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, 2023.
“We delivered a solid quarter, capping off another
record year for red violet that produced records in revenue, gross
profit, net income, adjusted EBITDA, cash flow from operations, and
free cash flow,” stated Derek Dubner, red violet’s CEO. “Our
industry-leading AI/ML-powered platform, proprietary linking
algorithms, and core identity graph continue to drive our
excellence in entity resolution that is pivotal to identity
verification, fraud prevention, and risk mitigation. With 2024
revenue to date off to a record start, we are highly focused on
accelerating our business and continuing to deliver exceptional
customer and shareholder value in 2024 and beyond.”
Fourth Quarter Financial
Results
For the three months ended December 31, 2023, as
compared to the three months ended December 31, 2022:
- Total revenue increased 15% to $15.1 million.
- Gross profit increased 16% to $9.6 million. Gross margin
increased to 64% from 63%.
- Adjusted gross profit increased 17% to $11.7 million. Adjusted
gross margin increased to 78% from 77%.
- Net loss narrowed 31% to $1.1 million, which resulted in a loss
of $0.08 per basic and diluted share. Net loss margin improved to
7% from 12%.
- Adjusted EBITDA increased 76% to $2.7 million. Adjusted EBITDA
margin increased to 18% from 12%.
- Adjusted net income increased 157% to $0.3 million, which
resulted in adjusted earnings of $0.02 per basic and diluted
share.
- Cash from operating activities decreased 4% to $4.2
million.
- Cash and cash equivalents were $32.0 million as of December 31,
2023.
Full Year Financial Results
For the year ended December 31, 2023, as compared
to the year ended December 31, 2022:
- Total revenue increased 13% to $60.2 million.
- Gross profit increased 13% to $39.0 million. Gross margin
remained consistent at 65%.
- Adjusted gross profit increased 15% to $47.1 million. Adjusted
gross margin increased to 78% from 77%.
- Net income increased to $13.5 million from $0.6 million, which
resulted in earnings of $0.97 and $0.96 per basic and diluted
share, respectively. Net income margin increased to 22% from
1%.
- Adjusted EBITDA increased 27% to $16.4 million. Adjusted EBITDA
margin increased to 27% from 24%.
- Adjusted net income increased 17% to $8.1 million, which
resulted in adjusted earnings of $0.58 and $0.57 per basic and
diluted share, respectively.
- Cash from operating activities increased 21% to $15.1
million.
Fourth Quarter and Recent Business
Highlights
- Added over 100 customers to IDI™ during the fourth quarter,
ending the year with 7,875 customers.
- Added over 17,000 users to FOREWARN® during the fourth quarter,
ending the year with 185,380 users. Over 400 REALTOR® Associations
are now contracted to use FOREWARN.
- Continued growth in the onboarding of higher-tier customers,
with 72 customers contributing over $100,000 of revenue in 2023
compared to 67 customers in 2022.
- Appointed Bill Livek as an independent director of the Board of
Directors, bringing his knowledge and expertise in platform-driven
consumer insights to the red violet Board of Directors.
- Appointed Jonathan McDonald as Executive Vice President of
Public Sector division, leveraging his extensive experience and
proven leadership in the public sector to strengthen our ability to
deliver our impactful solutions and drive sustainable growth in
this key market segment.
- The Board of Directors authorized the repurchase of an
additional $5.0 million of the Company’s common stock on December
19, 2023. During the fourth quarter, the Company purchased 125,703
shares at an average price of $19.89 per share pursuant to the
Stock Repurchase Program. Since inception in May of 2022, through
February 29, 2024, the Company purchased a total of 289,340 shares
at an average price of $18.73 per share. As of March 1, 2024, the
Company had approximately $4.6 million remaining under the Stock
Repurchase Program.
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 and full year results and provide a business update.
Please click here to pre-register for the conference call and
obtain your dial in number and passcode. 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,
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 build proprietary technologies
and apply analytical capabilities to deliver identity intelligence.
