Executive Summary

Q2 delivered solid growth and cash generation: revenue rose 14% YoY to $21.8M, adjusted gross margin set a record at 84%, and free cash flow was $4.8M; sequentially, revenue and adjusted EBITDA were modestly lower vs Q1 due to a strong Q1 that included $1.2M of one-time transactional revenue .
Versus S&P Global consensus, revenue modestly beat ($21.77M vs $21.45M*) and Primary EPS met (both $0.28*). Q1 had been a notable beat on both revenue ($22.00M vs $20.43M*) and EPS ($0.33 vs $0.23*) .
KPIs remained strong: contractual revenue mix increased to 77% and gross revenue retention improved to 97%; IDI billable customers grew to 9,549 (+308 QoQ) and FOREWARN users reached 346,671 (+21,335 QoQ) .
Catalysts highlighted: growing enterprise pipeline and public sector opportunities (including “seven-figure” deals), and an extended agreement with the largest data supplier through 2031 with minimal cost escalation supporting margin durability .

Values marked with * retrieved from S&P Global.

What Went Well and What Went Wrong

What Went Well
- Record profitability metrics on a non-GAAP basis: adjusted gross margin reached 84% (+200 bps YoY), supported by productivity initiatives and automation; adjusted EBITDA was $7.6M (35% margin) .
- Durable demand and retention: contractual revenue mix rose to 77% (+3 pts YoY) and gross revenue retention to 97% (+3 pts YoY), with broad-based growth across Law Enforcement, Legal, Government, Financial Services, and Collections .
- Cash generation and balance sheet: operating cash flow was $7.5M in Q2 (31% YoY), free cash flow $4.8M (+47% YoY), and cash ended at $38.8M; no Q2 repurchases, preserving optionality for organic and bolt-on M&A .
- Management quote: “We delivered another quarter of strong customer onboarding and broad-based demand... we are confident in our ability to... drive continued revenue growth” .
What Went Wrong
- Sequential step-down vs Q1: revenue of $21.8M was slightly below Q1’s $22.0M and adjusted EBITDA margin declined from 38% to 35%, largely due to the absence of Q1’s $1.2M one-time revenue and higher operating expenses to support growth .
- Operating expense intensity: sales & marketing +28% YoY and G&A +26% YoY as the company invests in go-to-market and product/infrastructure; this compressed YoY net income margin from 14% to 12% .
- Real Estate (ex-FOREWARN) continued to be pressured by affordability and rates; management noted a single-digit decline in the vertical .

Financial Results

Metric	Q4 2024	Q1 2025	Q2 2025
Revenue ($)	$19.565M	$22.003M	$21.774M
GAAP Diluted EPS ($)	$0.06	$0.24	$0.18
Adjusted Diluted EPS ($)	$0.09	$0.33	$0.28
Gross Margin (%)	70%	72%	72%
Adjusted Gross Margin (%)	82%	83%	84%
Adjusted EBITDA ($)	$4.468M	$8.368M	$7.600M
Adjusted EBITDA Margin (%)	23%	38%	35%
Operating Cash Flow ($)	$6.691M	$5.001M	$7.487M

Actual vs S&P Global Consensus (Q2 2025)

Revenue: Actual $21.774M vs Consensus $21.449M* .
Primary EPS: Actual $0.28 vs Consensus $0.28* .
Values marked with * retrieved from S&P Global.

KPI Trends

KPI	Q4 2024	Q1 2025	Q2 2025
IDI billable customers	8,926	9,241	9,549
FOREWARN users	303,418	325,336	346,671
Contractual revenue %	77%	74%	77%
Gross revenue retention %	96%	96%	97%

Vertical Performance Snapshot (qualitative)

Vertical	Q2 2025 Commentary
Investigative (Law Enforcement)	Strong double-digit growth; >200 agencies added over past year .
Emerging Markets (Legal, Government, Retail)	Led growth in dollars; strong contributions from Legal, Government, Retail .
Collections	High-teens YoY growth; best YoY since 2020 .
Financial & Corporate Risk	Record revenue despite tough comp; new high in Financial Services .
Real Estate (ex-FOREWARN)	Single-digit decline on affordability and rates .
FOREWARN	Strong double-digit growth; +21,335 users QoQ; 575+ REALTOR Associations .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Company financial guidance	FY/Q3-FY25	None issued	None issued; management reiterated confidence and a “strong back half of the year”	Maintained no formal guidance

Notes: Management emphasized ongoing investments and pipeline strength but did not provide numeric revenue/EPS/margin guidance .

