RDVT - Earnings call transcript Q4 2024

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Operator

Good day, ladies and gentlemen, and welcome to Red Violet's Fourth Quarter and Full Year 2024 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, Senior Vice President, Finance and Investor Relations. Please go ahead.

Camilo Ramirez

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

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

provisions we discussed the Reform Litigation of like by forward-looking Before are or Private to XXXX. information this Act could to differ our with by Actual during stated that statements harbor the conference and those call certain due under would materially risks of I company's management associated business. implied covered from forward-looking Securities advise begin, statements results listeners safe uncertainties the

The no this on the call. update company information obligation undertakes provided to

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

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

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

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

Derek Dubner

results. fourth Thanks, year quarter us Camilo. our discuss as today XXXX and joining Good those full we afternoon to

First, I will high go level, as I at results a do. always over our

of is In that our an and addition, core guiding this opportune will bit and beyond. in . initiatives to principles lead us XXXX provide insight into a time strategic

We for revenue throughout It for the the seasonality full of results mention, a XXXX. significant and revenue records of year was XX% traditionally are experienced. setting quarter particular bucked XXXX. fourth year quarter each growth announce pleased fourth accomplishments, our And to record quarter that we fourth of quarter record

to upmarket capabilities, our continued while margin the gross the Our investments XX% with our revenue success in of in move margins in XXXX the achieving XX% EBITDA plan, continued our XXXX. acceleration in part customer and marketing our base. our is adjusted business go-to-market of growth a and XX% our yearly of attributable markets, drove These in penetration adjusted expansion investments

you Thank hard Violet to in and dedication Red accomplishing work their team our objectives. for the

to XX%, $X.X let's profit Now up EBITDA quarter adjusted was producing million up margin the an the million, XX%. for briefly Adjusted gross $XX.X a percentage up margin Revenue of XX% of gross adjusted for was million, and run record points. a XX% record X numbers. EBITDA $XX.X through quarter the of adjusted producing to

$X.X cash adjusted per XXXX. Adjusted XX, earnings Cash of in the share. December diluted resulting at income for XXX% million increased million and net were quarter, to $X.XX $XX.X equivalents

XXX X,XXX third realtor grew are base added contracted customer the quarter, quarter, quarter the users. billable associations at Over now quarter FOREWARN the fourth IDI over XX,XXX customers the by use customers. FOREWARN. XXX ending to users XXX,XXX at Our fourth sequentially during ending from

of over contributing Adjusted onboarding the saw million of EBITDA continued year. XX $XX.X XX was the with $XXX,XXX of of compared customers We year in adjusted XXXX For throughout the XX% in growth XXXX. customers strong million, $XX.X in onboarding revenue customer million. adjusted customers year, $XX.X the higher-tier to XX% with to producing revenue margin profit EBITDA increased for and gross

true $XX.X contribute million a cash mission, generated Staying $X.X million our our We in free to to flow to safer compared world. XXXX solutions XXXX. in in generating

law For utilize tools officers children risks apprehend to missing clients FOREWARN professionals real locate and estate while enforcement their assess personal instance, our safety. to potential meeting prospective before employ enhancing suspects, face-to-face,

for customers only consumers. abuse, and prevent would depend facilitate consumers burden Our From fraud underbanked identity solutions openings, not seamless, conducting purchases otherwise us for to of enabling and online on to costs interactions. essential high-confidence app services commerce, verifications that our also new reducing account millions logins but access

and take our solutions large. in at society on We have mission our pride the impact positive

revisit we transition principles to and As guiding continue refine initiatives to that our new moment accelerated and opportune it's our growth. core year, key propel an into will a

always First, be customer-centric.

consistently Our unwavering on us listen value. drives extraordinary deliver focus to intently customers and

