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Red Violet, Inc.

Red Violet, Inc.RDVTEarnings & Financial Report

Nasdaq · Information Technology · Services-Prepackaged Software

Red Violet, Inc. is a technology firm specializing in advanced data analytics, risk mitigation, and identity verification solutions. It serves clients across law enforcement, financial services, insurance, and corporate compliance sectors, delivering actionable insights from curated public and proprietary data sets to support informed decision-making.

What changed in Red Violet, Inc.'s 10-K — 2023 vs 2024

Top changes in Red Violet, Inc.'s 2024 10-K

190 paragraphs added · 176 removed · 153 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

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Adjusted EBITDA is a non-GAAP financial measure equal to net income, the most directly comparable financial measure based on accounting principles generally accepted in the United States (“US GAAP”), excluding interest income, net, income tax (benefit) expense, depreciation and amortization, share-based compensation expense, litigation costs, and write-off of long-lived assets and others.
Adjusted EBITDA is a non-GAAP financial measure equal to net income, the most directly comparable financial measure based on accounting principles generally accepted in the United States (“US GAAP”), excluding interest income, income tax expense (benefit), depreciation and amortization, share-based compensation expense, litigation costs, and write-off of long-lived assets and others.
Our AI/ML-driven identity intelligence platform, CORE TM , is purpose-built for the enterprise, yet flexible enough for organizations of all sizes, bringing clarity to massive datasets by transforming data into intelligence. We drive workflow efficiency and enable organizations to make better data-driven decisions. Organizations are challenged by the structure, volume, and disparity of data.
Our AI/ML-driven identity intelligence platform, CORE TM , is purpose-built for the enterprise, yet flexible enough for organizations of all sizes, bringing clarity to massive datasets by transforming data into intelligence. We drive workflow efficiency and enable organizations to make better data-driven decisions. Organizations are challenged by the structure, volume, velocity, and disparity of data.
Primary use cases include, but are not limited to, obtaining information on consumers, businesses, assets, and their interrelationships, to facilitate the location of individuals and assets, identity verification, legislative compliance, and to support criminal, legal, financial, insurance, and corporate investigations, due diligence, and the assessment and mitigation of counterparty risk. 2 Key Challenges Facing Our Customers We believe our solutions address the challenges that the industry faces today, which include: Actionable Insights Through a Single, Cloud-Native, AI/ML-Driven Platform —As the velocity and volume of data continues to grow exponentially across various mediums, organizations have become overwhelmed with data and their inability to glean actionable insights from such data to enable informed decisions in real-time.
Primary use cases include, but are not limited to, obtaining information on consumers, businesses, assets, and their interrelationships, to facilitate the location of individuals and assets, identity verification, legislative compliance, and to support criminal, legal, financial, insurance, and corporate investigations, due diligence, and the assessment and mitigation of counterparty risk. 2 Key Challenges Facing Our Customers We believe our solutions address the challenges that organizations face today, which include: Actionable Insights Through a Single, Cloud-Native, AI/ML-Driven Platform —As the velocity and volume of data continues to grow exponentially across various mediums, organizations have become overwhelmed with data and their inability to glean actionable insights from such data to enable informed decisions in real-time.
We employ a “land and expand” approach. Our sales model generally begins with a free trial followed by an initial purchase on a transactional basis or minimum-committed monthly spend.
We employ a “land and expand” approach. Our sales model generally begins with a trial followed by an initial purchase on a transactional basis or minimum-committed monthly spend.
Derek Dubner , 52, has served as the Chief Executive Officer and a director of the Company since its formation in August 2017 and continuing through the Spin-off from cogint on March 26, 2018. Mr. Dubner was appointed as Interim Chairman of our board of directors in September 2018 and as Chairman of our board of directors in April 2020.
Derek Dubner , 53, has served as the Chief Executive Officer and a director of the Company since its formation in August 2017 and continuing through the Spin-off from cogint on March 26, 2018. Mr. Dubner was appointed as Interim Chairman of our Board of Directors in September 2018 and as Chairman of our Board of Directors in April 2020.
Marketing — We have implemented several methods to market our products, including participation in trade shows and seminars, advertising, public relations, distribution of sales literature and product specifications and ongoing communication with prospective customers, distributors, resellers, strategic partners and our installed base of current customers.
Marketing — We have implemented various methods to market our products, including participation in trade shows and seminars, advertising, public relations, distribution of sales literature and product specifications and ongoing communication with prospective customers, distributors, resellers, strategic partners and our installed base of current customers.
The website address provided in this 2023 Form 10-K is not intended to function as a hyperlink and information obtained on the website is not and should not be considered part of this 2023 Form 10-K and is not incorporated by reference in this 2023 Form 10-K or any filing with the Securities and Exchange Commission (the “SEC”).
The website address provided in this 2024 Form 10-K is not intended to function as a hyperlink and information obtained on the website is not and should not be considered part of this 2024 Form 10-K and is not incorporated by reference in this 2024 Form 10-K or any filing with the Securities and Exchange Commission (the “SEC”).
Daniel MacLachlan , 45, has served as the Chief Financial Officer of the Company since its formation in August 2017 and continuing through its Spin-off from cogint. Mr. MacLachlan served as Chief Financial Officer of cogint from March 2016 until the Spin-off and brings over fifteen years of experience as the chief financial officer of data-driven technology companies. Mr.
Daniel MacLachlan , 46, has served as the Chief Financial Officer of the Company since its formation in August 2017 and continuing through its Spin-off from cogint. Mr. MacLachlan served as Chief Financial Officer of cogint from March 2016 until the Spin-off and brings over fifteen years of experience as the chief financial officer of data-driven technology companies. Mr.
Our solutions enable the real-time identification and location of people, businesses, assets, and their interrelationships. These solutions are used for purposes including risk mitigation, due diligence, fraud detection and prevention, regulatory compliance, and customer acquisition.
Our solutions enable the real-time identification and location of people, businesses, assets, and their interrelationships. These solutions are used for purposes including identity verification, risk mitigation, due diligence, fraud detection and prevention, regulatory compliance, and customer acquisition.
Jeff Dell , 52, has served as the Chief Information Officer of the Company since its formation in August 2017 and continuing through its Spin-off from cogint. Mr. Dell served as Chief Information Officer of cogint from September 2016 until the Spin-off and served as the Interim Chief Information Officer of cogint from June 2016 through September 2016.
Jeff Dell , 53, has served as the Chief Information Officer of the Company since its formation in August 2017 and continuing through its Spin-off from cogint. Mr. Dell served as Chief Information Officer of cogint from September 2016 until the Spin-off and served as the Interim Chief Information Officer of cogint from June 2016 through September 2016.
During the years ended December 31, 2023 and 2022, no individual customer accounted for more than 10% of total revenue. One individual customer accounted for 11% of our accounts receivable, net, as of December 31, 2023, and one individual customer accounted for 11% of our accounts receivable, net, as of December 31, 2022.
During the years ended December 31, 2024 and 2023, no individual customer accounted for more than 10% of total revenue. No individual customer accounted for more than 10% of our accounts receivable, net, as of December 31, 2024, and one individual customer accounted for 11% of our accounts receivable, net, as of December 31, 2023.
Item 1. B usiness. This business description should be read in conjunction with our audited consolidated financial statements and accompanying notes thereto appearing elsewhere in this Annual Report on Form 10-K for the year ended December 31, 2023 (the “2023 Form 10-K”), which are incorporated herein by this reference. Company Overview Red Violet, Inc.
Item 1. B usiness. This business description should be read in conjunction with our audited consolidated financial statements and accompanying notes thereto appearing elsewhere in this Annual Report on Form 10-K for the year ended December 31, 2024 (the “2024 Form 10-K”), which are incorporated herein by this reference. Company Overview Red Violet, Inc.
James Reilly , 49, has served as President of the Company since its formation in August 2017 and continuing through its Spin-off from cogint. Mr.
James Reilly , 50, has served as President of the Company since its formation in August 2017 and continuing through its Spin-off from cogint. Mr.
Our largest data supplier, with whom we have expanded our relationship while securing what we believe to be favorable business terms over the years, accounted for 48% and 49% of our total data acquisition costs for the years ended December 31, 2023 and 2022, respectively. The amended and renewed term of the agreement with this supplier ends June 30, 2026.
Our largest data supplier, with whom we have expanded our relationship while securing what we believe to be favorable business terms over the years, accounted for 45% and 48% of our total data acquisition costs for the years ended December 31, 2024 and 2023, respectively. The amended and renewed term of the agreement with this supplier ends June 30, 2026.
Our Employees We employ a total of 183 employees, all full-time, as of December 31, 2023. None of our employees are represented by a labor organization, and none are party to any collective bargaining agreement. We have not experienced any work stoppages and consider our relations with our employees to be good.
Our Employees We employ a total of 215 employees, all full-time, as of December 31, 2024. None of our employees are represented by a labor organization, and none are party to any collective bargaining agreement. We have not experienced any work stoppages and consider our relations with our employees to be good.
Our platform and applications transform the way our customers interact with information, presenting connections and relevance of information otherwise unattainable, which drives actionable insights and better outcomes. Leveraging cloud-native proprietary technology and applying machine learning and advanced analytical capabilities, CORE provides essential solutions to public and private sector organizations through intuitive, easy-to-use analytical interfaces.
Our platform and applications provide real-time analytics, transforming the way our customers interact with information by presenting connections and relevance of information otherwise unattainable, which drives actionable insights and better outcomes. Leveraging cloud-native proprietary technology and applying machine learning and advanced analytical capabilities, CORE provides essential solutions to public and private sector organizations through intuitive, easy-to-use analytical interfaces.
The data and analytics sector continues to grow at an accelerated pace due to the proliferation of data generated over the past two decades from both traditional and emerging sources, including e-commerce, mobile, and social media.
Our addressable market includes the data and analytics sector, which continues to grow at an accelerated pace due to the proliferation of data generated over the past two decades from both traditional and emerging sources, including e-commerce, mobile, and social media.
For the years ended December 31, 2023 and 2022, 79% and 75% of total revenue was attributable to customers with pricing contracts, respectively, versus 21% and 25% attributable to transactional customers, respectively. 1 We endeavor to understand our customers’ needs at the moment of first engagement.
For the years ended December 31, 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. 1 We endeavor to understand our customers’ needs at the moment of first engagement.
FOREWARN is an app-based solution currently tailored for the real estate industry, providing instant knowledge prior to face-to-face engagement with a consumer, helping professionals identify and mitigate risk. As of December 31, 2023 and 2022, IDI had 7,875 and 7,021 billable customers and FOREWARN had 185,380 and 116,960 users, respectively.
FOREWARN is an app-based solution currently tailored for the real estate industry, providing instant knowledge prior to face-to-face engagement with a consumer, helping professionals identify and mitigate risk. As of December 31, 2024 and 2023, IDI had 8,926 and 7,875 billable customers and FOREWARN had 303,418 and 185,380 users, respectively.
Dell served as Chief Information Security Officer of Seisint, Inc., a leading provider in the data fusion industry.
Dell served as Chief Information Security Officer of Seisint, Inc., an information solutions provider in the data fusion industry.
As of December 31, 2023, the remaining minimum purchase commitments through the end of the amended and renewed term is $13.4 million.
As of December 31, 2024, the remaining minimum purchase commitments through the end of the amended and renewed term is $8.1 million.
Fortune Business Insights TM projected the global big data analytics market to rise to $745.2 billion by 2030, exhibiting a CAGR of 13.5% during the forecast period from 2023 through 2030.
Fortune Business Insights TM projected the global big data analytics market to rise to $924.4 billion by 2032, exhibiting a CAGR of 13.0% during the forecast period from 2024 through 2032.
According to the market research company MarketsAndMarkets TM , the risk analytics market is projected to grow to $70.5 billion by 2027, representing CAGR of 12.4% from 2022 through 2027, with North America expected to account for the largest market size in the risk analytics market.
According to the market research company MarketsAndMarkets TM , the risk analytics market is projected to grow to $180.9 billion by 2029, representing CAGR of 24.8% from 2024 through 2029, with North America expected to account for the largest market size in the risk analytics market.
For the years ended December 31, 2023 and 2022, we had revenue of $60.2 million and $53.3 million, net income of $13.5 million and $0.6 million, adjusted EBITDA of $16.4 million and $12.9 million, and adjusted net income of $8.1 million and $6.9 million, respectively.
For the years ended December 31, 2024 and 2023, we had revenue of $75.2 million and $60.2 million, net income of $7.0 million and $13.5 million (inclusive of a one-time deferred income tax benefit of $10.3 million in 2023), adjusted EBITDA of $23.6 million and $16.4 million, and adjusted net income of $11.5 million and $8.1 million, respectively.
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We have also sought protection and registration of certain brands and trademarks internationally, such as in Europe and Canada. At present, we do not hold any issued patents. We use data acquired through licensing rights from approximately 30 providers.
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While we may hold one or more patents, we do not rely primarily on patents to protect our intellectually property. Through contractual arrangements, robust employee training programs, and other information safeguards, we protect our key proprietary information and databases as trade secrets. We use data acquired through licensing rights from approximately 30 providers.
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Additional requirements may also apply to us when providing services to U.S. federal, state, and local government agencies, including, without limitation, various Federal Acquisition Regulation and associated supplemental contract clauses.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Although we ceased to be an “emerging growth company,” on December 31, 2023, as defined in the Jumpstart Our Business Startups Act of 2012, or JOBS Act, we remain a “smaller reporting company.” We may continue to be a smaller reporting company if either (i) the market value of our stock held by non-affiliates is less than $250.0 million or (ii) our annual revenue is less than $100.0 million during the most recently completed fiscal year and the market value of our stock held by non-affiliates is less than $700.0 million.
