Red Violet, Inc.

Previous wording

You should read the following discussion and analysis in conjunction with our condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q (“Form 10-Q”). This Form 10-Q contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (“PSLRA”), Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), about our expectations, beliefs, or intentions regarding our business, financial condition, results of operations, strategies, or prospects. You can identify forward-looking statements by the fact that these statements do not relate strictly to historical or current matters. Rather, forward-looking statements relate to anticipated or expected events, activities, trends, or results as of the date they are made. Because forward-looking statements relate to matters that have not yet occurred, these statements are inherently subject to risks and uncertainties that could cause our actual results to differ materially from any future results expressed or implied by the forward-looking statements. Many factors could cause our actual activities or results to differ materially from the activities and results anticipated in forward-looking statements. These factors include those contained in this Form 10-Q, as well as the disclosures made in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 filed on March 4, 2026 (“Form 10-K”), and other filings we make with the Securities and Exchange Commission (the "SEC"). We do not undertake any obligation to update forward-looking statements, except as required by law. We intend that all forward-looking statements be subject to the safe harbor provisions of PSLRA. These forward-looking statements are only predictions and reflect our views as of the date they are made with respect to future events and financial performance.

Current wording

You should read the following discussion and analysis in conjunction with our condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q (“Form 10-Q”). This Form 10-Q contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (“PSLRA”), Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), about our expectations, beliefs, or intentions regarding our business, financial condition, results of operations, strategies, or prospects. You can identify forward-looking statements by the fact that these statements do not relate strictly to historical or current matters. Rather, forward-looking statements relate to anticipated or expected events, activities, trends, or results as of the date they are made. Because forward-looking statements relate to matters that have not yet occurred, these statements are inherently subject to risks and uncertainties that could cause our actual results to differ materially from any future results expressed or implied by the forward-looking statements. Many factors could cause our actual activities or results to differ materially from the activities and results anticipated in forward-looking statements. These factors include those contained in this Form 10-Q, as well as the disclosures made in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 filed on March 4, 2026 (the “2025 Form 10-K”), and other filings we make with the Securities and Exchange Commission (the "SEC"). We do not undertake any obligation to update forward-looking statements, except as required by law. We intend that all forward-looking statements be subject to the safe harbor provisions of PSLRA. These forward-looking statements are only predictions and reflect our views as of the date they are made with respect to future events and financial performance.

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, 2026 and 2025, IDI had 10,422 and 9,241 billable customers, respectively, and FOREWARN had 417,680 and 325,336 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, 2026 and 2025, IDI had 10,869 and 9,549 billable customers, respectively, and FOREWARN had 443,173 and 346,671 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, 2026 and 2025, 75% and 74% of total revenue was attributable to customers with pricing contracts, respectively, versus 25% and 26% 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 each of the three months ended June 30, 2026 and 2025, 77% of total revenue was attributable to customers with pricing contracts, versus 23% attributable to transactional customers. For each of the six months ended June 30, 2026 and 2025, 76% of total revenue was attributable to customers with pricing contracts, versus 24% attributable to transactional customers.

Previous wording

For additional information, please refer to our Form 10-K. There have been no material changes to Critical Accounting Policies and Estimates disclosed in our Form 10-K.

Current wording

For additional information, please refer to our 2025 Form 10-K. There have been no material changes to Critical Accounting Policies and Estimates disclosed in our 2025 Form 10-K.

Previous wording

Gross profit increased 22% to $19.3 million. Gross margin increased to 75% from 72%.

Current wording

Gross profit increased 29% to $20.2 million. Gross margin increased to 76% from 72%.

Previous wording

Adjusted gross profit increased 20% to $22.0 million. Adjusted gross margin increased to 85% from 83%.

Current wording

Adjusted gross profit increased 25% to $22.9 million. Adjusted gross margin increased to 86% from 84%.

Previous wording

Net income increased 28% to $4.4 million, which resulted in earnings of $0.31 and $0.30 per basic and diluted share, respectively. Net income margin increased to 17% from 16%.

Current wording

Net income increased 85% to $5.0 million, which resulted in earnings of $0.35 and $0.34 per basic and diluted share, respectively. Net income margin increased to 19% from 12%.

Previous wording

Adjusted EBITDA increased 27% to $10.7 million. Adjusted EBITDA margin increased to 41% from 38%.

Current wording

Adjusted EBITDA increased 48% to $11.2 million. Adjusted EBITDA margin increased to 42% from 35%.

Previous wording

Adjusted net income increased 29% to $6.6 million, which resulted in adjusted earnings of $0.46 per basic and diluted share.

Current wording

Adjusted net income increased 58% to $7.2 million, which resulted in adjusted earnings of $0.51 and $0.50 per basic and diluted share, respectively.

Previous wording

Cash and cash equivalents were $43.5 million as of March 31, 2026.

Current wording

Cash and cash equivalents were $50.0 million as of June 30, 2026.