The even larger market unique platform increasingly acknowledges what that solutions capabilities surpass we've competitors. our always offers with believed, technology superior

innovative confidence most enhancing Our the tools with operate workflows. by clients empowered their

are committed of the core to platform. our we Second, leading competitive expanding edge

architected unrivaled While platform the cloud. major agility systems, natively cloud-based scalability, to was to competitors This and foundational to innovate ability the invest in advantage transition rapidly. our heavily grants us

is to identity Third, we digital industries realm, can leading data allows points continue support. assimilates the diverse graft, that through of addressing developed the their engine enhance challenges. applications our data depth integrate consumer to which the core various the and our we backbone of of spectrum The more data breadth broader assets we've unique will the data recognizing the

disparate identifying our will detection and assets inform automation. Fourth, expand our analytics, to numerous our linkages, refined evaluating connections points, signal Leveraging bolster enhance owned margins. Fifth, and already will through signals risk Augmenting core boost advanced platform, proprietary our and our fuel data data systems. we will artificial further assets. we productivity analysis and robust between uncover intelligence we data

efforts. team processes, expansion particularly increasing our to internal in over through Our exceptional time, we automation AI aim productivity. By facilitating exemplifies select efficiency amplify integration,

upon resources into we channel to our will projects. year, continue AI-driven investment our Building we from Sixth, AI continue initiatives. last in discussions

rich indicators, models models solutions make to fraud processing and utilizing deep extract extensive assets, ways focuses natural novel through team language language expertise models industries in Our on detect and equipping various interacting our training to deep our learning graph. to of decisions informed with with to large relationships, data learning analyzing events, provide transformer with identity

mantra Lastly, push steadfast. the We our a with of relentlessly operating founding urgency. remains perpetual of innovation, sense boundaries

guiding deliver stakeholders. principles initiatives on value we steer As our ensuring and we journey, and embark XXXX, our exceptional to customers these will

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

Daniel MacLachlan

metric. sacrificing what was we in At we setting every annual another new year XXXX, the for Thank delivered. That's of you, Red about accelerating records XXXX leaning profitability. outstanding afternoon. exactly XXXX key without and spoke in, end Derek, nearly revenue good Violet, across financial growth

we a customers. consistently flow. profitability impressively, drive of sequentially team's deliver This record more quarter is and in Even our quarter, all the every success value execution fourth increasing including we announced ability cash achieved direct revenue continuing to to while our relentless today, result to our and

on we exceptionally sustain and sales by capabilities, the we nearly and With FOREWARN superior in XXXX executed about we X,XXX momentum of across history, leveraging industry-leading future. than the markets ever strategy on stronger platform positioned as scale impact our this pipeline XXX,XXX We serve. deepen growing As industries. customers was evidenced solutions our our well are our go-to-market the to IDI, a adoption into our to the users over in on well, technology platform well

to results. now quarter Turning fourth our

a million $XX.X the clarity, was million, today fourth otherwise. gross noted will For points. profit prior a We margin of revenue record the XX% discuss fourth adjusted all X comparisons in quarter against the $XX.X I resulting year. produced over XX% a of record Total up be in will unless a quarter, in percentage XXXX increase

for million, adjusted XXX% EBITDA quarter the $X.XX diluted of margin $X.X EBITDA prior XX%, was up the income was X Adjusted $X.X net over percentage quarter, to resulting in per for increased points. XX% earnings share. Adjusted up Adjusted year. million

Moving through P&L. of details the our

As for quarter. defied as a highlight we million marks record significant quarter seasonality typically would mentioned, experience quarter. revenue was I revenue the this the achievement during fourth historic the we $XX.X

growth including experienced to fraud and financial corporate adoption background vertical. IDI, as accelerate. continued Within way support screening every the vertical risk Leading most verification, we growth of mitigation across solutions, identity saw the and our our

markets with emerging health retail, repossession double-digit solid legal, revenue delivering remains all care government, growth. industries, and Our vertical strong

Our investigative which revenue enforcement, consecutive growth law consecutive driven strong sequential revenue revenue by with vertical continued its of its also of collections quarter The its upward double-digit achieved vertical XXth growth. quarter posted double-digit growth. fourth trajectory

fourth the the which in environment, its to be economic landscape meaningful current the in collections over excludes the single-digit evolving contributor expansion growth revenue estate growth a and vertical returned we IDI's to to with positive expect first recovery ongoing real this industry, regulatory our Given in a vertical, FOREWARN quarter XXXX. in quarter, year.

consecutive its revenue sequential of continued delivering of quarter growth, its performance, impressive FOREWARN XXth Meanwhile, quarter another double-digit marking growth.

