Red Violet, Inc.

Good day, ladies and gentlemen, and welcome to Red Violet's first quarter 2024 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. As a reminder, this call is being recorded. I would now like to introduce your host for today's conference, Camilo Ramirez, Senior Vice President, Finance and Investor Relations. Please go ahead.

Good afternoon and welcome. Thank you for joining us today to discuss our first quarter 2024 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 on the call on our website. To access the webcast, please visit our investor page on our website, 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, adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted earnings per share, and free cash flow. Reconciliations of these non-GAAP financial measures to their most directly comparable U.S. 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 Violets Chairman and Chief Executive Officer, Derek Dubner.

Thanks, Camilo. Good afternoon, and thank you for joining us today to discuss our first quarter 2024 results. 2024 is off to a great start as we posted our highest quarterly revenue and adjusted EBITDA in our company history, driven by broad-based demand across verticals and strong volumes experienced throughout the quarter. Our strategic initiatives executed over the last 18 months are paying off. We have been investing in our technology, the expansion of our product suite, and our go-to-market capabilities. and these investments are clearly bearing fruit. Our team executed superbly, capitalizing on the increasing realization by our target markets that our innovative solutions are indispensable tools for identity verification, fraud prevention, and investigations. Our performance this quarter positions us well for 2024 and, in fact, We just closed out the month of April, which produced a record revenue month for Red Violet. Now, turning to the numbers. Total revenue for the quarter was a record $17.5 million, a 20 percent increase over prior year. We produced a record $13.8 million in adjusted gross profit, resulting in a margin of 79 percent in the first quarter. Adjusted EBITDA for the quarter was a record $5.7 million, up 54% over prior year. Adjusted EBITDA margin was 32%, up 7 percentage points. Adjusted net income increased 36% to $3.2 million for the quarter, resulting in adjusted earnings of 22 cents per diluted share. Our IDI billable customer base grew by a very strong 366 customers sequentially from the fourth quarter, which is our largest sequential quarterly increase since 2020, ending the first quarter at 8,241 customers. ForWarn added over 51,000 users during the first quarter, the largest quarterly increase in our history, ending the quarter at 236,639 users. Over 425 realtor associations are now contracted to use ForeWarm. We saw solid contribution from law enforcement and legal, two segments that we have been very focused on and continue to make substantial progress in. We experienced increasing volumes from the diverse identity verification platforms that we power as financial and corporate risk were also strong contributors. Consistent with the last few quarters, we saw continued progress in our collections vertical with double digit percentage growth. We continue to see significant opportunities ahead in both further penetrating these markets as well as those where we are still very early stage, including marketing services, background screening, and government. We generated $4.3 million in cash from operating activities in the first quarter, a 181% increase from the same period in 2023. Given our continued healthy cash generation, as we previously indicated, we've been leaning into these market opportunities, investing in our technology, various product developments and enhancements, and strategically adding personnel to bolster our go-to-market capabilities. In addition to investing in our business, we purchased just under 300,000 shares of the company's common stock year-to-date through April 30th 2024 at an average price of $19.81 per share, pursuant to the company's $15 million stock repurchase program. The company currently has $4.6 million remaining under its stock repurchase program. To sum up, RedViolet had a terrific quarter driven by robust and balanced demand across verticals, Given the continuing momentum we're currently experiencing and the opportunities in front of us, we are very optimistic about the remainder of the year. With that, I turn it over to Dan to discuss the financials.