Red Violet, Inc.

Good day, ladies and gentlemen, and welcome to Red Violet's fourth quarter and full year 2020 earnings conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session, and instructions will follow at that time. If any of you require operator assistance, please press star, then zero on your phone. As a reminder, this call is being recorded. I would now like to introduce your host for today's conference, Camila Ramirez, Director of Finance and Investor Relations. Please go ahead.

Good afternoon and welcome. Thank you for joining us today to discuss our fourth quarter full year 2020 financial results. With me today is Derek Dubner, our Chairman and Chief Executive Officer, and Dan McLaughlin, our Chief Financial Officer. Our call today will begin with comments from Derek and Dan, followed by a question and answer session. www.redviolet.com Before we begin, I would like to advise listeners that certain information discussed by management during this conference call are forward-looking statements covered under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Actual results could differ materially from those stated or implied by our forward-looking statements due to risk and uncertainties associated with the company's business. The company undertakes no obligation to update the information provided on this call. For a discussion of risk and uncertainties associated with Red Violet's business, I encourage you to review the company's filings with the Securities and Exchange Commission, including the most recent annual report on Form 10-K and subsequent 10-Qs. During the call, we may present certain non-GAAP financial information relating to adjusted gross profit, adjusted gross margin, and adjusted EBITDA. Reconciliations of these non-GAAP financial measures to their most directly comparable GAAP financial measure are provided in the earnings press release issued earlier today. In addition, certain supplemental metrics that are not necessarily derived from any underlying financial statement amount may be discussed, and these metrics and their definitions can also be found in the earnings press release issued earlier today. With that, I am pleased to introduce Red Violet's Chairman and Chief Executive Officer, Derek Dubner.

Thanks, Camilo. And good afternoon to those joining us today to discuss our fourth quarter and full year 2020 results. RedViolet delivered another strong quarter as we close out a very unique year. It was a year full of challenges in which the RedViolet team executed brilliantly. Throughout, we've remained focused on the key drivers of our business, leveraging our business model to not only bolster our financial strength, but also positioning ourselves for the recovery. We demonstrated the power and versatility of our innovative technology and critical solutions. We performed better in all key financial metrics in 2020 as compared to the prior year. Turning now to the numbers, fourth quarter revenue was $9 million, a 1% decrease from prior year. Adjusted gross profit increased 11% to $6.3 million, and adjusted gross margin increased to 70% from 62% compared to the same period of 2019. Adjusted EBITDA increased 49% to $1.2 million. Of key importance, our high-margin platform revenue increased 12% to $8.6 million for the quarter. In the fourth quarter, we set a new record for contractual revenue at 77%, backing out the spike that occurred in the second quarter of 2020 as a result of our accommodations granted to certain pandemic impacted customers. For the full year 2020, total revenue increased 14% to $34.6 million. platform revenue increased 26% to $32.5 million, and adjusted EBITDA increased 213% to $5.9 million. Evidencing the strength of our business model, our high-margin platform revenue allowed us to generate over 90% contribution of total incremental revenue to adjusted EBITDA. with a $4.3 million increase in total revenue in 2020, generating a $4 million increase in adjusted EBITDA. While the fourth quarter traditionally faces seasonal headwinds, our business is firing on all cylinders. Platform revenue is strong. With the exception of certain parts of our collections vertical, all of our verticals are back to pre-pandemic levels. And I'm pleased to report that the first quarter of 2021 is currently pacing towards record revenue and adjusted EBITDA. Performing in the manner we did throughout 2020 has energized the company internally. Overcoming the obstacles that 2020 presented has strengthened an already strong culture. It has confirmed that which we already knew. We have demonstrated that organizations across diverse industries need our solutions to conduct business with confidence. In order to ensure continued success, our 2021 goals are straightforward. We are devoting our time and resources to the expansion of our competitive strengths. These strengths include innovative cloud-native technology, a massive differentiated and unified data asset, and customer-centric solutions by which customers derive better intelligence-driven decisions. Behind the information that drives these solutions is our innovative technology. Unlike legacy technology constructs, our technology, purpose-built for the enterprise, was built in the cloud from the ground up. Due to its cloud native construct, our platform exhibits increased speed and scalability against competitor technologies. Competitors are investing millions of dollars transitioning their platforms from dated infrastructures to primarily hybrid cloud environments. We are already cloud native and we are investing our time and our resources in our technology and people. to widen our lead over competitive technologies. We've spent years assimilating and unifying a massive differentiated data asset. The accelerating digitization of human interactions and the corresponding generation of data therefrom is creating information overload for organizations that are desirous of unifying often disparate and siloed sets of data. We are continuously working towards the enhancement of our data assets so that customers can seamlessly integrate a single platform to drive their workflow. We are relentlessly focused on innovation and the customer experience. Customers rely on our solutions to solve complex problems, make better information-driven decisions, and to produce greater efficiencies in their workflow. We endeavor to understand our customers' needs at the moment of first engagement. We continuously engage with our customers thereafter to evaluate their usage of our solutions throughout their lifecycle to maximize utilization of our solutions and, hence, their productivity. We are working to enhance our current solutions and develop new products to enable more intelligent interaction with information which further ingrains us in the daily workflow of our customers. As we have demonstrated over the last couple of years, if we remain committed to focusing on these key areas, our technology, data assets, and customer-centric solutions, then our solutions expand in applicability to larger customers, additional industries, and use cases within. As to our incredible Red Violet team, I am proud of their devotion to the success of the company. We have added 12 team members throughout the year to our product development and infrastructure teams to deepen and strengthen our current capabilities to ensure that we stand ready to meet current and future growth opportunities. I'd like to share with you our theme for 2021. It is Raising the Bar. While we are pleased with our performance to date, we are by no means complacent. Consistent with this theme, 2021 is a year of advancing our technology, expanding our solutions, deepening our data assets, bolstering our infrastructure, and augmenting the teams to accomplish these objectives. I have every bit of confidence in the Red Violet team and I remain as confident as I have ever been in our business model, the health of our business, and our prospects in 2021 and beyond. With that, I turn it over to Dan to discuss the financials.