Earnings call transcript Q2 2023

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day ladies and gentlemen, and welcome to Red Violet's Second Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this call is being recorded.

I would now like to the hand the -- I would like to introduce your host for today's conference, Camilo Ramirez, Vice President, Finance and Investor Relations. ahead. go Please

Camilo Ramirez

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

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

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

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

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

discussed financial may the earnings are and metrics derived not supplemental can from press also be any certain in statement underlying these necessarily issued release today. found definitions their addition, earlier metrics be that amounts and In

Chairman Dubner. Red Executive pleased I and introduce Violet's that, With am Chief to Officer, Derek

Derek Dubner

our discuss for and afternoon. to us quarter of XXXX. second afternoon joining to today results Good Good for all Camilo. thanks the Thanks,

drive are line We and quarter, strong to profitability. both top a our ability report to growth pleased very further highlighting

experiencing continued conversion at pipeline customer onboarding, from and are levels. We new higher-tier strength robust prospects in customer all expansion

solid margins translated P&L environment. net generated adaptability company's market the growth resilience with and operational healthy income, into again revenue in our which a efficiency, throughout showcasing to solid dedication We the combined and dynamic

Given our the strong closing of out pulse July, including for the are positioned and results well the present a business, very we the back on half year.

Now, the turning numbers. to

million million, prior resulting XX% one revenue second quarter, XX% the in produced increase adjusted gross for the up million, over We gross a XX% $XX.X over profit, adjusted $X.X margin $XX.X quarter EBITDA point. total year. Adjusted quarter, For in was of percentage was up prior year. the in

in the generated prior year. million Adjusted EBITDA margin for was free up points. quarter, the nine percentage generating quarter, to million cash $X.X $X.X flow compared for We XX% in the

Associations Our grew ending by XXX,XXX REALTOR are sequentially billable to users second XX,XXX now at base X,XXX quarter FOREWARN first the the during added customer quarter, from Over users. ending FOREWARN. IDI second the quarter, use at the quarter customers. contracted XXX XXX customers

the highs. identity IDI of we and second all across online. our Last access, the reported. XX-month API be and customer proportional just trend to quarter, fraud customer That continues healthy continued Demand demand quarter across new for experienced We means at applications strong batch enterprise. solutions saw throughout

they workflows profitable strategic to road enabling continues to map, months. business. higher-tier the nine higher-tier to prior the receptive our Most pipeline new importantly, sales it in of solutions growth relates into be as prospects and reinvestment have of business be continues to the their our view our the and than idea our grow in been introducing new more well, to As appear multiyear

By way million our increase a flow. we as and contribution adjusted $X.X profit, business a increase the in million strengthening EBITDA are of XX% driving adjusted gross $X.X We example, in leverage cash margins margin. scale produced us investing map healthy adjust us road of enables financial while our still The profile. product in high affords maintaining our flexibility to allocation model operating the dynamically of plan our and a capital robust

Our ML platform, scalable unified provide demonstrates accurate growth and in a data linking proprietary continued algorithms that assets and AI highly our us innovative, advantage distinct solutions. powered delivering

other platform through years, building for of supervised been learning and and have identify We patterns AI unsupervised types machine our to platform. of and the data into among use solutions things, specifically the learning within our

varied undoubtedly much data large information The there excitement available language potential of industries applications. prominent trained potential models is most sets, Today, specifically change Internet. the uses around their on large the are and processes. large could models models transform language The on publicly and language today large of business

the such information on errors the Internet output also models As errors. contains from contains

data revolution is AI generative at internal What high-confidence clear early will abundantly that of assets. be this own is the proprietary those winners with their stage the

acquiring, the that the and internally rely via on decade data our unifying We clients linking high create our their of and data assimilating part confidence data, have in sets better past to proprietary disparate spent algorithms, generating points workflow.

generative platform ML our an high confidence we and to enable enhance our only and confidence and processes with platform, we data, platform extraordinary industries run believe which opportunity across inform build layer us to intelligently materially will interact number capabilities in various our their over AI applications also of have high of data AI our decision-making. analytics a but business AI to including front With to not

we this become to investment. better take the size at the opportunity of impact and more And plans measured and our AI. we defined, the passes and Given the around hand, the able quantify a time be in investment approach will will increase opportunities as

to stock repurchase our program. as Now,

we to we've average purchased program shares purchased was X, $XX.XX XX,XXX that our May authorized common During total, the quarter, repurchase per an shares at $X second of stock share. million pursuant our XXXX. XXX,XXX on In of price

combined and Overall, effectiveness our growth to revenue the market. Coupled of with profitability the sheet, reflect the million growth demonstrate a with resonance results these and in the financial under our offerings model program. have management. our stability prudent $X.X remaining purchases solid our balance We business for and additional commitment of

we As I'd we extend for Violet customer to opportunities. gratitude always hard like capitalizing and remain the dedication. move and team relationships my as nurturing work to dedicated their Red innovation, driving to on forward, emerging

We are still history. in long-term as our plan early the positioned strong are days in ever well we been we and and of have our financially as

it turn discuss Dan I'll the that, With financials. to over to

Dan MacLachlan

afternoon. good and Derek, you, Thank

highly are We flowed nicely pleased quarter dollars. growth revenue saw We translating year-over-year second which results. our the P&L, solid with extremely profitable into growth down

$X.X EBITDA. This XX% profit in million is to adjusted earlier, As leverage million increase productivity Derek indicative $X.X adjusted our pointed a our out gross our underscores and contribution profitability increase approach of efficiency. driving disciplined in produced and

expansion strength in tier and of including are our opportunity see prospects, We pipeline those opportunities converting higher continue to to the win.