Although we ceased to be an “emerging growth company” on December 31, 2023, as defined in the Jumpstart Our Business Startups Act of 2012, or JOBS Act, we remain a “smaller reporting company.” We may continue to be a smaller reporting company if either (i) the market value of our stock held by non-affiliates is less than $250.0 million or (ii) our annual revenue is less than $100.0 million during the most recently completed fiscal year and the market value of our stock held by non-affiliates is less than $700.0 million.
Our customers, and therefore our business and revenue, sometimes depend on favorable macroeconomic conditions and are impacted by the availability of credit, the level and volatility of interest rates, inflation, employment levels, consumer confidence, and housing demand. In addition, a significant amount of our revenue is concentrated in the U.S. market across a broad range of industries.
Our customers, and therefore our business and revenue, sometimes depend on favorable macroeconomic conditions and are impacted by the availability of credit, the level and volatility of interest rates, inflation, tariffs, employment levels, consumer confidence, and housing demand. In addition, a significant amount of our revenue is concentrated in the U.S. market across a broad range of industries.
If we or our alliance agreements’ partners are not successful in maintaining or commercializing the alliance agreements’ services, such commercial failure could adversely affect our business. If we consummate any future acquisitions, we will be subject to the risks inherent in identifying, acquiring, and operating a newly acquired business .
If we or our alliance agreements’ partners are not successful in maintaining or commercializing the alliance agreements’ services, such commercial failure could adversely affect our business. 13 If we consummate any future acquisitions, we will be subject to the risks inherent in identifying, acquiring, and operating a newly acquired business .
This litigation, if instituted against us, could result in substantial costs and a diversion of our management’s attention and resources. Future issuances of shares of our common stock in connection with acquisitions or pursuant to our stock incentive plans could have a dilutive effect on your investment.
This litigation, if instituted against us, could result in substantial costs and a diversion of our management’s attention and resources. 18 Future issuances of shares of our common stock in connection with acquisitions or pursuant to our stock incentive plans could have a dilutive effect on your investment.
Item 1A. Risk Factors . Our business, financial condition, operating results, and cash flows may be impacted by a number of factors, many of which are beyond our control, including those set forth below and elsewhere in this 2023 Form 10-K, the occurrence of any one of which could have a material adverse effect on our actual results.
Item 1A. Risk Factors . Our business, financial condition, operating results, and cash flows may be impacted by a number of factors, many of which are beyond our control, including those set forth below and elsewhere in this 2024 Form 10-K, the occurrence of any one of which could have a material adverse effect on our actual results.
Additionally, it is likely that new competitors or alliances among existing competitors could emerge and rapidly acquire significant market share. 17 There may be further consolidation in our end-customer markets, which may adversely affect our revenue. There has been, and we expect there will continue to be, merger, acquisition, and consolidation activity in our customer markets.
Additionally, it is likely that new competitors or alliances among existing competitors could emerge and rapidly acquire significant market share. 16 There may be further consolidation in our end-customer markets, which may adversely affect our revenue. There has been, and we expect there will continue to be, merger, acquisition, and consolidation activity in our customer markets.
If our service providers and vendors do not perform their service obligations, it could adversely affect our reputation, business, financial condition, and results of operations. 18 Consolidation in the data and analytics sector may limit market acceptance of our products and services. Several of our competitors have acquired companies with complementary technologies in the past.
If our service providers and vendors do not perform their service obligations, it could adversely affect our reputation, business, financial condition, and results of operations. 17 Consolidation in the data and analytics sector may limit market acceptance of our products and services. Several of our competitors have acquired companies with complementary technologies in the past.
Disruptions in the global equity and credit markets may limit our ability to access capital. Since the Spin-off and through December 31, 2023, we issued an aggregate of 1,233,915 shares of our common stock in connection with registered direct offerings.
Disruptions in the global equity and credit markets may limit our ability to access capital. Since the Spin-off and through December 31, 2024, we issued an aggregate of 1,233,915 shares of our common stock in connection with registered direct offerings.
We must adequately protect our intellectual property in order to prevent loss of valuable proprietary information. We rely primarily upon a combination of patent, copyright, trademark, and trade secret laws, as well as other intellectual property laws, and confidentiality procedures and contractual agreements, such as non-disclosure agreements, to protect our proprietary technology.
Also see “Concentration of Suppliers” above. 15 We must adequately protect our intellectual property in order to prevent loss of valuable proprietary information. We rely primarily upon a combination of patent, copyright, trademark, and trade secret laws, as well as other intellectual property laws, and confidentiality procedures and contractual agreements, such as non-disclosure agreements, to protect our proprietary technology.
Royalty and licensing agreements, if required and available, may be on terms unacceptable to us or detrimental to our business. Moreover, a successful claim of product infringement against us or our failure or inability to license the infringed or similar technology on commercially reasonable terms could seriously harm our business. Ite m 1B. Unresolved Staff Comments. None.
Royalty and licensing agreements, if required and available, may be on terms unacceptable to us or detrimental to our business. Moreover, a successful claim of product infringement against us or our failure or inability to license the infringed or similar technology on commercially reasonable terms could seriously harm our business.
We cannot provide assurance that we will be successful in maintaining our relationships with these external data source providers or that we will be able to continue to obtain data from them on acceptable terms or at all.
We cannot provide assurance that we will be successful in maintaining our relationships with these external data source providers or that we will be able to continue to obtain data from them on acceptable terms or at all. Furthermore, we cannot provide assurance that we will be able to obtain data from alternative sources if our current sources become unavailable.
Since the Spin-off and through December 31, 2023, we issued an aggregate of 3,435,793 shares of our common stock in connection with vesting of awards made under the Red Violet, Inc. 2018 Stock Incentive Plan, as amended (the “2018 Plan”), 719,735 shares of which were retired and cancelled.
Since the Spin-off and through December 31, 2024, we issued an aggregate of 3,831,483 shares of our common stock in connection with vesting of awards made under the Red Violet, Inc. 2018 Stock Incentive Plan, as amended (the “2018 Plan”), 857,198 shares of which were retired and cancelled.
Legal proceedings arise as part of the normal course of our business. These may include actions between us and a current or former employee, actions between us and a current former customer, individual consumer cases, class action lawsuits and inquiries, investigations, examinations, regulatory proceedings, or other actions brought by federal (e.g., the FTC) or state (e.g., state attorneys general) authorities.
These may include actions between us and a current or former employee, actions between us and a current former customer, individual consumer cases, class action lawsuits and inquiries, investigations, examinations, regulatory proceedings, or other actions brought by federal (e.g., the FTC or CFPB) or state (e.g., state attorneys general) authorities.
Although we believe the exclusive forum provision benefits us by providing increased consistency in the application of Delaware law for the specified types of actions and proceedings, this provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with the Company and its directors, officers, or other employees, and may discourage lawsuits with respect to such claims. 12 Risks Related to Our Common Stock Our stock price has been and may continue to be volatile, and the value of an investment in our common stock may decline.
Although we believe the exclusive forum provision benefits us by providing increased consistency in the application of Delaware law for the specified types of actions and proceedings, this provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with the Company and its directors, officers, or other employees, and may discourage lawsuits with respect to such claims.
We have already incurred significant expenses in our endeavors to comply with these laws. 10 Currently, public concern is high with regard to the collection, use, accuracy, correction, and sharing of personal information, including Social Security numbers, dates of birth, financial information, department of motor vehicle data, and other data which is personally identifiable or may be considered sensitive.
Currently, public concern is high with regard to the collection, use, accuracy, correction, and sharing of personal information, including Social Security numbers, dates of birth, financial information, department of motor vehicle data, and other data which is personally identifiable or may be considered sensitive.
While we maintain business continuity and disaster recovery plans, we cannot be certain that those plans will be effective. Even if we are unaffected by an extreme weather event or natural disaster, or recover from one quickly, our customers or suppliers may be more severely impacted, thereby affecting their ability to continue to do business with us.
Even if we are unaffected by an extreme weather event or natural disaster, or recover from one quickly, our customers or suppliers may be more severely impacted, thereby affecting their ability to continue to do business with us.
As of December 31, 2023, officers and directors of the Company owned approximately 10% of our common stock (approximately 12% on a fully diluted basis). In addition, two other significant stockholders of the Company owned approximately 14% and 11% of our common stock (approximately 13% and 10% on a fully diluted basis), respectively.
As of December 31, 2024, officers and directors of the Company owned approximately 10% of our common stock (approximately 12% on a fully diluted basis). In addition, one other significant stockholder of the Company owned approximately 11% of our common stock.
If we cannot overcome these challenges, we may not realize actual benefits from past and future acquisitions, which will impair our overall business results.
If we cannot overcome these challenges, we may not realize actual benefits from past and future acquisitions, which will impair our overall business results. If we complete an investment or acquisition, we may not realize the anticipated benefits from the transaction.
In our industry, there are continuous improvements in computer hardware, network operating systems, programming tools, programming languages, operating systems, data matching, data filtering and other database technologies, and the use of the internet.
In our industry, there are continuous improvements in computer hardware, network operating systems, programming tools, programming languages, operating systems, data matching, data filtering and other database technologies, as well as the use of the internet and emerging technologies, such as but not limited to, artificial intelligence.
There is no guarantee that we will be able to retain or renew existing agreements, maintain relationships with any of our customers on acceptable terms or at all, or collect amounts owed to us from insolvent customers. The loss of one or more of our major customers could adversely affect our business, financial condition and results of operations.
There is no guarantee that we will be able to retain or renew existing agreements, maintain relationships with any of our customers on acceptable terms or at all, or collect amounts owed to us from insolvent customers.
If we lose the services of key personnel, it could adversely affect our business. Our future success depends, in part, on our ability to attract and retain key personnel.
The loss of one or more of our major customers could adversely affect our business, financial condition and results of operations. 14 If we lose the services of key personnel, it could adversely affect our business. Our future success depends, in part, on our ability to attract and retain key personnel.
At this time, it is unclear whether Congress will pass a law or whether the FTC will proceed with regulatory action. At this time, it is also unclear whether any federal requirements will supplement or preempt state-level data privacy and security laws.
At this time, it is also unclear whether any federal requirements will supplement or preempt state-level data privacy and security laws.
We cannot predict what effect the interpretation of existing or new laws or regulations may have on our business. 11 The outcome of litigation, inquiries, investigations, examinations, or other legal proceedings in which we are involved, in which we may become involved, or in which our customers or competitors are involved, could subject us to significant monetary damages or restrictions on our ability to do business .
The outcome of litigation, inquiries, investigations, examinations, or other legal proceedings in which we are involved, in which we may become involved, or in which our customers or competitors are involved, could subject us to significant monetary damages or restrictions on our ability to do business . Legal proceedings arise as part of the normal course of our business.
Certain of the laws and regulations governing our business are subject to interpretation by judges, juries, and administrative entities, creating substantial uncertainty for our business.
Certain of the laws and regulations governing our business are subject to interpretation by judges, juries, and administrative entities, creating substantial uncertainty for our business. We cannot predict what effect the interpretation of existing or new laws or regulations may have on our business.
Business and Operations Risks We have a history of losses which makes our future results uncertain. Since inception, we incurred operating losses through December 31, 2021. We need to generate greater revenue from the sale of our products and services if we are to sustain profitability.
Business and Operations Risks Our future operating results remain uncertain. We need to generate greater revenue from the sale of our products and services if we are to sustain profitability.
While we do not believe that the outcome of any pending or threatened legal proceeding, investigation, examination, or supervisory activity will have a material adverse effect on our financial position, such events are inherently uncertain and adverse outcomes could result in significant monetary damages, penalties, or injunctive relief against us.
While we maintain various insurance policies that we believe provide us with suitable coverage and protection in the event of litigation or other legal proceedings, those policies may contain exclusions or limitations, resulting in some cases in us retaining all or a portion of the risk of loss. 12 While we do not believe that the outcome of any pending or threatened legal proceeding, investigation, examination, or supervisory activity will have a material adverse effect on our financial position, such events are inherently uncertain and adverse outcomes could result in significant monetary damages, penalties, or injunctive relief against us.
While these laws include specific exemptions, including exemptions for practices and activities conducted pursuant to the GLBA and DPPA, they apply to other portions of our business that are not conducted pursuant to these laws.
While these laws include specific exemptions, including exemptions for practices and activities conducted pursuant to the GLBA and DPPA, they apply to other portions of our business that are not conducted pursuant to these laws. Other states are actively considering privacy and security bills, and may pass laws, either similar or dissimilar to existing state privacy laws in the future.
We have established relationships with a number of customers, many of whom could unilaterally terminate their relationship with us or materially reduce the amount of business they conduct with us at any time. Market competition, customer requirements, customer financial condition, and customer consolidation through mergers or acquisitions also could adversely affect our ability to continue or expand these relationships.
Our relationships with key customers may be materially diminished or terminated, which could adversely affect our business, financial condition, and results of operations. We have established relationships with a number of customers, many of whom could unilaterally terminate their relationship with us or materially reduce the amount of business they conduct with us at any time.
If we are unable to generate greater revenue, we may not be able to continue to achieve profitability and generate positive cash flow from operations in the future. Environmental issues, including any future reporting obligations in connection with environmental issues, may adversely impact our business and operations.
If we are unable to generate greater revenue, we may not be able to continue to achieve profitability and generate positive cash flow from operations in the future We depend, in part, on strategic alliances and joint ventures to grow our business.
