Red Violet, Inc. (NASDAQ: RDVT), a leading analytics and
information solutions provider, today announced financial results
for the quarter ended June 30, 2024.
“We are pleased to deliver a very strong quarter, achieving new
highs across all key metrics driven by broad-based demand for our
solutions,” stated Derek Dubner, red violet’s CEO. “Our second
quarter results reflect the ongoing success of the strategic
initiatives implemented over the past eighteen months. This marks
the strongest first half results in our history, and we remain
confident in our ability to sustain this momentum and continue
driving accelerated growth in the quarters ahead.”
Second Quarter Financial Results
For the three months ended June 30, 2024, as compared to the
three months ended June 30, 2023:
- Total revenue increased 30% to $19.1 million.
- Gross profit increased 41% to $13.3 million. Gross margin
increased to 70% from 64%.
- Adjusted gross profit increased 36% to $15.6 million. Adjusted
gross margin increased to 82% from 78%.
- Net income increased 90% to $2.6 million, which resulted in
earnings of $0.19 per basic and diluted share. Net income margin
increased to 14% from 9%.
- Adjusted EBITDA increased 47% to $6.8 million. Adjusted EBITDA
margin increased to 36% from 32%.
- Adjusted net income increased 33% to $3.9 million, which
resulted in adjusted earnings of $0.28 per basic and diluted
share.
- Net cash provided by operating activities increased 61% to $5.7
million.
- Cash and cash equivalents were $30.9 million as of June 30,
2024.
Second Quarter and Recent Business
Highlights
- Added 236 customers to IDI™ during the second quarter, ending
the quarter with 8,477 customers.
- Added 27,237 users to FOREWARN® during the second quarter,
ending the quarter with 263,876 users. Over 490 REALTOR®
Associations throughout the U.S. are now contracted to use
FOREWARN.
- Purchased 15,804 shares of the Company’s common stock during
the second quarter at an average price of $18.61 per share pursuant
to the Company’s $15.0 million Stock Repurchase Program, as
amended, that was initially authorized on May 2, 2022. Total shares
purchased during the first half of 2024 was 292,744 shares at an
average price of $19.81 per share. The Company has $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 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, the most directly comparable
financial measure based on US GAAP, excluding interest income, net,
income tax expense, 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, the most directly
comparable financial measure based on US GAAP, excluding
share-based compensation expense, and amortization of share-based
compensation capitalized in intangible assets, 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 we will be
able to sustain our 2024 momentum and continue driving accelerated
growth in the quarters ahead. 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,
2023, filed on March 7, 2024, 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) |
|
|
|
June 30, 2024 |
|
|
December 31, 2023 |
|
ASSETS: |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
30,943 |
|
|
$ |
32,032 |
|
Accounts receivable, net of
allowance for doubtful accounts of $196 and $159 as of June 30,
