Red Violet — Third Quarter 2026 Earnings Summary

Financial Performance

• Total revenue increased 20% year-over-year to $27.8 million for the quarter ended September 30, 2026.
• Gross profit increased 25% to $21.0 million, with gross margin expanding to 76% from 73% in the prior year period.
• Adjusted gross profit rose 22% to $23.7 million, resulting in an adjusted gross margin of 85% compared to 84% previously.
• Net income increased 29% to $5.4 million, yielding earnings of $0.35 per basic and diluted share; net income margin improved to 20% from 18%.
• Adjusted EBITDA grew 22% to $11.0 million, with an adjusted EBITDA margin of 40% versus 39% in the prior year.
• Adjusted net income increased 23% to $7.3 million, generating adjusted earnings of $0.48 per basic and $0.47 per diluted share.
• Net cash provided by operating activities increased 25% to $12.7 million.
• Cash, cash equivalents, and U.S. Treasury securities totaled $165.7 million as of September 30, 2026, with no outstanding debt.

Guidance and Future Outlook

• The company surpassed $100 million in trailing twelve-month revenue for the first time.
• Management cites secular tailwinds from the expansion of digital interactions and increasingly sophisticated AI-driven fraud as fueling demand for identity resolution, fraud prevention, and compliance solutions.
• Leadership believes the company's proprietary platform and longitudinal identity graph position it to capture a growing share of the expanding market.

Business Segments and Product Lines

• IDI added 383 customers during the third quarter, ending the period with 11,252 billable customers.
• FOREWARN added 19,688 users during the quarter, reaching a total of 462,861 users.
• Over 665 REALTOR® Associations throughout the U.S. are now contracted to use FOREWARN.
• Contractual revenue percentage increased to 78% in Q3 2026 from 77% in Q2 2026.
• Gross revenue retention was 96% for the quarter ended September 30, 2026, up from 95% in the prior quarter.

Market and Competitive Landscape

• The company operates in the identity intelligence and analytics sector, leveraging a cloud-native, AI-embedded platform (CORE) to transform data into intelligence.
• Solutions are utilized for identity verification, risk mitigation, due diligence, fraud detection, regulatory compliance, and customer acquisition.
• Management highlights strengthening competitive advantages derived from their proprietary platform and longitudinal identity graph.

Risks and Challenges

• Forward-looking statements note risks regarding whether the expansion of digital interactions and AI-driven fraud will continue to fuel demand for the company's solutions.
• There is a risk that the company's proprietary platform and competitive advantages may not enable it to capture a growing market share as expected.
• Results may differ materially from expectations due to uncertainties beyond the company's control.

Management Commentary and Tone

• CEO Derek Dubner stated the company delivered another record revenue quarter and generated record operating cash flow.
• Management expressed confidence that secular tailwinds and competitive advantages will drive future growth.
• The tone reflects strong confidence in the company's ability to inform critical decisions and support customer workflows through accurate identity intelligence.

Other Key Points

• The company closed an underwritten public offering of 1,916,667 shares of common stock, including the full exercise of the underwriters' option, netting $108.7 million in proceeds after deducting discounts, commissions, and expenses.
• The company hosted a conference call and webcast on November 4, 2026, to discuss results.
• Share-based compensation expense for the quarter was $2.079 million.
• The company repurchased $3.122 million of common stock during the nine months ended September 30, 2026.
• Deferred revenue increased to $1.634 million as of September 30, 2026, from $1.028 million as of December 31, 2025.