Earnings Call Themes & Trends

Topic	Q4 2024 (Q-2)	Q1 2025 (Q-1)	Q2 2025 (Current)	Trend
AI/Technology initiatives	Multi-pronged AI roadmap (data expansion, automation, NLP/LLMs)	Continued AI to derive insights, productivity automation	ML-based automation across functions; AI-driven ingestion/entity resolution; ongoing AI capex	Expanding depth and deployment
Public sector / Government	Early innings; large long-term opportunity	—	“Big Beautiful Bill” + contract churn opening opportunities; testing and ramping; seven-figure deals possible	Increasingly material
Enterprise pipeline / large accounts	Move up-market driving acceleration; higher-tier onboarding	>100 customers now TTM >$100k	Testing/winning top-tier; broad cohort acceleration ($10k→$100k+)	Strengthening
Collections vertical	4th straight quarter of double-digit growth	Normalized mid-teens YoY growth ex prior-year transactional	High-teens YoY; best since 2020	Improving
Data supplier concentration	—	—	Amended/extended largest supplier to Apr 2031; minimal price escalation	Risk reduced; margin visibility
FOREWARN expansion	303k users; 525+ associations	325k users; 545+ associations	346k users; 575+ associations; testing beyond real estate over next 3–6 months	Broadening TAM

Management Commentary

Strategic priorities: “We achieved solid year-over-year growth, strong margins, and healthy cash flow… supported by sustained customer utilization and revenue expansion.”
AI and data: “AI-driven ingestion, normalization, and entity resolution [are] allowing us to accelerate the velocity at which data becomes actionable… Capital investment in AI remains a key part of our long-term growth strategy.”
Margin/cash discipline: “Our strengthening margin profile continues to support healthy cash flow generation… all without compromising financial discipline.”
Market positioning: “We continue to make solid progress against our large enterprise sales pipeline, testing and winning top-tier customers.”
CFO on supplier extension: “Extending the term… through April 30, 2031… with very minimal price escalation” .

Q&A Highlights

Enterprise wins and pipeline: Management emphasized testing and phased ramps at large enterprises with growing penetration and the potential for contracts “many hundreds of thousands or even $1 million plus per year” .
Government opportunity: Changing federal budgets and re-opened contracts are creating seven-figure opportunities as the company builds public-sector presence .
FOREWARN adjacencies: Active beta testing into multiple non-real-estate verticals over the next 3–6 months; heavier investment to follow in 2026 if ROI validates .
Data supplier risk: Largest supplier agreement extended to 2031 on consistent usage terms and minimal price escalation; negotiations began early to lock in long-term visibility .
Capital allocation: Focused on organic investment (esp. AI), considering small bolt-on, accretive M&A as valuations normalize; buybacks remain an option; special $0.30 dividend paid in February 2025 .

Estimates Context

Quarterly actuals vs S&P Global consensus

Metric	Q1 2025 Consensus	Q1 2025 Actual	Q2 2025 Consensus	Q2 2025 Actual
Revenue ($)	$20.432M*	$22.003M	$21.449M*	$21.774M
Primary EPS ($)	$0.23*	$0.33	$0.28*	$0.28

Full-year context

Metric	FY 2024 Consensus	FY 2024 Actual	FY 2025 Consensus
Revenue ($)	$73.706M*	$75.189M	$88.864M*
Primary EPS ($)	$0.81*	$0.82	$1.155*

Coverage depth is limited (typically 1–2 estimates), which can magnify reported “beats/misses.” Values marked with * retrieved from S&P Global.

Implications for estimates: Q2 met EPS and modestly beat revenue; with higher retention and a lengthened data-supplier contract, Street may modestly lift FY revenue and sustain/raise margin expectations, while factoring continued investment in S&M/G&A noted by management .

Key Takeaways for Investors

Mix and retention tailwinds: Higher contractual mix (77%) and record 97% gross revenue retention underpin multi-quarter visibility and support premium margins .
Enterprise and public sector are catalysts: Testing/wins at top-tier accounts and emerging seven-figure public sector opportunities could drive step-ups in revenue cohorts through 2026+ .
Margin durability supported by supplier terms: Extension of the largest data supplier through 2031 with minimal price escalation reduces cost risk and supports sustained gross/EBITDA margins .
Investment phase near term: Elevated S&M and G&A to pursue TAM expansion may cap near-term EBITDA margin expansion (Q2: 35% vs Q1: 38%), but are intended to accelerate growth and operating leverage over time .
Cash optionality: Strong cash generation and $38.8M cash provide flexibility for organic investment and small, accretive bolt-ons; buybacks remain opportunistic .
Trading setup: Near-term narrative hinges on enterprise/public-sector deal conversion and continued KPI outperformance; any confirmation of large contract ramps or FOREWARN adjacency wins would be stock-positive .
Watch items: Real estate (ex-FOREWARN) remains a headwind; monitor Opex growth vs revenue scaling to gauge pace of operating leverage .

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