Red Violet, Inc.

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 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 March 31, 2025 and 2024, IDI had 9,241 and 8,241 billable customers, respectively, and FOREWARN had 325,336 and 236,639 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 June 30, 2025 and 2024, IDI had 9,549 and 8,477 billable customers, respectively, and FOREWARN had 346,671 and 263,876 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 three months ended March 31, 2025 and 2024, 74% and 78% of total revenue was attributable to customers with pricing contracts, respectively, versus 26% and 22% 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 three months ended June 30, 2025 and 2024, 77% and 74% of total revenue was attributable to customers with pricing contracts, respectively, versus 23% and 26% attributable to transactional customers, respectively. For the six months ended June 30, 2025 and 2024, 76% of total revenue was attributable to customers with pricing contracts, versus 24% attributable to transactional customers.

Previous wording

Gross profit increased 37% to $15.8 million. Gross margin increased to 72% from 66%.

Current wording

Gross profit increased 18% to $15.7 million. Gross margin increased to 72% from 70%.

Previous wording

Adjusted gross profit increased 33% to $18.3 million. Adjusted gross margin increased to 83% from 79%.

Current wording

Adjusted gross profit increased 17% to $18.2 million. Adjusted gross margin increased to 84% from 82%.

Previous wording

Net income increased 93% to $3.4 million, which resulted in earnings of $0.25 and $0.24 per basic and diluted share, respectively. Net income margin increased to 16% from 10%.

Current wording

Net income increased 2% to $2.7 million, which resulted in earnings of $0.19 and $0.18 per basic and diluted share, respectively. Net income margin decreased to 12% from 14%.

Previous wording

Adjusted EBITDA increased 47% to $8.4 million. Adjusted EBITDA margin increased to 38% from 32%.

Current wording

Adjusted EBITDA increased 12% to $7.6 million. Adjusted EBITDA margin decreased to 35% from 36%.

Previous wording

Adjusted net income increased 53% to $4.8 million, which resulted in adjusted earnings of $0.35 and $0.33 per basic and diluted share, respectively.

Current wording

Adjusted net income increased 6% to $4.1 million, which resulted in adjusted earnings of $0.29 and $0.28 per basic and diluted share, respectively.

Previous wording

Cash and cash equivalents were $34.6 million as of March 31, 2025.

Current wording

Cash and cash equivalents were $38.8 million as of June 30, 2025.

Previous wording

First Quarter and Recent Business Highlights

Current wording

Second Quarter and Recent Business Highlights

Previous wording

Added 315 customers to IDI during the first quarter, ending the quarter with 9,241 customers.

Current wording

Added 308 customers to IDI during the second quarter, ending the quarter with 9,549 customers.

Previous wording

Added 21,918 users to FOREWARN during the first quarter, ending the quarter with 325,336 users. Over 545 REALTOR® Associations throughout the U.S. are now contracted to use FOREWARN.

Current wording

Added 21,335 users to FOREWARN during the second quarter, ending the quarter with 346,671 users. Over 575 REALTOR® Associations throughout the U.S. are now contracted to use FOREWARN.

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, the most directly comparable financial measure based on US GAAP, excluding interest income, income tax 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, the most directly comparable financial measure based on US GAAP, 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. We define adjusted earnings per share as adjusted net income divided by the weighted average shares outstanding. We define adjusted gross profit as gross profit plus depreciation and amortization of certain intangible assets, 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, the most directly comparable financial measure based on US GAAP, 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. 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, the most directly comparable financial measure based on US GAAP, 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. We define adjusted earnings per share as adjusted net income divided by the weighted average shares outstanding. We define adjusted gross profit as gross profit plus depreciation and amortization of certain intangible assets, 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) 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% and 25.75% for the three months ended March 31, 2025 and 2024, respectively.

Current wording

(1) 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 six months ended June 30, 2025, and 25.75% for the three and six months ended June 30, 2024.

Previous wording

The increase was primarily driven by:

Current wording

Revenue increased $2.7 million, or 14%, to $21.8 million for the three months ended June 30, 2025, compared to $19.1 million for the same period in 2024. The increase was driven by volume expansion across the existing customer base, partially offset by the decrease in revenue from new customers.

Previous wording

As of March 31, 2025, our IDI billable customer base increased to 9,241 customers, up from 8,241 customers a year earlier. Our FOREWARN user base increased to 325,336 users, up from 236,639 users a year earlier.

Current wording

As of June 30, 2025, our IDI billable customer base increased to 9,549 customers, up from 8,477 customers a year earlier. Our FOREWARN user base increased to 346,671 users, up from 263,876 users a year earlier.