Our technology powers critical solutions, which empower
organizations to operate with confidence. Our solutions enable the
real-time identification and location of people, businesses, assets
and their interrelationships. These solutions are used for purposes
including identity verification, risk mitigation, due diligence,
fraud detection and prevention, regulatory compliance, and customer
acquisition. Our intelligent platform, CORE™, is purpose-built for
the enterprise, yet flexible enough for organizations of all sizes,
bringing clarity to massive datasets by transforming data into
intelligence. Our solutions are used today to enable frictionless
commerce, to ensure safety, and to reduce fraud and the concomitant
expense borne by society. For more information, please
visit www.redviolet.com.
Company Contact:Camilo RamirezRed
Violet, Inc.561-757-4500ir@redviolet.com
Investor Relations Contact:Steven
Hooser Three Part Advisors214-872-2710ir@redviolet.com
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 EBITDA margin, adjusted net
income, adjusted earnings per share, adjusted gross profit,
adjusted gross margin, and free cash flow ("FCF"). Adjusted EBITDA
is a non-GAAP financial measure equal to net income (loss), the
most directly comparable financial measure based on US GAAP,
excluding interest income, net, income tax expense (benefit),
depreciation and amortization, share-based compensation expense,
litigation costs, and write-off of long-lived assets and others. We
define adjusted EBITDA margin as adjusted EBITDA as a percentage of
revenue. Adjusted net income is a non-GAAP financial measure equal
to net income (loss), the most directly comparable financial
measure based on US GAAP, excluding share-based compensation
expense, amortization of share-based compensation capitalized in
intangible assets, and discrete tax items, and including the tax
effect of adjustments. We define adjusted earnings per share as
adjusted net income divided by the weighted average shares
outstanding. 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. We define FCF as net cash provided by operating activities
reduced by purchase of property and equipment and capitalized costs
included in intangible assets.
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 the 2024
revenue to date resulting in a record start will help in
accelerating our business and continuing to deliver exceptional
customer and shareholder value in 2024 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
Form 10-K for the year ended December 31, 2022 filed on March 8,
2023, as may be supplemented or amended by the Company's other SEC
filings, including the Form 10-K for year ended December 31, 2023
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.
|
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|
|
|
|
RED VIOLET, INC.CONSOLIDATED BALANCE
SHEETS(Amounts in thousands, except share
data) |
|
|
|
|
|
|
|
|
December 31, 2023 |
|
|
December 31, 2022 |
|
ASSETS: |
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
Cash and cash equivalents |
$ |
32,032 |
|
|
$ |
31,810 |
|
Accounts receivable, net of
allowance for doubtful accounts of $159 and $60 as of December 31,
2023 and 2022, respectively |
|
7,135 |
|
|
|
5,535 |
|
Prepaid expenses and other
current assets |
|
1,113 |
|
|
|
771 |
|
Total current assets |
|
40,280 |
|
|
|
38,116 |
|
Property and equipment, net |
|
592 |
|
|
|
709 |
|
Intangible assets, net |
|
34,403 |
