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Tel: 212.921.1122
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www.reis.com



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Reis, Inc. Announces Second Quarter 2012 Results

Revenue and EBITDA Gains Fueled by a Record First Half for New Business

NEW YORK, Aug. 2, 2012 (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 second quarter ended June 30, 2012.

Consolidated revenue, which is comprised entirely of subscription revenue generated at the Company's Reis Services segment, was $7,522,085 for the three months ended June 30, 2012 as compared to $6,836,510 for the three months ended June 30, 2011, an increase of 10.0%. For the six months ended June 30, 2012, consolidated revenue was $14,820,457 as compared to $13,453,878 for the six months ended June 30, 2011, an increase of 10.2%.

Income from continuing operations was $498,032, or $0.05 per basic and diluted share, for the three months ended June 30, 2012. For the three months ended June 30, 2011, the Company had income from continuing operations of $100,629, or $0.01 per basic and diluted share. For the six months ended June 30, 2012, income from continuing operations was $634,411, or $0.06 per basic and diluted share. Income from continuing operations was $200,158 for the six months ended June 30, 2011, or $0.02 per basic and diluted share.

Reis's CEO, Lloyd Lynford, noted the strong performance of the Company's core business during the second quarter of 2012. "A record volume of new contracts in the first half of 2012 is testimony to the long-standing excellence of our product and to the sustained pace of our innovation. Our record revenue and EBITDA speak for themselves. We look forward to driving additional growth during the second half of the year—traditionally our busiest period for subscription renewals and new contracts—through the introduction of our industry-first Self-Storage market reports and by exploiting the additional competitive advantages afforded us by the successful launch in June of Reis SE 2.0, the company's flagship product."

On a consolidated basis, the Company had net income of $2,193,235, or $0.21 per basic share and $0.20 per diluted share, for the three months ended June 30, 2012. For the three months ended June 30, 2011, the Company had net income of $1,442,609, or $0.14 per basic share and $0.13 per diluted share. For the six months ended June 30, 2012, the Company had a net loss of $(12,015,641), or $(1.13) per basic share and $(1.10) per diluted share. The company had net income of $1,452,408 for the six months ended June 30, 2011, or $0.14 per basic share and $0.13 per diluted share.

The consolidated net loss for the six months ended June 30, 2012 was negatively impacted by a net $12,260,000 charge recorded in discontinued operations related to the litigation at the Company's former Gold Peak condominium development project. The Company recorded a charge of $14,216,000 during the first quarter of 2012 related to the March 13, 2012 jury verdict. On June 20, 2012, Reis reached a settlement with the plaintiff, providing for a total payment by Reis of $17,000,000. Of this amount, $5,000,000 is payable by August 3, 2012 and the remaining $12,000,000 is payable by October 15, 2012. As a result of the settlement, in the second quarter of 2012 the Company reversed $1,956,000 of the previously recorded charge, resulting in the net litigation charge for the six months ended June 30, 2012 of $12,260,000. See Reis's quarterly report on Form 10-Q for the quarter ended June 30, 2012, filed with the Securities and Exchange Commission ("SEC") on August 2, 2012 for additional information related to the Gold Peak litigation.

Reis Services's EBITDA (earnings before interest, taxes, depreciation and amortization) was $3,070,000 during the second quarter of 2012. EBITDA increased $322,000, or 11.7%, over the second quarter of 2011 amount of $2,748,000. The EBITDA margins were 40.8% and 40.2% for the three months ended June 30, 2012 and 2011, respectively. For the six months ended June 30, 2012 and 2011, Reis Services EBITDA was $5,991,000 and $5,367,000, respectively, representing growth of $624,000, or 11.6%. The EBITDA margins were 40.4% and 39.9% for the six months ended June 30, 2012 and 2011, 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).

Operational and Financial Highlights 

Following are recent operational and financial highlights for Reis:

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

Reis Services's revenue increased by approximately $685,000, or 10.0%, from the second quarter of 2011 to the second quarter of 2012 and $1,366,000, or 10.2%, in the six months ended June 30, 2012 over the comparable 2011 six month period. The revenue increase over the corresponding prior quarterly period is the ninth consecutively quarterly increase in revenue over the prior year's quarter. In addition, revenue increased by approximately $224,000 or 3.1%, from the first quarter of 2012 to the second quarter of 2012.  In general, these revenue increases reflect: (1) positive improvements in overall renewal rates as the trailing twelve month renewal rate rose to 93% at June 30, 2012 as compared to 92% for the trailing twelve months ended June 30, 2011 (for institutional subscribers, the renewal rates remained constant at 95% at June 30, 2012 and 2011); (2) incremental new business as the first half of 2012 produced the highest level of new contract signings in the Company's history; (3) revenue growth from ReisReports; (4) revenue growth from our data redistribution initiatives; and (5) the cumulative impact of the increased volume of contract signings in 2011 and into 2012. 

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.  

