UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(Mark One)
For the quarterly period ended
or
For the transition period from to
Commission file number
(Exact Name of Registrant as Specified in Its Charter)
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(State or Other Jurisdiction of Incorporation or Organization) |
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(I.R.S. Employer Identification No.) |
(Address of Principal Executive Offices) (Zip Code)
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(Registrant’s Telephone Number, Including Area Code)
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
Trading Symbol (s) |
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
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Accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ☐ No
As of May 5, 2025, the registrant had
RED VIOLET, INC.
TABLE OF CONTENTS FOR FORM 10-Q
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Item 1. |
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Condensed consolidated balance sheets as of March 31, 2025 and December 31, 2024 |
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1 |
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Condensed consolidated statements of operations for the three months ended March 31, 2025 and 2024 |
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2 |
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3 |
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Condensed consolidated statements of cash flows for the three months ended March 31, 2025 and 2024 |
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Item 2. |
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Management's Discussion and Analysis of Financial Condition and Results of Operations |
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13 |
Item 3. |
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21 |
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Item 4. |
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21 |
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Item 1. |
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22 |
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Item 1A. |
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Item 2. |
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Item 3. |
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Item 4. |
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Item 5. |
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Item 6. |
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23 |
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24 |
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PART I - FINANCIAL INFORMATION
Unless otherwise indicated or required by the context, all references in this Quarterly Report on Form 10-Q to “we,” “us,” “our,” “red violet,” or the “Company,” refer to Red Violet, Inc. and its consolidated subsidiaries.
Item 1. Financial Statements.
RED VIOLET, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share data)
(unaudited)
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March 31, 2025 |
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December 31, 2024 |
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ASSETS: |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Accounts receivable, net of allowance for doubtful accounts of $ |
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Prepaid expenses and other current assets |
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Total current assets |
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Property and equipment, net |
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Intangible assets, net |
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Goodwill |
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Right-of-use assets |
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Deferred tax assets |
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Other noncurrent assets |
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Total assets |
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$ |
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$ |
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LIABILITIES AND SHAREHOLDERS' EQUITY: |
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Current liabilities: |
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Accounts payable |
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$ |
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$ |
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Accrued expenses and other current liabilities |
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Current portion of operating lease liabilities |
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Deferred revenue |
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Dividend payable |
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Total current liabilities |
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Noncurrent operating lease liabilities |
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Other noncurrent liabilities |
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Total liabilities |
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Shareholders' equity: |
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Preferred stock—$ |
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Common stock—$ |
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Additional paid-in capital |
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Retained earnings (accumulated deficit) |
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( |
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Total shareholders' equity |
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Total liabilities and shareholders' equity |
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$ |
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$ |
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See notes to condensed consolidated financial statements.
1
RED VIOLET, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except share data)
(unaudited)
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Three Months Ended March 31, |
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2025 |
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2024 |
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Revenue |
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$ |
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$ |
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Costs and expenses: |
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Cost of revenue (exclusive of depreciation and amortization) |
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Sales and marketing expenses |
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General and administrative expenses |
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Depreciation and amortization |
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Total costs and expenses |
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Income from operations |
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Interest income |
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Income before income taxes |
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Income tax expense |
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Net income |
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$ |
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$ |
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Earnings per share: |
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Basic |
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$ |
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$ |
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Diluted |
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$ |
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$ |
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Weighted average shares outstanding: |
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Basic |
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Diluted |
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See notes to condensed consolidated financial statements.
2
RED VIOLET, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(Amounts in thousands, except share data)
(unaudited)
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Common stock |
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Treasury stock |
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Additional |
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Retained earnings |
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Shares |
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Amount |
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Shares |
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Amount |
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paid-in capital |
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(accumulated deficit) |
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Total |
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Balance at December 31, 2023 |
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$ |
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( |
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$ |
( |
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$ |
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$ |
( |
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$ |
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Vesting of restricted stock units |
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- |
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- |
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- |
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- |
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- |
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- |
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Increase in treasury stock resulting |
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- |
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- |
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( |
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( |
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- |
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- |
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( |
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Common stock repurchased |
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- |
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- |
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( |
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( |
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- |
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- |
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( |
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Retirement of treasury stock |
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( |
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- |
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( |
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- |
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- |
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Share-based compensation |
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- |
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- |
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- |
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- |
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- |
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Net income |
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- |
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- |
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- |
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- |
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- |
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Balance at March 31, 2024 |
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$ |
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( |
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$ |
( |
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$ |
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$ |
( |
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$ |
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Balance at December 31, 2024 |
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$ |
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- |
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$ |
- |
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$ |
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$ |
( |
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$ |
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Vesting of restricted stock units |
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- |
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- |
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- |
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- |
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- |
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- |
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Increase in treasury stock resulting |
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- |
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- |
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( |
) |
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( |
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- |
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- |
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( |
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Retirement of treasury stock |
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( |
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- |
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( |
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- |
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- |
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Share-based compensation |
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- |
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- |
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- |
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- |
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- |
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Net income |
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- |
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- |
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- |
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- |
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- |
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Balance at March 31, 2025 |
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$ |
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$ |
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$ |
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$ |
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$ |
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See notes to condensed consolidated financial statements.
