Red Violet's Q2 2025 Earnings Call: Navigating Key Contradictions in Retention, Expansion, and Growth Strategies

Retention rates and expectations, expansion into niche verticals, product launch and development timeline, sales and marketing investment strategy, public sector growth opportunities are the key contradictions discussed in Red Violet's latest 2025Q2 earnings call



Revenue Growth and Customer Base Expansion:
- Red Violet reported revenue of $21.8 million for Q2 2025, up 14% year-on-year, excluding a $1 million transactional revenue from the prior year.
- Growth was driven by solid new customer onboarding, notable expansion within the existing customer base, and strong customer utilization and demand across multiple verticals.

Adjusted Gross Margin and Cash Flow:
- The company achieved a record adjusted gross margin of 84%, with an increase in adjusted EBITDA to $7.6 million, resulting in a margin of 35%.
- This was due to increased productivity across the enterprise, automation implementations, and optimization of internal workflows through machine learning applications.

IDI and FOREWARN Performance:
- The IDI billable customer base increased by 308 customers to 9,549, while FOREWARN added more than 21,000 users and now has 575 REALTOR Associations under contract.
- This growth is attributed to the increasing adoption of proactive safety solutions, particularly in the real estate sector, and solid customer retention.

AI and Data Initiatives:
- Red Violet is advancing its efforts in proprietary data aggregation and AI initiatives, enhancing its identity graph through organic expansion and integration of new data streams powered by AI.
- These initiatives are aimed at strengthening fraud detection, improving data quality, and increasing embedded intelligence within the company's solutions to drive long-term growth.