Red Violet(RDVT) - 2025 Q2 - Quarterly Results

Executive Summary Red Violet achieved strong Q2 2025 financial results, marked by significant revenue growth, improved profitability, and robust customer acquisition across its key platforms Q2 2025 Financial and Operational Highlights Red Violet achieved strong Q2 2025 financial results, marked by significant revenue growth, improved profitability, and robust customer acquisition across its key platforms Financial Highlights (in thousands) | Metric | Q2 2025 (in thousands) | Q2 2024 (in thousands) | Change (%) | | :-------------------------------- | :--------------------- | :--------------------- | :--------- | | Total Revenue | $21,774 | $19,056 | +14% | | Gross Profit | $15,678 | $13,279 | +18% | | Gross Margin | 72% | 70% | +2 pp | | Adjusted Gross Profit | $18,238 | $15,601 | +17% | | Adjusted Gross Margin | 84% | 82% | +2 pp | | Net Income | $2,686 | $2,637 | +2% | | Net Income Margin | 12% | 14% | -2 pp | | Basic EPS | $0.19 | $0.19 | 0% | | Diluted EPS | $0.18 | $0.19 | -5% | | Adjusted EBITDA | $7,600 | $6,811 | +12% | | Adjusted EBITDA Margin | 35% | 36% | -1 pp | | Adjusted Net Income | $4,117 | $3,891 | +6% | | Adjusted Basic EPS | $0.29 | $0.28 | +4% | | Adjusted Diluted EPS | $0.28 | $0.28 | 0% | | Net Cash from Operations | $7,487 | $5,717 | +31% | | Cash & Cash Equivalents (as of June 30) | $38,848 | $30,943 | +25.5% | - Added 308 customers to IDI™ during Q2 2025, ending the quarter with 9,549 customers[5] - Added 21,335 users to FOREWARN® during Q2 2025, ending the quarter with 346,671 users[5] - Continued to win higher-tier customers at an accelerated pace, with total customer spend outpacing prior-year levels across key revenue cohorts ($10,000 to $25,000, $25,000 to $100,000, and over $100,000 in trailing twelve-month revenue)[5] CEO Commentary CEO Derek Dubner highlighted solid revenue growth and profitability, noting strong customer onboarding and broad-based demand despite a challenging prior-year comparison - Reported another strong quarter, delivering solid revenue growth and profitability[2] - Achieved strong customer onboarding and broad-based demand, evidenced by volume expansion across the existing customer base[2] - Confident in the ability to build on this performance, drive continued revenue growth, and capitalize on significant opportunities ahead, despite a challenging comparison to last year which included $1.0 million in one-time transactional revenue[2] About Red Violet Red Violet is a leading analytics and information solutions provider, leveraging proprietary technologies to deliver identity intelligence for verification, risk mitigation, and fraud detection Company Overview Red Violet provides identity intelligence through proprietary technologies, enabling real-time identification and location for verification, risk mitigation, and compliance - Red Violet is a leading analytics and information solutions provider[4] - Builds proprietary technologies and applies analytical capabilities to deliver identity intelligence[4] - Solutions enable real-time identification and location of people, businesses, assets, and their interrelationships for purposes including identity verification, risk mitigation, due diligence, fraud detection and prevention, regulatory compliance, and customer acquisition[4] Condensed Consolidated Financial Statements This section provides Red Violet's condensed consolidated financial statements, detailing the company's balance sheet, income statement, and cash flow performance Condensed Consolidated Balance Sheets As of June 30, 2025, Red Violet's total assets increased to $104,834 thousand, driven by cash, receivables, and intangibles, while liabilities decreased, boosting shareholders' equity Balance Sheet (in thousands) | Balance Sheet Item | June 30, 2025 (in thousands) | Dec 31, 2024 (in thousands) | Change | | :-------------------------------- | :--------------------------- | :-------------------------- | :----- | | Cash and cash equivalents | $38,848 | $36,504 | +$2,344 | | Accounts receivable, net | $9,811 | $8,061 | +$1,750 | | Total current assets | $50,796 | $46,192 | +$4,604 | | Intangible assets, net | $37,677 | $35,997 | +$1,680 | | Total assets | $104,834 | $98,531 | +$6,303 | | Total current liabilities | $5,569 | $10,307 | -$4,738 | | Total liabilities | $8,628 | $11,899 | -$3,271 | | Total shareholders' equity | $96,206 | $86,632 | +$9,574 | Condensed Consolidated Statements of Operations Q2 2025 revenue increased 14% to $21,774 thousand, with net income up 2% to $2,686 thousand, though operating income declined due to higher expenses Income Statement (in thousands) | Income Statement Item | Q2 2025 (in thousands) | Q2 2024 (in thousands) | Change (%) | | :-------------------------------- | :--------------------- | :--------------------- | :--------- | | Revenue | $21,774 | $19,056 | +14% | | Cost of revenue | $3,501 | $3,455 | +1% | | Sales and marketing expenses | $5,622 | $4,406 | +28% | | General and administrative expenses | $7,253 | $5,750 | +26% | | Income from operations | $2,751 | $3,068 | -10% | | Net income | $2,686 | $2,637 | +2% | | Basic EPS | $0.19 | $0.19 | 0% | | Diluted EPS | $0.18 | $0.19 | -5% | Condensed Consolidated Statements of Cash Flows For the six months ended June 30, 2025, operating cash flow rose 24.6% to $12,488 thousand, with investing and financing activities using cash, resulting in an overall increase in cash and cash equivalents Cash Flow Statement (in thousands) | Cash Flow Item | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | Change | | :-------------------------------- | :------------------------------------------ | :------------------------------------------ | :----- | | Net cash provided by operating activities | $12,488 | $10,022 | +$2,466 | | Net cash used in investing activities | $(5,236) | $(4,855) | -$381 | | Net cash used in financing activities | $(4,908) | $(6,256) | +$1,348 | | Net increase (decrease) in cash and cash equivalents | $2,344 | $(1,089) | +$3,433 | | Cash and cash equivalents at end of period | $38,848 | $30,943 | +$7,905 | Non-GAAP Financial Measures and Reconciliations This section defines Red Violet's non-GAAP financial measures, including Adjusted EBITDA and Free Cash Flow, and provides their reconciliations to GAAP metrics Definitions of Non-GAAP Measures Red Violet uses non-GAAP measures like Adjusted EBITDA, Adjusted Net Income, and Free Cash Flow to offer additional insights into operating performance by excluding non-cash or non-recurring items - Adjusted EBITDA: Net income excluding interest income, income tax expense, depreciation and amortization, share-based compensation expense, litigation costs, acquisition-related costs, and write-off of long-lived assets[6] - Adjusted Net Income: Net income adjusted to exclude share-based compensation expense and amortization of share-based compensation capitalized in intangible assets, and to include the tax effect of adjustments[6] - Free Cash Flow (FCF): Net cash provided by operating activities reduced by purchase of property and equipment, and capitalized costs included in intangible assets[17] Reconciliation of Adjusted EBITDA Q2 2025 Adjusted EBITDA increased 12% to $7,600 thousand, reflecting improved operational performance, though the margin slightly decreased to 35% Adjusted EBITDA Reconciliation (in thousands) | Metric | Q2 2025 (in thousands) | Q2 2024 (in thousands) | Change (%) | | :---------------- | :--------------------- | :--------------------- | :--------- | | Net income | $2,686 | $2,637 | +2% | | Adjusted EBITDA | $7,600 | $6,811 | +12% | | Revenue | $21,774 | $19,056 | +14% | | Net income margin | 12% | 14% | -2 pp | | Adjusted EBITDA margin | 35% | 36% | -1 pp | Reconciliation of Adjusted Net Income Q2 2025 Adjusted Net Income increased 6% to $4,117 thousand, indicating stronger underlying profitability, with Adjusted diluted EPS stable at $0.28 Adjusted Net Income Reconciliation (in thousands) | Metric | Q2 2025 (in thousands) | Q2 2024 (in thousands) | Change (%) | | :--------------------- | :--------------------- | :--------------------- | :--------- | | Net income | $2,686 | $2,637 | +2% | | Adjusted net income | $4,117 | $3,891 | +6% | | Basic EPS | $0.19 | $0.19 | 0% | | Diluted EPS | $0.18 | $0.19 | -5% | | Adjusted Basic EPS | $0.29 | $0.28 | +4% | | Adjusted Diluted EPS | $0.28 | $0.28 | 0% | Reconciliation of Adjusted Gross Profit Q2 2025 Adjusted Gross Profit rose 17% to $18,238 thousand, with Adjusted Gross Margin improving to 84%, reflecting enhanced revenue generation efficiency Adjusted Gross Profit Reconciliation (in thousands) | Metric | Q2 2025 (in thousands) | Q2 2024 (in thousands) | Change (%) | | :--------------------- | :--------------------- | :--------------------- | :--------- | | Gross profit | $15,678 | $13,279 | +18% | | Adjusted gross profit | $18,238 | $15,601 | +17% | | Gross margin | 72% | 70% | +2 pp | | Adjusted gross margin | 84% | 82% | +2 pp | Reconciliation of Free Cash Flow (FCF) Q2 2025 Free Cash Flow (FCF) significantly increased by 46.6% to $4,770 thousand, demonstrating strong cash generation after capital expenditures Free Cash Flow Reconciliation (in thousands) | Metric | Q2 2025 (in thousands) | Q2 2024 (in thousands) | Change (%) | | :-------------------------------- | :--------------------- | :--------------------- | :--------- | | Net cash provided by operating activities | $7,487 | $5,717 | +31% | | Free cash flow | $4,770 | $3,254 | +46.6% | Purpose and Limitations of Non-GAAP Measures Non-GAAP measures are used by management for performance evaluation and investor information, excluding non-cash or non-recurring items, but are not GAAP alternatives and may not be comparable - Non-GAAP measures provide useful information by eliminating the impact of certain items not indicative of cash operations and ongoing operating performance[20] - Used by management as an integral part of internal reporting to measure business performance and operating strength[21] - Not intended to be performance measures that should be regarded as an alternative to, or more meaningful than, financial measures presented in accordance with US GAAP, and may not be comparable to similarly titled measures presented by other companies[22] Supplemental Metrics This section presents Red Violet's key supplemental metrics, including customer growth, revenue retention, and employee headcount, reflecting operational performance and strategic investments Customer Metrics Red Violet expanded its customer base in Q2 2025, showing significant growth in both IDI™ billable customers and FOREWARN® users Customer Metrics | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :-------------------- | :------ | :------ | :------ | | IDI - billable customers | 9,549 | 9,241 | 8,477 | | FOREWARN - users | 346,671 | 325,336 | 263,876 | Revenue Metrics Q2 2025 contractual revenue remained strong at 77%, with gross revenue retention improving to 97%, indicating high customer loyalty and recurring revenue Revenue Metrics | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :---------------------- | :------ | :------ | :------ | | Contractual revenue % | 77% | 74% | 74% | | Gross revenue retention % | 97% | 96% | 94% | Employee Metrics As of Q2 2025, Red Violet's employee count increased across most departments, particularly in sales, marketing, and engineering, reflecting growth investments Employee Headcount | Department | Q2 2025 | Q1 2025 | Q2 2024 | | :-------------------- | :------ | :------ | :------ | | Sales and marketing | 92 | 90 | 86 | | Support | 11 | 11 | 10 | | Infrastructure | 29 | 29 | 27 | | Engineering | 63 | 62 | 56 | | Administration | 28 | 24 | 25 | Forward-Looking Statements This section contains forward-looking statements, subject to risks and uncertainties that may cause actual results to differ materially from expectations Disclaimer on Forward-Looking Statements Forward-looking statements are subject to risks and uncertainties, and readers are cautioned against undue reliance and advised to review SEC filings for risk factors - Statements are subject to risks and uncertainties that may cause results to differ materially from expectations[7] - Readers are cautioned not to place undue reliance on these forward-looking statements[7] - Company undertakes no obligation to publicly update or revise any forward-looking statement, except as required by law[7] Company Information This section provides Red Violet's contact information and details regarding the quarterly conference call and webcast Contact Information Provides contact details for Red Violet's company and investor relations departments - Company Contact: Camilo Ramirez, Red Violet, Inc., 561-757-4500, ir@redviolet.com[6] - Investor Relations Contact: Steven Hooser, Three Part Advisors, 214-872-2710, ir@redviolet.com[6] Conference Call Details Red Violet hosted a conference call and webcast on August 6, 2025, to discuss quarterly results and provide a business update - Conference call and webcast held on August 6, 2025, at 4:30 PM ET[3] - Purpose: Discuss quarterly results and provide a business update[3] - Pre-registration and live audio webcast access details available on www.redviolet.com[3](index=3&type=chunk)