Red Violet, Inc. (NASDAQ:RDVT) Q2 2023 Earnings Conference Call August 7, 2023 4:30 PM ET Company Participants Camilo Ramirez - Vice President, Finance & Investor Relations Derek Dubner - Chairman & Chief Executive Officer Dan MacLachlan - Chief Financial Officer Conference Call Participants Operator Good day ladies and gentlemen, and welcome to Red Violet's Second Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2023 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-38407 RED VIOLET, INC. (Exact Name of Registrant as Specified in Its Charter) (State or Other Jurisdiction of Incorporation or Orga ...

Financial Data and Key Metrics Changes - Total revenue for Q1 2023 was $14.6 million, a 15% increase compared to the same period in 2022 [13][24] - Adjusted gross profit was $11.4 million, resulting in an adjusted gross margin of 78%, up 3 percentage points year-over-year [13][24] - Adjusted EBITDA for the quarter was $3.7 million, also up 15% from the previous year, with an adjusted EBITDA margin consistent at 25% [13][24] - Net income increased by $0.6 million or 569% to $0.7 million, with earnings of $0.05 per share [48] Business Line Data and Key Metrics Changes - The IDI billable customer base grew by 235 customers sequentially, ending Q1 2023 at 7,256 customers [6][31] - FOREWARN added over 14,300 users during Q1, ending the quarter with 131,348 users, with over 255 realtor associations contracted [6][14] - Services revenue represented approximately 2% of total revenue for Q1 2023, down from 2.5% in 2022, indicating a continued decrease in this segment [15] Market Data and Key Metrics Changes - The company experienced broad-based demand across various sectors, particularly in financial services and investigative spaces, while collections remained stagnant [19][30] - Gross revenue retention was reported at 94%, down from 97% in the prior year [14] Company Strategy and Development Direction - The company continues to invest in its business to penetrate target markets and advance its product roadmap, with a focus on optimizing productivity and efficiency [5][27] - New product launches, including idiCREM and coreIDENTITY, are aimed at enhancing the identity verification solutions for the background screening industry [7][26] - The company is optimistic about future growth, particularly with larger enterprise prospects and ongoing marketing initiatives [41][44] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to weather economic uncertainties while maintaining a long-term growth perspective [27][41] - There is cautiousness observed among larger enterprises regarding spending, but smaller to medium-sized enterprises are not showing similar hesitance [54] Other Important Information - The company reduced its total headcount from 187 to 170 employees, which is expected to yield cost savings not reflected in Q1 results [28][59] - Cash and cash equivalents were $30.8 million at the end of Q1 2023, a slight decrease from $31.8 million at the end of 2022 [34] Q&A Session Summary Question: What industries are seeing strength and where are the new customers coming from? - The company noted good uptake across financial services, investigative spaces, and public sector, with a consistent addition of new customers [19][50] Question: What is the size of the new IDI customers relative to the historic customer base? - The company is seeing more medium and larger enterprises entering the customer base, which presents opportunities for volume increases over time [51] Question: Is there any cautiousness from financial service customers? - Management indicated some hesitation from larger enterprises regarding spending, but smaller to medium-sized enterprises are not showing similar caution [54]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-38407 RED VIOLET, INC. (Exact Name of Registrant as Specified in Its Charter) Delaware 82-2408531 (State or Other Jurisdiction of ...

Financial Data and Key Metrics Changes - Total revenue for Q4 2022 was $13.1 million, a 16% increase year-over-year, marking a record fourth quarter for the company [41][42] - Adjusted gross profit for Q4 was $10 million, resulting in an adjusted gross margin of 77%, up 3 percentage points from the previous year [16][26] - Adjusted EBITDA for Q4 was $1.5 million, a 16% increase compared to the prior year [16][50] - The company achieved its first full year of GAAP profitability in 2022, generating net income of $0.6 million [42][48] Business Line Data and Key Metrics Changes - Platform revenue increased by 19% to $12.9 million in Q4, while services revenue decreased by 54% to $0.2 million [41][23] - The IDI billable customer base grew by 148 customers sequentially, ending Q4 with 7,021 customers [51] - FOREWARN added over 6,900 users during Q4, bringing the total to 116,960 users [51] Market Data and Key Metrics Changes - The company reported a revenue attrition percentage of 5%, up from 4% in the prior year, and expects this to trend between 5% and 10% in the foreseeable future [25] - The markets for the company's solutions continue to show strong fundamentals and increasing opportunities, particularly in identity and fraud prevention [22] Company Strategy and Development Direction - The company is focused on executing its long-term strategic plan while continuing to invest in product development and market expansion [7][9] - A robust product roadmap is in place for 2023 and beyond, including enhancements to existing solutions and new offerings in various sectors [18][19] - The company aims to leverage its strong balance sheet and cash flow to reinvest in business growth while maintaining financial prudence [43] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about 2023, highlighting strong demand for existing and new solutions despite the uncertain economic environment [10][32] - The company is well-positioned to advance its strategic plan while many competitors are downsizing [9][10] - Management noted that the digital transformation and the omnipresence of cybercrimes and fraud present significant opportunities for growth [19] Other Important Information - General and administrative expenses increased by 14% to $7.1 million in Q4, primarily due to higher employee salaries and benefits [27] - Cash and cash equivalents were $31.8 million at the end of 2022, down from $34.3 million at the end of 2021 [29] Q&A Session Summary Question: Can you remind me what the dollar value of the headwind you faced this year was? - The headwind was approximately $0.5 million per quarter due to a customer acquisition [35][65] Question: Can you give me a feel for the repo market and the real estate market? - There has been an uptick in the repo market, and the real estate market has stabilized after initial impacts from rising mortgage rates [70][88] Question: Are you ready for this year with the current headcount? - The company does not plan to significantly increase headcount in 2023, as it is well-positioned with current staff [97] Question: Is it fair to expect that Q1 revenues will be above Q4 revenues? - Management indicated that it is a fair expectation for Q1 revenues to exceed Q4 revenues [86] Question: What are the expectations for margins in 2023? - Margins are expected to remain consistent with 2022, in the mid-20s range, with potential for improvement as revenue grows [78][100]

