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RDVT - Red Violet Inc News Story

$19.65 -0.2  -0.8%

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Sector
Technology
Size
Small Cap
Market Cap £176.3m
Enterprise Value £168.4m
Revenue £25.2m
Position in Universe 4369th / 6827

red violet Announces Third Quarter 2020 Financial Results

Tue 10th November, 2020 9:05pm
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Strong Sequential Revenue Growth Fuels Record Gross Profit

BOCA RATON, Fla., Nov. 10, 2020 (GLOBE NEWSWIRE) -- Red Violet, Inc. (NASDAQ:
RDVT), a leading analytics and information solutions provider, today announced
financial results for the quarter ended September 30, 2020.

“We delivered another strong quarter during an incredibly challenging time,
further demonstrating the applicability of our technology and solutions across
diverse markets and industries, as well as the necessity of integrating our
solutions to enable better data-driven decisioning,” stated Derek Dubner,
red violet’s CEO. “The momentum we experienced exiting the second quarter
continued throughout the third quarter, generating a 31% sequential increase
in revenue to $9.3 million and 130% sequential increase in adjusted EBITDA to
a record $2.1 million. I am extremely proud of the performance of our team and
remain optimistic in our ability to continue to drive growth for the
foreseeable future.”

Third Quarter Financial Results

For the three months ended September 30, 2020 as compared to the three months
ended September 30, 2019:
* Total revenue increased 12% to $9.3 million. Platform revenue increased 27%
to $9.0 million. Services revenue decreased 75% to $0.3 million.
* Net loss narrowed 7% to $0.9 million.
* Adjusted EBITDA increased 84% to $2.1 million.
* Gross profit increased 24% to $5.5 million. Gross margin increased to 59%
from 54%.
* Adjusted gross profit increased 28% to $6.6 million. Adjusted gross margin
increased to 71% from 62%.
* Generated $1.7 million in cash from operating activities in the third
quarter.
* Cash and cash equivalents were $12.4 million as of September 30, 2020.
Third Quarter and Recent Business Highlights
* Our high-margin, platform revenue demonstrated accelerated growth throughout
the third quarter. As a result, we generated a record 71% adjusted gross
margin, producing a record adjusted gross profit of $6.6 million. Adjusted
EBITDA increased 84% over prior year and increased 130% on a sequential
quarter basis to $2.1 million.
* Increased customer adoption of idiCORE™ with over 380 new customers added
to the platform in the third quarter.
* FOREWARN(®), our subscription app-based real estate solution, added over
4,000 users in the third quarter.
* Strong revenue growth from existing customer expansion. Growth revenue from
existing customers increased 116% over prior year and 151% on a sequential
quarter basis.
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 GAAP,
excluding interest expense (income), net, depreciation and amortization,
share-based compensation expense, and write-off of long-lived assets and
others. We define adjusted gross profit as revenue less cost of revenue
(exclusive of depreciation and amortization), and adjusted gross margin as
adjusted gross profit as a percentage of revenue.

Conference Call

In conjunction with this release, red violet will host a conference call and
webcast today at 4:30pm ET to discuss its quarterly results and provide a
business update. To listen to the call, please dial (877) 665-6635 for
domestic callers or (602) 563-8608 for international callers, using the
passcode 1356743. 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 1356743. An archived
webcast of the conference call will be available on the Investors section of
the red violet website at www.redviolet.com.

About red violet(®)

At red violet, we believe that time is your most valuable asset. Through
powerful analytics, we transform data into intelligence, in a fast and
efficient manner, so that our clients can spend their time on what matters
most - running their organizations with confidence. Through leading-edge,
proprietary technology and a massive data repository, our analytics and
information solutions harness the power of data fusion, uncovering the
relevance of disparate data points and converting them into comprehensive and
insightful views of people, businesses, assets and their interrelationships.
We empower clients across markets and industries to better execute all aspects
of their business, from managing risk, recovering debt, identifying fraud and
abuse, and ensuring legislative compliance, to identifying and acquiring
customers. At red violet, we are dedicated to making the world a safer place
and reducing the cost of doing business. For more information, please
visit www.redviolet.com.

