Red Violet Inc

Previous wording

Red Violet, Inc., a Delaware corporation, is dedicated to making the world a safer place and reducing the cost of doing business. We build proprietary technologies and apply analytical capabilities to deliver identity intelligence. Our technology powers critical solutions, which empower organizations to operate with confidence. Our solutions enable the real-time identification and location of people, businesses, assets, and their interrelationships. These solutions are used for purposes including risk mitigation, due diligence, fraud detection and prevention, regulatory compliance, and customer acquisition. Our AI/ML-driven identity intelligence platform, CORETM, is purpose-built for the enterprise, yet flexible enough for organizations of all sizes, bringing clarity to massive datasets by transforming data into intelligence. We drive workflow efficiency and enable organizations to make better data-driven decisions.

Current wording

Red Violet, Inc., a Delaware corporation, is dedicated to making the world a safer place and reducing the cost of doing business. We build proprietary technologies and apply analytical capabilities to deliver identity intelligence. Our technology powers critical solutions, which empower organizations to operate with confidence. Our solutions enable the real-time identification and location of people, businesses, assets, and their interrelationships. These solutions are used for purposes including identity verification, risk mitigation, due diligence, fraud detection and prevention, regulatory compliance, and customer acquisition. Our AI/ML-driven identity intelligence platform, CORETM, is purpose-built for the enterprise, yet flexible enough for organizations of all sizes, bringing clarity to massive datasets by transforming data into intelligence. We drive workflow efficiency and enable organizations to make better data-driven decisions.

Previous wording

Organizations are challenged by the structure, volume, and disparity of data. Our platform and applications transform the way our customers interact with information, presenting connections and relevance of information otherwise unattainable, which drives actionable insights and better outcomes. Leveraging cloud-native proprietary technology and applying machine learning and advanced analytical capabilities, CORE provides essential solutions to public and private sector organizations through intuitive, easy-to-use analytical interfaces. With massive data assets consisting of public record, proprietary, and publicly-available data, our differentiated information and innovative platform and solutions deliver identity intelligence – entities, relationships, affiliations, interactions, and events. Our solutions are used today to enable frictionless commerce, to ensure safety, and to reduce fraud and the concomitant expense borne by society.

Current wording

Organizations are challenged by the structure, volume, velocity, and disparity of data. Our platform and applications provide real-time analytics, transforming the way our customers interact with information by presenting connections and relevance of information otherwise unattainable, which drives actionable insights and better outcomes. Leveraging cloud-native proprietary technology and applying machine learning and advanced analytical capabilities, CORE provides essential solutions to public and private sector organizations through intuitive, easy-to-use analytical interfaces. With massive data assets consisting of public record, proprietary, and publicly-available data, our differentiated information and innovative platform and solutions deliver identity intelligence – entities, relationships, affiliations, interactions, and events. Our solutions are used today to enable frictionless commerce, to ensure safety, and to reduce fraud and the concomitant expense borne by society.

Previous wording

While our platform powers a vast array of solutions for our customers, we presently market our solutions primarily through two brands, IDI™ and FOREWARN®. IDI is a leading-edge, analytics and information solutions provider delivering actionable intelligence to the an expansive and diverse set of industries in support of use cases such as the verification and authentication of consumer identities, due diligence, prevention of fraud and abuse, legislative compliance, and debt recovery. idiCORE™ is IDI's flagship product. idiCORE is a next-generation, investigative solution used to address a variety of organizational challenges, including, but not limited to, due diligence, risk mitigation, identity authentication, and regulatory compliance, by financial services companies, insurance companies, healthcare companies, law enforcement and government, identity verification platforms, collections, law firms, retail, telecommunication companies, corporate security, and investigative firms. FOREWARN is an app-based solution currently tailored for the real estate industry, providing instant knowledge prior to face-to-face engagement with a consumer, helping professionals identify and mitigate risk. As of December 31, 2023 and 2022, IDI had 7,875 and 7,021 billable customers and FOREWARN had 185,380 and 116,960 users, respectively. We define a billable customer of IDI as a single entity that generated revenue during the last three months of the period. Billable customers are typically corporate organizations. In most cases, corporate organizations will have multiple users and/or departments purchasing our solutions, however, we count the entire organization as a discrete customer. We define a user of FOREWARN as a unique person that has a subscription to use the FOREWARN service as of the last day of the period. A unique person can only have one user account.

