Summary of Red Violet's Q2 2026 Earnings Call

1Key Financial Results and Metrics

Revenue: Achieved a record of $26.7 million, up 23% year-over-year.

Adjusted Gross Margin: Reached a record 86%, an increase of 2 percentage points.

Adjusted EBITDA: Increased 48% to $11.2 million, resulting in a margin of 42%.

Adjusted Net Income: Rose 58% to $7.2 million, translating to adjusted earnings of $0.50 per diluted share.

Cash Flow from Operations: Increased 42% to a record $10.6 million.

Customer Growth: Added 447 new IDI customers, the highest in the company's history, ending with 10.9 thousand total customers.

2Strategic Updates and Business Highlights

Market Position: Red Violet is experiencing strong demand for its identity intelligence solutions, driven by increased fraud and the need for secure digital transactions.

FOREWARN Expansion: FOREWARN, a proactive safety solution, added over 25 thousand new users, reaching 443 thousand users and contracting with 660 realtor associations.

New Market Entry: FOREWARN is expanding into the home health care sector, targeting 4 million home health aides and 12 thousand agencies.

Public Offering: Completed a public offering raising approximately $109 million for working capital and strategic acquisitions.

3Forward Guidance and Outlook

Growth Expectations: Management expects continued strong demand for identity intelligence, with a robust pipeline of strategic initiatives.

Investment Plans: The company plans to invest in product development and personnel to capitalize on growth opportunities while maintaining healthy margins.

Long-term Strategy: Focus on leveraging AI capabilities and expanding into new verticals, with a disciplined approach to potential acquisitions.

4Bad News, Challenges, or Points of Concern

Real Estate Sector: The real estate vertical (excluding FOREWARN) experienced a modest decline due to market headwinds such as limited inventory and high interest rates.

Public Sector Sales Cycle: Progress in the federal public sector is slower than anticipated, with challenges in technology implementations and procurement processes.

Competitive Landscape: While Red Violet has a strong market position, it faces competition from larger incumbents, particularly in the public sector.

5Notable Q&A Insights

Customer Acquisition: The new customer additions are a mix of greenfield opportunities and displacing competitors, indicating a strong market recognition of Red Violet's solutions.

Public Sector Progress: Significant wins in state and local law enforcement were highlighted, with a notable displacement of a long-term incumbent.

Home Health Care Market: Management is optimistic about the home health care market's potential, emphasizing the safety needs of caregivers and the opportunity for API integrations.

Investment in Growth: The company plans to continue investing in product development and infrastructure to support its growth trajectory while maintaining profitability. Overall, Red Violet reported a strong quarter with record financial results and strategic advancements, although it faces challenges in specific sectors and the public market. The outlook remains positive, with a focus on leveraging its technology and expanding into new markets.