Release Date: May 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Record quarterly revenue of $17.5 million, a 20% increase over the previous year, showcasing strong business growth.
- Record adjusted EBITDA of $5.7 million, up 54% from the previous year, indicating improved profitability.
- Significant customer base growth with IDI adding 366 new customers and FOREWARN adding over 51,000 users, the largest quarterly increase in history.
- Strong cash generation with $4.3 million from operating activities, a 181% increase from the same period in 2023.
- Strategic investments in technology and market expansion are paying off, leading to enhanced product offerings and go-to-market capabilities.
Negative Points
- Increased cost of revenue by $0.6 million or 18% due to higher data acquisition costs, impacting overall cost efficiency.
- A slight decrease in FOREWARN's real estate vertical revenue, down a few percentage points.
- General and administrative expenses increased by $0.6 million or 10%, primarily due to higher professional fees.
- Depreciation and amortization costs rose by $0.4 million or 18%, reflecting higher expenses related to internally developed software.
- Despite overall growth, the gross revenue retention percentage slightly decreased to 93% from 94% the previous year.
Q & A Highlights
Q: Can you provide more details on the strength seen in IDI, particularly regarding customer growth and potential for $100,000-plus annual revenue accounts?
A: Derek Dubner, CEO of Red Violet, highlighted strong activity within IDI across various sectors, especially in legal and law enforcement. The company's AI/ML-powered platform and consumer identity graph have driven robust activity and strong volumes from identity verification platforms. Dan MacLachlan, CFO, added that the first quarter saw about 10 additional customers reaching the $100,000 revenue cohort, with significant potential for future growth across newly added quality logos.
Q: What are the expectations for FOREWARN's subscriber growth trajectory, considering recent wins?
A: Daniel MacLachlan, CFO, expects continued acceleration in FOREWARN's market expansion into 2024 and 2025. With over 425 realtor associations contracted and significant potential in the market of approximately 1.6 million realtors under the National Association of Realtors, there's substantial room for growth in user numbers.
Q: Given the recent return to double-digit growth, do you expect the collections business to continue growing this year?
A: Daniel MacLachlan expressed optimism about the collections vertical, noting strong signs and good volume continuing into April. While cautious, the expectation is for a healthy performance in the next few quarters, with significant growth potential as consumer financial pressures persist.
Q: Can you discuss the overall market sentiment and the impact of your marketing efforts on business growth?
A: Derek Dubner noted positive market sentiment across the verticals served by Red Violet, with increased interest in the company's differentiated solutions. The company has also ramped up its marketing efforts over the past year, which has significantly improved market awareness and contributed positively to business growth.
Q: How has the financial performance in Q1 2024 compared to previous quarters?
A: Daniel MacLachlan reported that Q1 2024 saw record revenues and adjusted EBITDA, with revenue growing by 20% year-over-year to $17.5 million. Adjusted EBITDA was up 54% from the previous year, and adjusted net income increased by 36%. These results reflect strong volume growth and efficient execution across the company's operations.
Q: What strategic investments has Red Violet made, and what are the expectations for these investments moving forward?
A: Derek Dubner explained that Red Violet has invested in technology, product development, and market expansion, which have all started to pay off, as evidenced by the strong financial performance. The company plans to continue these investments, aiming to enhance its product suite and go-to-market capabilities, thereby driving further growth and shareholder value.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