2024 and December 31, 2023, respectively |
|
|
7,963 |
|
|
|
7,135 |
|
Prepaid expenses and other
current assets |
|
|
1,483 |
|
|
|
1,113 |
|
Total current assets |
|
|
40,389 |
|
|
|
40,280 |
|
Property and equipment,
net |
|
|
598 |
|
|
|
592 |
|
Intangible assets, net |
|
|
35,487 |
|
|
|
34,403 |
|
Goodwill |
|
|
5,227 |
|
|
|
5,227 |
|
Right-of-use assets |
|
|
2,185 |
|
|
|
2,457 |
|
Deferred tax assets |
|
|
8,433 |
|
|
|
9,514 |
|
Other noncurrent assets |
|
|
1,133 |
|
|
|
517 |
|
Total
assets |
|
$ |
93,452 |
|
|
$ |
92,990 |
|
LIABILITIES AND
SHAREHOLDERS' EQUITY: |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
1,969 |
|
|
$ |
1,631 |
|
Accrued expenses and other
current liabilities |
|
|
594 |
|
|
|
1,989 |
|
Current portion of operating
lease liabilities |
|
|
529 |
|
|
|
569 |
|
Deferred revenue |
|
|
597 |
|
|
|
690 |
|
Total current liabilities |
|
|
3,689 |
|
|
|
4,879 |
|
Noncurrent operating lease
liabilities |
|
|
1,765 |
|
|
|
1,999 |
|
Total
liabilities |
|
|
5,454 |
|
|
|
6,878 |
|
Shareholders' equity: |
|
|
|
|
|
|
|
|
Preferred stock—$0.001 par
value, 10,000,000 shares authorized, and 0 shares issued and
outstanding, as of June 30, 2024 and December 31, 2023 |
|
|
- |
|
|
|
- |
|
Common stock—$0.001 par value,
200,000,000 shares authorized, 13,744,189 and 13,980,274 shares
issued, and 13,731,385 and 13,970,846 shares outstanding, as of
June 30, 2024 and December 31, 2023 |
|
|
14 |
|
|
|
14 |
|
Treasury stock, at cost,
12,804 and 9,428 shares as of June 30, 2024 and December 31,
2023 |
|
|
(236 |
) |
|
|
(188 |
) |
Additional paid-in
capital |
|
|
91,672 |
|
|
|
94,159 |
|
Accumulated deficit |
|
|
(3,452 |
) |
|
|
(7,873 |
) |
Total shareholders'
equity |
|
|
87,998 |
|
|
|
86,112 |
|
Total liabilities and
shareholders' equity |
|
$ |
93,452 |
|
|
$ |
92,990 |
|
RED VIOLET, INC. |
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS |
(Amounts in thousands, except share data) |
(unaudited) |
|
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
Revenue |
|
$ |
19,056 |
|
|
$ |
14,680 |
|
|
$ |
36,567 |
|
|
$ |
29,306 |
|
Costs and
expenses(1): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue (exclusive of
depreciation and amortization) |
|
|
3,455 |
|
|
|
3,240 |
|
|
|
7,211 |
|
|
|
6,419 |
|
Sales and marketing
expenses |
|
|
4,406 |
|
|
|
3,078 |
|
|
|
8,118 |
|
|
|
6,967 |
|
General and administrative
expenses |
|
|
5,750 |
|
|
|
5,075 |
|
|
|
11,540 |
|
|
|
10,316 |
|
Depreciation and
amortization |
|
|
2,377 |
|
|
|
2,054 |
|
|
|
4,647 |
|
|
|
3,970 |
|
Total costs and
expenses |
|
|
15,988 |
|
|
|
13,447 |
|
|
|
31,516 |
|
|
|
27,672 |
|
Income from
operations |
|
|
3,068 |
|
|
|
1,233 |
|
|
|
5,051 |
|
|
|
1,634 |
|
Interest income, net |
|
|
314 |
|
|
|
315 |
|
|
|
679 |
|
|
|
601 |
|
Income before income
taxes |
|
|
3,382 |
|
|
|
1,548 |
|
|
|
5,730 |
|
|
|
2,235 |
|
Income tax expense |
|
|
745 |
|
|
|
160 |
|
|
|
1,309 |
|
|
|
131 |
|
Net
income |
|
$ |
2,637 |
|
|
$ |
1,388 |
|
|
$ |
4,421 |
|
|
$ |
2,104 |
|
Earnings per
share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.19 |
|
|
$ |
0.10 |
|
|
$ |
0.32 |
|
|
$ |
0.15 |
|
Diluted |
|
$ |
0.19 |
|
|
$ |
0.10 |
|
|
$ |
0.31 |
|
|
$ |
0.15 |
|
Weighted average
shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
