What changed in this filing

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Item 1. Financial Statements

2024-11-06 compared with 2024-08-07 · 78 added, 64 removed, 252 unchanged (36% of the section changed)

3 unchanged sentences

(Amounts in thousands, except share data)

June 30, 2024

September 30, 2024

December 31, 2023

2 unchanged sentences

Accounts receivable, net of allowance for doubtful accounts of $ 238 and $ 159 as of

June 30, 2024 and December 31, 2023, respectively

September 30, 2024 and December 31, 2023, respectively

Prepaid expenses and other current assets

16 unchanged sentences

Preferred stock—$ 0.001 par value, 10,000,000 shares authorized, and 0 shares

issued and outstanding, as of June 30, 2024 and December 31, 2023

issued and outstanding, as of September 30, 2024 and December 31, 2023

Common stock—$ 0.001 par value, 200,000,000 shares authorized, 13,735,387 and

13,980,274 shares issued, and 13,735,387 and 13,970,846 shares outstanding, as of

June 30, 2024 and December 31, 2023

Treasury stock, at cost, 12,804 and 9,428 shares as of June 30, 2024 and

September 30, 2024 and December 31, 2023

Treasury stock, at cost, 0 and 9,428 shares as of September 30, 2024 and

December 31, 2023

7 unchanged sentences

(Amounts in thousands, except share data)

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Costs and expenses:

7 unchanged sentences

Income before income taxes

Income tax expense

Income tax expense (benefit)

Earnings per share:

6 unchanged sentences

Additional paid-in

Balance at March 31, 2023

Balance at June 30, 2023

Vesting of restricted stock units

5 unchanged sentences

Share-based compensation

Balance at September 30, 2023

Balance at June 30, 2024

Balance at March 31, 2024

Vesting of restricted stock units

2 unchanged sentences

statutory taxes

Common stock repurchased

Retirement of treasury stock

Share-based compensation

Balance at June 30, 2024

Balance at September 30, 2024

Treasury stock

8 unchanged sentences

Share-based compensation

Balance at June 30, 2023

Balance at September 30, 2023

Balance at December 31, 2023

6 unchanged sentences

Share-based compensation

Balance at June 30, 2024

Balance at September 30, 2024

See notes to condensed consolidated financial statements.

2 unchanged sentences

(Amounts in thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

5 unchanged sentences

Noncash lease expenses

Deferred income tax expense

Deferred income tax expense (benefit)

Changes in assets and liabilities:

15 unchanged sentences

Net cash used in financing activities

Net decrease in cash and cash equivalents

Net increase in cash and cash equivalents

Cash and cash equivalents at beginning of period

5 unchanged sentences

Retirement of treasury stock

Right-of -use assets obtained in exchange of operating lease liabilities

Operating lease liabilities arising from obtaining right-of-use assets

See notes to condensed consolidated financial statements.

14 unchanged sentences

(b) Recently issued accounting standards

In December 2023, the Financial Accounting Standard Board (the “FASB”) issued Accounting Standard Updates (“ASU”) No.

In November 2023, the Financial Accounting Standard Board (the “FASB”) issued Accounting Standard Updates (“ASU”) No.

2023-07, " Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures ("ASU 2023-07") ," which requires a public entity to disclose significant segment expenses that are regularly provided to the chief operating decision maker ("CODM"), a description of other segment items by reportable segment, and an explanation of any additional measures the CODM uses in deciding how to allocate resources, and extend nearly all annual segment reporting requirements to quarterly reporting requirements.

In addition, entities with a single reportable segment must now provide all segment disclosures required in Accounting Standard Codification ("ASC") 280, including the new disclosures for reportable segments under the amendments in ASU 2023-07.

The new guidance is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024, and early adoption is permitted.

The guidance will be applied on a retrospective basis, with such disclosures to be made in regard to all prior periods presented in the financial statements.

The Company is currently evaluating the impact of adopting this ASU on its condensed consolidated financial statements and related disclosures.

In December 2023, the FASB issued ASU No.

2023-09, " Income Taxes (Topic 740):

8 unchanged sentences

Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock and is calculated using the treasury stock method for unvested shares.

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

(In thousands, except share data)

1 unchanged sentence

Earnings per share:

(1) For the three and six months ended June 30, 2024 and 2023, diluted weighted average shares outstanding are calculated by the inclusion of unvested restricted stock units ("RSUs").

