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 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.

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 September 30, 2025 and 2024, IDI had 9,853 and 8,743 billable customers, respectively, and FOREWARN had 372,209 and 284,967 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 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.

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 September 30, 2025 and 2024, 75% and 77% of total revenue was attributable to customers with pricing contracts, respectively, versus 25% and 23% attributable to transactional customers, respectively. For the nine months ended September 30, 2025 and 2024, 75% and 76% of total revenue was attributable to customers with pricing contracts, respectively, versus 25% and 24% attributable to transactional customers, respectively.

Previous wording

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

Current wording

Gross profit increased 26% to $16.8 million. Gross margin increased to 73% from 70%.

Previous wording

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

Current wording

Adjusted gross profit increased 23% to $19.4 million. Adjusted gross margin increased to 84% from 83%.

Previous 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%.

Current wording

Net income increased 145% to $4.2 million, which resulted in earnings of $0.30 and $0.29 per basic and diluted share, respectively. Net income margin increased to 18% from 9%.

Previous wording

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

Current wording

Adjusted EBITDA increased 35% to $9.0 million. Adjusted EBITDA margin increased to 39% from 35%.

Previous 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.

Current wording

Adjusted net income increased 75% to $5.8 million, which resulted in adjusted earnings of $0.41 and $0.39 per basic and diluted share, respectively.

Previous wording

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

Current wording

Cash and cash equivalents were $45.4 million as of September 30, 2025.

Previous wording

Second Quarter and Recent Business Highlights

Current wording

Third Quarter and Recent Business Highlights

Previous wording

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

Current wording

Added 304 customers to IDI during the third quarter, ending the quarter with 9,853 customers.

Previous 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.

Current wording

Added 25,538 users to FOREWARN during the third quarter, ending the quarter with 372,209 users. Over 590 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, 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.

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, acquisition-related costs, litigation 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, amortization of share-based compensation capitalized in intangible assets, acquisition-related costs, litigation costs, and write-off of long-lived 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% for the three and six months ended June 30, 2025, and 25.75% for the three and six months ended June 30, 2024.

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 nine months ended September 30, 2025 and 2024.

Previous wording

We believe adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted earnings per share, adjusted gross profit, adjusted gross margin, and FCF are relevant and provide useful information frequently used by securities analysts, investors and other interested parties in their evaluation of the operating performance of companies similar to ours and are indicators of the operational strength of our business. We believe adjusted EBITDA eliminates the uneven effect of considerable amounts of non-cash depreciation and amortization, share-based compensation expense, and the impact of other non-recurring items, providing useful comparisons versus prior periods or forecasts. Adjusted EBITDA margin is calculated as adjusted EBITDA as a percentage of revenue. We believe adjusted net income provides additional means of evaluating period-over-period operating performance by eliminating certain non-cash expenses and other items that might otherwise make comparisons of our ongoing business with prior periods more difficult and obscure trends in ongoing operations. Adjusted net income is a non-GAAP financial measure equal to 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. We define adjusted earnings per share as adjusted net income divided by the weighted average shares outstanding. Our adjusted gross profit is a measure used by management in evaluating the business’s current operating performance by excluding the impact of prior historical costs of assets that are expensed systematically and allocated over the estimated useful lives of the assets, which may not be indicative of the current operating activity. We define adjusted gross profit as gross profit plus depreciation and amortization of certain intangible assets. We believe adjusted gross profit provides useful information to our investors by eliminating the impact of certain non-cash depreciation and amortization, and primarily the amortization of software developed for internal use, providing a baseline of our core operating results that allow for analyzing trends in our underlying business consistently over multiple periods. Adjusted gross margin is calculated as adjusted gross profit as a percentage of revenue. We believe FCF is an important liquidity measure of the cash that is available, after capital expenditures, for operational expenses and investment in our business. FCF is a measure used by management to understand and evaluate the business’s operating performance and trends over time. FCF is calculated by using net cash provided by operating activities, less purchase of property and equipment and capitalized costs included in intangible assets.

Current wording

We believe adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted earnings per share, adjusted gross profit, adjusted gross margin, and FCF are relevant and provide useful information frequently used by securities analysts, investors and other interested parties in their evaluation of the operating performance of companies similar to ours and are indicators of the operational strength of our business. We believe adjusted EBITDA eliminates the uneven effect of considerable amounts of non-cash depreciation and amortization, and share-based compensation expense, and the impact of other items not indicative of our ongoing operating performance. Adjusted EBITDA margin is calculated as adjusted EBITDA as a percentage of revenue. We believe adjusted net income provides additional means of evaluating period-over-period operating performance by eliminating certain non-cash expenses and other items that might otherwise make comparisons of our ongoing business with prior periods more difficult and obscure trends in ongoing operations. Adjusted net income is a non-GAAP financial measure equal to net income, adjusted to exclude share-based compensation expense, amortization of share-based compensation capitalized in intangible assets, and other items not indicative of our ongoing operating performance, 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. Our adjusted gross profit is a measure used by management in evaluating the business’s current operating performance by excluding the impact of prior historical costs of assets that are expensed systematically and allocated over the estimated useful lives of the assets, which may not be indicative of the current operating activity. We define adjusted gross profit as gross profit plus depreciation and amortization of certain intangible assets. We believe adjusted gross profit provides useful information to our investors by eliminating the impact of certain non-cash depreciation and amortization, and primarily the amortization of software developed for internal use, providing a baseline of our core operating results that allow for analyzing trends in our underlying business consistently over multiple periods. Adjusted gross margin is calculated as adjusted gross profit as a percentage of revenue. We believe FCF is an important liquidity measure of the cash that is available, after capital expenditures, for operational expenses and investment in our business. FCF is a measure used by management to understand and evaluate the business’s operating performance and trends over time. FCF is calculated by using net cash provided by operating activities, less purchase of property and equipment and capitalized costs included in intangible assets.