13,780,074 |
|
|
|
13,961,862 |
|
|
|
13,888,569 |
|
|
|
13,979,411 |
|
Diluted |
|
|
14,051,466 |
|
|
|
14,172,024 |
|
|
|
14,129,262 |
|
|
|
14,180,614 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Share-based compensation
expense in each category: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing
expenses |
|
$ |
158 |
|
|
$ |
125 |
|
|
$ |
296 |
|
|
$ |
232 |
|
General and administrative
expenses |
|
|
1,235 |
|
|
|
1,180 |
|
|
|
2,499 |
|
|
|
2,457 |
|
Total |
|
$ |
1,393 |
|
|
$ |
1,305 |
|
|
$ |
2,795 |
|
|
$ |
2,689 |
|
RED VIOLET, INC. |
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS |
(Amounts in thousands) |
(unaudited) |
|
|
|
Six Months Ended June 30, |
|
|
|
2024 |
|
|
2023 |
|
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
|
Net income |
|
$ |
4,421 |
|
|
$ |
2,104 |
|
Adjustments to reconcile net
income to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
Depreciation and
amortization |
|
|
4,647 |
|
|
|
3,970 |
|
Share-based compensation
expense |
|
|
2,795 |
|
|
|
2,689 |
|
Write-off of long-lived
assets |
|
|
- |
|
|
|
3 |
|
Provision for bad debts |
|
|
224 |
|
|
|
789 |
|
Noncash lease expenses |
|
|
272 |
|
|
|
293 |
|
Deferred income tax
expense |
|
|
1,081 |
|
|
|
124 |
|
Changes in assets and
liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
(1,052 |
) |
|
|
(1,810 |
) |
Prepaid expenses and other
current assets |
|
|
(370 |
) |
|
|
(554 |
) |
Other noncurrent assets |
|
|
(616 |
) |
|
|
(164 |
) |
Accounts payable |
|
|
338 |
|
|
|
(535 |
) |
Accrued expenses and other
current liabilities |
|
|
(1,351 |
) |
|
|
(1,451 |
) |
Deferred revenue |
|
|
(93 |
) |
|
|
(43 |
) |
Operating lease
liabilities |
|
|
(274 |
) |
|
|
(337 |
) |
Net cash provided by operating
activities |
|
|
10,022 |
|
|
|
5,078 |
|
CASH FLOWS FROM INVESTING
ACTIVITIES: |
|
|
|
|
|
|
|
|
Purchase of property and
equipment |
|
|
(117 |
) |
|
|
(51 |
) |
Capitalized costs included in
intangible assets |
|
|
(4,738 |
) |
|
|
(4,509 |
) |
Net cash used in investing
activities |
|
|
(4,855 |
) |
|
|
(4,560 |
) |
CASH FLOWS FROM FINANCING
ACTIVITIES: |
|
|
|
|
|
|
|
|
Taxes paid related to net
share settlement of vesting of restricted stock units |
|
|
(403 |
) |
|
|
(50 |
) |
Repurchases of common
stock |
|
|
(5,853 |
) |
|
|
(910 |
) |
Net cash used in financing
activities |
|
|
(6,256 |
) |
|
|
(960 |
) |
Net decrease in cash
and cash equivalents |
|
$ |
(1,089 |
) |
|
$ |
(442 |
) |
Cash and cash equivalents at
beginning of period |
|
|
32,032 |
|
|
|
31,810 |
|
Cash and cash
equivalents at end of period |
|
$ |
30,943 |
|
|
$ |
31,368 |
|
SUPPLEMENTAL DISCLOSURE
INFORMATION: |
|
|
|
|
|
|
|
|
Cash paid for interest |
|
$ |
- |
|
|
$ |
- |
|
Cash paid for income
taxes |
|
$ |
439 |
|
|
$ |
22 |
|
Share-based compensation
capitalized in intangible assets |
|
$ |
882 |
|
|
$ |
872 |
|
Retirement of treasury
stock |
|
$ |
6,164 |
|
|
$ |
938 |
|
|
|
|
|
|
|
|
|
|
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 financial measure equal to
net income, the most directly comparable financial measure based on
GAAP, excluding interest income, net, income tax expense,
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, the most directly comparable financial measure based
