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RDVT - Red Violet Inc News Story

$19.3 0.2  1.1%

Last Trade - 07/05/21

Sector
Technology
Size
Small Cap
Market Cap £168.6m
Enterprise Value £160.9m
Revenue £24.8m
Position in Universe 4391st / 6858

red violet Announces Fourth Quarter and Full Year 2020 Financial Results

Wed 10th March, 2021 9:05pm
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Strong Finish to the Year Produces Record $1.8 Million in Positive Cash Flow
from Operations in the Fourth Quarter

Full Year 2020 Revenue up 14% to $34.6 Million

BOCA RATON, Fla., March 10, 2021 (GLOBE NEWSWIRE) -- 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, 2020.

“red violet delivered a solid quarter, concluding a year in which we
performed better in all key financial metrics compared to 2019 despite
pandemic impacts,” stated Derek Dubner, red violet’s CEO. “We saw rapid
expansion in our profitability driven by increasing platform revenue,
demonstrating our ability to drive highly profitable growth during a time of
economic uncertainty. While the fourth quarter is historically a seasonally
slower quarter for our business, I am extremely pleased with our performance,
and 2021 is off to a great start with the first quarter pacing towards record
revenue and adjusted EBITDA. As economic conditions improve, we are confident
our innovative technology and customer-centric solutions are well positioned
to continue to drive strong growth in 2021 and beyond.”  

Fourth Quarter Financial Results

For the three months ended December 31, 2020 as compared to the three months
ended December 31, 2019:
* Total revenue decreased 1% to $9.0 million. Platform revenue increased 12%
to $8.6 million. Services revenue decreased 74% to $0.4 million.
* Net loss narrowed 61% to $1.9 million.
* Adjusted EBITDA increased 49% to $1.2 million.
* Gross profit increased 5% to $5.1 million. Gross margin increased to 57%
from 54%.
* Adjusted gross profit increased 11% to $6.3 million. Adjusted gross margin
increased to 70% from 62%.
* Generated $1.8 million in cash from operating activities in the fourth
quarter.
* Cash and cash equivalents were $13.0 million as of December 31, 2020.
Full Year Financial Results

For the year ended December 31, 2020 as compared to the year ended December
31, 2019:
* Total revenue increased 14% to $34.6 million. Platform revenue increased 26%
to $32.5 million. Services revenue decreased 54% to $2.0 million.
* Net loss narrowed 38% to $6.8 million.
* Adjusted EBITDA increased 213% to $5.9 million.
* Gross profit increased 26% to $19.3 million. Gross margin increased to 56%
from 51%.
* Adjusted gross profit increased 29% to $23.3 million. Adjusted gross margin
increased to 67% from 60%.
* Generated $6.5 million in cash from operating activities in 2020.
Fourth Quarter and Recent Business Highlights
* Despite pandemic headwinds, strong growth in our high-margin platform
revenue allowed us to generate over 90% contribution of total incremental
revenue to adjusted EBITDA, with a $4.3 million increase in total revenue in
2020 generating a $4.0 million increase in adjusted EBITDA.
* idiCORE™ ended the fourth quarter 2020 with 5,726 customers, a 13%
increase from the fourth quarter 2019.
* FOREWARN(®) ended the fourth quarter 2020 with 48,377 users, a 58% increase
from the fourth quarter of 2019.
* Added 12 product development and infrastructure members to the technology
team to address growth opportunities.
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 expense (income), net, depreciation and amortization,
share-based compensation expense, write-off of long-lived assets and others,
and sales and use tax expense. 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 6558028. 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 6558028. 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 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.