(1) For the three and nine months ended September 30, 2024 and 2023, diluted weighted average shares outstanding are calculated by the inclusion of unvested restricted stock units ("RSUs").

Intangible assets, net

Intangible assets other than goodwill consist of the following:

June 30, 2024

September 30, 2024

December 31, 2023

4 unchanged sentences

The gross amount associated with software developed for internal use represents capitalized costs of internally-developed software, including eligible salaries and staff benefits, share-based compensation, travel expenses incurred by relevant employees, and other relevant costs.

Amortization expenses of $ 2,322 and $ 1,995 for the three months ended June 30, 2024 and 2023, respectively, and $ 4,536 and $ 3,853 for the six months ended June 30, 2024 and 2023, respectively, were included in depreciation and amortization expense.

As of June 30, 2024, intangible assets of $ 5,799 , included in the gross amounts of software developed for internal use, have not started amortization, as they are not ready for their intended use.

The Company capitalized costs of software developed for internal use of $ 2,847 and $ 2,649 during the three months ended June 30, 2024 and 2023, respectively, and $ 5,620 and $ 5,381 during the six months ended June 30, 2024 and 2023, respectively .

As of June 30, 2024, estimated amortization expense related to the Company’s intangible assets for the remainder of 2024 through 2029 and thereafter are as follows:

Amortization expenses of $ 2,382 and $ 2,112 for the three months ended September 30, 2024 and 2023, respectively, and $ 6,918 and $ 5,965 for the nine months ended September 30, 2024 and 2023, respectively, were included in depreciation and amortization expense.

As of September 30, 2024, intangible assets of $ 5,939 , included in the gross amounts of software developed for internal use, have not started amortization, as they are not ready for their intended use.

The Company capitalized costs of software developed for internal use of $ 2,708 and $ 2,929 during the three months ended September 30, 2024 and 2023, respectively, and $ 8,328 and $ 8,310 during the nine months ended September 30, 2024 and 2023, respectively .

As of September 30, 2024, estimated amortization expense related to the Company’s intangible assets for the remainder of 2024 through 2029 and thereafter are as follows:

(In thousands)

June 30, 2024

September 30, 2024

Remainder of 2024

1 unchanged sentence

Goodwill represents the cost in excess of the fair value of the net assets acquired in a business combination.

As of June 30, 2024 and December 31, 2023, the balance of goodwill of $ 5,227 was as a result of the acquisition of Interactive Data, LLC, a wholly-owned subsidiary of red violet, effective on October 2, 2014.

As of September 30, 2024 and December 31, 2023, the balance of goodwill of $ 5,227 was as a result of the acquisition of Interactive Data, LLC, a wholly-owned subsidiary of red violet, effective on October 2, 2014.

In accordance with ASC 350, “Intangibles - Goodwill and Other,” goodwill is tested at least annually for impairment, or when events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable, by assessing qualitative factors or performing a quantitative analysis in determining whether it is more likely than not that its fair value exceeds the carrying value.

The measurement date of the Company’s annual goodwill impairment test is October 1 .

The Company did no t record a goodwill impairment loss during the three and six months ended June 30, 2024 and 2023, and there was no accumulated goodwill impairment loss as of June 30, 2024.

The Company did no t record a goodwill impairment loss during the three and nine months ended September 30, 2024 and 2023, and there was no accumulated goodwill impairment loss as of September 30, 2024.

Revenue recognition

9 unchanged sentences

In some arrangements, a right to consideration for the Company's performance under the customer contract may occur before invoicing to the customer, resulting in an unbilled accounts receivable.

As of June 30, 2024, the current and noncurrent portion unbilled accounts receivable of $ 1,016 and $ 987 , respectively, were included within accounts receivable and other noncurrent assets, respectively, on the condensed consolidated balance sheets .

As of September 30, 2024, the current and noncurrent portion unbilled accounts receivable of $ 918 and $ 892 , respectively, were included within accounts receivable and other noncurrent assets, respectively, on the condensed consolidated balance sheets .

As of December 31, 2023, the current and noncurrent portion unbilled accounts receivable of $ 829 and $ 371 , respectively, were included within accounts receivable and other noncurrent assets, respectively , on the consolidated balance sheets.

The Company's revenue arrangements do not contain significant financing components.

