Red Violet (RDVT) Q1 2025 Earnings Call May 07, 2025 04:30 PM ET Speaker0 Good day, ladies and gentlemen, and welcome to Red Violet's First Quarter twenty twenty five Earnings Conference Call. At this time, all participants are in a listen only mode. Later, we will conduct a question and answer session, and instructions will follow at that time. As a reminder, this call is being recorded. I would now like to introduce your host for today's conference, Camilo Ramirez, Senior Vice President, Finance and Inves ...

PART I - FINANCIAL INFORMATION [Financial Statements (unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) The unaudited condensed consolidated financial statements for the three months ended March 31, 2025, show significant growth compared to the same period in 2024, with revenue increasing by 26% to $22.0 million and net income growing by 93% to $3.4 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $34,603 | $36,504 | | Total current assets | $45,902 | $46,192 | | Total assets | $99,089 | $98,531 | | Total current liabilities | $5,099 | $10,307 | | Total liabilities | $7,241 | $11,899 | | Total shareholders' equity | $91,848 | $86,632 | Condensed Consolidated Statements of Operations Highlights (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Revenue | $22,003 | $17,511 | | Income from operations | $4,211 | $1,983 | | Net income | $3,440 | $1,784 | | Basic EPS | $0.25 | $0.13 | | Diluted EPS | $0.24 | $0.13 | Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $5,001 | $4,305 | | Net cash used in investing activities | ($2,519) | ($2,392) | | Net cash used in financing activities | ($4,383) | ($1,798) | | Net (decrease) increase in cash | ($1,901) | $115 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=17&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the strong Q1 2025 performance to a 26% increase in revenue, driven by new customer onboarding and stable recurring revenue, with gross margin improving to 72% from 66% year-over-year - The company provides identity intelligence solutions through its AI/ML-driven platform, CORE™, marketed under two main brands: IDI™ for various industries and FOREWARN® for the real estate sector[67](index=67&type=chunk)[69](index=69&type=chunk) Key Performance Indicators (as of March 31) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | IDI Billable Customers | 9,241 | 8,241 | | FOREWARN Users | 325,336 | 236,639 | Q1 2025 Financial Highlights vs. Q1 2024 | Metric | Q1 2025 | Change YoY | | :--- | :--- | :--- | | Total Revenue | $22.0 million | +26% | | Gross Profit | $15.8 million | +37% | | Net Income | $3.4 million | +93% | | Adjusted EBITDA | $8.4 million | +47% | | Net cash from operations | $5.0 million | +16% | - In Q1 2025, the company paid a special cash dividend of **$0.30 per share**, totaling **$4.2 million**[78](index=78&type=chunk) [Results of Operations](index=23&type=section&id=Results%20of%20Operations) For Q1 2025, revenue grew 26% to $22.0 million, driven by an 80% increase from new customers and a 20% increase from existing customers, while net income increased 93% to $3.4 million Revenue Growth Breakdown (Q1 2025 vs Q1 2024) | Revenue Source | Increase ($M) | Growth Rate | | :--- | :--- | :--- | | New Customers | $1.3 | 80% | | Existing Customers | $3.2 | 20% | | **Total** | **$4.5** | **26%** | - Cost of revenue as a percentage of revenue decreased from **21% to 17%** year-over-year, which is expected to continue declining as revenue grows due to a fixed-cost data licensing structure[92](index=92&type=chunk) - Sales and marketing expenses increased by **$1.7 million (46%)**, primarily due to a **$1.6 million** increase in personnel-related expenses to expand go-to-market capabilities[93](index=93&type=chunk)[98](index=98&type=chunk) - The **92% increase** in income before taxes was driven by a **$4.5 million** revenue increase and a **$0.1 million** decrease in cost of revenue, partially offset by increased personnel, depreciation, and share-based compensation expenses[99](index=99&type=chunk)[105](index=105&type=chunk) [Liquidity and Capital Resources](index=26&type=section&id=Liquidity%20and%20Capital%20Resources) As of March 31, 2025, the company had $34.6 million in cash and cash equivalents, with net cash from operations at $5.0 million for the quarter, and believes existing resources are sufficient for the next twelve months - Net cash provided by operating activities was **$5.0 million** in Q1 2025, driven by **$3.4 million** in net income and **$5.3 million** in non-cash adjustments, offset by a **$3.7 million** use of cash in operating assets and liabilities[105](index=105&type=chunk)[106](index=106&type=chunk) - Net cash used in financing activities of **$4.4 million** in Q1 2025 was primarily due to a **$4.2 million** special dividend payment and **$0.2 million** for taxes on vested RSUs[108](index=108&type=chunk)[115](index=115&type=chunk) - The company has material commitments of **$11.5 million** under data licensing agreements as of March 31, 2025[109](index=109&type=chunk) - Management believes existing cash and projected cash flows will be sufficient to fund operations and capital expenditures for at least the next twelve months[111](index=111&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=28&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Red Violet, Inc. is not required to provide the information requested under this item - The company is exempt from this disclosure requirement due to its status as a smaller reporting company[116](index=116&type=chunk) [Controls and Procedures](index=28&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures as of March 31, 2025, concluding they were effective with no material changes in internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of March 31, 2025[118](index=118&type=chunk) - No changes occurred during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[119](index=119&type=chunk) PART II - OTHER INFORMATION [Legal Proceedings](index=29&type=section&id=Item%201.%20Legal%20Proceedings) The company is a defendant in a lawsuit filed by Atlas Data Privacy Corporation and others, alleging failure to comply with New Jersey's 'Daniel's Law,' which the company is vigorously defending - The company is involved in a legal proceeding initiated by Atlas Data Privacy Corporation regarding alleged violations of New Jersey's 'Daniel's Law'[61](index=61&type=chunk)[121](index=121&type=chunk) - The company is defending itself vigorously and has notified its insurer, which has confirmed the claim falls within its insurance coverage, subject to policy limits[62](index=62&type=chunk) [Risk Factors](index=29&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes to risk factors have occurred since the filing of the 2024 Form 10-K[122](index=122&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=29&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company did not repurchase any common stock during the three months ended March 31, 2025, under its Stock Repurchase Program, with approximately $4.6 million remaining available for future repurchases - No common stock was repurchased during Q1 2025 under the Stock Repurchase Program[124](index=124&type=chunk) - Approximately **$4.6 million** remains available for future repurchases under the authorized program[124](index=124&type=chunk) [Defaults Upon Senior Securities](index=29&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reports no defaults upon senior securities - The company reports no defaults upon senior securities[126](index=126&type=chunk) [Mine Safety Disclosures](index=29&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable - This item is not applicable to the company[127](index=127&type=chunk) [Other Information](index=29&type=section&id=Item%205.%20Other%20Information) During the quarter ended March 31, 2025, no officers or directors had any Rule 10b5-1 trading plans or other non-Rule 10b5-1 trading arrangements in effect - No officers or directors had Rule 10b5-1 trading plans in effect during the first quarter of 2025[128](index=128&type=chunk) [Exhibits](index=30&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Quarterly Report on Form 10-Q, which include CEO and CFO certifications pursuant to the Sarbanes-Oxley Act (Sections 302 and 906) and Inline XBRL data files - Exhibits filed include CEO and CFO certifications (**31.1, 31.2, 32.1, 32.2**) and Inline XBRL documents (**101.INS, 101.SCH, 104**)[130](index=130&type=chunk)