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 2021 is off to a great start
with the first quarter pacing towards record revenue and adjusted EBITDA and
whether our innovative technology and customer-centric solutions are well
positioned to continue to drive strong growth in 2021 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, 2019 filed on March 12, 2020, as may be
supplemented or amended by the Company's other SEC filings, including the Form
10-K for year ended December 31, 2020 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, 2020          December 31, 2019        
 ASSETS:                                                                                                                                                                                                                                        
 Current assets:                                                                                                                                                                                                                                
 Cash and cash equivalents                                                                                                                                                                  $          12,957          $          11,776        
 Accounts receivable, net of allowance for doubtful accounts of $38 and $40 as of December 31, 2020 and 2019, respectively                                                                             3,201                      3,543         
 Prepaid expenses and other current assets                                                                                                                                                             581                        722           
 Total current assets                                                                                                                                                                                  16,739                     16,041        
 Property and equipment, net                                                                                                                                                                           558                        660           
 Intangible assets, net                                                                                                                                                                                27,170                     24,034        
 Goodwill                                                                                                                                                                                              5,227                      5,227         
 Right-of-use assets                                                                                                                                                                                   2,161                      2,620         
 Other noncurrent assets                                                                                                                                                                               139                        289           
 Total assets                                                                                                                                                                               $          51,994          $          48,871        
 LIABILITIES AND SHAREHOLDERS' EQUITY:                                                                                                                                                                                                          
 Current liabilities:                                                                                                                                                                                                                           
 Accounts payable                                                                                                                                                                           $          2,075           $          2,138         
 Accrued expenses and other current liabilities                                                                                                                                                        1,458                      1,571         
 Current portion of operating lease liabilities                                                                                                                                                        552                        491           
 Current portion of long-term loan                                                                                                                                                                     449                        -             
 Deferred revenue                                                                                                                                                                                      504                        128           
 Total current liabilities                                                                                                                                                                             5,038                      4,328         
 Noncurrent operating lease liabilities                                                                                                                                                                1,908                      2,459         
 Long-term loan                                                                                                                                                                                        1,703                      -             
 Total liabilities                                                                                                                                                                                     8,649                      6,787         
 Shareholders' equity:                                                                                                                                                                                                                          
 Preferred stock—$0.001 par value, 10,000,000 shares authorized, and 0 shares issued and outstanding, as of December 31, 2020 and 2019                                                                 -                          -             
 Common stock—$0.001 par value, 200,000,000 shares authorized, 12,167,327 and 11,657,912 shares issued, 12,167,327 and 11,554,765 shares outstanding, as of December 31, 2020 and 2019                 13                         12            
 Treasury stock, at cost, 0 and 103,147 shares as of December 31, 2020 and 2019                                                                                                                        -                          (1,255     )  
 Additional paid-in capital                                                                                                                                                                            66,005                     59,187        
 Accumulated deficit                                                                                                                                                                                   (22,673    )               (15,860    )  
 Total shareholders' equity                                                                                                                                                                            43,345                     42,084        
 Total liabilities and shareholders' equity                                                                                                                                                 $          51,994          $          48,871        

RED VIOLET, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except share data)

                                                                 Year Ended December 31,                            
                                                                 2020                          2019                 
 Revenue                                                         $     34,586                  $     30,286         
 Costs and expenses (()(1)):                                                                                        
 Cost of revenue (exclusive of depreciation and amortization)          11,276                        12,257         
 Sales and marketing expenses                                          8,098                         7,528          
 General and administrative expenses                                   17,827                        18,824         
 Depreciation and amortization                                         4,216                         2,889          
 Total costs and expenses                                              41,417                        41,498         
 Loss from operations                                                  (6,831      )                 (11,212     )  
 Interest income, net                                                  18                            136            
 Loss before income taxes                                              (6,813      )                 (11,076     )  
 Income taxes                                                          -                             -              
 Net loss                                                        $     (6,813      )           $     (11,076     )  
 Loss per share:                                                                                                    
 Basic and diluted                                               $     (0.57       )           $     (1.03       )  
 Weighted average number of shares outstanding:                                                                     
 Basic and diluted                                                     11,863,413                    10,762,881     
                                                                                                                    
