Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2018 | May 10, 2018 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q1 | |
Trading Symbol | RDVT | |
Entity Registrant Name | RED VIOLET, INC. | |
Entity Central Index Key | 1,720,116 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 10,266,613 |
CONDENSED CONSOLIDATED AND COMB
CONDENSED CONSOLIDATED AND COMBINED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 19,793 | $ 65 |
Accounts receivable, net of allowance for doubtful accounts of $153 and $228 at March 31, 2018 and December 31, 2017, respectively | 2,032 | 1,650 |
Prepaid expenses and other current assets | 796 | 559 |
Total current assets | 22,621 | 2,274 |
Property and equipment, net | 974 | 1,091 |
Intangible assets, net | 16,531 | 15,353 |
Goodwill | 5,227 | 5,227 |
Other non-current assets | 1,182 | 1,180 |
Total assets | 46,535 | 25,125 |
Current liabilities: | ||
Trade accounts payable | 1,063 | 919 |
Accrued expenses and other current liabilities | 5,189 | 6,437 |
Deferred revenue | 21 | 33 |
Total liabilities | 6,273 | 7,389 |
Shareholders' equity: | ||
Preferred stock—$0.001 par value, 10,000,000 and 0 authorized, and 0 shares issued and outstanding, at March 31, 2018 and December 31, 2017, respectively | ||
Common stock—$0.001 par value, 200,000,000 and 5,000 shares authorized, and 10,266,613 and 1,000 shares issued and outstanding, at March 31, 2018 and December 31, 2017, respectively | 10 | |
Additional paid-in capital | 40,252 | |
Member's capital | 17,736 | |
Total shareholders' equity | 40,262 | 17,736 |
Total liabilities and shareholders' equity | $ 46,535 | $ 25,125 |
CONDENSED CONSOLIDATED AND COM3
CONDENSED CONSOLIDATED AND COMBINED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Statement Of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 153 | $ 228 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 10,000,000 | 0 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 200,000,000 | 5,000 |
Common stock, shares issued | 10,266,613 | 1,000 |
Common stock, shares outstanding | 10,266,613 | 1,000 |
CONDENSED CONSOLIDATED AND COM4
CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Income Statement [Abstract] | ||
Revenue | $ 3,325 | $ 1,572 |
Costs and expenses: | ||
Cost of revenue (exclusive of depreciation and amortization) | 2,017 | 1,401 |
Sales and marketing expenses | 1,089 | 818 |
General and administrative expenses | 1,852 | 2,030 |
Depreciation and amortization | 451 | 216 |
Total costs and expenses | 5,409 | 4,465 |
Loss before income taxes | (2,084) | (2,893) |
Net loss | $ (2,084) | $ (2,893) |
Loss per share: | ||
Basic and diluted | $ (0.20) | $ (0.28) |
Weighted average number of shares outstanding: | ||
Basic and diluted | 10,266,613 | 10,266,613 |
CONDENSED CONSOLIDATED AND COM5
CONDENSED CONSOLIDATED AND COMBINED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (Unaudited) - 3 months ended Mar. 31, 2018 - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Member's capital |
Beginning balance at Dec. 31, 2017 | $ 17,736 | $ 17,736 | ||
Beginning balance, shares at Dec. 31, 2017 | 1,000 | 1,000 | ||
Contribution by Fluent, Inc., including allocation of expenses | $ 24,264 | 24,264 | ||
Share-based compensation | 346 | 346 | ||
Net loss | (2,084) | (2,084) | ||
Spin-off from Fluent, Inc. | $ 10 | $ 40,252 | $ (40,262) | |
Spin-off from Fluent, Inc., shares | 10,265,613 | |||
Ending balance at Mar. 31, 2018 | $ 40,262 | $ 10 | $ 40,252 | |
Ending balance, shares at Mar. 31, 2018 | 10,266,613 | 10,266,613 |
CONDENSED CONSOLIDATED AND COM6
CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (2,084) | $ (2,893) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 451 | 216 |
Share-based compensation expense | 165 | 458 |
Write-off of long-lived assets | 55 | |
Provision for (recovery of) bad debts | (56) | 6 |
Allocation of expenses from Fluent, Inc. | 325 | 840 |
Changes in assets and liabilities: | ||
Accounts receivable | (326) | (202) |
Prepaid expenses and other current assets | (237) | (12) |
Other non-current assets | (2) | 85 |
Trade accounts payable | 144 | (29) |
Accrued expenses and other current liabilities | (1,248) | (14) |
Deferred revenue | (12) | (17) |
Net cash used in operating activities | (2,825) | (1,562) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchase of property and equipment | (16) | (225) |
Capitalized costs included in intangible assets | (1,370) | (1,702) |
Net cash used in investing activities | (1,386) | (1,927) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Capital contributed by Fluent, Inc. | 23,939 | 3,263 |
Net cash provided by financing activities | 23,939 | 3,263 |
Net increase (decrease) in cash and cash equivalents | 19,728 | (226) |
Cash and cash equivalents at beginning of period | 65 | 226 |
Cash and cash equivalents at end of period | 19,793 | |
SUPPLEMENTAL DISCLOSURE INFORMATION | ||
Share-based compensation capitalized in intangible assets | $ 181 | $ 191 |
Organization
Organization | 3 Months Ended |