3
RED VIOLET, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(unaudited)
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Three Months Ended March 31, |
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2025 |
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2024 |
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CASH FLOWS FROM OPERATING ACTIVITIES: |
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Net income |
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$ |
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$ |
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Adjustments to reconcile net income to net cash provided by operating activities: |
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Depreciation and amortization |
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Share-based compensation expense |
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Write-off of long-lived assets |
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Provision for bad debts |
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Noncash lease expenses |
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Deferred income tax expense |
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Changes in assets and liabilities: |
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Accounts receivable |
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( |
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( |
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Prepaid expenses and other current assets |
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( |
) |
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( |
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Other noncurrent assets |
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( |
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Accounts payable |
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( |
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Accrued expenses and other current liabilities |
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( |
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( |
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Deferred revenue |
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( |
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Operating lease liabilities |
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( |
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( |
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Net cash provided by operating activities |
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CASH FLOWS FROM INVESTING ACTIVITIES: |
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Purchase of property and equipment |
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( |
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( |
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Capitalized costs included in intangible assets |
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( |
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( |
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Net cash used in investing activities |
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( |
) |
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( |
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CASH FLOWS FROM FINANCING ACTIVITIES: |
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Taxes paid related to net share settlement of vesting of restricted stock units |
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( |
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( |
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Repurchases of common stock |
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( |
) |
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Dividend payable |
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( |
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Net cash used in financing activities |
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( |
) |
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( |
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Net (decrease) increase in cash and cash equivalents |
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$ |
( |
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$ |
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Cash and cash equivalents at beginning of period |
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Cash and cash equivalents at end of period |
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$ |
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$ |
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SUPPLEMENTAL DISCLOSURE INFORMATION: |
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Cash paid for interest |
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$ |
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$ |
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Cash paid for income taxes |
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$ |
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$ |
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Share-based compensation capitalized in intangible assets |
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$ |
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$ |
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Retirement of treasury stock |
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$ |
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$ |
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See notes to condensed consolidated financial statements.
4
RED VIOLET, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share data)
(unaudited)
1. Summary of significant accounting policies
(a) Basis of preparation
The accompanying unaudited condensed consolidated financial statements of Red Violet, Inc., a Delaware corporation, and its consolidated subsidiaries (collectively, “red violet” or the “Company”), have been prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (the “SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in annual financial statements prepared in accordance with US GAAP have been condensed or omitted pursuant to those rules and regulations.
The accompanying unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the financial position, results of operations, and cash flows for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for any future interim periods or for the full year ending December 31, 2025.
The information included in this quarterly report on Form 10-Q should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC on February 27, 2025 (“Form 10-K”).
The condensed consolidated balance sheet as of December 31, 2024 included herein was derived from the audited financial statements as of that date included in the Form 10-K, but does not include all disclosures required by US GAAP.
Principles of consolidation
The condensed consolidated financial statements include the financial statements of the Company and its subsidiaries. All significant transactions among the Company and its subsidiaries have been eliminated upon consolidation.
(b) Recently issued accounting standards
In December 2023, the Financial Accounting Standard Board (the “FASB”) issued Accounting Standard Updates (“ASU”) No. 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures (ASU 2023-09)," which improves the transparency of income tax disclosures by requiring consistent categories and greater disaggregation of information in the effective tax rate reconciliation and income taxes paid disaggregated by jurisdiction. It also includes certain other amendments to improve the effectiveness of income tax disclosures. This guidance will be effective for the annual periods beginning after December 31, 2024. Early adoption is permitted. Upon adoption, the guidance can be applied prospectively or retrospectively. The Company is currently evaluating the guidance to determine the impact on its condensed consolidated financial statements and related disclosures.
In November, 2024, the FASB issued ASU No. 2024-03, "Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-04), Disaggregation of Income Statement Expenses (ASU 2024-03)," which requires disclosure within the notes to financial statements of specific information about certain costs and expenses including more detailed disclosures of certain categories of expenses such as employee compensation, depreciation, and intangible asset amortization that are components of existing expense captions presented on the face of the income statement. The update is effective for annual periods for fiscal years beginning after December 15, 2026 and interim periods beginning after December 15, 2027 on a prospective or retrospective basis. Early adoption is permitted. The Company is currently assessing the impact adopting this ASU will have on its condensed consolidated financial statements.
2. Earnings per share
Basic earnings per share is computed by dividing net income by the weighted average number of shares of common stock outstanding during the periods. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock and is calculated using the treasury stock method for unvested shares.
