Red Violet Inc

Previous wording

While our platform powers a vast array of solutions for our customers, we presently market our solutions primarily through two brands, IDI™and FOREWARN®. 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. 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 June 30, 2024 and 2023, IDI had 8,477 and 7,497 billable customers and FOREWARN had 263,876 and 146,537 users, respectively. We define a billable customer of IDI as a single entity that generated revenue during the last three months of the period. Billable customers are typically corporate organizations. In most cases, corporate organizations will have multiple users and/or departments purchasing our solutions, however, we count the entire organization as a discrete customer. 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.

Current wording

While our platform powers a vast array of solutions for our customers, we presently market our solutions primarily through two brands, IDI™and FOREWARN®. 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. 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 September 30, 2024 and 2023, IDI had 8,743 and 7,769 billable customers and FOREWARN had 284,967 and 168,356 users, respectively. We define a billable customer of IDI as a single entity that generated revenue during the last three months of the period. Billable customers are typically corporate organizations. In most cases, corporate organizations will have multiple users and/or departments purchasing our solutions, however, we count the entire organization as a discrete customer. 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.

Previous wording

We generate substantially all of our revenue from licensing our solutions. Customers access our solutions through a hosted environment using an online interface, batch processing, API and custom integrations. We recognize revenue from licensing fees (a) on a transactional basis determined by the customer’s usage, (b) via a monthly fee or (c) from a combination of both. 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 three months ended June 30, 2024 and 2023, 74% and 79% of total revenue was attributable to customers with pricing contracts, respectively, versus 26% and 21% attributable to transactional customers, respectively. For the six months ended June 30, 2024 and 2023, 76% and 77% of total revenue was attributable to customers with pricing contracts, respectively, versus 24% and 23% attributable to transactional customers, respectively.

Current wording

We generate substantially all of our revenue from licensing our solutions. Customers access our solutions through a hosted environment using an online interface, batch processing, API and custom integrations. We recognize revenue from licensing fees (a) on a transactional basis determined by the customer’s usage, (b) via a monthly fee or (c) from a combination of both. 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 three months ended September 30, 2024 and 2023, 77% and 79% of total revenue was attributable to customers with pricing contracts, respectively, versus 23% and 21% attributable to transactional customers, respectively. For the nine months ended September 30, 2024 and 2023, 76% and 78% of total revenue was attributable to customers with pricing contracts, respectively, versus 24% and 22% attributable to transactional customers, respectively.

Previous wording

Total revenue increased 30% to $19.1 million.

Current wording

Total revenue increased 20% to $19.1 million.

Previous wording

Gross profit increased 41% to $13.3 million. Gross margin increased to 70% from 64%.

Current wording

Gross profit increased 28% to $13.4 million. Gross margin increased to 70% from 66%.

Previous wording

Adjusted gross profit increased 36% to $15.6 million. Adjusted gross margin increased to 82% from 78%.

Current wording

Adjusted gross profit increased 26% to $15.7 million. Adjusted gross margin increased to 83% from 79%.

Previous wording

Net income increased 90% to $2.6 million, which resulted in earnings of $0.19 per basic and diluted share. Net income margin increased to 14% from 9%.

Current wording

Net income was $1.7 million compared to $12.5 million (inclusive of a one-time deferred income tax benefit of $10.3 million), which resulted in earnings of $0.12 per basic and diluted share. Net income margin decreased to 9% from 79%.

Previous wording

Adjusted EBITDA increased 47% to $6.8 million. Adjusted EBITDA margin increased to 36% from 32%.

Current wording

Adjusted EBITDA increased 25% to $6.7 million. Adjusted EBITDA margin increased to 35% from 34%.

Previous wording

Adjusted net income increased 33% to $3.9 million, which resulted in adjusted earnings of $0.28 per basic and diluted share.

Current wording

Adjusted net income increased 23% to $3.2 million, which resulted in adjusted earnings of $0.23 and $0.22 per basic and diluted share, respectively.

Previous wording

Cash and cash equivalents were $30.9 million as of June 30, 2024.

Current wording

Cash and cash equivalents were $35.7 million as of September 30, 2024.

Previous wording

Second Quarter and Recent Business Highlights

Current wording

Third Quarter and Recent Business Highlights

Previous wording

Added 236 customers to IDI during the second quarter, ending the quarter with 8,477 customers.

