Reis Services Revenue Up 12.8%, EBITDA Up 12.2%
Best First Quarter in Its History
NEW YORK, May 2, 2013 (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, 2013.
Consolidated revenue, which is comprised entirely of subscription revenue generated at the Company's Reis Services segment, was $8,234,328 for the three months ended March 31, 2013, as compared to $7,298,372 for the three months ended March 31, 2012, an increase of 12.8%. This is the Company's 12th consecutive quarterly increase in revenue over the prior year's corresponding quarter.
Income from continuing operations was $402,066, or $0.04 per basic and diluted share, for the quarter ended March 31, 2013. For the quarter ended March 31, 2012, the Company had income from continuing operations of $136,379, or $0.01 per basic and diluted share.
On a consolidated basis, the Company had net income of $250,434, or $0.02 per basic and diluted share, for the three months ended March 31, 2013. For the three months ended March 31, 2012, the Company had a net loss of $(14,208,876), or a loss of $(1.34) per basic share and $(1.29) per diluted share.
Reis's CEO, Lloyd Lynford, stated, "Our strong double-digit revenue, EBITDA and deferred revenue growth during the first quarter demonstrate Reis's sustained momentum and competitive advantages. Just yesterday, we launched coverage of 75 new apartment markets and dramatically expanded our self storage product to include rent and sales comparables, as well as market forecasts for 50 metropolitan areas and 279 submarkets." Mr. Lynford also discussed another exciting product innovation: the release of two additional "Downside Market Scenarios" that apply the effects of moderate and more severe economic downturns on commercial real estate market performance. "Regulators, lenders and investors must consider the potential impact of rapid economic reversals on their portfolios. With each quarter, Reis introduces new content and analytics that distance us from our would-be competitors and position the Company for continued robust revenue and EBITDA growth."
Reis Services EBITDA (earnings before interest, taxes, depreciation and amortization) was $3,277,000 during the first quarter of 2013, an increase of $356,000, or 12.2%, over the first quarter 2012 amount of $2,921,000. The EBITDA margins were 39.8% and 40.0% for the three months ended March 31, 2013 and 2012, respectively. Management uses other 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 Reconciliations of Income from Continuing Operations to EBITDA and Adjusted EBITDA below for the Reis Services segment and on a consolidated basis).
Financial and Operational Highlights
Following are recent operational and financial highlights for Reis:
- Revenue growth was 12.8% in the first quarter of 2013 over the 2012 first quarter, an acceleration from the first quarter 2012 over 2011 growth rate of 10.3%;
- Revenue for the trailing twelve months (TTM) March 31, 2013 was $32,165,000, growth of 15.4% over the TTM March 31, 2012;
- Reis Services EBITDA growth was 12.2% in the first quarter of 2013 over the 2012 comparable period, an acceleration from the first quarter 2012 over 2011 growth rate of 11.5%;
- Reis Services EBITDA for the TTM March 31, 2013 was $13,118,000, growth of 17.8% over the TTM March 31, 2012;
- Deferred revenue of $16,880,000 at March 31, 2013 represents growth of 14.4% over the March 31, 2012 balance;
- Generated cash of $1,698,000 in the quarter, bringing our cash balance to $6,659,000 at March 31, 2013;
- Continued investment in our business as we spent an aggregate of $1,086,000 in the first quarter on our web sites and databases to further differentiate us from competitors;
- Launched, in February 2013, Mobiuss® Portfolio CRE, a new, web-based credit risk, stress testing and portfolio surveillance platform, developed in conjunction with Opera Solutions, LLC. Mobiuss® Portfolio CRE will enable clients to quickly and thoroughly assess portfolio risks and opportunities by integrating Reis property, submarket and market data with Opera Solutions's rich analytics and client loan and property information;
- Expanded our self storage coverage in February 2013 with the inclusion of 20 additional self storage markets, bringing our total coverage to 50 markets in that property type;
- Added 75 apartment markets on May 1, 2013, bringing our total coverage to 275 apartment markets; and
- Further enhanced subscriber capabilities within Reis SE with the addition of "Downside Market Scenarios," a supplement to the company's baseline forecasts with the inclusion of two additional downside scenarios that apply the effects of moderate and more severe economic downturns to commercial real estate performance at the market and submarket level.
Critical Metrics: Revenue; Deferred Revenue; Aggregate Revenue Under Contract; and EBITDA
Revenue for the three months ended March 31, 2013 was $8,234,000, an increase of approximately $936,000, or 12.8%, from the first quarter of 2012 to the first quarter of 2013. In general, the revenue increase reflects: (1) additional new Reis SE business; (2) revenue growth from ReisReports; and (3) revenue growth from our data redistribution initiatives. These results reflect not just a single strong revenue quarter, but also the momentum created by sustained contract growth during 2012 and into 2013. The Company's overall renewal rate for the trailing twelve months ended March 31, 2013 was 91% as compared to 92% for the trailing twelve months ended March 31, 2012 (for institutional subscribers, renewal rates were 92% and 94% for the trailing twelve months ended March 31, 2013 and 2012, respectively).
On a consecutive quarter basis, revenue decreased by $347,000, or 4.0%, in the first quarter of 2013 from the fourth quarter of 2012. This decrease is the result of incremental revenue of $427,000 from one specific custom project recognized in the fourth quarter of 2012; there was no comparable custom project in the first quarter of 2013. As previously disclosed, management expected that there would be no comparable custom project of this magnitude in the first quarter of 2013 and, as a result, both revenue and EBITDA would decrease from the fourth quarter 2012 to the first quarter of 2013. The exclusion of the $427,000 of revenue from the fourth quarter 2012 associated with this custom project, would result in a revenue increase, on a pro forma basis, of $80,000, representing a 1.0% increase on a consecutive quarter basis.
Two additional metrics management utilizes in understanding the business and future performance are deferred revenue and Aggregate Revenue Under Contract. Analyzing these amounts can provide additional insight into Reis Services's 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, 2013 and 2012, respectively. A comparison of these balances at March 31 of each year is more meaningful than a comparison to the December 31, 2012 balances, as a greater percentage of renewals occur in the fourth quarter of each year and would distort the analysis.
|Deferred revenue (GAAP basis)||$16,880,000||$14,758,000|
|Amounts under non-cancellable contracts for which the Company does not yet have the contractual right to bill at the period end (A)||17,575,000||11,212,000|
|Aggregate Revenue Under Contract||$34,455,000||$25,970,000|
|(A) Amounts are billable subsequent to March 31 of each year and represent (i) non-cancellable contracts for subscribers with multi-year subscriptions where the future years are not yet billable, or (ii) subscribers with non-cancellable annual subscriptions with interim billing terms.|
Included in Aggregate Revenue Under Contract at March 31, 2013 was approximately $23,315,000 related to amounts under contract for the forward twelve month period through March 31, 2014. The remainder reflects amounts under contract beyond March 31, 2014. The forward twelve month Aggregate Revenue Under Contract amount is approximately 72.5% of revenue on a trailing twelve month basis at March 31, 2013 of approximately $32,165,000. For comparison purposes, at March 31, 2012, the forward twelve month Aggregate Revenue Under Contract of $19,756,000 was approximately 70.9% of revenue on a trailing twelve month basis at March 31, 2012.
Both deferred revenue and Aggregate Revenue Under Contract are influenced by: (1) the timing and dollar value of contracts signed; (2) the quantity and timing of contracts that are multiyear; and (3) the impact of recording revenue ratably over the life of a contract, which moderates the effect of price increases after the first year. Coupled with record new business and contract signings in 2012 and more multi-year contracts (in both number of contracts and gross dollar value) in 2012 than in any previous annual period, both deferred revenue and Aggregate Revenue Under Contract had substantial year over year increases.
EBITDA for the three months ended March 31, 2013 was $3,277,000, an increase of $356,000, or 12.2%, over the first quarter 2012 amount. This increase was primarily derived from the corresponding increases in revenue, as described above, while maintaining the Reis Services EBITDA margin at approximately 40%.
On a consecutive quarter basis, EBITDA decreased by $266,000, or 7.5%, in the first quarter of 2013 from the fourth quarter of 2012. EBITDA in the fourth quarter 2012 was similarly impacted by the incremental revenue generated by the aforementioned custom project. The exclusion of the $427,000 of revenue associated with this custom project would result in an EBITDA increase, on a pro forma basis, of $161,000, representing a 5.2% increase on a consecutive quarter basis (fourth quarter 2012 to first quarter 2013).
Reconciliations of Income from Continuing Operations to EBITDA and Adjusted EBITDA
EBITDA is defined as earnings before interest, taxes, depreciation and amortization. Adjusted EBITDA is defined 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 metrics that may be used by investors as supplemental financial measures to be considered in addition to the reported GAAP basis financial information to 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 to make 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, 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 (income), net||26||—||26|
|Stock based compensation expense, net||—||581||581|
|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 March 31, 2012||Reis Services||Other (A)||Consolidated|
|Income from continuing operations||$136|
|Income tax expense||84|
|Income (loss) before income taxes and discontinued operations||$1,528||$(1,308)||220|
|Depreciation and amortization expense||1,355||1||1,356|
|Interest expense (income), net||38||(1)||37|
|Stock based compensation expense, net||—||546||546|
|Adjusted EBITDA margin – Reis Services and consolidated (B)||40.0%||29.6%|
|Reconciliation of Income from Continuing Operations to EBITDA and||By Segment|
|Adjusted EBITDA for the Three Months Ended December 31, 2012||Reis Services||Other (A)||Consolidated|
|Income from continuing operations||$6,519|
|Income tax (benefit)||(5,427)|
|Income (loss) before income taxes and discontinued operations||$2,337||$(1,245)||1,092|
|Depreciation and amortization expense||1,182||2||1,184|
|Interest expense (income), net||24||—||24|
|Stock based compensation expense, net||—||505||505|
|Adjusted EBITDA margin – Reis Services and consolidated (B)||41.3%||32.7%|
|(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 consolidated net loss for the three months ended March 31, 2012 was primarily the result of the $14,345,000 loss from discontinued operations, net of taxes, which included a $14.2 million charge, plus other costs, related to the March 2012 jury verdict rendered in the litigation at the Company's former Gold Peak condominium development project. In the first quarter of 2013, the loss from discontinued operations, net of taxes, was $152,000.