5
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Three Months Ended March 31, |
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(In thousands, except share data) |
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2025 |
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2024 |
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Numerator: |
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Net income |
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$ |
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$ |
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Denominator: |
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Weighted average shares outstanding: |
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Basic |
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Diluted(1) |
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Earnings per share: |
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Basic |
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$ |
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$ |
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Diluted |
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$ |
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$ |
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3. Intangible assets, net
Intangible assets other than goodwill consist of the following:
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March 31, 2025 |
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December 31, 2024 |
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(In thousands) |
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Amortization |
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Gross amount |
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Accumulated amortization |
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Net |
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Gross amount |
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Accumulated amortization |
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Net |
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Software developed for internal use |
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$ |
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$ |
( |
) |
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$ |
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$ |
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$ |
( |
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$ |
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Acquired intangible assets |
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( |
) |
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- |
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- |
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- |
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Total |
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$ |
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$ |
( |
) |
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$ |
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$ |
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$ |
( |
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$ |
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Amortization expenses of $
The Company capitalized costs of intangible assets of $
As of March 31, 2025, estimated amortization expense related to the Company’s intangible assets for the remainder of 2025 through 2030 and thereafter are as follows:
(In thousands) |
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Year |
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March 31, 2025 |
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Remainder of 2025 |
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2026 |
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2027 |
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2028 |
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2029 |
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2030 and thereafter |
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Total |
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$ |
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4. Goodwill
Goodwill represents the cost in excess of the fair value of the net assets acquired in a business combination. As of March 31, 2025 and December 31, 2024, the balance of goodwill of $
6
In accordance with ASC 350, “Intangibles - Goodwill and Other,” goodwill is tested at least annually for impairment, or when events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable, by assessing qualitative factors or performing a quantitative analysis in determining whether it is more likely than not that its fair value exceeds the carrying value. The measurement date of the Company’s annual goodwill impairment test is
The Company did
5. Revenue recognition
The Company recognized revenue in accordance with ASC 606, “Revenue from Contracts with Customers” (“Topic 606”). Under this standard, revenue is recognized when control of goods or services is transferred to the Company’s customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. The Company’s performance obligation is to provide on demand information and identity intelligence solutions to its customers by leveraging its proprietary technology and applying machine learning and advanced analytics to its massive data repository. The pricing for the customer contracts is based on usage, a monthly fee, or a combination of both.
Available within Topic 606, the Company has applied the portfolio approach practical expedient in accounting for customer revenue as one collective group, rather than individual contracts. Based on the Company’s historical knowledge of the contracts contained in this portfolio and the similar nature and characteristics of the customers, the Company has concluded the financial statement effects are not materially different than if accounting for revenue on a contract by contract basis.
Revenue is recognized over a period of time. The Company’s customers simultaneously receive and consume the benefits provided by the Company’s performance as and when provided. Furthermore, the Company has elected the “right to invoice” practical expedient, available within Topic 606, as its measure of progress, since it has a right to payment from a customer in an amount that corresponds directly with the value of its performance completed-to-date. In some arrangements, a right to consideration for the Company's performance under the customer contract may occur before invoicing to the customer, resulting in an unbilled accounts receivable. As of March 31, 2025, the current and noncurrent portion unbilled accounts receivable of $
For the three months ended March 31, 2025 and 2024,
If a customer pays consideration before the Company transfers services to the customer, those amounts are classified as deferred revenue. As of March 31, 2025 and December 31, 2024, the balance of deferred revenue was $
As of March 31, 2025, $
Sales commissions are incurred and recorded on an ongoing basis over the term of the customer relationship. These costs are recorded in sales and marketing expenses.
In addition, the Company elected the practical expedient to not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which the Company recognizes revenue at the amount to which it has the right to invoice for services performed.
7
6. Income taxes
The Company is subject to federal and state income taxes in the United States. The Company’s tax provision for interim periods is determined using an estimate of its annual effective tax rate, adjusted for discrete items arising in that quarter, unless a reliable estimate of ordinary income or the related tax expense/benefit cannot be made or the Company is in cumulative losses for which the benefit cannot be realized. In each quarter, the Company updates its estimate of the annual effective tax rate, and if its estimated annual tax rate changes, the Company makes a cumulative adjustment in that quarter. During the third quarter of 2023, the Company released the valuation allowance previously recorded on its deferred tax assets. The Company concluded that, due to its established historical cumulative positive income before income taxes plus permanent differences for the recent years, projections of future taxable income, and the reversal of taxable temporary differences, the realization of deferred tax assets as of March 31, 2025 was more likely than not.
The Company’s effective income tax rate was
The Company assesses its income tax positions and records tax benefits for all years subject to examination based upon its evaluation of the facts, circumstances and information available at the reporting date. For those tax positions where it is more-likely-than-not that a tax benefit will be sustained, the Company has recorded the largest amount of tax benefit with a
The Company continually evaluates expiring statutes of limitations, audits, proposed settlements, changes in tax law and new authoritative rulings. Due to the existence of net operating loss carryforwards since inception, all of the Company’s income tax filings remain open for tax examinations.
