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    RDVT
    Earnings call· Jun 2026(Q2 FY26)

    Red Violet Q2 FY26 earnings call RDVT

    Aug 10, 2026 Source

    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

    1
    CategoryTargetConfidence
    Adjusted EBITDA margin
    high 30s
    high materiality
    High

    Segment performance

    3
    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——

    Operational metrics

    19
    Total revenue
    $26.7Mup 23% over prior year
    Q2 FY26

    Record quarterly revenue.

    Adjusted gross profit
    $22.9Mup 25%
    Q2 FY26

    Highest in company history.

    Adjusted gross margin
    86%up 2 percentage points
    Q2 FY26

    Record adjusted gross margin.

    Adjusted EBITDA
    $11.2Mup 48%
    Q2 FY26

    Record adjusted EBITDA.

    Adjusted EBITDA margin
    42%up 7 percentage points
    Q2 FY26

    Record adjusted EBITDA margin.

    Adjusted net income
    $7.2Mup 58%
    Q2 FY26

    Record adjusted net income.

    Adjusted EPS
    $0.50
    Q2 FY26

    Record adjusted earnings per diluted share.

    Contractual revenue as % of total revenue
    77%consistent with prior year
    Q2 FY26

    Consistent with prior year.

    Gross revenue retention
    95%down 2 percentage points
    Q2 FY26

    Remained strong despite a slight decrease.

    Cost of revenue (exclusive of D&A)
    $3.8Mincreased $0.3M or 9%
    Q2 FY26

    Increase driven by higher revenue.

    Sales and marketing expenses
    $5.8Mincreased $0.1M or 2%
    Q2 FY26

    Driven primarily by marketing and other selling expenses.

    General and administrative expenses
    $8.3Mincreased $1M or 14%
    Q2 FY26

    Driven primarily by higher personnel costs.

    Depreciation and amortization
    $2.8Mincreased $0.1M or 5%
    Q2 FY26

    Slight increase in D&A.

    Net income
    $5.0Mincreased $2.3M or 85%
    Q2 FY26

    Strong increase in GAAP net income.

    Cash and cash equivalents balance
    $50.0Mcompared to $43.6M at December 31, 2025
    as of June 30, 2026

    Increased cash balance.

    Current assets
    $65.2Mcompared to $56.5M at year-end
    as of June 30, 2026

    Increase in current assets.

    Current liabilities
    $6.0Mdown from $7.9M
    as of June 30, 2026

    Decrease in current liabilities.

    Shares repurchased
    74,500
    YTD through June 30, 2026

    Shares purchased under the stock repurchase program.

    Remaining share repurchase authorization
    $15.5M
    as of June 30, 2026

    Remaining authorization under the stock repurchase program.

    Industry KPIs

    5
    MetricValueDetails
    Revenue growth$26.7MUSD
    Customer account count10,869customers
    Large deal new logo metrics—
    Gross retention renewal rate95%%
    Operating FCF margin rule of 4042%%

    Product announcements

    1
    ProductTypeDetails
    FOREWARN for home health careexpansion

    Deals & partnerships

    1
    New and existing investorsPublic 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

    2
    Real estate vertical headwindsnear-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

    5

    IDI customer additions

    next quarter
    Current447 new customers in Q2
    TargetContinued 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.

    Q&A highlights

    3

    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 read6 chapters

    Detailed Narrative

    01

    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.

    02

    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.

    03

    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.

    04

    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.

    05

    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.

    06

    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.

    AI-generated summary of the company’s earnings call. Not investment advice.