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New York, NY 10036
Tel: 212.921.1122
Fax: 212.921.2533
www.reis.com



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Reis, Inc. Announces Third Quarter 2011 Results

12% Revenue Growth Over 2010 and Additional Product Offerings Highlight Third Quarter

NEW YORK, Nov. 3, 2011 (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 quarter and nine months ended September 30, 2011.

The Company experienced growth for the key financial results and metrics of consolidated revenue, income from continuing operations, consolidated net income, EBITDA, deferred revenue and Aggregate Revenue Under Contract when comparing this quarter's performance to last year's.

Consolidated revenue, which is comprised entirely of subscription revenue, was $6,747,585 for the three months ended September 30, 2011 as compared to $6,013,122 for the three months ended September 30, 2010, an increase of 12.2%. For the nine months ended September 30, 2011 and 2010, consolidated revenue was $20,201,463 and $18,031,664, respectively, an increase of 12.0%.

Income from continuing operations was $288,967, or $0.03 per basic share and $0.02 per diluted share, for the three months ended September 30, 2011. For the three months ended September 30, 2010, the Company had income from continuing operations of $115,357, or $0.01 per basic and diluted share. For the nine months ended September 30, 2011, income from continuing operations was $489,125, or $0.05 per basic and diluted share. For the nine months ended September 30, 2010, the net (loss) from continuing operations was $(98,872), or $(0.01) per basic and diluted share.

On a consolidated basis, the Company had net income of $290,198, or $0.03 per basic share and $0.02 per diluted share, for the three months ended September 30, 2011. For the three months ended September 30, 2010, the Company's consolidated net income was $115,038, or $0.01 per basic and diluted share. The Company had net income of $1,742,606, or $0.16 per basic and diluted share for the nine months ended September 30, 2011. For the nine months ended September 30, 2010, the Company reported net income of $44,365, or $0.00 per basic and diluted share.

Management uses other metrics to monitor and assess the performance of its operating business, Reis Services, such as EBITDA (earnings before interest, taxes, depreciation and amortization), and believes it is helpful to investors in understanding the Reis Services business (see Reconciliations of Income (Loss) from Continuing Operations to EBITDA and Adjusted EBITDA below for the Reis Services segment and on a consolidated basis).

Reis Services's EBITDA was $2,722,000 and the EBITDA margin was 40.3% during the third quarter of 2011. EBITDA increased $282,000, or 11.6%, over the third quarter of 2010 total of $2,440,000. For the nine months ended September 30, 2011 and 2010, Reis Services EBITDA was $8,089,000 and $7,096,000, respectively, representing an increase of $993,000, or 14.0% EBITDA growth. The EBITDA margins were 40.0% and 39.4% for the nine months ended September 30, 2011 and 2010, respectively.

Operational, Financial and Balance Sheet Highlights

Following are recent operational, financial and balance sheet highlights for Reis:

Reis's CEO, Lloyd Lynford, observed, "The third quarter was marked by both successful financial performance and the delivery of important new content. Reis's year-over-year revenue and EBITDA gains are important barometers of the value of our market information and analytics to commercial real estate and financial industry professionals. At the same time, our enhanced coverage of the Warehouse/Distribution and Flex/R&D sectors represents yet another competitive advantage that separates us from our competitors and increases the value of our products to an ever expanding class of customers."

Reis Services Critical Metrics: Revenue; Deferred Revenue; Aggregate Revenue Under Contract; and EBITDA

Reis Services's revenue for the three months ended September 30, 2011 of $6,747,000 was achieved as a result of a strong sales environment which has supported gains in renewal rates and increased new business. Reis Services's revenue increased by approximately $734,000, or 12.2%, from the third quarter of 2010 to the third quarter of 2011. This revenue increase over the corresponding prior quarterly period is the sixth consecutive quarterly increase in revenue over the prior year's quarter. For the nine months ended September 30, 2011, Reis Services's revenue was approximately $20,201,000, an increase of approximately $2,170,000, or 12.0%, from the nine months ended September 30, 2010. These revenue increases reflect: (1) positive improvements in overall renewal rates as the trailing twelve month renewal rate improved to 93% at September 30, 2011 as compared to 90% for the trailing twelve months ended September 30, 2010 and, for institutional subscribers, the renewal rates improved to 95% at September 30, 2011 from 92% at September 30, 2010; (2) additional new business; (3) sales from ReisReports; and (4) the cumulative impact of the strength of contract signings from the third and fourth quarters of 2010 and into 2011. 

