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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 Second Quarter 2013 Results

13.0% Revenue Growth and 16.1% EBITDA Growth From Reis Services Highlight Second Quarter

Improving U.S. Commercial Real Estate Sector Supports Accelerating Company Growth

NEW YORK, Aug. 1, 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 second quarter ended June 30, 2013.

Subscription revenue was $8,498,309 for the three months ended June 30, 2013, as compared to $7,522,085 for the three months ended June 30, 2012, an organic growth rate of 13.0%. For the six months ended June 30, 2013, subscription revenue was $16,732,637 as compared to $14,820,457 for the six months ended June 30, 2012, an increase of 12.9%.

Income from continuing operations was $521,996, or $0.05 per basic and diluted share, for the three months ended June 30, 2013. For the three months ended June 30, 2012, the Company had income from continuing operations of $498,032, or $0.05 per basic and diluted share. For the six months ended June 30, 2013, income from continuing operations was $924,062, or $0.09 per basic share and $0.08 per diluted share as compared to $634,411, or $0.06 per basic and diluted share for the six months ended June 30, 2012.

On a consolidated basis, the Company had net income of $483,706, or $0.04 per basic and diluted share, for the three months ended June 30, 2013. For the three months ended June 30, 2012, the Company had net income of $2,193,235, or $0.21 per basic share and $0.20 per diluted share. For the six months ended June 30, 2013, the Company had net income of $734,140, or $0.07 per basic share and $0.06 per diluted share as compared to a net loss of $(12,015,641), or $(1.13) per basic share and $(1.10) per diluted share for the six months ended June 30, 2012.

Reis's CEO, Lloyd Lynford, stated, "It's gratifying to report organic growth in EBITDA of 16.1% and revenue of 13.0%, Reis's 13th consecutive quarter of year-over-year revenue growth. We are continuing to execute our business plan with great discipline, focusing on our robust product pipeline, which continues to separate us from our competitors while stimulating additional report consumption by our subscribers. At the same time, the improving commercial real estate sector is generating demand for our product at record levels. In short, we believe that Reis's future is extremely bright."

Reis Services EBITDA (earnings before interest, taxes, depreciation and amortization) was $3,563,000 during the second quarter of 2013, an increase of $493,000, or 16.1%, over the second quarter 2012 amount of $3,070,000. The EBITDA margins were 41.9% and 40.8% for the three months ended June 30, 2013 and 2012, respectively. For the six months ended June 30, 2013 and 2012, Reis Services EBITDA was $6,840,000 and $5,991,000, respectively, growth of $849,000, or 14.2%. The EBITDA margins were 40.9% and 40.4% for the six months ended June 30, 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:

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

Reis Services's revenue increased approximately $976,000, or 13.0%, in the second quarter of 2013 over the second quarter of 2012 and increased approximately $1,912,000, or 12.9% in the six months ended June 30, 2013 over the 2012 comparable six month period. The revenue increase over the corresponding prior quarterly period is the 13th consecutive quarterly increase in revenue over the prior year's quarter. In addition, revenue increased by approximately $264,000, or 3.2%, from the first quarter of 2013 to the second quarter of 2013. In general, these revenue increases reflect: (1) additional new Reis SE business; (2) revenue growth from ReisReports; and (3) revenue from Mobiuss in the 2013 periods. The Company's revenue growth reflects 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 June 30, 2013 was 91% as compared to 93% for the trailing twelve months ended June 30, 2012 (for institutional subscribers, renewal rates were 92% and 95% for the trailing twelve months ended June 30, 2013 and 2012, respectively).

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, 2013 and 2012, respectively. A comparison of these balances at June 30th 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.

