RDVT - Earnings call transcript Q3 2021

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Operator

Good day, ladies and gentlemen, and welcome to the Red Violet's Third Quarter 2021 Earnings Conference Call. [Operator Instructions].

As a reminder, this call is being recorded. I would now like to introduce your host for today's conference, Camilo Ramirez, Director of Finance and Investor Relations. Please go ahead.

Camilo Ramirez

welcome. and afternoon Good joining results. to for quarter our XXXX financial us you discuss today third Thank today Derek Financial me and With is Dan Executive and MacLachlan, Officer; Chief our Chief Officer. Dubner, our Chairman

access available with our A Our call by webcast, question-and-answer on event replay the being that of I session. webcast from website. you be and like remind call website, Dan the a our to our comments following would this visit today on Investors followed Derek live To the begin call will is please and will recorded. page www.redviolet.com.

or to Reform would differ to safe of by the our this information are associated I begin, we with XXXX. information call. conference Actual statements certain materially forward-looking listeners by harbor due risks discussed company provisions stated The Before during update obligation business. call those from Act undertakes this and like Litigation implied advise of to could under no the that the the uncertainties covered statements management forward-looking on Securities results provided company's Private

risks recent uncertainties Form and For Securities of filings subsequent Exchange the business, the review the and you on discussion associated company's with Violet's with and including Commission, I annual a report encourage most Red to XX-Qs. XX-K

call, today. most their are release issued margin adjusted to press EBITDA. and GAAP we financial information these adjusted EBITDA adjusted financial in relating comparable certain measures provided the may During non-GAAP earnings financial profit, Reconciliations present margin, to earlier adjusted the gross gross directly non-GAAP measures of

Red amounts With the from Chairman Dubner. be may and definitions Executive derived Derek earnings not metrics can in introduce release statement today. also Chief Violet's pleased that, supplemental be financial issued press and addition, metrics these certain am to In are underlying their necessarily Officer, I that discussed, found earlier and any

Derek Dubner

strong quarter, joining and XXXX. afternoon gross revenue, Violet hitting Good very profit to those third quarter records discuss adjusted us Red of delivered results to our in a Camilo. today EBITDA. Thanks, the

without our for across a achieved also profitability demand We of the gain. GAAP solutions onetime We board. experienced first strong quarter ever our

well, I'm against demand with our solutions. with meeting Our the especially our team data-driven cloud-native and differentiated multi-year of pleased and platform strategic unified road execution performed extremely assets our map. customer driving

result Adjusted to quarter a achieved strong $X.X XXXX, quarter million. to increased onetime gross to We sheet. $X.X the in X,XXX balance throughout U.S. increased the use Adjusted million which added Associations And quarter XX, XX% margin we XX% of of XXX customers. FOREWARN to from XXXX. our $X.X FOREWARN. million million ever of X,XXX leverage the We generated REALTOR cash record our increased of generating XX% GAAP increase XXX continue business. the in quarter compared now first million. new on and our to ending adjusted share. We income, same had into We $X.X of million. to our the quarter, added third $X.X cash equivalents IDI ending diluted of a customers users Platform profit As during year. with without the earnings of the operating gross profitability XX% are Over XX,XXX invest gain, of $XX.X we contracted over as over per cash users. translated period performance, last with revenue XX% XX% $X.XX in activities in quarter. EBITDA generated Services the third million to million, the third revenue $XX.X in over cash September record increased a a generation and increased expansion revenue XX% to from to $XX.X net

as plan, penetrate we positioning have by new strategic markets. the future against our we moves business multi-year continue made, are existing As to executing recent we and for demonstrated the

We develop platform, are new solutions applications differentiated innovative assets, data segments our for leveraging and to to customer-centric our adding new teams capabilities, of our and our business.