On a consecutive quarter basis, Reis Services had a modest revenue decrease of approximately $90,000, or 1.3%, from the second quarter of 2011 to the third quarter of 2011. Though total revenue declined, core recurring revenue, comprised of subscription fees for Reis SE and monthly credit card payments for ReisReports, grew by 1.3% in the third quarter. The total revenue decrease, on a consecutive quarter basis, was fully attributable to a below-average amount of custom revenue in the third quarter of 2011 after posting above-average custom revenue in the second quarter of 2011, accounting for a $173,000 negative swing in consecutive quarter custom revenue. While custom revenue typically only accounts for a small portion of total Reis Services revenue in a fiscal year, contracts and revenue related to custom projects are not realized in a predictable, linear fashion; by nature, they are dependent upon timing and client need. If a normalized level of custom revenue had been generated in both of these quarters, total revenue would have increased on a consecutive quarter basis by 1.3%. 

Reis's revenue model is based primarily on annual subscriptions that are paid in accordance with contractual billing terms. Reis recognizes revenue from its contracts on a ratable basis; for example, one-twelfth of the value of a one-year contract is recognized monthly. Therefore, increases in the dollar value of new contracts are spread evenly over the life of a contract, thereby moderating an immediate impact on revenue. Historically, the largest percentage of our contracts are executed in the fourth quarter of each year. As a result, in times of favorable pricing, larger consecutive quarter revenue growth occurs in the fourth and first quarters.  

Two additional metrics management believes are critical 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 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 life of a contract. The following table reconciles deferred revenue to Aggregate Revenue Under Contract at September 30, 2011 and 2010, respectively. A comparison of these balances at September 30 of each year is more meaningful than a comparison to the December 31, 2010 balances.

  September 30,   Percentage
  2011 2010 Increase Increase
         
Deferred revenue (GAAP basis)  $ 12,368,000 $ 10,275,000 $ 2,093,000  20.4%
Amounts under non-cancellable contracts for which the Company does not yet have the contractual right to bill at the period end (A)  12,263,000  11,681,000  582,000  5.0%
Aggregate Revenue Under Contract (B)  $ 24,631,000 $ 21,956,000 $ 2,675,000  12.2%
         
(A) Amounts are billable in the twelve month period subsequent to September 30 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.    
(B) Included in Aggregate Revenue Under Contract at September 30, 2011 was approximately $18,508,000 related to amounts under contract for the forward twelve month period through September 30, 2012. The remainder reflects amounts under contract beyond September 30, 2012. The forward twelve month Aggregate Revenue Under Contract amount is approximately 70% of revenue on a trailing twelve month basis at September 30, 2011 of approximately $26,368,000.    

The increases in both deferred revenue and Aggregate Revenue Under Contract are the result of an improved sales environment for renewals (by consistent improvement in renewal rates) and increased new business, as described above in the revenue discussion. As we enter our heavy renewal period for the year both deferred revenue and Aggregate Revenue Under Contract will be replenished.

EBITDA of Reis Services for the three months ended September 30, 2011 was $2,722,000, an increase of $282,000, or 11.6%, over the third quarter 2010 amount. EBITDA of Reis Services for the nine months ended September 30, 2011 was $8,089,000, an increase of $993,000, or 14.0%, over the corresponding 2010 period. These increases are directly impacted by the increases in revenue as described above while maintaining EBITDA margins for the Reis Services segment at 40%. On a consecutive quarter basis, EBITDA of Reis Services decreased $26,000, or 0.9%, in the third quarter 2011 from the second quarter 2011. This decrease is directly attributable to the $90,000 revenue decline previously described in this section. 