  June 30,
  2013 2012
Deferred revenue (GAAP basis) $ 16,174,000 $ 14,483,000
Amounts under non-cancellable contracts for which the Company does not yet have the contractual right to bill at the period end (A)  18,865,000  13,147,000
Aggregate Revenue Under Contract $ 35,039,000 $ 27,630,000
     
 
(A) Amounts are billable subsequent to June 30th 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, 2013 was approximately $23,246,000 related to amounts under contract for the forward twelve month period through June 30, 2014. The remainder reflects amounts under contract beyond June 30, 2014. The forward twelve month Aggregate Revenue Under Contract amount is approximately 70.1% of revenue on a trailing twelve month basis at June 30, 2013 of approximately $33,141,000. For comparison purposes, at June 30, 2012, the forward twelve month Aggregate Revenue Under Contract of $19,864,000 was approximately 69.6% of revenue on a trailing twelve month basis at June 30, 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 multi-year; 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 June 30, 2013 was $3,563,000, an increase of $493,000, or 16.1%, over the second quarter 2012 amount. For the six months ended June 30, 2013, EBITDA was $6,840,000, an increase of $849,000, or 14.2%, over the comparable 2012 six month period. On a consecutive quarter basis, EBITDA increased $286,000, or 8.7%, from the first quarter 2013 to the second quarter of 2013. These increases were primarily derived from the corresponding 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 improving to 41.9% and 40.9% for the three and six months ended June 30, 2013 over the 40.8% and 40.4% reported amounts in the 2012 comparable periods.

Reinvestment in our business remains a priority, including whether it is developing new products and functionality, expanding our databases or adding resources to grow our customer base and generate more revenue. 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 will be leasing additional space in the third quarter of 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 Adjusted EBITDA for the Three Months Ended June 30, 2013 By Segment  
  Reis Services Other (A) Consolidated
Income from continuing operations  $522
Income tax expense    347
Income (loss) before income taxes and discontinued operations  $2,251 $(1,382) 869
Add back:      
Depreciation and amortization expense  1,286 3 1,289
Interest expense (income), net  26 26
EBITDA  3,563 (1,379) 2,184
Add back:      
Stock based compensation expense, net  652 652
Adjusted EBITDA  $3,563 $(727) $2,836
Adjusted EBITDA margin — Reis Services and consolidated (B)  41.9%   33.4%
       
     
Reconciliation of Income from Continuing Operations to EBITDA and Adjusted EBITDA for the Three Months Ended June 30, 2012 By Segment  
  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%
       
See footnotes on next page.  
       
       
(amounts in thousands)    
Reconciliation of Income from Continuing Operations to EBITDA and Adjusted EBITDA for the Six Months Ended June 30, 2013 By Segment  
  Reis Services Other (A) Consolidated
Income from continuing operations  $924
Income tax expense    612
Income (loss) before income taxes and discontinued operations  $4,291 $(2,755) 1,536
Add back:      
Depreciation and amortization expense  2,497 5 2,502
Interest expense (income), net  52 52
EBITDA  6,840 (2,750) 4,090
Add back:      
Stock based compensation expense, net  1,233 1,233
Adjusted EBITDA  $6,840 $(1,517) $5,323
Adjusted EBITDA margin — Reis Services and consolidated (B)  40.9%   31.8%
     
     
Reconciliation of Income from Continuing Operations to EBITDA and Adjusted EBITDA for the Six Months Ended June 30, 2012 By Segment  
  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%
       
     
Reconciliation of Income from Continuing Operations to EBITDA and Adjusted EBITDA for the Three Months Ended March 31, 2013 By Segment  
  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
Add back:      
Depreciation and amortization expense  1,211 2 1,213
Interest expense (income), net  26 26
EBITDA  3,277 (1,371) 1,906
Add back:      
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%
       
(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 exclude the impact of discontinued operations. 

Discontinued Operations

The consolidated net loss for the six months ended June 30, 2012 was primarily the result of the $12,650,000 loss from discontinued operations, net of taxes, which included a net $12.3 million charge, plus other costs, related to the March 2012 jury verdict and subsequently negotiated June 2012 settlement of the litigation related to the Company's former Gold Peak condominium development project. As a result of the June 2012 settlement, the Company partially reduced its previously recorded charge by $1,956,000, positively impacting consolidated net income in the 2012 second quarter. In the three and six months ended June 30, 2013, the loss from discontinued operations, net of taxes, was $38,000 and $190,000, respectively, including the benefit of $80,000 of insurance recoveries in June 2013.

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 additional amounts in the short or long term.

Investor Conference Call

The Company will host a conference call on Thursday, August 1, 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 second 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 24454598, or "Reis." A replay of the conference call will be available from shortly after the conference call through midnight (EDT) on August 2, 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: 24454598, 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.

