Red Violet, Inc.

Good day, ladies and gentlemen, and welcome to Red Violet's fourth quarter and full year 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, Camila Ramirez, Senior 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 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 following the call on our website To access the webcast, please visit our investors 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 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, 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 Violet's Chairman and Chief Executive Officer, Derek Dubner.

Thanks, Camila. Good afternoon to those joining us today as we discuss our fourth quarter and full year 2024 results. First, I will go over our results at a high level, as I always do. In addition, this is an opportune time to provide a bit of insight into our core guiding principles and strategic initiatives that will lead us in 2025 and beyond. We are pleased to announce record results for the fourth quarter and full year 2024. It was a year of significant accomplishments, setting revenue records for each quarter throughout 2024, and of particular mention, our record fourth quarter of 30% revenue growth bucked the fourth quarter seasonality that we traditionally experience. Our success is attributable in part to the continued penetration of our markets, investments in our marketing plan, the expansion of our go-to-market capabilities, and our move-up market in our customer base. These continued investments drove the acceleration of our business in 2024 with 25% yearly revenue growth while achieving 81% adjusted gross margins and a 31% adjusted EBITDA margin in 2024. Thank you to the RedViolet team for their hard work and dedication in accomplishing our objectives. Now, let's briefly run through the numbers. Revenue for the quarter was up 30 percent to a record $19.6 million, producing a record adjusted gross profit of $16.1 million and adjusted gross margin of 82 percent. Adjusted EBITDA for the quarter was up 68 percent to $4.5 million, producing an adjusted EBITDA margin of 23 percent, up five percentage points. Adjusted net income increased 390 percent to $1.3 million for the quarter, resulting in adjusted earnings of 9 cents per diluted share. Cash and cash equivalents were $36.5 million at December 31, 2024. Our IDI billable customer base grew by 183 customers sequentially from the third quarter, ending the fourth quarter at 8,926 customers. ForeWarn added over 18,000 users during the fourth quarter, ending the quarter at 303,418 users. Over 525 realtor associations are now contracted to use ForeWarn. For the year, Revenue increased 25% to $75.2 million, producing adjusted gross profit of $61.2 million and adjusted EBITDA of $23.6 million. Adjusted EBITDA margin was 31% for the year. We saw strong customer onboarding throughout the year, with continued growth in the onboarding of higher tier customers, with 96 customers contributing over $100,000 of revenue in 2024 compared to 72 customers in 2023. We generated $14.4 million in free cash flow in 2024 compared to generating $5.9 million in 2023. Staying true to our mission, Our solutions contribute to a safer world. For instance, law enforcement officers utilize our tools to locate missing children and apprehend suspects, while real estate professionals employ forewarn to assess potential risks before meeting prospective clients face-to-face, enhancing their personal safety. Our solutions not only facilitate commerce, but also prevent fraud and abuse, reducing costs that would otherwise burden consumers. From conducting millions of identity verifications for new account openings, online purchases, and app logins, to enabling underbanked consumers to access essential services, our customers depend on us for seamless, high-confidence interactions. We take pride in our mission and the positive impact our solutions have on society at large. As we transition into a new year, it's an opportune moment to revisit and refine our core guiding principles and key initiatives that will continue to propel our accelerated growth. First, always be customer-centric. Our unwavering focus on customers drives us to listen intently and consistently deliver extraordinary value. The market increasingly acknowledges what we've always believed. Our technology platform offers superior solutions with unique capabilities that surpass even larger competitors. Our clients operate with confidence, empowered by the most innovative tools enhancing their workflows. Second, we are committed to expanding the competitive edge of our leading core platform. While major competitors invest heavily to transition to cloud-based systems, our platform was architected natively in the cloud. This foundational advantage grants us unrivaled scalability, agility, and the ability to innovate rapidly. We will continue to enhance the breadth and depth of our data assets. Recognizing that data is the backbone of the digital realm, we've developed the leading core consumer identity graph, which allows various industries to integrate through diverse data points, addressing their unique challenges. The more data our engine assimilates, the broader the spectrum of applications we can support. Fourth, we will expand our owned data assets. Leveraging artificial intelligence and advanced analytics, we uncover connections between disparate data points, identifying and evaluating numerous risk signals to inform our systems. Augmenting our proprietary data assets will further fuel our core platform, refine linkages, enhance signal detection and analysis, and bolster our already robust margins. Fifth, we will boost productivity through automation. Our team exemplifies exceptional productivity. By increasing automation in select internal processes, particularly through AI integration, we aim to amplify efficiency over time, facilitating our expansion efforts. Sixth, we will continue investment in our AI initiatives. Building upon our discussions from last year, we continue to channel resources into AI-driven projects. Our team, rich in deep learning expertise, focuses on analyzing extensive data to extract events, relationships, and assets, training transformer models to detect fraud indicators utilizing large language models with natural language processing to provide novel ways of interacting with our solutions, and equipping various industries with deep learning models to make informed decisions through our identity graph. Lastly, our founding mantra remains steadfast. We relentlessly push the boundaries of innovation, operating with a perpetual sense of urgency. As we embark on 2025, these guiding principles and initiatives will steer our journey, ensuring we deliver exceptional value to our customers and stakeholders. With that, I turn it over to Dan to discuss the financials.