FORWARD-LOOKING STATEMENTS

This press release contains "forward-looking statements," as that term is
defined under the Private Securities Litigation Reform Act of 1995 (PSLRA),
which statements may be identified by words such as "expects," "plans,"
"projects," "will," "may," "anticipate," "believes," "should," "intends,"
"estimates," and other words of similar meaning. Such forward looking
statements are subject to risks and uncertainties that are often difficult to
predict, are beyond our control and which may cause results to differ
materially from expectations, including the impact of the Covid-19 pandemic on
our current and future results of operations and whether we will continue to
drive growth for the foreseeable future. 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. 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 CONSOLIDA TED BALANCE SHEETS                                                                                                                                                                                                                       
 (Amounts in thousands, except share data)                                                                                                                                                                                                                    
 (unaudited)                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                              
                                                                                                                                                                                                        September 30, 2020           December 31, 2019        
 ASSETS:                                                                                                                                                                                                                                                      
 Current assets:                                                                                                                                                                                                                                              
 Cash and cash equivalents                                                                                                                                                                              $           12,441           $          11,776        
 Accounts receivable, net of allowance for doubtful accounts of $20 and $40 as of September 30, 2020 and December 31, 2019, respectively                                                                            2,920                       3,543         
 Prepaid expenses and other current assets                                                                                                                                                                          616                         722           
 Total current assets                                                                                                                                                                                               15,977                      16,041        
 Property and equipment, net                                                                                                                                                                                        555                         660           
 Intangible assets, net                                                                                                                                                                                             26,977                      24,034        
 Goodwill                                                                                                                                                                                                           5,227                       5,227         
 Right-of-use assets                                                                                                                                                                                                2,279                       2,620         
 Other noncurrent assets                                                                                                                                                                                            93                          289           
 Total assets                                                                                                                                                                                           $           51,108           $          48,871        
 LIABILITIES AND SHAREHOLDERS' EQUITY:                                                                                                                                                                                                                        
 Current liabilities:                                                                                                                                                                                                                                         
 Accounts payable                                                                                                                                                                                       $           2,199            $          2,138         
 Accrued expenses and other current liabilities                                                                                                                                                                     775                         1,571         
 Current portion of operating lease liabilities                                                                                                                                                                     536                         491           
 Current portion of long-term loan                                                                                                                                                                                  1,059                       -             
 Deferred revenue                                                                                                                                                                                                   180                         128           
 Total current liabilities                                                                                                                                                                                          4,749                       4,328         
 Noncurrent operating lease liabilities                                                                                                                                                                             2,052                       2,459         
 Long-term loan                                                                                                                                                                                                     1,093                       -             
 Total liabilities                                                                                                                                                                                                  7,894                       6,787         
 Shareholders' equity:                                                                                                                                                                                                                                        
 Preferred stock—$0.001 par value, 10,000,000 shares authorized, and 0 shares issued and outstanding, as of September 30, 2020 and December 31, 2019                                                                -                           -             
 Common stock—$0.001 par value, 200,000,000 shares authorized, 12,371,665 and 11,657,912 shares issued, 12,146,910 and 11,554,765 shares outstanding, as of September 30, 2020 and December 31, 2019                13                          12            
 Treasury stock, at cost, 224,755 and 103,147 shares as of September 30, 2020 and December 31, 2019                                                                                                                 (3,083      )               (1,255     )  
 Additional paid-in capital                                                                                                                                                                                         67,082                      59,187        
 Accumulated deficit                                                                                                                                                                                                (20,798     )               (15,860    )  
 Total shareholders' equity                                                                                                                                                                                         43,214                      42,084        
 Total liabilities and shareholders' equity                                                                                                                                                             $           51,108           $          48,871        



 RED VIOLET, INC.                                                                                                                                                                      
 CONDENSED CONSOLIDATED STATEMENTS O F OPERATIONS                                                                                                                                      
 (Amounts in thousands, except share data)                                                                                                                                             
 (unaudited)                                                                                                                                                                           
                                                                                                                                                                                       
