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Red Violet, Inc. (RDVT)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered record revenue of $19.6M (+30% YoY), record adjusted gross profit ($16.1M, 82% margin), and adjusted EBITDA of $4.5M (23% margin); GAAP diluted EPS was $0.06 as the company defied typical Q4 seasonality .
  • Customer metrics were strong: IDI billable customers +183 QoQ to 8,926; FOREWARN users +18,451 QoQ to 303,418; gross revenue retention improved to 96% and contractual revenue was 77% .
  • Capital allocation included a $0.30/share special cash dividend ($4.2M) paid Feb 14, 2025 and no Q4 buybacks (remaining authorization ~$4.6M) .
  • Management highlighted momentum into 2025, targeting adjusted EBITDA margins “consistent” with ~31% FY 2024 while reiterating a long-term 40% adjusted EBITDA margin bogey at ~$100M revenue; Street estimates were unavailable via S&P Global due to access limits .

What Went Well and What Went Wrong

What Went Well

  • Record Q4 revenue and profitability metrics despite historical Q4 seasonality; CEO: “record revenue in the fourth quarter…we defied the historic seasonality we typically experience” .
  • Broad-based growth across IDI verticals, led by Financial & Corporate Risk; Investigative (law enforcement) achieved its 12th consecutive quarter of sequential revenue growth; FOREWARN marked its 19th consecutive quarter of sequential growth .
  • KPI strength: IDI customers +183 QoQ; FOREWARN +18,451 users QoQ; gross revenue retention up to 96%, evidencing durable demand and customer stickiness .

What Went Wrong

  • Contractual revenue mix declined to 77% (down 5pp YoY), reflecting higher transactional revenues—this adds volatility to revenue composition .
  • Elevated OpEx: sales & marketing +40% YoY to $4.9M; G&A +21% YoY to $8.3M, driven primarily by personnel-related expenses, which tempered margin expansion vs prior quarters .
  • No explicit numeric guidance provided, limiting near-term visibility; management framed FY25 adjusted EBITDA margins as “consistent” with FY24 rather than raising margin targets .

Financial Results

Revenue, EPS, Profitability (YoY and QoQ comparisons; periods oldest → newest)

MetricQ4 2023Q2 2024Q3 2024Q4 2024
Revenue ($USD Millions)$15.061 $19.056 $19.057 $19.565
GAAP Diluted EPS ($)($0.08) $0.19 $0.12 $0.06
Adjusted EPS ($, Diluted)$0.02 $0.28 $0.22 $0.09
Gross Margin (%)64% 70% 70% 70%
Adjusted Gross Margin (%)78% 82% 83% 82%
Adjusted EBITDA ($USD Millions)$2.663 $6.811 $6.678 $4.468
Adjusted EBITDA Margin (%)18% 36% 35% 23%
Net Income ($USD Millions)($1.070) $2.637 $1.719 $0.863
Net Income Margin (%)(7%) 14% 9% 4%

Cash Flow and Balance Sheet Highlights

MetricQ4 2023Q2 2024Q3 2024Q4 2024
Cash from Operating Activities ($USD Millions)$4.204 $5.717 $7.247 $6.691
Free Cash Flow ($USD Millions)$2.077 $3.254 $4.832 $4.394
Cash & Cash Equivalents ($USD Millions)$32.032 $30.943 $35.747 $36.504

KPIs

KPIQ4 2023Q2 2024Q3 2024Q4 2024
IDI – Billable Customers7,875 8,477 8,743 8,926
FOREWARN – Users185,380 263,876 284,967 303,418
Contractual Revenue (%)82% 74% 77% 77%
Gross Revenue Retention (%)92% 94% 94% 96%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted EBITDA Margin (Company view)FY 2025N/A numeric“Consistent with ~31% FY 2024” Maintained trajectory (no raise)
Long-term Adj. EBITDA Margin TargetLT at ~$100M Rev40% bogey40% bogey reiterated Maintained
Special Cash DividendPaid Feb 14, 2025N/A$0.30/share; total ~$4.2M New action (paid)
Share Repurchase AuthorizationOngoingRemaining $4.6MRemaining ~$4.6M; no Q4 purchases Maintained

Note: No explicit numeric revenue/EPS guidance ranges were provided for Q1/Q2/Q4 2025 in the press release or call .

