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Red Violet (RDVT) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Information Technology· Aug 10, 2026

Source: earnings call transcript

Executive summary

Red Violet Q2 FY26 — Record Revenue, Profitability, and Customer Additions

Red Violet delivered an exceptional quarter, achieving record revenue, profitability, and customer growth, driven by increasing demand for identity intelligence in a fraud-prone digital environment. The company's AI-embedded platform is gaining market recognition, leading to significant customer additions and the strategic expansion of its FOREWARN solution into the home health care market. A recent public offering provides capital for organic growth and potential strategic acquisitions, reinforcing the company's disciplined approach to long-term returns.

Highlights

5

  • Record Q2 revenue of $26.7 million, up 23% year-over-year.

  • Record adjusted gross margin of 86%, up 2 percentage points.

  • Record adjusted EBITDA of $11.2 million, up 48% year-over-year, with a 42% margin.

  • Record 447 new IDI customer additions in a single quarter, bringing total to 10,869.

  • FOREWARN expanded into home health care, adding over 25,000 new users for a total of 443,173.

Concerns

2

  • IDI's real estate vertical declined modestly due to headwinds from limited inventory, elevated interest rates, and high home prices.

  • Federal public sector sales cycles are slower to convert compared to state and local law enforcement.

Guidance & targets

CategoryTargetConfidence
Adjusted EBITDA margin
high 30s
high materiality
High

Segment performance

SegmentRevenueYoYQoQMargin
IDI
IDI added a record number of new billable customers, ending the quarter with 10,869. Growth was broad-based across most verticals.
Customers: 10,869New billable customers added: 447
————
IDI - Collections
Strong quarter with growth surpassing 20%, driven by recurring demand due to high consumer delinquencies.
—over 20%——
FOREWARN
Delivered strong double-digit revenue growth and added over 25,000 new users. Expanded into the home health care market.
Users: 443,173New users added: 25,493REALTOR Associations contracted: 660Renewal rate among association customers: 100%
—strong double-digit——

Product announcements

ProductTypeDetails
FOREWARN for home health careexpansion

Deals & partnerships

New and existing investors Public offering of common stock $109M net proceeds

Red Violet completed a public offering, raising approximately $109 million in net proceeds. This capital provides increased flexibility for strategic initiatives, including organic growth and M&A.

Risks & headwinds

Real estate vertical headwinds near-term

declined modestly

Mitigation:Company remains tempered in expectations for near-term recovery, but sees early signs of encouraging activity.

Federal public sector sales cycle

slower to convert

Mitigation:Company believes it's a matter of 'when, not if' for conversion, with pipeline growing and testing continuing to show positive results.

What to watch in Q3 FY26

IDI customer additions

next quarter
Current 447 new customers in Q2
Target Continued high rate of new customer adds

Why it matters

Sustained high customer additions indicate continued market penetration and demand for the platform, crucial for long-term growth.

447 new customers in a single quarter is the highest in any quarter in Red Violet's history. It surpasses the 400 we added in Q1, which was itself one of the highest quarterly additions in our history. Back-to-back quarters of new customer additions at this level is not a coincidence. It is a very meaningful indicator.

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Q&A highlights

Josh asked about the acceleration in IDI customer adds, whether they are greenfield or competitive wins, and for an update on the public sector, particularly federal sales cycles.

Derek Dubner confirmed a healthy mix of greenfield and competitive wins, driven by increasing demand for identity intelligence across industries due to emerging technologies. Dan MacLachlan added that new customer cohorts are significantly larger than in the past. Derek also highlighted strong progress in state and local law enforcement, including displacing a major incumbent, but noted federal public sector conversions are slower due to procurement and budgeting, though the pipeline is growing.

“So we're not only competing for the industry, the customers within the industries and verticals that we serve. But over these last couple of decades, with the Internet and with all of the various use cases on the Internet, mobile, e-commerce and social and the online transactions and really with everything we all do every single day with these online transactions, it creates more demand to understand identity intelligence and to clear a transaction or to understand whether or not to move into any transaction, who's on the other side of the table.”

asked by Josh Nichols · answered by Derek Dubner

2 min read 6 chapters

Detailed narrative

Identity Intelligence Market Dynamics and AI's Role

The identity intelligence market is highly active, driven by increased fraud, synthetic identity, and regulatory exposure, particularly with the rise of AI tools. Red Violet's proprietary entity resolution engine, IRON, and its AI-embedded platform are positioned to address these challenges, creating a structural advantage over legacy competitors. The company believes AI accelerates the need for certain identity verification, making its platform a 'must-have' for customers.

Record Customer Additions and Platform Differentiation

Red Violet achieved a record 447 new IDI customer additions in Q2, surpassing the previous quarter's high. This indicates accelerating market recognition of the platform's depth, accuracy, speed, and scalability. The company ended Q2 with 10,869 total IDI customers across diverse sectors, with wins in larger customer cohorts growing significantly. Management highlighted a successful displacement of a large incumbent in law enforcement due to superior product quality.

FOREWARN Expansion into Home Health Care

FOREWARN, the leading proactive safety solution for real estate professionals, expanded into home health care. This new vertical addresses the need for pre-visit household insights for an estimated 4 million home health aides and 12,000 agencies. The expansion leverages FOREWARN's proven platform and scaling playbook from real estate, aiming to enhance caregiver safety and retention in an industry facing similar occupational hazards.

Public Offering and Capital Allocation Strategy

Red Violet completed a public offering, raising approximately $109 million in net proceeds. This capital will be used for working capital, general corporate purposes, and potential strategic acquisitions. The company emphasizes a disciplined approach to M&A, focusing on targets that expand its identity graph, accelerate product development, or enhance vertical market presence, with a high bar for strategic fit and synergies.

Five Dimensions of AI Opportunity

The company outlined five distinct AI opportunities: risk signal intelligence, intelligent data aggregation, new customer interaction layers (e.g., natural language interfaces), enterprise workflow automation for internal operations, and AI-augmented development to compress development cycles. These initiatives aim to expand operating leverage, accelerate product iteration, and broaden roadmap execution, leveraging the company's AI-embedded architecture.

Broad-Based Vertical Growth

Q2 saw broad-based strength across Red Violet's business, with four of five verticals achieving their highest quarterly revenue levels. Financial and Corporate Risk, Background Screening, Financial Services, Insurance, Investigative, Collections, and Emerging Markets all demonstrated strong growth. The company noted the 'K-shaped' economic environment continues to drive demand from both high-end transaction activity and financial stress, contributing to the durability and breadth of its demand profile.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.