Also, as of December 31, 2023, 49,034 shares underlying awards made under the 2018 Plan have vested but have not been delivered, and an additional 1,017,718 shares underlying awards made under the 2018 Plan are scheduled to vest and be delivered through 2027.
Also, as of December 31, 2024, 56,984 shares underlying awards made under the 2018 Plan have vested but the delivery has been deferred by the recipients, and an additional 887,268 shares underlying awards made under the 2018 Plan are scheduled to vest and be delivered through 2030.
Furthermore, we cannot provide assurance that we will be able to obtain data from alternative sources if our current sources become unavailable. 16 The foregoing risks are heightened with respect to our largest data supplier, with whom we have expanded our relationship while securing favorable business terms over the years.
The foregoing risks are heightened with respect to our largest data supplier, with whom we have expanded our relationship while securing favorable business terms over the years.
The interests of these stockholders may not always coincide with the interests of other stockholders, and these stockholders may act in a manner that advances their interests and not necessarily those of other stockholders, and might affect the prevailing market price for our securities. 13 We are no longer an “emerging growth company,” however, we are still a “smaller reporting company,” and the reduced disclosure requirements applicable to smaller reporting companies may make our common stock less attractive to investors.
We are no longer an “emerging growth company,” however, we are still a “smaller reporting company,” and the reduced disclosure requirements applicable to smaller reporting companies may make our common stock less attractive to investors.
Our business is subject to regulation under the GLBA, the DPPA, the FTC Act, and various other federal, state, and local laws and regulations. These laws and regulations, which generally are designed to protect consumers and to prevent the misuse of personal information are complex, change frequently, and have tended to become more stringent over time.
These laws and regulations, which generally are designed to protect consumers and to prevent the misuse of personal information are complex, change frequently, and have tended to become more stringent over time. We have already incurred significant expenses in our endeavors to comply with these laws.
Furthermore, we may be required to obtain various industry or technical certifications under our contracts or otherwise to keep pace with our competitors. If we fail to achieve and maintain these key industry or technical certifications, our customers may stop doing business with us and we may not be able to win new business, which would negatively affect our revenue.
If we fail to achieve and maintain these key industry or technical certifications, our customers may stop doing business with us and we may not be able to win new business, which would negatively affect our revenue. 10 Issues in the development and use of artificial intelligence may result in reputational harm, liability, or other adverse consequences to our business.
If we are unable to raise additional capital when required or on acceptable terms, we may have to significantly delay, scale back or discontinue certain operations. Any of these events could significantly harm our business and prospects and could cause our stock price to decline. We do not currently intend to pay dividends on our common stock.
If we are unable to raise additional capital when required or on acceptable terms, we may have to significantly delay, scale back or discontinue certain operations.
Extreme weather events and natural disasters may disrupt our operations or those of our customers and suppliers. These events may become more frequent and more severe as a result of climate change, and the long-term impacts to the economy and our industry are unknown.
These events may become more frequent and more severe as a result of climate change, and the long-term impacts to the economy and our industry are unknown. While we maintain business continuity and disaster recovery plans, we cannot be certain that those plans will be effective.
In the absence of additional federal legislation or rulemaking, the FTC has increasingly used its existing authority, such as under Section 5 of the FTC Act, to bring legal action against organizations who are alleged to have violated consumers’ privacy rights or failed to maintain adequate security measures.
In the absence of additional federal legislation or rulemaking, federal administrative agencies such as the FTC and the Consumer Financial Protection Bureau (CFPB) have increasingly used their existing authority to bring legal action against organizations who are alleged to have violated consumers’ privacy rights or failed to maintain adequate security measures. 11 These U.S. federal and state laws and regulations, which can be enforced by government entities or, in some cases, private parties, are constantly evolving and can be subject to significant change.
These U.S. federal and state laws and regulations, which can be enforced by government entities or, in some cases, private parties, are constantly evolving and can be subject to significant change. Keeping our business in compliance with or bringing our business into compliance with new laws may be costly and may affect our revenue and/or harm our financial results.
Keeping our business in compliance with or bringing our business into compliance with new laws may be costly and may affect our revenue and/or harm our financial results.
Other states are actively considering privacy and security bills, and may pass laws, either similar or dissimilar to California’s, Virginia’s, Colorado’s, Connecticut’s, or Utah’s privacy laws in the future. Furthermore, the U.S. Congress is considering legislation and the FTC is considering rulemaking, each with respect to data privacy and security.
Furthermore, the U.S. Congress is considering legislation and several administrative agencies are considering or have proposed rulemaking, each with respect to data privacy and security. At this time, it is unclear whether Congress will pass a law or whether any administrative agencies will proceed with regulatory action.
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For example, the following state privacy laws have taken effect: (i) the California Privacy Rights Act (the “CPRA”), effective January 2023, with some provisions applying retroactively, amending the California Consumer Privacy Act (the “CCPA”); (ii) the Virginia Consumer Data Protection Act (the “VCDPA”), effective January 2023; (iii) the Colorado Privacy Act (the “CPA”), effective July 2023; (iv) the Connecticut Data Privacy Act (the “CTDPA”), effective July 2023; and (v) the Utah Consumer Privacy Act (the “UCPA”), effective December 2023.
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Furthermore, we may be required to obtain various industry or technical certifications under our contracts or otherwise to keep pace with our competitors.
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While we maintain various insurance policies that we believe provide us with suitable coverage and protection in the event of litigation or other legal proceedings, those policies may contain exclusions or limitations, resulting in some cases in us retaining all or a portion of the risk of loss.
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We use certain machine learning and artificial intelligence technologies in our business, and we are making continuing investments in this area, including ongoing deployment and improvement of existing machine learning and artificial intelligence technologies. These technologies are complex and continually evolving, and we face significant competition from other companies.
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We do not currently expect to pay cash dividends on our common stock and have not paid cash dividends on our common stock to date.
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Also, lawmakers have proposed laws and rulemaking related to the development and use of these technologies. Likewise, regulatory agencies, such as the Federal Trade Commission (FTC), have used their existing authority to bring legal action against organizations who are alleged to have deceived or harmed consumers through their usage of these technologies.
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Additionally, the SEC is considering enhancing and standardizing climate-related disclosure rules for publicly traded companies. This, in turn, may result in increased compliance costs and increased legal exposure. Any climate-related disclosures would likely be based on certain assumptions, estimates and third-party data, and our reports may not meet the expectations of regulators, investors, or other third parties.
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We may be required to comply with new laws and regulations, as well as develop additional policies and practices for using certain data within machine learning and artificial intelligence technologies, which may be costly and time consuming.
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If our environmental practices, reporting, and performance do not meet expectations, or are perceived as not meeting expectations, we may be subject to government investigations, lawsuits, or other legal actions. Our reputation and customer retention may also be negatively affected. 14 We depend, in part, on strategic alliances and joint ventures to grow our business.
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The introduction of machine learning and artificial intelligence technologies into new or existing products may result in increased risks, such as the risk of government scrutiny, lawsuits, security risks, or other issues that could adversely affect our business, our reputation, and/or our financial results. Also, artificial intelligence may create content that appears correct but is flawed or erroneous.
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If we complete an investment or acquisition, we may not realize the anticipated benefits from the transaction. 15 Our relationships with key customers may be materially diminished or terminated, which could adversely affect our business, financial condition, and results of operations.
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Any flaws or errors discovered in our products after commercial release could result in loss of revenue or delay in revenue recognition, or loss of customers, any of which could adversely affect our business and results of operations. In addition, we could face claims for product liability.
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Defending a lawsuit, regardless of its merit, is costly and may divert management’s attention. In addition, if our business liability insurance coverage is inadequate or future coverage is unavailable on acceptable terms or at all, our financial condition could be harmed.
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Our business is subject to regulation under the GLBA, the DPPA, the FTC Act, and various other federal, state, and local laws and regulations, as well as - when we provide services to government agencies - applicable government procurement regulations and associated contract clauses.
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There are approximately 20 states that have enacted some form of comprehensive data privacy legislation similar to the California Consumer Privacy Act and/or the Virginia Consumer Data Protection Act.
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Market competition, customer requirements, customer financial condition, and customer consolidation through mergers or acquisitions also could adversely affect our ability to continue or expand these relationships.
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The imposition of tariffs by the United States on foreign goods, tensions over the imposition of such tariffs, and (both actual and anticipated) retaliation from other countries may exasperate these issues.
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Environmental issues, including any future reporting obligations in connection with environmental issues, may adversely impact our business and operations. Extreme weather events and natural disasters may disrupt our operations or those of our customers and suppliers.
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Risks Related to Our Common Stock Our stock price has been and may continue to be volatile, and the value of an investment in our common stock may decline.
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The interests of these stockholders may not always coincide with the interests of other stockholders, and these stockholders may act in a manner that advances their interests and not necessarily those of other stockholders, and might affect the prevailing market price for our securities.
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Any of these events could significantly harm our business and prospects and could cause our stock price to decline. 19 There is no assurance that we will continue to declare or pay dividends on our common stock in the future.
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On December 3, 2024, we declared a special cash dividend on our common stock of $0.30 per share (the "Special Cash Dividend"), payable on or about February 14, 2025, to shareholders of record as of the close of business on January 31, 2025.
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However, there is no assurance that we will continue to declare or pay cash dividends in the future.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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However, the possibility of future cybersecurity incidents, as well as cybersecurity and technology risks more generally, could have a material adverse effect on the Company’s business, financial condition, results of operations, cash flows or reputation. See “Item 1A. Risk Factors – Cybersecurity and Technology Risks” for more information.
However, the possibility of future cybersecurity incidents, as well as cybersecurity and technology risks more generally, could have a material adverse effect on our business, financial condition, results of operations, cash flows or reputation. See “Item 1A. Risk Factors – Cybersecurity and Technology Risks” for more information.
Our employees participate in annual training, including insider threat awareness, simulated phishing exercises, and other awareness training. • Third-party risk management —We maintain a third-party risk management program that is designed to help identify, assess, manage, mitigate, and respond to risks associated with the Company’s suppliers and other third parties. 19 We regularly review our information security program and associated policies, making periodic updates as we deem necessary and appropriate in accordance with recognized best practices and standards.
Our employees participate in annual training, including insider threat awareness, simulated phishing exercises, and other awareness training. • Third-party risk management — We maintain a third-party risk management program that is designed to help identify, assess, manage, mitigate, and respond to risks associated with the Company’s suppliers and other third parties.
Our CIO also provides quarterly reports of our information security program, as well as any material cybersecurity risks, to the board of directors. The Company did not experience a material cybersecurity incident during the year ended December 31, 2023.
Our CIO also provides quarterly reports of our information security program, as well as any material cybersecurity risks, to the Board of Directors .
Governance Our information security program and cyber risk management program is managed by our Chief Information Officer (“CIO”) and a team of information security personnel reporting to the CIO. Our CIO brings over 30 years of experience in information technology and information security, working as an executive within data-driven companies for the last 20 years.
Dell brings over 30 years of experience in information technology and information security, working as an executive within data-driven companies for the last 20 years, including serving as CIO since our formation in August 2017 and continuing through our Spin-off from cogint. Mr.
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We regularly review our information security program and associated policies, making periodic updates as we deem necessary and appropriate in accordance with recognized best practices and standards. 20 Governance Our information security program and cyber risk management program is managed and overseen by Jeff Dell, our Chief Information Officer (“CIO”) and a team of information security personnel reporting to the CIO.
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Our CIO reports directly to the CEO and is responsible for the assessment and management of material risks for cybersecurity threats. Mr.
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Dell holds a Bachelor of Science in Business from Arizona State University and has earned GCIA, GCWN, GWAPT and CISSP certifications. For additional information regarding Mr. Dell’s business experience, see Part 1, Item 1 Business – Information About Our Executive Officers included in this Annual Report.
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We did not experience a material cybersecurity incident during the year ended December 31, 2024, which has materially affected or is reasonably likely to materially affect us, including our business strategy, results of operations, or financial condition.

Item 2. Properties

Properties — owned and leased real estate

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Our Seattle office is located at 1111 Third Avenue, Seattle, Washington 98101, where we lease 6,003 rentable square feet of office space in accordance with a 90-month lease agreement entered into in April 2017.
Our Seattle office is located at 1111 Third Avenue, Seattle, Washington 98101, where we lease 6,003 rentable square feet of office space in accordance with a 90-month lease agreement entered into in April 2017, which will expire in March 2025.
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On December 20, 2024, we entered into a new non-cancellable 80-month lease agreement for our new Seattle office space of 6,709 rentable square feet, located at 520 Pike Tower, Seattle, Washington 98101, with the lease term preliminarily set to commence on May 1, 2025.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Item 3. Legal Proceedings. The Company is not currently a party to any legal proceeding, investigation or claim which, in the opinion of management, is likely to have a material adverse effect on the business, financial condition, results of operations, or cash flows. Legal fees associated with such legal proceedings are expensed as incurred.
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Item 3. Legal Proceedings. Information with respect to certain legal proceedings is included in Note 13, “Commitments and contingencies,” included in “Notes to our Consolidated Financial Statements” contained in Part II, Item 8 of this 2024 Form 10-K, and is incorporated herein by reference. For additional discussion of certain risks associated with legal proceedings, see Item 1A, “Risk Factors” above.
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We review legal proceedings and claims on an ongoing basis and follow appropriate accounting guidance, including ASC 450, when making accrual and disclosure decisions.