The Company does
7. Shareholders' equity
Common stock and treasury stock
As of March 31, 2025 and December 31, 2024, the number of issued shares of common stock was
Dividend
On December 3, 2024, the Company declared a special cash dividend on its common stock of $
8. Share-based compensation
On March 22, 2018, the Board of Directors of the Company and Cogint, Inc. (“cogint”) (now known as Fluent, Inc.), in its capacity as sole stockholder of the Company prior to the Company’s spin-off from cogint on March 26, 2018 (the “Spin-off”), approved the Red Violet, Inc. 2018 Stock Incentive Plan (the “2018 Plan”), which became effective immediately prior to the Spin-off. A total of
8
The primary purpose of the 2018 Plan, as amended, is to attract, retain, reward and motivate certain individuals by providing them with an opportunity to acquire or increase a proprietary interest in the Company and to incentivize them to expend maximum effort for the growth and success of the Company, so as to strengthen the mutuality of the interests between such individuals and the stockholders of the Company.
As of March 31, 2025, there were
To date, all stock incentives issued under the 2018 Plan, as amended, have been in the form of RSUs. RSUs granted under the 2018 Plan, as amended, vest and settle upon the satisfaction of a time-based condition or with both time- and performance-based conditions. The time-based condition for these awards is generally satisfied over three or four years with annual vesting.
|
|
Number of units |
|
|
Weighted average |
|
||
Unvested as of December 31, 2024 |
|
|
|
|
$ |
|
||
Granted(1) |
|
|
|
|
$ |
|
||
Vested and delivered |
|
|
( |
) |
|
$ |
|
|
Withheld as treasury stock(2) |
|
|
( |
) |
|
$ |
|
|
Forfeited |
|
|
( |
) |
|
$ |
|
|
Unvested as of March 31, 2025 |
|
|
|
|
$ |
|
||
As of March 31, 2025, unrecognized share-based compensation expense associated with the granted RSUs amounted to $
Share-based compensation was allocated to the following accounts in the condensed consolidated financial statements for the three months ended March 31, 2025 and 2024:
|
|
Three Months Ended March 31, |
|
|||||
(In thousands) |
|
2025 |
|
|
2024 |
|
||
Sales and marketing expenses |
|
$ |
|
|
$ |
|
||
General and administrative expenses |
|
|
|
|
|
|
||
Share-based compensation expense |
|
|
|
|
|
|
||
Capitalized in intangible assets |
|
|
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
||
9. Leases
The Company leases its corporate headquarters of
On December 20, 2024, the Company entered into a non-cancellable 80-month operating lease agreement for its new Seattle office space of
For the three months ended March 31, 2025 and 2024, a summary of the Company’s lease information is shown below:
|
|
Three Months Ended March 31, |
|
|||||
(In thousands) |
|
2025 |
|
|
2024 |
|
||
Lease cost: |
|
|
|
|
|
|
||
Operating lease costs |
|
$ |
|
|
$ |
|
||
Other information: |
|
|
|
|
|
|
||
Cash paid for operating leases |
|
$ |
|
|
$ |
|
||
9
As of March 31, 2025, the weighted average remaining operating lease term was
As of March 31, 2025, scheduled future maturities and present value of the operating lease liabilities are as follows:
(In thousands) |
|
|
|
|
Year |
|
March 31, 2025 |
|
|
Remainder of 2025 |
|
|
|
|
2026 |
|
|
|
|
2027 |
|
|
|
|
2028 |
|
|
|
|
2029 |
|
|
|
|
2030 and thereafter |
|
|
|
|
Total maturities |
|
$ |
|
|
Less: Lease not yet commenced(1) |
|
|
|
|
Total maturities, excluding lease not yet commenced |
|
$ |
|
|
Present value included in consolidated balance sheet: |
|
|
|
|
Current portion of operating lease liabilities |
|
$ |
|
|
Noncurrent operating lease liabilities |
|
|
|
|
Total operating lease liabilities |
|
$ |
|
|
Difference between the maturities, excluding lease not yet commenced, and |
|
$ |
|
|
(1)
10. Segment information
The Company currently has one single operating and reporting segment, identity and information solutions, as defined by ASC 280, “Segment Reporting.” The Company adopted ASU 2023-07 as of December 31, 2024. There have been no significant changes in the basis of segmentation or in the basis of measurement of segment profit since the last annual report.
The Company’s chief operating decision maker (the “CODM”) assesses performance for the identity and information solutions segment and decides how to allocate resources based on net income that also is reported on the condensed consolidated statements of operations as net income. The measure of segment assets is reported on the condensed consolidated balance sheet as total assets.