About Reis

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.

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

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

REIS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
  June 30, December 31,
  2013 2012
  (Unaudited)  
ASSETS    
Current assets:    
Cash and cash equivalents $ 8,099,523 $ 4,960,850
Restricted cash and investments  216,430  216,125
Accounts receivable, net  5,603,979  10,694,201
Prepaid and other assets  1,128,960  1,438,829
Total current assets  15,048,892  17,310,005
Furniture, fixtures and equipment, net of accumulated depreciation of $1,758,683 and $1,828,199, respectively  786,972  738,490
Intangible assets, net of accumulated amortization of $26,409,134 and $24,067,250, respectively  16,122,120  16,332,596
Deferred tax asset, net  8,331,420  8,557,420
Goodwill  54,824,648  54,824,648
Other assets  277,297  271,257
Total assets $ 95,391,349 $ 98,034,416
     
LIABILITIES AND STOCKHOLDERS' EQUITY    
Current liabilities:    
Current portion of debt $ — $ —
Accrued expenses and other liabilities  2,569,465  3,902,206
Liability for option cancellations  490,069  296,523
Deferred revenue  16,173,630  18,230,332
Liabilities attributable to discontinued operations  400,704  460,251
Total current liabilities  19,633,868  22,889,312
Other long-term liabilities  537,053  588,484
Total liabilities  20,170,921  23,477,796
Commitments and contingencies    
Stockholders' equity:    
Common stock, $0.02 par value per share, 101,000,000 shares authorized, 10,907,579 and 10,782,643 shares issued and outstanding, respectively  218,151  215,652
Additional paid in capital  101,930,141  102,002,972
Retained earnings (deficit)  (26,927,864)  (27,662,004)
Total stockholders' equity  75,220,428  74,556,620
Total liabilities and stockholders' equity $ 95,391,349 $ 98,034,416
 
 
REIS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 
 
 
For the Three Months Ended
June 30,
For the Six Months Ended
June 30,
  2013 2012 2013 2012
         
Subscription revenue $ 8,498,309 $ 7,522,085 $ 16,732,637 $ 14,820,457
Cost of sales of subscription revenue    1,674,793  1,685,496  3,356,197  3,531,210
Gross profit   6,823,516  5,836,589  13,376,440  11,289,247
Operating expenses:        
Sales and marketing  2,031,618  1,821,604  4,000,584  3,550,923
Product development  792,199  566,405  1,513,765  1,079,999
General and administrative expenses  3,104,751  2,976,316  6,274,062  5,928,584
Total operating expenses  5,928,568  5,364,325  11,788,411  10,559,506
Other income (expenses):        
Interest and other income  2,331  16,207  4,529  32,272
Interest expense  (28,283)  (74,439)  (56,496)  (127,602)
Total other income (expenses)  (25,952)  (58,232)  (51,967)  (95,330)
Income before income taxes and discontinued operations  868,996  414,032  1,536,062  634,411
Income tax expense (benefit)  347,000  (84,000)  612,000  —
Income from continuing operations  521,996  498,032  924,062  634,411
(Loss) income from discontinued operations, net of income tax (benefit) expense of $(24,000), $79,000, $(123,000) and $—, respectively  (38,290)  1,695,203  (189,922)  (12,650,052)
Net income (loss) $ 483,706 $ 2,193,235 $ 734,140 $ (12,015,641)
         
Per share amounts — basic:        
Income from continuing operations $ 0.05 $ 0.05 $ 0.09 $ 0.06
Net income (loss) $ 0.04 $ 0.21 $ 0.07 $ (1.13)
         
Per share amounts — diluted:        
Income from continuing operations $ 0.05 $ 0.05 $ 0.08 $ 0.06
Net income (loss) $ 0.04 $ 0.20 $ 0.06 $ (1.10)
         
Weighted average number of common shares outstanding:        
Basic  10,891,993   10,686,469  10,860,370  10,655,022
Diluted  11,398,094  10,950,417  11,368,882  10,963,826
CONTACT: Mark P. Cantaluppi

         Vice President, Chief Financial Officer

         Reis, Inc.

         (212) 921-1122

Reis, Inc. Logo

Source: Reis, Inc.

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