Previous wording

Our cost of revenue primarily consists of data acquisition costs, which includes the cost to acquire data under flat-fee licensing agreements, including unlimited usage arrangements, as well as purchases on a transactional basis. We continue to enhance the breadth and depth of our data by the addition and expansion of relationships with key data suppliers, including our largest data supplier, which accounted for 43% and 41% of our total data acquisition costs for the three months ended March 31, 2025 and 2024, respectively.

Current wording

Our cost of revenue primarily consists of data acquisition costs, which includes the cost to acquire data under flat-fee licensing agreements, including unlimited usage arrangements, as well as purchases on a transactional basis. We continue to enhance the breadth and depth of our data by the addition and expansion of relationships with key data suppliers, including our largest data supplier, which accounted for 46% of our total data acquisition costs for the three months ended June 30, 2025 and 2024. Effective on May 1, 2025, we entered into an amendment with our largest data supplier, extending the term of the agreement through April 30, 2031.

Previous wording

Due to the fixed-cost nature of our primary data licensing structure, cost of revenue as a percentage of revenue decreased to 17% for the three months ended March 31, 2025, compared to 21% for the same period in 2024. We expect this percentage to continue to decline over time as our revenue increases.

Current wording

Due to the fixed-cost nature of our primary data licensing structure, cost of revenue as a percentage of revenue decreased to 16% for the three months ended June 30, 2025, compared to 18% for the same period in 2024. We expect this percentage to continue to decline over time as our revenue increases.

Previous wording

Sales and marketing expenses increased $1.7 million, or 46%, to $5.4 million for the three months ended March 31, 2025, compared to $3.7 million for the same period in 2024. The increase reflects our continued investment in expanding our go-to-market capabilities to support long-term revenue growth.

Current wording

Sales and marketing expenses increased $1.2 million, or 28%, to $5.6 million for the three months ended June 30, 2025, compared to $4.4 million for the same period in 2024. The increase reflects our continued investment in expanding our go-to-market capabilities to support long-term revenue growth.

Previous wording

General and administrative expenses increased $0.4 million, or 7%, to $6.2 million for the three months ended March 31, 2025, compared to $5.8 million for the same period in 2024. The increase reflects higher personnel-related expenses and share-based compensation expense to support the continued growth of the business.

Current wording

General and administrative expenses increased $1.5 million, or 26%, to $7.3 million for the three months ended June 30, 2025, compared to $5.8 million for the same period in 2024. The increase reflects higher personnel-related expenses and share-based compensation expense to support the continued growth of the business.

Previous wording

share-based compensation expense of $1.4 million and $1.3 million, respectively; and

Current wording

share-based compensation expense of $1.6 million and $1.2 million, respectively; and

Previous wording

Depreciation and amortization expenses increased $0.3 million, or 12%, to $2.6 million for the three months ended March 31, 2025, compared to $2.3 million for the same period in 2024.

Current wording

Depreciation and amortization expenses increased $0.2 million, or 11%, to $2.6 million for the three months ended June 30, 2025, compared to $2.4 million for the same period in 2024.

Previous wording

an increase of $1.6 million in personnel-related expenses; and

Current wording

an increase of $1.6 million in personnel-related expenses;

Previous wording

an increase of $0.3 million in depreciation and amortization expense; and

Current wording

an increase of $0.2 million in depreciation and amortization expense,

Previous wording

Net income increased $1.6 million, or 93%, to $3.4 million for the three months ended March 31, 2025, compared to $1.8 million for the same period in 2024, as a result of the foregoing.

Current wording

Net income increased $0.1 million, or 2%, to $2.7 million for the three months ended June 30, 2025, compared to $2.6 million for the same period in 2024, as a result of the foregoing.

Previous wording

Revenue increased $4.5 million, or 26%, to $22.0 million for the three months ended March 31, 2025, compared to $17.5 million for the same period in 2024. The increase was driven by strong onboarding of new customers and stable recurring revenue from our existing customer base.

Current wording

Revenue increased $7.2 million, or 20%, to $43.8 million for the six months ended June 30, 2025, compared to $36.6 million for the same period in 2024. The increase was driven by strong onboarding of new customers and volume expansion across the existing customer base.

Previous wording

Interest income decreased $0.1 million, or 16%, to $0.3 million for the three months ended March 31, 2025, compared to $0.4 million for the same period in 2024.

Current wording

Interest income decreased $0.1 million, or 5%, to $0.6 million for the six months ended June 30, 2025, compared to $0.7 million for the same period in 2024.