on US GAAP, excluding share-based compensation expense, and
amortization of share-based compensation capitalized in intangible
assets, 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, the most
directly comparable US GAAP financial measure, to adjusted
EBITDA:
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
(Dollars in
thousands) |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
Net income |
|
$ |
2,637 |
|
|
$ |
1,388 |
|
|
$ |
4,421 |
|
|
$ |
2,104 |
|
Interest income, net |
|
|
(314 |
) |
|
|
(315 |
) |
|
|
(679 |
) |
|
|
(601 |
) |
Income tax expense |
|
|
745 |
|
|
|
160 |
|
|
|
1,309 |
|
|
|
131 |
|
Depreciation and
amortization |
|
|
2,377 |
|
|
|
2,054 |
|
|
|
4,647 |
|
|
|
3,970 |
|
Share-based compensation
expense |
|
|
1,393 |
|
|
|
1,305 |
|
|
|
2,795 |
|
|
|
2,689 |
|
Litigation costs |
|
|
(27 |
) |
|
|
45 |
|
|
|
- |
|
|
|
48 |
|
Write-off of long-lived assets
and others |
|
|
- |
|
|
|
- |
|
|
|
7 |
|
|
|
2 |
|
Adjusted
EBITDA |
|
$ |
6,811 |
|
|
$ |
4,637 |
|
|
$ |
12,500 |
|
|
$ |
8,343 |
|
Revenue |
|
$ |
19,056 |
|
|
$ |
14,680 |
|
|
$ |
36,567 |
|
|
$ |
29,306 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
margin |
|
|
14 |
% |
|
|
9 |
% |
|
|
12 |
% |
|
|
7 |
% |
Adjusted EBITDA
margin |
|
|
36 |
% |
|
|
32 |
% |
|
|
34 |
% |
|
|
28 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following is a reconciliation of net income, the most
directly comparable US GAAP financial measure, to adjusted net
income:
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
(Dollars in thousands,
except share data) |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
Net income |
|
$ |
2,637 |
|
|
$ |
1,388 |
|
|
$ |
4,421 |
|
|
$ |
2,104 |
|
Share-based compensation
expense |
|
|
1,393 |
|
|
|
1,305 |
|
|
|
2,795 |
|
|
|
2,689 |
|
Amortization of share-based
compensation capitalized in intangible assets |
|
|
286 |
|
|
|
235 |
|
|
|
561 |
|
|
|
457 |
|
Tax effect of
adjustments(1) |
|
|
(425 |
) |
|
|
- |
|
|
|
(733 |
) |
|
|
- |
|
Adjusted net
income |
|
$ |
3,891 |
|
|
$ |
2,928 |
|
|
$ |
7,044 |
|
|
$ |
5,250 |
|
Earnings per
share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.19 |
|
|
$ |
0.10 |
|
|
$ |
0.32 |
|
|
$ |
0.15 |
|
Diluted |
|
$ |
0.19 |
|
|
$ |
0.10 |
|
|
$ |
0.31 |
|
|
$ |
0.15 |
|
Adjusted earnings per
share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.28 |
|
|
$ |
0.21 |
|
|
$ |
0.51 |
|
|
$ |
0.38 |
|
Diluted |
|
$ |
0.28 |
|
|
$ |
0.21 |
|
|
$ |
0.50 |
|
|
$ |
0.37 |
|
Weighted average
shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
13,780,074 |
|
|
|
13,961,862 |
|
|
|
13,888,569 |
|
|
|
13,979,411 |
|
Diluted |
|
|
14,051,466 |
|
|
|
14,172,024 |
|
|
|
14,129,262 |
|
|
|
14,180,614 |
|
(1) |
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
six months ended June 30, 2024. There was no tax effect of such
adjustments for the three and six months ended June 30, 2023, as a
full valuation allowance was provided for the net deferred tax
assets. |
|
|
The following is a reconciliation of gross profit, the most
directly comparable US GAAP financial measure, to adjusted gross
profit:
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
(Dollars in
thousands) |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
Revenue |
|
$ |
19,056 |
|
|
$ |
14,680 |
|
|
$ |
