Red Violet (RDVT) 6 Nov 24 2024 Q3 Earnings call transcript

Red Violet, a leading provider of consumer, social media, and public data analytics, released its third-quarter 2024 financial results, showcasing a strong performance across various metrics. The company's earnings call, led by Chairman and CEO Derek Dubner and CFO Daniel MacLachlan, highlighted the company's commitment to growth and its optimism for the future.

Record Performance and Strategic Investments

Red Violet reported a record quarter in terms of revenue, gross profit, and cash flow, driven by strong customer demand and strategic investments. The company added 266 new customers sequentially, reflecting its success in onboarding new clients and maintaining existing relationships. Revenue for the quarter grew by 20% to a record $19.1 million, with strong contributions from the investigative, emerging markets, financial and corporate risk, and collections verticals. The company also achieved a record adjusted gross profit of $15.7 million and an adjusted gross margin of 83%, showcasing its operational efficiency and financial health.

Strategic Investments and Expansion

Red Violet's strategic investments, particularly in its sales and marketing capabilities, have started to bear fruit. The company added 13 new team members in the third quarter, focusing on various sales and marketing roles, and this investment has led to increased customer onboarding and growth from existing customers. The company's focus on expanding into larger enterprise and government customers also holds significant potential for future growth.

FOREWARN's Continued Success and Expansion

FOREWARN, Red Violet's leading proactive safety tool for face-to-face engagement, continues to be a standout performer, adding 21,091 users during the quarter. With over 500 REALTOR associations now contracted to use FOREWARN, the tool's penetration within the real estate industry remains a significant opportunity for growth. However, Red Violet is also exploring expanding FOREWARN's applicability to other industries, highlighting its potential for broader market penetration and revenue growth.

Outlook for 2025 and Beyond

Red Violet's strong financial performance and strategic initiatives position the company well for continued growth in 2025. The company's optimism is reflected in its strategic investments, particularly in its sales and marketing capabilities, which are expected to drive further customer onboarding and revenue growth. With a record $35.7 million in cash and cash equivalents, Red Violet is well-positioned to capitalize on opportunities and continue its growth trajectory.

Conclusion

Red Violet's third-quarter 2024 results underscore its commitment to growth and financial health. With a strong focus on strategic investments, expanding customer base, and a robust product portfolio, Red Violet is well-positioned to continue its momentum into 2025 and beyond. As the company looks to expand into larger enterprise and government customers and explore new applications for its tools like FOREWARN, investors and stakeholders can look forward to a promising future for Red Violet.