For the three months ended June 30, 2024 and 2023, 74 % and 79 % of total revenue was attributable to customers with pricing contracts, respectively, versus 26 % and 21 % attributable to transactional customers, respectively.

For the six months ended June 30, 2024 and 2023, 76 % and 77 % of total revenue was attributable to customers with pricing contracts, respectively, versus 24 % and 23 % attributable to transactional customers, respectively.

For the three months ended September 30, 2024 and 2023, 77 % and 79 % of total revenue was attributable to customers with pricing contracts, respectively, versus 23 % and 21 % attributable to transactional customers, respectively.

For the nine months ended September 30, 2024 and 2023, 76 % and 78 % of total revenue was attributable to customers with pricing contracts, respectively, versus 24 % and 22 % attributable to transactional customers, respectively.

Pricing contracts are generally annual contracts or longer, with auto renewal.

If a customer pays consideration before the Company transfers services to the customer, those amounts are classified as deferred revenue.

As of June 30, 2024 and December 31, 2023, the balance of deferred revenue was $ 597 and $ 690 , respectively, all of which is expected to be realized in the next 12 months.

In relation to the deferred revenue balance as of December 31, 2023, $ 166 and $ 430 was recognized into revenue during the three and six months ended June 30, 2024, respectively.

As of June 30, 2024, $ 22,932 of revenue is expected to be recognized in the future for performance obligations that are unsatisfied or partially unsatisfied , related to pricing contracts that have a term of more than 12 months, of which, $ 6,167 of revenue will be recognized in the remainder of 2024, $ 8,896 in 2025, $ 4,548 in 2026, $ 2,936 in 2027, $ 342 in 2028, and $ 43 in 2029.

As of September 30, 2024 and December 31, 2023, the balance of deferred revenue was $ 565 and $ 690 , respectively, all of which is expected to be realized in the next 12 months.

In relation to the deferred revenue balance as of December 31, 2023, $ 147 and $ 577 was recognized into revenue during the three and nine months ended September 30, 2024, respectively.

As of September 30, 2024, $ 22,098 of revenue is expected to be recognized in the future for performance obligations that are unsatisfied or partially unsatisfied , related to pricing contracts that have a term of more than 12 months, of which, $ 3,284 of revenue will be recognized in the remainder of 2024, $ 9,946 in 2025, $ 5,207 in 2026, $ 3,252 in 2027, $ 364 in 2028, and $ 45 in 2029.

The actual timing of recognition may vary due to factors outside of the Company’s control.

8 unchanged sentences

During the third quarter of 2023, the Company released the valuation allowance previously recorded on its deferred tax assets.

The Company concluded that, due to its established historical cumulative positive income before income taxes plus permanent differences for the recent years, projections of future taxable income, and the reversal of taxable temporary differences, the realization of deferred tax assets as of June 30, 2024 was more likely than not.

The Company’s effective income tax rate was 22 % and 10 % for the three months ended June 30, 2024 and 2023, respectively, and 23 % and 6 % for the six months ended June 30, 2024 and 2023, respectively, differing from the U.S.

The Company’s effective income tax rate was 40 % and ( 492 %) for the three months ended September 30, 2024 and 2023, respectively, and 28 % and ( 236 %) for the nine months ended September 30, 2024 and 2023, respectively, differing from the U.S.

corporate statutory federal income tax rate of 21 %.

T he difference for the three and six months ended June 30, 2024 was primarily the effect of state income taxes and certain nondeductible permanent differences, partially offset by the utilization of research and development tax credits.

The difference for the three and six months ended June 30, 2023 was primarily the result of the valuation allowance applied to reduce the Company’s deferred tax assets to the amount that is more likely than not to be realized.

T he difference for the three and nine months ended September 30, 2024 was primarily the effect of state income taxes and certain nondeductible permanent differences, partially offset by the utilization of research and development tax credits.

The difference for the three and nine months ended September 30, 2023 was primarily the result of release of the valuation allowance, recognition of research and development tax credit, state income taxes and permanent differences.

The Company assesses its income tax positions and records tax benefits for all years subject to examination based upon its evaluation of the facts, circumstances and information available at the reporting date.

3 unchanged sentences

Due to the existence of net operating loss carryforwards since inception, all of the Company’s income tax filings remain open for tax examinations.

The Company does no t have any material unrecognized tax benefits as of June 30, 2024 and December 31, 2023.