Mar. 31, 2018 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Organization | 1. Organization On March 26, 2018, Fluent, Inc. (“Fluent”), formerly known as Cogint, Inc., a Delaware corporation, completed the previously announced spin-off (the “Spin-off”) of its risk management business from its digital marketing business by way of a distribution of all the shares of common stock of Fluent’s wholly-owned subsidiary, Red Violet, Inc. (“red violet” or the “Company”), a Delaware corporation, to Fluent’s stockholders of record as of March 19, 2018 (the “Record Date”) and certain warrant holders. The distribution occurred by way of a pro rata stock distribution to such common stock and warrant holders, each of whom received one share of red violet’s common stock for every 7.5 shares of Fluent’s common stock held on the Record Date or to which they were entitled to under their warrant, which resulted in a distribution of a total of 10,266,613 shares of red violet common stock. Upon the Spin-off, red violet owns Fluent subsidiaries which previously operated Fluent’s risk manag e ment business. As a result of the Spin-off, red violet is an independent public company and red violet’s common stock began regular-way trading on The NASDAQ Capital Market under the symbol “RDVT” on March 27, 2018. red violet has only one operating segment, as defined by ASC 280, “ Segment Reporting |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2018 | |
Accounting Policies [Abstract] | |
Summary of significant accounting policies | 2. Summary of significant accounting policies (a) Basis of preparation and liquidity The accompanying unaudited condensed consolidated and combined financial statements have been prepared for red violet in accordance with accounting principles generally accepted in the United States (“US GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (the “SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in annual financial statements prepared in accordance with US GAAP have been condensed or omitted pursuant to those rules and regulations. red violet accounted for the Spin-off in accordance with ASC 805-50-30-5 Initial Measurement- Transactions Between Entities Under Common Control Transfer Date Measurement The accompanying unaudited condensed consolidated and combined financial statements reflect all normal recurring adjustments necessary to present fairly the financial position, results of operations, and cash flows for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for any future interim periods or for the full year ending December 31, 2018. The information included in this quarterly report on Form 10-Q should be read in conjunction with the consolidated and combined financial statements and accompanying notes of red violet for the year ended December 31, 2017 (“2017 Financials”) included in Exhibit 99.1, Information Statement, to the current report on Form 8-K filed with the SEC on March 27, 2018. The condensed consolidated and combined balance sheet as of December 31, 2017 included herein was derived from the audited financial statements as of that date included in the 2017 Financials, but does not include all disclosures including notes required by US GAAP. Principles of consolidation and combination Although the Spin-off was completed on March 26, 2018, the Company has reflected the Spin-off in these financial statements as if it occurred on March 31, 2018 as the Company determined that the impact is not material to the consolidated and combined financial statements. The financial statements present the consolidated and combined results of operations, financial condition, and cash flows of red violet and its subsidiaries. These financial statements were prepared on a consolidated and combined basis because certain of the entities were under common control for periods prior to the Spin-off. All intercompany accounts and transactions have been eliminated between the consolidated and combined entities. The historical condensed consolidated and combined financial results presented prior to the Spin-off may not be indicative of the results that would have been achieved by the Company had it operated as a separate, standalone entity prior to the Spin-off. The condensed consolidated and combined financial statements presented prior to the Spin-off do not reflect any changes that may occur in the Company’s operations in connection with or as a result of the Spin-off. (b) Recently issued accounting standards As an emerging growth company, we have left open the opportunity to take advantage of the extended transition In May 2014, Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09 (“ASU 2014-09”), “ Revenue from Contracts with Customers (Topic 606) Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net) In February 2016, FASB issued ASU No. 2016-02 (“ASU 2016-02”), “ Leases (Topic 842) In August 2016, FASB issued ASU No. 2016-15 (“ASU 2016-15”), “ Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (c) Revenue recognition On January 1, 2018, we adopted Topic 606 using the modified retrospective method applied to all contracts that are not completed contracts at the date of initial application. There was no impact on the opening accumulated deficit as of January 1, 2018 due to the adoption of Topic 606. Revenue is recognized when control of goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. In other words, our performance obligation is to provide on demand solutions to our customers by leveraging our proprietary technology and applying machine learning and advanced analytic techniques to our massive data repository. The pricing for the customer contracts is based on usage, a monthly fee, or a combination of both. Available within Topic 606, we have applied the portfolio approach practical expedient in accounting for customer revenue as one collective group, rather than individual contracts. 