|
|
|
31,647 |
|
Goodwill |
|
5,227 |
|
|
|
5,227 |
|
Right-of-use assets |
|
2,457 |
|
|
|
1,114 |
|
Deferred tax assets |
|
9,514 |
|
|
|
- |
|
Other noncurrent assets |
|
517 |
|
|
|
601 |
|
Total
assets |
$ |
92,990 |
|
|
$ |
77,414 |
|
LIABILITIES AND
SHAREHOLDERS' EQUITY: |
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
Accounts payable |
$ |
1,631 |
|
|
$ |
2,229 |
|
Accrued expenses and other
current liabilities |
|
1,989 |
|
|
|
1,845 |
|
Current portion of operating
lease liabilities |
|
569 |
|
|
|
692 |
|
Deferred revenue |
|
690 |
|
|
|
670 |
|
Total current liabilities |
|
4,879 |
|
|
|
5,436 |
|
Noncurrent operating lease
liabilities |
|
1,999 |
|
|
|
598 |
|
Deferred tax liabilities |
|
- |
|
|
|
287 |
|
Total
liabilities |
|
6,878 |
|
|
|
6,321 |
|
Shareholders' equity: |
|
|
|
|
|
|
|
Preferred stock—$0.001 par value,
10,000,000 shares authorized, and 0 shares issued and outstanding,
as of December 31, 2023 and 2022 |
|
- |
|
|
|
- |
|
Common stock—$0.001 par value,
200,000,000 shares authorized, 13,980,274 and 13,956,404 shares
issued, and 13,970,846 and 13,956,404 shares outstanding, as of
December 31, 2023 and 2022 |
|
14 |
|
|
|
14 |
|
Treasury stock, at cost, 9,428
and 0 shares as of December 31, 2023 and 2022 |
|
(188 |
) |
|
|
- |
|
Additional paid-in capital |
|
94,159 |
|
|
|
92,481 |
|
Accumulated deficit |
|
(7,873 |
) |
|
|
(21,402 |
) |
Total shareholders'
equity |
|
86,112 |
|
|
|
71,093 |
|
Total liabilities and
shareholders' equity |
$ |
92,990 |
|
|
$ |
77,414 |
|
|
|
|
|
|
|
|
|
|
|
|
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|
RED VIOLET, INC.CONSOLIDATED STATEMENTS OF
OPERATIONS(Amounts in thousands, except share
data) |
|
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|
|
|
Year Ended December 31, |
|
|
|
2023 |
|
|
2022 |
|
Revenue |
|
$ |
60,204 |
|
|
$ |
53,318 |
|
Costs and
expenses(1): |
|
|
|
|
|
|
|
|
Cost of revenue (exclusive of
depreciation and amortization) |
|
|
13,069 |
|
|
|
12,211 |
|
Sales and marketing expenses |
|
|
13,833 |
|
|
|
10,834 |
|
General and administrative
expenses |
|
|
22,446 |
|
|
|
23,237 |
|
Depreciation and
amortization |
|
|
8,352 |
|
|
|
6,675 |
|
Total costs and
expenses |
|
|
57,700 |
|
|
|
52,957 |
|
Income from
operations |
|
|
2,504 |
|
|
|
361 |
|
Interest income, net |
|
|
1,334 |
|
|
|
351 |
|
Income before income
taxes |
|
|
3,838 |
|
|
|
712 |
|
Income tax (benefit) expense |
|
|
(9,691 |
) |
|
|
96 |
|
Net income |
|
$ |
13,529 |
|
|
$ |
616 |
|
Earnings per
share: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.97 |
|
|
$ |
0.04 |
|
Diluted |
|
$ |
0.96 |
|
|
$ |
0.04 |
|
Weighted average shares
outstanding: |
|
|
|
|
|
|
|
|
Basic |
|
|
13,974,125 |
|
|
|
13,759,296 |
|
Diluted |
|
|
14,134,021 |
|
|
|
14,107,144 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Share-based compensation
expense in each category: |
|
|
|
|
|
|
|
|
Sales and marketing
expenses |
|
$ |
462 |
|
|
$ |
290 |
|
General and administrative
expenses |
|
|
4,924 |
|
|
|
5,215 |
|
Total |
|
$ |
5,386 |
|
|
$ |
5,505 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
RED VIOLET, INC.CONSOLIDATED STATEMENTS OF
CASH FLOWS(Amounts in thousands) |
|
|
|
|
Year Ended December 31, |
|
|
2023 |
|
|
2022 |
|
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
Net income |
$ |
13,529 |
|
|
$ |
616 |
|
Adjustments to reconcile net
income to net cash provided by operating activities: |
|
|
|
|
|
|
|