The Company does no t have any material unrecognized tax benefits as of September 30, 2024 and December 31, 2023.

Common stock and treasury stock

As of June 30, 2024 and December 31, 2023, the number of issued shares of common stock was 13,744,189 and 13,980,274 , respectively, which included shares of treasury stock of 12,804 and 9,428 , respectively.

As of September 30, 2024 and December 31, 2023, the number of issued shares of common stock was 13,735,387 and 13,980,274 , respectively, which included shares of treasury stock of 0 and 9,428 , respectively.

The changes in the number of issued shares of common stock and treasury stock were due to the following factors:

• An aggregate of 80,187 shares of common stock were issued as a result of the vesting of RSUs, of which, 22,902 shares of common stock were withheld to pay withholding taxes upon such vesting, which were reflected in treasury stock, with a cost of $ 431 .

Related treasury stock of 21,826 shares was then retired during the six months ended June 30, 2024.

Related treasury stock of 22,902 shares was then retired during the nine months ended September 30, 2024.

• On May 2, 2022, the board of directors of the Company authorized the repurchase of up to $ 5.0 million of the Company's common stock from time to time, and subsequently on each of December 19, 2023 and March 28, 2024, the board of directors authorized the repurchase of an additional $ 5.0 million of the Company's common stock (the "Stock Repurchase Program").

The Stock Repurchase Program does not obligate the Company to repurchase any shares and may be modified, suspended, or terminated at any time and for any reason at the discretion of the board of directors.

During the six months ended June 30, 2024, the Company repurchased 292,744 shares of common stock under the Stock Repurchase Program, which was reflected in treasury stock, with a cost of $ 5,809 .

Related treasury stock of 289,368 shares, with a cost of $ 5,761 , was retired during the six months ended June 30, 2024, which resulted in a treasury stock balance of $ 236 as of June 30, 2024.

The Company has $ 4,577 remaining under the Stock Repurchase Program as of June 30, 2024.

During the nine months ended September 30, 2024, the Company repurchased 292,744 shares of common stock under the Stock Repurchase Program, which was reflected in treasury stock, with a cost of $ 5,809 .

Related treasury stock of 302,172 shares as a result of the repurchases, with a cost of $ 5,997 , was retired during the nine months ended September 30, 2024, resulting in no treasury stock balance as of September 30, 2024.

The Company has $ 4,577 remaining under the Stock Repurchase Program as of September 30, 2024.

Share-based compensation

5 unchanged sentences

The primary purpose of the 2018 Plan, as amended, is to attract, retain, reward and motivate certain individuals by providing them with an opportunity to acquire or increase a proprietary interest in the Company and to incentivize them to expend maximum effort for the growth and success of the Company, so as to strengthen the mutuality of the interests between such individuals and the stockholders of the Company.

As of June 30, 2024, there were 1,926,852 shares of common stock available for future issuance under the 2018 Plan, as amended.

As of September 30, 2024, there were 1,908,864 shares of common stock available for future issuance under the 2018 Plan, as amended.

To date, all stock incentives issued under the 2018 Plan, as amended, have been in the form of RSUs.

1 unchanged sentence

The time-based condition for these awards is generally satisfied over three or four years with annual vesting.

Details of unvested RSU activity during the six months ended June 30, 2024 were as follows:

Details of unvested RSU activity during the nine months ended September 30, 2024 were as follows:

Number of units

4 unchanged sentences

Withheld as treasury stock (2)

Unvested as of June 30, 2024

Unvested as of September 30, 2024

(1) In March 2024, the Company granted 130,000 RSUs, subject to performance-based requirements, to one non-executive employee at a grant date fair value of $ 18.30 per share.

Such RSU grant shall not vest unless and until the Company has achieved certain revenue for a portion of its business prior to December 31, 2030, the last achievement date deadline.

No amortization of share-based compensation expense has been recognized for 115,000 RSUs among the above-mentioned grant, because, as of June 30, 2024, the Company determined that it is not probable that related performance criteria will be met.

In addition to the 130,000 RSUs discussed above, the Company granted, during the six months ended June 30, 2024, an aggregate of 102,985 RSUs to certain employees and directors at grant date fair values ranging from $ 18.12 to $ 22.85 per share, with a vesting period ranging from one to four years .

No amortization of share-based compensation expense has been recognized for 95,000 RSUs among the above-mentioned grant, because, as of September 30, 2024, the Company determined that it is not probable that related performance criteria will be met.