Current wording

Added 266 customers to IDI during the third quarter, ending the quarter with 8,743 customers.

Previous wording

Added 27,237 users to FOREWARN during the second quarter, ending the quarter with 263,876 users. Over 490 REALTOR® Associations throughout the U.S. are now contracted to use FOREWARN.

Current wording

Added 21,091 users to FOREWARN during the third quarter, ending the quarter with 284,967 users. Over 500 REALTOR® Associations throughout the U.S. are now contracted to use FOREWARN.

Previous wording

Purchased 15,804 shares of the Company’s common stock during the second quarter at an average price of $18.61 per share pursuant to the Company’s $15.0 million Stock Repurchase Program (as defined below). Total shares purchased during the first half of 2024 was 292,744 shares at an average price of $19.81 per share. The Company has $4.6 million remaining under the Stock Repurchase Program.

Current wording

Purchased 292,744 shares of the Company’s common stock year to date at an average price of $19.81 per share pursuant to the Company’s $15.0 million Stock Repurchase Program, as amended, that was initially authorized on May 2, 2022. The Company has $4.6 million remaining under the Stock Repurchase Program.

Previous wording

Management evaluates the financial performance of our business on a variety of key indicators, including non-GAAP metrics of adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted earnings per share, adjusted gross profit, adjusted gross margin, and free cash flow ("FCF"). Adjusted EBITDA is a non-GAAP financial measure equal to net income, the most directly comparable financial measure based on US GAAP, excluding interest income, net, income tax 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. Adjusted net income is a non-GAAP financial measure equal to net income, the most directly comparable financial measure based on US GAAP, excluding share-based compensation expense, and amortization of share-based compensation capitalized in intangible assets, and including the tax effect of adjustments. We define adjusted earnings per share as adjusted net income divided by the weighted average shares outstanding. We define adjusted gross profit as revenue less cost of revenue (exclusive of depreciation and amortization), and adjusted gross margin as adjusted gross profit as a percentage of revenue. We define FCF as net cash provided by operating activities reduced by purchase of property and equipment, and capitalized costs included in intangible assets.

Current wording

Management evaluates the financial performance of our business on a variety of key indicators, including non-GAAP metrics of adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted earnings per share, adjusted gross profit, adjusted gross margin, and free cash flow ("FCF"). Adjusted EBITDA is a non-GAAP financial measure equal to net income, 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 net income is a non-GAAP financial measure equal to net income, the most directly comparable financial measure based on US GAAP, excluding share-based compensation expense, amortization of share-based compensation capitalized in intangible assets, and discrete tax items, and including the tax effect of adjustments. We define adjusted earnings per share as adjusted net income divided by the weighted average shares outstanding. We define adjusted gross profit as revenue less cost of revenue (exclusive of depreciation and amortization), and adjusted gross margin as adjusted gross profit as a percentage of revenue. We define FCF as net cash provided by operating activities reduced by purchase of property and equipment, and capitalized costs included in intangible assets.

Previous wording

(1) 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 six months ended June 30, 2024. There was no tax effect of such adjustments for the three and six months ended June 30, 2023, as a full valuation allowance was provided for the net deferred tax assets.

Current wording

(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 nine months ended September 30, 2024, and 25.75% for the three and nine months ended September 30, 2023.

Previous wording

Revenue. Revenue increased $4.4 million or 30% to $19.1 million for the three months ended June 30, 2024 from $14.7 million for the three months ended June 30, 2023. Revenue from new customers increased $0.7 million or 58%, base revenue from existing customers increased $2.4 million or 21%, and growth revenue from existing customers increased $1.3 million or 69%. Our IDI billable customer base grew from 7,497 customers as of June 30, 2023 to 8,477 customers as of June 30, 2024, and our FOREWARN user base grew from 146,537 users to 263,876 users during that same period. Revenue from new customers represents the total monthly revenue generated from new customers in a given period. A customer is defined as a new customer during the first six months of revenue generation. Base revenue from existing customers represents the total monthly revenue generated from existing customers in a given period that does not exceed the customers' trailing six-month average revenue. A customer is defined as an existing customer six months after their initial month of revenue. Growth revenue from existing customers represents the total monthly revenue generated from existing customers in a given period in excess of the customers' trailing six-month average revenue.