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Item 4. Mine Safety Disclosures. Not Applicable. 21 PART II
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We establish accruals for those contingencies where the incurrence of a loss is probable and can be reasonably estimated, and we disclose the amount accrued and the amount of a reasonably possible loss in excess of the amount accrued, if such disclosure is necessary for our financial statements to not be misleading.
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To estimate whether a loss contingency should be accrued by a charge to income, we evaluate, among other factors, the degree of probability of an unfavorable outcome and the ability to make a reasonable estimate of the amount of the loss.
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We do not record liabilities when the likelihood that the liability has been incurred is probable, but the amount cannot be reasonably estimated. In addition to the foregoing, we may be involved in litigation from time to time in the ordinary course of business.
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We do not believe that the ultimate resolution of any such matters will have a material adverse effect on our business, financial condition, results of operations, or cash flows.
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However, the results of such matters cannot be predicted with certainty, and we cannot assure you that the ultimate resolution of any legal or administrative proceeding or dispute will not have a material adverse effect on our business, financial condition, results of operations, and cash flows. Item 4. Mine Safety Disclosures. Not Applicable. 20 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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IDI is a leading-edge, analytics and information solutions provider delivering actionable intelligence to the an expansive and diverse set of industries in support of use cases such as the verification and authentication of consumer identities, due diligence, prevention of fraud and abuse, legislative compliance, and debt recovery. idiCORE ™ is IDI's flagship product. idiCORE is a next-generation, investigative solution used to address a variety of organizational challenges, including, but not limited to, due diligence, risk mitigation, identity authentication, and regulatory compliance, by financial services companies, insurance companies, healthcare companies, law enforcement and government, identity verification platforms, collections, law firms, retail, telecommunication companies, corporate security, and investigative firms.
IDI is a leading-edge, analytics and information solutions provider delivering actionable intelligence to an expansive and diverse set of industries in support of use cases such as the verification and authentication of consumer identities, due diligence, prevention of fraud and abuse, legislative compliance, and debt recovery. idiCORE ™ is IDI's flagship product. idiCORE is a next-generation, investigative solution used to address a variety of organizational challenges, including, but not limited to, due diligence, risk mitigation, identity authentication, and regulatory compliance, by financial services companies, insurance companies, healthcare companies, law enforcement and government, identity verification platforms, collections, law firms, retail, telecommunication companies, corporate security, and investigative firms.
Adjusted EBITDA is a non-GAAP financial measure equal to net income (loss), the most directly comparable financial measure based on US GAAP, excluding interest income, net, income tax expense (benefit), depreciation and amortization, share-based compensation expense, litigation costs, and write-off of long-lived assets and others. We define adjusted EBITDA margin as adjusted EBITDA as a percentage of revenue.
Adjusted EBITDA is a non-GAAP financial measure equal to net income (loss), the most directly comparable financial measure based on US GAAP, excluding interest income, income tax (benefit) expense, depreciation and amortization, share-based compensation expense, litigation costs, and write-off of long-lived assets and others. We define adjusted EBITDA margin as adjusted EBITDA as a percentage of revenue.
You can identify forward-looking statements by the fact that these statements do not relate strictly to historical or current matters. Rather, forward-looking statements relate to anticipated or expected events, activities, trends or results as of the date they are made.
You can identify forward-looking statements by the fact that these statements do not relate strictly to historical or current matters. Rather, forward-looking statements relate to anticipated or expected events, activities, trends or results as of the date they are made.
Because forward-looking statements relate to matters that have not yet occurred, these statements are inherently subject to risks and uncertainties that could cause our actual results to differ materially from any future results expressed or implied by the forward-looking statements.
Because forward-looking statements relate to matters that have not yet occurred, these statements are inherently subject to risks and uncertainties that could cause our actual results to differ materially from any future results expressed or implied by the forward-looking statements.
There can be no assurance that we will be able to compete successfully in the future with current or new competitors. 23 Critical Accounting Policies and Estimates Management’s discussion and analysis of financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with US GAAP.
There can be no assurance that we will be able to compete successfully in the future with current or new competitors. Critical Accounting Policies and Estimates Management’s discussion and analysis of financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with US GAAP.
Our AI/ML-driven identity intelligence platform, CORE TM , is purpose-built for the enterprise, yet flexible enough for organizations of all sizes, bringing clarity to massive datasets by transforming data into intelligence. We drive workflow efficiency and enable organizations to make better data-driven decisions. Organizations are challenged by the structure, volume, and disparity of data.
Our AI/ML-driven identity intelligence platform, CORE TM , is purpose-built for the enterprise, yet flexible enough for organizations of all sizes, bringing clarity to massive datasets by transforming data into intelligence. We drive workflow efficiency and enable organizations to make better data-driven decisions. Organizations are challenged by the structure, volume, velocity, and disparity of data.
Any equity or debt financings, if available at all, may be on terms which are not favorable to us. 34 Off-Balance Sheet Arrangements We do not have any outstanding off-balance sheet guarantees, interest rate swap transactions or foreign currency forward contracts. In addition, we do not engage in trading activities involving non-exchange traded contracts.
Any equity or debt financings, if available at all, may be on terms which are not favorable to us. Off-Balance Sheet Arrangements We do not have any outstanding off-balance sheet guarantees, interest rate swap transactions or foreign currency forward contracts. In addition, we do not engage in trading activities involving non-exchange traded contracts.
The actual timing of recognition may vary due to factors outside of our control. We exclude variable consideration related entirely to wholly unsatisfied performance obligations and contracts and recognizes such variable consideration based upon the right to invoice the customer. 24 Sales commissions are incurred and recorded on an ongoing basis over the term of the customer relationship.
The actual timing of recognition may vary due to factors outside of our control. We exclude variable consideration related entirely to wholly unsatisfied performance obligations and contracts and recognizes such variable consideration based upon the right to invoice the customer. Sales commissions are incurred and recorded on an ongoing basis over the term of the customer relationship.
Based on our historical knowledge of the contracts contained in this portfolio and the similar nature and characteristics of the customers, we have concluded the financial statement effects are not materially different than if accounting for revenue on a contract by contract basis. Revenue is recognized over a period of time.
Based on our historical knowledge of the contracts contained in this portfolio and the similar nature and characteristics of the customers, we have concluded the financial statement effects are not materially different than if accounting for revenue on a contract by contract basis. 25 Revenue is recognized over a period of time.
We define a user of FOREWARN as a unique person that has a subscription to use the FOREWARN service as of the last day of the period. A unique person can only have one user account. We generate substantially all of our revenue from licensing our solutions.
We define a user of FOREWARN as a unique person that has a subscription to use the FOREWARN service as of the last day of the period. A unique person can only have one user account. 23 We generate substantially all of our revenue from licensing our solutions.
We employ a “land and expand” approach. Our sales model generally begins with a free trial followed by an initial purchase on a transactional basis or minimum-committed monthly spend.
We employ a “land and expand” approach. Our sales model generally begins with a trial followed by an initial purchase on a transactional basis or minimum-committed monthly spend.
The Stock Repurchase Program does not obligate the Company to repurchase any shares and it may be modified, suspended, or terminated at any time and for any reason at the discretion of the board of directors.
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.
Many factors could cause our actual activities or results to differ materially from the activities and results anticipated in forward-looking statements. These factors include those contained in Part I, “Item 1A. Risk Factors” of this 2023 Form 10-K. We do not undertake any obligation to update forward-looking statements, except as required by law.
Many factors could cause our actual activities or results to differ materially from the activities and results anticipated in forward-looking statements. These factors include those contained in Part I, “Item 1A. Risk Factors” of this 2024 Form 10-K. We do not undertake any obligation to update forward-looking statements, except as required by law.
We concluded that, due to our 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 the deferred tax assets as of December 31, 2023 is more likely than not. ASC 740 clarifies the accounting for uncertain tax positions.
We concluded that, due to our 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 the deferred tax assets as of December 31, 2024 and 2023 is more likely than not. 26 ASC 740 clarifies the accounting for uncertain tax positions.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This 2023 Form 10-K contains certain “forward-looking statements” within the meaning of the PSLRA, Section 27A of the Securities Act, and Section 21E of the Exchange Act. Such forward-looking statements contain information about our expectations, beliefs or intentions regarding our product development and commercialization efforts, business, financial condition, results of operations, strategies or prospects.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This 2024 Form 10-K contains certain “forward-looking statements” within the meaning of the PSLRA, Section 27A of the Securities Act, and Section 21E of the Exchange Act. Such forward-looking statements contain information about our expectations, beliefs or intentions regarding our product development and commercialization efforts, business, financial condition, results of operations, strategies or prospects.
The way we measure adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted earnings per share, adjusted gross profit, adjusted gross margin, and FCF may not be comparable to similarly titled measures presented by other companies, and may not be identical to corresponding measures used in our various agreements. 30 Quarterly Financial Data (unaudited) The following tables set forth the Company's unaudited quarterly consolidated statements of operations data and reconciliations of certain directly comparable US GAAP financial measures to non-GAAP financial measures, including adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted earnings per share, adjusted gross profit, adjusted gross margin, and FCF for each of the eight quarters in the two-year period ended December 31, 2023.
The way we measure adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted earnings per share, adjusted gross profit, adjusted gross margin, and FCF may not be comparable to similarly titled measures presented by other companies, and may not be identical to corresponding measures used in our various agreements. 31 Quarterly Financial Data (unaudited) The following tables set forth the Company's unaudited quarterly consolidated statements of operations data and reconciliations of certain directly comparable US GAAP financial measures to non-GAAP financial measures, including adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted earnings per share, adjusted gross profit, adjusted gross margin, and FCF for each of the eight quarters in the two-year period ended December 31, 2024.
The Company has prepared the quarterly unaudited consolidated statements of operations data on a basis consistent with the audited consolidated financial statements included elsewhere in this 2023 Form 10-K. In the opinion of management, the financial information in these tables reflects all adjustments, consisting only of normal recurring adjustments, which management considers necessary for a fair presentation of this data.
The Company has prepared the quarterly unaudited consolidated statements of operations data on a basis consistent with the audited consolidated financial statements included elsewhere in this 2024 Form 10-K. In the opinion of management, the financial information in these tables reflects all adjustments, consisting only of normal recurring adjustments, which management considers necessary for a fair presentation of this data.
Effect of Inflation We believe the persistent inflationary pressure throughout 2023 and 2022 has contributed to deteriorating macroeconomic conditions and increased recession fears, causing businesses to slow their spending, which have resulted in, and may continue to result, in fluctuations in volumes, pricing and operating margins for our services.
Effect of Inflation We believe the persistent inflationary pressure throughout 2024 and 2023 has contributed to deteriorating macroeconomic conditions and increased recession fears, causing businesses to slow their spending, which have resulted in, and may continue to result, in fluctuations in volumes, pricing, and operating margins for our services.
This 2023 Form 10-K contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the “PSLRA”), Section 27A of the Securities Act, and Section 21E of the Exchange Act, about our expectations, beliefs, or intentions regarding our business, financial condition, results of operations, strategies, or prospects.
This 2024 Form 10-K contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the “PSLRA”), Section 27A of the Securities Act, and Section 21E of the Exchange Act, about our expectations, beliefs, or intentions regarding our business, financial condition, results of operations, strategies, or prospects.
This information should be read in conjunction with the audited consolidated financial statements and related notes included elsewhere in this 2023 Form 10-K. The results of historical periods are not necessarily indicative of the results for any future period.
This information should be read in conjunction with the audited consolidated financial statements and related notes included elsewhere in this 2024 Form 10-K. The results of historical periods are not necessarily indicative of the results for any future period.
Our solutions enable the real-time identification and location of people, businesses, assets, and their interrelationships. These solutions are used for purposes including risk mitigation, due diligence, fraud detection and prevention, regulatory compliance, and customer acquisition.
Our solutions enable the real-time identification and location of people, businesses, assets, and their interrelationships. These solutions are used for purposes including identity verification, risk mitigation, due diligence, fraud detection and prevention, regulatory compliance, and customer acquisition.
These costs are recorded in sales and marketing expenses. In addition, we elected the practical expedient to not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed.
These costs are recorded in sales and marketing expenses. In addition, we elected the practical expedient to not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed.
The increase in depreciation and amortization for the year ended December 31, 2023 resulted primarily from the amortization of software developed for internal use that became ready for its intended use after December 31, 2022. Interest income, net .
The increase in depreciation and amortization for the year ended December 31, 2024 resulted primarily from the amortization of software developed for internal use that became ready for its intended use after December 31, 2023. Interest income, net .
We did not record a goodwill impairment loss during the years ended December 31, 2023 and 2022, and as of December 31, 2023, there was no accumulated goodwill impairment loss.
We did not record a goodwill impairment loss during the years ended December 31, 2024 and 2023, and as of December 31, 2024, there was no accumulated goodwill impairment loss.
In relation to the deferred revenue balance as of December 31, 2022, $0.7 million was recognized into revenue during the year ended December 31, 2023.
In relation to the deferred revenue balance as of December 31, 2023, $0.7 million was recognized into revenue during the year ended December 31, 2024.
(2) The tax effect of adjustments is calculated using the expected federal and state statutory tax rate. The expected federal and state income tax rate was approximately 25.75% for the three and twelve months ended December 31, 2023.
(2) The tax effect of adjustments is calculated using the expected federal and state statutory tax rate. The expected federal and state income tax rate was approximately 26.00% for the three and twelve months ended December 31, 2024, and 25.75% for the three and twelve months ended December 31, 2023.
