Red Violet (RDVT) Q2 2024 earnings summary

Executive summary

• Achieved record Q2 2024 revenue of $19.1 million, up 30% year-over-year, with broad-based demand and strong growth in law enforcement, financial/corporate risk, and collections segments.

• Net income rose 90% to $2.6 million, with net income margin increasing to 14% from 9% and GAAP EPS of $0.19.

• Adjusted EBITDA increased 47% to $6.8 million, with a record margin of 36%; adjusted net income grew 33% to $3.9 million (adjusted EPS $0.28).

• Added 236 IDI customers and 27,237 FOREWARN users in Q2, ending with 8,477 and 263,876, respectively; over 490 Realtor associations now contracted.

• Repurchased 15,804 shares in Q2 at an average price of $18.61; $4.6 million remains under the repurchase program.

Financial highlights

• Adjusted gross profit reached $15.6 million, with an adjusted gross margin of 82%, up 4 percentage points year-over-year.

• Gross profit increased 41% to $13.3 million, with gross margin up to 70% from 64%.

• Generated $5.7 million in cash from operating activities and $3.3 million in free cash flow, both up significantly year-over-year.

• For the six months ended June 30, 2024, revenue was $36.6 million (up 25%), and net income was $4.4 million (up from $2.1 million).

• Earnings per share (basic and diluted) were $0.19 for Q2 2024, up from $0.10; adjusted EPS was $0.28, up from $0.21.

Outlook and guidance

• Management expects momentum to continue through the remainder of 2024 and into 2025, with accelerating pipeline and minimal current penetration in new markets.

• Cost of revenue as a percentage of revenue is expected to decrease as revenue scales, targeting an industry range of 15%-30%.

• The company believes it has sufficient cash resources to fund operations and capital expenditures for the next twelve months.