Current wording

Revenue. Revenue increased $3.3 million or 20% to $19.1 million for the three months ended September 30, 2024 from $15.8 million for the three months ended September 30, 2023. Revenue from new customers increased $0.3 million or 19%, base revenue from existing customers increased $2.9 million or 23%, and growth revenue from existing customers increased $0.1 million or 3%. Our IDI billable customer base grew from 7,769 customers as of September 30, 2023 to 8,743 customers as of September 30, 2024, and our FOREWARN user base grew from 168,356 users to 284,967 users during that same period. Revenue from new customers represents the total monthly revenue generated from new customers in a given period. A customer is defined as a new customer during the first six months of revenue generation. Base revenue from existing customers represents the total monthly revenue generated from existing customers in a given period that does not exceed the customers' trailing six-month average revenue. A customer is defined as an existing customer six months after their initial month of revenue. Growth revenue from existing customers represents the total monthly revenue generated from existing customers in a given period in excess of the customers' trailing six-month average revenue.

Previous wording

Cost of revenue (exclusive of depreciation and amortization). Cost of revenue increased $0.3 million or 7% to $3.5 million for the three months ended June 30, 2024 from $3.2 million for the three months ended June 30, 2023. Our cost of revenue primarily includes data acquisition costs. Data acquisition costs consist primarily of the costs to acquire data either on a transactional basis or through flat-fee data licensing agreements, including unlimited usage agreements. 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 46% and 48% of our total data acquisition costs for the three months ended June 30, 2024 and 2023, respectively. Other cost of revenue items include expenses related to third-party infrastructure fees and pertinent personnel costs.

Current wording

Cost of revenue (exclusive of depreciation and amortization). Cost of revenue remained consistent at $3.3 million for the three months ended September 30, 2024 and 2023. Our cost of revenue primarily includes data acquisition costs. Data acquisition costs consist primarily of the costs to acquire data either on a transactional basis or through flat-fee data licensing agreements, including unlimited usage agreements. 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 48% and 47% of our total data acquisition costs for the three months ended September 30, 2024 and 2023, respectively. Other cost of revenue items include expenses related to third-party infrastructure fees and pertinent personnel costs.

Previous wording

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 18% for the three months ended June 30, 2024 from 22% for the three months ended June 30, 2023. We expect that cost of revenue as a percentage of revenue will continue to decrease over the coming years as our revenue increases. Historically, at scale, the industry business model’s cost of revenue will trend between 15% and 30% as a percentage of revenue.

Current wording

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 17% for the three months ended September 30, 2024 from 21% for the three months ended September 30, 2023. We expect that cost of revenue as a percentage of revenue will continue to decrease over the coming years as our revenue increases. Historically, at scale, the industry business model’s cost of revenue will trend between 15% and 30% as a percentage of revenue.

Previous wording

Sales and marketing expenses. Sales and marketing expenses increased $1.3 million or 43% to $4.4 million for the three months ended June 30, 2024 from $3.1 million for the three months ended June 30, 2023. 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. The increase during the three months ended June 30, 2024 was primarily attributable to the increase of $1.2 million in salaries and benefits, and sales commission.

Current wording

Sales and marketing expenses. Sales and marketing expenses increased $1.4 million or 43% to $4.8 million for the three months ended September 30, 2024 from $3.4 million for the three months ended September 30, 2023. 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. The increase during the three months ended September 30, 2024 was primarily attributable to the increase of $1.3 million in salaries and benefits, and sales commission.

Previous wording

General and administrative expenses. General and administrative expenses increased $0.7 million or 13% to $5.8 million for the three months ended June 30, 2024 from $5.1 million for the three months ended June 30, 2023. For the three months ended June 30, 2024 and 2023, our general and administrative expenses consisted primarily of employee salaries and benefits of $2.9 million and $2.6 million, respectively, share-based compensation expense of $1.2 million and $1.2 million, respectively, and professional fees of $1.0 million and $0.8 million, respectively.

Current wording

General and administrative expenses. General and administrative expenses increased $0.8 million or 15% to $6.0 million for the three months ended September 30, 2024 from $5.2 million for the three months ended September 30, 2023. For the three months ended September 30, 2024 and 2023, our general and administrative expenses consisted primarily of employee salaries and benefits of $2.9 million and $2.4 million, respectively, share-based compensation expense of $1.5 million and $1.3 million, respectively, and professional fees of $0.9 million and $0.9 million, respectively.