Core Insights - Red Violet, Inc. reported a record revenue increase of 26% to $22.0 million for the first quarter of 2025 compared to the same period in 2024, with a GAAP EPS of $0.24 [1][5][12] Financial Performance - Gross profit rose by 37% to $15.8 million, with gross margin improving to 72% from 66% [5][12] - Adjusted gross profit increased by 33% to $18.3 million, and adjusted gross margin rose to 83% from 79% [5][12] - Net income surged by 93% to $3.4 million, resulting in earnings of $0.25 and $0.24 per basic and diluted share, respectively [5][12] - Adjusted EBITDA grew by 47% to $8.4 million, with adjusted EBITDA margin increasing to 38% from 32% [5][12] - Adjusted net income increased by 53% to $4.8 million, leading to adjusted earnings of $0.35 and $0.33 per basic and diluted share, respectively [5][12] Cash Flow and Dividends - Net cash provided by operating activities rose by 16% to $5.0 million [5][14] - Cash and cash equivalents stood at $34.6 million as of March 31, 2025 [5][14] - The company paid a special cash dividend of $0.30 per share, totaling $4.2 million, to shareholders of record as of January 31, 2025 [5][12] Customer Metrics - The company added 315 customers to its IDI platform, ending the quarter with 9,241 customers [5][12] - FOREWARN saw an addition of 21,918 users, bringing the total to 325,336 users, with over 545 REALTOR Associations contracted to use the service [5][12] Business Model and Strategy - Red Violet focuses on proprietary technologies and analytical capabilities to deliver identity intelligence, enabling real-time identification and location of people, businesses, and assets [4][5] - The company's solutions are utilized for identity verification, risk mitigation, fraud detection, and regulatory compliance, among other applications [4][5]