Financial Performance - For the years ended December 31, 2022 and 2021, revenue increased to $53.3 million from $44.0 million, representing a growth of 21.6%[21] - Net income for the same periods was $0.6 million in 2022 compared to $0.7 million in 2021, showing a decrease of 14.3%[21] - Adjusted EBITDA rose to $12.9 million in 2022 from $10.9 million in 2021, reflecting an increase of 18.4%[21] Market Trends - The global data and business analytics services market was valued at $215.7 billion in 2021, with a projected CAGR of 12.8% from 2021 to 2025[23] - The risk analytics market is expected to grow to $70.5 billion by 2027, with a CAGR of 12.4% from 2022 to 2027[24] Customer and Supplier Dynamics - The company’s largest data supplier accounted for 49% of total data acquisition costs for the years ended December 31, 2022 and 2021[40] - As of December 31, 2022, one individual customer accounted for 11% of accounts receivable, net[39] Product Development and Technology - The company aims to enhance functionality and develop new products to better serve customer needs and expand applications[34] - The company’s cloud-native platform allows for the assimilation and structuring of billions of disparate records, providing real-time identity intelligence[31] - The company is committed to investing in technology and people to maintain a competitive edge in the rapidly evolving data and analytics sector[34] - The company has overseen the expansion of its proprietary technology platform while transitioning from a development-focused to a sales-driven company[45] Workforce and Management - The company employs a total of 186 full-time employees and one part-time employee as of December 31, 2022[46] - The management team has a strong track record and significant expertise in the data and analytics sector, positioning the company for organic growth[45] - The company has not experienced significant difficulties in attracting or retaining qualified employees, despite intense competition in the recruiting sector[46] - The company has not experienced any work stoppages and considers its relations with employees to be good[46] - The executive team includes Derek Dubner as CEO, James Reilly as President, Daniel MacLachlan as CFO, and Jeff Dell as CIO, all with extensive experience in the industry[49][50][51][52][53] Corporate Structure - The company spun off its risk management business on March 26, 2018, distributing shares of its subsidiary to stockholders[47] - The company’s principal executive offices are located in Boca Raton, Florida[48] - The company is classified as a smaller reporting company and is not required to include certain market risk disclosures[194]

Financial Data and Key Metrics Changes - Total revenue reached a record $15 million, representing a 29% increase year-over-year [8][15] - Adjusted gross profit was a record $12 million, resulting in an adjusted gross margin of 80%, up four percentage points from the previous year [8][15] - Adjusted EBITDA for the quarter was a record $5.2 million, up 43% from the prior year, with an adjusted EBITDA margin of 35% compared to 31% in the prior year [8][15] - Net income was a record $2.3 million, an 80% increase year-over-year, leading to earnings of $0.16 per diluted share [9][20] Business Line Data and Key Metrics Changes - Platform revenue increased by 31% to $14.8 million, while services revenue decreased by 29% to $0.2 million [15] - The IDI billable customer base grew by 56 customers sequentially, ending the quarter at 6,873 customers [17] - FOREWARN added 8,790 users during the quarter, ending with 110,051 users, with over 225 realtor associations contracted [9][17] Market Data and Key Metrics Changes - Revenue from the real estate marketing segment remained relatively flat due to a spike in mortgage rates and housing market volatility [10] - Collections revenue was flat, with expectations for future growth as consumer financial health deteriorates [11] Company Strategy and Development Direction - The company is focused on expanding its sales and product teams to capitalize on opportunities and drive its product roadmap [8][12] - There is a commitment to invest in strategic areas where strong traction is observed, including identity, property solutions, and financial services [19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growing sales pipeline and the ability to win against larger competitors [8][9] - The company remains flexible in its operations to adapt to the dynamic economic environment [11] - There is an expectation for collections activity to pick up in the near future, leading to revenue growth from that vertical [11] Other Important Information - Cash and cash equivalents were $31.3 million at the end of the quarter, down from $34.3 million at the end of the previous year [21] - The company generated $2.9 million in free cash flow for the quarter, an increase from $2.4 million in the same period last year [21] Q&A Session Summary - Management reiterated the strong performance in a challenging economic environment and expressed excitement about the growing pipeline and product roadmap [27]