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 since the performance obligation is delivered in a series. Our customers simultaneously receive and consume the benefits provided by the performance as the Company performs. Furthermore, we have elected the “right to invoice” practical expedient, available within ASC 606-10-55-18, as our measure of progress, since we have a right to payment from a customer in an amount that corresponds directly with the value of our performance completed-to-date. The Company's revenue arrangements do not contain significant financing components. If a customer pays consideration before we transfer services to the customer, those amounts are classified as deferred revenue. As of March 31, 2018 and December 31, 2017, the balance of deferred revenue was $21 and $33, respectively, all of which are expected to be realized in the next 12 months. $17 of the deferred revenue balance as of December 31, 2017 had been recognized into revenue during the three months ended March 31, 2018. As of March 31, 2018, approximately $363 of revenue is expected to be recognized in the future related to outstanding performance obligations. The balance relates primarily to revenues for subscription contracts that has a term of more than 12 months. Approximately $180 will be recognized during the remaining nine months of 2018, $174 in 2019 and the remainder in 2020. The actual timing of recognition may vary due to factors outside of the Company’s control. The Company has elected to exclude variable consideration related entirely to wholly unsatisfied performance obligations and contracts where revenue is recognized based upon the right to invoice the customer. Sales commissions are recorded at the time revenue is recognized. 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. |
Loss Per Share
Loss Per Share | 3 Months Ended |
Mar. 31, 2018 | |
Earnings Per Share [Abstract] | |
Loss per share | 3. Loss per share Basic loss per share is computed by dividing net loss by the weighted average number of common shares outstanding during the periods. Diluted loss per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock and is calculated using the treasury stock method for stock options and unvested shares. Common equivalent shares are excluded from the calculation in the loss periods as their effects would be anti-dilutive. Prior to the Spin-off, the financial information of red violet represented the consolidated and combined figures of red violet and its subsidiaries. red violet only had 1,000 shares of common stock outstanding, all of which Fluent owned. On March 26, 2018, upon the Spin-off of red violet, an aggregate of 10,266,613 shares of red violet common stock were distributed to Fluent stockholders and certain warrant holders. This number of shares remained outstanding at March 31, 2018, and is utilized to calculate loss per share for the three months ended March 31, 2018 and 2017, as shown in the table below. Three Months Ended March 31, (In thousands, except share data) 2018 2017 Numerator: Net loss $ (2,084 ) $ (2,893 ) Denominator: Weighted average shares outstanding - Basic and diluted 10,266,613 10,266,613 Loss per share: Basic and diluted: $ (0.20 ) $ (0.28 ) A total of 56,000 shares of unvested restricted stock units (“RSUs”) have been excluded from the diluted loss per share calculation as the impact is anti-dilutive. |
Intangible assets, net
Intangible assets, net | 3 Months Ended |
Mar. 31, 2018 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Intangible assets, net | 4. Intangible assets, net Intangible assets other than goodwill consist of the following: (In thousands) Amortization period March 31, 2018 December 31, 2017 Gross amount: Software developed for internal use 10 years $ 18,193 $ 16,642 Accumulated amortization: Software developed for internal use (1,662 ) (1,289 ) Net intangible assets: Software developed for internal use $ 16,531 $ 15,353 The gross amount associated with software developed for internal use mainly represents capitalized costs of internally developed software, including eligible salaries and staff benefits, share-based compensation expense, traveling expenses incurred by relevant employees, and other relevant costs. Amortization expenses of $373 and $156 were included in depreciation and amortization expenses for the three months ended March 31, 2018 and 2017, respectively. As of March 31, 2018, intangible assets of $1,920, included in the gross amounts of software developed for internal use, have not started amortization, as they have not yet been ready for their intended use. red violet capitalized $1,551 and $1,893 related to internally developed software during the three months ended March 31, 2018 and 2017, respectively. As of March 31, 2018, estimated amortization expenses related to the Company’s intangible assets for the remainder of 2018 through 2023 and thereafter are as follows: (In thousands) Year March 31, 2018 Remainder of 2018 $ 1,270 2019 1,822 2020 1,821 2021 1,819 2022 1,818 2023 and thereafter 7,981 Total $ 16,531 |
Goodwill
Goodwill | 3 Months Ended |
Mar. 31, 2018 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Goodwill | 5. Goodwill Goodwill represents the cost in excess of the fair value of the net assets acquired in a business combination. As of March 31, 2018 and December 31, 2017, the balance of goodwill of $5,227 was as a result of the acquisition of Interactive Data, LLC (“Interactive Data”), a wholly-owned subsidiary of red violet, effective on October 2, 2014. In accordance with ASC 350, “Intangibles - Goodwill and Other,” As of March 31, 2018 and December 31, 2017, there are no events or changes in circumstances to indicate that goodwill is impaired. |
Income taxes
Income taxes | 3 Months Ended |