                                                               Three Months Ended September 30,                             Nine Months Ended September 30,                            
                                                               2020                                2019                     2020                                2019                   
 Revenue                                                       $       9,267                       $       8,257            $       25,623                      $       21,236         
 Costs and expenses (()(1)):                                                                                                                                                           
 Cost of revenue (exclusive of depreciation and amortization)          2,703                               3,122                    8,582                               8,843          
 Sales and marketing expenses                                          2,217                               1,925                    6,139                               5,428          
 General and administrative expenses                                   4,147                               3,498                    12,844                              11,259         
 Depreciation and amortization                                         1,118                               750                      3,020                               2,049          
 Total costs and expenses                                              10,185                              9,295                    30,585                              27,579         
 Loss from operations                                                  (918        )                       (1,038      )            (4,962      )                       (6,343      )  
 Interest (expense) income, net                                        (7          )                       46                       24                                  123            
 Loss before income taxes                                              (925        )                       (992        )            (4,938      )                       (6,220      )  
 Income taxes                                                          -                                   -                        -                                   -              
 Net loss                                                      $       (925        )               $       (992        )    $       (4,938      )               $       (6,220      )  
 Loss per share:                                                                                                                                                                       
 Basic and diluted                                             $       (0.08       )               $       (0.09       )    $       (0.42       )               $       (0.59       )  
 Weighted average number of shares outstanding:                                                                                                                                        
 Basic and diluted                                                     12,072,716                          10,917,673               11,758,907                          10,497,036     
                                                                                                                                                                                       
                                                                                                                                                                                       
 (1) Share-based compensation expense in each category:                                                                                                                                
 Sales and marketing expenses                                  $       151                         $       114              $       460                         $       290            
 General and administrative expenses                                   1,702                               1,293                    5,956                               5,000          
 Total                                                         $       1,853                       $       1,407            $       6,416                       $       5,290          



 RED VIOLET, INC.                                                                                                                    
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS                                                                                     
 (Amounts in thousands)                                                                                                              
 (unaudited)                                                                                                                         
                                                                                                                                     
                                                                                  Nine Months Ended September 30,                    
                                                                                  2020                            2019               
 CASH FLOWS FROM OPERATING ACTIVITIES:                                                                                               
 Net loss                                                                         $       (4,938  )               $       (6,220  )  
 Adjustments to reconcile net loss to net cash provided by operating activities:                                                     
 Depreciation and amortization                                                            3,020                           2,049      
 Share-based compensation expense                                                         6,416                           5,290      
 Write-off of long-lived assets                                                           117                             30         
 Provision for bad debts                                                                  360                             398        
 Noncash lease expenses                                                                   341                             313        
 Interest expense                                                                         7                               -          
 Changes in assets and liabilities:                                                                                                  
 Accounts receivable                                                                      263                             (1,458  )  
 Prepaid expenses and other current assets                                                106                             40         
 Other noncurrent assets                                                                  109                             254        
 Accounts payable                                                                         61                              235        
 Accrued expenses and other current liabilities                                           (803    )                       (183    )  
 Deferred revenue                                                                         52                              9          
 Operating lease liabilities                                                              (362    )                       (322    )  
 Net cash provided by operating activities                                                4,749                           435        
 CASH FLOWS FROM INVESTING ACTIVITIES:                                                                                               
 Purchase of property and equipment                                                       (98     )                       (71     )  
 Capitalized costs included in intangible assets                                          (4,310  )                       (4,413  )  
 Net cash used in investing activities                                                    (4,408  )                       (4,484  )  
 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  )                       -          
 Net cash provided by financing activities                                                324                             7,436      
 Net increase in cash and cash equivalents                                        $       665                     $       3,387      
 Cash and cash equivalents at beginning of period                                         11,776                          9,950      
 Cash and cash equivalents at end of period                                       $       12,441                  $       13,337     
 SUPPLEMENTAL DISCLOSURE INFORMATION                                                                                                 
 Cash paid for interest                                                           $       -                       $       -          
 Cash paid for income taxes                                                       $       -                       $       -          
 Share-based compensation capitalized in intangible assets                        $       1,480                   $       526        
 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 GAAP,
excluding interest expense (income), net, depreciation and amortization,
share-based compensation expense, and write-off of long-lived assets and
others, as noted in the tables below. We define adjusted gross profit as
revenue less cost of revenue (exclusive of depreciation and amortization), and
adjusted gross margin as adjusted gross profit as a percentage of revenue.