Other cost of revenue items include expenses related to third-party infrastructure fees. As the construct of our data costs is primarily a flat-fee, unlimited usage model, the cost of revenue as a percentage of revenue decreased to 22% for the year ended December 31, 2023 from 23% for the year ended December 31, 2022.
Other cost of revenue items include expenses related to third-party infrastructure fees. As the construct of our data costs is primarily a flat-fee, unlimited usage model, the cost of revenue as a percentage of revenue decreased to 19% for the year ended December 31, 2024 from 22% for the year ended December 31, 2023.
We continue to enhance the breadth and depth of our data through the addition and expansion of relationships with key data suppliers, including our largest data supplier, which accounted for 49% and 48% of our total data acquisition costs for the years ended December 31, 2023 and 2022, respectively.
We continue to enhance the breadth and depth of our data through the addition and expansion of relationships with key data suppliers, including our largest data supplier, which accounted for 45% and 48% of our total data acquisition costs for the years ended December 31, 2024 and 2023, respectively.
In accordance with ASC 350-40, “Software—internal use software,” we capitalize eligible costs, including salaries and staff benefits, share-based compensation, travel expenses incurred by relevant employees, and other relevant costs of developing internal-use software that are incurred in the application development stage when developing or obtaining software for internal use.
In accordance with ASC 350-40, “Software—internal use software,” we capitalize eligible costs, including personnel-related expenses, share-based compensation, and travel expenses incurred by relevant employees, and other relevant costs of developing internal-use software that are incurred in the application development stage when developing or obtaining software for internal use.
Cash flows used in investing activities . For the years ended December 31, 2023 and 2022, net cash used in investing activities was $9.1 million and $8.8 million, respectively, primarily as a result of capitalized costs included in intangible assets. Cash flows used in financing activities .
Cash flows used in investing activities . For the years ended December 31, 2024 and 2023, net cash used in investing activities was $9.6 million and $9.1 million, respectively, primarily as a result of capitalized costs included in intangible assets. Cash flows used in financing activities .
If a customer pays consideration before we transfer services to the customer, those amounts are classified as deferred revenue. As of December 31, 2023 and 2022, the balance of deferred revenue was $0.7 million, all of which is expected to be realized in the next 12 months.
If a customer pays consideration before we transfer services to the customer, those amounts are classified as deferred revenue. As of December 31, 2024 and 2023, the balance of deferred revenue was $0.7 million, all of which is expected to be realized in the next 12 months.
Our platform and applications transform the way our customers interact with information, presenting connections and relevance of information otherwise unattainable, which drives actionable insights and better outcomes. Leveraging cloud-native proprietary technology and applying machine learning and advanced analytical capabilities, CORE provides essential solutions to public and private sector organizations through intuitive, easy-to-use analytical interfaces.
Our platform and applications provide real-time analytics, transforming the way our customers interact with information by presenting connections and relevance of information otherwise unattainable, which drives actionable insights and better outcomes. Leveraging cloud-native proprietary technology and applying machine learning and advanced analytical capabilities, CORE provides essential solutions to public and private sector organizations through intuitive, easy-to-use analytical interfaces.
Interest income increased $0.9 million or 280% to $1.3 million for the year ended December 31, 2023 from $0.4 million for the year ended December 31, 2022. This was primarily due to interest income earned on investments in certain money market funds. Income before income taxes .
Interest income increased $0.1 million or 5% to $1.4 million for the year ended December 31, 2024 from $1.3 million for the year ended December 31, 2023. This was primarily due to interest income earned on investments in certain money market funds. Income before income taxes .
For the years ended December 31, 2023 and 2022, 79% and 75% of total revenue was attributable to customers with pricing contracts, respectively, versus 21% and 25% attributable to transactional customers, respectively. Pricing contracts are generally annual contracts or longer, with auto renewal.
For the years ended December 31, 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. Pricing contracts are generally annual contracts or longer, with auto renewal.
For the year ended December 31, 2022, net cash provided by operating activities was $12.5 million, primarily the result of the net income of $0.6 million, adjusted for certain non-cash items (consisting of share-based compensation expense, depreciation and amortization, write-off of long-lived assets, provision for bad debts, noncash lease expenses, and deferred income tax expense) totaling $13.2 million, and the cash used as a result of changes in assets and liabilities of $1.3 million, primarily the result of the increase in accounts receivable and other noncurrent assets, and the decrease in operating lease liabilities, which was offset by the increase in accounts payable and accrued expenses and other current liabilities.
For the year ended December 31, 2024, net cash provided by operating activities was $24.0 million, primarily the result of the net income of $7.0 million, adjusted for certain non-cash items (consisting of share-based compensation expense, depreciation and amortization, write-off of long-lived assets, provision for bad debts, noncash lease expenses, and deferred income tax expense (benefit)) totaling $18.5 million, and the cash used as a result of changes in assets and liabilities of $1.5 million, primarily the result of the increase in accounts receivable, prepaid expenses and other current assets, and other noncurrent assets, and the decrease in operating lease liabilities, which was partially offset by the increase in accounts payable and accrued expenses and other current liabilities.
FOREWARN is an app-based solution currently tailored for the real estate industry, providing instant knowledge prior to face-to-face engagement with a consumer, helping professionals identify and mitigate risk. As of December 31, 2023 and 2022, IDI had 7,875 and 7,021 billable customers and FOREWARN had 185,380 and 116,960 users, respectively.
FOREWARN is an app-based solution currently tailored for the real estate industry, providing instant knowledge prior to face-to-face engagement with a consumer, helping professionals identify and mitigate risk. As of December 31, 2024 and 2023, IDI had 8,926 and 7,875 billable customers and FOREWARN had 303,418 and 185,380 users, respectively.
Shares of common stock withheld as payment of withholding taxes in connection with the vesting of equity awards are also treated as common stock repurchases. Those withheld shares of common stock are not required to be disclosed under Item 703 of Regulation S-K and accordingly are excluded from the amounts in the table above.
Shares of common stock withheld as payment of withholding taxes in connection with the vesting of equity awards are also treated as common stock repurchases. Those withheld shares of common stock are not required to be disclosed under Item 703 of Regulation S-K and accordingly are excluded from the amounts mentioned above. It em 6. [Reserved]. 22 It em 7.
For the year ended December 31, 2023, net cash used in financing activities was $5.7 million, mainly the result of $2.0 million in taxes paid related to the net share settlement of vesting of RSUs, and $3.7 million paid in aggregate for the repurchase of common stock pursuant to a stock repurchase program that the board of directors authorized on May 2, 2022 (the "Stock Repurchase Program"), authorizing the repurchase of up to $5.0 million of our common stock.
For the year ended December 31, 2024, net cash used in financing activities was $9.9 million, resulting from the taxes paid related to the net share settlement of vesting of RSUs of $4.1 million, and the result of $5.9 million paid in aggregate for the repurchase of common stock pursuant to a stock repurchase program that the Board of Directors authorized on May 2, 2022 (the "Stock Repurchase Program"), authorizing the repurchase of up to $5.0 million of our common stock.
As of December 31, 2023, $15.8 million 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 $8.7 million of revenue will be recognized in 2024, $4.6 million in 2025, $1.7 million in 2026, and $0.8 million in 2027.
As of December 31, 2024, $22.3 million 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 $11.3 million of revenue will be recognized in 2025, $6.5 million in 2026, $3.8 million in 2027, $0.6 million in 2028, and $0.1 million in 2029.
Our IDI billable customer base grew from 7,021 customers as of December 31, 2022 to 7,875 customers as of December 31, 2023, and our FOREWARN user base grew from 116,960 users to 185,380 users during that same period. Revenue from new customers represents the total monthly revenue generated from new customers in a given period.
Our IDI billable customer base grew from 7,875 customers as of December 31, 2023 to 8,926 customers as of December 31, 2024, and our FOREWARN user base grew from 185,380 users to 303,418 users during that same period. Revenue from new customers represents the total monthly revenue generated from new customers in a given period.
For the year ended December 31, 2022, net cash used in financing activities was $6.1 million, mainly the result of $5.2 million in taxes paid related to the net share settlement of vesting of RSUs during the year and $0.9 million paid in aggregate for the repurchase of common stock pursuant to the Stock Repurchase Program.
For the year ended December 31, 2023, net cash used in financing activities was $5.7 million, the result of $2.0 million in taxes paid related to the net share settlement of vesting of RSUs, and $3.7 million paid in aggregate for the repurchase of common stock pursuant to the Stock Repurchase Program.
For the years ended December 31, 2023 and 2022, our general and administrative expenses consisted primarily of employee salaries and benefits of $11.8 million and $11.8 million, share-based compensation expense of $4.9 million and $5.2 million, and professional fees of $3.2 million and $3.7 million, respectively. Depreciation and amortization .
For the years ended December 31, 2024 and 2023, our general and administrative expenses consisted primarily of personnel-related expenses of $13.8 million and $11.8 million, share-based compensation expense of $5.3 million and $4.9 million, and professional fees of $4.2 million and $3.2 million, respectively. Depreciation and amortization .
Share-based compensation We account for share-based compensation to employees in accordance with ASC 718, “Compensation—Stock Compensation.” Under ASC 718, we measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award and, for those awards subject only to service condition, recognizes the costs on a straight-line basis over the period the employee is required to provide service in exchange for the award, which generally is the vesting period.
We did not record an impairment loss of long-lived assets during the years ended December 31, 2024 and 2023. 27 Share-based compensation We account for share-based compensation to employees in accordance with ASC 718, “Compensation—Stock Compensation.” Under ASC 718, we measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award and, for those awards subject only to service condition, recognizes the costs on a straight-line basis over the period the employee is required to provide service in exchange for the award, which generally is the vesting period.
It em 6. [Reserved]. 21 It em 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. You should read the following discussion in conjunction with our consolidated financial statements and related notes included in this 2023 Form 10-K.
Management’s Discussion and Analysis of Financial Condition and Results of Operations. You should read the following discussion in conjunction with our consolidated financial statements and related notes included in this 2024 Form 10-K.
Cost of revenue increased $0.9 million or 7% to $13.1 million for the year ended December 31, 2023 from $12.2 million for the year ended December 31, 2022. Our cost of revenue primarily includes data acquisition costs.
Cost of revenue (exclusive of depreciation and amortization) increased $0.9 million or 7% to $14.0 million for the year ended December 31, 2024 from $13.1 million for the year ended December 31, 2023. Our cost of revenue primarily includes data acquisition costs.
Depreciation and amortization expenses increased $1.7 million or 25% to $8.4 million for the year ended December 31, 2023 from $6.7 million for the year ended December 31, 2022.
Depreciation and amortization expenses increased $1.2 million or 14% to $9.6 million for the year ended December 31, 2024 from $8.4 million for the year ended December 31, 2023.
Summary of significant accounting policies - (r) Recently issued accounting standards. ” 26 Fourth Quarter Financial Results For the three months ended December 31, 2023 as compared to the three months ended December 31, 2022: • Total revenue increased 15% to $15.1 million. • Gross profit increased 16% to $9.6 million.
Summary of significant accounting policies - (r) Recently issued accounting standards. ” Fourth Quarter Financial Results For the three months ended December 31, 2024 as compared to the three months ended December 31, 2023: • Total revenue increased 30% to $19.6 million. • Gross profit increased 43% to $13.7 million.
Sales and marketing expenses increased $3.0 million or 28% to $13.8 million for the year ended December 31, 2023 from $10.8 million for the year ended December 31, 2022. Sales and marketing expenses consist of salaries and benefits, advertising and marketing, travel expenses, and share-based compensation expense, incurred by our sales team, and provision for bad debts.
Sales and marketing expenses increased $4.0 million or 29% to $17.8 million for the year ended December 31, 2024 from $13.8 million for the year ended December 31, 2023. Sales and marketing expenses consist of personnel-related expenses, advertising, marketing and agency expenses, travel expenses, and share-based compensation expense, incurred by our sales team, and provision for bad debts.
During the year ended December 31, 2023, the Company released the valuation allowance as the Company concluded that the realization of the deferred tax assets as of December 31, 2023 is more likely than not. See Note 8, “Income Taxes,” included in “Notes to Consolidated Financial Statements.” Net income .
Beginning from the third quarter of 2023, the Company released the valuation allowance previously recorded against its deferred tax assets as the Company concluded that the realization of the deferred tax assets is more likely than not. See Note 8, “Income Taxes,” included in “Notes to Consolidated Financial Statements.” Net income .
Revenue increased $6.9 million or 13% to $60.2 million for the year ended December 31, 2023 from $53.3 million for the year ended December 31, 2022. Revenue from new customers increased $0.5 million or 11%, base revenue from existing customers increased $6.1 million or 15%, and growth revenue from existing customers increased $0.3 million or 4%.
Revenue increased $15.0 million or 25% to $75.2 million for the year ended December 31, 2024 from $60.2 million for the year ended December 31, 2023. Revenue from new customers increased $1.0 million or 18%, base revenue from existing customers increased $11.6 million or 25%, and growth revenue from existing customers increased $2.4 million or 33%.
For the year ended December 31, 2023, net cash provided by operating activities was $15.1 million, primarily the result of the net income of $13.5 million, adjusted for certain non-cash items (consisting of share-based compensation expense, depreciation and amortization, write-off of long-lived assets, provision for bad debts, noncash lease expenses, and deferred income tax benefit) totaling $5.6 million, and the cash used as a result of changes in assets and liabilities of $4.1 million, primarily the result of the increase in accounts receivable, and prepaid expenses and other current assets, and the decrease in accounts payable and operating lease liabilities.