Depreciation and
amortization |
|
8,352 |
|
|
|
6,675 |
|
Share-based compensation
expense |
|
5,386 |
|
|
|
5,505 |
|
Write-off of long-lived
assets |
|
6 |
|
|
|
177 |
|
Provision for bad debts |
|
1,088 |
|
|
|
174 |
|
Noncash lease expenses |
|
576 |
|
|
|
547 |
|
Deferred income tax (benefit)
expense |
|
(9,801 |
) |
|
|
89 |
|
Changes in assets and
liabilities: |
|
|
|
|
|
|
|
Accounts receivable |
|
(2,688 |
) |
|
|
(1,973 |
) |
Prepaid expenses and other
current assets |
|
(342 |
) |
|
|
(172 |
) |
Other noncurrent assets |
|
84 |
|
|
|
(464 |
) |
Accounts payable |
|
(598 |
) |
|
|
624 |
|
Accrued expenses and other
current liabilities |
|
100 |
|
|
|
1,450 |
|
Deferred revenue |
|
20 |
|
|
|
(171 |
) |
Operating lease liabilities |
|
(641 |
) |
|
|
(618 |
) |
Net cash provided by operating
activities |
|
15,071 |
|
|
|
12,459 |
|
CASH FLOWS FROM INVESTING
ACTIVITIES: |
|
|
|
|
|
|
|
Purchase of property and
equipment |
|
(122 |
) |
|
|
(373 |
) |
Capitalized costs included in
intangible assets |
|
(9,024 |
) |
|
|
(8,456 |
) |
Net cash used in investing
activities |
|
(9,146 |
) |
|
|
(8,829 |
) |
CASH FLOWS FROM FINANCING
ACTIVITIES: |
|
|
|
|
|
|
|
Taxes paid related to net share
settlement of vesting of restricted stock units |
|
(1,992 |
) |
|
|
(5,200 |
) |
Repurchases of common stock |
|
(3,711 |
) |
|
|
(878 |
) |
Net cash used in financing
activities |
|
(5,703 |
) |
|
|
(6,078 |
) |
Net increase (decrease)
in cash and cash equivalents |
$ |
222 |
|
|
$ |
(2,448 |
) |
Cash and cash equivalents at
beginning of period |
|
31,810 |
|
|
|
34,258 |
|
Cash and cash equivalents
at end of period |
$ |
32,032 |
|
|
$ |
31,810 |
|
SUPPLEMENTAL DISCLOSURE
INFORMATION: |
|
|
|
|
|
|
|
Cash paid for interest |
$ |
- |
|
|
$ |
- |
|
Cash paid for income taxes |
$ |
82 |
|
|
$ |
39 |
|
Share-based compensation
capitalized in intangible assets |
$ |
1,851 |
|
|
$ |
1,621 |
|
Retirement of treasury stock |
$ |
5,559 |
|
|
$ |
6,078 |
|
Right-of -use assets obtained in
exchange of operating lease liabilities |
$ |
1,919 |
|
|
$ |
- |
|
Operating lease liabilities
arising from obtaining right-of-use assets |
$ |
1,919 |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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 EBITDA margin, adjusted net
income, adjusted earnings per share, adjusted gross profit,
adjusted gross margin, and FCF. Adjusted EBITDA is a non-GAAP
financial measure equal to net income (loss), the most directly
comparable financial measure based on US GAAP, excluding interest
income, net, income tax expense (benefit), depreciation and
amortization, share-based compensation expense, litigation costs,
and write-off of long-lived assets and others. We define adjusted
EBITDA margin as adjusted EBITDA as a percentage of revenue.
Adjusted net income is a non-GAAP financial measure equal to net
income (loss), the most directly comparable financial measure based
on US GAAP, excluding share-based compensation expense,
amortization of share-based compensation capitalized in intangible
assets, and discrete tax items, and including the tax effect of
adjustments. We define adjusted earnings per share as adjusted net
income divided by the weighted average shares outstanding. 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. We
define FCF as net cash provided by operating activities reduced by
purchase of property and equipment and capitalized costs included
in intangible assets.
