Red Violet, Inc. Q4 FY2024 earnings call

• 2024 was a year of significant achievements with record revenues in the fourth quarter and full year. Annual revenue grew by 25%, adjusted gross margin was 81% and adjusted EBITDA margin was 31%. - Core guiding principles: Always be customer-centric, focus on listening and delivering extraordinary value; continue to expand the competitive edge of the leading core platform with its native cloud architecture offering unrivaled scalability, agility, and rapid innovation; enhance the breadth and depth of data assets with a leading core consumer identity graph; expand owned data assets using AI and advanced analytics; increase productivity through automation in select internal processes, especially via AI integration; continue to invest in AI initiatives using deep learning and large language models; adhere to the founding mantra of relentlessly pushing the boundaries of innovation. - Specific 2024 results: Fourth quarter revenue was $19.6 million, adjusted gross profit was $16.1 million, adjusted EBITDA was $4.5 million; full-year IDI billable customer base grew by 183 customers sequentially from the third quarter to end at 8,926 customers; FOREWARN added over 18,000 users in the fourth quarter to end at 303,418 users; over 525 realtor associations were contracted to use FOREWARN; free cash flow in 2024 was $14.4 million.

Fourth quarter revenue reached a record $19.6 million, an increase of 30% compared to the same period last year. The full-year revenue was $75.2 million, up 25% from the previous year. Adjusted gross profit for the fourth quarter was $16.1 million with an adjusted gross margin of 82%. For the full year, adjusted gross profit was $61.2 million and adjusted EBITDA was $23.6 million with an adjusted EBITDA margin of 31%. In IDI, the financial and corporate risk vertical saw significant growth, the emerging markets including government, legal, etc. maintained double-digit growth, the investigative vertical achieved 12 consecutive quarters of sequential revenue growth due to law enforcement, the collections vertical had four consecutive quarters of double-digit revenue growth, and FOREWARN achieved double-digit revenue growth for 19 consecutive quarters.

• 2025 will continue to advance various strategic initiatives. It will maintain the acceleration of business, continue to focus on customer needs, promote platform advantage expansion, data asset enhancement, automation improvement, AI investment, etc. The collections vertical is expected to be a significant growth contributor in 2025, and new products and features under development are expected to drive further business development.

Actual results could differ materially from those stated or implied by forward-looking statements due to risks and uncertainties associated with the company's business. For a discussion of risks and uncertainties, refer to the company's filings with the Securities and Exchange Commission, including the most recent annual report on Form 10-K and subsequent 10-Q.

Q: Josh Nichols asked about how to maintain the elevated top-line growth in 2025.

A: Derek Dubner said it's a culmination of multiple factors like brand awareness and sales pipeline growth, the company will continue operating as before with a focus on goals, and new products and functionality in development are expected to drive greater momentum.

Q: Josh Nichols inquired about the opportunities in existing customer base and new customers in 2025.

A: Dan MacLachlan said historically they've done well extracting volume from existing customer base, and now there's more opportunity to expand in current relationships while still having a lot to get from new customers.

Q: Josh Nichols asked about the ROI of sales and marketing investments in 2024 and 2025 investment plans.

A: Dan MacLachlan said 2025 investment in sales and marketing will be consistent with 2024, some 2024 hires are already seeing ROI and 2025 is expected to have a consistent ramp.

Q: Josh Nichols asked about new products under development.

A: Derek Dubner said they are iterating on functionality, like expanding law enforcement mobile app capabilities, working on account monitoring, know your business, and AI-related initiatives for better data extraction and interaction.

Q: Shawn Boyd inquired about market situations.

A: Dan MacLachlan said all five key verticals are in early innings with huge growth opportunities, such as government in emerging markets has enormous potential though currently a small percentage of revenue.

Q: Shawn Boyd asked about margins.

A: Dan MacLachlan said the goal is an adjusted EBITDA margin of around 40% at $100 million revenue, and 2025 adjusted EBITDA margin is expected to be consistent with 2024's level while investing in strategic areas.