10
Information about reported segment revenue, segment net income, and significant segment expenses is shown as follows:
|
|
Three Months Ended March 31, |
|
|||||
(Dollars in thousands) |
|
2025 |
|
|
2024 |
|
||
Revenue |
|
$ |
|
|
$ |
|
||
Less: |
|
|
|
|
|
|
||
Cost of revenue (exclusive of depreciation and amortization) |
|
|
|
|
|
|
||
Personnel-related expenses |
|
|
|
|
|
|
||
Advertising, marketing and agency expenses |
|
|
|
|
|
|
||
Provision for bad debts |
|
|
|
|
|
|
||
Share-based compensation expense |
|
|
|
|
|
|
||
Occupancy expenses |
|
|
|
|
|
|
||
Professional fees |
|
|
|
|
|
|
||
Other segment items(1) |
|
|
|
|
|
|
||
Depreciation and amortization |
|
|
|
|
|
|
||
Interest income |
|
|
( |
) |
|
|
( |
) |
Income tax expense |
|
|
|
|
|
|
||
Segment net income |
|
$ |
|
|
$ |
|
||
Consolidated net income |
|
$ |
|
|
$ |
|
||
(1) Other segment items included in segment net income includes primarily travel and entertainments, acquisition costs, write-off of long-lived assets, and other selling, general and administrative expenses.
11. Commitments and contingencies
(a) Capital commitment
The Company incurred data costs of $
(In thousands) |
|
|
|
|
Year |
|
March 31, 2025 |
|
|
Remainder of 2025 |
|
$ |
|
|
2026 |
|
|
|
|
2027 |
|
|
|
|
2028 |
|
|
|
|
Total |
|
$ |
|
|
In April 2025, the Company entered into a
(b) Contingencies
Other than as described below, the Company is not currently a party to any legal proceeding, investigation or claim which, in the opinion of management, is likely to have a material adverse effect on the business, financial condition, results of operations, or cash flows. Legal fees associated with such legal proceedings are expensed as incurred. The Company reviews legal proceedings and claims on an ongoing basis and follow appropriate accounting guidance, including ASC 450, when making accrual and disclosure decisions. The Company establishes accruals for those contingencies where the incurrence of a loss is probable and can be reasonably estimated, and it discloses the amount accrued and the amount of a reasonably possible loss in excess of the amount accrued, if such disclosure is necessary for its financial statements to not be misleading. To estimate whether a loss contingency should be accrued by a charge to income, the Company evaluates, among other factors, the degree of probability of an unfavorable outcome and the ability to make a reasonable estimate of the amount of the loss. The Company does not record liabilities when the likelihood that the liability has been incurred is probable, but the amount cannot be reasonably estimated.
11
On
The Company is one of over 150 companies sued by Atlas and a combination of individual plaintiffs in actions containing nearly identical allegations and seeking similar damages. The Company removed the matter to the United States District Court for the District of New Jersey, but the matter was remanded back to the Superior Court of New Jersey, Law Division, Monmouth County by order dated November 21, 2024, where the Action is pending. No trial date has been scheduled. Each plaintiff and Atlas seek to recover actual damages that are not less than liquidated damages under Daniel’s Law, punitive damages, pre- and post-judgment interest, attorneys’ fees and costs and injunctive relief. The Company is vigorously defending itself in the Action. Should the case be tried, an adverse ruling could have an immediate near-term impact on the Company's business, financial position, and/or operations. The Company has notified its insurer of the Action and has confirmed that the claim falls within the scope of its insurance coverage. As such, the Company anticipates that the insurer will cover defense costs and any potential liability, subject to policy limits and customary exclusions.
In addition to the foregoing, the Company may be involved in litigation from time to time in the ordinary course of business. The Company does not believe that the ultimate resolution of any such matters will have a material adverse effect on its business, financial condition, results of operations or cash flows. However, the results of such matters cannot be predicted with certainty and the Company cannot assure you that the ultimate resolution of any legal or administrative proceeding or dispute will not have a material adverse effect on its business, financial condition, results of operations and cash flows.
12
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
You should read the following discussion and analysis in conjunction with our condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q (“Form 10-Q”). This Form 10-Q contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (“PSLRA”), Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), about our expectations, beliefs, or intentions regarding our business, financial condition, results of operations, strategies, or prospects. You can identify forward-looking statements by the fact that these statements do not relate strictly to historical or current matters. Rather, forward-looking statements relate to anticipated or expected events, activities, trends, or results as of the date they are made. Because forward-looking statements relate to matters that have not yet occurred, these statements are inherently subject to risks and uncertainties that could cause our actual results to differ materially from any future results expressed or implied by the forward-looking statements. Many factors could cause our actual activities or results to differ materially from the activities and results anticipated in forward-looking statements. These factors include those contained in this Form 10-Q, as well as the disclosures made in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 filed on February 27, 2025 (“Form 10-K”), and other filings we make with the Securities and Exchange Commission (the "SEC"). We do not undertake any obligation to update forward-looking statements, except as required by law. We intend that all forward-looking statements be subject to the safe harbor provisions of PSLRA. These forward-looking statements are only predictions and reflect our views as of the date they are made with respect to future events and financial performance.