identified the As Property call, Identity. on team can in Property and lead the Solutions sector. to that solve our joined we challenges very for our we using our various a several the Solutions, have of and our highlighted real talented delivering efforts from in individuals data Within last analytic number derived estate there to earnings where are opportunities capabilities and we commercial marketplace insights residential

sectors in whole. transactions recent increased enormous insights accelerated we space, against And due online private to want highlight graph we see from and company we fashion journey, society have access reducing and with to Executing quarter, all and Within few frictionless our we the our to capture. public with of to like Justin public the Identity mission, associated to to Consistent continue the the moves the and our goal log sector. is pandemic. the drive During including to our in would fraud entire ultimately the I the to unbanked technology a an capturing fraud a within welcomed head underbanked broader plan, consumer passed to services, on Identity deliver to commerce Cleveland opportunity onboarding made: move that leverage consumer expansion throughout while to the as to transaction, and expense

state digital the sector demonstrable scaling track across given sector an and leading and teams programs record opportunity verticals. ongoing the public a local building convergence is rapidly accomplished of various executive a is significant government The Justin and transformation. federal, businesses with and public

LexisNexis services. as financial and product and our all to view the Fiserv have industry. to develop believe lead we knowledge him services sector, for services financial our We're a Aju us. brings offerings from a and Red assets John to targeted vertical enhance financial Recently, a them for aboard Aju, former be Violet team of the of solutions. wealth executive solutions We deliver we to growth the current experience the new enterprise excited strong to welcomed we public the needed have to will of up package and which solutions

we industries guidance strategic innovations the consisting creation executives in industry of the our support Advisory Board, of quarter, of provide Lastly, from announced luminaries to Identity the company's accomplished mission. and in during diverse

can As our as solutions. strengthens from our the does economy year, for demand see progression the throughout you so

utilizing and our generation position cash are XXXX solid for beyond. We company to the

evolution. at in even discuss always it and a pace. while And the will now are be road over innings are we extremely still excited the performance to We of and innovating Dan rapid year-to-date I'm because turn the our I about map am ahead, financials. early to our I'll excited more

Daniel MacLachlan

Thank you, afternoon. and Derek, good

about and from and hitting extremely third tell are future. commentary, As with business very how is our quarter the in This revenue, EBITDA. adjusted we excited you gross pleased the records consecutive can is Derek's performing profit

without mentioned, record strong we income, for a quarter gain, our million share. Derek numbers ever execution team. in net entire demand solutions GAAP Red onetime $X.XX of from first our translated As profitability generating reflect and the which diluted into outstanding These earnings $X.X also achieved per of Violet

and As expansion, and we drive across invest to up leadership talent opportunity see our XXXX believe our and beyond. both to tremendous support growth markets, solutions we will we in in accelerate which

about cash understand what our business, reinvesting talk to want expansion means P&L. our the we that to generation you into As and I

including pandemic. great a years, job through done global business several the the have driving over past We the

top During line. at pleased of and we bottom have been time, with growth the the that the business both

cost incredible revenue due nicely we of revenue before, with nearly have the to shown bottom line, has growth XXX% at margin of the to fixed model, our As line. each growth our growth in in translate contribution. leverage dollar Those contributing explained gross dollars

net in historically sequential leverage operations the and profitability that see EBITDA, can adjusted You in improvement metrics income. of cash from our

We and are infrastructure beyond. expansion, in tactically well expanding teams, our for building our accelerated us revenue for areas and market XXXX out sales capabilities hardening and new growth solution positioning

confident make continuing see that our profitability these still third let's into are our quarter can We we said, in dive improvement metrics. and With investments results.

third or discuss will noted $X.X I million. XXXX, revenue $X.X revenue highest record Platform a will unless comparisons was today to year revenue Services increased quarter a prior the revenue XX% million the quarterly over all ever. our $XX.X clarity, XX% up XX% million, was be Total $XX.X increase million. to otherwise. and against For

impacted a quarter. programs we for quarters stated highs $X.X services below pre-COVID its to to moratoria now, As COVID-related, and have as well million be by continues per million remains revenue collections $X.X forbearance and result of several our government-imposed