36,567 |
|
|
$ |
29,306 |
|
Cost of revenue (exclusive of
depreciation and amortization) |
|
|
(3,455 |
) |
|
|
(3,240 |
) |
|
|
(7,211 |
) |
|
|
(6,419 |
) |
Depreciation and amortization
of intangible assets |
|
|
(2,322 |
) |
|
|
(1,995 |
) |
|
|
(4,536 |
) |
|
|
(3,853 |
) |
Gross
profit |
|
|
13,279 |
|
|
|
9,445 |
|
|
|
24,820 |
|
|
|
19,034 |
|
Depreciation and amortization
of intangible assets |
|
|
2,322 |
|
|
|
1,995 |
|
|
|
4,536 |
|
|
|
3,853 |
|
Adjusted gross
profit |
|
$ |
15,601 |
|
|
$ |
11,440 |
|
|
$ |
29,356 |
|
|
$ |
22,887 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
margin |
|
|
70 |
% |
|
|
64 |
% |
|
|
68 |
% |
|
|
65 |
% |
Adjusted gross
margin |
|
|
82 |
% |
|
|
78 |
% |
|
|
80 |
% |
|
|
78 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following is a reconciliation of net cash provided by
operating activities, the most directly comparable US GAAP
financial measure, to FCF:
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
(Dollars in
thousands) |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
Net cash provided by operating activities |
|
$ |
5,717 |
|
|
$ |
3,547 |
|
|
$ |
10,022 |
|
|
$ |
5,078 |
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of property and
equipment |
|
|
(52 |
) |
|
|
(7 |
) |
|
|
(117 |
) |
|
|
(51 |
) |
Capitalized costs included in
intangible assets |
|
|
(2,411 |
) |
|
|
(2,236 |
) |
|
|
(4,738 |
) |
|
|
(4,509 |
) |
Free cash
flow |
|
$ |
3,254 |
|
|
$ |
1,304 |
|
|
$ |
5,167 |
|
|
$ |
518 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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,
excluding share-based compensation expense, and amortization of
share-based compensation capitalized in intangible assets, 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) |
|
Q3'22 |
|
|
Q4'22 |
|
|
Q1'23 |
|
|
Q2'23 |
|
|
Q3'23 |
|
|
Q4'23 |
|
|
Q1'24 |
|
|
Q2'24 |
|
Customer metrics |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
IDI – billable customers(1) |
|
|
6,873 |
|
|
|
7,021 |
|
|
|
7,256 |
|
|
|
7,497 |
|
|
|
7,769 |
|
|
|
7,875 |
|
|
|
8,241 |
|
|
|
8,477 |
|
FOREWARN – users(2) |
|
|
110,051 |
|
|
|
116,960 |
|
|
|
131,348 |
|
|
|
146,537 |
|
|
|
168,356 |
|
|
|
185,380 |
|
|
|
236,639 |
|
|
|
263,876 |
|
Revenue
metrics |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contractual revenue %(3) |
|
|
68 |
% |
|
|
77 |
% |
|
|
75 |
% |
|
|
79 |
% |
|
|
79 |
% |
|
|
82 |
% |
|
|
78 |
% |
|
|
74 |
% |
Gross revenue retention %(4) |
|
|
94 |
% |
|
|
95 |
% |
|
|
94 |
% |
|
|
94 |
% |
|
|
94 |
% |
|
|
92 |
% |
|
|
93 |
% |
|
|
94 |
% |
Other
metrics |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employees – sales and marketing |
|
64 |
|
|
68 |
|
|
61 |
|
|
63 |
|
|
65 |
|
|
71 |
|
|
76 |
|
|
86 |
|
Employees – support |
|
10 |
|
|
10 |
|
|
10 |
|
|
9 |
|
|
9 |
|
|
9 |
|
|
10 |
|
|
10 |
|
Employees – infrastructure |
|
25 |
|
|
28 |
|
|
27 |
|
|
26 |
|
|
27 |
|
|
27 |
|
|
29 |
|
|
27 |
|
Employees – engineering |
|
52 |
|
|
54 |
|
|
47 |
|
|
47 |
|
|
47 |
|
|
51 |
|
|
51 |
|
|
56 |
|
Employees – administration |
|
26 |
|
|
27 |
|
|
25 |
|
|
25 |
|
|
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. 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. |
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