Executive Summary

Red Violet delivered a record quarter: revenue $23.08M (+21% YoY), GAAP diluted EPS $0.29, adjusted diluted EPS $0.39, adjusted EBITDA $9.04M with a 39% margin .
Results beat S&P Global consensus: adjusted EPS $0.39 vs $0.31*, revenue $23.08M vs $22.64M*; beats were driven by broad-based volume strength without one-time transactional revenue in Q3 . Values retrieved from S&P Global*.
Free cash flow reached $7.29M and cash from operations hit $10.17M; cash on hand was $45.35M .
Board increased the Stock Repurchase Program authorization by $15.0M to $30.0M, with $18.9M remaining as of Nov 3, 2025—an incremental capital return catalyst .
CFO flagged typical Q4 seasonality (fewer business days) and guided gross margin to ~82–84% for Q4, suggesting margin stability into year-end .

What Went Well and What Went Wrong

What Went Well

“Record-breaking quarter” across key metrics; management highlighted enterprise-wide AI initiatives and technology advantage driving innovation and efficiency .
Strong core activity with no meaningful one-time transactions; momentum broad-based across investigative, collections, financial/corporate risk, government, and emerging markets .
Customer and user growth continued: +304 IDI customers to 9,853 and +25,538 FOREWARN users to 372,209; over 590 REALTOR associations contracted on FOREWARN .

What Went Wrong

IDI real estate vertical (ex-FOREWARN) declined year-over-year due to affordability pressures from high home prices and interest rates .
Contractual revenue mix dipped to 75% (down 2pp YoY), reflecting higher transactional activity mix vs prior year .
Management cautioned Q4 seasonality likely limits sequential customer adds and drives lower transactional volumes; though gross margin is expected to remain ~82–84% .

Financial Results

Quarterly progression (oldest → newest)

Metric	Q1 2025	Q2 2025	Q3 2025
Revenue ($USD Millions)	$22.003	$21.774	$23.083
Diluted EPS (GAAP) ($USD)	$0.24	$0.18	$0.29
Adjusted Diluted EPS ($USD)	$0.33	$0.28	$0.39
Gross Margin % (GAAP)	72%	72%	73%
Adjusted Gross Margin %	83%	84%	84%
Adjusted EBITDA ($USD Millions)	$8.37	$7.60	$9.04
Adjusted EBITDA Margin %	38%	35%	39%
Net Income ($USD Millions)	$3.44	$2.69	$4.21
Net Income Margin %	16%	12%	18%
Cash from Operations ($USD Millions)	$5.00	$7.49	$10.17
Free Cash Flow ($USD Millions)	$2.48	$4.77	$7.29

YoY comparison (Q3 2024 vs Q3 2025)

Metric	Q3 2024	Q3 2025
Revenue ($USD Millions)	$19.057	$23.083
Diluted EPS (GAAP) ($USD)	$0.12	$0.29
Adjusted Diluted EPS ($USD)	$0.23	$0.39
Gross Margin % (GAAP)	70%	73%
Adjusted Gross Margin %	83%	84%
Adjusted EBITDA ($USD Millions)	$6.68	$9.04
Adjusted EBITDA Margin %	35%	39%
Net Income ($USD Millions)	$1.72	$4.21
Net Income Margin %	9%	18%

Actuals vs Wall Street Consensus (S&P Global)

Metric	Q1 2025	Q2 2025	Q3 2025
Revenue Consensus Mean ($USD)	$20.43M*	$21.45M*	$22.64M*
Revenue Actual ($USD)	$22.00M	$21.77M	$23.08M
Primary EPS Consensus Mean ($USD)	$0.23*	$0.28*	$0.31*
Adjusted Diluted EPS Actual ($USD)	$0.33	$0.28	$0.39
Primary EPS - # of Estimates	1*	1*	2*
Revenue - # of Estimates	1*	1*	2*

Values retrieved from S&P Global*.

KPIs

Metric	Q1 2025	Q2 2025	Q3 2025
IDI – Billable Customers (units)	9,241	9,549	9,853
FOREWARN – Users (units)	325,336	346,671	372,209
Contractual Revenue %	74%	77%	75%
Gross Revenue Retention %	96%	97%	96%

Note: RDVT does not disclose segment revenue tables; management provides qualitative vertical performance updates (investigative, collections, financial services, government, real estate) .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Gross Margin (%)	Q4 2025	N/A	~82–84%	Provided
IDI Customer Adds (sequential)	Q4 2025	N/A	Expect fewer than ~300 adds due to seasonality	Provided
Stock Repurchase Authorization ($)	Current	$15.0M	$30.0M	Raised
Stock Repurchase Remaining ($)	Current	N/A	$18.9M	N/A