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

Our XX%, percentage retention gross points. percentage up was X revenue

the to back P&L. Moving

to Our gross increased $X.X $X.X gross million or in and profit XX% and personnel-related an of an increase primarily cost due for million. producing point exclusive over million $X.X margin X% million, of $X.X $XX.X to expenses. year. revenue increase X quarter. depreciation marketing to was percentage prior Sales XX% or XX%, amortization million Adjusted of increased increased to a adjusted the expenses increase This

was XX% increased primarily quarter. $X.X to or for expenses to an due personnel-related quarter. Depreciation increase or General increase to XX% expenses. increased for and and administrative million $X.X million in This $X.X million million $X.X amortization the the

was of $X.X $X.XX produced net net quarter a income for share diluted Our of prior earnings $X.X to million compared which loss the in million, per year.

increased Adjusted produced for of share. XXX% which $X.XX or earnings quarter $X.X diluted to per million net $X.X income adjusted million, the

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

We to repurchase our in of fourth $X.X million period the XXXX. generated the in free compared cash activities operating any stock in fourth million company in million same We XXXX. in the $X.X cash period generated $X.X quarter same generating purchase compared quarter million flow stock We generating quarter in under not shares the to $X.X did for fourth the program. from in

remaining On $XX.XX had a announced XXXX, special under million In shares purchased dividend at January $X.XX to share. close record an X, of per our out of on on repurchase total on shareholders XX, We $X.X and we stock December dividend of XXXX, a business the paid February as average cash totaled program. we XXX,XXX XXXX. our common of of price stock was share XX, million XXXX. This per of $X.X

our expanded was share. with X to per ending We growth, $X.XX and share consecutive We XXXX revenue our outstanding to adjusted earnings we accelerated EBITDA of by XX% margin year increased margin closing, Red gross XX% delivering the adjusted adjusted Violet, and growth an record to per In XX%. quarters year for XX% revenue. our

grew we million. flow XXX% to $XX.X cash free by Additionally,

are our start, XXXX, momentum this We proud incredibly the of to and excited ahead. team already continued in and with off on in XXXX we to drive success are a year build strong what accomplished

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

Operator

Instructions] [Operator

Nichols Our from Josh B. first comes Riley. at question

Josh Nichols

there. of typical customers Curious on to what you kind level you're on looking alluded top momentum to in of that that headwinds how sustain Great can seasonal We've the XXXX? in terms higher-tier healthy in some data, able that see XXXX the build clearly the ramp seeing some you there. up were of to growth despite at ramping of the line call. record to on revenue this a maintain you seen of elevated you're When

Derek Dubner

Josh, Thanks, for business. again. talk the X Derek. to very we've This to is an here we're with Josh. results definitely in our pleased seen X our quarters last acceleration where Good

a As a quite call, multiple business from as early enterprise. investing we strategic sort I in and larger of we've medium-sized mentioned days areas, businesses in the certain culmination that, to while the small- transition key in been on of our of the that's factors for development,

of orchestration identity is some pipeline sales is those stronger. and at awareness some as brand we're the volume of customers, increase seeing the large The stronger user end platforms large The increases. volumes

us, for So of you by one know It's foot now. in just it's front the other. kind us of

the essentially a operate we've to expect accomplishing goals, operating and momentum been toward and our we view a with the we continue to going how have today. are as same focus We

believe how seeing for that internally we're with is and that's very operating We momentum. as the expect we and verticals, new we're good, climate on. even that mindset transform and excited greater the and we've into through all to we're to about across mentioned, new and that functionality carry, working been And going flow we're products Dan operating

Josh Nichols

of expand opportunity there's How up? the Clearly, of would customer to a lot base. within existing you kind split things

that, X doing 'XX you opportunities? clearly also or good job customers. that very a you base of customers would players. been of adding You've large How opportunities considering the those think most you're in with where already new but see about existing a within big serve Is number you new the and

