Presented at: B. Riley & Co. s 17 th Annual Investor Conference Los Angeles, California May 25, 2016

Transcription

1 Presented by: Lloyd Lynford, CEO Mark P. Cantaluppi, CFO Reis, Inc. Presented at: B. Riley & Co. s 17 th Annual Investor Conference Los Angeles, California May 25, 2016

2 DRAFT Disclaimer This presentation may include forward-looking statements which involve a number of risks and uncertainties that could cause actual results to differ materially from those described or implied in those forward-looking statements. These statements are based on currently available information and current management outlook or expectations. In addition, we do not plan to update any forward-looking statements to reflect subsequent events or circumstances or if our expectations change. For more information relating to the risks and uncertainties involved in our forward-looking statements and Reis generally, please see the Risk Factors and Cautionary Statement Regarding Forward-Looking Statements sections of our recent filings with the SEC, including our 2015 Annual Report on Form 10-K filed on March 3, 2016 and the March 31, 2016 Quarterly Report on Form 10-Q filed on May 3,

3 DRAFT Executive Summary Reis is a leading provider of U.S. commercial real estate ( CRE ) market and transaction-support information. Unique Proprietary Databases Diversified Customer Base Significant Growth Opportunities Subscription Business Model Attractive Financial Profile Compelling Industry Dynamics Strong Platform to Execute Growth Strategy 3

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6 DRAFT Executive Summary Subscription-based business model with high revenue visibility, significant cash generation and substantial growth potential. Delivers proprietary CRE market information and analytics. Unrivaled depth of proprietary data on over 7,200 market areas and segments. 36 year history of data collection and aggregation; difficult to replicate. Blue-chip client base across wide spectrum of CRE and financial sectors. Outstanding platform to capture logically adjacent opportunities (space leasing and marketplace sectors). 6

7 Products DESCRIPTION Primary delivery platform Data on rents, vacancy rates, absorption, lease terms, property sales and new construction activity Market-based trends, comparable properties, valuation and credit analysis Repurposes Reis SE market data to prosumers and smaller businesses Provides subset of information available to Reis SE subscribers Property and loan-level analyses of cash flows, collateral values and default risk Property valuation, credit analysis, recurring stress testing and benchmarking CUSTOMERS Property owners, developers, managers, banks and nonbank lenders, equity investors and service providers Smaller enterprises and individuals, professional investors, brokers, appraisers and other service providers Available to new and existing customers as an add-on to Reis SE Banks and lending institutions seeking CRE risk Management tools CMBS and equity investors PRICING / CONTRACT Annual and multi-year subscriptions ($1,000 $1 million+) with an average of approximately $43,000 Prices of individual reports typically range up to $999 Monthly subscriptions in the low hundreds of dollars Annual subscriptions are also available Varies by client and usage Annual and multi-year subscriptions Low tens of thousands of dollars into the hundreds of thousand of dollars per year 7

8 Key Databases Property Data Physical Attributes Geocoding Performance Data Up to 36-year Time Series New Construction Planned Proposed Under Construction Sales Comps 277 Markets 14-year history Cap Rate Trends $250K+ Transactions Trends 275 Markets 7,200+ Submarkets/Segments Up to 36-year Time Series Forecasts 5-year Forecasts 275 Markets and Thousands of Submarkets Property Type Markets Apartment 275 Office 190 Retail 190 Warehouse/Distribution 47 Flex/R&D 47 Self Storage 50 Seniors Housing 110 Student Housing 200 Totals 1,109 8

9 Curated Databases Curated databases for CRE professionals Reis s databases are carefully constructed and maintained. Competitive inventories are coded and sub-property types are defined. Historical property-level performance data is archived at the record level. Consistent samples ensure disciplined market trends. Not repositories of land use records of low value to CRE professionals. Only precisely designed and populated databases will succeed in the emerging analytics marketplace... 9

10 Data Collection Thousands of sources are accessed on an ongoing basis. Primary Research Methodologies Proprietary lists of brokers, managers and owners Individual telephonic surveys (1M+ calls placed annually) List processing of brokerage feeds Websites and internet searches Extensive database of market sources must be maintained Other Research Sources Utilized Planning and Zoning Boards Public Records (Deed recorders and Tax assessors) Building Directories Business and Trade Press Visiting selected markets 10

11 Premier Brand Name Reis is a trusted source for many of the nation s most well respected news organizations. 11

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13 Reis SE Product Overview Product Overview Reis Subscriber Edition (Reis SE) is our primary web-based delivery platform for market and property level reports. The average annual subscription fee is approximately $43,000. Annual and multi-year subscriptions range from $1K to $1M+ depending on anticipated usage and what the subscriber is entitled to. The product can be entitled at the user or account level to support customized access by selected markets, property and report types and analytical modules. 13

14 Reis SE Report Types Report Types Market and Submarket Reports: Provide trends and forecasts on critical performance criteria such as rent, vacancy, inventory, class cuts and eco/demo variables at the metro and submarket levels. Rent Comparables: Property-level performance data such as rents and vacancies, as well as comp group summary statistics and geocode mapping. Sales Transactions: Timely tracking of sales transactions (including Hotels) along with buyer, seller, price and pro forma cap rates in over 277 metropolitan areas. New Construction: Tracking of all planned, proposed, and under construction projects as well as lease up velocity for newly completed construction. Executive Briefing Reports: Instantly translate key conclusions from Reis data and charts into a straightforward narrative that takes the form of an analyst s report. 14

15 Reis SE Key Features Key Features Single Property Valuation: Automated Valuation model (AVM) utilizes three valuation methods discounted cash flow, direct capitalization and sales price per square foot. Transaction Analytics: CRE capital market trends, including market level trend information on buyers, sellers, transaction prices and cap rates. Property Sales Real Estate News and Commentary: Executive Briefings, the Reis Observer and news stories selected by Reis analysts. Alerts: Customizable alerts that let users receive proactive updates on changing market conditions, transactions of interest and new construction projects. Translation into Six Languages: Reis SE is available in six languages to assist our many non-u.s. clients as their non-english speaking employees work with Reis data. Languages include: Chinese, French, German, Japanese, Russian and Spanish. 15

16 Client Composition 52% Debt Banks Non-Bank Lenders Investment Banks and Conduits Insurance Companies Government 86% Capital Providers 14% Service Providers 34% Equity Developers Real Estate Investment Trusts Investment Managers Opportunity Funds Pension Funds Private Investors Service Providers Appraisers Brokers Accountants Consultants Academia Government Note: Percentages in chart based on an analysis of Reis customers at December 31,

17 Growth Opportunities Content Expansion Next Asset Class: Affordable Housing (2016) Medical Office (2017) Potential additions: Data Centers Hotel Land Sales Comps Expansion Greater property granularity International markets Analytical Tools CRE Portfolio monitoring CRE-backed Securities: REITs CMBS Reis-timates summary values for millions of CRE properties Data Dashboards Custom data / APIs Acquisitions Regional data vendors (roll-up strategy) Software providers: Property Mgmt. Cash flow Budgeting Valuation Appraisers 17

18 Financial Performance 18

19 Historical Reis Services Performance Fiscal Years 2006 to 2015 (in millions) $55 $50 $45 $40 $35 $30 $25 $20 $15 $10 $5 $ % % % 44.9% % 39.9% 40.9% % 40.8% EBITDA Revenue Margin % 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Note: Results relate to the Reis Services segment. Please see Reis s SEC filings for information relating to Reis s consolidated results. 19

20 Financial Performance Metrics Reis Services Segment First Quarter For the Years Ended December 31, ($ in thousands) (Unaudited) Reis Services: Increase Increase (1) Revenue $ 12,824 $ 11,131 $ 1, % $ 50,890 $ 41,335 $ 9, % EBITDA $ 5,382 $ 4,594 $ % $ 22,074 $ 16,852 $ 5, % EBITDA Margin 42.0% 41.3% 43.4% 40.8% Annualized First Qtr 2016: Revenue = $51,296 EBITDA = $21,528 Margin = 42.0% TTM Ended March 31, 2016: Revenue = $52,583 EBITDA = $22,862 Margin = 43.5% (1) Growth rates and margins during the year ended December 31, 2015 were influenced by revenue recognized during the year related to separate contracts for custom portfolio and advisory services for a major financial services firm in the U.S. Revenue and EBITDA in the period were positively impacted by incremental revenue, as more fully described in our Form 10-K and earnings press release issued on March 3, On a pro forma basis, the revenue growth rate was 14.9% and the Reis Services EBITDA growth rate was 17.3% for the year ended December 31, Note: EBITDA and Adjusted EBITDA are non-gaap measures that senior management of Reis uses to measure operational and management performance, and may be appropriate for investors to use as a supplement to reported GAAP basis financial information for the Reis Services segment and on a consolidated basis. Please see our March 31, 2016 Quarterly Report on Form 10-Q filed with the SEC on May 3, 2016 and our December 31, 2015 Annual Report on Form 10-K, filed with the SEC on March 3, 2016, for cautionary language about the use of EBITDA and Adjusted EBITDA and reconciliations of income from continuing operations to EBITDA and Adjusted EBITDA for the Reis Services segment and on a consolidated basis. 20

21 Financial Performance Metrics Consolidated First Quarter For the Years Ended December 31, ($ in thousands) (Unaudited) Increase Increase (1) Consolidated, excluding discontinued operations: Revenue $ 12,824 $ 11,131 $ 1, % $ 50,890 $ 41,335 $ 9, % Adjusted EBITDA $ 4,629 $ 3,881 $ % $ 19,481 $ 14,325 $ 5, % Adjusted EBITDA Margin 36.1% 34.9% 38.3% 34.7% Annualized First Qtr 2016: Revenue = $51,296 Adjusted EBITDA = $18,516 Margin = 36.1% TTM Ended March 31, 2016: Revenue = $52,583 Adjusted EBITDA = $20,229 Margin = 38.5% (1) Growth rates and margins during the year ended December 31, 2015 were influenced by revenue recognized during the year related to separate contracts for custom portfolio and advisory services for a major financial services firm in the U.S. Revenue and Adjusted EBITDA in the period were positively impacted by incremental revenue, as more fully described in our Form 10-K and earnings press release issued on March 3, On a pro forma basis, the revenue growth rate was 14.9% and the consolidated Adjusted EBITDA growth rate was 20.6% for the year ended December 31, Note: EBITDA and Adjusted EBITDA are non-gaap measures that senior management of Reis uses to measure operational and management performance, and may be appropriate for investors to use as a supplement to reported GAAP basis financial information for the Reis Services segment and on a consolidated basis. Please see our March 31, 2016 Quarterly Report on Form 10-Q filed with the SEC on May 3, 2016 and our December 31, 2015 Annual Report on Form 10-K, filed with the SEC on March 3, 2016, for cautionary language about the use of EBITDA and Adjusted EBITDA and reconciliations of income from continuing operations to EBITDA and Adjusted EBITDA for the Reis Services segment and on a consolidated basis. 21

22 (In thousands) Condensed Balance Sheet Data Consolidated Balance Sheets March 31, 2016 December 31, 2015 Assets (unaudited) Cash $ 28,911 $ 28,658 Accounts Receivable, Net 7,107 13,741 Prepaid and Other Current and Non-Current Assets 3,198 1,858 Goodwill and Intangible Assets Deferred Tax Assets, Net 71,122 17,690 70,512 18,430 Total Assets $ 128,028 $ 133,199 Liabilities and Stockholders Equity Debt (A) $ $ Deferred Revenue (B) 22,268 25,291 Other Liabilities 4,478 6,329 Total Liabilities 26,746 31,620 Stockholders Equity 101, ,579 Total Liabilities and Stockholder s Equity Common Shares Outstanding $ 128,028 11,316 $ 133,199 11,256 (A) The Company previously had a $10 million credit revolving facility with an interest at a rate of LIBOR % per annum, which was set to expire on October 16, 2015; however, the expiration dates were extended to January 31, On January 28, 2016, the Company entered into a new three-year agreement to renew and expand the revolving credit facility to $20 million, with terms substantially similar to the previous agreement and with an expiration date on January 28, (B) Aggregate Revenue Under Contract (which is deferred revenue, plus future revenue under non-cancellable contracts for which we do not have the contractual right to bill) aggregated $45,262 and $48,014 at March 31, 2016 and December 31, 2015, respectively. At March 31, 2016, $31,486 relates to amounts under contract that will turn into revenue in the forward twelve month period through March 31, Please see our March 31, 2016 Quarterly Report on Form 10-Q, filed with the SEC on May 3, 2016, and our December 31, 2015 Annual Report on Form 10-K, filed with the SEC on March 3, 2016, for reconciliations to the most comparable GAAP financial measure. 22

23 DRAFT Investor Highlights Executive Summary Unique Proprietary Databases: Continuing development of three curated databases with a 36 year history of data. Growth Opportunities: The addition of new property types, the introduction of narrative reports at the property level and the expansion of our sales comparables database will drive growth in 2016 and beyond. Excellent Revenue Visibility: Recurring revenue, digital delivery, subscription model (not ad-based). Strong Business Fundamentals: Our high renewal rates, enviable EBITDA margins and cost structure fuel significant cash flow creation. Predictable Dividend: Commenced a quarterly dividend program in May 2014 at $0.11 per common share which was increased 27.3% in the first quarter of 2015 to $0.14 per common share and then further increased by 21.4% in the first quarter of 2016 to $0.17 per common share. Significant Management Focus: Management and board members own approximately 23% of the Company. 23

24 Reis, Inc. 530 Fifth Avenue, 5th Floor New York, NY (212) Lloyd Lynford, CEO Mark P. Cantaluppi, CFO

25 SUPPLEMENTAL INFORMATION

26 Reconciliations of Income from Continuing Operations to EBITDA and Adjusted EBITDA We define EBITDA as earnings (income (loss) from continuing operations) before interest, taxes, depreciation and amortization. We define Adjusted EBITDA as earnings before interest, taxes, depreciation, amortization and stock based compensation. Although EBITDA and Adjusted EBITDA are not measures of performance calculated in accordance with GAAP, senior management uses EBITDA and Adjusted EBITDA to measure operational and management performance. Management believes that EBITDA and Adjusted EBITDA are appropriate supplemental financial measures to be considered in addition to the reported GAAP basis financial information which may assist investors in evaluating and understanding: (1) the performance of the Reis Services segment, the primary business of the Company and (2) the Company s continuing consolidated results, from year to year or period to period, as applicable. Further, these measures provide the reader with the ability to understand our operational performance while isolating noncash charges, such as depreciation and amortization expenses, as well as other non-operating items, such as interest income, interest expense and income taxes and, in the case of Adjusted EBITDA, isolates non-cash charges for stock based compensation. Management also believes that disclosing EBITDA and Adjusted EBITDA will provide better comparability to other companies in the information services sector. However, because EBITDA and Adjusted EBITDA are not calculated in accordance with GAAP, they may not necessarily be comparable to similarly titled measures employed by other companies. EBITDA and Adjusted EBITDA are presented both for the Reis Services segment and on a consolidated basis. We believe that these metrics, for Reis Services, provide the reader with valuable information for evaluating the financial performance of the core Reis Services business, excluding public company costs, and for making assessments about the intrinsic value of that stand-alone business to a potential acquirer. Management primarily monitors and measures its performance, and is compensated, based on the results of the Reis Services segment. EBITDA and Adjusted EBITDA, on a consolidated basis, allow the reader to make assessments about the current trading value of the Company s common stock, including expenses related to operating as a public company. However, investors should not consider these measures in isolation or as substitutes for net income (loss), income from continuing operations, operating income, or any other measure for determining operating performance that is calculated in accordance with GAAP. Reconciliations of EBITDA and Adjusted EBITDA to the most comparable GAAP financial measure, income from continuing operations, follow for each identified period on a segment basis (including the Reis Services segment), as well as on a consolidated basis: (amounts in thousands) Reconciliation of Income from Continuing Operations to EBITDA and By Segment Adjusted EBITDA for the Three Months Ended March 31, 2016 Reis Services Other (A) Consolidated Income from continuing operations... $ 1,604 Income tax expense Income (loss) before income taxes and discontinued operations... $ 3,880 $ (1,289) 2,591 Add back: Depreciation and amortization expense... 1, ,491 Interest expense (income), net EBITDA... 5,382 (1,287) 4,095 Add back: Stock based compensation expense, net Adjusted EBITDA... $ 5,382 $ (753) $ 4,629 Reconciliation of Income from Continuing Operations to EBITDA and Adjusted EBITDA for the Three Months Ended March 31, 2015 By Segment Reis Services Other (A) Consolidated Income from continuing operations... $ 1,293 Income tax expense Income (loss) before income taxes and discontinued operations... $ 3,248 $ (1,161) 2,087 Add back: Depreciation and amortization expense... 1, ,327 Interest expense (income), net EBITDA... 4,594 (1,159) 3,435 Add back: Stock based compensation expense Adjusted EBITDA... $ 4,594 $ (713) $ 3,881 See footnotes on next page. i

27 (amounts in thousands) Reconciliation of Income from Continuing Operations to EBITDA and Adjusted EBITDA for the Year Ended December 31, 2015 By Segment Reis Services Other (A) Consolidated Income from continuing operations... $ 8,071 Income tax expense... 4,005 Income (loss) before income taxes and discontinued operations... $ 16,451 $ (4,375) 12,076 Add back: Depreciation and amortization expense... 5, ,578 Interest expense (income), net EBITDA... 22,074 (4,366) 17,708 Add back: Stock based compensation expense, net... 1,773 1,773 Adjusted EBITDA... $ 22,074 $ (2,593) $ 19,481 Reconciliation of Income from Continuing Operations to EBITDA and Adjusted EBITDA for the Year Ended December 31, 2014 Reis Services By Segment Other (A) Consolidated Income from continuing operations... $ 4,616 Income tax expense... 2,842 Income (loss) before income taxes and discontinued operations... $ 11,559 $ (4,101) 7,458 Add back: Depreciation and amortization expense... 5, ,211 Interest expense (income), net EBITDA... 16,852 (4,092) 12,760 Add back: Stock based compensation expense, net... 1,565 1,565 Adjusted EBITDA... $ 16,852 $ (2,527) $ 14,325 (A) Includes interest and other income, depreciation expense and general and administrative expenses (including public company related costs) that are not associated with the Reis Services segment. Since the reconciliations start with income from continuing operations, the effects of the discontinued operations are excluded from these reconciliations for all periods presented. Deferred Revenue and Aggregate Revenue Under Contract Two additional metrics management utilizes are deferred revenue and Aggregate Revenue Under Contract. Analyzing these amounts can provide additional insight into Reis Services s future financial performance. Deferred revenue, which is a GAAP basis accounting concept and is reported by the Company on the consolidated balance sheet, represents revenue from annual or longer term contracts for which we have billed and/or received payments from our subscribers related to services we will be providing over the remaining contract period. It does not include future revenue under non-cancellable contracts for which we do not yet have the contractual right to bill; this aggregate number we refer to as Aggregate Revenue Under Contract. Deferred revenue will be recognized as revenue ratably over the remaining life of a contract for subscriptions, or in the case of future custom reports or projects, will be recognized as revenue upon completion and delivery to the customer, provided no significant Company obligations remain. The following table reconciles deferred revenue to Aggregate Revenue Under Contract at March 31, 2016 and December 31, 2015, respectively. March 31, 2016 December 31, 2015 Deferred revenue (GAAP basis)... $ 22,268,000 $ 25,291,000 Amounts under non-cancellable contracts for which the Company does not yet have the contractual right to bill at the period end (A)... 22,994,000 22,723,000 Aggregate Revenue Under Contract... $ 45,262,000 $ 48,014,000 (A) Amounts are billable subsequent to March 31, 2016 and December 31, 2015, respectively, and represent (i) non-cancellable contracts for subscribers with multi-year subscriptions where the future years are not yet billable, or (ii) subscribers with non-cancellable annual subscriptions with interim billing terms. ii