Current wording

While our platform powers a vast array of solutions for our customers, we presently market our solutions primarily through two brands, IDI™ and FOREWARN®. IDI is a leading-edge, analytics and information solutions provider delivering actionable intelligence to an expansive and diverse set of industries in support of use cases such as the verification and authentication of consumer identities, due diligence, prevention of fraud and abuse, legislative compliance, and debt recovery. idiCORE™ is IDI's flagship product. idiCORE is a next-generation, investigative solution used to address a variety of organizational challenges, including, but not limited to, due diligence, risk mitigation, identity authentication, and regulatory compliance, by financial services companies, insurance companies, healthcare companies, law enforcement and government, identity verification platforms, collections, law firms, retail, telecommunication companies, corporate security, and investigative firms. FOREWARN is an app-based solution currently tailored for the real estate industry, providing instant knowledge prior to face-to-face engagement with a consumer, helping professionals identify and mitigate risk. As of December 31, 2024 and 2023, IDI had 8,926 and 7,875 billable customers and FOREWARN had 303,418 and 185,380 users, respectively. We define a billable customer of IDI as a single entity that generated revenue during the last three months of the period. Billable customers are typically corporate organizations. In most cases, corporate organizations will have multiple users and/or departments purchasing our solutions, however, we count the entire organization as a discrete customer. We define a user of FOREWARN as a unique person that has a subscription to use the FOREWARN service as of the last day of the period. A unique person can only have one user account.

Previous wording

We generate substantially all of our revenue from licensing our solutions. Customers access our solutions through a hosted environment using an online interface, batch processing, API and custom integrations. We recognize revenue from licensing fees (a) on a transactional basis determined by the customer’s usage, (b) via a monthly fee or (c) from a combination of both. Revenue pursuant to pricing contracts containing a monthly fee is recognized ratably over the contract period. Pricing contracts are generally annual contracts or longer, with auto renewal. For the years ended December 31, 2023 and 2022, 79% and 75% of total revenue was attributable to customers with pricing contracts, respectively, versus 21% and 25% attributable to transactional customers, respectively.

Current wording

We generate substantially all of our revenue from licensing our solutions. Customers access our solutions through a hosted environment using an online interface, batch processing, API, and custom integrations. We recognize revenue from licensing fees (a) on a transactional basis determined by the customer’s usage, (b) via a monthly fee or (c) from a combination of both. Revenue pursuant to pricing contracts containing a monthly fee is recognized ratably over the contract period. Pricing contracts are generally annual contracts or longer, with auto renewal. For the years ended December 31, 2024 and 2023, 77% and 79% of total revenue was attributable to customers with pricing contracts, respectively, versus 23% and 21% attributable to transactional customers, respectively.

Previous wording

We endeavor to understand our customers’ needs at the moment of first engagement. We continuously engage with our customers and evaluate their usage of our solutions throughout their life cycle, to maximize utilization of our solutions and, hence, their productivity. Our go-to-market strategy leverages (a) an inside sales team that cultivates relationships, and ultimately closes business, with their end-user markets, (b) a strategic sales team that provides a more personal, face-to-face approach for major accounts within certain industries, and (c) distributors, resellers, and strategic partners that have a significant foothold in many of the industries that we have not historically served, as well as to further penetrate those industries that we do serve. We employ a “land and expand” approach. Our sales model generally begins with a free trial followed by an initial purchase on a transactional basis or minimum-committed monthly spend. As organizations derive benefits from our solutions, we are able to expand within organizations as additional use cases are presented across departments, divisions and geographic locations and customers become increasingly reliant on our solutions in their daily workflow.

Current wording

We endeavor to understand our customers’ needs at the moment of first engagement. We continuously engage with our customers and evaluate their usage of our solutions throughout their life cycle, to maximize utilization of our solutions and, hence, their productivity. Our go-to-market strategy leverages (a) an inside sales team that cultivates relationships, and ultimately closes business, with their end-user markets, (b) a strategic sales team that provides a more personal, face-to-face approach for major accounts within certain industries, and (c) distributors, resellers, and strategic partners that have a significant foothold in many of the industries that we have not historically served, as well as to further penetrate those industries that we do serve. We employ a “land and expand” approach. Our sales model generally begins with a trial followed by an initial purchase on a transactional basis or minimum-committed monthly spend. As organizations derive benefits from our solutions, we are able to expand within organizations as additional use cases are presented across departments, divisions, and geographic locations, and customers become increasingly reliant on our solutions in their daily workflow.

Previous wording

Revenue is recognized over a period of time. Our customers simultaneously receive and consume the benefits provided by our performance as and when provided. Furthermore, we have elected the “right to invoice” practical expedient, available within Topic 606, as our measure of progress, since we have a right to payment from a customer in an amount that corresponds directly with the value of our performance completed-to-date. In some arrangements, a right to consideration for our performance under the customer contract may occur before invoicing to the customer. Our revenue arrangements do not contain significant financing components.

Current wording

Revenue is recognized over a period of time. Our customers simultaneously receive and consume the benefits provided by our performance as and when provided. Furthermore, we have elected the “right to invoice” practical expedient, available within Topic 606, as our measure of progress, since we have a right to payment from a customer in an amount that corresponds directly with the value of our performance completed-to-date. In some arrangements, a right to consideration for our performance under the customer contract may occur before invoicing to the customer, resulting in an unbilled accounts receivable. As of December 31, 2024, the current and noncurrent portion unbilled accounts receivable of $0.9 million and $1.1 million, respectively, were included within accounts receivable and other noncurrent assets, respectively, on the consolidated balance sheets. As of December 31, 2023, the current and noncurrent portion unbilled accounts receivable of $0.8 and $0.4, respectively, were included within accounts receivable and other noncurrent assets, respectively, on the consolidated balance sheets. Our revenue arrangements do not contain significant financing components.