Mar. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Income taxes | 6. Income taxes red violet is a “C” corporation, while its subsidiaries are all limited liability companies. Before the Spin-off, red violet and its subsidiaries, were consolidated with Fluent for U.S. federal income tax purposes. However, for purposes of these financial statements, the income tax provisions were prepared assuming the entities filed separate tax returns. The Company is subject to federal and state income taxes in the United States. Our tax provision for interim periods is determined using an estimate of our annual effective tax rate, adjusted for discrete items arising in that quarter. In each quarter, we update our estimate of the annual effective tax rate, and if our estimated annual tax rate changes, we make a cumulative adjustment in that quarter. On December 22, 2017, the tax reform legislation commonly known as the Tax Cuts and Jobs Act (the “Act”) The Company’s effective income tax rate differed from the statutory federal income tax rate of 21% for the three months ended March 31, 2018 and 34% for the three months ended March 31, 2017. The Company assesses its income tax positions and records tax benefits for all years subject to examination based upon its evaluation of the facts, circumstances and information available at the reporting date. For those tax positions where it is more-likely-than-not that a tax benefit will be sustained, the Company has recorded the largest amount of tax benefit with a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. For those income tax positions where it is not more-likely-than-not that a tax benefit will be sustained, no tax benefit has been recognized in the Company’s financial statements. red violet continually evaluates expiring statutes of limitations, audits, proposed settlements, changes in tax law and new authoritative red violet does not have any unrecognized tax benefits as of March 31, 2018 and December 31, 2017. |
Common Stock and Preferred Stoc
Common Stock and Preferred Stock | 3 Months Ended |
Mar. 31, 2018 | |
Equity [Abstract] | |
Common stock and preferred stock | 7. Common stock and preferred stock Common stock As of March 31, 2018 and December 31, 2017, the number of authorized shares of common stock was 200,000,000 and 5,000, with par value of $0.001 per share, respectively, of which, 10,266,613 and 1,000 shares of common stock were issued and outstanding, respectively. On March 26, 2018, Fluent completed the Spin-off of its risk management business from its digital marketing business by way of a distribution of all the shares of common stock of red violet to Fluent’s stockholders of record as of March 19, 2018, the Record Date, and certain warrant holders, which resulted in a distribution of a total of 10,266,613 shares of red violet common stock. Preferred stock As of March 31, 2018, we had 10,000,000 shares of preferred stock with par value of $0.001 per share authorized, and there were no shares of preferred stock issued or outstanding. There was no preferred stock authorized as of December 31, 2017. |
Share-based Compensation
Share-based Compensation | 3 Months Ended |
Mar. 31, 2018 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Share-based Compensation | 8. Share-based compensation On March 22, 2018, the board of directors of red violet and Fluent, in its capacity as sole stockholder of red violet prior to the Spin-off, approved the Red Violet, Inc. 2018 Stock Incentive Plan, (the “2018 Plan”), which became effective immediately prior to the Spin-off. A total of 3,000,000 shares of common stock were authorized to be issued under the 2018 Plan. The primary purpose of the 2018 Plan is to attract, retain, reward and motivate certain individuals by providing them with an opportunity to acquire or increase a proprietary interest in the Company and to incentivize them to expend maximum effort for the growth and success of the Company, so as to strengthen the mutuality of the interests between such individuals and the stockholders of the Company. On March 29, 2018, an aggregate of 56,000 shares of RSUs were granted to certain directors, at a grant date fair value of $6.10 per share, under the 2018 Plan, with vesting periods ranging from one to three years. The fair value of the RSUs was estimated using the market value of the Company’s common stock on the date of grant, which was equivalent to the closing price of the common stock on the grant date. As of March 31, 2018, unrecognized share-based compensation expense associated with the granted RSUs amounted to $340, which is expected to be recognized over a weighted average period of 2.3 years. Share-based compensation of $346 and $649 was recorded during the three months ended March 31, 2018 and 2017, respectively. Included in the total share-based compensation recorded was $344 and $649 related to the share-based awards granted by Fluent to company employees or non-employees during the three months ended March 31, 2018 and 2017, respectively. Share-based compensation was allocated to the following accounts in the condensed consolidated and combined financial statements for the three months ended March 31, 2018 and 2017: Three Months Ended March 31, (In thousands) 2018 2017 Sales and marketing expenses $ 41 $ 85 General and administrative expenses 124 373 Share-based compensation expense 165 458 Capitalized in intangible assets 181 191 Total $ 346 $ 649 |
Related party transactions
Related party transactions | 3 Months Ended |
Mar. 31, 2018 | |
Related Party Transactions [Abstract] | |
