferred stock—$0.001 par value,
10,000,000 shares authorized, and 0 shares
issued and outstanding, as of December 31,
2019 and December 31, 2018
-
-
Common stock—$0.001 par value, 200,000,000
shares authorized, 11,657,912 and
10,266,613 shares issued, 11,554,765 and
10,266,613 shares outstanding, as of
December 31, 2019 and 2018
12
10
Treasury stock, at cost, 103,147 and 0
shares as of December 31, 2019 and 2018
(1,255
)
-
Additional paid-in capital
59,187
41,052
Accumulated deficit
(15,860
)
(4,784
)
Total shareholders' equity
42,084
36,278
Total liabilities and shareholders'
equity
$
48,871
$
39,827
RED VIOLET, INC.
CONSOLIDATED STATEMENTS OF
OPERATIONS
(Amounts in thousands, except
share data)
Year Ended December
31,
2019
2018
Revenue
$
30,286
$
16,302
Costs and expenses(1):
Cost of revenue (exclusive of depreciation
and amortization)
12,257
8,638
Sales and marketing expenses
7,528
4,754
General and administrative expenses
18,824
8,405
Depreciation and amortization
2,889
1,996
Total costs and expenses
41,498
23,793
Loss from operations
(11,212
)
(7,491
)
Interest income, net
136
84
Other income, net
-
539
Loss before income taxes
(11,076
)
(6,868
)
Income taxes
-
-
Net loss
$
(11,076
)
$
(6,868
)
Loss per share:
Basic and diluted
$
(1.03
)
$
(0.67
)
Weighted average number of shares
outstanding:
Basic and diluted
10,762,881
10,266,613
(1) Share-based compensation expense in
each category:
Sales and marketing expenses
$
454
$
158
General and administrative expenses
9,459
551
Total
$
9,913
$
709
RED VIOLET, INC.
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(Amounts in thousands)
Year Ended December
31,
2019
2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss
$
(11,076
)
$
(6,868
)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:
Depreciation and amortization
2,889
1,996
Share-based compensation expense
9,913
709
Write-off of long-lived assets
30
63
Provision for bad debts
582
294
Allocation of expenses from Fluent,
Inc.
-
325
Noncash lease expenses
422
-
Changes in assets and liabilities:
Accounts receivable
(1,860
)
(909
)
Prepaid expenses and other current
assets
212
(375
)
Other noncurrent assets
339
552
Accounts payable
(108
)
(332
)
Accrued expenses and other current
liabilities
639
(3,501
)
Deferred revenue
102
(7
)
Operating lease liabilities
(437
)
-
Net cash provided by (used in) operating
activities
1,647
(8,053
)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment
(90
)
(90
)
Capitalized costs included in intangible
assets
(5,912
)
(5,911
)
Net cash used in investing activities
(6,002
)
(6,001
)
CASH FLOWS FROM FINANCING ACTIVITIES:
Capital contributed by Fluent, Inc.