References in this discussion and analysis to “we,” “us,” “our,” “red violet,” or the “Company,” refer to Red Violet, Inc. and its consolidated subsidiaries.
Overview
Red Violet, Inc., a Delaware corporation, is dedicated to making the world a safer place and reducing the cost of doing business. We build proprietary technologies and apply analytical capabilities to deliver identity intelligence. Our technology powers critical solutions, which empower organizations to operate with confidence. Our solutions enable the real-time identification and location of people, businesses, assets, and their interrelationships. These solutions are used for purposes including identity verification, risk mitigation, due diligence, fraud detection and prevention, regulatory compliance, and customer acquisition. Our AI/ML-driven identity intelligence platform, CORETM, is purpose-built for the enterprise, yet flexible enough for organizations of all sizes, bringing clarity to massive datasets by transforming data into intelligence. We drive workflow efficiency and enable organizations to make better data-driven decisions.
Organizations are challenged by the structure, volume, and disparity of data. Our platform and applications provide real-time analytics, transforming the way our customers interact with information by presenting connections and relevance of information otherwise unattainable, which drives actionable insights and better outcomes. Leveraging cloud-native proprietary technology and applying machine learning and advanced analytical capabilities, CORE provides essential solutions to public and private sector organizations through intuitive, easy-to-use analytical interfaces. With massive data assets consisting of public record, proprietary, and publicly-available data, our differentiated information and innovative platform and solutions deliver identity intelligence – entities, relationships, affiliations, interactions, and events. Our solutions are used today to enable frictionless commerce, to ensure safety, and to reduce fraud and the concomitant expense borne by society.
While our platform powers a vast array of solutions for our customers, we presently market our solutions primarily through two brands, IDI™ and FOREWARN®. IDI is a leading-edge, analytics and information solutions provider delivering actionable intelligence to an expansive and diverse set of industries in support of use cases such as the verification and authentication of consumer identities, due diligence, prevention of fraud and abuse, legislative compliance, and debt recovery. idiCORE™ is IDI's flagship product. idiCORE is a next-generation, investigative solution used to address a variety of organizational challenges, including, but not limited to, due diligence, risk mitigation, identity authentication, and regulatory compliance, by financial services companies, insurance companies, healthcare companies, law enforcement and government, identity verification platforms, collections, law firms, retail, telecommunication companies, corporate security, and investigative firms. FOREWARN is an app-based solution currently tailored for the real estate industry, providing instant knowledge prior to face-to-face engagement with a consumer, helping professionals identify and mitigate risk. As of March 31, 2025 and 2024, IDI had 9,241 and 8,241 billable customers, respectively, and FOREWARN had 325,336 and 236,639 users, respectively. We define a billable customer of IDI as a single entity that generated revenue during the last three months of the period. Billable customers are typically corporate organizations. In most cases, corporate organizations will have multiple users and/or departments purchasing our solutions, however, we count the entire organization as a discrete customer. We define a user of FOREWARN as a unique person that has a subscription to use the FOREWARN service as of the last day of the period. A unique person can only have one user account.
13
We generate substantially all of our revenue from licensing our solutions. Customers access our solutions through a hosted environment using an online interface, batch processing, API and custom integrations. We recognize revenue from licensing fees (a) on a transactional basis determined by the customer’s usage, (b) via a monthly fee or (c) from a combination of both. Revenue pursuant to pricing contracts containing a monthly fee is recognized ratably over the contract period. Pricing contracts are generally annual contracts or longer, with auto renewal. For the three months ended March 31, 2025 and 2024, 74% and 78% of total revenue was attributable to customers with pricing contracts, respectively, versus 26% and 22% attributable to transactional customers, respectively.
We endeavor to understand our customers’ needs at the moment of first engagement. We continuously engage with our customers and evaluate their usage of our solutions throughout their life cycle, to maximize utilization of our solutions and, hence, their productivity. Our go-to-market strategy leverages (a) an inside sales team that cultivates relationships, and ultimately closes business, with their end-user markets, (b) a strategic sales team that provides a more personal, face-to-face approach for major accounts within certain industries, and (c) distributors, resellers, and strategic partners that have a significant foothold in many of the industries that we have not historically served, as well as to further penetrate those industries that we do serve. We employ a “land and expand” approach. Our sales model generally begins with a free trial followed by an initial purchase on a transactional basis or minimum-committed monthly spend. As organizations derive benefits from our solutions, we are able to expand within organizations as additional use cases are presented across departments, divisions and geographic locations and customers become increasingly reliant on our solutions in their daily workflow.
In order for us to continue to develop new products, grow our existing business and expand into additional markets, we must generate and sustain sufficient operating profits and cash flow in future periods. This will require us to generate additional sales from current products and new products currently under development. We continue to build out our sales organization to drive current products and to introduce new products into the marketplace.