Previous wording

Depreciation and amortization. Depreciation and amortization expenses increased $0.3 million or 16% to $2.4 million for the three months ended June 30, 2024 from $2.1 million for the three months ended June 30, 2023. The increase in depreciation and amortization for the three months ended June 30, 2024 resulted primarily from the amortization of software developed for internal use that became ready for its intended use after June 30, 2023.

Current wording

Depreciation and amortization. Depreciation and amortization expenses increased $0.2 million or 12% to $2.4 million for the three months ended September 30, 2024 from $2.2 million for the three months ended September 30, 2023. The increase in depreciation and amortization for the three months ended September 30, 2024 resulted primarily from the amortization of software developed for internal use that became ready for its intended use after September 30, 2023.

Previous wording

Interest income, net. Interest income, net increased $0.1 million or 13% to $0.7 million for the six months ended June 30, 2024 from $0.6 million for the six months ended June 30, 2023. This was primarily due to interest income earned on investments in certain money market funds.

Current wording

Interest income, net. Interest income, net increased $0.1 million or 1% to $0.4 million for the three months ended September 30, 2024 from $0.3 million for the three months ended September 30, 2023. This was primarily due to interest income earned on investments in certain money market funds.

Previous wording

Income before income taxes. Income before income taxes increased $1.9 million or 118% to $3.4 million for the three months ended June 30, 2024 from $1.5 million for the three months ended June 30, 2023. The increase was primarily attributable to the increase in revenue, and decrease in our cost of revenue as a percentage of revenue, which was partially offset by the increase in employee salaries and benefits and sales commissions of $1.5 million, professional fees of $0.2 million, and depreciation and amortization of $0.3 million.

Current wording

Income before income taxes. Income before income taxes increased $0.8 million or 35% to $2.9 million for the three months ended September 30, 2024 from $2.1 million for the three months ended September 30, 2023. The increase was primarily attributable to the increase in revenue, and decrease in our cost of revenue as a percentage of revenue, which was partially offset by the increase in employee salaries and benefits and sales commissions of $1.8 million, share-based compensation expense of $0.3 million, and depreciation and amortization of $0.2 million.

Previous wording

Income taxes. Income tax expense of $0.7 million and $0.2 million was recognized for the three months ended June 30, 2024 and 2023, respectively. A valuation allowance on the deferred tax assets was recognized as of June 30, 2023 to reduce the deferred tax assets to the amount that is more likely than not to be realized. Beginning from the three months ended September 30, 2023, the Company released the valuation allowance as the Company concluded that the realization of the deferred tax assets is more likely than not. See Note 6, “Income taxes,” included in “Notes to Condensed Consolidated Financial Statements.”

Current wording

Income taxes. Income tax expense of $1.1 million was recognized for the three months ended September 30, 2024 compared to income tax benefit of $10.4 million, inclusive of a one-time deferred income tax benefit of $10.3 million as a result of the release of the valuation allowance previously recorded on deferred tax asset and the cumulative research and development tax credit, for the three months ended September 30, 2023. During the three months ended September 30, 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 as of September 30, 2023 is more likely than not. See Note 6, “Income taxes,” included in “Notes to Condensed Consolidated Financial Statements.”

Previous wording

Net income. Net income was $2.6 million for the three months ended June 30, 2024 compared to $1.4 million for the three months ended June 30, 2023, as a result of the foregoing.

Current wording

Net income. Net income was $1.7 million for the three months ended September 30, 2024 compared to $12.5 million for the three months ended September 30, 2023, as a result of the foregoing.

Previous wording

Revenue. Revenue increased $7.3 million or 25% to $36.6 million for the six months ended June 30, 2024 from $29.3 million for the six months ended June 30, 2023. Revenue from new customers increased $0.4 million or 14%, base revenue from existing customers increased $4.6 million or 20%, and growth revenue from existing customers increased $2.3 million or 66%. Our IDI billable customer base grew from 7,497 customers as of June 30, 2023 to 8,477 customers as of June 30, 2024, and our FOREWARN user base grew from 146,537 users to 263,876 users during that same period. Revenue from new customers represents the total monthly revenue generated from new customers in a given period. A customer is defined as a new customer during the first six months of revenue generation. Base revenue from existing customers represents the total monthly revenue generated from existing customers in a given period that does not exceed the customers' trailing six-month average revenue. A customer is defined as an existing customer six months after their initial month of revenue. Growth revenue from existing customers represents the total monthly revenue generated from existing customers in a given period in excess of the customers' trailing six-month average revenue.