Previous wording

First Quarter and Recent Business Highlights

Current wording

Second Quarter and Recent Business Highlights

Previous wording

Added 400 customers to IDI during the first quarter, ending the quarter with 10,422 customers.

Current wording

Added 447 customers to IDI during the second quarter, ending the quarter with 10,869 customers.

Previous wording

Added 27,662 users to FOREWARN during the first quarter, ending the quarter with 417,680 users. Over 640 REALTOR® Associations throughout the U.S. are now contracted to use FOREWARN.

Current wording

Added 25,493 users to FOREWARN during the second quarter, ending the quarter with 443,173 users. 660 REALTOR® Associations throughout the U.S. are now contracted to use FOREWARN.

Previous wording

Purchased 73,250 shares of the Company’s common stock year to date through April 30, 2026, at an average price of $41.90 per share pursuant to the Company’s Stock Repurchase Program. As of April 30, 2026, the Company had $15.6 million remaining under the Stock Repurchase Program.

Current wording

Purchased 74,500 shares of the Company’s common stock year to date through June 30, 2026, at an average price of $41.87 per share pursuant to the Company’s Stock Repurchase Program. As of June 30, 2026, the Company had $15.5 million remaining under the Stock Repurchase Program.

Previous wording

(1) The tax effect of adjustments is calculated using the expected combined federal and state statutory tax rate, which was approximately 26.00% for the three months ended March 31, 2026 and 2025. The resulting tax effect may differ from applying such rate to total adjustments due to the tax treatment of certain items. Beginning with the Form 10-K, we updated the methodology for determining the income tax effects of adjustments in calculating non-GAAP adjusted net income. Prior-period amounts have been revised to conform to the current methodology and presentation. These revisions did not affect our previously reported GAAP financial statements.

Current wording

(1) The tax effect of adjustments is calculated using the expected combined federal and state statutory tax rate, which was approximately 26.00% for each of the three and six months ended June 30, 2026 and 2025. The resulting tax effect may differ from applying such rate to total adjustments due to the tax treatment of certain items. Beginning with the 2025 Form 10-K, we updated the methodology for determining the income tax effects of adjustments in calculating non-GAAP adjusted net income. Prior-period amounts have been revised to conform to the current methodology and presentation. These revisions did not affect our previously reported GAAP financial statements.

Previous wording

As of March 31, 2026, our IDI billable customer base increased to 10,422 customers, up from 9,241 customers a year earlier. Our FOREWARN user base increased to 417,680 users, up from 325,336 users a year earlier.

Current wording

As of June 30, 2026, our IDI billable customer base increased to 10,869 customers, up from 9,549 customers a year earlier. Our FOREWARN user base increased to 443,173 users, up from 346,671 users a year earlier.

Previous wording

Cost of revenue (exclusive of depreciation and amortization) increased $0.1 million, or 4%, to $3.8 million for the three months ended March 31, 2026, compared to $3.7 million for the same period in 2025.

Current wording

Cost of revenue (exclusive of depreciation and amortization) increased $0.3 million, or 9%, to $3.8 million for the three months ended June 30, 2026, compared to $3.5 million for the same period in 2025.

Previous wording

Due to the fixed-cost nature of our primary data licensing structure, cost of revenue as a percentage of revenue decreased to 15% for the three months ended March 31, 2026, compared to 17% for the same period in 2025. 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 14% for the three months ended June 30, 2026, compared to 16% for the same period in 2025. We expect this percentage to continue to decline over time as our revenue increases.

Previous wording

Sales and marketing expenses increased $0.5 million, or 8%, to $5.9 million for the three months ended March 31, 2026, compared to $5.4 million for the same period in 2025. We continued to invest in expanding our go-to-market capabilities to support long-term revenue growth.

Current wording

Sales and marketing expenses increased $0.2 million, or 2%, to $5.8 million for the three months ended June 30, 2026, compared to $5.6 million for the same period in 2025. We continued to invest in expanding our go-to-market capabilities to support long-term revenue growth.

Previous wording

share-based compensation expense of $0.2 million and $0.2 million, respectively; and

Current wording

share-based compensation expense of $0.1 million and $0.2 million, respectively; and

Previous wording

General and administrative expenses increased $1.7 million, or 28%, to $7.9 million for the three months ended March 31, 2026, compared to $6.2 million for the same period in 2025. 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 $1.0 million, or 14%, to $8.3 million for the three months ended June 30, 2026, compared to $7.3 million for the same period in 2025. The increase reflects higher personnel-related expenses and share-based compensation expense to support the continued growth of the business.

Previous wording

Depreciation and amortization expenses increased $0.2 million, or 10%, to $2.8 million for the three months ended March 31, 2026, compared to $2.6 million for the same period in 2025.

Current wording

Depreciation and amortization expenses increased $0.2 million, or 5%, to $2.8 million for the three months ended June 30, 2026, compared to $2.6 million for the same period in 2025.