The following is a reconciliation of net income
(loss), the most directly comparable US GAAP financial measure, to
adjusted EBITDA:
|
Three Months EndedDecember 31, |
|
|
Year EndedDecember 31, |
|
(Dollars in
thousands) |
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Net income (loss) |
$ |
(1,070 |
) |
|
$ |
(1,544 |
) |
|
$ |
13,529 |
|
|
$ |
616 |
|
Interest income, net |
|
(387 |
) |
|
|
(225 |
) |
|
|
(1,334 |
) |
|
|
(351 |
) |
Income tax expense (benefit) |
|
562 |
|
|
|
(148 |
) |
|
|
(9,691 |
) |
|
|
96 |
|
Depreciation and
amortization |
|
2,211 |
|
|
|
1,815 |
|
|
|
8,352 |
|
|
|
6,675 |
|
Share-based compensation
expense |
|
1,328 |
|
|
|
1,439 |
|
|
|
5,386 |
|
|
|
5,505 |
|
Litigation costs |
|
- |
|
|
|
4 |
|
|
|
49 |
|
|
|
132 |
|
Write-off of long-lived assets
and others |
|
19 |
|
|
|
171 |
|
|
|
77 |
|
|
|
178 |
|
Adjusted
EBITDA |
$ |
2,663 |
|
|
$ |
1,512 |
|
|
$ |
16,368 |
|
|
$ |
12,851 |
|
Revenue |
$ |
15,061 |
|
|
$ |
13,069 |
|
|
$ |
60,204 |
|
|
$ |
53,318 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
margin |
|
(7 |
%) |
|
|
(12 |
%) |
|
|
22 |
% |
|
|
1 |
% |
Adjusted EBITDA
margin |
|
18 |
% |
|
|
12 |
% |
|
|
27 |
% |
|
|
24 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following is a reconciliation of net income
(loss), the most directly comparable US GAAP financial measure, to
adjusted net income:
|
Three Months EndedDecember 31, |
|
|
Year EndedDecember 31, |
|
(Dollars in thousands,
except share data) |
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Net income (loss) |
$ |
(1,070 |
) |
|
$ |
(1,544 |
) |
|
$ |
13,529 |
|
|
$ |
616 |
|
Share-based compensation
expense |
|
1,328 |
|
|
|
1,439 |
|
|
|
5,386 |
|
|
|
5,505 |
|
Amortization of share-based
compensation capitalized in intangible assets |
|
263 |
|
|
|
210 |
|
|
|
969 |
|
|
|
766 |
|
Discrete tax items(1) |
|
- |
|
|
|
- |
|
|
|
(10,272 |
) |
|
|
- |
|
Tax effect of adjustments(2) |
|
(251 |
) |
|
|
- |
|
|
|
(1,526 |
) |
|
|
- |
|
Adjusted net
income |
$ |
270 |
|
|
$ |
105 |
|
|
$ |
8,086 |
|
|
$ |
6,887 |
|
Earnings (loss) per
share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
(0.08 |
) |
|
$ |
(0.11 |
) |
|
$ |
0.97 |
|
|
$ |
0.04 |
|
Diluted |
$ |
(0.08 |
) |
|
$ |
(0.11 |
) |
|
$ |
0.96 |
|
|
$ |
0.04 |
|
Adjusted earnings per
share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
0.02 |
|
|
$ |
0.01 |
|
|
$ |
0.58 |
|
|
$ |
0.50 |
|
Diluted |
$ |
0.02 |
|
|
$ |
0.01 |
|
|
$ |
0.57 |
|
|
$ |
0.49 |
|
Weighted average shares
outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
13,985,426 |
|
|
|
13,964,010 |
|
|
|
13,974,125 |
|
|
|
13,759,296 |
|
Diluted(3) |
|
14,307,797 |
|
|
|
14,205,633 |
|
|
|
14,134,021 |
|
|
|
14,107,144 |
|
(1) |
During the three months ended September 30, 2023, $10.3 million of
income tax benefit was recognized as a result of the release of the
valuation allowance previously recorded on our deferred tax asset
and cumulative research and development tax credit, which were
excluded to calculate the adjusted net income. |
(2) |
The tax effect of adjustments is
calculated using the expected federal and state statutory tax rate.
The expected federal and state income tax rate was approximately
25.75% for the three and twelve months ended December 31, 2023.