Related party transactions | 9. Related party transactions Contribution by Fluent, Inc., recorded in the condensed consolidated and combined statement of changes in shareholders’ equity, represents cash funding provided or the portion of certain expenses allocated by Fluent to red violet, on or prior to the Spin-off. These allocated expenses are primarily corporate employee salaries and benefits of the functional groups (inclusive of executive management, accounting, administrative and information technology) and corporate administrative expenses (inclusive of legal services, accounting and finance services and other corporate and infrastructure services). Corporate employee salaries and benefits were allocated on the basis of time spent, and corporate administrative expenses were allocated on the basis of relative percentage of services utilized or benefit received. red violet recorded expenses of $325 and $840 as a result of the allocation of expenses from Fluent during the three months ended March 31, 2018 and 2017, respectively. Upon the Spin-off, Fluent no longer allocates any expenses to red violet. As discussed in Note 8, “Share-based compensation,” share-based compensation of $344 and $649 in relation with the share-based awards granted by Fluent were recorded during the three months ended March 31, 2018 and 2017, respectively. Management believes the assumptions and allocations underlying the condensed consolidated and combined financial statements are reasonable and appropriate under the circumstances. The expense allocations have been determined on a basis considered to be a reasonable reflection of the utilization of services provided to or the benefit received by red violet during the periods presented relative to the total costs and expenses incurred by Fluent. However, these expenses may not be reflective of the expenses that would have been recorded had red violet been an entity that operated independently of Fluent, and not been a subsidiary of Fluent. Consequently, future results of operations of red violet after the Spin-off will include costs and expenses that may be materially different than red violet’s historical results of operations, financial position, and cash flows. Accordingly, the financial statements for these periods are not indicative of red violet’s future results of operations, financial position, and cash flow. |
Commitments
Commitments | 3 Months Ended |
Mar. 31, 2018 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments | 10. Commitments (a) Capital commitment The Company incurred data costs of $1,241 and $980 for the three months ended March 31, 2018 and 2017, respectively, under certain data licensing agreements. As of March 31, 2018, material capital commitments under certain data licensing agreements were $22,011, shown as follows: (In thousands) Year March 31, 2018 Remainder of 2018 $ 3,784 2019 5,900 2020 6,250 2021 4,775 2022 1,302 Total $ 22,011 (b) Guarantees As of December 31, 2017, the Company was a guarantor on certain Fluent debt, with an outstanding principal amount, plus paid-in-kind interest, of $55.6 million Upon the Spin-off on March 26, 2018, Fluent, LLC, a subsidiary of Fluent, refinanced such Fluent debt, and red violet’s obligations as a guarantor ceased. (c) Employment agreements We have employment agreements with certain executives, including our Chief Executive Officer, President, Chief Financial Officer and Chief Accounting Officer, which provide for compensation and certain other benefits and for severance payments under certain circumstances. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | 11. Subsequent events On April 26, 2018, the Company entered into a consulting agreement with MDB Management, Inc. (“MDB”), a company owned by Michael Brauser, chairman of the Company’s board of directors, and one of his sons, for MDB to provide consulting services related to business development, future acquisitions, and strategic transactions to the Company (“MDB Agreement”), f or a term of six months, and shall automatically renew for additional six-month periods unless either party provides written notice to the other of its intent not to renew not fewer than 30 days prior to the expiration of the then current term |
Summary of Significant Accoun18
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2018 | |
Accounting Policies [Abstract] | |
Basis of preparation and liquidity | (a) Basis of preparation and liquidity The accompanying unaudited condensed consolidated and combined financial statements have been prepared for red violet in accordance with accounting principles generally accepted in the United States (“US GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (the “SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in annual financial statements prepared in accordance with US GAAP have been condensed or omitted pursuant to those rules and regulations. red violet accounted for the Spin-off in accordance with ASC 805-50-30-5 Initial Measurement- Transactions Between Entities Under Common Control Transfer Date Measurement The accompanying unaudited condensed consolidated and combined financial statements reflect all normal recurring adjustments necessary to present fairly the financial position, results of operations, and cash flows for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for any future interim periods or for the full year ending December 31, 2018. The information included in this quarterly report on Form 10-Q should be read in conjunction with the consolidated and combined financial statements and accompanying notes of red violet for the year ended December 31, 2017 (“2017 Financials”) included in Exhibit 99.1, Information Statement, to the current report on Form 