Daniel MacLachlan

Thanks, Dan. Josh. appreciate And is the this question. I

I with medium-sized would done capabilities good business base. usage base consider being customer small volume of extract to customers, really even additional what historically, and So a job that and a of able and out of we've

current land the for organization. we're and use of what we've also in moved but as us, expand tier we're more only volume the case, is because in have to seeing expand the relationships, very seeing right, you up use lot to opportunity an exciting in Now within additional a cases not opportunity a current which

So I customer when existing a what great more perspective. lot look But to at bigger out opportunity that more volume, base. think, of go XXXX, our we is is have, new extract have I a still revenue from get we think customer to we

revenue of gives year this percent though even be this of that that the to confidence able past today a of seen we're at we've bigger growth. much see really us over So to a momentum to lot XX-plus continue to base

Josh Nichols

I'm a And invested I does in continue professionals sales of know EBITDA 'XX, marketing some context in appreciate there. ROI. bit and investments just like of expanding significantly company generating I marketing headcount that? healthy for those curious, still in additions the now sales made the 'XX to like more expanding And you expect the that things are terms you margins. while and and a

Daniel MacLachlan

Yes.

regards sellers. you'll invest executives going and in going product account infrastructure year then to think 'XX to in We're go-to-market We're account rather a seen I going we're to be what right? our to invest with in managers, continue in to what to in strategic where new both see our 'XX you've consistent investing, in in sales continue leaders, development, also team. is

I 'XX kind and ROI sellers to with addition from think now member to those we're of consistent those and what say, I would a we're be will of perspective, earlier seeing team from what So strategic account see and midyear really in some 'XX, those, starting hires, now executives.

the still more of that definitely But to proving getting and seeing ramp in the from late in is, those Some of made kind months we're yes, their book, expect ROI creating of few expectation of it's kind see building a hires a we've in year just hires, out pipeline, you'll consistent would acclimated, a I their and starting XXXX, XXXX. pipeline. numbers convert that our

Josh Nichols

And last me. question for

like bit I'd a little but it, on touched to You more. dive

company If be And great. benefit detail the you products additional on? of could launches that overall, some new and could provide how working some are the you timing about terms of potential guys in that that would

Derek Dubner

Sure.

with regularly solutions for iterate use various ways cases. solve functionality and interacting to we on of our expanding industry So

For which used by our talked we in have about XX may differentiated competition which by useful mobile app, found to enforcement, capabilities have months, be our example, expanded XX last we is of law the against enforcement. law app and to very the

other and our the and capabilities we've We've certain search released, geospatial of ways vehicle along criminal lines solutions. with interacting also search had of

various working monitoring. FOREWARN We We're on of on. on expand of those your business. We're capabilities We're account to have know working number different we're a more areas. that working working into on

AI how that almost and we theme signals do inform know our find we it's knowledge the of and in fashion which jour, go there of better risk fashion with an see really extract do data, extract but that how and patterns, du from anomalies, out the we in unsupervised new overarching and topic data really the all immediate customers. And the data, of I across all

around abilities along which with about path, and already did and in talked about continuing So this our term that we're natural interact can to knowledge, floodgates that's of ingest our of AI call, just and to excited those mention just initiatives language I a the longer real the which sort solutions extremely language really we've the out with customers the of actionable and data intelligence models where processing open ways data. real up get going large it's lines, the

So that gives of you we're sort of where a high going. level

Josh Nichols

Appreciate it, I'll back in hop the queue.

Daniel MacLachlan

Thanks, Josh.

Derek Dubner

Josh. you, Thank

Operator

Capital. next Our from question Mark Next Boyd Shawn at comes

Shawn Boyd

me hear okay? you Can

Derek Dubner

Yes, we can.