For the year ended December 31, 2023, net cash provided by operating activities was $15.1 million, primarily the result of the net income of $13.5 million, adjusted for certain non-cash items, as mentioned above, totaling $5.6 million, and the cash used as a result of changes in assets and liabilities of $4.1 million, primarily the result of the increase in accounts receivable and prepaid expenses and other current assets, and the decrease in accounts payable and operating lease liabilities.
These factors include the following: • Our products and services are highly technical and if they contain undetected errors, our business could be adversely affected and we may have to defend lawsuits or pay damages in connection with any alleged or actual failure of our products and services. • If we fail to respond to rapid technological changes in the data and analytics sector, we may lose customers and/or our products and/or services may become obsolete. • Because our networks and information technology systems are critical to our success, if unauthorized persons access our systems or our systems otherwise cease to function properly, our operations could be adversely affected and we could lose revenue or proprietary information, all of which could materially adversely affect our business. • Data security and integrity are critically important to our business, and breaches of security, unauthorized access to or disclosure of confidential information, disruption, including distributed denial of service (“DDoS”) attacks or the perception that confidential information is not secure, could result in a material loss of business, substantial legal liability or significant harm to our reputation. • If we fail to maintain and improve our systems, our certifications, our technology, and our interfaces with data and customers, demand for our services could be adversely affected. • Our business is subject to various governmental regulations, laws, and orders, compliance with which may cause us to incur significant expenses or reduce the availability or effectiveness of our solutions, and the failure to comply with which could subject us to civil or criminal penalties or other liabilities. • The outcome of litigation, inquiries, investigations, examinations, or other legal proceedings in which we are involved, in which we may become involved, or in which our customers or competitors are involved, could subject us to significant monetary damages or restrictions on our ability to do business. • Our bylaws designate the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain actions, including derivative actions, which could limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with the Company and its directors, officers, other employees, or the Company's stockholders, and may discourage lawsuits with respect to such claims. • Our stock price has been and may continue to be volatile, and the value of an investment in our common stock may decline. • Future issuances of shares of our common stock in connection with acquisitions or pursuant to our stock incentive plan could have a dilutive effect on your investment. 35 • The concentration of our stock ownership may limit individual stockholder ability to influence corporate matters. • We are no longer an “emerging growth company,” however, we are still a “smaller reporting company,” and the reduced disclosure requirements applicable to smaller reporting companies may make our common stock less attractive to investors. • We expect that we may need additional capital in the future; however, such capital may not be available to us on reasonable terms, if at all, when or as we require additional funding.
These factors include the following: • Our products and services are highly technical and if they contain undetected errors, our business could be adversely affected and we may have to defend lawsuits or pay damages in connection with any alleged or actual failure of our products and services. • If we fail to respond to rapid technological changes in the data and analytics sector, we may lose customers and/or our products and/or services may become obsolete. • Because our networks and information technology systems are critical to our success, if unauthorized persons access our systems or our systems otherwise cease to function properly, our operations could be adversely affected and we could lose revenue or proprietary information, all of which could materially adversely affect our business. • Data security and integrity are critically important to our business, and breaches of security, unauthorized access to or disclosure of confidential information, disruption, including distributed denial of service (“DDoS”) attacks or the perception that confidential information is not secure, could result in a material loss of business, substantial legal liability or significant harm to our reputation. • If we fail to maintain and improve our systems, our certifications, our technology, and our interfaces with data and customers, demand for our services could be adversely affected. • Issues in the development and use of artificial intelligence may result in reputational harm, liability, or other adverse consequences to our business. • Our business is subject to various governmental regulations, laws, and orders, compliance with which may cause us to incur significant expenses or reduce the availability or effectiveness of our solutions, and the failure to comply with which could subject us to civil or criminal penalties or other liabilities. • The outcome of litigation, inquiries, investigations, examinations, or other legal proceedings in which we are involved, in which we may become involved, or in which our customers or competitors are involved, could subject us to significant monetary damages or restrictions on our ability to do business. 36 • Our bylaws designate the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain actions, including derivative actions, which could limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with the Company and its directors, officers, other employees, or the Company's stockholders, and may discourage lawsuits with respect to such claims. • Our future operating results remain uncertain. • We depend, in part, on strategic alliances and joint ventures to grow our business.
We continuously engage with our customers and evaluate their usage of our solutions throughout their life cycle, to maximize utilization of our solutions and, hence, their productivity.
We endeavor to understand our customers’ needs at the moment of first engagement. We continuously engage with our customers and evaluate their usage of our solutions throughout their life cycle, to maximize utilization of our solutions and, hence, their productivity.
The increase during the year ended December 31, 2023 was primarily attributable to an increase of $1.4 million in salaries and benefits and sales commissions, $0.9 million in provision for bad debts, $0.3 million in advertising and marketing, and $0.2 million in share-based compensation expense. General and administrative expenses .
The increase during the year ended December 31, 2024 was primarily attributable to an increase of $4.1 million in personnel-related expenses, $0.3 million in advertising, marketing and agency expenses, and $0.2 million in share-based compensation expense, which was partially offset by the decrease of $0.7 million in provision for bad debts. General and administrative expenses .
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 December 19, 2023, the board of directors authorized the repurchase of an additional $5.0 million of the Company's common stock (the "Stock Repurchase Program").
Repurchases of Equity Securities 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, and subsequently on December 19, 2023 and March 28, 2024, the Board of Directors authorized the repurchase of an additional $5.0 million each, bringing the total authorization to $15.0 million (the "Stock Repurchase Program").
As of December 31, 2023, we had a total shareholders’ equity balance of $86.1 million. As of December 31, 2023, we had cash and cash equivalents of $32.0 million.
As of December 31, 2024, we had a total shareholders’ equity balance of $86.6 million. As of December 31, 2024, we had cash and cash equivalents of $36.5 million.
An entity should recognize an impairment charge for the amount by which the carrying amount of a reporting unit exceeds its fair value up to the amount of goodwill allocated to that reporting unit. 25 On October 1, 2023 and 2022, we performed qualitative assessments on the reporting unit and, based on this assessment, no events have occurred to indicate that it is more likely than not that the fair value of the reporting unit is less than its carry amount.
On October 1, 2024 and 2023, we performed qualitative assessments on the reporting unit and, based on this assessment, no events have occurred to indicate that it is more likely than not that the fair value of the reporting unit is less than its carry amount.
As of December 31, 2023, we had material commitments under certain data licensing agreements of $19.8 million. We anticipate funding our operations using available cash and cash flow generated from operations within the next twelve months. We reported net income of $13.5 million and $0.6 million for the years ended December 31, 2023 and 2022, respectively.
As of December 31, 2024, we had material commitments under certain data licensing agreements of $13.7 million. We anticipate funding our operations using available cash and cash flow generated from operations within the next twelve months.
FCF is calculated by using net cash provided by operating activities, less purchase of property and equipment and capitalized costs included in intangible assets. 29 Adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted earnings per share, adjusted gross profit, adjusted gross margin, and FCF are not intended to be performance measures that should be regarded as an alternative to, or more meaningful than, financial measures presented in accordance with US GAAP.
Adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted earnings per share, adjusted gross profit, adjusted gross margin, and FCF are not intended to be performance measures that should be regarded as an alternative to, or more meaningful than, financial measures presented in accordance with US GAAP.
Income before income taxes increased $3.1 million or 439% to $3.8 million for the year ended December 31, 2023 from $0.7 million for the year ended December 31, 2022.
Income before income taxes increased $5.5 million or 143% to $9.3 million for the year ended December 31, 2024 from $3.8 million for the year ended December 31, 2023.
Subsequently on December 19, 2023, the board of directors authorized the repurchase of an additional $5.0 million of our common stock.
Subsequently on each of December 19, 2023 and March 28, 2024, the Board of Directors approved the repurchases of an additional $5.0 million of our common stock under the Stock Repurchase Program.
Net income was $13.5 million for the year ended December 31, 2023 compared to $0.6 million for the year ended December 31, 2022, as a result of the foregoing.
Net income was $7.0 million for the year ended December 31, 2024 compared to $13.5 million (inclusive of a one-time deferred income tax benefit of $10.3 million) for the year ended December 31, 2023, as a result of the foregoing.
We define FCF as net cash provided by operating activities reduced by purchase of property and equipment and capitalized costs included in intangible assets. 27 The following is a reconciliation of net income (loss), the most directly comparable US GAAP financial measure, to adjusted EBITDA: Three Months Ended December 31, Year Ended December 31, (Dollars in thousands) 2023 2022 2023 2022 Net income (loss) $ (1,070 ) $ (1,544 ) $ 13,529 $ 616 Interest income, net (387 ) (225 ) (1,334 ) (351 ) Income tax expense (benefit) 562 (148 ) (9,691 ) 96 Depreciation and amortization 2,211 1,815 8,352 6,675 Share-based compensation expense 1,328 1,439 5,386 5,505 Litigation costs - 4 49 132 Write-off of long-lived assets and others 19 171 77 178 Adjusted EBITDA $ 2,663 $ 1,512 $ 16,368 $ 12,851 Revenue $ 15,061 $ 13,069 $ 60,204 $ 53,318 Net income (loss) margin (7 %) (12 %) 22 % 1 % Adjusted EBITDA margin 18 % 12 % 27 % 24 % The following is a reconciliation of net income (loss), the most directly comparable US GAAP financial measure, to adjusted net income: Three Months Ended December 31, Year Ended December 31, (Dollars in thousands, except share data) 2023 2022 2023 2022 Net income (loss) $ (1,070 ) $ (1,544 ) $ 13,529 $ 616 Share-based compensation expense 1,328 1,439 5,386 5,505 Amortization of share-based compensation capitalized in intangible assets 263 210 969 766 Discrete tax items (1) - - (10,272 ) - Tax effect of adjustments (2) (251 ) - (1,526 ) - Adjusted net income $ 270 $ 105 $ 8,086 $ 6,887 Earnings (loss) per share: Basic $ (0.08 ) $ (0.11 ) $ 0.97 $ 0.04 Diluted $ (0.08 ) $ (0.11 ) $ 0.96 $ 0.04 Adjusted earnings per share: Basic $ 0.02 $ 0.01 $ 0.58 $ 0.50 Diluted $ 0.02 $ 0.01 $ 0.57 $ 0.49 Weighted average shares outstanding: Basic 13,985,426 13,964,010 13,974,125 13,759,296 Diluted (3) 14,307,797 14,205,633 14,134,021 14,107,144 (1) During the three months ended September 30, 2023, $10.3 million of income tax benefit was recognized as a result of the release of the valuation allowance previously recorded on our deferred tax asset and cumulative research and development tax credit, which were excluded to calculate the adjusted net income.
The following is a reconciliation of net income (loss), the most directly comparable US GAAP financial measure, to adjusted EBITDA: Three Months Ended December 31, Year Ended December 31, (Dollars in thousands) 2024 2023 2024 2023 Net income (loss) $ 863 $ (1,070 ) $ 7,003 $ 13,529 Interest income (368 ) (387 ) (1,400 ) (1,334 ) Income tax (benefit) expense (124 ) 562 2,317 (9,691 ) Depreciation and amortization 2,481 2,211 9,562 8,352 Share-based compensation expense 1,496 1,328 5,948 5,386 Litigation costs 117 - 124 49 Write-off of long-lived assets and others 3 19 92 77 Adjusted EBITDA $ 4,468 $ 2,663 $ 23,646 $ 16,368 Revenue $ 19,565 $ 15,061 $ 75,189 $ 60,204 Net income (loss) margin 4 % (7 %) 9 % 22 % Adjusted EBITDA margin 23 % 18 % 31 % 27 % 29 The following is a reconciliation of net income (loss), the most directly comparable US GAAP financial measure, to adjusted net income: Three Months Ended December 31, Year Ended December 31, (Dollars in thousands, except share data) 2024 2023 2024 2023 Net income (loss) $ 863 $ (1,070 ) $ 7,003 $ 13,529 Share-based compensation expense 1,496 1,328 5,948 5,386 Amortization of share-based compensation capitalized in intangible assets 299 263 1,152 969 Discrete tax items (1) - - - (10,272 ) Tax effect of adjustments (2) (1,336 ) (251 ) (2,587 ) (1,526 ) Adjusted net income $ 1,322 $ 270 $ 11,516 $ 8,086 Earnings per share: Basic $ 0.06 $ (0.08 ) $ 0.51 $ 0.97 Diluted $ 0.06 $ (0.08 ) $ 0.50 $ 0.96 Adjusted earnings per share: Basic $ 0.10 $ 0.02 $ 0.83 $ 0.58 Diluted $ 0.09 $ 0.02 $ 0.82 $ 0.57 Weighted average shares outstanding: Basic 13,900,091 13,985,426 13,864,797 13,974,125 Diluted (3) 14,366,545 14,307,797 14,125,825 14,134,021 (1) During the three months ended September 30, 2023, a one-time income tax benefit of $10.3 million was recognized as a result of the release of the valuation allowance previously recorded on our deferred tax asset and cumulative research and development tax credit, which were excluded to calculate the adjusted net income.
When these industries or the broader financial markets experience a downturn, demand for our services and revenue may be adversely affected. • We could lose our access to data sources which could prevent us from providing our services. • We must adequately protect our intellectual property in order to prevent loss of valuable proprietary information. • We face intense competition from both start-up and established companies that may have significant advantages over us and our products. • There may be further consolidation in our end-customer markets, which may adversely affect our revenue. • To the extent the availability of free or relatively inexpensive consumer and/or business information increases, the demand for some of our services may decrease. • If our newer products do not achieve market acceptance, revenue growth may suffer. • Our products and services can have long sales and implementation cycles, which may result in substantial expenses before realizing any associated revenue. • If our outside service providers and key vendors are not able to or do not fulfill their service obligations, our operations could be disrupted and our operating results could be harmed. • Consolidation in the data and analytics sector may limit market acceptance of our products and services. • We may incur substantial expenses defending against claims of infringement. 36 It em 7A.