Previous wording

For the years ended December 31, 2023 and 2022, 79% and 75% of total revenue was attributable to customers with pricing contracts, respectively, versus 21% and 25% attributable to transactional customers, respectively. Pricing contracts are generally annual contracts or longer, with auto renewal.

Current wording

For the years ended December 31, 2024 and 2023, 77% and 79% of total revenue was attributable to customers with pricing contracts, respectively, versus 23% and 21% attributable to transactional customers, respectively. Pricing contracts are generally annual contracts or longer, with auto renewal.

Previous wording

If a customer pays consideration before we transfer services to the customer, those amounts are classified as deferred revenue. As of December 31, 2023 and 2022, the balance of deferred revenue was $0.7 million, all of which is expected to be realized in the next 12 months. In relation to the deferred revenue balance as of December 31, 2022, $0.7 million was recognized into revenue during the year ended December 31, 2023.

Current wording

If a customer pays consideration before we transfer services to the customer, those amounts are classified as deferred revenue. As of December 31, 2024 and 2023, the balance of deferred revenue was $0.7 million, all of which is expected to be realized in the next 12 months. In relation to the deferred revenue balance as of December 31, 2023, $0.7 million was recognized into revenue during the year ended December 31, 2024.

Previous wording

As of December 31, 2023, $15.8 million of revenue is expected to be recognized in the future for performance obligations that are unsatisfied or partially unsatisfied, related to pricing contracts that have a term of more than 12 months, of which $8.7 million of revenue will be recognized in 2024, $4.6 million in 2025, $1.7 million in 2026, and $0.8 million in 2027. The actual timing of recognition may vary due to factors outside of our control. We exclude variable consideration related entirely to wholly unsatisfied performance obligations and contracts and recognizes such variable consideration based upon the right to invoice the customer.

Current wording

As of December 31, 2024, $22.3 million of revenue is expected to be recognized in the future for performance obligations that are unsatisfied or partially unsatisfied, related to pricing contracts that have a term of more than 12 months, of which $11.3 million of revenue will be recognized in 2025, $6.5 million in 2026, $3.8 million in 2027, $0.6 million in 2028, and $0.1 million in 2029. The actual timing of recognition may vary due to factors outside of our control. We exclude variable consideration related entirely to wholly unsatisfied performance obligations and contracts and recognizes such variable consideration based upon the right to invoice the customer.

Previous wording

In addition, we elected the practical expedient to not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed.

Current wording

In addition, we elected the practical expedient to not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed.

Previous wording

We maintain allowance for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments. Management determines whether an allowance needs to be provided for an amount due from a customer depending on the aging of the individual receivable balance, recent payment history, contractual terms and other qualitative factors such as status of business relationship with the customer. Historically, our estimates for doubtful accounts have not differed materially from actual results. The amount of the allowance for doubtful accounts was $0.2 million and $0.06 million as of December 31, 2023 and 2022, respectively, which was included within accounts receivable, net, in the consolidated balance sheets.

Current wording

We maintain allowance for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments. Management determines whether an allowance needs to be provided for an amount due from a customer depending on the aging of the individual receivable balance, recent payment history, contractual terms and other qualitative factors such as status of business relationship with the customer. Historically, our estimates for doubtful accounts have not differed materially from actual results. The amount of the allowance for doubtful accounts was $0.2 million as of December 31, 2024 and 2023, which was included within accounts receivable, net, in the consolidated balance sheets.

Previous wording

We account for income taxes in accordance with ASC 740,“Income Taxes,” which requires the use of the asset and liability method of accounting for income taxes. Under the asset and liability method, deferred tax assets and liabilities are computed based upon the difference between the financial statement and income tax basis of assets and liabilities using the enacted tax rate applicable when the related asset or liability is expected to be realized or settled. Deferred income tax expenses or benefits are based on the changes in the asset or liability each period. If available evidence suggests that it is more likely than not that some portion or all of the deferred tax assets will not be realized, a valuation allowance is required to reduce the deferred tax assets to the amount that is more likely than not to be realized. As of December 31, 2022, we had a full valuation allowance of $8.0 million. During the year ended December 31, 2023, we released the valuation allowance previously recorded on our deferred tax assets. We concluded that, due to our established historical cumulative positive income before income taxes plus permanent differences for the recent years, projections of future taxable income and the reversal of taxable temporary differences, the realization of the deferred tax assets as of December 31, 2023 is more likely than not.