Core Insights - Red Violet, Inc. will participate in the 20th Annual Needham Technology, Media, & Consumer Conference from May 8-13, 2025, with investor meetings hosted virtually on May 12, 2025 [1] Company Overview - Red Violet, Inc. specializes in analytics and information solutions, focusing on identity intelligence through proprietary technologies and analytical capabilities [2] - The company's solutions facilitate real-time identification and location of individuals, businesses, and assets, serving purposes such as identity verification, risk mitigation, due diligence, fraud detection, regulatory compliance, and customer acquisition [2] - Red Violet's intelligent platform, CORE™, is designed for enterprises but adaptable for organizations of all sizes, transforming large datasets into actionable intelligence [2]

Core Insights - FOREWARN, LLC, a subsidiary of red violet, announced a partnership with HiCentral MLS® to provide its services to over 6,000 real estate agents in Honolulu and Oahu, enhancing agent safety [1][3] - The FOREWARN service utilizes extensive data analysis to help agents verify identities, check criminal histories, and validate client information using just a phone number, thereby increasing safety during property showings [2][5] Company Overview - FOREWARN offers its services at no additional cost to HiCentral MLS® members, aligning with the organization's mission to equip agents with resources for safety and fraud mitigation [3] - The technology behind FOREWARN is designed to provide real-time knowledge and risk assessment, enabling safer engagements and smarter interactions for real estate professionals [5][6] Additional Information - Other real estate agencies and professionals can access more information about FOREWARN through its website [4] - Red violet focuses on delivering identity intelligence through proprietary technologies and analytical capabilities, supporting various applications including fraud detection and regulatory compliance [6]

BOCA RATON, Fla., April 04, 2025 (GLOBE NEWSWIRE) -- FOREWARN, LLC, a red violet company (NASDAQ:RDVT) and the leading provider of real-time information solutions for real estate agents, today announced that Little Rock REALTORS® Association ("LRRA") will offer FOREWARN® services to its 1,400+ members it serves throughout the Little Rock metropolitan area to promote proactive real estate agent safety. Available both online and through a mobile application, FOREWARN analyzes billions of data points and provi ...

When it comes to short-term investing or trading, they say "the trend is your friend." And there's no denying that this is the most profitable strategy. But making sure of the sustainability of a trend to profit from it is easier said than done.The trend often reverses before exiting the trade, leading to a short-term capital loss for investors. So, for a profitable trade, one should confirm factors such as sound fundamentals, positive earnings estimate revisions, etc. that could keep the momentum in the st ...

Core Insights - FOREWARN, LLC has partnered with Willamette Valley Multiple Listing Service (WVMLS) to provide real-time information solutions to over 3,000 real estate agents, enhancing agent safety [1][3] - The FOREWARN service allows agents to verify identities, search criminal histories, and validate client information using just a phone number, thus improving safety during property showings [2][5] - The service is offered at no additional cost to WVMLS members, promoting proactive safety measures in the real estate industry [2][3] Company Overview - FOREWARN specializes in providing innovative solutions for real estate professionals, focusing on safety and fraud prevention through real-time identity verification [3][5] - The technology leverages a vast data repository and powerful analytics to enable organizations to conduct risk assessments and due diligence efficiently [5][6] - Red Violet, the parent company of FOREWARN, develops proprietary technologies for identity intelligence, supporting various applications including fraud detection and regulatory compliance [6]

BOCA RATON, Fla., March 05, 2025 (GLOBE NEWSWIRE) -- Red Violet, Inc. (NASDAQ: RDVT), a leading analytics and information solutions provider, today announced the appointment of Greg Strakosch to the red violet Board of Directors, effective March 4, 2025. "We are thrilled to welcome Greg to our Board of Directors," said Derek Dubner, Chairman and CEO of red violet. "His proven track record in scaling technology businesses and deep understanding of market dynamics will be invaluable as we continue to drive ou ...

Exhibit 99.1 red violet Announces Fourth Quarter and Full Year 2024 Financial Results Fourth Quarter Revenue Increased 30% to a Record $19.6 Million, Producing $6.7 Million of Cash Flow from Operations Full Year 2024 Revenue Increased 25% to $75.2 Million, Generating GAAP EPS of $0.50 BOCA RATON, Fla. – February 27, 2025 – Red Violet, Inc. (NASDAQ: RDVT), a leading analytics and information solutions provider, today announced financial results for the fourth quarter and full year ended December 31, 2024. "W ...