8-K filed with the SEC on March 27, 2018. The condensed consolidated and combined balance sheet as of December 31, 2017 included herein was derived from the audited financial statements as of that date included in the 2017 Financials, but does not include all disclosures including notes required by US GAAP. Principles of consolidation and combination Although the Spin-off was completed on March 26, 2018, the Company has reflected the Spin-off in these financial statements as if it occurred on March 31, 2018 as the Company determined that the impact is not material to the consolidated and combined financial statements. The financial statements present the consolidated and combined results of operations, financial condition, and cash flows of red violet and its subsidiaries. These financial statements were prepared on a consolidated and combined basis because certain of the entities were under common control for periods prior to the Spin-off. All intercompany accounts and transactions have been eliminated between the consolidated and combined entities. The historical condensed consolidated and combined financial results presented prior to the Spin-off may not be indicative of the results that would have been achieved by the Company had it operated as a separate, standalone entity prior to the Spin-off. The condensed consolidated and combined financial statements presented prior to the Spin-off do not reflect any changes that may occur in the Company’s operations in connection with or as a result of the Spin-off. |
Recently issued accounting standards | (b) Recently issued accounting standards As an emerging growth company, we have left open the opportunity to take advantage of the extended transition In May 2014, Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09 (“ASU 2014-09”), “ Revenue from Contracts with Customers (Topic 606) Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net) In February 2016, FASB issued ASU No. 2016-02 (“ASU 2016-02”), “ Leases (Topic 842) In August 2016, FASB issued ASU No. 2016-15 (“ASU 2016-15”), “ Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments |
Revenue recognition | (c) Revenue recognition On January 1, 2018, we adopted Topic 606 using the modified retrospective method applied to all contracts that are not completed contracts at the date of initial application. There was no impact on the opening accumulated deficit as of January 1, 2018 due to the adoption of Topic 606. Revenue is recognized when control of goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. In other words, our performance obligation is to provide on demand solutions to our customers by leveraging our proprietary technology and applying machine learning and advanced analytic techniques to our massive data repository. The pricing for the customer contracts is based on usage, a monthly fee, or a combination of both. Available within Topic 606, we have applied the portfolio approach practical expedient in accounting for customer revenue as one collective group, rather than individual contracts. 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 since the performance obligation is delivered in a series. Our customers simultaneously receive and consume the benefits provided by the performance as the Company performs. Furthermore, we have elected the “right to invoice” practical expedient, available within ASC 606-10-55-18, as our measure of progress, since we have a right to payment from a customer in an amount that corresponds directly with the value of our performance completed-to-date. The Company's revenue arrangements do not contain significant financing components. If a customer pays consideration before we transfer services to the customer, those amounts are classified as deferred revenue. As of March 31, 2018 and December 31, 2017, the balance of deferred revenue was $21 and $33, respectively, all of which are expected to be realized in the next 12 months. $17 of the deferred revenue balance as of December 31, 2017 had been recognized into revenue during the three months ended March 31, 2018. As of March 31, 2018, approximately $363 of revenue is expected to be recognized in the future related to outstanding performance obligations. The balance relates primarily to revenues for subscription contracts that has a term of more than 12 months. Approximately $180 will be recognized during the remaining nine months of 2018, $174 in 2019 and the remainder in 2020. The actual timing of recognition may vary due to factors outside of the Company’s control. The Company has elected to exclude variable consideration related entirely to wholly unsatisfied performance obligations and contracts where revenue is recognized based upon the right to invoice the customer. Sales commissions are recorded at the time revenue is recognized. 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. |
Loss Per Share (Tables)
Loss Per Share (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Earnings Per Share [Abstract] | |
Schedule of Basic and Diluted Loss Per Share | This number of shares remained outstanding at March 31, 2018, and is utilized to calculate loss per share for the three months ended March 31, 2018 and 2017, as shown in the table below. Three Months Ended March 31, (In thousands, except share data) 2018 2017 Numerator: Net loss $ (2,084 ) $ (2,893 ) Denominator: Weighted average shares outstanding - Basic and diluted 10,266,613 10,266,613 Loss per share: Basic and diluted: $ (0.20 ) $ (0.28 ) |
Intangible assets, net (Tables)