Previous wording

an increase of $1.0 million in personnel-related expenses;

Current wording

an increase of $0.7 million in personnel-related expenses;

Previous wording

The increase in income tax expense was primarily attributable to higher pre-tax income, as the Company’s effective tax rate remained consistent at 24% in both periods.

Current wording

The increase in income tax expense was primarily attributable to higher pre-tax income and the increase in the Company’s effective tax rate to 24% for the three months ended June 30, 2026 from 13% for the same period in 2025.

Previous wording

Net income increased $1.0 million, or 28%, to $4.4 million for the three months ended March 31, 2026, compared to $3.4 million for the same period in 2025, as a result of the foregoing.

Current wording

Net income increased $2.3 million, or 85%, to $5.0 million for the three months ended June 30, 2026, compared to $2.7 million for the same period in 2025, as a result of the foregoing.

Previous wording

Revenue increased $3.8 million, or 17%, to $25.8 million for the three months ended March 31, 2026, compared to $22.0 million for the same period in 2025. 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 $8.7 million, or 20%, to $52.5 million for the six months ended June 30, 2026, compared to $43.8 million for the same period in 2025. The increase was driven by volume expansion across the existing customer base, partially offset by the decrease in revenue from new customers.

Previous wording

Our cost of revenue primarily consists of data acquisition costs, which include 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 43% of our total data acquisition costs for the three months ended March 31, 2026 and 2025, 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 include 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 45% of our total data acquisition costs for the six months ended June 30, 2026 and 2025, 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

professional fees of $1.5 million and $1.1 million, respectively. Professional fees included $0.3 million and $0, respectively, of acquisition-related costs incurred in connection with the due diligence of potential strategic targets.

Current wording

professional fees of $3.0 million and $2.6 million, respectively. Professional fees included $0.3 million and $0.4 million, respectively, of acquisition-related costs incurred in connection with the due diligence of potential strategic targets.

Previous wording

an increase of $0.5 million in share-based compensation expense;

Current wording

an increase of $0.9 million in share-based compensation expense;

Previous wording

non-cash adjustments totaling $6.1 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 $12.5 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 $4.6 million, primarily due to an increase in accounts receivable, and a decrease in accounts payable, and accrued expenses and other current liabilities.

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 $4.0 million, primarily due to an increase in accounts receivable, and a decrease in accrued expenses and other current liabilities, partially offset by the decrease in prepaid expenses and other current assets.

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

For the three months ended March 31, 2026 and 2025, net cash used in investing activities was $3.5 million and $2.5 million, respectively, primarily as a result of capitalized costs included in intangible assets.

Current wording

For the six months ended June 30, 2026 and 2025, net cash used in investing activities was $7.0 million and $5.2 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 $0.5 million; and

Current wording

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

Previous wording

common stock repurchases totaling $2.7 million, conducted pursuant to our Stock Repurchase Program (as defined below).

Current wording

common stock repurchases totaling $3.1 million, conducted pursuant to our Stock Repurchase Program (as defined below).

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

As of March 31, 2026, we had material commitments under data licensing agreements and a cloud service agreement totaling $39.8 million.

Current wording

As of June 30, 2026, we had material commitments under data licensing agreements and a cloud service agreement totaling $35.5 million.

Previous wording

We reported net income of $4.4 million and $3.4 million for the three months ended March 31, 2026 and 2025, respectively. As of March 31, 2026, we had total shareholders’ equity of $104.5 million and cash and cash equivalents of $43.5 million.

Current wording

We reported net income of $5.0 million and $2.7 million for the three months ended June 30, 2026 and 2025, respectively, and $9.3 million and $6.1 million for the six months ended June 30, 2026 and 2025, respectively. As of June 30, 2026, we had total shareholders’ equity of $111.6 million and cash and cash equivalents of $50.0 million. Also, in August 2026, we closed an underwritten public offering of our common stock with net proceeds to us of approximately $108.6 million, after deducting underwriting discounts and commissions and estimated offering expenses. See Note 11, “Subsequent events,” in “Notes to Condensed Consolidated Financial Statements” for additional information on the offering.

Previous wording

While we anticipate continuing to fund our business through internally generated cash flows, future capital needs may arise based on the pace of revenue growth, investment in technology, or strategic initiatives. In such cases, we may seek to raise additional capital through the issuance of equity and/or debt securities. However, any such financing, if available, could result in dilution to existing stockholders and may involve terms that are not favorable to the Company.

Current wording

While we anticipate continuing to fund our business through internally generated cash flows, future capital needs may arise based on the pace of revenue growth, investment in technology, or strategic initiatives, including potential acquisitions. In such cases, we may seek to raise additional capital through the issuance of equity and/or debt securities. However, any such financing, if available, could result in dilution to existing stockholders and may involve terms that are not favorable to the Company.