red violet Announces Second Quarter 2024 Financial Results
Red Violet (NASDAQ: RDVT) reported strong financial results for Q2 2024, with revenue increasing 30% to a record $19.1 million. The company achieved GAAP EPS of $0.19, representing a 90% increase in net income. Key highlights include:
- Gross profit up 41% to $13.3 million, with gross margin improving to 70%
- Adjusted EBITDA increased 47% to $6.8 million, with margin expanding to 36%
- Added 236 new IDI™ customers and 27,237 FOREWARN® users
- Repurchased 15,804 shares at an average price of $18.61
CEO Derek Dubner expressed confidence in sustaining momentum and driving accelerated growth in the coming quarters.
Red Violet (NASDAQ: RDVT) ha riportato risultati finanziari solidi per il secondo trimestre del 2024, con un aumento del 30% dei ricavi, raggiungendo un record di 19,1 milioni di dollari. L'azienda ha ottenuto un utile per azione GAAP di 0,19 dollari, che rappresenta un aumento del 90% nel reddito netto. I punti salienti includono:
- Profitto lordo in crescita del 41%, pari a 13,3 milioni di dollari, con un margine lordo migliorato al 70%
- EBITDA adjusted aumentato del 47%, arrivando a 6,8 milioni di dollari, con un margine in espansione al 36%
- Aggiunti 236 nuovi clienti IDI™ e 27.237 utenti di FOREWARN®
- Riacquisto di 15.804 azioni a un prezzo medio di 18,61 dollari
Il CEO Derek Dubner ha espresso fiducia nella capacità di mantenere lo slancio e di guidare una crescita accelerata nei prossimi trimestri.
Red Violet (NASDAQ: RDVT) reportó sólidos resultados financieros para el segundo trimestre de 2024, con un aumento del 30% en los ingresos, alcanzando un récord de 19.1 millones de dólares. La compañía logró una utilidad por acción GAAP de 0.19 dólares, lo que representa un aumento del 90% en los ingresos netos. Los puntos destacados incluyen:
- Ganancia bruta aumentó un 41% a 13.3 millones de dólares, con un margen bruto mejorando al 70%
- EBITDA ajustado incrementado un 47% a 6.8 millones de dólares, con un margen expandiendo al 36%
- Se añadieron 236 nuevos clientes de IDI™ y 27,237 usuarios de FOREWARN®
- Recompra de 15,804 acciones a un precio promedio de 18.61 dólares
El CEO Derek Dubner expresó confianza en mantener el impulso y en impulsar un crecimiento acelerado en los próximos trimestres.
레드 바이올렛 (NASDAQ: RDVT)는 2024년 2분기에 대해 30% 증가한 1,910만 달러의 매출을 기록하며 강력한 재무 실적을 보고했습니다. 회사는 GAAP 주당순이익 0.19 달러를 달성하며 순이익이 90% 증가했습니다. 주요 내용은 다음과 같습니다:
- 총 이익 41% 증가하여 1,330만 달러에 달하며, 총 이익률이 70%로 개선
- 조정 EBITDA가 47% 증가하여 680만 달러에 도달하며, 이익률이 36%로 확장
- 236명의 새로운 IDI™ 고객 및 27,237명의 FOREWARN® 사용자 추가
- 평균 가격 18.61 달러에 15,804주 재매입
CEO 데렉 더브너는 향후 분기에서 지속적인 동력을 유지하고 가속 성장을 이끌 자신감을 나타냈습니다.
Red Violet (NASDAQ: RDVT) a annoncé des résultats financiers solides pour le deuxième trimestre 2024, avec une augmentation de 30% de ses revenus, atteignant un record de 19,1 millions de dollars. La société a réalisé un BPA GAAP de 0,19 dollar, représentant une augmentation de 90% du revenu net. Les points saillants comprennent :
- Bénéfice brut en hausse de 41% à 13,3 millions de dollars, avec une marge brute améliorée à 70%
- EBITDA ajusté en hausse de 47% à 6,8 millions de dollars, avec une marge passant à 36%
- Ajout de 236 nouveaux clients IDI™ et 27.237 utilisateurs de FOREWARN®
- Rachat de 15.804 actions à un prix moyen de 18,61 dollars
Le PDG Derek Dubner a exprimé sa confiance dans le maintien de l'élan et la stimulation d'une croissance accélérée dans les prochains trimestres.
Red Violet (NASDAQ: RDVT) berichtete über starke finanzielle Ergebnisse für das 2. Quartal 2024, mit einem Umsatzanstieg von 30% auf einen Rekordwert von 19,1 Millionen Dollar. Das Unternehmen erzielte einen GAAP EPS von 0,19 Dollar, was einem Anstieg des Nettogewinns um 90% entspricht. Wichtige Höhepunkte sind:
- Bruttogewinn stieg um 41% auf 13,3 Millionen Dollar, mit einer Verbesserung der Bruttomarge auf 70%
- Bereinigtes EBITDA erhöhte sich um 47% auf 6,8 Millionen Dollar, mit einer Erweiterung der Marge auf 36%
- 236 neue IDI™-Kunden und 27.237 FOREWARN®-Nutzer hinzugefügt
- 15.804 Aktien zum durchschnittlichen Preis von 18,61 Dollar zurückgekauft
CEO Derek Dubner äußerte Vertrauen, den Schwung aufrechterhalten und das beschleunigte Wachstum in den kommenden Quartalen vorantreiben zu können.
- Record revenue of $19.1 million, up 30% year-over-year
- Net income increased 90% to $2.6 million, with EPS of $0.19
- Gross margin improved to 70% from 64% in the previous year
- Adjusted EBITDA grew 47% to $6.8 million, with margin expanding to 36%
- Added 236 new IDI™ customers and 27,237 FOREWARN® users
- Over 490 REALTOR® Associations now contracted to use FOREWARN
- None.
Insights
Red Violet's Q2 2024 results are impressively strong, showcasing robust growth across key financial metrics. The
The adjusted EBITDA growth of
Red Violet's Q2 performance reflects strong market positioning in the analytics and information solutions sector. The addition of 236 new customers to IDI™ and 27,237 new users to FOREWARN® indicates robust product adoption and market penetration. The expansion of FOREWARN® to over 490 REALTOR® Associations underscores its growing acceptance in the real estate industry.
The company's ability to achieve record highs across key metrics suggests that their strategic initiatives are resonating well with the market. The broad-based demand for their solutions, as mentioned by the CEO, points to a diversified customer base and potentially multiple growth vectors. This positions Red Violet favorably for sustained growth, although investors should monitor the competitive landscape and potential market saturation in future quarters.
Revenue Increases
BOCA RATON, Fla., Aug. 07, 2024 (GLOBE NEWSWIRE) -- 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 to70% from64% . - Adjusted gross profit increased
36% to$15.6 million . Adjusted gross margin increased to82% from78% . - Net income increased
90% to$2.6 million , which resulted in earnings of$0.19 per basic and diluted share. Net income margin increased to14% from9% . - Adjusted EBITDA increased
47% to$6.8 million . Adjusted EBITDA margin increased to36% from32% . - 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 Ramirez
Red Violet, Inc.
561-757-4500
ir@redviolet.com
Investor Relations Contact:
Steven Hooser
Three Part Advisors
214-872-2710
ir@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 | 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— | - | - | ||||||
| Common stock— | 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 |
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 |
FAQ
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