Intangible assets, net (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Intangible Assets Other than Goodwill | Intangible assets other than goodwill consist of the following: (In thousands) Amortization period March 31, 2018 December 31, 2017 Gross amount: Software developed for internal use 10 years $ 18,193 $ 16,642 Accumulated amortization: Software developed for internal use (1,662 ) (1,289 ) Net intangible assets: Software developed for internal use $ 16,531 $ 15,353 |
Schedule of Estimated Amortization Expenses | As of March 31, 2018, estimated amortization expenses related to the Company’s intangible assets for the remainder of 2018 through 2023 and thereafter are as follows: (In thousands) Year March 31, 2018 Remainder of 2018 $ 1,270 2019 1,822 2020 1,821 2021 1,819 2022 1,818 2023 and thereafter 7,981 Total $ 16,531 |
Share-based Compensation (Table
Share-based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Summary of Allocated Share-based Compensation | Share-based compensation was allocated to the following accounts in the condensed consolidated and combined financial statements for the three months ended March 31, 2018 and 2017: Three Months Ended March 31, (In thousands) 2018 2017 Sales and marketing expenses $ 41 $ 85 General and administrative expenses 124 373 Share-based compensation expense 165 458 Capitalized in intangible assets 181 191 Total $ 346 $ 649 |
Commitments (Tables)
Commitments (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Commitments And Contingencies Disclosure [Abstract] | |
Future Minimum Capital Payments under Certain Data Licensing Agreements | The Company incurred data costs of $1,241 and $980 for the three months ended March 31, 2018 and 2017, respectively, under certain data licensing agreements. As of March 31, 2018, material capital commitments under certain data licensing agreements were $22,011, shown as follows: (In thousands) Year March 31, 2018 Remainder of 2018 $ 3,784 2019 5,900 2020 6,250 2021 4,775 2022 1,302 Total $ 22,011 |
Organization - Additional Infor
Organization - Additional Information (Details) | 3 Months Ended | |
Mar. 31, 2018Segment | Mar. 26, 2018shares | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | ||
Spin-off completed date | Mar. 26, 2018 | |
Spin-off record date | Mar. 19, 2018 | |
Common stock distribution ratio at spin-off | 13.33% | |
Common stock shares distributed at spin-off | shares | 10,266,613 | |
Operating segments | Segment | 1 |
Summary of significant accoun24
Summary of significant accounting policies - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Dec. 31, 2017 | |
Accounting Policies [Abstract] | ||
Deferred revenue | $ 21 | $ 33 |
Deferred revenue realization period | 12 months | |
Revenue recognized, previously reported as deferred | $ 17 |
Summary of significant accoun25
Summary of significant accounting policies - Additional Information 1 (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2018USD ($) | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2018-04-01 | |
Revenue Remaining Performance Obligation Expected Timing Of Satisfaction [Line Items] | |
Estimated revenue expected to be recognized in the future | $ 180 |
Revenue, remaining performance obligation, expected timing of satisfaction, period | 9 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2019-01-01 | |
Revenue Remaining Performance Obligation Expected Timing Of Satisfaction [Line Items] | |
Estimated revenue expected to be recognized in the future | $ 174 |
Revenue, remaining performance obligation, expected timing of satisfaction, period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2020-01-01 | |
Revenue Remaining Performance Obligation Expected Timing Of Satisfaction [Line Items] | |
Estimated revenue expected to be recognized in the future | |
Revenue, remaining performance obligation, expected timing of satisfaction, period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: (nil) | |
Revenue Remaining Performance Obligation Expected Timing Of Satisfaction [Line Items] | |
Estimated revenue expected to be recognized in the future | $ 363 |
Period over which subscription contract terms exceed | 12 months |
Loss Per Share - Additional Inf
Loss Per Share - Additional Information (Details) - shares | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 26, 2018 | Dec. 31, 2017 | |
Earnings Per Share [Line Items] | |||
Common stock, shares outstanding | 10,266,613 | 1,000 | |
Common stock shares distributed at spin-off | 10,266,613 | ||
Restricted Stock Units (RSUs) | |||
Earnings Per Share [Line Items] | |||
Shares excluded from the diluted loss per share calculation | 56,000 |
Loss Per Share - Schedule of Ba
Loss Per Share - Schedule of Basic and Diluted Loss Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Earnings Per Share [Abstract] | ||
Net loss | $ (2,084) | $ (2,893) |
Weighted average shares outstanding - Basic and diluted | 10,266,613 | 10,266,613 |
Loss per share: | ||
Basic and diluted: | $ (0.20) | $ (0.28) |
Intangible assets, net - Intang
Intangible assets, net - Intangible Assets Other than Goodwill (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Dec. 31, 2017 | |
Finite Lived Intangible Assets [Line Items] | ||
Net intangible assets | $ 16,531 | $ 15,353 |
Software Developed for Internal Use | ||
Finite Lived Intangible Assets [Line Items] | ||
Estimated useful life of intangible assets | 10 years | |
Gross amount | $ 18,193 | 16,642 |
Accumulated amortization | (1,662) | (1,289) |
Net intangible assets | $ 16,531 | $ 15,353 |
Intangible assets, net - Additi
Intangible assets, net - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Finite Lived Intangible Assets [Line Items] | ||