Current wording

We account for income taxes in accordance with ASC 740,“Income Taxes,” which requires the use of the asset and liability method of accounting for income taxes. Under the asset and liability method, deferred tax assets and liabilities are computed based upon the difference between the financial statement and income tax basis of assets and liabilities using the enacted tax rate applicable when the related asset or liability is expected to be realized or settled. Deferred income tax expenses or benefits are based on the changes in the asset or liability each period. If available evidence suggests that it is more likely than not that some portion or all of the deferred tax assets will not be realized, a valuation allowance is required to reduce the deferred tax assets to the amount that is more likely than not to be realized. Prior to the third quarter of 2023, primarily due to cumulative pre-tax losses, management determined a full valuation allowance was necessary to reduce the deferred tax assets to the amount that is more likely than not to be realized. During the third quarter of 2023, we released the valuation allowance previously recorded on our deferred tax assets. We concluded that, due to our established historical cumulative positive income before income taxes plus permanent differences for the recent years, projections of future taxable income, and the reversal of taxable temporary differences, the realization of the deferred tax assets as of December 31, 2024 and 2023 is more likely than not.

Previous wording

In accordance with ASC 350-40, “Software—internal use software,” we capitalize eligible costs, including salaries and staff benefits, share-based compensation, travel expenses incurred by relevant employees, and other relevant costs of developing internal-use software that are incurred in the application development stage when developing or obtaining software for internal use. Once the software developed for internal use is ready for its intended use, it is amortized on a straight-line basis over its useful life.

Current wording

In accordance with ASC 350-40, “Software—internal use software,” we capitalize eligible costs, including personnel-related expenses, share-based compensation, and travel expenses incurred by relevant employees, and other relevant costs of developing internal-use software that are incurred in the application development stage when developing or obtaining software for internal use. Once the software developed for internal use is ready for its intended use, it is amortized on a straight-line basis over its useful life.

Previous wording

In accordance with ASC 350, “Intangibles—Goodwill and Other,” goodwill is tested at least annually for impairment, or when events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable, by assessing qualitative factors or performing a quantitative analysis in determining whether it is more likely than not that its fair value exceeds the carrying value. A quantitative assessment involves determining the fair value of each reporting unit using market participant assumptions. An entity should recognize an impairment charge for the amount by which the carrying amount of a reporting unit exceeds its fair value up to the amount of goodwill allocated to that reporting unit.

Current wording

In accordance with ASC 350, “Intangibles—Goodwill and Other,” goodwill is tested at least annually for impairment, or when events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable, by assessing qualitative factors or performing a quantitative analysis in determining whether it is more likely than not that its fair value exceeds the carrying value. A quantitative assessment involves determining the fair value of each reporting unit using market participant assumptions. An entity should recognize an impairment charge for the amount by which the carrying amount of a reporting unit exceeds its fair value up to the amount of goodwill allocated to that reporting unit. We have assessed that we have one operating segment and one reporting unit, and the consolidated net assets, including existing goodwill and other intangible assets, are considered to be the carrying value of the reporting unit.

Previous wording

We have issued share-based awards with performance-based vesting criteria. Achievement of the milestones must be probable before we begin recording share-based compensation expense. When the performance-based vesting criteria is considered probable, we begin to recognize compensation expense at that time. In the period that achievement of the performance-based criteria is deemed probable, US GAAP requires the immediate recognition of all previously unrecognized compensation since the original grant date. As a result, compensation expense recorded in the period that achievement is deemed probable could include a substantial amount of previously unrecorded compensation expense related to the prior periods. For any share-based awards where performance-based vesting criteria is no longer considered probable, previously recognized compensation cost would be reversed. As of December 31, 2023, we have achieved the performance-based criteria for all share-based awards with performance-based vesting criteria, except for the Criteria Four and Five awards, as defined in Note 10, “Share-based compensation,” included in “Notes to Consolidated Financial Statements.”

Current wording

We have issued share-based awards with performance-based vesting criteria. Achievement of the milestones must be probable before we begin recording share-based compensation expense. When the performance-based vesting criteria is considered probable, we begin to recognize compensation expense at that time. In the period that achievement of the performance-based criteria is deemed probable, US GAAP requires the immediate recognition of all previously unrecognized compensation since the original grant date. As a result, compensation expense recorded in the period that achievement is deemed probable could include a substantial amount of previously unrecorded compensation expense related to the prior periods. For any share-based awards where performance-based vesting criteria is no longer considered probable, previously recognized compensation cost would be reversed. As of December 31, 2024, no amortization of share-based compensation expense has been recognized for 95,000 RSUs subject to Criteria Four, as defined in Note 10, “Share-based compensation,” included in “Notes to Consolidated Financial Statements,” because the Company determined that it is not probable that related performance criteria will be met.

Previous wording

Adjusted EBITDA increased 76% to $2.7 million. Adjusted EBITDA margin increased to 18% from 12%.

Current wording

Adjusted EBITDA increased 68% to $4.5 million. Adjusted EBITDA margin increased to 23% from 18%.

Previous wording

Adjusted net income increased 17% to $8.1 million, which resulted in adjusted earnings of $0.58 and $0.57 per basic and diluted share, respectively.

Current wording

Adjusted net income increased 390% to $1.3 million, which resulted in adjusted earnings of $0.10 and $0.09 per basic and diluted share, respectively.

