Red Violet, Inc.

Good day, ladies and gentlemen, and welcome to Red Violet's first quarter 2022 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 anyone should require operator assistance, please press star and 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, Camilo Ramirez, Vice President, Finance and Investor Relations. Please go ahead.

Good afternoon and welcome. Thank you for joining us today to discuss our first quarter 2022 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 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 filing 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, and adjusted EBITDA margin. 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.

Thank you, Camilo. Good afternoon to those joining us today to discuss the results of our first quarter 2022. We delivered a strong start to the year, once again achieving record quarterly revenue, which resulted in positive net income and solid adjusted EBITDA. Our performance this quarter demonstrated our ability to capitalize on our competitive advantages in the marketplace. As digital transactions expand exponentially, Organizations require insight, speed, and scalability in clearing transactions and capturing fraud. To that end, customers are increasingly leveraging and adopting our cloud-native technology platform and customer-centric solutions. These advantages will become even more apparent with the passage of time as we continue our move upmarket and deeper into various verticals. I'm particularly proud of the team's execution against our strategic plan of reinvesting our strong cash flows into the business, always with an eye towards bolstering our foundation and executing upon our product roadmap and go-to-market, while balancing the financial health of our business. Turning now to the detail of the quarter, total revenue was $12.7 million. a 25% increase over prior year, and our highest quarterly revenue ever. Platform revenue increased 24% to a record $12.2 million. Services revenue was up $.1 million, or 27%, to $.5 million. We generated a record $9.6 million in adjusted gross profit, resulting in a margin of 75 percent for the first quarter, up two percentage points. Adjusted EBITDA for the quarter was $3.2 million, up 12 percent over prior year. We generated $2.4 million in cash from operating activities in the quarter. Cash and cash equivalents were $34.8 million at March 31st, 2022. I would like to point out that we achieved record quarterly revenue of $12.7 million despite the negative impact we experienced from one of our larger strategic integration customers being acquired in the fourth quarter of last year. Recall that on our last earnings call, we provided some detail around this circumstance, where this customer was acquired by a large information services provider, and as a cost-cutting initiative, the acquirer sought to utilize its own data feeds and reduce reliance on our solutions. As this customer contributed about $.6 million per quarter to our revenue last year, we experienced a negative $.5 million impact in the first quarter of this year. Notwithstanding, our record results this quarter illustrate the diversification of our customer base as well as the adoption of and increased reliance on our solutions. Our IDI billable customer base grew by 44 customers sequentially from the fourth quarter, ending the first quarter at 6,592 customers. Dan will provide a bit more color around this metric. Forewarn added 9,071 users during the first quarter. ending the quarter at 91,490 users. Over 200 realtor associations throughout the country are now contracted to use ForeWarm. Given our strong financial performance and our confidence in our ability to continue to use our healthy cash flow to invest for growth, combined with the strength of our balance sheet, the Board has authorized a $5 million share repurchase program This repurchase authorization affords the company optionality and strategically serves as another tool in our capital allocation framework. I will now turn it over to Dan to discuss the financials.