Red Violet, Inc. Q1 FY2025 earnings call

• Strong first quarter with record revenue, adjusted gross profit, adjusted EBITDA, and adjusted net income. • IDI showed growth across verticals, with emerging markets leading in percentage growth, investigative vertical growing since Q4 2021, financial/corporate risk up double digits, collections improving (normalized mid-teens growth), and real estate (excluding FOREWARN) down low single digits. • FOREWARN had 21,918 users added, 20th consecutive quarter of sequential revenue growth, and over 545 realtor associations under contract. • Business model is durable through economic cycles, serving diverse industries with critical solutions. • Strategic priorities include increasing productivity across the organization, implementing automation to streamline operations as scaling occurs, and intensifying efforts around proprietary data generation and aggregation, including use of AI to derive insights from the core identity graph.

Revenue for the first quarter was $22 million, a 26% increase from the prior year, reaching a record. Adjusted gross profit was a record $18.3 million with an adjusted gross margin of 83%. Adjusted EBITDA was a record $8.4 million, up 47%, and adjusted net income was a record $4.8 million, up 53%. Within IDI, the billable customer base ended the quarter at 9,241. The emerging markets vertical led in percentage revenue growth, including the $1.2 million in one-time transactional revenue. The investigative vertical has grown sequentially since Q4 2021. The financial and corporate risk vertical saw double-digit growth, collections had mid-single digit growth (normalizing, mid-teens growth), and real estate (excluding FOREWARN) declined low single digits. FOREWARN had 21,918 users added during the quarter, 20th consecutive quarter of sequential revenue growth, with over 545 realtor associations contracted. Contractual revenue was 74% of total revenue, and gross revenue retention was 96%.

• Expect continued momentum and healthy, sustainable growth in 2025. • Anticipate further growth from investments in technology and strategic priorities, such as enhancing the identity graph and proprietary data capabilities.

• Economic volatility and uncertainty pose risks to the business, as mentioned in the discussion of forward-looking statements and the need to review the company's SEC filings for detailed risk discussions.

Q: Josh Nichols asks about granularity on IDI customer growth and trends for the rest of the year.

A: Dan MacLachlan states that there was strong onboarding across customer verticals and sizes in the first quarter, with no impact from broader economic uncertainty, and expects growth to continue over the remainder of the year.

Q: Josh Nichols inquires about large customers and public sector awards.

A: Dan MacLachlan mentions that the number of customers spending over $100,000 annually has grown to well over 100, close to 110 in the trailing 12 months, with investment in medium and larger enterprise customers paying off.

Q: Derek Dubner is asked about internal/external tech investments for long-term growth.

A: Derek Dubner talks about investing in the identity graph, enhancing proprietary data generation and aggregation including through AI, expanding capabilities in know your business (KYB), account monitoring, and driving more risk signals from data, and increasing automation across the enterprise.