                                                                                                                    
 (1) Share-based compensation expense in each category:                                                             
 Sales and marketing expenses                                    $     609                     $     454            
 General and administrative expenses                                   7,455                         9,459          
 Total                                                           $     8,064                   $     9,913          

RED VIOLET, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)

                                                                                    Year Ended December 31,                     
                                                                                    2020                      2019              
 CASH FLOWS FROM OPERATING ACTIVITIES:                                                                                          
 Net loss                                                                           $     (6,813  )           $     (11,076  )  
 Adjustments to reconcile net loss to net cash provided by operating activities:                                                
 Depreciation and amortization                                                            4,216                     2,889       
 Share-based compensation expense                                                         8,064                     9,913       
 Write-off of long-lived assets                                                           337                       30          
 Provision for bad debts                                                                  406                       582         
 Noncash lease expenses                                                                   459                       422         
 Interest expense                                                                         12                        -           
 Changes in assets and liabilities:                                                                                             
 Accounts receivable                                                                      (64     )                 (1,860   )  
 Prepaid expenses and other current assets                                                141                       212         
 Other noncurrent assets                                                                  63                        339         
 Accounts payable                                                                         (63     )                 (108     )  
 Accrued expenses and other current liabilities                                           (125    )                 639         
 Deferred revenue                                                                         376                       102         
 Operating lease liabilities                                                              (490    )                 (437     )  
 Net cash provided by operating activities                                                6,519                     1,647       
 CASH FLOWS FROM INVESTING ACTIVITIES:                                                                                          
 Purchase of property and equipment                                                       (154    )                 (90      )  
 Capitalized costs included in intangible assets                                          (5,508  )                 (5,912   )  
 Net cash used in investing activities                                                    (5,662  )                 (6,002   )  
 CASH FLOWS FROM FINANCING ACTIVITIES:                                                                                          
 Proceeds from issuance of shares, net of issuance costs                                  -                         7,436       
 Proceeds from long-term loan                                                             2,152                     -           
 Taxes paid related to net share settlement of vesting of restricted stock units          (1,828  )                 (1,255   )  
 Net cash provided by financing activities                                                324                       6,181       
 Net increase in cash and cash equivalents                                          $     1,181               $     1,826       
 Cash and cash equivalents at beginning of period                                         11,776                    9,950       
 Cash and cash equivalents at end of period                                         $     12,957              $     11,776      
 SUPPLEMENTAL DISCLOSURE INFORMATION                                                                                            
 Cash paid for interest                                                             $     -                   $     -           
 Cash paid for income taxes                                                         $     -                   $     -           
 Share-based compensation capitalized in intangible assets                          $     1,838               $     788         
 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 expense (income), net, depreciation and amortization,
share-based compensation expense, write-off of long-lived assets and others,
and sales and use tax expense, 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)                               2020                            2019                 2020                      2019              
 Net loss                                     $       (1,875  )               $       (4,856  )    $     (6,813  )           $     (11,076  )  
 Interest expense (income), net                       6                               (13     )          (18     )                 (136     )  
 Depreciation and amortization                        1,196                           840                4,216                     2,889       
 Share-based compensation expense                     1,648                           4,623              8,064                     9,913       
 Write-off of long-lived assets and others            222                             3                  474                       98          
 Sales and use tax expense                            -                               205                -                         205         
 Adjusted EBITDA                              $       1,197                   $       802          $     5,923               $     1,893       

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)                                                  2020                            2019                 2020                       2019              
 Revenue                                                         $       8,963                   $       9,050        $     34,586               $     30,286      
 Cost of revenue (exclusive of depreciation and amortization)            (2,694  )                       (3,414  )          (11,276  )                 (12,257  )  
 Depreciation and amortization of intangible assets                      (1,143  )                       (777    )          (3,990   )                 (2,637   )  
 Gross profit                                                            5,126                           4,859              19,320                     15,392      
 Depreciation and amortization of intangible assets                      1,143                           777                3,990                      2,637       
 Adjusted gross profit                                           $       6,269                   $       5,636        $     23,310               $     18,029      
                                                                                                                                                                   