                                            Three Months Ended September 30,                     Three Months Ended           Nine Months Ended September 30,                    
 (In thousands)                             2020                            2019                 June 30, 2020                2020                            2019               
 Net loss                                   $       (925    )               $       (992    )    $           (2,532      )    $       (4,938  )               $       (6,220  )  
 Interest expense (income), net                     7                               (46     )                -                        (24     )                       (123    )  
 Depreciation and amortization                      1,118                           750                      992                      3,020                           2,049      
 Share-based compensation expense                   1,853                           1,407                    2,342                    6,416                           5,290      
 Write-off of long-lived assets and others          35                              18                       106                      252                             95         
 Adjusted EBITDA                            $       2,088                   $       1,137        $           908              $       4,726                   $       1,091      

The following is a reconciliation of gross profit, the most directly
comparable GAAP financial measure, to adjusted gross profit:

                                                               Three Months Ended September 30,                     Three Months Ended           Nine Months Ended September 30,                    
 (In thousands)                                                2020                            2019                 June 30, 2020                2020                            2019               
 Revenue                                                       $       9,267                   $       8,257        $           7,056            $       25,623                  $       21,236     
 Cost of revenue (exclusive of depreciation and amortization)          (2,703  )                       (3,122  )                (2,587      )            (8,582  )                       (8,843  )  
 Depreciation and amortization of intangible assets                    (1,063  )                       (689    )                (934        )            (2,847  )                       (1,860  )  
 Gross profit                                                          5,501                           4,446                    3,535                    14,194                          10,533     
 Depreciation and amortization of intangible assets                    1,063                           689                      934                      2,847                           1,860      
 Adjusted gross profit                                         $       6,564                   $       5,135        $           4,469            $       17,041                  $       12,393     
                                                                                                                                                                                                    
 Gross margin                                                          59      %                       54      %                50          %            55      %                       50      %  
 Adjusted gross margin                                                 71      %                       62      %                63          %            67      %                       58      %  

In order to assist readers of our condensed 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)                                        Q4'18              Q1'19              Q2'19              Q3'19              Q4'19              Q1'20              Q2'20              Q3'20           
 Customer metrics                                                                                                                                                                                                   
 idiCORE - billable customers (()(1))                               3,627              4,020              4,370              4,781              5,064              5,326              5,375              5,758      
 FOREWARN - users (()(2))                                           11,397             15,444             19,721             23,853             30,577             36,506             40,857             44,927     
 Revenue metrics                                                                                                                                                                                                    
 Contractual revenue % (()(3))                                      66      %          67      %          62      %          66      %          66      %          69      %          79      %          68      %  
 Revenue attrition % (()(4))                                        5       %          5       %          5       %          6       %          6       %          8       %          11      %          10      %  
 Revenue from new customers (()(5))                            $    1,096         $    1,285         $    1,596         $    1,406         $    1,018         $    1,417         $    916           $    726        
 Base revenue from existing customers (()(6))                  $    3,127         $    3,593         $    4,480         $    5,578         $    6,690         $    6,629         $    5,047         $    5,797      
 Growth revenue from existing customers (()(7))                $    485           $    856           $    1,169         $    1,273         $    1,342         $    1,254         $    1,093         $    2,744      
 Platform financial metrics                                                                                                                                                                                         
 Platform revenue (()(8))                                      $    4,112         $    4,894         $    6,153         $    7,085         $    7,652         $    8,108         $    6,857         $    8,968      
 Cost of revenue (exclusive of depreciation and amortization)  $    1,883         $    2,069         $    2,287         $    2,286         $    2,431         $    2,498         $    2,427         $    2,489      
 Adjusted gross margin                                              54      %          58      %          63      %          68      %          68      %          69      %          65      %          72      %  
 Services financial metrics                                                                                                                                                                                         
 Services revenue (()(9))                                      $    595           $    839           $    1,093         $    1,171         $    1,399         $    1,191         $    200           $    299        
 Cost of revenue (exclusive of depreciation and amortization)  $    421           $    600           $    765           $    836           $    983           $    794           $    159           $    214        
 Adjusted gross margin                                              29      %          29      %          30      %          29      %          30      %          33      %          20      %          28      %  
 Other metrics                                                                                                                                                                                                      
 Employees - sales and marketing                               46                 47                 48                 48                 51                 51                 53                 52              
 Employees - support                                           6                  6                  7                  8                  7                  8                  8                  9               
 Employees - infrastructure                                    11                 12                 12                 13                 11                 13                 12                 12              
 Employees - engineering                                       21                 20                 20                 25                 23                 26                 27                 27              
 Employees - administration                                    14                 14                 14                 13                 16                 15                 14                 15              



 (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)    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 data fusion 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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