Our Adjusted EBITDA for Continuing a the points. X margin record of This in the for was was hit quarter third our quarter to quarter, the XX% gross EBITDA at through percentage million, year. was margin adjusted up XX% P&L. up our consecutive EBITDA. XX% $X.X of for prior Adjusted quarter the year. details prior record adjusted compared third over XX%

and $X.X from growth million, million $X.X As the for mentioned, million. of customers of $X.X from customers revenue million from third customers $XX.X new existing revenue existing base of of revenue quarter revenue was consisting

customers FOREWARN added the customer quarter, third sequentially customers. XXX the XX,XXX from approximately users at during quarter third base Our the ending idiCORE the X,XXX users. billable grew second X,XXX quarter quarter, by at ending

was revenue XX% increase quarter, XX percentage a prior for the over contractual point year. Our

to attrition compared prior XX% in year. revenue percentage X% was Our

We trend and the expect our revenue XX% future. X% for attrition to percentage between foreseeable

revenue Moving from down our on metrics and P&L. the

in and employee quarter $X.X consistent sales expenses $X.X million for or out pointed primarily remained salaries general and amortization our of an administrative third increase to revenue, $X.X $X producing or for the year year million adjusted point increase This million $X.X adjusted profit internally in the earlier, at of developed million Sales share-based primarily to compensation quarter. $X.X million the percentage and employee and record result XX%, fees. margin for of million ever. and an million expense; million $X.X expenses noncash $X.X gross XX% quarter. increased and $X.X Our increased was and the The gross for exclusive commissions. increased expense I General of software. of of $X.X at This the highest as administrative and consistent the costs. accounting, and million and $X.X $X.X million million. $X.X for marketing Depreciation in The $X.X in million and in expenses sales IT other to benefits quarter X acquisition of primarily was amortization a marketing million consisted with remain the XX% professional of million amortization, prior X% quarter of $X.X margin a of with prior over increase and XXXX increase quarter. in cost consisted benefits; depreciation result a salaries Adjusted data million, gross

be first GAAP gain. quarter are ever our profitability without a reporting We of onetime proud to

the a based XX.X reported weighted million to of of year. average shares for prior share $X.XX compared earnings income quarter We million in per net diluted share was $X.XX and $X.X of shares, respectively. Our on XX.X count and million $X.X third a basic share per loss million

$X September at assets million to Moving $XX million XXXX, $X.X balance to XX, XXXX. XX, million in months $X to and cash XX, liabilities operating X the equivalents $XX.X compared compared the activities XXXX. million. on and period generating Cash operating from current cash the were December million million $XX.X in from cash for Current XXXX, at compared million We same for $X.X ended sheet. $XX.X to were activities compared generated September were in million to

Looking for cash in use. use used X September mainly $X.X the we adjusted we developed we XXXX. flow, internal using million $X.X cash used million $X.X and at for calculate XXXX, which Cash activities million generating compared our for EBITDA third investing the to of for cash quarter quarter shares generated capital is for XX, was during $X.X net in stock the for free financing million restricted units. months the XXXX closing, the software withheld for was result speak Cash in These expenses, and from end to share were the from settlement ended in months XXXX, prior subtracting abound of the the September $X.X ended is third taxes to the In the used of activities continue strong, resulting quarter. quality the XXX,XXX business. executing. retired the X Business approximately to paid million the shares team and XX, numbers treasury opportunities the third of

seasonal fourth quarter we business fourth in look our form presents explained some past to headwinds in of we customers historically the the from the our transactional have As quarter, days. that less

a However, our is fourth great quarter off start. to

in Violet open are now in what to for Q&A. we close even better a are will year highly operator XXXX, XXXX. that, confident We in With has Red have line and an our excited out year ability the for to our been great

Operator

[Operator Instructions].

Your first from [ph] James is from question Lee Insight.