Previous wording

Cash from operating activities increased 21% to $15.1 million.

Current wording

Cash from operating activities increased 59% to $6.7 million.

Previous wording

Cash and cash equivalents were $32.0 million as of December 31, 2023.

Current wording

Cash and cash equivalents were $36.5 million as of December 31, 2024.

Previous wording

Net income increased to $13.5 million from $0.6 million, which resulted in earnings of $0.97 and $0.96 per basic and diluted share, respectively. Net income margin increased to 22% from 1%.

Current wording

Net income was $7.0 million compared to $13.5 million (inclusive of a one-time deferred income tax benefit of $10.3 million in 2023), which resulted in earnings of $0.51 and $0.50 per basic and diluted share, respectively. Net income margin decreased to 9% from 22%.

Previous wording

Adjusted EBITDA increased 27% to $16.4 million. Adjusted EBITDA margin increased to 27% from 24%.

Current wording

Adjusted EBITDA increased 44% to $23.6 million. Adjusted EBITDA margin increased to 31% from 27%.

Previous wording

Adjusted net income increased 157% to $0.3 million, which resulted in adjusted earnings of $0.02 per basic and diluted share.

Current wording

Adjusted net income increased 42% to $11.5 million, which resulted in adjusted earnings of $0.83 and $0.82 per basic and diluted share, respectively.

Previous wording

Cash from operating activities decreased 4% to $4.2 million.

Current wording

Cash from operating activities increased 59% to $24.0 million.

Previous wording

Management evaluates the financial performance of our business on a variety of key indicators, including non-GAAP metrics of adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted earnings per share, adjusted gross profit, adjusted gross margin, and free cash flow ("FCF"). Adjusted EBITDA is a non-GAAP financial measure equal to net income (loss), the most directly comparable financial measure based on US GAAP, excluding interest income, net, income tax expense (benefit), depreciation and amortization, share-based compensation expense, litigation costs, and write-off of long-lived assets and others. We define adjusted EBITDA margin as adjusted EBITDA as a percentage of revenue. Adjusted net income is a non-GAAP financial measure equal to net income (loss), the most directly comparable financial measure based on US GAAP, excluding share-based compensation expense, amortization of share-based compensation capitalized in intangible assets, and discrete tax items, and including the tax effect of adjustments. We define adjusted earnings per share as adjusted net income divided by the weighted average shares outstanding. We define adjusted gross profit as revenue less cost of revenue (exclusive of depreciation and amortization), and adjusted gross margin as adjusted gross profit as a percentage of revenue. We define FCF as net cash provided by operating activities reduced by purchase of property and equipment and capitalized costs included in intangible assets.

Current wording

Management evaluates the financial performance of our business on a variety of key indicators, including non-GAAP metrics of adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted earnings per share, adjusted gross profit, adjusted gross margin, and free cash flow ("FCF"). Adjusted EBITDA is a non-GAAP financial measure equal to net income (loss), the most directly comparable financial measure based on US GAAP, excluding interest income, income tax (benefit) expense, depreciation and amortization, share-based compensation expense, litigation costs, and write-off of long-lived assets and others. We define adjusted EBITDA margin as adjusted EBITDA as a percentage of revenue. Adjusted net income is a non-GAAP financial measure equal to net income (loss), the most directly comparable financial measure based on US GAAP, excluding share-based compensation expense, amortization of share-based compensation capitalized in intangible assets, and discrete tax items, and including the tax effect of adjustments. We define adjusted earnings per share as adjusted net income divided by the weighted average shares outstanding. We define adjusted gross profit as revenue less cost of revenue (exclusive of depreciation and amortization), and adjusted gross margin as adjusted gross profit as a percentage of revenue. We define FCF as net cash provided by operating activities reduced by purchase of property and equipment and capitalized costs included in intangible assets.

Previous wording

(1) During the three months ended September 30, 2023, $10.3 million of income tax benefit was recognized as a result of the release of the valuation allowance previously recorded on our deferred tax asset and cumulative research and development tax credit, which were excluded to calculate the adjusted net income.

Current wording

(1) During the three months ended September 30, 2023, a one-time income tax benefit of $10.3 million was recognized as a result of the release of the valuation allowance previously recorded on our deferred tax asset and cumulative research and development tax credit, which were excluded to calculate the adjusted net income.

Previous wording

(2) The tax effect of adjustments is calculated using the expected federal and state statutory tax rate. The expected federal and state income tax rate was approximately 25.75% for the three and twelve months ended December 31, 2023. There was no tax effect of such adjustments for the three and twelve months ended December 31, 2022, as a full valuation allowance was provided for the net deferred tax assets.

Current wording

(2) The tax effect of adjustments is calculated using the expected federal and state statutory tax rate. The expected federal and state income tax rate was approximately 26.00% for the three and twelve months ended December 31, 2024, and 25.75% for the three and twelve months ended December 31, 2023.

Previous wording

(3) For the three months ended December 31, 2023 and 2022, diluted weighted average shares outstanding for adjusted diluted earnings per share are calculated by the inclusion of unvested RSUs, which were not included in US GAAP diluted weighted average shares outstanding due to the Company's net loss position for such periods.

Current wording

(3) For the three months ended December 31, 2023, diluted weighted average shares outstanding for adjusted diluted earnings per share are calculated by the inclusion of unvested RSUs, which were not included in US GAAP diluted weighted average shares outstanding due to the Company's net loss position for such period.

Previous wording

Revenue. Revenue increased $6.9 million or 13% to $60.2 million for the year ended December 31, 2023 from $53.3 million for the year ended December 31, 2022. Revenue from new customers increased $0.5 million or 11%, base revenue from existing customers increased $6.1 million or 15%, and growth revenue from existing customers increased $0.3 million or 4%. Our IDI billable customer base grew from 7,021 customers as of December 31, 2022 to 7,875 customers as of December 31, 2023, and our FOREWARN user base grew from 116,960 users to 185,380 users during that same period. Revenue from new customers represents the total monthly revenue generated from new customers in a given period. A customer is defined as a new customer during the first six months of revenue generation. Base revenue from existing customers represents the total monthly revenue generated from existing customers in a given period that does not exceed the customers' trailing six-month average revenue. A customer is defined as an existing customer six months after their initial month of revenue. Growth revenue from existing customers represents the total monthly revenue generated from existing customers in a given period in excess of the customers' trailing six-month average revenue.

Current wording

Revenue. Revenue increased $15.0 million or 25% to $75.2 million for the year ended December 31, 2024 from $60.2 million for the year ended December 31, 2023. Revenue from new customers increased $1.0 million or 18%, base revenue from existing customers increased $11.6 million or 25%, and growth revenue from existing customers increased $2.4 million or 33%. Our IDI billable customer base grew from 7,875 customers as of December 31, 2023 to 8,926 customers as of December 31, 2024, and our FOREWARN user base grew from 185,380 users to 303,418 users during that same period. Revenue from new customers represents the total monthly revenue generated from new customers in a given period. A customer is defined as a new customer during the first six months of revenue generation. Base revenue from existing customers represents the total monthly revenue generated from existing customers in a given period that does not exceed the customers' trailing six-month average revenue. A customer is defined as an existing customer six months after their initial month of revenue. Growth revenue from existing customers represents the total monthly revenue generated from existing customers in a given period in excess of the customers' trailing six-month average revenue.

Previous wording

Cost of revenue (exclusive of depreciation and amortization). Cost of revenue increased $0.9 million or 7% to $13.1 million for the year ended December 31, 2023 from $12.2 million for the year ended December 31, 2022. Our cost of revenue primarily includes data acquisition costs. Data acquisition costs consist primarily of the costs to acquire data either on a transactional basis or through flat-fee data licensing agreements, including unlimited usage agreements. We continue to enhance the breadth and depth of our data through the addition and expansion of relationships with key data suppliers, including our largest data supplier, which accounted for 49% and 48% of our total data acquisition costs for the years ended December 31, 2023 and 2022, respectively. Other cost of revenue items include expenses related to third-party infrastructure fees.

Current wording

Cost of revenue (exclusive of depreciation and amortization). Cost of revenue (exclusive of depreciation and amortization) increased $0.9 million or 7% to $14.0 million for the year ended December 31, 2024 from $13.1 million for the year ended December 31, 2023. Our cost of revenue primarily includes data acquisition costs. Data acquisition costs consist primarily of the costs to acquire data either on a transactional basis or through flat-fee data licensing agreements, including unlimited usage agreements. We continue to enhance the breadth and depth of our data through the addition and expansion of relationships with key data suppliers, including our largest data supplier, which accounted for 45% and 48% of our total data acquisition costs for the years ended December 31, 2024 and 2023, respectively. Other cost of revenue items include expenses related to third-party infrastructure fees.

Previous wording

As the construct of our data costs is primarily a flat-fee, unlimited usage model, the cost of revenue as a percentage of revenue decreased to 22% for the year ended December 31, 2023 from 23% for the year ended December 31, 2022. We expect that cost of revenue as a percentage of revenue will continue to decrease over the coming years as our revenue increases. Historically, at scale, the industry business model’s cost of revenue will trend between 15% and 30% as a percentage of revenue.

Current wording

As the construct of our data costs is primarily a flat-fee, unlimited usage model, the cost of revenue as a percentage of revenue decreased to 19% for the year ended December 31, 2024 from 22% for the year ended December 31, 2023. We expect that cost of revenue as a percentage of revenue will continue to decrease over the coming years as our revenue increases. Historically, at scale, the industry business model’s cost of revenue will trend between 15% and 30% as a percentage of revenue.

