red violet Announces Fourth Quarter and Full Year 2019 Financial Results
Revenue Increases 92% to
“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
Fourth Quarter Financial Results
For the three months ended
-
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
-
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
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
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CONSOLIDATED BALANCE SHEETS |
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(Amounts in thousands, except share data) |
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ASSETS: |
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Current assets: |
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|
|
|
|
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|
Cash and cash equivalents |
|
$ |
11,776 |
|
|
$ |
9,950 |
|
|
Accounts receivable, net of allowance for doubtful accounts of
as of |
|
|
3,543 |
|
|
|
2,265 |
|
|
Prepaid expenses and other current assets |
|
|
722 |
|
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|
934 |
|
|
Total current assets |
|
|
16,041 |
|
|
|
13,149 |
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|
Property and equipment, net |
|
|
660 |
|
|
|
852 |
|
|
Intangible assets, net |
|
|
24,034 |
|
|
|
19,971 |
|
|
|
|
|
5,227 |
|
|
|
5,227 |
|
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Right-of-use assets |
|
|
2,620 |
|
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|
- |
|
|
Other noncurrent assets |
|
|
289 |
|
|
|
628 |
|
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Total assets |
|
$ |
48,871 |
|
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$ |
39,827 |
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LIABILITIES AND SHAREHOLDERS' EQUITY: |
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Current liabilities: |
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Accounts payable |
|
$ |
2,138 |
|
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$ |
2,246 |
|
|
Accrued expenses and other current liabilities |
|
|
1,571 |
|
|
|
1,277 |
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|
Current portion of operating lease liabilities |
|
|
491 |
|
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|
- |
|
|
Deferred revenue |
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|
128 |
|
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|
26 |
|
|
Total current liabilities |
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4,328 |
|
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|
3,549 |
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Noncurrent operating lease liabilities |
|
|
2,459 |
|
|
|
- |
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|
Total liabilities |
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|
6,787 |
|
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|
3,549 |
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Shareholders' equity: |
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Preferred stock—$0.001 par value, 10,000,000 shares authorized, and 0 shares
issued and outstanding, as of |
|
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- |
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- |
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|
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
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12 |
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|
10 |
|
|
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(1,255 |
) |
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- |
|
|
Additional paid-in capital |
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|
59,187 |
|
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|
41,052 |
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Accumulated deficit |
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|
(15,860 |
) |
|
|
(4,784 |
) |
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Total shareholders' equity |
|
|
42,084 |
|
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|
36,278 |
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Total liabilities and shareholders' equity |
|
$ |
48,871 |
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$ |
39,827 |
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CONSOLIDATED STATEMENTS OF OPERATIONS |
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(Amounts in thousands, except share data) |
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Year Ended |
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2019 |
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2018 |
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Revenue |
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$ |
30,286 |
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$ |
16,302 |
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Costs and expenses(1): |
|
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|
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Cost of revenue (exclusive of depreciation and amortization) |
|
|
12,257 |
|
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|
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 |
|
|
- |
|
|
|
- |
|
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Net loss |
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$ |
(11,076 |
) |
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$ |
(6,868 |
) |
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Loss per share: |
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Basic and diluted |
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$ |
(1.03 |
) |
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$ |
(0.67 |
) |
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Weighted average number of shares outstanding: |
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Basic and diluted |
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10,762,881 |
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10,266,613 |
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(1) Share-based compensation expense in each category: |
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Sales and marketing expenses |
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$ |
454 |
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$ |
158 |
|
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General and administrative expenses |
|
|
9,459 |
|
|
|
551 |
|
|
Total |
|
$ |
9,913 |
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|
$ |
709 |
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CONSOLIDATED STATEMENTS OF CASH FLOWS |
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(Amounts in thousands) |
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Year Ended |
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2019 |
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2018 |
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CASH FLOWS FROM OPERATING ACTIVITIES: |
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Net loss |
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$ |
(11,076 |
) |
|
$ |
(6,868 |
) |
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Adjustments to reconcile net loss to net cash provided by (used in) operating activities: |
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Depreciation and amortization |
|
|
2,889 |
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|
1,996 |
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Share-based compensation expense |
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|
9,913 |
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|
709 |
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Write-off of long-lived assets |
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|
30 |
|
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|
63 |
|
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Provision for bad debts |
|
|
582 |
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|
294 |
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Allocation of expenses from Fluent, Inc. |
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- |
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|
325 |
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Noncash lease expenses |
|
|
422 |
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|
- |
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Changes in assets and liabilities: |
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Accounts receivable |
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(1,860 |
) |
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|
(909 |
) |
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Prepaid expenses and other current assets |
|
|
212 |
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|
(375 |
) |
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Other noncurrent assets |
|
|
339 |
|
|
|
552 |
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|
Accounts payable |
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(108 |
) |
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|
(332 |
) |
|
Accrued expenses and other current liabilities |
|
|
639 |
|
|
|
(3,501 |
) |
|
Deferred revenue |
|
|
102 |
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(7 |
) |
|
Operating lease liabilities |
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|
(437 |
) |
|
|
- |
|
|
Net cash provided by (used in) operating activities |
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|
1,647 |
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|
(8,053 |
) |
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CASH FLOWS FROM INVESTING ACTIVITIES: |
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Purchase of property and equipment |
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|
(90 |
) |
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|
(90 |
) |
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Capitalized costs included in intangible assets |
|
|
(5,912 |
) |
|
|
(5,911 |
) |
|
Net cash used in investing activities |
|
|
(6,002 |
) |
|
|
(6,001 |
) |
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CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
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|
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Capital contributed by Fluent, Inc. |
|
|
- |
|
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|
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 |
|
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Cash and cash equivalents at beginning of period |
|
|
9,950 |
|
|
|
65 |
|
|
Cash and cash equivalents at end of period |
|
$ |
11,776 |
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|
$ |
9,950 |
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SUPPLEMENTAL DISCLOSURE INFORMATION |
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Cash paid for interest |
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$ |
- |
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$ |
- |
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Cash paid for income taxes |
|
$ |
- |
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|
$ |
- |
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|
Share-based compensation capitalized in intangible assets |
|
$ |
788 |
|
|
$ |
437 |
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|
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.
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Three Months Ended |
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Year Ended |
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(In thousands) |
|
2019 |
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2018 |
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|
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:
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Three Months Ended |
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Year Ended |
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(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
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.
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(Unaudited) |
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(Dollars in thousands) |
|
Q1'18 |
|
Q2'18 |
|
Q3'18 |
|
Q4'18 |
|
Q1'19 |
|
Q2'19 |
|
Q3'19 |
|
Q4'19 |
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Customer metrics |
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|
|
|
|
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|
|
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|
|
|
|
|
|
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:
561-757-4500
ir@redviolet.com
Source: