Reis, Inc. Announces Second Quarter 2011 Results

13.9% Revenue Growth and 17.9% EBITDA Growth for Reis Services in Second Quarter 2011 Over 2010

Second Consecutive Quarter of Record Revenue for Reis Services

NEW YORK, Aug. 4, 2011 (GLOBE NEWSWIRE) -- Reis, Inc. (Nasdaq:REIS) ("Reis" or the "Company"), a leading provider of commercial real estate market information and analytical tools, announced its financial results and operational achievements for the quarter and six months ended June 30, 2011.

Results and Performance

Financial Results Summary

Consolidated revenue, which is comprised entirely of subscription revenue, was $6,836,510 for the three months ended June 30, 2011 as compared to $6,004,373 for the three months ended June 30, 2010, an increase of 13.9%. For the six months ended June 30, 2011 and 2010, consolidated revenue was $13,453,878 and $12,018,542, respectively, an increase of 11.9%.

Income from continuing operations was $100,629, or $0.01 per basic and diluted share, for the three months ended June 30, 2011. For the three months ended June 30, 2010, the Company had a loss from continuing operations of $(57,697), or $(0.01) per basic and diluted share. For the six months ended June 30, 2011, income from continuing operations was $200,158, or $0.02 per basic and diluted share. For the six months ended June 30, 2010, the loss from continuing operations was $(214,229), or $(0.02) per basic and diluted share.

On a consolidated basis, the Company had net income of $1,442,609, or $0.14 per basic share and $0.13 per diluted share, for the three months ended June 30, 2011. For the three months ended June 30, 2010, the Company's consolidated net income was $106,397, or $0.01 per basic and diluted share. The Company had net income of $1,452,408, or $0.14 per basic share and $0.13 per diluted share, for the six months ended June 30, 2011. For the six months ended June 30, 2010, the Company reported a net loss of $(70,673), or $(0.01) per basic and diluted share.

Management uses other metrics such as EBITDA (earnings before interest, taxes, depreciation and amortization) to monitor and assess Reis Services's performance and believes it is helpful to investors in understanding Reis Services's business (see Reconciliations of Income (Loss) from Continuing Operations to EBITDA and Adjusted EBITDA below for the Reis Services segment and on a consolidated basis).

Reis Services's EBITDA was $2,748,000 and the EBITDA margin was 40.2% during the second quarter of 2011. EBITDA increased $418,000, or 17.9%, over the second quarter of 2010 total of $2,330,000. EBITDA for the second quarter of 2011 is also in excess of the first quarter 2011 amount of $2,619,000, representing growth on a consecutive quarter basis of $129,000, or 4.9%. The EBITDA margins were 38.8% and 39.6% for the second quarter of 2010 and the first quarter of 2011, respectively. For the six months ended June 30, 2011 and 2010, Reis Services EBITDA was $5,367,000 and $4,656,000, respectively, representing growth of $711,000, or 15.3%. The EBITDA margins were 39.9% and 38.7% for the six months ended June 30, 2011 and 2010, respectively.

Operational, Financial and Balance Sheet Highlights

Following are recent operational, financial and balance sheet highlights for Reis:

• Established an exclusive market data agreement with the Self Storage Association to introduce coverage of the U.S. self storage market;
• Wider sales comparable coverage released in April 2011 to include: hotels – a new property type for Reis, and a dramatic expansion to include transactions valued at greater than $250,000;
• The addition of 30 retail markets in May 2011, raising the total number of metropolitan areas for which retail coverage is offered to 170;
• Reis Services's revenue for the second quarter of 2011 was the segment's highest revenue quarter in the Company's history at $6,837,000;
• Growth of subscription revenue by $833,000, or 13.9% in the second quarter 2011 over the second quarter of 2010 – the fifth consecutive quarterly revenue increase over the prior year's corresponding quarter;
• Consecutive quarter growth in subscription revenue of $220,000, or 3.3% in the second quarter over the first quarter of 2011;
• Continued improvements in our trailing twelve month renewal rates to 92% overall and 95% for institutional customers, up from the June 30, 2010 trailing twelve month renewal rates of 88% and 90%, respectively;
• Reis Services EBITDA growth of $418,000 or 17.9% in the second quarter of 2011 over the second quarter of 2010 and a year to date improvement of 15.3% over the 2010 period;
• Consecutive quarter growth in EBITDA of 4.9%;
• The April 2011 sale of our last remaining real estate project (located in East Lyme, Connecticut), generated cash at closing of approximately $2,600,000, or $0.24 per share from net proceeds and escrow releases and resulted in a gain of $1,242,000 (this segment's financial information and the related other expenses have been presented as discontinued operations in our June 30, 2011 financial statements);
• Total debt was reduced to $8,468,000 at June 30, 2011 after contractual minimum payments of $2,766,000 during 2011;
• Consolidated cash grew to $23,285,000, or $2.20 per share, at June 30, 2011 from $20,164,000, or $1.93 per share, at December 31, 2010; and
• Consolidated net cash (total cash and cash equivalents minus total debt) grew to $14,817,000, or $1.40 per share, at June 30, 2011 from $8,914,000, or $0.85 per share, at December 31, 2010.

Reis's CEO, Lloyd Lynford, commented on the latest results, "Reis's strong revenue and EBITDA gains during the 2011 second quarter are impressive, and they are the result of thoughtful investments in our product and marketing. We continue to execute and to enhance our information and analytics. As we put more distance between Reis's capabilities and those of the competition, we are confident that we will sustain revenue and EBITDA growth in the coming quarters and beyond."

Reis Services Critical Metrics: Revenue, Deferred Revenue, Aggregate Revenue Under Contract and EBITDA

Reis Services's revenue for the three months ended June 30, 2011 of $6,837,000 is the highest quarterly amount in the Company's history, achieved for the second consecutive quarter. An improved sales environment supported gains in renewal rates and strong new business. Reis Services's revenue increased by approximately $833,000, or 13.9%, from the second quarter of 2010 to the second quarter of 2011. This revenue increase over the corresponding prior quarterly period is the fifth consecutive quarterly increase in revenue over the prior year's quarter. In addition, revenue increased by approximately $220,000, or 3.3%, from the first quarter of 2011 to the second quarter of 2011. For the six months ended June 30, 2011, Reis Services's revenue was approximately $13,454,000, an increase of approximately $1,436,000, or 11.9%, from the six months ended June 30, 2010. These revenue increases reflect (1) positive improvements in overall renewal rates as the trailing twelve month renewal rate improved to 92% at June 30, 2011 as compared to 88% for the trailing twelve months ended June 30, 2010, (2) additional new business, (3) sales from ReisReports and (4) the cumulative impact of the strength of contract signings from the third and fourth quarters of 2010 and into 2011.

As noted above, our overall trailing twelve month renewal rates improved from 88% at June 30, 2010 to 92% at June 30, 2011 and, for institutional subscribers, the renewal rates improved from 90% at June 30, 2010 to 95% at June 30, 2011. The fourth quarter and full year of 2010 were record periods for the Company for total contracts signed (based upon the value of annual contracts executed in those periods for both new and renewal business). The renewal rate improvements, coupled with new business from both existing and new subscribers, allowed revenue to stabilize in the first nine months of 2010 as older prior year contracts rolled out of the revenue base and a higher percentage of expiring contracts were renewed. The level of contract signings in 2010, and specifically in the fourth quarter of 2010, resulted in the revenue growth recorded during the fourth quarter of 2010 and continuing into the first six months of 2011.

Reis's revenue model is based primarily on annual subscriptions that are paid in accordance with contractual billing terms. Reis recognizes revenue from its contracts on a ratable basis; for example, one-twelfth of the value of a one-year contract is recognized monthly. Therefore, increases in the dollar value of new contracts are spread evenly over the life of a contract, thereby moderating an immediate impact on revenue. It took over four quarters to realize the full impact of contract declines on revenue in late 2008 and into 2009. These older, lower value contracts are rolling and being replaced by renewals with more favorable pricing over a similar time period. This trend is evidenced by our 2010 quarterly revenue, as each of the first three quarters reported stable revenue at slightly over $6,000,000, followed by growth in the fourth quarter of 2010 to $6,167,000 and again to $6,617,000 and $6,837,000 in the first and second quarters of 2011, respectively.

Our contract pricing model is based on actual and projected report consumption; we believe it is generally not as susceptible to economic downturns and personnel reductions at our subscribers as a model based upon individual user licenses. We generally impose contractual restrictions limiting our immediate exposure (during existing contract terms) to revenue reductions due to mergers and consolidations. However, we have been, and we may in the future be, impacted by consolidation among our subscribers and potential subscribers, or in the event that subscribers enter bankruptcy or otherwise go out of business. As budget constraints and economic pressures moderated, there has been an overall positive impact on revenue stabilization and growth. These impacts can be seen in the reported results for 2011 in excess of 2010 revenue and the growth on a consecutive quarter basis from the third quarter to fourth quarter 2010, which continued into the first and second quarters of 2011.

Two additional metrics management believes are critical in understanding the business and future performance are deferred revenue and Aggregate Revenue Under Contract. Analyzing these amounts can provide additional insight into Reis Services's 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 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 life of a contract. The following table reconciles deferred revenue to Aggregate Revenue Under Contract at June 30, 2011 and 2010, respectively. A comparison of these balances at June 30 of each year is more meaningful than a comparison to the December 31, 2010 balances, as a greater percentage of renewals occur in the fourth quarter of each year.

The increases in both deferred revenue and Aggregate Revenue Under Contract are the result of an improved sales environment for renewals, increased new business, as described above in the revenue discussion, and the signing of more multi-year contracts during the twelve months ended June 30, 2011 as compared to the June 30, 2010 trailing twelve month period.

EBITDA for the three months ended June 30, 2011 was $2,748,000, an increase of $418,000, or 17.9%, over the second quarter 2010 amount. On a consecutive quarter basis, EBITDA increased $129,000, or 4.9%, in the second quarter 2011 over the first quarter 2011. EBITDA for the six months ended June 30, 2011 was $5,367,000, an increase of $711,000, or 15.3%, over the corresponding 2010 period. These increases are directly impacted by the increases in revenue as described above while maintaining EBITDA margins in the 39% to 40% range.

EBITDA is defined as earnings before interest, taxes, depreciation and amortization. Adjusted EBITDA is defined 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 metrics that may be used by investors as supplemental financial measures to be considered in addition to the reported GAAP basis financial information to 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 non-cash 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, investors should not consider these measures in isolation or as substitutes for net income (loss), income (loss) from continuing operations, operating income (loss), or any other measure for determining operating performance that is calculated in accordance with GAAP. In addition, 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. Reconciliations of EBITDA and Adjusted EBITDA to the most comparable GAAP financial measure, income (loss) from continuing operations, follow for each identified period:

Discontinued Operations – Residential Development Activities

Prior to its sale in April 2011, the Company's last remaining residential development was The Orchards, a single family home development in East Lyme, Connecticut, zoned for 161 single family homes on 224 acres. 

The East Lyme project was sold in a bulk transaction for a gross sales price of $1,800,000 for the remaining 119 lots in inventory, plus the release of approximately $792,000 of project-related deposits and escrows held as restricted cash. Net cash received at closing, after selling expenses and closing adjustments, and including the cash received upon release of the deposits and escrows, aggregated approximately $2,600,000. As a result of this transaction, the Company recorded a gain in the three and six months ended June 30, 2011 of approximately $1,242,000, which is included in income from discontinued operations. One home was sold during the three and six months ended June 30, 2010.

Investor Conference Call

The Company will host a conference call on Thursday, August 4, 2011, at 2:00 PM (EDT). This call is for the benefit of existing and prospective stockholders, stock analysts, and other interested parties to discuss second quarter 2011 results and other matters. The Company has a policy of not providing quarterly or annual guidance.

The dial-in number from inside the U.S. or Canada for this teleconference is (877) 390-5537. The dial-in number for outside the U.S. and Canada is (760) 666-3763. The conference ID is 86492192 or "Reis". A replay of the conference call will be available from shortly after the conference call through midnight (EDT) on August 18, 2011 by dialing (855) 859-2056 from inside the U.S. or Canada or (404) 537-3406 from outside the U.S. and Canada, and referring to the conference ID: 86492192. An audio webcast of the conference call will also be available on Reis's website at www.reis.com/events and will remain on the website for a period of time following the call.

About Reis

The Company's primary business is providing commercial real estate market information and analytical tools for its subscribers, through its Reis Services subsidiary. Reis Services, including its predecessors, was founded in 1980. Reis maintains a proprietary database containing detailed information on commercial properties in metropolitan markets and neighborhoods throughout the U.S. The database contains information on apartment, office, retail and industrial properties and is used by real estate investors, lenders and other professionals to make informed buying, selling and financing decisions. In addition, Reis data is used by debt and equity investors to assess, quantify and manage the risks of default and loss associated with individual mortgages, properties, portfolios and real estate backed securities. Reis currently provides its information services to many of the nation's leading lending institutions, equity investors, brokers and appraisers.

Reis, through its flagship institutional product, Reis SE, and through its new small business product, ReisReports, provides online access to a proprietary database of commercial real estate information and analytical tools designed to facilitate debt and equity transactions as well as ongoing evaluations. Depending on the product, users have access to trend and forecast analysis at metropolitan and neighborhood levels throughout the U.S. and/or detailed building-specific information such as rents, vacancy rates, lease terms, property sales, new construction listings and property valuation estimates. Reis's products are designed to meet the demand for timely and accurate information to support the decision-making of property owners, developers, builders, banks and non-bank lenders, and equity investors. These real estate professionals require access to timely information on both the performance and pricing of assets, including detailed data on market transactions, supply, absorption, rents and sale prices. This information is critical to all aspects of valuing assets and financing their acquisition, development and construction.

For more information regarding Reis's products and services, visit www.reis.com and www.ReisReports.com.

The Reis, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=7042

Cautionary Statement Regarding Forward-Looking Statements

This press release contains "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995.  These forward-looking statements may relate to the Company's or management's outlook or expectations for earnings, revenues, expenses, asset quality, or other future financial or business performance, strategies, prospects or expectations, or the impact of legal, regulatory or supervisory matters on our business, operations or performance. Specifically, forward-looking statements may include:

• statements relating to future services and product development of the Reis Services segment;
• statements relating to future business prospects, potential acquisitions, revenue, expenses, income (loss), cash flows, valuation of assets and liabilities and other business metrics of the Company and its businesses, including EBITDA, Adjusted EBITDA and Aggregate Revenue Under Contract; and
• statements preceded by, followed by or that include the words "estimate," "plan," "project," "intend," "expect," "anticipate," "believe," "seek," "target" or similar expressions relating to future periods.

Forward-looking statements reflect management's judgment based on currently available information and involve a number of risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. With respect to these forward-looking statements, management has made certain assumptions. Future performance cannot be assured. Actual results may differ materially from those contemplated by the forward-looking statements. Some factors that could cause actual results to differ include:

• revenues may be lower than expected;
• inability to retain and increase the Company's subscriber base;
• inability to execute properly on new product and service initiatives, or failure of subscribers to accept these products and services;
• competition;
• inability to attract and retain sales and senior management personnel;
• difficulties in protecting the security, confidentiality, integrity and reliability of the Company's data;
• changes in accounting policies or practices;
• legal and regulatory issues; and
• the risk factors listed under "Item 1A. Risk Factors" of our annual report on Form 10-K for the year ended December 31, 2010, which was filed with the Securities and Exchange Commission on March 11, 2011.

You are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date of this press release. Except as required by law, the Company undertakes no obligation to publicly update or release any revisions to these forward-looking statements to reflect any events or circumstances after the date of this press release or to reflect the occurrence of unanticipated events.

Financial Information

The following financial information should be read in conjunction with Reis's consolidated financial statements and the notes thereto and Management's Discussion and Analysis of Financial Condition and Results of Operations, both of which are included in Reis's quarterly report on Form 10-Q for the three months ended June 30, 2011, which was filed with the Securities and Exchange Commission on August 4, 2011.