Revenue Grows 20.8%, EBITDA By 24.1%
All New Products Contributing to Growth
NEW YORK, May 1, 2014 (GLOBE NEWSWIRE) -- Reis, Inc. (Nasdaq:REIS) ("Reis" or the "Company"), a leading provider of commercial real estate market information and analytical tools, announced its financial results and operational achievements for the first quarter ended March 31, 2014.
Consolidated revenue, which is comprised entirely of subscription revenue generated at the Company's Reis Services segment, was $9,946,045 for the three months ended March 31, 2014, as compared to $8,234,328 for the three months ended March 31, 2013, an increase of 20.8%. This is the Company's 16th consecutive quarterly increase in revenue over the prior year's corresponding quarter. Over this four year period, 100% of the Company's revenue growth has been generated organically.
Income from continuing operations was $1,046,980, or $0.10 per basic share and $0.09 per diluted share, for the quarter ended March 31, 2014. For the quarter ended March 31, 2013, the Company had income from continuing operations of $402,066, or $0.04 per basic and diluted share.
On a consolidated basis, the Company had net income of $669,102, or $0.06 per basic and diluted share, for the three months ended March 31, 2014. For the three months ended March 31, 2013, the Company had net income of $250,434, or $0.02 per basic and diluted share.
Reis Services EBITDA (which is earnings (defined as income (loss) from continuing operations) before interest, taxes, depreciation and amortization) was $4,066,000 during the first quarter of 2014, an increase of $789,000, or 24.1%, over the first quarter 2013 amount of $3,277,000. This is the Company's 14th consecutive quarterly increase in EBITDA over the prior year's corresponding quarter. The Reis Services EBITDA margins were 40.9% and 39.8% for the three months ended March 31, 2014 and 2013, respectively. Management uses metrics, such as EBITDA, to monitor and assess the performance of its operating business, Reis Services, and believes it is helpful to investors in understanding the Reis Services business (see below for reconciliations of income from continuing operations to EBITDA and Adjusted EBITDA for the Reis Services segment and on a consolidated basis).
Reis's CEO, Lloyd Lynford, observed that, "Reis is firing on all pistons, generating revenues from all of our initiatives of recent years, including of course our flagship, Reis SE, the industry's most widely adopted tool for market information and analytics. In addition, contributions to growth are being made by our ReisReports and Mobiuss products. Our strong deferred revenue and Aggregate Revenue Under Contract provide excellent visibility on future revenue and we are confident – especially in light of the introduction of Reis's new products – of continuing our robust top-line and EBITDA growth."
Financial and Operational Highlights
Following are recent financial and operational highlights for Reis:
- revenue growth was 20.8% in the first quarter of 2014 over the 2013 first quarter, an acceleration from the first quarter 2013 over 2012 growth rate of 12.8%;
- Reis Services EBITDA growth was 24.1% in the first quarter of 2014 over the 2013 comparable period, an acceleration from the first quarter 2013 over 2012 growth rate of 12.2%;
- consolidated Adjusted EBITDA of $3,357,000 for the first quarter of 2014 (see reconciliations below) grew 35.0% over the first quarter of 2013 with margin expansion to 33.8% from 30.2%;
- Reis SE renewal rates for the trailing twelve months ended March 31, 2014 were 91% overall and 93% for institutional subscribers;
- deferred revenue ($19,251,000), Aggregate Revenue Under Contract ($40,089,000) and the forward twelve month component of Aggregate Revenue Under Contract ($27,009,000) continue to demonstrate strong visibility into our future revenue;
- cash generation of $5,228,000 in the quarter, bringing our cash balance to $15,788,000 at March 31, 2014; and
- coverage was initiated in 57 metropolitan markets on the senior housing/congregate care sector, our seventh property type.
Critical Metrics: Revenue; Deferred Revenue; Aggregate Revenue Under Contract; and EBITDA
Reis Services's revenue increased by approximately $1,712,000, or 20.8%, from the first quarter of 2013 to the first quarter of 2014. The revenue increase over the corresponding prior quarterly period is the 16th consecutive quarterly increase in revenue over the prior year's quarter. In addition, revenue increased by approximately $737,000, or 8.0%, from the fourth quarter of 2013 to the first quarter of 2014. In general, these revenue increases reflect: (1) additional new Reis SE business; (2) revenue growth from ReisReports; and (3) revenue growth from Mobiuss in the 2014 period. The Company's revenue growth reflects not just a single strong quarter, but also the momentum created by sustained contract growth during 2013 and into the first quarter of 2014. In 2013, the Company had its best booking year and the fourth quarter of 2013 was the best booking quarter in Reis's history. The Company's overall renewal rate was unchanged at 91% for the trailing twelve months ended March 31, 2014 and 2013 (for institutional subscribers, the renewal rates were 93% and 92% at March 31, 2014 and 2013, respectively). Total Reis SE subscribers increased to 1,007 at March 31, 2014.