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 (loss) from continuing operations, operating income (loss), 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 (loss) 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 September 30, 2011 Reis Services Other (A) Consolidated
       
Income from continuing operations      $ 289
Income tax expense       —
Income (loss) before income taxes  $ 1,357 $ (1,068)  289
Add back:      
Depreciation and amortization expense   1,318  1  1,319
Interest expense (income), net   47  (2)  45
EBITDA   2,722  (1,069)  1,653
Add back:      
Stock based compensation expense, net   —  446  446
Adjusted EBITDA  $ 2,722 $ (623) $ 2,099
       


Reconciliation of Income from Continuing Operations to EBITDA and
By
Segment
 
Adjusted EBITDA for the Nine Months Ended September 30, 2011 Reis Services Other (A) Consolidated
       
Income from continuing operations      $ 489
Income tax expense       —
Income (loss) before income taxes and discontinued operations  $ 4,130 $ (3,641)  489
Add back:      
Depreciation and amortization expense   3,801  2  3,803
Interest expense, net   158  (5)  153
EBITDA   8,089  (3,644)  4,445
Add back:      
Stock based compensation expense, net    —  1,667  1,667
Adjusted EBITDA  $ 8,089 $ (1,977) $ 6,112


(amounts in thousands)      
       
Reconciliation of Income from Continuing Operations to EBITDA and By Segment  
 Adjusted EBITDA for the Three Months Ended September 30, 2010  Reis Services  Other (A) Consolidated 

Income from continuing operations 
    $ 116
Income tax expense       79
Income (loss) before income taxes  $ 1,254 $ (1,059)  195
Add back:      
Depreciation and amortization expense   1,114  1  1,115
Interest expense (income), net   72  (5)  67
EBITDA   2,440  (1,063)  1,377
Add back:      
Stock based compensation expense, net   —  416  416
Adjusted EBITDA  $ 2,440 $ (647) $ 1,793
       
 Reconciliation of (Loss) from Continuing Operations to EBITDA and By Segment  
Adjusted EBITDA for the Nine Months Ended September 30, 2010 Reis Services Other (A) Consolidated
       
(Loss) from continuing operations      $ (99)
Income tax (benefit)        (63)
Income (loss) before income taxes  $ 3,316 $ (3,478)  (162)
Add back:      
Depreciation and amortization expense   3,549  4  3,553
Interest expense (income), net   231  (15)  216
EBITDA   7,096  (3,489)  3,607
Add back:      
Stock based compensation expense, net   —  1,201  1,201
Adjusted EBITDA  $ 7,096 $ (2,288) $ 4,808
     
 Reconciliation of Income from Continuing Operations to EBITDA and By Segment   
Adjusted EBITDA for the Three Months Ended June 30, 2011 Reis Services Other (A) Consolidated
       
Income from continuing operations      $ 100
Income tax expense       —
Income (loss) before income taxes  $ 1,448 $ (1,348)  100
Add back:      
Depreciation and amortization expense   1,249   —  1,249
Interest expense (income), net   51   (2)   49
EBITDA   2,748  (1,350)  1,398
Add back:      
Stock based compensation expense, net    —  675  675
Adjusted EBITDA  $ 2,748 $ (675) $ 2,073
       
(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 (loss) from continuing operations, the effects of the discontinued operations (residential development activities) are excluded from these reconciliations for all periods presented.      

Investor Conference Call

The Company will host a conference call on Thursday, November 3, 2011, at 11:00 AM (ET). This call is for the benefit of existing and prospective stockholders, stock analysts, and other interested parties to discuss third quarter 2011 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 22824119 or "Reis". A replay of the conference call will be available from shortly after the conference call through midnight (ET) on November 17, 2011 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: 22824119. 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.

About Reis

The Company'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 and flex/research & development 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 new 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 evaluations. Depending on the product, users have access to trend and forecast analysis 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, and equity investors. 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.

For more information regarding Reis's products and services, visit www.reis.com and www.ReisReports.com.

The Reis, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=7042

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:

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:

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.

Financial Information

The following financial information should be read in conjunction with Reis's consolidated financial statements and the notes thereto and Management's Discussion and Analysis of Financial Condition and Results of Operations, both of which are included in Reis's quarterly report on Form 10-Q for the three months ended September 30, 2011, which was filed with the Securities and Exchange Commission on November 3, 2011.