 Gross margin                                                            57      %                       54      %          56       %                 51       %  
 Adjusted gross margin                                                   70      %                       62      %          67       %                 60       %  

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)                                          Q1'19              Q2'19              Q3'19              Q4'19              Q1'20              Q2'20              Q3'20              Q4'20           
 Customer metrics                                                                                                                                                                                                     
 idiCORE - billable customers (()(1))                                 4,020              4,370              4,781              5,064              5,326              5,375              5,758              5,726      
 FOREWARN - users (()(2))                                             15,444             19,721             23,853             30,577             36,506             40,857             44,927             48,377     
 Revenue metrics                                                                                                                                                                                                      
 Contractual revenue % (()(3))                                        67      %          62      %          66      %          66      %          69      %          79      %          68      %          77      %  
 Revenue attrition % (()(4))                                          5       %          5       %          6       %          6       %          8       %          11      %          10      %          11      %  
 Revenue from new customers (()(5))                              $    1,285         $    1,596         $    1,406         $    1,018         $    1,417         $    916           $    726           $    877        
 Base revenue from existing customers (()(6))                    $    3,593         $    4,480         $    5,578         $    6,690         $    6,629         $    5,047         $    5,797         $    6,678      
 Growth revenue from existing customers (()(7))                  $    856           $    1,169         $    1,273         $    1,342         $    1,254         $    1,093         $    2,744         $    1,408      
 Platform financial metrics                                                                                                                                                                                           
 Platform revenue (()(8))                                        $    4,894         $    6,153         $    7,085         $    7,652         $    8,108         $    6,857         $    8,968         $    8,604      
 Cost of revenue (exclusive of depreciation and amortization)    $    2,069         $    2,287         $    2,286         $    2,431         $    2,498         $    2,427         $    2,489         $    2,447      
 Adjusted gross margin                                                58      %          63      %          68      %          68      %          69      %          65      %          72      %          72      %  
 Services financial metrics                                                                                                                                                                                           
 Services revenue (()(9))                                        $    839           $    1,093         $    1,171         $    1,399         $    1,191         $    200           $    299           $    360        
 Cost of revenue (exclusive of depreciation and amortization)    $    600           $    765           $    836           $    983           $    794           $    159           $    214           $    246        
 Adjusted gross margin                                                29      %          30      %          29      %          30      %          33      %          20      %          28      %          31      %  
 Other metrics                                                                                                                                                                                                        
 Employees - sales and marketing                                 47                 48                 48                 51                 51                 53                 52                 53              
 Employees - support                                             6                  7                  8                  7                  8                  8                  9                  9               
 Employees - infrastructure                                      12                 12                 13                 11                 13                 12                 12                 14              
 Employees - engineering                                         20                 20                 25                 23                 26                 27                 27                 32              
 Employees - administration                                      14                 14                 13                 16                 15                 14                 15                 18              



 (1)  We define a billable customer of idiCORE 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)  Revenue attrition is defined as the revenue lost as a result of customer attrition, net of reinstated customer revenue. It excludes expansion revenue and revenue from FOREWARN. 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. 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.                                                                 
 (8)  Platform revenue consists of both contractual and transactional revenue generated from our technology platform, CORE. It includes all revenue generated through our idiCORE and FOREWARN solutions. The cost of revenue, which consists primarily of data       
      acquisition costs, remains relatively fixed irrespective of revenue generation.                                                                                                                                                                                 
 (9)  Services revenue consists of transactional revenue generated from our idiVERIFIED service. The cost of revenue, which consists primarily of third-party servicer costs, is variable.                                                                            

Investor Relations Contact:
Camilo Ramirez
Red Violet, Inc.
561-757-4500
ir@redviolet.com



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