Previous wording

Sales and marketing expenses. Sales and marketing expenses increased $3.0 million or 28% to $13.8 million for the year ended December 31, 2023 from $10.8 million for the year ended December 31, 2022. Sales and marketing expenses consist of salaries and benefits, advertising and marketing, travel expenses, and share-based compensation expense, incurred by our sales team, and provision for bad debts. The increase during the year ended December 31, 2023 was primarily attributable to an increase of $1.4 million in salaries and benefits and sales commissions, $0.9 million in provision for bad debts, $0.3 million in advertising and marketing, and $0.2 million in share-based compensation expense.

Current wording

Sales and marketing expenses. Sales and marketing expenses increased $4.0 million or 29% to $17.8 million for the year ended December 31, 2024 from $13.8 million for the year ended December 31, 2023. Sales and marketing expenses consist of personnel-related expenses, advertising, marketing and agency expenses, travel expenses, and share-based compensation expense, incurred by our sales team, and provision for bad debts. The increase during the year ended December 31, 2024 was primarily attributable to an increase of $4.1 million in personnel-related expenses, $0.3 million in advertising, marketing and agency expenses, and $0.2 million in share-based compensation expense, which was partially offset by the decrease of $0.7 million in provision for bad debts.

Previous wording

General and administrative expenses. General and administrative expenses decreased $0.8 million or 3% to $22.4 million for the year ended December 31, 2023 from $23.2 million for the year ended December 31, 2022. For the years ended December 31, 2023 and 2022, our general and administrative expenses consisted primarily of employee salaries and benefits of $11.8 million and $11.8 million, share-based compensation expense of $4.9 million and $5.2 million, and professional fees of $3.2 million and $3.7 million, respectively.

Current wording

General and administrative expenses. General and administrative expenses increased $3.5 million or 15% to $25.9 million for the year ended December 31, 2024 from $22.4 million for the year ended December 31, 2023. For the years ended December 31, 2024 and 2023, our general and administrative expenses consisted primarily of personnel-related expenses of $13.8 million and $11.8 million, share-based compensation expense of $5.3 million and $4.9 million, and professional fees of $4.2 million and $3.2 million, respectively.

Previous wording

Depreciation and amortization. Depreciation and amortization expenses increased $1.7 million or 25% to $8.4 million for the year ended December 31, 2023 from $6.7 million for the year ended December 31, 2022. The increase in depreciation and amortization for the year ended December 31, 2023 resulted primarily from the amortization of software developed for internal use that became ready for its intended use after December 31, 2022.

Current wording

Depreciation and amortization. Depreciation and amortization expenses increased $1.2 million or 14% to $9.6 million for the year ended December 31, 2024 from $8.4 million for the year ended December 31, 2023. The increase in depreciation and amortization for the year ended December 31, 2024 resulted primarily from the amortization of software developed for internal use that became ready for its intended use after December 31, 2023.

Previous wording

Interest income, net. Interest income increased $0.9 million or 280% to $1.3 million for the year ended December 31, 2023 from $0.4 million for the year ended December 31, 2022. This was primarily due to interest income earned on investments in certain money market funds.

Current wording

Interest income, net. Interest income increased $0.1 million or 5% to $1.4 million for the year ended December 31, 2024 from $1.3 million for the year ended December 31, 2023. This was primarily due to interest income earned on investments in certain money market funds.

Previous wording

Income before income taxes. Income before income taxes increased $3.1 million or 439% to $3.8 million for the year ended December 31, 2023 from $0.7 million for the year ended December 31, 2022. The increase was primarily attributable to the increase in revenue, decrease in our cost of revenue as a percentage of revenue, and decrease in professional fees, which was partially offset by the increase in employee salaries and benefits and sales commissions of $1.4 million, depreciation and amortization of $1.7 million, and $0.9 million in provision for bad debts.

Current wording

Income before income taxes. Income before income taxes increased $5.5 million or 143% to $9.3 million for the year ended December 31, 2024 from $3.8 million for the year ended December 31, 2023. The increase was primarily attributable to the increase in revenue, decrease in our cost of revenue as a percentage of revenue, and decrease in provision for bad debts of $0.7 million, which was partially offset by the increase in personnel-related expenses of $6.1 million, share-based compensation expense of $0.6 million, professional fees of $1.0 million, and depreciation and amortization of $1.2 million.

Previous wording

Income taxes. Income tax benefit of $9.7 million was recognized for the year ended December 31, 2023 compared to income tax expense of $0.1 million for the year ended December 31, 2022. A full valuation allowance on the deferred tax assets was recognized as of December 31, 2022 to reduce the deferred tax assets to the amount that is more likely than not to be realized. During the year ended December 31, 2023, the Company released the valuation allowance as the Company concluded that the realization of the deferred tax assets as of December 31, 2023 is more likely than not. See Note 8, “Income Taxes,” included in “Notes to Consolidated Financial Statements.”

Current wording

Income tax expense (benefit). Income tax expense of $2.3 million was recognized for the year ended December 31, 2024 compared to income tax benefit of $9.7 million, inclusive of a one-time deferred income tax benefit as a result of the release of the valuation allowance previously recorded on deferred tax asset and the cumulative research and development tax credit, for the year ended December 31, 2023. Beginning from the third quarter of 2023, the Company released the valuation allowance previously recorded against its deferred tax assets as the Company concluded that the realization of the deferred tax assets is more likely than not. See Note 8, “Income Taxes,” included in “Notes to Consolidated Financial Statements.”