Financial Performance - Total revenue increased by 29% to $15.0 million, with platform revenue rising by 31% to $14.8 million, while services revenue decreased by 29% to $0.2 million[75]. - Gross profit increased by 36% to $10.3 million, resulting in a gross margin increase to 69% from 65%[75]. - Adjusted EBITDA rose by 43% to $5.2 million, with an adjusted EBITDA margin of 35% compared to 31% in the previous year[75]. - Net income increased by 80% to $2.3 million, translating to $0.16 per basic and diluted share[75]. - Revenue increased by $3.3 million or 29% to $15.0 million for the three months ended September 30, 2022, compared to $11.7 million for the same period in 2021[79]. - Net income increased by $1.0 million or 80% to $2.3 million for the three months ended September 30, 2022, compared to $1.3 million for the same period in 2021[86]. - For the nine months ended September 30, 2022, revenue increased by $7.4 million or 23% to $40.2 million compared to $32.8 million for the same period in 2021[87]. - The company reported net income of $2.3 million for the three months ended September 30, 2022, compared to $1.3 million for the same period in 2021, showing a year-over-year increase of 76.9%[101]. Customer Growth - The company added 56 customers to IDI during the third quarter, bringing the total to 6,873 customers[75]. - Revenue from new customers increased by $1.1 million or 130%, while base revenue from existing customers rose by $1.6 million or 18% for the three months ended September 30, 2022[79]. - The IDI billable customer base grew from 6,314 customers as of September 30, 2021, to 6,873 customers as of September 30, 2022[79]. - FOREWARN saw an addition of 8,790 users in the third quarter, ending with 110,051 users, with over 225 REALTOR® Associations contracted to use the service[75]. Cash and Liquidity - Cash and cash equivalents stood at $31.3 million as of September 30, 2022[75]. - Cash and cash equivalents as of September 30, 2022, were approximately $31.3 million, indicating sufficient resources to finance operations for the next twelve months[102]. - The company anticipates funding operations using available cash and cash flow generated from operations within the next twelve months[100]. Expenses and Costs - Cost of revenue increased by $0.3 million or 10% to $3.1 million for the three months ended September 30, 2022, while the cost of revenue as a percentage of revenue decreased to 20% from 24%[80][81]. - Sales and marketing expenses rose by $0.4 million or 22% to $2.6 million for the three months ended September 30, 2022, primarily due to increased salaries and benefits[82]. - General and administrative expenses increased by $1.4 million or 32% to $5.5 million for the three months ended September 30, 2022, driven by higher employee salaries and professional fees[83]. Shareholder Equity and Capital - As of September 30, 2022, total shareholders' equity was $72.2 million[101]. - The company has repurchased a total of 50,000 shares of its common stock at an average price of $17.52 per share under its Stock Repurchase Program[75]. - Material commitments under data licensing agreements amounted to $28.7 million as of September 30, 2022[100]. - The company may need to raise capital through additional equity and/or debt, which could dilute stockholders if terms are unfavorable[103]. - As of September 30, 2022, there were no off-balance sheet arrangements[104]. Operational Insights - The company continues to enhance its go-to-market capabilities with the expansion of its sales team, focusing on strategic areas within fraud and identity[75]. - The idiVERIFIED service is expected to return to pre-Covid levels in the first half of 2023[67]. - For the nine months ended September 30, 2022, net cash provided by operating activities was $8.1 million, compared to $7.0 million for the same period in 2021, reflecting an increase of approximately 15.7%[97]. - Net cash used in investing activities for the nine months ended September 30, 2022, was $6.4 million, up from $3.8 million in 2021, indicating a 68.4% increase[98]. - Net cash used in financing activities was $4.7 million for the nine months ended September 30, 2022, compared to $2.8 million in 2021, representing a 67.9% increase[99].

Red Violet, Inc. (NASDAQ:RDVT) Q2 2022 Earnings Conference Call August 9, 2022 4:30 PM ET Company Participants Camilo Ramirez - Vice President, Finance and Investor Relations Derek Dubner - Chairman and Chief Executive Officer Dan MacLachlan - Chief Financial Officer Conference Call Participants Operator Good day, ladies and gentlemen, and welcome to Red Violet's Second Quarter 2022 Earnings Conference Call. At this time all aprticipants’ are in a listen-only mode. Later, we will conduct a question-and-answ ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2022 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-38407 RED VIOLET, INC. (Exact Name of Registrant as Specified in Its Charter) (State or Other Jurisdiction of Incorporation or Orga ...