Red Violet(RDVT) - 2025 Q1 - Quarterly Report

PART I - FINANCIAL INFORMATION Financial Statements (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 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][69] 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] Results of Operations 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] - 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][98] - 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][105] Liquidity and Capital Resources 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][106] - 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][115] - The company has material commitments of $11.5 million under data licensing agreements as of March 31, 2025[109] - 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] Quantitative and Qualitative Disclosures About Market Risk 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] Controls and Procedures 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] - 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] PART II - OTHER INFORMATION Legal Proceedings 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][121] - 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] Risk Factors 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] Unregistered Sales of Equity Securities and Use of Proceeds 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] - Approximately $4.6 million remains available for future repurchases under the authorized program[124] Defaults Upon Senior Securities The company reports no defaults upon senior securities - The company reports no defaults upon senior securities[126] Mine Safety Disclosures This item is not applicable - This item is not applicable to the company[127] Other Information 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] Exhibits 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]