Two additional metrics management utilizes are deferred revenue and Aggregate Revenue Under Contract. Analyzing these amounts can provide additional insight into Reis Services's future financial performance. Deferred revenue, which is a GAAP basis accounting concept and is reported by the Company on the consolidated balance sheet, represents revenue from annual or longer term contracts for which we have billed and/or received payments from our subscribers related to services we will be providing over the remaining contract period. It does not include future revenue under non-cancellable contracts for which we do not yet have the contractual right to bill; this aggregate number we refer to as Aggregate Revenue Under Contract. Deferred revenue will be recognized as revenue ratably over the remaining life of a contract. The following table reconciles deferred revenue to Aggregate Revenue Under Contract at March 31, 2014 and 2013, respectively. A comparison of these balances at March 31 of each year is more meaningful than a comparison to the December 31, 2013 balances, as a greater percentage of renewals occur in the fourth quarter of each year and would distort the analysis.
|Deferred revenue (GAAP basis)||$ 19,251,000||$ 16,880,000|
|Amounts under non-cancellable contracts for which the Company does not yet have the contractual right to bill at the period end (A)||20,838,000||17,575,000|
|Aggregate Revenue Under Contract||$ 40,089,000||$ 34,455,000|
|(A) Amounts are billable subsequent to March 31 of each year and represent (1) non-cancellable contracts for subscribers with multi-year subscriptions where the future years are not yet billable, or (2) subscribers with non-cancellable annual subscriptions with interim billing terms.|
Included in Aggregate Revenue Under Contract at March 31, 2014 was approximately $27,009,000 related to amounts under contract for the forward twelve month period through March 31, 2015. The remainder reflects amounts under contract beyond March 31, 2015. The forward twelve month Aggregate Revenue Under Contract amount is approximately 74.1% of revenue on a trailing twelve month basis at March 31, 2014 of approximately $36,433,000. For comparison purposes, at March 31, 2013, the forward twelve month Aggregate Revenue Under Contract of $23,315,000 was approximately 72.5% of revenue on a trailing twelve month basis at March 31, 2013.
Both deferred revenue and Aggregate Revenue Under Contract are influenced by: (1) the timing and dollar value of contracts signed and billed; (2) the quantity and timing of contracts that are multi-year; and (3) the impact of recording revenue ratably over the life of a multi-year contract, which moderates the effect of price increases after the first year. Coupled with record new business and contract signings in 2013, the Company continued to sign new multi-year contracts.
EBITDA for the three months ended March 31, 2014 was $4,066,000, an increase of $789,000, or 24.1%, over the first quarter 2013 amount. On a consecutive quarter basis, EBITDA increased $278,000, or 7.3%, from the fourth quarter of 2013 to the first quarter of 2014. These increases were primarily derived from the increases in revenue, as described above. Operating expenses also continued to grow, but at a slower pace than revenue growth, the net effect of which resulted in the Reis Services EBITDA margins of 40.9% and 39.8% for the three months ended March 31, 2014, and 2013, respectively.
Reinvestment in our business remains a priority, including developing new products and functionality, expanding our databases and adding resources to grow our customer base. Accordingly, we continue to hire in many departments, including in sales (both new business and account management) as well as in operations, including our data collection departments. With a growing head count, the Company leased additional space in the third quarter of 2013. The impact of this additional expense began in the fourth quarter of 2013. Separately, as Reis's business continues to grow, we expect to devote additional resources to expand our sales pipeline through marketing efforts and sales force expansion. The impact of these initiatives was less than expected in the first quarter of 2014, due to the timing of hiring and the timing of implementation of these initiatives. Although our EBITDA margin in the last two fiscal quarters has been consistent at 40.9% and 41.1%, respectively, the expectation for additional spending in 2014 may result in margins for future quarters being below the 40.9% Reis Services EBITDA margin we reported for the first quarter of 2014.