Our contract pricing model is based on actual and projected report consumption; we believe it is generally not as susceptible to economic downturns and personnel reductions at our subscribers as a model based upon individual user licenses. We typically impose contractual restrictions limiting our immediate exposure (during existing contract terms) to revenue reductions due to mergers and consolidations. However, we have been, and we may in the future be impacted by consolidation among our subscribers and potential subscribers, or in the event that subscribers enter bankruptcy or otherwise go out of business. 

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 June 30, 2012 and 2011, respectively. A comparison of these balances at June 30 of each year is more meaningful than a comparison to the December 31, 2011 balances, as a greater percentage of renewals occur in the fourth quarter of each year and would distort the comparison.

  June 30,   Percentage
  2012 2011 Increase Increase
         
Deferred revenue (GAAP basis)  $14,483,000 $12,278,000 $2,205,000 18.0%
Amounts under non-cancellable contracts for which the Company does not yet have the contractual right to bill at the period end (A)  13,147,000 12,398,000 749,000 6.0%
Aggregate Revenue Under Contract  $27,630,000 $24,676,000 $2,954,000 12.0%
         
(A) Amounts are billable subsequent to June 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.

Included in Aggregate Revenue Under Contract at June 30, 2012 was approximately $19,864,000 related to amounts under contract for the forward twelve month period through June 30, 2013. The remainder reflects amounts under contract beyond June 30, 2013. The forward twelve month Aggregate Revenue Under Contract amount at June 30, 2012 is approximately 69.6% of revenue on a trailing twelve month basis at June 30, 2012 of approximately $28,546,000. For comparison purposes, at June 30, 2011, the forward twelve month Aggregate Revenue Under Contract amount of $18,319,000 was approximately 71.5% of revenue on a trailing twelve month basis at June 30, 2011. Management believes that this is a strong indicator of revenue visibility and the power of our business model.

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 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. 

EBITDA for the three months ended June 30, 2012 was $3,070,000, an increase of $322,000, or 11.7%, over the second quarter 2011 amount and increased $624,000, or 11.6%, in the six months ended June 30, 2012 over the comparable 2011 six month period. On a consecutive quarter basis, EBITDA increased $149,000 or 5.1% in the second quarter 2012 over the first quarter 2012. These increases were primarily derived by the corresponding increases in revenue, as described above, and improving EBITDA margins in excess of 40%.

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, 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 June 30, 2012 Reis Services Other (A) Consolidated
       
Income from continuing operations       $ 498
Income tax (benefit)      (84)
Income (loss) before income taxes and discontinued operations   $ 1,712  $ (1,298) 414
Add back:      
Depreciation and amortization expense  1,300 3 1,303
Interest expense (income), net  58 -- 58
EBITDA  3,070 (1,295) 1,775
Add back:      
Stock based compensation expense, net  -- 646 646
Adjusted EBITDA   $ 3,070  $ (649)  $ 2,421
Adjusted EBITDA margin — Reis Services and consolidated (B)  40.8%   32.2%
       
Reconciliation of Income from Continuing Operations to EBITDA and By Segment  
Adjusted EBITDA for the Six Months Ended June 30, 2012 Reis Services Other (A) Consolidated
       
Income from continuing operations       $ 634
Income tax expense      --
Income (loss) before income taxes and discontinued operations   $ 3,240  $ (2,606) 634
Add back:      
Depreciation and amortization expense  2,655 4 2,659
Interest expense (income), net  96 (1) 95
EBITDA  5,991 (2,603) 3,388
Add back:      
Stock based compensation expense, net  -- 1,192 1,192
Adjusted EBITDA   $ 5,991  $ (1,411)  $ 4,580
Adjusted EBITDA margin — Reis Services and consolidated (B)  40.4%   30.9%
       
See footnotes on next page.      
       
(amounts in thousands)      
       
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 and discontinued operations   $ 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
Adjusted EBITDA Margin — Reis Services and consolidated (B)  40.2%   30.3%
       
Reconciliation of Income from Continuing Operations to EBITDA and  By Segment  
Adjusted EBITDA for the Six Months Ended June 30, 2011 Reis Services Other (A) Consolidated
       
Income from continuing operations       $ 200
Income tax expense      --
Income (loss) before income taxes and discontinued operations   $ 2,773  $ (2,573) 200
Add back:      
Depreciation and amortization expense  2,483 1 2,484
Interest expense (income), net  111 (3) 108
EBITDA  5,367 (2,575) 2,792
Add back:      
Stock based compensation expense, net  -- 1,221 1,221
Adjusted EBITDA   $ 5,367  $ (1,354)  $ 4,013
Adjusted EBITDA margin — Reis Services and consolidated (B)  39.9%   29.8%
       
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
Add back:      
Depreciation and amortization expense  1,355 1 1,356
Interest expense (income), net  38 (1) 37
EBITDA  2,921 (1,308) 1,613
Add back:      
Stock based compensation expense, net  -- 546 546
Adjusted EBITDA   $ 2,921  $ (762)  $ 2,159
Adjusted EBITDA margin — Reis Services and consolidated (B)  40.0%   29.6%
       
(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. 