With quarter that, second into results. let's jump our

percentage XX% year. compared flow EBITDA for Adjusted margin X $X.X was up all points. I $X.X generating second quarter over the quarter against cash X the will gross today resulting noted $X.X We the second XX% in million up for free comparisons profit prior million, point. produced was percentage in margin prior Adjusted $XX.X generated of unless $XX.X million year. gross in discuss was For otherwise. over in be the will the quarter in Total XX% prior revenue We to EBITDA year. increase quarter adjusted XX%, a clarity, XXXX up million, million of adjusted

see side, the revenue and On several IDI verticals, emerging risk, we financial strong across and including volume continue investigative growth to corporate double-digit and markets.

the over relatively for collections expect As and flat both in remain real and revenue tailwinds collections see believe some increase in estate in case the has not-too-distant and quarters, prior will term been near several We to do future. volumes the year. corresponding form

estate around residential commercial volumes rates struggling related housing inventory include still of FOREWARN to remained interest with which the segment not remain rates, for does post issues hovering we As and real with X%, the year. and remaining but for IDI's flat estate, expect remainder high pandemic interest steady, low real

as On to we tool FOREWARN and safety which for and volume double-digit strong today revenue real prevention leading the fraud estate the growth. realtors, side, continue see services

revenue customers $XX.X customers million, $XX.X and as of growth P&L, consisting million $X.X details of existing of the from existing revenue our customers revenue new from of for Continuing $X.X through million. million revenue quarter, second mentioned the base from of was

billable during use the users XXX ending customers quarter by second REALTORS first from added at grew the contracted quarter FOREWARN are to base the IDI the ending XX,XXX sequentially customers. second quarter Associations customer quarter FOREWARN. Over Our now at XXX users. X,XXX XXX,XXX

point quarter, Our was from prior for XX% contractual percentage year. one down revenue the

was Our XX%, to compared year. prior retention gross in XX% revenue

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

million, result XX% in XX% This of producing increased to increase revenue Moving our Adjusted data of $X.X of quarter increase gross back third-party increase was million margin costs a the over million and exclusive point XXXX. P&L, $X.X profit to million. $X.X $XX.X percentage an or gross depreciation and fees. adjusted an XX%, of increased amortization acquisition second infrastructure a one to cost

for This salaries Sales debt million sales primarily $X.X and consisted in and quarter to sales The expense and benefits X% was of million benefits the $X.X provision. quarter. million and primarily expenses marketing increase salaries or of the increase increased $X.X employee to for due marketing million an commissions. $X.X and in in and $X.X million bad

expense the a This decreased decrease $X.X decrease the million of expenses $X.X share-based quarter. or million compensation X% million $X.X professional in a and $X.X decrease fees. administrative and to in General million primarily for was result

The and of consisted $X.X non-cash million $X.X $X.X of Professional expenses IT million employee expense million Other share-based for benefits, fees. primarily of salaries compensation in in the Accounting, and general and quarter million $X.X administrative and

or of software. of quarter. Depreciation for $X.X was This result the million and primarily million amortization developed increase internally increased amortization $X.X to the XX% the

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

compared to on million assets balance and million current XX, to equivalents XX, million December $XX.X million compared Moving $XX.X Current were sheet, June at XXXX. and were XXXX to to $X.X $XX.X $XX.X compared $X.X at the cash liabilities million million. were cash

months We million cash for activities used operating from XXXX activities activities activities of the to period the Cash developed six million in XXXX generating in result the in XX, period software million. from for million investing use. $X Cash ended XX, million in cash operating XXXX used in the the for mainly months $X.X compared for generated six $X.X our same XXXX. internal June ended for was June used $X.X $X.X to same was investing

in XX, stock our under of result repurchase used was June XX,XXX $X activities price the financing XXXX purchasing at common six program, $XX.XX months ended of mainly average stock company the shares per share. million Cash for of an

financing activities result of stock $X.X company in from used During common restricted employee cash same was million, net the shares of of period share XXXX, the stock acquiring XXX,XXX the settlement tax units.

relates repurchase it program. As stock our to

purchased shares was authorized May purchased price During per total, average to the million quarter, XXXX. stock program we at pursuant shares an of that we our share. common second repurchase have $X of In our XX,XXX $XX.XX on X, XXX,XXX

We program. remaining have million purchases for under the additional $X.X

to cash that our more year of program. back with We accomplishing XXXX. for our as will with of of half we conditions the the acquire have investment even strategically continue opportunities to the the monitor other shares are and our look In applicable pleased forward and first results closing, repurchase we market half balances, in for accordance, and prevailing additional use or in

the open With for now that, our operator Q&A. will line

Derek Dubner

Thank you, quarter growth conclude, for of you report pleased top us profitability. joining strong to and and a are line To we today. thank again,

fraud Given healthy balance and growing sheet, our progress onboarding, secular positioned our solutions, enterprise tailwinds for the pipeline, our back year XXXX. robust identity against in half we the of a well and are and verification larger customer the

Operator

you conference participating. This concludes today's for call. Thank

You disconnect. may now

Red Violet (RDVT) 7 Aug 232023 Q2 Earnings call transcript