Shawn Boyd

the Congrats outlook. and on quarter the

ones quick couple here. Just a of

markets, On kind the on several markets. you of strength touched different across

corporate help help can bit sort You out you little maybe frame how more that about talked could talked -- as of But you about a us and to financial you big, investigative, risk. us in rough looking are big are here? of numbers. to of they biggest and you the most kind of go in What the as 'XX just revenues sort are we who very how percentage markets, into and

Daniel MacLachlan

for and verticals, This is and highlight But corporate of fifth, third, I we in disclose call across key mean investigative, markets, consistent as concentration. verticals one, we of of some we as emerging what regards the kind breakdown as publicly thanks what that. kind pretty to the said of Dan, financial across real collections risk as the and question. verticals. is highlight don't which X have the I'll those those we estate X revenue another, the revenue

smallest markets innings. an on few high today, the there a the IDI side to of know out has the competition Those you largest give just We platform. customers. low vertical, about the To we're a on points in So the to thousands early customers X,XXX and vertical, just few the side. of points idea, hundreds

opportunity and vertical in our only then that's highlighted, financial up Huge and not And current I continue get. to a and move winning, corporate to just when started. said, base for we where move go of about we're plenty customer getting we we're but to great have as tier, expansion we risk, us. So talk

pretty candidly that over in market vertical seeing because for of COVID the in growth moratoria. as last quarters some the aftermath we've and a But been the and metrics. Collections soft, to that last has seen the came government a and is reversion years nice just several what X

couple consistency. what anecdotal, there. get of seeing plenty maybe there's And ago, we're thought go of growth and we is a For quarters

us. excites really that So

large plenty think We different end traction that FOREWARN of to and a we whole, with itself take also to opportunity kind of see as there's And real FOREWARN very brand continue simple safety think we estate evolving there. a that's market. great that verticals and tool. user into face-to-face

so looking to we're And out. expand that

investigative And us, call it, plus for and over, the There's to regards enforcement. XX,XXX headway great only in agencies throughout getting we've made started. law U.S. we're

years. early in we're wins as We're innings competition with opportunity. grained seeing for tested, the gone the contracts, against been regularly we're in, the incredible just closing that So We've see there have won. we've we've contracts competition and

feedback just great that so And is we're and that momentum great seeing there.

years competitors that of of hundreds And for probably a where the revenue emerging is dollars now, our very verticals size millions biggest through up is because us, of markets percentage a is there vertical. only us, it know be have it's the for could revenue, and hundreds small key X we number ultimately and coming its of today, of the which own vertical government, from enormous, X, made of but

from and here. all we're key those So just we can X go on we're of innings early about excited the areas, where in

Shawn Boyd

margins million margins XX%. about at thinking talked a believe $XXX EBITDA around then the past, in you revenues for maybe the I second. And in Fantastic. about

already at in Here are, and a $XX million we margin. EBITDA XX% revenue

bogey Is the about? also kind basis as questions. and pace in thinking what, added, about about last of from we still year. kind that the that XXX be the points of XX% thing year, term the more we that coming we XX% just year like think Is X think kind of So nearer to should

Daniel MacLachlan

revenue we grow continue with That Yes. perspective, that an driving And we quarters you obviously, million I that's goal that can in and that extract of adjusted up, adjusted XX% from perspective can kind we what bogey. $XXX EBITDA think, feel profitability I of And is at I'll and margin, EBITDA so where as XX% and the the see can some the those. to take to. we is rate put both think where of yes, run we're revenue. of revenue, into for the you come see us, kind that margin

screening margin When XXX% talked whether contribution tactical government, which risk, we've that number we in identity we it's a and invest areas, whether that when we every background about look areas at it's of in business incremental continue broader whether dollar we're to XXXX, ultimate drive the we going about know to kind it's of to so think strategic and support, EBITDA margin. is corporate financial drive sales

XXXX, for us, going But margins from in EBITDA XXXX. with an investment consistent you probably we're to standpoint, saw what keep

year, the For over XX%. just up ended we

XXXX that with to investment so And with EBITDA for the drive the see expectation 'XX revenue, margins continued consistent is and 'XX would number. you both 'XX,

Operator

back I'm to like turn showing questions it I no to this closing . remarks. further would for time. Derek at now

Derek Dubner

a Thank report year fourth pleased Violet. and to for quarter you. We're Red record

are extremely and XXXX excited . for positioned well beyond. afternoon. and Good We

Operator

conclude you conference. participation in Thank your does the program. This for today's

You may disconnect. now

Red Violet (RDVT) 27 Feb 252024 Q4 Earnings call transcript