Unidentified Analyst

in a some what and pipeline quick have and upcoming able new like any My look James. name these Are I of of is on about provide of verticals? color dynamics the you public spaces some to sales in the question these sector terms verticals. the fintech new

Derek Dubner

who is meet the James. that it. Yes, we of and of are question. understands anybody the Dubner. appreciate which multi-year of a sort the to evolution we is Thanks, story been days. Derek early this following Appreciate business This has Nice you, in

As this the with the and technology with technology and data as the opportunity serving with that platform, to our today evolve, and this we cases expand scalability are incredible to throughput including twice this taking have our done involved current cloud we've that use time the learning And differentiated we built. customer X we've stress an currently into the underbanked, of like to assets platform continue platform those and we we millennials the being is today, have unbanked the base. machine before. This we successfully with innovative that native third sold we're

sector. We public are entering the just now

presence small there. a have We

market get, in who thought interest there. board space is our bringing We advancing out go hence Justin Cleveland, to that a on significant have there leader

public As industry, interest fintech everything that who convergence private to through far is we goes sector. or frictionless the and just really the bit a fintech public make the of the the not or of understanding in you public of it sector, and and moving consumer sector need about as while person talked little experience moving really the for and seamless a every entity identity, to know, as the system understand protecting online

serving calling if public end running glean turning are to to that and presently for and us will, more need that like verification, we run the able of have you're are out to the some number large sector truth. users. Many who really of various we understand know of They're for and third in So identity data. leading will, able in ground I out believe, no such data platforms identity you private parties a like of companies parties we us more the much from platform there, your we resolution, and to of We're a the private entity which are, way systems. asset Of back transactional. saying, verification of information the analytics, your way they're perform we're if the analytics performing these we're platforms other. and across to able that And to you our

we're of quarters we really flow and for are now those a for So reinvesting business us in healthy it's as natural cash that expanding generating number that in the areas.

Greenwell leading sector. Justin a is path our Identity, very Jim in Cleveland So excited. through the It's public very market. competitive

on hold we're intentionally vest these to we're of do where we many So things close and the winning. going where

think not So numbers bear to we're to in going many But as in And we forgive where we to we our that. demonstrate us and there interested for where business. and are sharing much the the going out, going. are success we're are expand detail continue

Operator

question Notvest next Your is from SEMCAP. from Ryan

Ryan Notvest

largest cause and to to the data a reset you about they're you? front? question to be your with guys the of in up structure kind anything contract on that expanding Is that you on that into provider cost as James' repurpose and of following verticals expand providing there of Just use your aware cases. data new Anything would

Daniel MacLachlan

No.

a We term with flexible and thanks is and have Dan, this for -- the very question.

the over that contract, in of very X renewed our data to so our case unlimited run times, transaction kind and And partnership lot the bring fee really same kind have for we Whether perspective. it We we onetime how with that a costs long provider in-house. use data largest partnership. provider. years broader from of within flexibility of just the flexible we us. XXX data serve We hardened we or the terms But another and that million term of have with actually we use have the kind a identity

cost as down gives tremendous to to as the that leverage. public go be way what profitability drive all true true that revenue increase us be fixed to the model bottom sector, that's continue leverage that those go fintech the that able And So and be numbers will line. ultimately we will into into we and to

Ryan Notvest

it. Got it. Got

to modeling out be terms purposes? how now that. renewed You Anything call paying in said went we that that of the the renewal you should you're pricing for and just aware

Daniel MacLachlan

No, really. not

look cycle. you that these are that kind contracts the when of around most at kind think of long partnerships I just of cycle, X-year

-- we at data back And renewing of you just when renewed we at same ago, kind just the provider renewed look so or cost and the X it's years. that for particularly started Basically, largest up renewal. coming when potentially over ending We've are number them expense. another X years for of our a

data no cost material near standpoint, to in midterm. change or modeling a anytime the from So the

Operator

There are over now at turn Mr. to questions time. I will the this back Dubner. further no call Derek

Derek Dubner

data. We product who guided very we strong to insights our accelerating XXXX to our the solid we the of And by greater head upon Thanks in people, technology the capture tailwinds Good derive that's everyone today. digital ever-present are an and cash from fraud a increasing and afternoon. secular generation, beyond. road into result and quarter the as customer-centric us of We're need even delivered as to joined desire innovative and executing for towards way transformation, actionable optimistic investing valuable a third path of assets solutions in deep eye map with opportunities. a are our

Operator

day. this concludes today's conference. your Thank gentlemen, Ladies participation. for Have and you a wonderful

all You disconnect. may

Red Violet (RDVT) 10 Nov 212021 Q3 Earnings call transcript