Critical Accounting Policies and Estimates
Management’s discussion and analysis of financial condition and results of operations are based upon our condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”). The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to the revenue recognition, allowance for doubtful accounts, useful lives of intangible assets, recoverability of the carrying amounts of goodwill and intangible assets, share-based compensation, and income tax provision. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
For additional information, please refer to our Form 10-K. There have been no material changes to Critical Accounting Policies and Estimates disclosed in our Form 10-K.
Recently issued accounting standards
See Note 1(b), “Recently issued accounting standards,” in “Notes to Condensed Consolidated Financial Statements.”
First Quarter Financial Results
For the three months ended March 31, 2025 as compared to the three months ended March 31, 2024:
14
First Quarter and Recent Business Highlights
Use and Reconciliation of Non-GAAP Financial Measures
Management evaluates the financial performance of our business on a variety of key indicators, including non-GAAP metrics of adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted earnings per share, adjusted gross profit, adjusted gross margin, and free cash flow ("FCF"). Adjusted EBITDA is a non-GAAP financial measure equal to net income, the most directly comparable financial measure based on US GAAP, excluding interest income, income tax expense, depreciation and amortization, share-based compensation expense, litigation costs, and write-off of long-lived assets and others. We define adjusted EBITDA margin as adjusted EBITDA as a percentage of revenue. Adjusted net income is a non-GAAP financial measure equal to net income, the most directly comparable financial measure based on US GAAP, adjusted to exclude share-based compensation expense, and amortization of share-based compensation capitalized in intangible assets, and to include the tax effect of adjustments. We define adjusted earnings per share as adjusted net income divided by the weighted average shares outstanding. We define adjusted gross profit as gross profit plus depreciation and amortization of certain intangible assets, and adjusted gross margin as adjusted gross profit as a percentage of revenue. We define FCF as net cash provided by operating activities reduced by purchase of property and equipment and capitalized costs included in intangible assets.
The following is a reconciliation of net income, the most directly comparable US GAAP financial measure, to adjusted EBITDA:
|
|
Three Months Ended March 31, |
|
|||||
(Dollars in thousands) |
|
2025 |
|
|
2024 |
|
||
Net income |
|
$ |
3,440 |
|
|
$ |
1,784 |
|
Interest income |
|
|
(308 |
) |
|
|
(365 |
) |
Income tax expense |
|
|
1,079 |
|
|
|
564 |
|
Depreciation and amortization |
|
|
2,550 |
|
|
|
2,270 |
|
Share-based compensation expense |
|
|
1,596 |
|
|
|
1,402 |
|
Litigation costs |
|
|
9 |
|
|
|
27 |
|
Write-off of long-lived assets and others |
|
|
2 |
|
|
|
7 |
|
Adjusted EBITDA |
|
$ |
8,368 |
|
|
$ |
5,689 |
|
Revenue |
|
$ |
22,003 |
|
|
$ |
17,511 |
|
|
|
|
|
|
|
|
||
Net income margin |
|
|
16 |
% |
|
|
10 |
% |
Adjusted EBITDA margin |
|
|
38 |
% |
|
|
32 |
% |
15
The following is a reconciliation of net income, the most directly comparable US GAAP financial measure, to adjusted net income:
|
|
Three Months Ended March 31, |
|
|||||
(Dollars in thousands, except share data) |
|
2025 |
|
|
2024 |
|
||
Net income |
|
$ |
3,440 |
|
|
$ |
1,784 |
|
Share-based compensation expense |
|
|
1,596 |
|
|
|
1,402 |
|
Amortization of share-based compensation |
|
|
409 |
|
|
|
275 |
|
Tax effect of adjustments(1) |
|
|
(613 |
) |
|
|
(308 |
) |
Adjusted net income |
|
$ |
4,832 |
|
|
$ |
3,153 |
|
Earnings per share: |
|
|
|
|
|
|
||
Basic |
|
$ |
0.25 |
|
|
$ |
0.13 |
|
Diluted |
|
$ |
0.24 |
|
|
$ |
0.13 |
|
Adjusted earnings per share: |
|
|
|
|
|
|
||
Basic |
|
$ |
0.35 |
|
|
$ |
0.23 |
|
Diluted |
|
$ |
0.33 |
|
|
$ |
0.22 |
|
Weighted average shares outstanding: |
|
|
|
|
|
|
||
Basic |
|
|
13,998,028 |
|
|
|
13,997,064 |
|
Diluted |
|
|
14,491,713 |
|
|
|
14,164,506 |
|
(1) The tax effect of adjustments is calculated using the expected federal and state statutory tax rate. The expected federal and state income tax rate was approximately 26.00% and 25.75% for the three months ended March 31, 2025 and 2024, respectively.