Reconciliations of Income from Continuing Operations to EBITDA and Adjusted EBITDA
We define EBITDA as earnings (defined as income (loss) from continuing operations) before interest, taxes, depreciation and amortization. We define Adjusted EBITDA as earnings before interest, taxes, depreciation, amortization and stock based compensation. Although EBITDA and Adjusted EBITDA are not measures of performance calculated in accordance with GAAP, senior management uses EBITDA and Adjusted EBITDA to measure operational and management performance. Management believes that EBITDA and Adjusted EBITDA are appropriate supplemental financial measures to be considered in addition to the reported GAAP basis financial information which may assist investors in evaluating and understanding: (1) the performance of the Reis Services segment, the primary business of the Company and (2) the Company's continuing consolidated results, from year to year or period to period, as applicable. Further, these measures provide the reader with the ability to understand our operational performance while isolating non-cash charges, such as depreciation and amortization expenses, as well as other non-operating items, such as interest income, interest expense and income taxes and, in the case of Adjusted EBITDA, isolates non-cash charges for stock based compensation. Management also believes that disclosing EBITDA and Adjusted EBITDA will provide better comparability to other companies in the information services sector. EBITDA and Adjusted EBITDA are presented both for the Reis Services business and on a consolidated basis. We believe that these metrics, for Reis Services, provide the reader with valuable information for evaluating the financial performance of the core Reis Services business, excluding public company costs, and for making assessments about the intrinsic value of that stand-alone business to a potential acquirer. Management primarily monitors and measures its performance, and is compensated, based on the results of the Reis Services business. EBITDA and Adjusted EBITDA, on a consolidated basis, allow the reader to make assessments about the current trading value of the Company's common stock, including expenses related to operating as a public company. However, investors should not consider these measures in isolation or as substitutes for net income (loss), income from continuing operations, operating income, or any other measure for determining operating performance that is calculated in accordance with GAAP. In addition, because EBITDA and Adjusted EBITDA are not calculated in accordance with GAAP, they may not necessarily be comparable to similarly titled measures employed by other companies. Reconciliations of EBITDA and Adjusted EBITDA to the most comparable GAAP financial measure, income from continuing operations, follow for each identified period on a segment basis (including the Reis Services segment), as well as on a consolidated basis:
|(amounts in thousands)|
|Reconciliation of Income from Continuing Operations to EBITDA and||By Segment|
|Adjusted EBITDA for the Three Months Ended March 31, 2014||Reis Services||Other (A)||Consolidated|
|Income from continuing operations||$ 1,047|
|Income tax expense||605|
|Income (loss) before income taxes and discontinued operations||$ 2,798||$ (1,146)||1,652|
|Depreciation and amortization expense||1,243||2||1,245|
|Interest expense, net||25||—||25|
|Stock based compensation expense, net||—||435||435|
|Adjusted EBITDA||$ 4,066||$ (709)||$ 3,357|
|Adjusted EBITDA margin – Reis Services and consolidated (B)||40.9%||33.8%|
|Reconciliation of Income from Continuing Operations to EBITDA and||By Segment|
|Adjusted EBITDA for the Three Months Ended March 31, 2013||Reis Services||Other (A)||Consolidated|
|Income from continuing operations||$ 402|
|Income tax expense||265|
|Income (loss) before income taxes and discontinued operations||$ 2,040||$ (1,373)||667|
|Depreciation and amortization expense||1,211||2||1,213|
|Interest expense, net||26||—||26|
|Stock based compensation expense, net||—||581||581|
|Adjusted EBITDA||$ 3,277||$ (790)||$ 2,487|
|Adjusted EBITDA margin – Reis Services and consolidated (B)||39.8%||30.2%|
|Reconciliation of Income from Continuing Operations to EBITDA and||By Segment|
|Adjusted EBITDA for the Three Months Ended December 31, 2013||Reis Services||Other (A)||Consolidated|
|Income from continuing operations||$ 16,304|
|Income tax (benefit)||(14,751)|
|Income (loss) before income taxes and discontinued operations||$ 2,511||$ (958)||1,553|
|Depreciation and amortization expense||1,251||2||1,253|
|Interest expense, net||26||—||26|
|Stock based compensation expense, net||—||379||379|
|Adjusted EBITDA||$ 3,788||$ (577)||$ 3,211|
|Adjusted EBITDA margin – Reis Services and consolidated (B)||41.1%||34.9%|
|(A) Includes interest and other income, depreciation expense and general and administrative expenses (including public company related costs) that are not associated with the Reis Services segment. Since the reconciliations start with income from continuing operations, the effects of the discontinued operations (Residential Development Activities) are excluded from these reconciliations for all periods presented.|
|(B) Reflects an Adjusted EBITDA margin on the Reis Services segment and on a consolidated basis, both of which excludes the impact of discontinued operations.|
The loss from discontinued operations was $378,000 and $152,000 for the three months ended March 31, 2014 and 2013, respectively. The losses in the 2014 and 2013 periods primarily reflected legal and professional fees of $613,000 and $251,000, respectively, in connection with our recovery efforts (related to the 2012 Gold Peak settlement of $17,000,000), offset by income tax benefits of $235,000 and $99,000, respectively.