REIS, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
  September 30,
2011
December 31,
2010
     
ASSETS    
Current assets:    
Cash and cash equivalents  $ 22,267,925 $ 20,163,787
Restricted cash and investments   215,190  214,298
Accounts receivable, net   4,489,892  8,961,623
Prepaid and other assets   443,937  384,384
Assets attributable to discontinued operations   —  2,438,240
Total current assets   27,416,944  32,162,332
Furniture, fixtures and equipment, net   945,938  958,505
Intangible assets, net of accumulated amortization of $18,198,744 and $14,891,406, respectively  17,625,641  18,576,606
Goodwill   54,824,648  54,824,648
Other assets   123,478  165,868
Total assets  $ 100,936,649 $ 106,687,959
     
LIABILITIES AND STOCKHOLDERS' EQUITY    
Current liabilities:    
Current portion of Bank Loan  $ 7,073,703 $ 5,531,050
Current portion of other debt   6,055  27,851
Accrued expenses and other liabilities   2,770,188  2,818,496
Liability for option cancellations   287,483  157,744
Deferred revenue   12,368,132  15,446,248
Liabilities attributable to discontinued operations   845,753  1,963,530
Total current liabilities   23,351,314  25,944,919
Non-current portion of Bank Loan   —  5,690,940
Other long-term liabilities   686,656  693,092
Deferred tax liability, net   66,580  66,580
Total liabilities   24,104,550  32,395,531
Commitments and contingencies    
Stockholders' equity:    
Common stock, $0.02 par value per share, 101,000,000 shares authorized, 10,562,570 and 10,472,010 shares
issued and outstanding, respectively
 211,251  209,440
Additional paid in capital   100,143,091  99,347,837
Retained earnings (deficit)   (23,522,243)  (25,264,849)
Total stockholders' equity   76,832,099  74,292,428
Total liabilities and stockholders' equity  $ 100,936,649 $ 106,687,959
 
REIS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 
 
For the Three Months Ended
September 30,
For the Nine Months Ended
September 30,
  2011 2010 2011 2010
         
Subscription revenue  $ 6,747,585 $ 6,013,122 $ 20,201,463 $ 18,031,664
Cost of sales of subscription revenue   1,550,435  1,402,455  4,623,673  4,402,204
Gross profit   5,197,150  4,610,667  15,577,790  13,629,460
Operating expenses:        
Sales and marketing   1,656,187  1,369,201  4,988,681  4,360,152
Product development   574,066  419,015  1,562,224  1,353,046
General and administrative expenses   2,632,106  2,560,233  8,384,599  7,861,733
Total operating expenses   4,862,359  4,348,449  14,935,504  13,574,931
Other income (expenses):        
Interest and other income   19,321  28,132  61,646  101,400
Interest expense   (65,145)  (95,993)  (214,807)  (317,801)
Total other income (expenses)   (45,824)  (67,861)  (153,161)  (216,401)
Income (loss) before income taxes and discontinued operations   288,967  194,357  489,125  (161,872)
Income tax expense (benefit)   —  79,000  —  (63,000)
Income (loss) from continuing operations   288,967  115,357  489,125  (98,872)
Income (loss) from discontinued operations, net of income tax expense of $—, $—, $—, and $97,000,
respectively
 1,231  (319)  1,253,481  143,237
Net income  $ 290,198 $ 115,038 $ 1,742,606 $ 44,365
         
Per share amounts — basic:        
Income (loss) from continuing operations  $ 0.03 $ 0.01 $ 0.05 $ (0.01)
Net income  $ 0.03 $ 0.01 $ 0.16 $ —
         
Per share amounts — diluted:        
Income (loss) from continuing operations  $ 0.02 $ 0.01 $ 0.05 $ (0.01)
Net income  $ 0.02 $ 0.01 $ 0.16 $ —
         
Weighted average number of common shares outstanding:        
Basic   10,599,031  10,594,443  10,572,288  10,504,098
Diluted   10,997,157  10,815,890  10,835,602  10,504,098
CONTACT: Press Contact:

         Mark P. Cantaluppi

         Vice President, Chief Financial Officer

         Reis, Inc.

         (212) 921-1122

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Source: Reis, Inc.

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