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 2025)	Previous Mentions (Q2 2025)	Current Period (Q3 2025)	Trend
AI/technology initiatives	Emphasis on automation, AI-driven data lifecycle and identity graph	Continued machine learning, AI for margin and productivity	Enterprise-wide AI initiatives; workflow automation; proprietary data enrichment	Intensifying
Public sector traction	Early pipeline building; strong onboarding across verticals	Macro/gov’t budget tailwinds (“Big Beautiful Bill”) and pipeline conversion	Wins at state toll authority, departments of revenue, secretaries of state; replicable across states	Accelerating
Background screening / payroll processor	N/A	Contracted one of the largest payroll processors; testing with others	Confirmed multi-year contract; continued testing with large peers	Expanding
Collections vertical	Mid-single-digit headline; normalized mid-teens YoY when adjusted	High-teens YoY growth; recovery building	Momentum carried over; strong performance	Improving
Real estate (ex-FOREWARN)	Low single-digit decline due to affordability	Single-digit decline persists	Slight YoY decline continues amid affordability headwinds	Persistent headwind
Revenue mix & retention	Contractual 74%; retention 96%	Contractual 77%; retention 97%	Contractual 75%; retention 96%	Stable/high
Margin trajectory	Adjusted GM 83%; adj. EBITDA margin 38%	Adjusted GM 84%; adj. EBITDA margin 35%	Adjusted GM 84%; adj. EBITDA margin 39%; Q4 GM guided 82–84%	Stable to modest expansion

Management Commentary

“We are thrilled to report another record-breaking quarter, delivering new highs across all key financial metrics… enabling continued investment in… enterprise-wide AI initiatives” — Derek Dubner, CEO .
“Our Rule of 40 score notched an impressive 60%… We are using AI to advance multiple initiatives… will ultimately drive operational efficiency and translate to an even stronger margin profile” — Derek Dubner .
“Adjusted EBITDA… $9 million… Adjusted net income… $5.8 million… free cash flow… $7.3 million… contractually driven revenue 75%; gross revenue retention 96%” — Dan MacLachlan, CFO .

Q&A Highlights

Enterprise/public sector: Won a large state toll authority vs a major competitor; pipeline across departments of revenue and secretaries of state viewed as replicable across states; testing underway with multiple large payroll/background screening players .
FOREWARN strategy: Strong renewals, frequent use; considering feature enhancements and potential monetization on renewal, with pricing viewed as competitive today .
Seasonality and margins: Management expects fewer business days to temper transactional volumes and sequential customer adds in Q4; gross margin guided to ~82–84% .
Buybacks: Board and management view current share price as attractive within broader capital allocation, while prioritizing high-ROI business investment .

Estimates Context

Q3 2025 beat: Adjusted EPS $0.39 vs $0.31*, revenue $23.08M vs $22.64M* . Values retrieved from S&P Global*.
Prior quarters: Q1 beat (EPS $0.33 vs $0.23*; revenue $22.00M vs $20.43M*), Q2 in-line on EPS ($0.28 vs $0.28*) and slight revenue beat ($21.77M vs $21.45M*) . Values retrieved from S&P Global*.
FY 2025 consensus EPS stands at $1.155*, with Q3 execution and expanded repurchase authorization potentially supportive of upward estimate revisions. Values retrieved from S&P Global*.

Key Takeaways for Investors

Strong fundamental beat: Q3 adjusted EPS and revenue exceeded consensus with record margins and cash generation, absent one-time transactional boosts — a high-quality print .
Durable growth drivers: Broad-based vertical strength (investigative, collections, financial/corporate risk, government) and rising enterprise wins support sustained top-line momentum .
AI-enabled operating leverage: Ongoing automation and AI/data enrichment initiatives underpin margin expansion and scalability into 2026+ .
Capital return optionality: Authorization raised to $30.0M ($18.9M remaining), adding buyback firepower alongside robust free cash flow .
Near-term setup: Expect typical Q4 seasonality; margin guidance (~82–84% GM) signals stability despite fewer business days .
FOREWARN flywheel: User base and association count continue to climb; management evaluating feature add-ons and potential ARPU uplift on renewals .
Watch list: Real estate affordability headwind persists; contractual mix fluctuation manageable amid high gross revenue retention (96%) .

Additional Q3 Press Releases (context)

FOREWARN expansions announced with Salt Lake Board of REALTORS® (9,000+ members) and REALTOR® Alliance of Greater Cincinnati (5,000+ members), reinforcing adoption momentum .
PACMLS to offer FOREWARN to 1,800+ members (southeastern Washington), further broadening reach .

Red Violet, Inc. (RDVT)·Q3 2025 Earnings Summary