Current wording

Revenue. Revenue increased $10.5 million or 23% to $55.6 million for the nine months ended September 30, 2024 from $45.1 million for the nine months ended September 30, 2023. Revenue from new customers increased $0.7 million or 15%, base revenue from existing customers increased $7.5 million or 21%, and growth revenue from existing customers increased $2.3 million or 42%. Our IDI billable customer base grew from 7,769 customers as of September 30, 2023 to 8,743 customers as of September 30, 2024, and our FOREWARN user base grew from 168,356 users to 284,967 users during that same period. Revenue from new customers represents the total monthly revenue generated from new customers in a given period. A customer is defined as a new customer during the first six months of revenue generation. Base revenue from existing customers represents the total monthly revenue generated from existing customers in a given period that does not exceed the customers' trailing six-month average revenue. A customer is defined as an existing customer six months after their initial month of revenue. Growth revenue from existing customers represents the total monthly revenue generated from existing customers in a given period in excess of the customers' trailing six-month average revenue.

Previous wording

Cost of revenue (exclusive of depreciation and amortization). Cost of revenue increased $0.8 million or 12% to $7.2 million for the six months ended June 30, 2024 from $6.4 million for the six months ended June 30, 2023. Our cost of revenue primarily includes data acquisition costs. Data acquisition costs consist primarily of the costs to acquire data either on a transactional basis or through flat-fee data licensing agreements, including unlimited usage agreements. 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 44% and 48% of our total data acquisition costs for the six months ended June 30, 2024 and 2023, respectively. Other cost of revenue items include expenses related to third-party infrastructure fees and pertinent personnel costs.

Current wording

Cost of revenue (exclusive of depreciation and amortization). Cost of revenue increased $0.8 million or 8% to $10.5 million for the nine months ended September 30, 2024 from $9.7 million for the nine months ended September 30, 2023. Our cost of revenue primarily includes data acquisition costs. Data acquisition costs consist primarily of the costs to acquire data either on a transactional basis or through flat-fee data licensing agreements, including unlimited usage agreements. 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 nine months ended September 30, 2024 and 2023, respectively. Other cost of revenue items include expenses related to third-party infrastructure fees and pertinent personnel costs.

Previous wording

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 20% for the six months ended June 30, 2024 from 22% for the six months ended June 30, 2023. We expect that cost of revenue as a percentage of revenue will continue to decrease over the coming years as our revenue increases. Historically, at scale, the industry business model’s cost of revenue will trend between 15% and 30% as a percentage of revenue.

Current wording

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 nine months ended September 30, 2024 from 22% for the nine months ended September 30, 2023. We expect that cost of revenue as a percentage of revenue will continue to decrease over the coming years as our revenue increases. Historically, at scale, the industry business model’s cost of revenue will trend between 15% and 30% as a percentage of revenue.

Previous wording

Sales and marketing expenses. Sales and marketing expenses increased $1.1 million or 17% to $8.1 million for the six months ended June 30, 2024 from $7.0 million for the six months ended June 30, 2023. 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. The increase during the six months ended June 30, 2024 was primarily attributable to the increase of $1.5 million in salaries and benefits, and sales commission, which was offset by the decrease of $0.6 million in provision for bad debts.

Current wording

Sales and marketing expenses. Sales and marketing expenses increased $2.6 million or 25% to $12.9 million for the nine months ended September 30, 2024 from $10.3 million for the nine months ended September 30, 2023. 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. The increase during the nine months ended September 30, 2024 was primarily attributable to the increase of $2.8 million in salaries and benefits, and sales commission, which was offset by the decrease of $0.6 million in provision for bad debts.

Previous wording

General and administrative expenses. General and administrative expenses increased $1.2 million or 12% to $11.5 million for the six months ended June 30, 2024 from $10.3 million for the six months ended June 30, 2023. For the six months ended June 30, 2024 and 2023, our general and administrative expenses consisted primarily of employee salaries and benefits of $5.6 million and $5.3 million, respectively, share-based compensation expense of $2.5 million and $2.5 million, respectively, and professional fees of $2.2 million and $1.4 million, respectively.

Current wording

General and administrative expenses. General and administrative expenses increased $2.0 million or 13% to $17.5 million for the nine months ended September 30, 2024 from $15.5 million for the nine months ended September 30, 2023. For the nine months ended September 30, 2024 and 2023, our general and administrative expenses consisted primarily of employee salaries and benefits of $8.5 million and $7.7 million, respectively, share-based compensation expense of $4.0 million and $3.7 million, respectively, and professional fees of $3.1 million and $2.3 million, respectively.

Previous wording

Depreciation and amortization. Depreciation and amortization expenses increased $0.6 million or 17% to $4.6 million for the six months ended June 30, 2024 from $4.0 million for the six months ended June 30, 2023. The increase in depreciation and amortization for the six months ended June 30, 2024 resulted primarily from the amortization of software developed for internal use that became ready for its intended use after June 30, 2023.

Current wording

Depreciation and amortization. Depreciation and amortization expenses increased $1.0 million or 15% to $7.1 million for the nine months ended September 30, 2024 from $6.1 million for the nine months ended September 30, 2023. The increase in depreciation and amortization for the nine months ended September 30, 2024 resulted primarily from the amortization of software developed for internal use that became ready for its intended use after September 30, 2023.

Previous wording

Interest income, net. Interest income, net remained consistent at $0.3 million for the three months ended June 30, 2024 and 2023. This was primarily due to interest income earned on investments in certain money market funds.

Current wording

Interest income, net. Interest income, net increased $0.1 million or 9% to $1.0 million for the nine months ended September 30, 2024 from $0.9 million for the nine months ended September 30, 2023. This was primarily due to interest income earned on investments in certain money market funds.

Previous wording

Income before income taxes. Income before income taxes increased $3.5 million or 156% to $5.7 million for the six months ended June 30, 2024 from $2.2 million for the six months ended June 30, 2023. 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 $0.6 million, which was partially offset by the increase in employee salaries and benefits and sales commissions of $1.8 million, professional fees of $0.8 million, and depreciation and amortization of $0.6 million.

Current wording

Income before income taxes. Income before income taxes increased $4.3 million or 97% to $8.6 million for the nine months ended September 30, 2024 from $4.3 million for the nine months ended September 30, 2023. 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 $0.6 million, which was partially offset by the increase in employee salaries and benefits and sales commissions of $3.6 million, share-based compensation expense of $0.4 million, professional fees of $0.8 million, and depreciation and amortization of $1.0 million.

Previous wording

Income taxes. Income tax expense of $1.3 million and $0.1 million was recognized for the six months ended June 30, 2024 and 2023, respectively. A valuation allowance on the deferred tax assets was recognized as of June 30, 2023 to reduce the deferred tax assets to the amount that is more likely than not to be realized. Beginning from the three months ended September 30, 2023, the Company released the valuation allowance as the Company concluded that the realization of the deferred tax assets is more likely than not. See Note 6, “Income taxes,” included in “Notes to Condensed Consolidated Financial Statements.”

Current wording

Income taxes. Income tax expense of $2.4 million was recognized for the nine months ended September 30, 2024 compared to income tax benefit of $10.3 million, primarily a one-time deferred income tax benefit as a result of the release of the valuation allowance previously recorded on deferred tax asset and the cumulative research and development tax credit, for the nine months ended September 30, 2023. Beginning from the three months ended September 30, 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 as of

Previous wording

Net income. Net income was $4.4 million for the six months ended June 30, 2024 compared to $2.1 million for the six months ended June 30, 2023, as a result of the foregoing.

Current wording

Net income. Net income was $6.1 million for the nine months ended September 30, 2024 compared to $14.6 million for the nine months ended September 30, 2023, as a result of the foregoing.