In addition to the 130,000 RSUs discussed above, the Company granted, during the nine months ended September 30, 2024, an aggregate of 133,985 RSUs to certain employees and directors at grant date fair values ranging from $ 17.00 to $ 28.50 per share, with a vesting period ranging from one to four years .

(2) Withheld as treasury stock represents shares withheld to pay statutory taxes upon the vesting of RSUs.

Refer to Note 7, "Common stock and treasury stock," for details.

As of June 30, 2024, unrecognized share-based compensation expense associated with the granted RSUs amounted to $ 14,288 , which is expected to be recognized over a remaining weighted average period of 1.9 years.

Share-based compensation was allocated to the following accounts in the condensed consolidated financial statements for the three and six months ended June 30, 2024 and 2023:

Three Months Ended June 30,

Six Months Ended June 30,

As of September 30, 2024, unrecognized share-based compensation expense associated with the granted RSUs amounted to $ 12,770 , which is expected to be recognized over a remaining weighted average period of 2.7 years.

Share-based compensation was allocated to the following accounts in the condensed consolidated financial statements for the three and nine months ended September 30, 2024 and 2023:

Three Months Ended September 30,

Nine Months Ended September 30,

(In thousands)

4 unchanged sentences

The Company leases its corporate headquarters of 21,020 rentable square feet in accordance with a non-cancellable 89 -month operating lease agreement as amended and effective in January 2017, with an option to extend for an additional 60 months .

On September 20, 2023, the Company entered into an amendment to its corporate headquarters lease agreement to exercise the extension option for an additional 60 months through June 30, 2029, with an option to further extend for an additional 60 months .

On September 20, 2023, the Company entered into an amendment to its corporate headquarters lease agreement to exercise the extension option for an additional 60 months through June 30, 2029 (the "Amended Lease"), with an option to further extend for an additional 60 months .

The Company also leases an additional office space of 6,003 rentable square feet in accordance with a non-cancellable 90 -month operating lease agreement entered into in April 2017, with an option to extend for an additional 60 months .

The extension option is not included in the determination of the lease term as it is not reasonably certain to be exercised.

For the three and six months ended June 30, 2024 and 2023, a summary of the Company’s lease information is shown below:

Three Months Ended June 30,

Six Months Ended June 30,

For the three and nine months ended September 30, 2024 and 2023, a summary of the Company’s lease information is shown below:

Three Months Ended September 30,

Nine Months Ended September 30,

(In thousands)

2 unchanged sentences

Cash paid for operating leases

As of June 30, 2024, the weighted average remaining operating lease term was 4.6 years.

As of June 30, 2024, scheduled future maturities and present value of the operating lease liabilities are as follows:

Right-of-use assets obtained in exchange for operating

lease liabilities (1)

Weighted average discount rate for operating leases (2)

(1) The Amended Lease resulted in an addition of $ 1,919 to right-of-use assets and operating lease liabilities, as of September 20, 2023 (the "Remeasurement Date").

(2) The Company used 10 %, its estimated incremental borrowing rate for similar secured assets, as the discount rate for the Amended Lease to determine the present value of the lease payments because the implicit rate in each lease is not readily determinable.

The discount rate was calculated on the basis of information available as of the Remeasurement Date.

As of September 30, 2024, the weighted average remaining operating lease term was 4.5 years.

As of September 30, 2024, scheduled future maturities and present value of the operating lease liabilities are as follows:

(In thousands)

June 30, 2024

September 30, 2024

Remainder of 2024

8 unchanged sentences

(a) Capital commitment

The Company incurred data costs of $ 2,406 and $ 2,358 for the three months ended June 30, 2024 and 2023, respectively , and $ 4,840 and $ 4,719 for the six months ended June 30, 2024 and 2023, under certain data licensing agreements.

As of June 30, 2024, material capital commitments under certain data licensing agreements were $ 17,949 , shown as follows:

The Company incurred data costs of $ 2,328 and $ 2,367 for the three months ended September 30, 2024 and 2023, respectively , and $ 7,168 and $ 7,086 for the nine months ended September 30, 2024 and 2023, under certain data licensing agreements.

As of September 30, 2024, material capital commitments under certain data licensing agreements were $ 15,215 , shown as follows:

(In thousands)

June 30, 2024

September 30, 2024

Remainder of 2024

7 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements