Reis Inc (NASDAQ:REIS), a leading provider of commercial real estate market information and analytical tools announced its first quarter financial results. The company said that it had a total revenue of $11.8 million for the three months ended March 31, 2018 which represented a 2.9 percent decline over the first quarter 2017. The company’s loss …
Reis Inc (NASDAQ:REIS), a leading provider of commercial real estate market information and analytical tools announced its first quarter financial results.
The company said that it had a total revenue of $11.8 million for the three months ended March 31, 2018 which represented a 2.9 percent decline over the first quarter 2017. The company’s loss before income tax was $396,000 and its net loss was at $352,000 or $0.03 per diluted share.
As quoted in the press release:
Total revenue in the 2018 first quarter was comprised of subscription revenue of $11.6 million and other revenue of $0.2 million. The majority of the decline in total revenue was from lower revenue related to one-time fees for settlements of previous unauthorized usage of Reis data which can fluctuate period to period and was lower by $324,000 in the 2018 period. Subscription revenue for the three months ended March 31, 2018 declined $(22,000), or (0.2)% from the corresponding 2017 period.
Mr. Lynford additionally noted, “We are pleased that Reis’s financial performance continues to remain sound as we gain further traction with our recently launched products, databases, and technology platform. Reis, and the entire commercial real estate industry, is at an inflection point in how data and analytics will be consumed throughout the lifecycle of the CRE asset. We believe that our launch of our “Every Property, Everywhere,” in concert with the availability of our API that allows for the seamless integration into an organization’s systems and decision flow, opens up many more applications and use cases than has historically been supported by Reis SE.”
Cost of Sales and Total Operating Expenses
Total cost of sales and operating expenses for the quarter ended March 31, 2018 were $3.4 million and $8.8 million, respectively, compared to $3.4 million and $8.6 million for the corresponding period last year, respectively. The increase in operating expenses was driven primarily by greater general and administrative expense of $359,000 as a result of increased professional fees relating to our previously announced review of strategic alternatives, as well as consulting fees relating to the adoption of the new revenue recognition standard incurred in the 2018 period. Product development expense increased $122,000 primarily due to greater website amortization expense for the website intangible asset, partially offset by a $329,000 decline in sales and marketing expenses driven by lower employment related costs in the 2018 period.
(Loss) Income Before Income Taxes and Net (Loss) Income
The Company’s loss before income taxes was $(396,000) and its net loss was $(352,000), or $(0.03) per diluted share, for the three months ended March 31, 2018 as compared to income before income taxes of $113,000 and net income of $535,000, or $0.05 per diluted share for the corresponding 2017 period.
Reis’s first quarter 2018 performance, specifically the earning metrics of net income or loss, income or loss before taxes and Consolidated Adjusted EBITDA (as defined below), were negatively impacted by three discrete factors having an aggregate pre-tax impact of $361,000:
- professional fees of $171,000 expensed in the quarter in connection with our review of strategic alternatives;
- the adoption of the new revenue recognition accounting standard which negatively impacted pre-tax earnings by $98,000; and
- consulting fees incurred in the first quarter associated with the revenue recognition accounting change of $92,000.
Consolidated Adjusted EBITDA and Reis Services EBITDA
Consolidated Adjusted EBITDA was $2.5 million for the three months ended March 31, 2018, decline of (3.3)%, from the first quarter 2017 amount. The consolidated Adjusted EBITDA margins were 21.2% and 21.3% for the three months ended March 31, 2018 and 2017, respectively (see the “Supplemental Financial Information and Reconciliations from GAAP to Non-GAAP Metrics” section at the end of this earnings release for a definition and reconciliations of net (loss) income to EBITDA and Adjusted EBITDA for the Reis Services segment and on a consolidated basis). The effects of the revenue standard adoption, professional fees and consultant costs all negatively impacted the reported Consolidated Adjusted EBITDA amount. Excluding those items, Consolidated Adjusted EBITDA would have been $2.8 million, an increase of $276,000, or 10.7% over the 2017 period.
Reis Services EBITDA was $3.3 million during the first quarter of 2018, growth of 1.4% over the first quarter 2017 reported amount of $3.3 million. The Reis Services EBITDA margins were 28.3% and 27.1% for the three months ended March 31, 2018 and 2017, respectively. Reis Services EBITDA was affected by the new revenue accounting standard and the consulting fees incurred in the period related to its adoption, but does not include the professional fees related to the strategic alternatives review as that is not a cost charged to the Reis Services segment. Excluding those items, Reis Services EBITDA would have been $3.5 million, an increase of $237,000, or 7.2% over the 2017 period.