Red Violet, Inc.

Again, today's conference will begin momentarily. Thank you for your patience. Thank you. Thank you. Good day, ladies and gentlemen, and welcome to Red Violet's fourth quarter and full year 2021 learnings conference call. At this time, all participants are on a listen-only mode. Later, we will conduct a question and answer session, and instructions will follow at that time. If anyone should require operator assistance, please press star, then zero on your phone. As a reminder, this call is being recorded. I would like to introduce your host for today's conference, Camila Ramirez, Vice President, Finance and Investor Relations. Please go ahead.

Good afternoon and welcome. Thank you for joining us today to discuss our fourth quarter and full year 2021 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. I would like to remind you that this call is being webcast live and recorded. A replay of the event will be available following the call on our website. 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 Harvest Provisions of 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 the subsequent 10-Qs. During the call, we may present certain non-GAAP financial information relating to adjusted gross profit, adjusted gross margin, adjusted EBITDA 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 amounts 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 2021 results. We are pleased to announce yet another solid quarter, which closes out an incredible 2021. It was a year of once again achieving major milestones in the business, while topping all key financial metrics compared to prior year. Today, I will first touch on our financial performance in the quarter and full year. Next, I'll be discussing a transaction involving a key customer that impacted revenue in the fourth quarter. Then, I will be highlighting a key customer win, one of the largest contractual commitments we have received to date. Lastly, I will be discussing our continued execution against our goals of bolstering our foundation for growth over the next few years and, relatedly, provide you some color around how we view the business and our three-year base case outlook for the business, which Dan will elaborate on. Now to the quarter. Total revenue increased 26% over prior year to $11.3 million. Platform revenue increased 25 percent to $10.8 million. Services revenue increased 31 percent to $.5 million. Adjusted gross profit increased 33 percent to $8.3 million. Adjusted gross margin increased to 74 percent from 70 percent compared to the same period of 2020. Adjusted EBITDA increased 9% to $1.3 million. We generated $2 million in cash from operations, and we finished the quarter with $34.3 million in cash and cash equivalents. For the full year, total revenue increased 27% to $44 million. Platform revenue increased 31%. to $42.5 million. Services revenue decreased 25 percent to $1.5 million. Adjusted gross profit increased 41 percent to $32.8 million. Adjusted gross margin increased to 75 percent from 67 percent. Adjusted EBITDA increased 85 percent to $10.9 million. Net income was $.7 million compared to a loss of $6.8 million in prior year. We generated $8.9 million in cash from operating activities for the year ended December 31st, 2021, compared to generating $6.5 million in cash from operating activities for the same period in 2020. With fourth quarter behind us, we are very optimistic about 2022 as we are off to a great start. The first two months have us tracking for a record revenue quarter. Turning back to the fourth quarter, as many of our investors know, we are always swimming a bit upstream in the quarter due to its seasonality. And the fact that less business days in the quarter resulting from holiday periods impacts our transactional revenue. In addition to this seasonality, during the fourth quarter, one of our larger strategic integration customers in the real estate segment was acquired by a multi-billion dollar information solutions provider. As often happens with acquisitions, the acquirer sought to exploit synergies with its new acquisition by integrating the acquirer's existing data feeds into our customers' solutions. As a result, we were moved down the waterfall. In other words, the customer would now be primarily relying on its parents' data sources. Let me be crystal clear that this had nothing to do with the customer's satisfaction or lack thereof with our products and solutions. This was just business. As a result, we saw a negative $0.3 million impact to our revenue in the fourth quarter. We believe this customer will see a material degradation in the quality of the data by migrating away from us. And, in fact, we've already heard from several end users of the customer who have contacted us inquiring about potentially accessing our data directly because they are seeing degradation. We are excited to announce that at the end of the fourth quarter, we closed one of the largest contractual commitments in our history with a customer in the online investigative space. We tested against other providers and won this business. It is a $2.4 million contract with a minimum commitment of $100,000 per month for 24 months. These are the types of much larger opportunities we are pursuing and that are within our growing pipeline. It is due to our cloud-native platform architecture, data accuracy, and customer-centric approach that we won this opportunity, and we are confident we will continue to win more of these types of opportunities in 2022 and beyond. Now to our goals for 2022. This year, our goals center around the continued execution of the strategic plan that we implemented last year, namely reinvesting in our business to further enhance the competitive lead of our cloud-native technology platform, developing innovative solutions and complementing our teams with additional bandwidth to expand within our existing customer base and to onboard large enterprise customers across industries. With a strong balance sheet and solid cash flow generation, we are well-positioned to invest in our key assets. We are enhancing the thought leadership and depth of various teams in laying the groundwork for accelerated product development and commercialization in 2022 and the following several years. We're adding data scientists and engineers in product development, team members in infrastructure, marketing, and sales, and we're expanding product and new business development teams in segments including public sector, financial services, real estate, and identity in general. Lastly, in order to provide a bit more clarity, I'd like to share with you how management views the business over the next three-year period. The RedViolet team has built an incredible company over the last few years, and I thank each and every team member for their hard work and their dedication. We have truly unique assets. We have all the tools in place to expand the business significantly over the long term. Given our positioning, Our three-year base case outlook has us reaching or exceeding annual revenue of $100 million, adjusted gross margin of over 80%, and adjusted EBITDA margin approaching 40%. With that, I turn it over to Dan to discuss the financials.