There was no tax effect of such adjustments for the three and
twelve months ended December 31, 2022, as a full valuation
allowance was provided for the net deferred tax assets. |
(3) |
For the three months ended
December 31, 2023 and 2022, diluted weighted average shares
outstanding for adjusted diluted earnings per share are calculated
by the inclusion of unvested RSUs, which were not included in US
GAAP diluted weighted average shares outstanding due to the
Company's net loss position for such periods. |
|
|
The following is a reconciliation of gross profit,
the most directly comparable US GAAP financial measure, to adjusted
gross profit:
|
Three Months EndedDecember 31, |
|
|
Year EndedDecember 31, |
|
(Dollars in
thousands) |
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Revenue |
$ |
15,061 |
|
|
$ |
13,069 |
|
|
$ |
60,204 |
|
|
$ |
53,318 |
|
Cost of revenue (exclusive of
depreciation and amortization) |
|
(3,337 |
) |
|
|
(3,054 |
) |
|
|
(13,069 |
) |
|
|
(12,211 |
) |
Depreciation and amortization
of intangible assets |
|
(2,154 |
) |
|
|
(1,758 |
) |
|
|
(8,119 |
) |
|
|
(6,440 |
) |
Gross
profit |
|
9,570 |
|
|
|
8,257 |
|
|
|
39,016 |
|
|
|
34,667 |
|
Depreciation and amortization
of intangible assets |
|
2,154 |
|
|
|
1,758 |
|
|
|
8,119 |
|
|
|
6,440 |
|
Adjusted gross
profit |
$ |
11,724 |
|
|
$ |
10,015 |
|
|
$ |
47,135 |
|
|
$ |
41,107 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
margin |
|
64 |
% |
|
|
63 |
% |
|
|
65 |
% |
|
|
65 |
% |
Adjusted gross
margin |
|
78 |
% |
|
|
77 |
% |
|
|
78 |
% |
|
|
77 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following is a reconciliation of net cash
provided by operating activities, the most directly comparable US
GAAP measure, to FCF:
|
Three Months EndedDecember 31, |
|
|
Year EndedDecember 31, |
|
(Dollars in
thousands) |
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Net cash provided by operating activities |
$ |
4,204 |
|
|
$ |
4,359 |
|
|
$ |
15,071 |
|
|
$ |
12,459 |
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of property and
equipment |
|
(24 |
) |
|
|
(102 |
) |
|
|
(122 |
) |
|
|
(373 |
) |
Capitalized costs included in
intangible assets |
|
(2,103 |
) |
|
|
(2,317 |
) |
|
|
(9,024 |
) |
|
|
(8,456 |
) |
Free cash
flow |
$ |
2,077 |
|
|
$ |
1,940 |
|
|
$ |
5,925 |
|
|
$ |
3,630 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
EBITDA margin, adjusted net income, adjusted earnings per share,
adjusted gross profit, adjusted gross margin, and FCF 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 EBITDA margin,
adjusted net income, adjusted earnings per share, adjusted gross
profit, adjusted gross margin, and FCF 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.
Adjusted EBITDA margin is calculated as adjusted EBITDA as a
percentage of revenue. We believe adjusted net income provides
additional means of evaluating period-over-period operating
performance by eliminating certain non-cash expenses and other
items that might otherwise make comparisons of our ongoing business
with prior periods more difficult and obscure trends in ongoing
operations. Adjusted net income is a non-GAAP financial measure
equal to net income (loss), excluding share-based compensation
expense, amortization of share-based compensation capitalized in
intangible assets, and discrete tax items, and including the tax
effect of adjustments. We define adjusted earnings per share as
adjusted net income divided by the weighted average shares
outstanding. 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. We believe FCF is an important
liquidity measure of the cash that is available, after capital
expenditures, for operational expenses and investment in our
business. FCF is a measure used by management to understand and
evaluate the business’s operating performance and trends over time.
FCF is calculated by using net cash provided by operating
activities, less purchase of property and equipment and capitalized
costs included in intangible assets.