Previous wording

Net income. Net income was $13.5 million for the year ended December 31, 2023 compared to $0.6 million for the year ended December 31, 2022, as a result of the foregoing.

Current wording

Net income. Net income was $7.0 million for the year ended December 31, 2024 compared to $13.5 million (inclusive of a one-time deferred income tax benefit of $10.3 million) for the year ended December 31, 2023, as a result of the foregoing.

Previous wording

Cash flows provided by operating activities. For the year ended December 31, 2023, net cash provided by operating activities was $15.1 million, primarily the result of the net income of $13.5 million, adjusted for certain non-cash items (consisting of share-based compensation expense, depreciation and amortization, write-off of long-lived assets, provision for bad debts, noncash lease expenses, and deferred income tax benefit) totaling $5.6 million, and the cash used as a result of changes in assets and liabilities of $4.1 million, primarily the result of the increase in accounts receivable, and prepaid expenses and other current assets, and the decrease in accounts payable and operating lease liabilities. For the year ended December 31, 2022, net cash provided by operating activities was $12.5 million, primarily the result of the net income of $0.6 million, adjusted for certain non-cash items (consisting of share-based compensation expense, depreciation and amortization, write-off of long-lived assets, provision for bad debts, noncash lease expenses, and deferred income tax expense) totaling $13.2 million, and the cash used as a result of changes in assets and liabilities of $1.3 million, primarily the result of the increase in accounts receivable and other noncurrent assets, and the decrease in operating lease liabilities, which was offset by the increase in accounts payable and accrued expenses and other current liabilities.

Current wording

Cash flows provided by operating activities. For the year ended December 31, 2024, net cash provided by operating activities was $24.0 million, primarily the result of the net income of $7.0 million, adjusted for certain non-cash items (consisting of share-based compensation expense, depreciation and amortization, write-off of long-lived assets, provision for bad debts, noncash lease expenses, and deferred income tax expense (benefit)) totaling $18.5 million, and the cash used as a result of changes in assets and liabilities of $1.5 million, primarily the result of the increase in accounts receivable, prepaid expenses and other current assets, and other noncurrent assets, and the decrease in operating lease liabilities, which was partially offset by the increase in accounts payable and accrued expenses and other current liabilities. For the year ended December 31, 2023, net cash provided by operating activities was $15.1 million, primarily the result of the net income of $13.5 million, adjusted for certain non-cash items, as mentioned above, totaling $5.6 million, and the cash used as a result of changes in assets and liabilities of $4.1 million, primarily the result of the increase in accounts receivable and prepaid expenses and other current assets, and the decrease in accounts payable and operating lease liabilities.

Previous wording

Cash flows used in investing activities. For the years ended December 31, 2023 and 2022, net cash used in investing activities was $9.1 million and $8.8 million, respectively, primarily as a result of capitalized costs included in intangible assets.

Current wording

Cash flows used in investing activities. For the years ended December 31, 2024 and 2023, net cash used in investing activities was $9.6 million and $9.1 million, respectively, primarily as a result of capitalized costs included in intangible assets.

Previous wording

Cash flows used in financing activities. For the year ended December 31, 2023, net cash used in financing activities was $5.7 million, mainly the result of $2.0 million in taxes paid related to the net share settlement of vesting of RSUs, and $3.7 million paid in aggregate for the repurchase of common stock pursuant to a stock repurchase program that the board of directors authorized on May 2, 2022 (the "Stock Repurchase Program"), authorizing the repurchase of up to $5.0 million of our common stock. Subsequently on December 19, 2023, the board of directors authorized the repurchase of an additional $5.0 million of our common stock. For the year ended December 31, 2022, net cash used in financing activities was $6.1 million, mainly the result of $5.2 million in taxes paid related to the net share settlement of vesting of RSUs during the year and $0.9 million paid in aggregate for the repurchase of common stock pursuant to the Stock Repurchase Program.

Current wording

Cash flows used in financing activities. For the year ended December 31, 2024, net cash used in financing activities was $9.9 million, resulting from the taxes paid related to the net share settlement of vesting of RSUs of $4.1 million, and the result of $5.9 million paid in aggregate for the repurchase of common stock pursuant to a stock repurchase program that the Board of Directors authorized on May 2, 2022 (the "Stock Repurchase Program"), authorizing the repurchase of up to $5.0 million of our common stock. Subsequently on each of December 19, 2023 and March 28, 2024, the Board of Directors approved the repurchases of an additional $5.0 million of our common stock under the Stock Repurchase Program. For the year ended December 31, 2023, net cash used in financing activities was $5.7 million, the result of $2.0 million in taxes paid related to the net share settlement of vesting of RSUs, and $3.7 million paid in aggregate for the repurchase of common stock pursuant to the Stock Repurchase Program.