Investor Conference Call

The Company will host a conference call on Thursday, August 2, 2012, at 1:00 PM (EDT). This call is for the benefit of existing and prospective stockholders, stock analysts, and other interested parties to discuss the second quarter 2012 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 14621414 or "Reis." A replay of the conference call will be available from shortly after the conference call through midnight (EDT) on August 16, 2012 by dialing (800) 585-8367 from inside the U.S. or Canada or (404) 537-3406 from outside the U.S. and Canada, and referring to the conference ID:14621414. 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

Reis, founded in 1980, provides commercial real estate market information and analytical tools for its subscribers. 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 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 quarter ended June 30, 2012, which was filed with the SEC on August 2, 2012.

REIS, INC. AND SUBSIDIARIES
 CONSOLIDATED BALANCE SHEETS
     
     
  June 30, December 31,
  2012 2011
  (Unaudited)  
ASSETS    
Current assets:    
Cash and cash equivalents   $ 19,671,513  $ 22,152,802
Restricted cash and investments  215,800 215,405
Accounts receivable, net  4,767,351 8,597,464
Prepaid and other assets  371,061 625,451
Assets attributable to discontinued operations  -- 3,000,000
Total current assets  25,025,725 34,591,122
Furniture, fixtures and equipment, net of accumulated depreciation of $1,708,788 and $1,556,022, respectively  794,361 863,309
Intangible assets, net of accumulated amortization of $21,924,593 and $19,437,856, respectively  16,576,847 17,155,195
Deferred tax asset, net  3,867,420 3,685,420
Goodwill  54,824,648 54,824,648
Other assets  35,500 98,412
Total assets   $ 101,124,501  $ 111,218,106
     
LIABILITIES AND STOCKHOLDERS' EQUITY    
Current liabilities:    
Current portion of Bank Loan  $ --  $ 5,690,940
Accrued expenses and other liabilities  2,359,900 3,352,445
Liability for option cancellations  266,569 240,515
Deferred revenue  14,482,836 15,706,851
Liabilities attributable to discontinued operations  17,473,461 8,048,568
Total current liabilities  34,582,766 33,039,319
Other long-term liabilities  632,056 668,456
Total liabilities  35,214,822 33,707,775
Commitments and contingencies    
Stockholders' equity:    
Common stock, $0.02 par value per share, 101,000,000 shares authorized, 10,702,277 and 10,570,891 shares issued and outstanding, respectively  214,045 211,417
Additional paid in capital  101,089,697 100,677,336
Retained earnings (deficit)   (35,394,063)  (23,378,422)
Total stockholders' equity  65,909,679 77,510,331
Total liabilities and stockholders' equity   $ 101,124,501  $ 111,218,106
 
 
REIS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
         
         
         
  For the Three Months Ended For the Six Months Ended
  June 30,  June 30,
  2012 2011 2012 2011
         
Subscription revenue   $ 7,522,085  $ 6,836,510  $ 14,820,457  $ 13,453,878
Cost of sales of subscription revenue  1,685,496 1,522,854 3,531,210 3,073,238
Gross profit  5,836,589 5,313,656 11,289,247 10,380,640
Operating expenses:        
Sales and marketing  1,821,604 1,680,080 3,550,923 3,332,494
Product development  566,405 507,061 1,079,999 988,158
General and administrative expenses  2,976,316 2,976,688 5,928,584 5,752,493
Total operating expenses  5,364,325 5,163,829 10,559,506 10,073,145
Other income (expenses):        
Interest and other income  16,207 22,101 32,272 42,325
Interest expense   (74,439)  (71,299)  (127,602)  (149,662)
Total other income (expenses)   (58,232)  (49,198)  (95,330)  (107,337)
Income before income taxes and discontinued operations  414,032 100,629 634,411 200,158
Income tax expense (benefit)   (84,000) -- -- --
Income from continuing operations  498,032 100,629 634,411 200,158
Income (loss) from discontinued operations, net of income tax expense of $79,000, $—, $—, and $—, respectively  1,695,203 1,341,980  (12,650,052) 1,252,250
Net income (loss)   $ 2,193,235  $ 1,442,609  $ (12,015,641)  $ 1,452,408
         
Per share amounts — basic:        
Income from continuing operations   $ 0.05  $ 0.01  $ 0.06  $ 0.02
Net income (loss)   $ 0.21  $ 0.14  $ (1.13)  $ 0.14
         
Per share amounts — diluted:        
Income from continuing operations   $ 0.05  $ 0.01  $ 0.06  $ 0.02
Net income (loss)   $ 0.20  $ 0.13  $ (1.10)  $ 0.13
         
Weighted average number of common shares outstanding:        
Basic  10,686,469 10,587,923 10,655,022 10,558,694
Diluted  10,950,417 10,914,276 10,963,826 10,826,251
CONTACT: Press Contact:

         Mark P. Cantaluppi

         Vice President, Chief Financial Officer

         Reis, Inc.

         (212) 921-1122

Reis, Inc. Logo

Source: Reis, Inc.

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