Future cash flows from discontinued operations will be solely comprised of expenditures incurred as part of our cash recovery efforts from insurance companies and other potentially responsible parties and, to the extent that we are successful in these efforts, cash inflows from any future recoveries; however, there can be no assurance that the Company will recover any amounts in the short or long term.
Investor Conference Call
The Company will host a conference call on Thursday, May 1, 2014, at 11:00 AM (EDT). This call is for the benefit of existing and prospective stockholders, stock analysts, and other interested parties to discuss the first quarter 2014 results and other matters. The Company has a policy of not providing quarterly or annual guidance.
The dial-in number from inside the U.S. or Canada for this teleconference is (877) 390-5537. The dial-in number for outside the U.S. and Canada is (760) 666-3763. The conference ID is 35786116, or "Reis." A replay of the conference call will be available from shortly after the conference call through midnight (EDT) on May 3, 2014 by dialing (855) 859-2056 from inside the U.S. or Canada or (404) 537-3406 from outside the U.S. and Canada, and referring to the conference ID: 35786116, or "Reis". An audio webcast of the conference call will also be available on Reis's website at www.reis.com/events and will remain on the website for a period of time following the call.
Reis provides commercial real estate market information and analytical tools to real estate professionals through its Reis Services subsidiary. Reis Services, including its predecessors, was founded in 1980. Reis maintains a proprietary database containing detailed information on commercial properties in metropolitan markets and neighborhoods throughout the U.S. The database contains information on apartment, office, retail, warehouse/distribution, flex/research & development and self storage properties, and is used by real estate investors, lenders and other professionals to make informed buying, selling and financing decisions. In addition, Reis data is used by debt and equity investors to assess, quantify and manage the risks of default and loss associated with individual mortgages, properties, portfolios and real estate backed securities. Reis currently provides its information services to many of the nation's leading lending institutions, equity investors, brokers and appraisers.
The Company's product portfolio features: Reis SE, its flagship delivery platform aimed at larger and mid-sized enterprises; ReisReports, aimed at prosumers and smaller enterprises; and Mobiuss Portfolio CRE, or Mobiuss, aimed primarily at risk managers and credit administrators at banks and non-bank lending institutions. It is through these products that Reis provides online access to a proprietary database of commercial real estate information and analytical tools designed to facilitate debt and equity transactions as well as ongoing asset and portfolio evaluations. Depending on the product or level of entitlement, users have access to market trends and forecasts at metropolitan and neighborhood levels throughout the U.S. and/or detailed building-specific information such as rents, vacancy rates, lease terms, property sales, new construction listings and property valuation estimates. Reis's products are designed to meet the demand for timely and accurate information to support the decision-making of property owners, developers, builders, banks and non-bank lenders, equity investors and service providers. These real estate professionals require access to timely information on both the performance and pricing of assets, including detailed data on market transactions, supply, absorption, rents and sale prices. This information is critical to all aspects of valuing assets and financing their acquisition, development and construction.
Cautionary Statement Regarding Forward-Looking Statements
This press release contains "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements may relate to the Company's or management's outlook or expectations for earnings, revenues, expenses, asset quality, or other future financial or business performance, strategies, prospects or expectations, or the impact of legal, regulatory or supervisory matters on our business, operations or performance. Specifically, forward-looking statements may include:
- statements relating to future services and product development of the Reis Services segment;
- statements relating to business prospects, potential acquisitions, sources and uses of cash, revenue, expenses, income (loss) from continuing or discontinued operations, cash flows, valuation of assets and liabilities and other business metrics of the Company and its businesses, including EBITDA, Adjusted EBITDA and Aggregate Revenue Under Contract; and
- statements preceded by, followed by or that include the words "estimate," "plan," "project," "intend," "expect," "anticipate," "believe," "seek," "target" or similar expressions relating to future periods.