Previous wording

The decrease was primarily attributable to lower yields on money market fund investments during the quarter.

Current wording

This decline was primarily attributable to lower yields on money market fund investments during the current period.

Previous wording

We believe that persistent inflationary pressures throughout 2024 and into the first quarter of 2025 have contributed to a more challenging macroeconomic environment, increasing recessionary concerns and prompting some businesses to moderate discretionary spending. These conditions have resulted in — and may continue to contribute to — fluctuations in transaction volumes, pricing dynamics, and operating margins across our services.

Current wording

We believe that persistent inflationary pressures throughout 2024 and into the first half of 2025 have contributed to a more challenging macroeconomic environment, increasing recessionary concerns and prompting some businesses to moderate discretionary spending. These conditions have resulted in — and may continue to contribute to — fluctuations in transaction volumes, pricing dynamics, and operating margins across our services.

Previous wording

non-cash adjustments totaling $5.3 million, including 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; and

Current wording

non-cash adjustments totaling $10.3 million, including 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; and

Previous wording

changes in operating assets and liabilities, which resulted in a net use of cash of $3.7 million, primarily due to an increase in accounts receivable and other noncurrent assets, and a decrease in accrued expenses and other current liabilities.

Current wording

changes in operating assets and liabilities, which resulted in a net use of cash of $4.0 million, primarily due to an increase in accounts receivable, and prepaid expenses and other current assets, and a decrease in accounts payable, accrued expenses and other current liabilities, and operating lease liabilities.

Previous wording

non-cash adjustments totaling $4.3 million, including share-based compensation expense, depreciation and amortization, provision for bad debts, noncash lease expenses, and deferred income tax expense; and

Current wording

non-cash adjustments totaling $9.0 million, including share-based compensation expense, depreciation and amortization, provision for bad debts, noncash lease expenses, and deferred income tax expense; and

Previous wording

changes in operating assets and liabilities, which resulted in a net use of cash of $1.8 million, primarily due to an increase in accounts receivable and prepaid expenses and other noncurrent assets, and a decrease in accrued expenses and other current liabilities, partially offset by the increase in accounts payable.

Current wording

changes in operating assets and liabilities, which resulted in a net use of cash of $3.4 million, primarily due to an increase in accounts receivable, prepaid expenses and other current assets, and other noncurrent assets, and a decrease in accrued expenses and other current liabilities and operating lease liabilities, partially offset by the increase in accounts payable.

Previous wording

For the three months ended March 31, 2025 and 2024, net cash used in investing activities was $2.5 million and $2.4 million, respectively, primarily as a result of capitalized costs included in intangible assets.

Current wording

For the six months ended June 30, 2025 and 2024, net cash used in investing activities was $5.2 million and $4.9 million, respectively, primarily as a result of capitalized costs included in intangible assets.

Previous wording

taxes paid in connection with the net share settlement of vesting RSUs totaling $0.2 million.

Current wording

taxes paid in connection with the net share settlement of vesting RSUs totaling $0.7 million.

Previous wording

common stock repurchases totaling $1.4 million, conducted pursuant to the Company’s Stock Repurchase Program; and

Current wording

common stock repurchases totaling $5.9 million, conducted pursuant to the Company’s Stock Repurchase Program; and

Previous wording

The Stock Repurchase Program was originally authorized by the Board of Directors on May 2, 2022, permitting repurchases of up to $5.0 million of the Company’s common stock. On December 19, 2023, and again on March 28, 2024, the Board approved additional authorizations of $5.0 million each, expanding the total program size.

Current wording

The Stock Repurchase Program was originally authorized by the Board of Directors on May 2, 2022, permitting repurchases of up to $5.0 million of the Company’s common stock. On December 19, 2023, and again on March 28, 2024, the Board of Directors approved additional authorizations of $5.0 million each, expanding the total program size.

Previous wording

As of March 31, 2025, we had material commitments under certain data licensing agreements totaling $11.5 million.

Current wording

As of June 30, 2025, we had material commitments under certain data licensing agreements and a cloud service agreement totaling $44.0 million.

Previous wording

We reported net income of $3.4 million and $1.8 million for the three months ended March 31, 2025 and 2024, respectively. As of March 31, 2025, we had total shareholders’ equity of $91.8 million and cash and cash equivalents of $34.6 million.

Current wording

We reported net income of $2.7 million and $2.6 million for the three months ended June 30, 2025 and 2024, respectively, and net income of $6.1 million and $4.4 million for the six months ended June 30, 2025 and 2024, respectively. As of June 30, 2025, we had total shareholders’ equity of $96.2 million and cash and cash equivalents of $38.8 million.