Adjusted EBITDA, adjusted EBITDA margin, adjusted
net income, adjusted earnings per share, adjusted gross profit,
adjusted gross margin, and FCF 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 US
GAAP. In addition, FCF is not intended to represent our residual
cash flow available for discretionary expenses and is not
necessarily a measure of our ability to fund our cash needs. The
way we measure adjusted EBITDA, adjusted EBITDA margin, adjusted
net income, adjusted earnings per share, adjusted gross profit,
adjusted gross margin, and FCF 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) |
Q1'22 |
|
|
Q2'22 |
|
|
Q3'22 |
|
|
Q4'22 |
|
|
Q1'23 |
|
|
Q2'23 |
|
|
Q3'23 |
|
|
Q4'23 |
|
Customer metrics |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
IDI - billable customers(1) |
|
6,592 |
|
|
|
6,817 |
|
|
|
6,873 |
|
|
|
7,021 |
|
|
|
7,256 |
|
|
|
7,497 |
|
|
|
7,769 |
|
|
|
7,875 |
|
FOREWARN - users(2) |
|
91,490 |
|
|
|
101,261 |
|
|
|
110,051 |
|
|
|
116,960 |
|
|
|
131,348 |
|
|
|
146,537 |
|
|
|
168,356 |
|
|
|
185,380 |
|
Revenue
metrics |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contractual revenue %(3) |
|
77 |
% |
|
|
80 |
% |
|
|
68 |
% |
|
|
77 |
% |
|
|
75 |
% |
|
|
79 |
% |
|
|
79 |
% |
|
|
82 |
% |
Gross revenue retention %(4) |
|
97 |
% |
|
|
95 |
% |
|
|
94 |
% |
|
|
95 |
% |
|
|
94 |
% |
|
|
94 |
% |
|
|
94 |
% |
|
|
92 |
% |
Revenue from new customers(5) |
$ |
1,014 |
|
|
$ |
805 |
|
|
$ |
2,016 |
|
|
$ |
1,216 |
|
|
$ |
1,869 |
|
|
$ |
1,147 |
|
|
$ |
1,326 |
|
|
$ |
1,258 |
|
Base revenue from existing customers(6) |
$ |
9,721 |
|
|
$ |
10,164 |
|
|
$ |
10,839 |
|
|
$ |
10,574 |
|
|
$ |
11,121 |
|
|
$ |
11,707 |
|
|
$ |
12,432 |
|
|
$ |
12,111 |
|
Growth revenue from existing customers(7) |
$ |
1,994 |
|
|
$ |
1,525 |
|
|
$ |
2,171 |
|
|
$ |
1,279 |
|
|
$ |
1,636 |
|
|
$ |
1,826 |
|
|
$ |
2,079 |
|
|
$ |
1,692 |
|
Other
metrics |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employees - sales and marketing |
59 |
|
|
57 |
|
|
64 |
|
|
68 |
|
|
61 |
|
|
63 |
|
|
65 |
|
|
71 |
|
Employees - support |
10 |
|
|
9 |
|
|
10 |
|
|
10 |
|
|
10 |
|
|
9 |
|
|
9 |
|
|
9 |
|
Employees - infrastructure |
23 |
|
|
25 |
|
|
25 |
|
|
28 |
|
|
27 |
|
|
26 |
|
|
27 |
|
|
27 |
|
Employees - engineering |
50 |
|
|
52 |
|
|
52 |
|
|
54 |
|
|
47 |
|
|
47 |
|
|
47 |
|
|
51 |
|
Employees - administration |
26 |
|
|
27 |
|
|
26 |
|
|
27 |
|
|
25 |
|
|
25 |
|
|
25 |
|
|
25 |
|
(1) |
We
define a billable customer of IDI as a single entity that generated
revenue in the last three months 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) |
Gross revenue retention is
defined as the revenue retained from existing customers, net of
reinstated revenue, and excluding expansion 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. Gross revenue retention percentage is calculated on a
trailing twelve-month basis. The numerator of which is 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,
with the quotient subtracted from one. Prior to Q1’22, FOREWARN
revenue was excluded from our gross revenue retention calculation.
Beginning Q4’22, our gross revenue retention calculation excludes
revenue from idiVERIFIED, which is purely transactional and
currently represents less than 3% of total revenue. |
(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. |
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