Earnings Call Themes & Trends

TopicQ2 2024 (Prior-2)Q3 2024 (Prior-1)Q4 2024 (Current)Trend
AI & technology initiativesEmphasis on cloud-native CORE, product roadmap, differentiated search; hiring for public sector and product/infrastructure teams Continued investment; record gross margins; verticalized law enforcement; geospatial/search differentiation Native cloud advantage; expanding owned data assets; deep learning, transformers for fraud signals; LLM/NLP to enhance user interaction Expanding AI scope and platform differentiation
Law enforcement traction10th consecutive sequential revenue growth; brand building and team additions 11th consecutive; strong Investigative vertical 12th consecutive; wins against entrenched competitors Strengthening
Collections verticalReturned to double-digit growth; cautious optimism 3rd consecutive double-digit growth; recovery signs 4th consecutive double-digit growth; expected meaningful contributor in 2025 Improving
FOREWARN penetration17th consecutive sequential growth; >490 associations 18th consecutive; >500 associations 19th consecutive; >525 associations; exploring other industries Broadening reach
Contractual vs transactional mixContractual down to 74% due to one-time transactional revenue Contractual at 77% (down YoY) Contractual at 77% (down YoY) Mix more transactional than prior year
Macro/tariffs/macro backdropFavorable environment; consumer bifurcation supporting verification/KYC and collections demand Expect favorable macro to continue barring unforeseen events Momentum and pipeline noted; no specific macro shift Stable-favorable
Go-to-market scalingAdded 10 S&M hires; moving up-market (enterprise/public) Added 13 more team members; pipeline stronger than ever Continued ROI from hires; 2025 hiring consistent with 2024; focus on strategic sellers Continued investment with ROI emerging

Management Commentary

  • “Record revenue in the fourth quarter…we defied the historic seasonality we typically experience during that quarter.” — Derek Dubner, CEO .
  • “Our platform was architected natively in the cloud…foundational advantage grants unrivaled scalability, agility, and ability to innovate rapidly.” — Derek Dubner .
  • “We will continue investment in our AI initiatives…training transformer models to detect fraud indicators…utilizing large language models…to provide novel ways of interacting with our solutions.” — Derek Dubner .
  • “Adjusted EBITDA margin was 31% for the year…we are well-positioned to sustain this momentum well into the future.” — Dan MacLachlan, CFO .

Q&A Highlights

  • Growth durability: Management expects momentum to carry into 2025, citing stronger brand awareness, pipeline, and new products/functionality; focus on consistent execution .
  • New vs existing customers: Larger-tier customers provide greater “land and expand” opportunities; 2025 should see more expansion within the existing base alongside new wins .
  • Sales & marketing investments: 2025 investments will be consistent with 2024; ROI from midyear 2024 hires is materializing; late-2024 hires expected to ramp over coming months .
  • Product roadmap: Account monitoring, KYB, extended search functionality, expanded mobile app for law enforcement; AI to improve detection of patterns/anomalies and NLP-based user experiences .
  • Margin framework: Long-term adjusted EBITDA margin bogey of ~40% at $100M revenue reiterated; 2025 adjusted EBITDA margins expected to be “consistent” with FY 2024 (~31%) amid ongoing investments .

Estimates Context

  • Wall Street consensus (S&P Global) for Q4 2024 EPS and revenue was unavailable due to access limits; therefore, formal beat/miss analysis versus consensus cannot be provided at this time. Values retrieved from S&P Global (unavailable due to request limit) [GetEstimates attempt].

Key Takeaways for Investors

  • Q4 2024 was a quality print: record revenue, strong non-GAAP profitability, and improved retention metrics despite a lower contractual revenue mix — the company bucked Q4 seasonality, a positive narrative driver .
  • Growth breadth matters: multiple IDI verticals are contributing, with particularly strong contributions from Financial & Corporate Risk, Investigative (law enforcement), and a recovering Collections vertical, supporting durability into 2025 .
  • FOREWARN remains a compounder with expanding TAM beyond real estate, sustaining its multi-year streak of sequential growth and offering optionality .
  • Operating leverage is intact, but near-term margins will likely be “consistent” with FY 2024 (~31% adj. EBITDA) as management continues to invest in go-to-market, product, and infrastructure .
  • Strategic capital returns: the special dividend ($0.30/share) and remaining buyback authorization (~$4.6M) provide shareholder-return support alongside record cash generation .
  • AI-native platform differentiation and expanded proprietary data assets should deepen competitive moats and support premium margins over time; watch for product milestones (KYB, monitoring, NLP/LLM interactions) .
  • With consensus estimates unavailable, watch for subsequent updates from the Street; given the mix shift and investments, models may need to balance near-term margin consistency with sustained double-digit top-line growth.