-
23,939
Proceeds from issuance of shares, net of
issuance costs
7,436
-
Taxes paid related to net share settlement
of vesting of restricted stock units
(1,255
)
-
Net cash provided by financing
activities
6,181
23,939
Net increase in cash and cash
equivalents
$
1,826
$
9,885
Cash and cash equivalents at beginning of
period
9,950
65
Cash and cash equivalents at end of
period
$
11,776
$
9,950
SUPPLEMENTAL DISCLOSURE INFORMATION
Cash paid for interest
$
-
$
-
Cash paid for income taxes
$
-
$
-
Share-based compensation capitalized in
intangible assets
$
788
$
437
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, sales and use tax
expense, 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)
2019
2018
2019
2018
Net loss
$
(4,856
)
$
(2,038
)
$
(11,076
)
$
(6,868
)
Interest income, net
(13
)
(53
)
(136
)
(84
)
Depreciation and amortization
840
559
2,889
1,996
Share-based compensation expense
4,623
277
9,913
709
Litigation costs, net
-
248
54
382
Sales and use tax expense
205
-
205
-
Insurance proceeds in relation to settled
litigation
-
-
-
(350
)
Transition service income
-
(4
)
-
(218
)
Write-off of long-lived assets and
others
3
-
44
92
Adjusted EBITDA
$
802
$
(1,011
)
$
1,893
$
(4,341
)
The following is a reconciliation of gross profit, the most
directly comparable GAAP financial measure, to adjusted gross
profit:
Three Months Ended December
31,
Year Ended December
31,
(In thousands)
2019
2018
2019
2018
Revenue
$
9,050
$
4,708
$
30,286
$
16,302
Cost of revenue (exclusive of depreciation
and amortization)
3,414
2,304
12,257
8,638
Depreciation and amortization of
intangible assets
777
495
2,637
1,730
Gross profit
4,859
1,909
15,392
5,934
Depreciation and amortization of
intangible assets
777
495
2,637
1,730
Adjusted gross profit
$
5,636
$
2,404
$
18,029
$
7,664
Gross margin
54
%
41
%
51
%
36
%
Adjusted gross margin
62
%
51
%
60
%
47
%
In order to assist readers of our consolidated financial
statements in understanding the operating results that management
uses to evaluate the business and for financial planning purposes,
we present non-GAAP measures of adjusted EBITDA, adjusted gross
profit and adjusted gross margin as supplemental measures of our
operating performance. 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 and operating
strength of our business.
We believe adjusted EBITDA, adjusted gross profit and adjusted
gross margin are relevant and provide useful information 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. We believe adjusted EBITDA eliminates the uneven
effect of considerable amounts of non-cash depreciation and
amortization, share-based compensation expense and the impact of
other non-recurring items, providing useful comparisons versus
prior periods or forecasts. Our adjusted gross profit is a measure
used by management in evaluating the business’s current operating
performance by excluding the impact of prior historical costs of
assets that are expensed systematically and allocated over the
estimated useful lives of the assets, which may not be indicative
of the current operating activity. Our adjusted gross profit is
calculated by using revenue, less cost of revenue (exclusive of
depreciation and amortization). We believe adjusted gross profit
provides useful information to our investors by eliminating the
impact of non-cash depreciation and amortization, and specifically
the amortization of software developed for internal use, providing
a baseline of our core operating results that allow for analyzing
trends in our underlying business consistently over multiple
periods. Adjusted gross margin is calculated as adjusted gross
profit as a percentage of revenue.
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, financial measures
presented in accordance with GAAP. 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
Q4'19
Customer metrics
idiCORE - billable customers(1)
2,941
3,302
3,438
3,627
4,020
4,370
4,781
5,064
FOREWARN - users(2)
2,427
5,095
7,872
11,397
15,444
19,721
23,853
30,577
Revenue metrics
Contractual revenue %(3)
44
%
52
%
64
%
66
%
67
%
62
%
66
%
66
%
Net revenue attrition %(4)
10
%
10
%
6
%
5
%
5
%
5
%
6
%
6
%
Revenue from new customers(5)
$
756
$
802
$
842
$
1,096
$
1,285
$
1,596
$
1,406
$
1,018
Base revenue from existing
customers(6)
$
1,952
$
2,472
$
2,934
$
3,127
$
3,593
$
4,480
$
5,578
$
6,690
Growth revenue from existing
customers(7)
$
617
$
635
$
584
$
485
$
856
$
1,169
$
1,273
$
1,342
Other metrics
Employees - sales and marketing
35
33
37
46
47
48
48
51
Employees - support
7
7
5
6
6
7
8
7
Employees - infrastructure
11
11
9
11
12
12
13
11
Employees - engineering
18
20
22
21
20
20
25
23
Employees - administration
13
14
14
14
14
14
13
16
(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
person that has a subscription to use the FOREWARN service as of
the last day of the period. A unique person can only have one user
account.
(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/20200312005528/en/
Investor Relations Contact: Camilo Ramirez Red Violet,
Inc. 561-757-4500 ir@redviolet.com
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