When these industries or the broader financial markets experience a downturn, demand for our services and revenue may be adversely affected. • We could lose our access to data sources which could prevent us from providing our services. • We must adequately protect our intellectual property in order to prevent loss of valuable proprietary information. • We face intense competition from both start-up and established companies that may have significant advantages over us and our products. • There may be further consolidation in our end-customer markets, which may adversely affect our revenue. • To the extent the availability of free or relatively inexpensive consumer and/or business information increases, the demand for some of our services may decrease. • If our newer products do not achieve market acceptance, revenue growth may suffer. • Our products and services can have long sales and implementation cycles, which may result in substantial expenses before realizing any associated revenue. • If our outside service providers and key vendors are not able to or do not fulfill their service obligations, our operations could be disrupted and our operating results could be harmed. • Consolidation in the data and analytics sector may limit market acceptance of our products and services. • We may incur substantial expenses defending against claims of infringement. • Environmental issues, including any future reporting obligations in connection with environmental issues, may adversely impact our business and operations. • Our stock price has been and may continue to be volatile, and the value of an investment in our common stock may decline. • Future issuances of shares of our common stock in connection with acquisitions or pursuant to our stock incentive plan could have a dilutive effect on your investment. • The concentration of our stock ownership may limit individual stockholder ability to influence corporate matters. • We are no longer an “emerging growth company,” however, we are still a “smaller reporting company,” and the reduced disclosure requirements applicable to smaller reporting companies may make our common stock less attractive to investors. 37 • We expect that we may need additional capital in the future; however, such capital may not be available to us on reasonable terms, if at all, when or as we require additional funding.
The increase was primarily attributable to the increase in revenue, decrease in our cost of revenue as a percentage of revenue, and decrease in professional fees, which was partially offset by the increase in employee salaries and benefits and sales commissions of $1.4 million, depreciation and amortization of $1.7 million, and $0.9 million in provision for bad debts. 33 Income taxes .
The increase was primarily attributable to the increase in revenue, decrease in our cost of revenue as a percentage of revenue, and decrease in provision for bad debts of $0.7 million, which was partially offset by the increase in personnel-related expenses of $6.1 million, share-based compensation expense of $0.6 million, professional fees of $1.0 million, and depreciation and amortization of $1.2 million. 34 Income tax expense (benefit) .
Based on projections of growth in revenue and operating results in the next twelve months, and the available cash and cash equivalents held by us, we believe that we will have sufficient cash resources to finance our operations and expected capital expenditures for the next twelve months.
Based on projections of growth in revenue and operating results in the next twelve months, and the available cash and cash equivalents held by us, we believe that we will have sufficient cash resources to finance our operations and expected capital expenditures for the next twelve months. 35 Subject to revenue growth and our ability to generate positive cash flow, we may have to raise capital through the issuance of additional equity and/or debt, which, if we are able to obtain, could have the effect of diluting stockholders.
In some arrangements, a right to consideration for our performance under the customer contract may occur before invoicing to the customer. Our revenue arrangements do not contain significant financing components.
In some arrangements, a right to consideration for our performance under the customer contract may occur before invoicing to the customer, resulting in an unbilled accounts receivable.
General and administrative expenses decreased $0.8 million or 3% to $22.4 million for the year ended December 31, 2023 from $23.2 million for the year ended December 31, 2022.
General and administrative expenses increased $3.5 million or 15% to $25.9 million for the year ended December 31, 2024 from $22.4 million for the year ended December 31, 2023.
(3) For the three months ended December 31, 2023 and 2022, diluted weighted average shares outstanding for adjusted diluted earnings per share are calculated by the inclusion of unvested RSUs, which were not included in US GAAP diluted weighted average shares outstanding due to the Company's net loss position for such periods. 28 The following is a reconciliation of gross profit, the most directly comparable US GAAP financial measure, to adjusted gross profit: Three Months Ended December 31, Year Ended December 31, (Dollars in thousands) 2023 2022 2023 2022 Revenue $ 15,061 $ 13,069 $ 60,204 $ 53,318 Cost of revenue (exclusive of depreciation and amortization) (3,337 ) (3,054 ) (13,069 ) (12,211 ) Depreciation and amortization of intangible assets (2,154 ) (1,758 ) (8,119 ) (6,440 ) Gross profit 9,570 8,257 39,016 34,667 Depreciation and amortization of intangible assets 2,154 1,758 8,119 6,440 Adjusted gross profit $ 11,724 $ 10,015 $ 47,135 $ 41,107 Gross margin 64 % 63 % 65 % 65 % Adjusted gross margin 78 % 77 % 78 % 77 % The following is a reconciliation of net cash provided by operating activities, the most directly comparable US GAAP measure, to FCF: Three Months Ended December 31, Year Ended December 31, (Dollars in thousands) 2023 2022 2023 2022 Net cash provided by operating activities $ 4,204 $ 4,359 $ 15,071 $ 12,459 Less: Purchase of property and equipment (24 ) (102 ) (122 ) (373 ) Capitalized costs included in intangible assets (2,103 ) (2,317 ) (9,024 ) (8,456 ) Free cash flow $ 2,077 $ 1,940 $ 5,925 $ 3,630 In order to assist readers of our consolidated financial statements in understanding the operating results that management uses to evaluate the business and for financial planning purposes, we present non-GAAP measures of adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted earnings per share, adjusted gross profit, adjusted gross margin, and FCF as supplemental measures of our operating performance.
The following is a reconciliation of gross profit, the most directly comparable US GAAP financial measure, to adjusted gross profit: Three Months Ended December 31, Year Ended December 31, (Dollars in thousands) 2024 2023 2024 2023 Revenue $ 19,565 $ 15,061 $ 75,189 $ 60,204 Cost of revenue (exclusive of depreciation and amortization) (3,472 ) (3,337 ) (13,997 ) (13,069 ) Depreciation and amortization of intangible assets (2,431 ) (2,154 ) (9,349 ) (8,119 ) Gross profit 13,662 9,570 51,843 39,016 Depreciation and amortization of intangible assets 2,431 2,154 9,349 8,119 Adjusted gross profit $ 16,093 $ 11,724 $ 61,192 $ 47,135 Gross margin 70 % 64 % 69 % 65 % Adjusted gross margin 82 % 78 % 81 % 78 % 30 The following is a reconciliation of net cash provided by operating activities, the most directly comparable US GAAP measure, to FCF: Three Months Ended December 31, Year Ended December 31, (Dollars in thousands) 2024 2023 2024 2023 Net cash provided by operating activities $ 6,691 $ 4,204 $ 23,960 $ 15,071 Less: Purchase of property and equipment (17 ) (24 ) (169 ) (122 ) Capitalized costs included in intangible assets (2,280 ) (2,103 ) (9,398 ) (9,024 ) Free cash flow $ 4,394 $ 2,077 $ 14,393 $ 5,925 In order to assist readers of our consolidated financial statements in understanding the operating results that management uses to evaluate the business and for financial planning purposes, we present non-GAAP measures of adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted earnings per share, adjusted gross profit, adjusted gross margin, and FCF as supplemental measures of our operating performance.
Adjusted EBITDA margin increased to 27% from 24%. • Adjusted net income increased 17% to $8.1 million, which resulted in adjusted earnings of $0.58 and $0.57 per basic and diluted share, respectively. • Cash from operating activities increased 21% to $15.1 million.
Net income margin decreased to 9% from 22%. • Adjusted EBITDA increased 44% to $23.6 million. Adjusted EBITDA margin increased to 31% from 27%. • Adjusted net income increased 42% to $11.5 million, which resulted in adjusted earnings of $0.83 and $0.82 per basic and diluted share, respectively. • Cash from operating activities increased 59% to $24.0 million.
Company Specific Trends and Uncertainties Our operating results are also directly affected by company-specific factors, including the following: • Some of our competitors have substantially greater financial, technical, sales and marketing resources, better name recognition, and a larger customer base.
These types of legislation or industry regulations could also prohibit us from collecting or disseminating certain types of data, which could adversely affect our ability to meet our customers’ requirements and our profitability and cash flow targets. 24 Company Specific Trends and Uncertainties Our operating results are also directly affected by company-specific factors, including the following: • Some of our competitors have substantially greater financial, technical, sales and marketing resources, better name recognition, and a larger customer base.
The amount of the allowance for doubtful accounts was $0.2 million and $0.06 million as of December 31, 2023 and 2022, respectively, which was included within accounts receivable, net, in the consolidated balance sheets.
The amount of the allowance for doubtful accounts was $0.2 million as of December 31, 2024 and 2023, which was included within accounts receivable, net, in the consolidated balance sheets. Income taxes We account for income taxes in accordance with ASC 740, “Income Taxes,” which requires the use of the asset and liability method of accounting for income taxes.
Revenue pursuant to pricing contracts containing a monthly fee is recognized ratably over the contract period. Pricing contracts are generally annual contracts or longer, with auto renewal.
Revenue pursuant to pricing contracts containing a monthly fee is recognized ratably over the contract period. Pricing contracts are generally annual contracts or longer, with auto renewal. For the years ended December 31, 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.
Three Months Ended (In thousands, except share data) (Unaudited) 3/31/2022 6/30/2022 9/30/2022 12/31/2022 3/31/2023 6/30/2023 9/30/2023 12/31/2023 Revenue $ 12,729 $ 12,494 $ 15,026 $ 13,069 $ 14,626 $ 14,680 $ 15,837 $ 15,061 Costs and expenses: Cost of revenue (exclusive of depreciation and amortization) 3,170 2,920 3,067 3,054 3,179 3,240 3,313 3,337 Sales and marketing expenses 2,391 2,822 2,623 2,998 3,889 3,078 3,365 3,501 General and administrative expenses 5,353 5,300 5,465 7,119 5,241 5,075 5,223 6,907 Depreciation and amortization 1,534 1,613 1,713 1,815 1,916 2,054 2,171 2,211 Total costs and expenses 12,448 12,655 12,868 14,986 14,225 13,447 14,072 15,956 Income (loss) from operations 281 (161 ) 2,158 (1,917 ) 401 1,233 1,765 (895 ) Interest income, net 1 - 125 225 286 315 346 387 Income (loss) before income taxes 282 (161 ) 2,283 (1,692 ) 687 1,548 2,111 (508 ) Income tax expense (benefit) 175 44 25 (148 ) (29 ) 160 (10,384 ) 562 Net income (loss) $ 107 $ (205 ) $ 2,258 $ (1,544 ) $ 716 $ 1,388 $ 12,495 $ (1,070 ) Earnings (loss) per share: Basic $ 0.01 $ (0.01 ) $ 0.16 $ (0.11 ) $ 0.05 $ 0.10 $ 0.90 $ (0.08 ) Diluted $ 0.01 $ (0.01 ) $ 0.16 $ (0.11 ) $ 0.05 $ 0.10 $ 0.87 $ (0.08 ) Weighted average shares outstanding: Basic 13,543,607 13,776,479 13,748,587 13,964,010 13,997,154 13,961,862 13,952,426 13,985,426 Diluted 14,047,635 13,776,479 13,764,262 13,964,010 14,236,771 14,172,024 14,329,878 13,985,426 Three Months Ended (In thousands) (Unaudited) 3/31/2022 6/30/2022 9/30/2022 12/31/2022 3/31/2023 6/30/2023 9/30/2023 12/31/2023 Net income (loss) $ 107 $ (205 ) $ 2,258 $ (1,544 ) $ 716 $ 1,388 $ 12,495 $ (1,070 ) Interest income, net (1 ) - (125 ) (225 ) (286 ) (315 ) (346 ) (387 ) Income tax expense (benefit) 175 44 25 (148 ) (29 ) 160 (10,384 ) 562 Depreciation and amortization 1,534 1,613 1,713 1,815 1,916 2,054 2,171 2,211 Share-based compensation expense 1,387 1,406 1,273 1,439 1,384 1,305 1,369 1,328 Litigation costs 15 76 37 4 3 45 1 - Write-off of long-lived assets and others 3 - 4 171 2 - 56 19 Adjusted EBITDA $ 3,220 $ 2,934 $ 5,185 $ 1,512 $ 3,706 $ 4,637 $ 5,362 $ 2,663 Revenue $ 12,729 $ 12,494 $ 15,026 $ 13,069 $ 14,626 $ 14,680 $ 15,837 $ 15,061 Net income (loss) margin 1 % (2 %) 15 % (12 %) 5 % 9 % 79 % (7 %) Adjusted EBITDA margin 25 % 23 % 35 % 12 % 25 % 32 % 34 % 18 % Three Months Ended (In thousands, except share data) (Unaudited) 3/31/2022 6/30/2022 9/30/2022 12/31/2022 3/31/2023 6/30/2023 9/30/2023 12/31/2023 Net income (loss) $ 107 $ (205 ) $ 2,258 $ (1,544 ) $ 716 $ 1,388 $ 12,495 $ (1,070 ) Share-based compensation expense 1,387 1,406 1,273 1,439 1,384 1,305 1,369 1,328 Amortization of share-based compensation capitalized in intangible assets 174 184 198 210 222 235 249 263 Discrete tax items - - - - - - (10,272 ) - Tax effect of adjustments - - - - - - (1,275 ) (251 ) Adjusted net income $ 1,668 $ 1,385 $ 3,729 $ 105 $ 2,322 $ 2,928 $ 2,566 $ 270 Earnings (loss) per share: Basic $ 0.01 $ (0.01 ) $ 0.16 $ (0.11 ) $ 0.05 $ 0.10 $ 0.90 $ (0.08 ) Diluted $ 0.01 $ (0.01 ) $ 0.16 $ (0.11 ) $ 0.05 $ 0.10 $ 0.87 $ (0.08 ) Adjusted earnings per share: Basic $ 0.12 $ 0.10 $ 0.27 $ 0.01 $ 0.17 $ 0.21 $ 0.18 $ 0.02 Diluted $ 0.12 $ 0.10 $ 0.27 $ 0.01 $ 0.16 $ 0.21 $ 0.18 $ 0.02 Weighted average shares outstanding: Basic 13,543,607 13,776,479 13,748,587 13,964,010 13,997,154 13,961,862 13,952,426 13,985,426 Diluted 14,047,635 14,109,243 13,764,262 14,205,633 14,236,771 14,172,024 14,329,878 14,307,797 31 Three Months Ended (In thousands) (Unaudited) 3/31/2022 6/30/2022 9/30/2022 12/31/2022 3/31/2023 6/30/2023 9/30/2023 12/31/2023 Revenue $ 12,729 $ 12,494 $ 15,026 $ 13,069 $ 14,626 $ 14,680 $ 15,837 $ 15,061 Cost of revenue (exclusive of depreciation and amortization) (3,170 ) (2,920 ) (3,067 ) (3,054 ) (3,179 ) (3,240 ) (3,313 ) (3,337 ) Depreciation and amortization of intangible assets (1,472 ) (1,551 ) (1,659 ) (1,758 ) (1,858 ) (1,995 ) (2,112 ) (2,154 ) Gross profit 8,087 8,023 10,300 8,257 9,589 9,445 10,412 9,570 Depreciation and amortization of intangible assets 1,472 1,551 1,659 1,758 1,858 1,995 2,112 2,154 Adjusted gross profit $ 9,559 $ 9,574 $ 11,959 $ 10,015 $ 11,447 $ 11,440 $ 12,524 $ 11,724 Gross margin 64 % 64 % 69 % 63 % 66 % 64 % 66 % 64 % Adjusted gross margin 75 % 77 % 80 % 77 % 78 % 78 % 79 % 78 % Three Months Ended (In thousands) (Unaudited) 3/31/2022 6/30/2022 9/30/2022 12/31/2022 3/31/2023 6/30/2023 9/30/2023 12/31/2023 Net cash provided by operating activities $ 2,430 $ 2,525 $ 3,145 $ 4,359 $ 1,531 $ 3,547 $ 5,789 $ 4,204 Less: Purchase of property and equipment (113 ) (108 ) (50 ) (102 ) (44 ) (7 ) (47 ) (24 ) Capitalized costs included in intangible assets (1,794 ) (2,099 ) (2,246 ) (2,317 ) (2,273 ) (2,236 ) (2,412 ) (2,103 ) Free cash flow $ 523 $ 318 $ 849 $ 1,940 $ (786 ) $ 1,304 $ 3,330 $ 2,077 32 Results of Operations Year ended December 31, 2023 compared to year ended December 31, 2022 Revenue .