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 2, 2013, 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 2013 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 57626935, or "Reis." A replay of the conference call will be available from shortly after the conference call through midnight (EDT) on May 3, 2013 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: 57626935, 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's primary business is providing commercial real estate market information and analytical tools for its subscribers, 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 and 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.
Reis, through its flagship institutional product, Reis SE, and through its small business product, ReisReports, 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, 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, uses of cash, revenue, expenses, income (loss), 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:
- revenues and other performance measures such as income from continuing operations, EBITDA and Adjusted EBITDA may be lower than expected;
- 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, threatened or future litigation; and
- the risk factors included in our annual report on Form 10-K for the year ended December 31, 2012 and our quarterly report on Form 10-Q for the quarter ended March 31, 2013, each filed with the Securities and Exchange Commission ("SEC"), including the "Risk Factors" section of each 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 press 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 press release or to reflect the occurrence of unanticipated events.
|REIS, INC. AND SUBSIDIARIES|
|CONSOLIDATED BALANCE SHEETS|
|March 31,||December 31,|
|Cash and cash equivalents||$6,658,903||$4,960,850|
|Restricted cash and investments||216,285||216,125|
|Accounts receivable, net||5,937,109||10,694,201|
|Prepaid and other assets||1,107,877||1,438,829|
|Total current assets||13,920,174||17,310,005|
|Furniture, fixtures and equipment, net of accumulated depreciation of $1,889,123 and $1,828,199, respectively||782,078||738,490|
|Intangible assets, net of accumulated amortization of $25,202,014 and $24,067,250, respectively||16,284,307||16,332,596|
|Deferred tax asset, net||8,798,420||8,557,420|
|LIABILITIES AND STOCKHOLDERS' EQUITY|
|Current portion of debt||$ —||$ —|
|Accrued expenses and other liabilities||2,382,630||3,902,206|
|Liability for option cancellations||385,497||296,523|
|Liabilities attributable to discontinued operations||458,346||460,251|
|Total current liabilities||20,106,145||22,889,312|
|Other long-term liabilities||563,112||588,484|
|Commitments and contingencies|
|Common stock, $0.02 par value per share, 101,000,000 shares authorized, 10,891,820 and 10,782,643 shares issued and outstanding, respectively||217,836||215,652|
|Additional paid in capital||101,382,834||102,002,972|
|Retained earnings (deficit)||(27,411,570)||(27,662,004)|
|Total stockholders' equity||74,189,100||74,556,620|
|Total liabilities and stockholders' equity||$94,858,357||$98,034,416|
|REIS, INC. AND SUBSIDIARIES|
|CONSOLIDATED STATEMENTS OF OPERATIONS|
|For the Three Months Ended|
|Cost of sales of subscription revenue||1,681,404||1,845,714|
|Sales and marketing||1,968,966||1,729,319|
|General and administrative expenses||3,169,311||2,952,268|
|Total operating expenses||5,859,843||5,195,181|
|Other income (expenses):|
|Interest and other income||2,198||16,065|
|Total other income (expenses)||(26,015)||(37,098)|
|Income before income taxes and discontinued operations||667,066||220,379|
|Income tax expense||265,000||84,000|
|Income from continuing operations||402,066||136,379|
|(Loss) from discontinued operations, net of income tax (benefit) of $(99,000) and $(79,000), respectively||(151,632)||(14,345,255)|
|Net income (loss)||$250,434||$(14,208,876)|
|Per share amounts – basic:|
|Income from continuing operations||$0.04||$0.01|
|Net income (loss)||$0.02||$(1.34)|
|Per share amounts – diluted:|
|Income from continuing operations||$0.04||$0.01|
|Net income (loss)||$0.02||$(1.29)|
|Weighted average number of common shares outstanding:|
CONTACT: Press Contact: Mark P. Cantaluppi Vice President, Chief Financial Officer Reis, Inc. (212) 921-1122