Red Violet (NASDAQ:RDVT) reported record fourth-quarter results and capped what executives called an “exceptional year,” citing broad-based demand across verticals, expanding enterprise adoption, and continued investment in product development and go-to-market initiatives.
Fourth-quarter results set new records
Revenue in the fourth quarter rose 20% year over year to a record $23.4 million, according to management. Adjusted gross profit increased to $19.5 million, translating to an adjusted gross margin of 83%, up 1 percentage point from the prior year. Adjusted EBITDA rose 33% to $5.9 million, with an adjusted EBITDA margin of 25%.
Executives highlighted that the company delivered sequential revenue growth in the fourth quarter for the second consecutive year, outperforming the seasonality it had “traditionally experienced.” CFO Dan McLaughlin noted that personnel costs are typically elevated in the fourth quarter due to year-end incentive compensation tied to annual performance, but margins expanded despite those seasonal expenses.
Full-year 2025: 20% revenue growth and higher cash generation
For full-year 2025, Red Violet reported revenue of $90.3 million, up 20% from 2024. Adjusted gross profit was $75.4 million, and adjusted EBITDA was $31.0 million, producing an adjusted EBITDA margin of 34%. The company generated $18.2 million in free cash flow during 2025, up from $14.4 million in 2024.
Management also pointed to growth in larger customer relationships. The company ended 2025 with 127 customers contributing more than $100,000 of revenue, up from 96 customers in 2024. McLaughlin said the company is scaling both “vertically” (deeper adoption across existing markets, customers, and use cases) and “horizontally” (new products and expansion into new industries), and said that strategy is resulting in larger customer relationships and continued operating leverage.
Customer metrics: IDI surpasses 10,000 customers; FOREWARN user base expands
On platform usage and customer growth, the company reported that IDI billable customers increased by 169 sequentially from the third quarter to 10,022 at the end of the fourth quarter. FOREWARN added 17,809 users during the quarter, ending at 390,018 users, with more than 620 realtor associations contracted to use the platform.
Contractual revenue represented 77% of total fourth-quarter revenue, consistent with the prior year, while gross revenue retention was 95%, down one percentage point, management said.
Vertical trends and demand drivers
McLaughlin said demand was balanced across verticals in the quarter, with performance driven by increased transaction volumes, new customer wins, and deeper embedding of the company’s solutions into customer workflows. He detailed several vertical-level dynamics:
- Financial and corporate risk: Continued consistent performance, driven by core financial services customers including banking and insurance.
- Background screening: “Exceptional” performance, supported by additional products, enhanced functionality, and new integrations introduced over the past year.
- Investigative: Another strong quarter, supported by demand across state and local law enforcement and other investigative customers. The company said it added approximately 200 law enforcement customers in 2025.
- Emerging markets: A meaningful contributor to fourth-quarter growth, with management describing early-stage penetration and a “clear runway” for sustained growth.
- Collections: Maintained a positive trajectory, delivering “high teens” revenue growth and benefiting from improved activity levels.
- Real estate (IDI excluding FOREWARN): Declined modestly year over year as elevated home prices and interest rates constrained housing activity.
On FOREWARN specifically, management said revenue growth remained robust in the fourth quarter, driven by increasing adoption within the daily workflows of real estate professionals.
AI, platform positioning, and capital allocation
CEO Derek Dubner spent a significant portion of the call addressing artificial intelligence and competition. He argued that the company’s advantage is not “a front-end application layered on top of a model,” but a full technology stack that includes purpose-built cloud infrastructure, distributed computing, proprietary ingestion and normalization systems, validation and governance frameworks, API layers, and embedded machine learning workflows integrated into a longitudinal identity graph.
Dubner also described “Iron,” the company’s proprietary entity resolution, data processing, and machine learning framework, which he said is foundational to the identity graph and enables identity resolution with precision and scalability. He positioned AI—including generative AI—as an accelerator that can enhance automation and analytical precision, but said it does not replace the infrastructure required for “regulatory-grade workflows” where accuracy and auditability are essential.
Management also emphasized that the company’s revenue model is largely usage-based. Dubner said approximately 90% of revenue is volume-driven, supported by contractual minimums, and that increased AI adoption by customers could increase transaction volumes and data velocity across the platform.
During Q&A, executives discussed enterprise pipeline progress and large customer opportunities. McLaughlin said the growth in the cohort of customers contributing more than $100,000 annually reflects pipeline development and conversions to “meaningful customer wins.” Responding to questions about “whale-sized” opportunities, he said those opportunities exist in the pipeline and referenced a previously announced win with a large payroll processor, noting that over time it could become a multi-million-dollar annual customer as volume expands.
On timing, management said there was some revenue from the payroll processor in the fourth quarter, but described it as early-stage and “nothing meaningful,” and added that the contractual minimum commitment for that multi-year agreement begins in 2026. Management said a toll authority win was still in integration with minimal revenue contribution in the fourth quarter.
McLaughlin said the growth in higher-spending customers is coming from a combination of new customer wins with larger commitments and increased volume from existing customers, and added that existing customer spend is growing at “a little bit more” than mid-single digits.
On operating plans, the company said it added more than 30 team members in 2025, focused on product development and go-to-market expansion, and expects hiring in 2026 to be consistent with 2025, again focused on product development, AI, and go-to-market initiatives. Management also discussed ongoing efforts to increase automation across the business, describing current initiatives as investments aimed at improving efficiency and productivity over time.
On the balance sheet, cash and cash equivalents were $43.6 million at Dec. 31, 2025, up from $36.5 million a year earlier. The company generated $6.7 million in cash from operating activities in the fourth quarter. McLaughlin also discussed share repurchases, stating the company purchased 57,812 shares in the fourth quarter and through Feb. 27, 2026, and had $16.4 million remaining under its repurchase program as of that date.
Asked about the likely use of cash over the next six months, Dubner said the priority is investing in the business, citing opportunities to expand horizontally across industries and vertically by building more workflow, case management, and application-layer capabilities on top of the platform.
About Red Violet (NASDAQ:RDVT)
Red Violet, Inc (NASDAQ: RDVT) is a provider of advanced data, analytics and technology solutions designed to help organizations mitigate financial crime, fraud and security risks. The company’s cloud-native platform consolidates and enriches data from proprietary, public and third-party sources, applying artificial intelligence and machine learning to deliver insights across the risk-management lifecycle. Red Violet’s suite of services includes behavior-based transaction monitoring, automated watchlist and negative-news screening, enhanced due diligence and real-time geospatial threat intelligence.
Leveraging proprietary algorithms, Red Violet offers products that enable compliance teams to streamline anti-money laundering processes, improve fraud detection and respond swiftly to emerging threats.