Forward-looking statements reflect management's judgment based on currently available information and involve a number of risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. With respect to these forward-looking statements, management has made certain assumptions. Future performance cannot be assured. Actual results may differ materially from those contemplated by the forward-looking statements. Some factors that could cause actual results to differ include:
- lower than expected revenues and other performance measures such as income from continuing operations, EBITDA and Adjusted EBITDA;
- inability to retain and increase the Company's subscriber base;
- inability to execute properly on new products and services, or failure of subscribers to accept these products and services;
- inability to attract and retain sales and senior management personnel;
- inability to access adequate capital to fund operations and investments in our business;
- difficulties in protecting the security, confidentiality, integrity and reliability of the Company's data;
- changes in accounting policies or practices;
- legal and regulatory issues;
- the results of pending, threatening or future litigation; and
- the risk factors listed under "Item 1A. Risk Factors" in our annual report on Form 10-K for the year ended December 31, 2013, and in our quarterly report on Form 10-Q for the quarter ended March 31, 2014, each filed with the Securities and Exchange Commission ("SEC"), including the "Risk Factors" section of these filings, and the Company's other filings with the SEC available at the SEC's website (www.sec.gov).
You are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date of this release. Except as required by law, the Company undertakes no obligation to publicly update or release any revisions to these forward-looking statements to reflect any events or circumstances after the date of this release or to reflect the occurrence of unanticipated events.
|REIS, INC. AND SUBSIDIARIES|
|CONSOLIDATED BALANCE SHEETS|
|March 31,||December 31,|
|Cash and cash equivalents||$ 15,787,761||$ 10,559,899|
|Restricted cash and investments||216,835||216,702|
|Accounts receivable, net||5,124,171||11,386,584|
|Prepaid and other assets||2,173,767||2,787,909|
|Assets attributable to discontinued operations||3,500||8,500|
|Total current assets||23,306,034||24,959,594|
|Furniture, fixtures and equipment, net of accumulated depreciation of $1,962,094 and $1,905,933, respectively||864,761||853,377|
|Intangible assets, net of accumulated amortization of $29,917,266 and $28,764,189, respectively||15,612,310||15,687,117|
|Deferred tax asset, non-current portion, net||21,586,520||21,316,520|
|Total assets||$ 116,398,368||$ 117,866,784|
|LIABILITIES AND STOCKHOLDERS' EQUITY|
|Current portion of debt||$ —||$ —|
|Accrued expenses and other liabilities||1,991,795||3,578,227|
|Liability for option cancellations||123,713||268,341|
|Liabilities attributable to discontinued operations||507,352||342,138|
|Total current liabilities||21,873,882||24,472,884|
|Other long-term liabilities||536,456||522,941|
|Commitments and contingencies|
|Common stock, $0.02 par value per share, 101,000,000 shares authorized, 11,101,665 and 10,916,441 shares issued and outstanding, respectively||222,032||218,328|
|Additional paid in capital||103,161,958||102,717,693|
|Retained earnings (deficit)||(9,395,960)||(10,065,062)|
|Total stockholders' equity||93,988,030||92,870,959|
|Total liabilities and stockholders' equity||$ 116,398,368||$ 117,866,784|
|REIS, INC. AND SUBSIDIARIES|
|CONSOLIDATED STATEMENTS OF OPERATIONS|
| || For the Three Months Ended |
|Subscription revenue||$ 9,946,045||$ 8,234,328|
|Cost of sales of subscription revenue||1,916,345||1,681,404|
|Sales and marketing||2,552,020||1,968,966|
|General and administrative expenses||3,037,442||3,169,311|
|Total operating expenses||6,352,565||5,859,843|
|Other income (expenses):|
|Interest and other income||3,058||2,198|
|Total other income (expenses)||(25,155)||(26,015)|
|Income before income taxes and discontinued operations||1,651,980||667,066|
|Income tax expense||605,000||265,000|
|Income from continuing operations||1,046,980||402,066|
|(Loss) from discontinued operations, net of income tax (benefit) of $(235,000) and $(99,000), respectively||(377,878)||(151,632)|
|Net income||$ 669,102||$ 250,434|
|Per share amounts – basic:|
|Income from continuing operations||$ 0.10||$ 0.04|
|Net income||$ 0.06||$ 0.02|
|Per share amounts – diluted:|
|Income from continuing operations||$ 0.09||$ 0.04|
|Net income||$ 0.06||$ 0.02|
|Weighted average number of common shares outstanding:|
CONTACT: Press Contact: Mark P. Cantaluppi Vice President, Chief Financial Officer Reis, Inc. (212) 921-1122