Amortization expenses | $ 373 | $ 156 |
Software Developed for Internal Use | ||
Finite Lived Intangible Assets [Line Items] | ||
Intangible assets that have not started amortization | 1,920 | |
Internally developed software ,capitalized | $ 1,551 | $ 1,893 |
Intangible assets, net - Schedu
Intangible assets, net - Schedule of Estimated Amortization Expenses (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Goodwill And Intangible Assets Disclosure [Abstract] | ||
Remainder of 2018 | $ 1,270 | |
2,019 | 1,822 | |
2,020 | 1,821 | |
2,021 | 1,819 | |
2,022 | 1,818 | |
2023 and thereafter | 7,981 | |
Net intangible assets | $ 16,531 | $ 15,353 |
Goodwill - Additional Informati
Goodwill - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Dec. 31, 2017 | |
Goodwill And Intangible Assets Disclosure [Abstract] | ||
Goodwill | $ 5,227 | $ 5,227 |
Date of annual goodwill impairment test | October 1 |
Income taxes - Additional Infor
Income taxes - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Income Taxes [Line Items] | |||
Statutory federal income tax rate | 21.00% | 34.00% | |
Effective income tax rate, percentage | 0.00% | 0.00% | |
Percentage of tax benefits likelihood of being realized upon settlement of tax authority | greater than 50% | ||
Unrecognized tax benefits | $ 0 | $ 0 | |
Interactive Data, LLC | State Tax Returns | Earliest Tax Year | |||
Income Taxes [Line Items] | |||
Open tax year for examination | 2,014 |
Common Stock and Preferred St33
Common Stock and Preferred Stock - Additional Information (Details) - $ / shares | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 26, 2018 | Dec. 31, 2017 | |
Equity [Abstract] | |||
Common stock, shares authorized | 200,000,000 | 5,000 | |
Common stock, par value | $ 0.001 | $ 0.001 | |
Common stock, shares issued | 10,266,613 | 1,000 | |
Common stock, shares outstanding | 10,266,613 | 1,000 | |
Spin-off transaction completed date | Mar. 26, 2018 | ||
Spin-off transaction record date | Mar. 19, 2018 | ||
Common stock shares distributed at spin-off | 10,266,613 | ||
Preferred stock, shares authorized | 10,000,000 | 0 | |
Preferred stock, par value | $ 0.001 | $ 0.001 | |
Preferred stock, shares issued | 0 | 0 | |
Preferred stock, shares outstanding | 0 | 0 |
Share-based compensation - Addi
Share-based compensation - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands | Mar. 29, 2018 | Mar. 31, 2018 | Mar. 31, 2017 | Mar. 22, 2018 |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Share-based compensation amount | $ 346 | $ 649 | ||
Fluent, Inc. | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Share-based compensation amount | 344 | $ 649 | ||
Restricted Stock Units (RSUs) | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Unrecognized share-based compensation costs in respect of granted RSUs | $ 340 | |||
Unrecognized share-based compensation weighted average period | 2 years 3 months 18 days | |||
2018 Stock Incentive Plan | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Number of common stock authorized | 3,000,000 | |||
2018 Stock Incentive Plan | Restricted Stock Units (RSUs) | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Restricted stock units granted | 56,000 | |||
Grant date fair value | $ 6.10 | |||
2018 Stock Incentive Plan | Minimum | Restricted Stock Units (RSUs) | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Vesting period | 1 year | |||
2018 Stock Incentive Plan | Maximum | Restricted Stock Units (RSUs) | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Vesting period | 3 years |
Share-based Compensation - Summ
Share-based Compensation - Summary of Allocated Share-based Compensation (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Share-based compensation recognized | ||
Share-based compensation expense | $ 165 | $ 458 |
Capitalized in intangible assets | 181 | 191 |
Total | 346 | 649 |
Sales and Marketing Expenses | ||
Share-based compensation recognized | ||
Share-based compensation expense | 41 | 85 |
General and Administrative Expenses | ||
Share-based compensation recognized | ||
Share-based compensation expense | $ 124 | $ 373 |
Related party transactions - Ad
Related party transactions - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Related Party Transaction [Line Items] | ||
Share-based compensation amount | $ 346 | $ 649 |
Fluent, Inc. | ||
Related Party Transaction [Line Items] | ||
Allocation of expenses from Fluent | 325 | 840 |
Share-based compensation amount | $ 344 | $ 649 |
Commitments - Additional Inform
Commitments - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Commitments And Contingencies Disclosure [Abstract] | |||
Data cost incurred | $ 1,241 | $ 980 | |
Total capital commitment under certain data licensing agreements | $ 22,011 | ||
Fluent debt instrument principal amount including PIK interest | $ 55,600 | ||
Spin-off distribution date | Mar. 26, 2018 |
Commitments - Future Minimum Ca
Commitments - Future Minimum Capital Payments under Certain Data Licensing Agreements (Details) $ in Thousands | Mar. 31, 2018USD ($) |
Commitments And Contingencies Disclosure [Abstract] | |
Remainder of 2018 | $ 3,784 |
2,019 | 5,900 |
2,020 | 6,250 |
2,021 | 4,775 |
2,022 | 1,302 |
Total | $ 22,011 |
Subsequent Events - Additional
Subsequent Events - Additional Information (Detail) - MDB Management Group Inc. [Member] - Subsequent Event [Member] $ in Thousands | Apr. 26, 2018USD ($) |
Subsequent Event [Line Items] | |
Consulting service fee monthly payment | $ 30 |
Term of agreement, related party | 6 months |
Renewal term of agreement, related party | 6 months |