Previous wording

Cash flows provided by operating activities. For the six months ended June 30, 2024, net cash provided by operating activities was $10.0 million, primarily the result of the net income of $4.4 million, adjusted for certain non-cash items (consisting of share-based compensation expense, depreciation and amortization, provision for bad debts, noncash lease expenses, and deferred income tax expense) totaling $9.0 million, and the cash used as a result of changes in assets and liabilities of $3.4 million, primarily the result of the increase in accounts receivable, prepaid expenses and other current assets, and other noncurrent assets, and the decrease in accrued expenses and other current liabilities, and operating lease liabilities, which was partially offset by the increase in accounts payable. For the six months ended June 30, 2023, net cash provided by operating activities was $5.1 million, primarily the result of the net income of $2.1 million, adjusted for certain non-cash items, primarily as mentioned above, totaling $7.9 million, and the cash used as a result of changes in assets and liabilities of $4.9 million, primarily the result of the increase in accounts receivable, and prepaid expenses and other current assets, and the decrease in accounts payable, accrued expenses and other current liabilities, and operating lease liabilities.

Current wording

Cash flows provided by operating activities. For the nine months ended September 30, 2024, net cash provided by operating activities was $17.3 million, primarily the result of the net income of $6.1 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 $14.4 million, and the cash used as a result of changes in assets and liabilities of $3.3 million, primarily the result of the increase in accounts receivable, prepaid expenses and other current assets, and other noncurrent assets, and the decrease in accrued expenses and other current liabilities, and operating lease liabilities, which was partially offset by the increase in accounts payable. For the nine months ended September 30, 2023, net cash provided by operating activities was $10.9 million, primarily the result of the net income of $14.6 million, adjusted for certain non-cash items, as mentioned above, totaling $(1.3) million, and the cash used as a result of changes in assets and liabilities of $5.0 million, primarily the result of the increase in accounts receivable, and prepaid expenses and other current assets, and the decrease in accounts payable, accrued expenses and other current liabilities, and operating lease liabilities.

Previous wording

Cash flows used in investing activities. For the six months ended June 30, 2024 and 2023, net cash used in investing activities was $4.9 million and $4.6 million, respectively, primarily as a result of capitalized costs included in intangible assets.

Current wording

Cash flows used in investing activities. For the nine months ended September 30, 2024 and 2023, net cash used in investing activities was $7.3 million and $7.0 million, respectively, primarily as a result of capitalized costs included in intangible assets.

Previous wording

Cash flows used in financing activities. For the six months ended June 30, 2024, net cash used in financing activities was $6.3 million, resulting from the taxes paid related to the net share settlement of vesting of RSUs of $0.4 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. 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. For the six months ended June 30, 2023, net cash used in financing activities was $1.0 million, mainly the result of $0.9 million paid in aggregate for the repurchase of common stock pursuant to the Stock Repurchase Program.

Current wording

Cash flows used in financing activities. For the nine months ended September 30, 2024, net cash used in financing activities was $6.3 million, resulting from the taxes paid related to the net share settlement of vesting of RSUs of $0.4 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. 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. For the nine months ended September 30, 2023, net cash used in financing activities was $1.4 million, mainly the result of $1.3 million paid in aggregate for the repurchase of common stock pursuant to the Stock Repurchase Program.

Previous wording

As of June 30, 2024, we had material commitments under certain data licensing agreements of $17.9 million. We anticipate funding our operations using available cash and cash flow generated from operations within the next twelve months.

Current wording

As of September 30, 2024, we had material commitments under certain data licensing agreements of $15.2 million. We anticipate funding our operations using available cash and cash flow generated from operations within the next twelve months.

Previous wording

We reported net income of $2.6 million and $1.4 million for the three months ended June 30, 2024 and 2023, respectively, and net income of $4.4 million and $2.1 million for the six months ended June 30, 2024 and 2023, respectively. As of June 30, 2024, we had a total shareholders’ equity balance of $88.0 million.

Current wording

We reported net income of $1.7 million and $12.5 million (inclusive of a one-time deferred income tax benefit of $10.3 million as a result of the release of valuation allowance previously recorded against our deferred tax assets and the cumulative research and development tax credit) for the three months ended September 30, 2024 and 2023, respectively, and $6.1 million and $14.6 million (inclusive of a one-time deferred income tax benefit of $10.3 million as a result of the release of valuation allowance previously recorded against our deferred tax assets and the cumulative research and development tax credit) for the nine months ended September 30, 2024 and 2023, respectively. As of September 30, 2024, we had a total shareholders’ equity balance of $91.7 million.