Previous 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.

Current wording

Revenue increased $4.0 million, or 21%, to $23.1 million for the three months ended September 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

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.

Current wording

Revenue from new customers decreased $0.1 million, or 6%.

Previous 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.

Current wording

As of September 30, 2025, our IDI billable customer base increased to 9,853 customers, up from 8,743 customers a year earlier. Our FOREWARN user base increased to 372,209 users, up from 284,967 users a year earlier.

Previous wording

Income before income taxes decreased $0.3 million, or 9%, to $3.1 million for the three months ended June 30, 2025, compared to $3.4 million for the same period in 2024.

Current wording

Cost of revenue (exclusive of depreciation and amortization) increased $0.3 million, or 9%, to $3.6 million for the three months ended September 30, 2025, compared to $3.3 million for the same period in 2024.

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 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.

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% and 48% of our total data acquisition costs for the three months ended September 30, 2025 and 2024, respectively. 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 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.

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 September 30, 2025, compared to 17% 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 $1.2 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.

Current wording

Sales and marketing expenses increased $0.6 million, or 12%, to $5.4 million for the three months ended September 30, 2025, compared to $4.8 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

an increase of $0.1 million in share-based compensation expense.

Current wording

an increase of $0.3 million in personnel-related expenses; and

Previous wording

General and administrative expenses increased $1.9 million, or 16%, to $13.4 million for the six months ended June 30, 2025, compared to $11.5 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 $0.8 million, or 13%, to $6.8 million for the three months ended September 30, 2025, compared to $6.0 million for the same period in 2024. The increase reflects higher personnel-related expenses to support the continued growth of the business.

Previous wording

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

Current wording

share-based compensation expense of $1.5 million and $1.5 million, respectively; and

Previous 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.

Current wording

Depreciation and amortization expenses increased $0.3 million, or 11%, to $2.7 million for the three months ended September 30, 2025, compared to $2.4 million for the same period in 2024.

Previous wording

Interest income remained consistent at $0.3 million for the three months ended June 30, 2025 and 2024.

Current wording

Interest income remained consistent at $0.4 million for the three months ended September 30, 2025 and 2024.

Previous wording

an increase of $0.4 million in professional fees;

Current wording

an increase of $0.3 million in professional fees; and

Previous wording

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

Current wording

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

Previous wording

The decrease in income tax expense was primarily attributable to the lower pre-tax income, and a decrease in the effective tax rate to 13% for the three months ended June 30, 2025 from 22% for the same period in 2024.

Current wording

The decrease in income tax expense was primarily attributable to a decrease in the effective tax rate to 15% for the three months ended September 30, 2025 from 40% for the same period in 2024, partially offset by higher pre-tax income.

Previous 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.

Current wording

Net income increased $2.5 million, or 145%, to $4.2 million for the three months ended September 30, 2025, compared to $1.7 million for the same period in 2024, as a result of the foregoing.

Previous 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.

Current wording

Revenue increased $11.3 million, or 20%, to $66.9 million for the nine months ended September 30, 2025, compared to $55.6 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

Revenue from new customers increased $0.9 million, or 28%.

Current wording

Revenue from new customers increased $0.9 million, or 17%.

Previous 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.

Current wording

As of September 30, 2025, our IDI billable customer base increased to 9,853 customers, up from 8,743 customers a year earlier. Our FOREWARN user base increased to 372,209 users, up from 284,967 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 45% and 44% of our total data acquisition costs for the six months ended June 30, 2025 and 2024, respectively. 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.

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 45% of our total data acquisition costs for the nine months ended September 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 16% for the six months ended June 30, 2025, compared to 20% 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 nine months ended September 30, 2025, compared to 19% 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 $2.9 million, or 36%, to $11.0 million for the six months ended June 30, 2025, compared to $8.1 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 $3.5 million, or 27%, to $16.4 million for the nine months ended September 30, 2025, compared to $12.9 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

an increase of $0.1 million in advertising, marketing and agency expenses; and

Current wording

an increase of $0.2 million in advertising, marketing and agency expenses; and

Previous 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.

Current wording

General and administrative expenses increased $2.7 million, or 15%, to $20.2 million for the nine months ended September 30, 2025, compared to $17.5 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

For the six months ended June 30, 2025 and 2024, general and administrative expenses consisted primarily of:

Current wording

For the nine months ended September 30, 2025 and 2024, general and administrative expenses consisted primarily of:

Previous wording

share-based compensation expense of $3.0 million and $2.5 million, respectively; and

Current wording

share-based compensation expense of $4.5 million and $4.0 million, respectively; and