Red Violet, Inc. Q3 FY2025 earnings call

• Record revenue of $23.1 million, up 21% YoY. Adjusted gross profit was $19.4 million, adjusted gross margin 84%. Adjusted EBITDA $9 million, adjusted EBITDA margin 39%. Adjusted net income $5.8 million, adjusted earnings $0.39 per diluted share. - Invested in platform capabilities, product introductions, go-to-market expansion, and AI integration. - Added over 300 customers to IDI, over 25,000 users to FOREWARN. - Announced $15 million increase to share repurchase program, purchased 15,437 shares in Q3.

IDI: Total revenue for IDI showed balanced growth across verticals. Added 304 billable customers in Q3, ending with 9,853 customers. Investigative vertical performed exceptionally well with sustained demand from law enforcement and investigative customers. Emerging markets vertical (retail, legal, repossession, government, health care) delivered strong growth. Collections had high teens revenue growth, Financial and Corporate Risk had strong growth with new customer wins. Real estate vertical (excluding FOREWARN) saw slight year-over-year decline. FOREWARN: Revenue grew at double-digit rate, added over 25,000 users, ended quarter with over 590 realtor associations contracted. Contractual revenue accounted for 75% of total revenue, down 2 percentage points from prior year. Gross revenue retention was 96%, up 2 percentage points from prior year.

• Confident in strong finish to 2025. - Sales pipeline for public sector and background screening areas is strong with larger opportunities. - Investments in public sector and background screening solutions are starting to show green shoots with recent wins.

Q: Josh Nichols asks about traction in larger public and enterprise sector customers and how it will play out.

A: Derek Dubner mentions investments in public sector and background screening, recent wins in toll authority and departments of revenue, and testing showing differentiation.

Q: Eric Martinuzzi asks about FOREWARN renewals, ARPU, and Q4 pipeline.

A: Dan MacLachlan says FOREWARN has strong renewals and usage, Derek Dubner talks about product road map for FOREWARN features. Dan also mentions strong pipeline for IDI but seasonal slowdown in Q4.

Q: Eric Martinuzzi asks about IDI Q4 pipeline.

A: Dan MacLachlan states strong pipeline but Q4 has seasonal slowdown due to fewer business days.

Q: Eric Martinuzzi asks about gross margin and buyback.

A: Dan MacLachlan expects Q4 gross margin to be in line with Q3, Derek Dubner says share repurchase is attractive due to confidence in the business and competitive advantages.