Red Violet, Inc.

Good day, ladies and gentlemen, and welcome to the Red Violet's fourth quarter 2025 earnings conference call. At this time, all participants are in a listen-only mode. Later, we'll conduct a question-and-answer session, and instructions will follow at that time. As a reminder, this call is being recorded. Now, I would like to introduce your host for today's conference call, 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 fourth quarter and full year 2025 financial results. With me today is Derek Grudner, 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 provision 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 Security 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 Violet's Chairman and Chief Executive Officer, Derek Dubner.

Good afternoon, and thank you for joining us today to discuss our fourth quarter and full year 2025 financial results. We are pleased to report a record fourth quarter and a strong finish to 2025. The year was defined by disciplined execution, sustained momentum, and broad-based demand across our markets. Adoption of our solutions remained robust, driven by the strength of our cloud-native intelligence platform and the expanding integration of our identity graph within customer workflows. Our team executed at a high level, and the strategic investments we have made over the past two years are translating into measurable operating performance. We enter 2026 from a position of strength with confidence in our architecture, our trajectory, and the opportunity ahead. Let's briefly run through the numbers. Revenue for the quarter was up 20% to a record $23.4 million, producing record adjusted gross profit of $19.5 million, translating to adjusted gross margin of 83%. Adjusted EBITDA for the quarter was up 33% to $5.9 million, producing an adjusted EBITDA margin of 25%. Adjusted net income increased 53% to $3.1 million, resulting in adjusted earnings of 21 cents per diluted share. We generated free cash flow of $3.7 million during the quarter. For the second consecutive year, we bucked the fourth quarter seasonality we had traditionally experienced, delivering sequential revenue growth and establishing a new record quarter. Our IDI billable customer base grew by 169 customers sequentially from the third quarter, ending the fourth quarter at 10,022 customers. ForWARN added 17,809 users during the fourth quarter, ending the quarter at 390,018 users. Over 620 realtor associations are now contracted to use for WARN. For the year, revenue increased 20% to $90.3 million, producing adjusted gross profit of $75.4 million and adjusted EBITDA of $31 million. Adjusted EBITDA margin was 34% for the year. We saw continued growth in the onboarding of top tier customers, with 127 customers contributing over $100,000 of revenue in 2025, compared to 96 customers in 2024. We generated $18.2 million in free cash flow in 2025, compared to generating $14.4 million in 2024. The momentum we generated in the first three quarters extended through the fourth quarter and capped a strong year overall. Demand was well balanced across our verticals, underscoring the versatility of our platform and its growing integration into regulated and mission critical environments. We continue to see expanding enterprise adoption as customers embed our intelligence more deeply into core operational workflows further strengthening the durability and visibility of our revenue base. Throughout the year, we continued to execute against a robust product roadmap, advancing capabilities across our cloud-native, AI-enabled platform. We made targeted investments in data science, product development, and go-to-market resources to support innovation and long-term growth. At the same time, we executed upon our strategic plan announced last year of increased automation across key areas of the organization, enhancing efficiency and productivity while maintaining operating discipline. We believe there remains meaningful opportunities to further automate and optimize workflows across the business, which we expect will continue to improve performance and scalability over time. On the pervasive topic of AI, there has been significant discussion in the market about artificial intelligence potentially commoditizing software. We believe it's important to distinguish between AI as a capability and the infrastructure required to deliver mission-critical intelligence at scale. Our platform is not a front-end application layered on top of a model. It is a full technology stack, a purpose-built cloud infrastructure, distributed and parallel computing architecture, proprietary data ingestion and normalization systems, rigorous validation frameworks, governance and security controls, API layers, and embedded machine learning workflows, all integrated to create and continuously refine a longitudinal identity graph developed and validated over many years. Our management team has been building platforms and companies in this sector for nearly three decades. This is our third platform in the identity and analytics space. And throughout that time, we've repeatedly been asked how we compete with larger incumbents or what prevents new entrants from replicating what we build. The answer has never been a single model or a single data set. It has been the integration of architectural design, proprietary engineering, accumulated data intelligence, regulatory alignment, and disciplined execution over time. From the earliest days of our first company in the late 90s, we recognized that solving identity at scale required parallel computing and proprietary processing frameworks. We developed our own internal language and systems to ingest, normalize, validate, and unify large volumes of structured and unstructured data. IRON is our proprietary entity resolution, data processing, and machine learning framework, purpose-built to resolve identities with precision, scalability, and computational efficiency that generic frameworks cannot easily replicate. It serves as the core intelligence layer within our architecture, enabling high confidence identity resolution across complex and fragmented data environments. Our AI-assisted development capabilities operate natively within this framework, allowing us to further optimize performance and accelerate innovation. This intellectual property is not publicly available and remains foundational to the construction and continuous refinement of our identity graph. These capabilities were not developed in response to the current AI cycle. They've been embedded in our architecture and our operating philosophy from inception. Artificial intelligence, including generative AI, is a powerful accelerator. It can shorten development cycles, enhance automation, and improve analytical precision. But AI alone does not create a durable platform, a unified longitudinal identity graph, or the regulatory-grade workflows that our customers depend on. Environments where accuracy, consistency, and auditability are essential. As AI capabilities continue to evolve, we believe the platforms that will benefit most are those already architected with embedded AI deep analytical frameworks, and secure cloud-native infrastructure. In that respect, AI strengthens and extends the advantages we have built. It does not replace them. Moreover, certain competitors continue to operate on legacy on-premises or hybrid architectures that were not designed for modern cloud-native deployment or deeply embedded machine learning. Because our platform was architected from inception, As a cloud native system with AI integrated directly into core workflows, we believe we are structurally better positioned to incorporate new advancements rapidly and continue widening our competitive moat. Much of the current AI discussion has centered on agent-based automation and what that could mean for traditional per seat software models. It's important to understand that our revenue model is and always has been usage-based supported by contractual minimums. Approximately 90% of our revenue is volume-driven. The limited portion that is seat-based exists primarily in regulated environments, including law enforcement and collections, where seats are limited to direct human interaction and any automated use is converted to volume-based pricing. Importantly, We view increasing AI adoption by our customers, including agent-based automation and workflow augmentation, as a productivity enhancer. As automation reduces manual effort and accelerates decision-making, we expect transaction volumes and data velocity across our platform to increase. In that context, AI is not a substitute for our solutions. It's a catalyst for greater utilization of them. Expanding the depth and breadth of data within our intelligence engine to serve additional use cases and industries has long been a core element of our strategy. We have consistently enriched our identity graph with new data attributes and analytical capabilities to broaden its applicability across verticals. As AI reduces the cost and time required to build application layers and orchestration tools, We believe competitive advantage increasingly shifts toward platforms that control the intelligence engine. Because we control that engine via our cloud native platform and longitudinal identity graph, we are now positioned not only to continue expanding horizontally across industries, but also to expand vertically by building and integrating more workflow, case management, and application layer capabilities directly on top of our platform. allowing us to internalize key orchestration layers and further embed our intelligence at the center of customer operations. At the same time, we continue to deploy AI-enabled capabilities to aggregate and contextualize fragmented data across our identity graph, uncover deeper relational linkages between entities, identify and surface risk signals, with greater precision and deliver more intuitive workflow-driven interfaces. Advancements in AI-assisted development are accelerating our roadmap, compressing development cycles, and broadening the solutions we can deliver. In that respect, AI is not simply enhancing our existing capabilities, it is expanding the strategic scope of our platform. and deepening our integration within customer workflows. Now I'll turn it over to Dan to discuss the financials.