Three Months Ended (In thousands, except share data) (Unaudited) 3/31/2023 6/30/2023 9/30/2023 12/31/2023 3/31/2024 6/30/2024 9/30/2024 12/31/2024 Revenue $ 14,626 $ 14,680 $ 15,837 $ 15,061 $ 17,511 $ 19,056 $ 19,057 $ 19,565 Costs and expenses: Cost of revenue (exclusive of depreciation and amortization) 3,179 3,240 3,313 3,337 3,756 3,455 3,314 3,472 Sales and marketing expenses 3,889 3,078 3,365 3,501 3,712 4,406 4,817 4,900 General and administrative expenses 5,241 5,075 5,223 6,907 5,790 5,750 5,994 8,341 Depreciation and amortization 1,916 2,054 2,171 2,211 2,270 2,377 2,434 2,481 Total costs and expenses 14,225 13,447 14,072 15,956 15,528 15,988 16,559 19,194 Income from operations 401 1,233 1,765 (895 ) 1,983 3,068 2,498 371 Interest income 286 315 346 387 365 314 353 368 Income before income taxes 687 1,548 2,111 (508 ) 2,348 3,382 2,851 739 Income tax (benefit) expense (29 ) 160 (10,384 ) 562 564 745 1,132 (124 ) Net income (loss) $ 716 $ 1,388 $ 12,495 $ (1,070 ) $ 1,784 $ 2,637 $ 1,719 $ 863 Earnings (loss) per share: Basic $ 0.05 $ 0.10 $ 0.90 $ (0.08 ) $ 0.13 $ 0.19 $ 0.12 $ 0.06 Diluted $ 0.05 $ 0.10 $ 0.87 $ (0.08 ) $ 0.13 $ 0.19 $ 0.12 $ 0.06 Weighted average shares outstanding: Basic 13,997,154 13,961,862 13,952,426 13,985,426 13,997,064 13,780,074 13,782,476 13,900,091 Diluted 14,236,771 14,172,024 14,329,878 13,985,426 14,164,506 14,051,466 14,311,575 14,366,545 Three Months Ended (In thousands) (Unaudited) 3/31/2023 6/30/2023 9/30/2023 12/31/2023 3/31/2024 6/30/2024 9/30/2024 12/31/2024 Net income (loss) $ 716 $ 1,388 $ 12,495 $ (1,070 ) $ 1,784 $ 2,637 $ 1,719 $ 863 Interest income (286 ) (315 ) (346 ) (387 ) (365 ) (314 ) (353 ) (368 ) Income tax (benefit) expense (29 ) 160 (10,384 ) 562 564 745 1,132 (124 ) Depreciation and amortization 1,916 2,054 2,171 2,211 2,270 2,377 2,434 2,481 Share-based compensation expense 1,384 1,305 1,369 1,328 1,402 1,393 1,657 1,496 Litigation costs 3 45 1 - 27 (27 ) 7 117 Write-off of long-lived assets and others 2 - 56 19 7 - 82 3 Adjusted EBITDA $ 3,706 $ 4,637 $ 5,362 $ 2,663 $ 5,689 $ 6,811 $ 6,678 $ 4,468 Revenue $ 14,626 $ 14,680 $ 15,837 $ 15,061 $ 17,511 $ 19,056 $ 19,057 $ 19,565 Net income (loss) margin 5 % 9 % 79 % (7 %) 10 % 14 % 9 % 4 % Adjusted EBITDA margin 25 % 32 % 34 % 18 % 32 % 36 % 35 % 23 % 32 Three Months Ended (In thousands, except share data) (Unaudited) 3/31/2023 6/30/2023 9/30/2023 12/31/2023 3/31/2024 6/30/2024 9/30/2024 12/31/2024 Net income (loss) $ 716 $ 1,388 $ 12,495 $ (1,070 ) $ 1,784 $ 2,637 $ 1,719 $ 863 Share-based compensation expense 1,384 1,305 1,369 1,328 1,402 1,393 1,657 1,496 Amortization of share-based compensation capitalized in intangible assets 222 235 249 263 275 286 292 299 Discrete tax items - - (10,272 ) - - - - - Tax effect of adjustments - - (1,275 ) (251 ) (308 ) (425 ) (518 ) (1,336 ) Adjusted net income $ 2,322 $ 2,928 $ 2,566 $ 270 $ 3,153 $ 3,891 $ 3,150 $ 1,322 Earnings (loss) per share: Basic $ 0.05 $ 0.10 $ 0.90 $ (0.08 ) $ 0.13 $ 0.19 $ 0.12 $ 0.06 Diluted $ 0.05 $ 0.10 $ 0.87 $ (0.08 ) $ 0.13 $ 0.19 $ 0.12 $ 0.06 Adjusted earnings per share: Basic $ 0.17 $ 0.21 $ 0.18 $ 0.02 $ 0.23 $ 0.28 $ 0.23 $ 0.10 Diluted $ 0.16 $ 0.21 $ 0.18 $ 0.02 $ 0.22 $ 0.28 $ 0.22 $ 0.09 Weighted average shares outstanding: Basic 13,997,154 13,961,862 13,952,426 13,985,426 13,997,064 13,780,074 13,782,476 13,900,091 Diluted 14,236,771 14,172,024 14,329,878 14,307,797 14,164,506 14,051,466 14,311,575 14,366,545 Three Months Ended (In thousands) (Unaudited) 3/31/2023 6/30/2023 9/30/2023 12/31/2023 3/31/2024 6/30/2024 9/30/2024 12/31/2024 Revenue $ 14,626 $ 14,680 $ 15,837 $ 15,061 $ 17,511 $ 19,056 $ 19,057 $ 19,565 Cost of revenue (exclusive of depreciation and amortization) (3,179 ) (3,240 ) (3,313 ) (3,337 ) (3,756 ) (3,455 ) (3,314 ) (3,472 ) Depreciation and amortization of intangible assets (1,858 ) (1,995 ) (2,112 ) (2,154 ) (2,214 ) (2,322 ) (2,382 ) (2,431 ) Gross profit 9,589 9,445 10,412 9,570 11,541 13,279 13,361 13,662 Depreciation and amortization of intangible assets 1,858 1,995 2,112 2,154 2,214 2,322 2,382 2,431 Adjusted gross profit $ 11,447 $ 11,440 $ 12,524 $ 11,724 $ 13,755 $ 15,601 $ 15,743 $ 16,093 Gross margin 66 % 64 % 66 % 64 % 66 % 70 % 70 % 70 % Adjusted gross margin 78 % 78 % 79 % 78 % 79 % 82 % 83 % 82 % Three Months Ended (In thousands) (Unaudited) 3/31/2023 6/30/2023 9/30/2023 12/31/2023 3/31/2024 6/30/2024 9/30/2024 12/31/2024 Net cash provided by operating activities $ 1,531 $ 3,547 $ 5,789 $ 4,204 $ 4,305 $ 5,717 $ 7,247 $ 6,691 Less: Purchase of property and equipment (44 ) (7 ) (47 ) (24 ) (65 ) (52 ) (35 ) (17 ) Capitalized costs included in intangible assets (2,273 ) (2,236 ) (2,412 ) (2,103 ) (2,327 ) (2,411 ) (2,380 ) (2,280 ) Free cash flow $ (786 ) $ 1,304 $ 3,330 $ 2,077 $ 1,913 $ 3,254 $ 4,832 $ 4,394 33 Results of Operations Year ended December 31, 2024 compared to year ended December 31, 2023 Revenue .
Adjusted gross margin increased to 78% from 77%. • Net income increased to $13.5 million from $0.6 million, which resulted in earnings of $0.97 and $0.96 per basic and diluted share, respectively. Net income margin increased to 22% from 1%. • Adjusted EBITDA increased 27% to $16.4 million.
Gross margin increased to 70% from 64%. • Adjusted gross profit increased 37% to $16.1 million. Adjusted gross margin increased to 82% from 78%. • Net income was $0.9 million compared to a net loss of $1.1 million, which resulted in earnings of $0.06 per basic and diluted share.
A full valuation allowance on the deferred tax assets was recognized as of December 31, 2022 to reduce the deferred tax assets to the amount that is more likely than not to be realized.
Prior to the third quarter of 2023, primarily due to cumulative pre-tax losses, management determined a full valuation allowance was necessary to reduce the deferred tax assets to the amount that is more likely than not to be realized. During the third quarter of 2023, we released the valuation allowance previously recorded on our deferred tax assets.
As of March 4, 2024, there were 25 record holders of our common stock. Recent Sale of Unregistered Securities None.
As of February 24, 2025, there were 13,938,623 shares of our common stock issued and outstanding. As of February 24, 2025, there were 23 record holders of our common stock. Recent Sale of Unregistered Securities None.
A quantitative assessment involves determining the fair value of each reporting unit using market participant assumptions.
A quantitative assessment involves determining the fair value of each reporting unit using market participant assumptions. An entity should recognize an impairment charge for the amount by which the carrying amount of a reporting unit exceeds its fair value up to the amount of goodwill allocated to that reporting unit.
Adjusted EBITDA margin increased to 18% from 12%. • Adjusted net income increased 157% to $0.3 million, which resulted in adjusted earnings of $0.02 per basic and diluted share. • Cash from operating activities decreased 4% to $4.2 million. • Cash and cash equivalents were $32.0 million as of December 31, 2023.
Adjusted EBITDA margin increased to 23% from 18%. • Adjusted net income increased 390% to $1.3 million, which resulted in adjusted earnings of $0.10 and $0.09 per basic and diluted share, respectively. • Cash from operating activities increased 59% to $6.7 million. • Cash and cash equivalents were $36.5 million as of December 31, 2024. 28 Full Year Financial Results For the year ended December 31, 2024 as compared to the year ended December 31, 2023: • Total revenue increased 25% to $75.2 million. • Gross profit increased 33% to $51.8 million.
We have not paid any dividends or made any other distributions in respect of our common stock since March 27, 2018, and we do not currently expect to pay any dividends or make any other distributions in the future. As of March 4, 2024, there were 13,964,028 shares of our common stock issued and outstanding.
Except for the above-mentioned Special Cash Dividend, we have not declared or paid other dividends or made any other distributions in respect of our common stock since March 27, 2018. There is no assurance that we will continue to declare or pay cash dividends in the future.

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