RDVT — Red Violet, Inc.

Summary of Red Violet, Inc. Q1 2026 Earnings Call

1. Key Financial Results and Metrics:

• Revenue: Record $25.8 million, up 17% year-over-year (YoY). Adjusted for $1.2 million in one-time revenue from Q1 2025, underlying growth exceeds 20%.
• Adjusted Gross Profit: Increased 20% to $22.0 million, with a record adjusted gross margin of 85%.
• Adjusted EBITDA: Rose 27% to $10.7 million, achieving a record margin of 41%.
• Adjusted Net Income: Increased 29% to $6.6 million, resulting in adjusted earnings of $0.46 per diluted share.
• Operating Cash Flow: Up 32% to $6.6 million.
• Customer Growth: Added 400 new billable customers, totaling 10,422. FOREWARN user base grew to over 417,000.

2. Strategic Updates and Business Highlights:

• The company emphasized strong execution and disciplined growth, attributing record results to a robust operational model and effective customer engagement.
• Significant investments in AI are enhancing product development, operational efficiency, and customer interactions.
• The company is positioned to leverage its proprietary identity graph for improved data accuracy and actionable insights.
• Continued expansion in various verticals, particularly financial and corporate risk, with strong performance in investigative services and law enforcement.

3. Forward Guidance and Outlook:

• Red Violet crossed a $100 million annual revenue run rate, marking a significant milestone.
• The company aims for continued margin expansion, with adjusted EBITDA margins expected to trend in the mid- to high-30% range in the near term.
• Long-term potential includes adjusted gross margins exceeding 90% and adjusted EBITDA margins approaching 65%, although no specific timeline was provided for achieving these targets.

4. Bad News, Challenges, or Points of Concern:

• Gross revenue retention decreased slightly to 95%, down one percentage point, indicating potential customer churn concerns.
• The real estate vertical, while stabilizing, continues to face macroeconomic headwinds due to elevated rates and affordability issues.
• The company is cautious about the competitive landscape, particularly regarding the adoption of AI technologies by competitors.

5. Notable Q&A Insights:

• Management refrained from providing formal guidance on timelines for achieving long-term margin targets, emphasizing a focus on building a strong foundational business.
• Q1 is typically a strong onboarding period, and the company is optimistic about maintaining momentum in customer acquisition.
• The executives highlighted the importance of AI as a tailwind for the business rather than a threat, asserting that their unique data foundation enhances AI capabilities.
• The company plans to continue investing in go-to-market strategies and expanding its sales team to capture broader market opportunities.

Overall, Red Violet, Inc. reported a strong quarter with record financial metrics and strategic advancements, while also acknowledging challenges in specific verticals and the competitive landscape. The focus remains on disciplined growth and leveraging AI for future success.