The following is a reconciliation of gross profit, the most directly comparable US GAAP financial measure, to adjusted gross profit:
|
|
Three Months Ended March 31, |
|
|||||
(Dollars in thousands) |
|
2025 |
|
|
2024 |
|
||
Revenue |
|
$ |
22,003 |
|
|
$ |
17,511 |
|
Cost of revenue (exclusive of depreciation and amortization) |
|
|
(3,661 |
) |
|
|
(3,756 |
) |
Depreciation and amortization related to cost of revenue |
|
|
(2,500 |
) |
|
|
(2,214 |
) |
Gross profit |
|
|
15,842 |
|
|
|
11,541 |
|
Depreciation and amortization of certain intangible assets(1) |
|
|
2,452 |
|
|
|
2,214 |
|
Adjusted gross profit |
|
$ |
18,294 |
|
|
$ |
13,755 |
|
|
|
|
|
|
|
|
||
Gross margin |
|
|
72 |
% |
|
|
66 |
% |
Adjusted gross margin |
|
|
83 |
% |
|
|
79 |
% |
(1) Depreciation and amortization of certain intangible assets primarily consists of the amortization of capitalized internal-use software development costs, which are included within intangible assets and amortized over their estimated useful lives.
The following is a reconciliation of net cash provided by operating activities, the most directly comparable US GAAP financial measure, to FCF:
|
|
Three Months Ended March 31, |
|
|||||
(Dollars in thousands) |
|
2025 |
|
|
2024 |
|
||
Net cash provided by operating activities |
|
$ |
5,001 |
|
|
$ |
4,305 |
|
Less: |
|
|
|
|
|
|
||
Purchase of property and equipment |
|
|
(50 |
) |
|
|
(65 |
) |
Capitalized costs included in intangible assets |
|
|
(2,469 |
) |
|
|
(2,327 |
) |
Free cash flow |
|
$ |
2,482 |
|
|
$ |
1,913 |
|
16
In order to assist readers of our consolidated financial statements in understanding the operating results that management uses to evaluate the business and for financial planning purposes, we present non-GAAP measures of adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted earnings per share, adjusted gross profit, adjusted gross margin, and FCF as supplemental measures of our operating performance. We believe they provide useful information to our investors as they eliminate the impact of certain items that we do not consider indicative of our cash operations and ongoing operating performance. In addition, we use them as an integral part of our internal reporting to measure the performance and operating strength of our business.
We believe adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted earnings per share, adjusted gross profit, adjusted gross margin, and FCF are relevant and provide useful information frequently used by securities analysts, investors and other interested parties in their evaluation of the operating performance of companies similar to ours and are indicators of the operational strength of our business. We believe adjusted EBITDA eliminates the uneven effect of considerable amounts of non-cash depreciation and amortization, share-based compensation expense, and the impact of other non-recurring items, providing useful comparisons versus prior periods or forecasts. Adjusted EBITDA margin is calculated as adjusted EBITDA as a percentage of revenue. We believe adjusted net income provides additional means of evaluating period-over-period operating performance by eliminating certain non-cash expenses and other items that might otherwise make comparisons of our ongoing business with prior periods more difficult and obscure trends in ongoing operations. Adjusted net income is a non-GAAP financial measure equal to net income, adjusted to exclude share-based compensation expense, and amortization of share-based compensation capitalized in intangible assets, and to include the tax effect of adjustments. We define adjusted earnings per share as adjusted net income divided by the weighted average shares outstanding. Our adjusted gross profit is a measure used by management in evaluating the business’s current operating performance by excluding the impact of prior historical costs of assets that are expensed systematically and allocated over the estimated useful lives of the assets, which may not be indicative of the current operating activity. We define adjusted gross profit as gross profit plus depreciation and amortization of certain intangible assets. We believe adjusted gross profit provides useful information to our investors by eliminating the impact of certain non-cash depreciation and amortization, and primarily the amortization of software developed for internal use, providing a baseline of our core operating results that allow for analyzing trends in our underlying business consistently over multiple periods. Adjusted gross margin is calculated as adjusted gross profit as a percentage of revenue. We believe FCF is an important liquidity measure of the cash that is available, after capital expenditures, for operational expenses and investment in our business. FCF is a measure used by management to understand and evaluate the business’s operating performance and trends over time. FCF is calculated by using net cash provided by operating activities, less purchase of property and equipment and capitalized costs included in intangible assets.
Adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted earnings per share, adjusted gross profit, adjusted gross margin, and FCF are not intended to be performance measures that should be regarded as an alternative to, or more meaningful than, financial measures presented in accordance with US GAAP. In addition, FCF is not intended to represent our residual cash flow available for discretionary expenses and is not necessarily a measure of our ability to fund our cash needs. The way we measure adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted earnings per share, adjusted gross profit, adjusted gross margin, and FCF may not be comparable to similarly titled measures presented by other companies, and may not be identical to corresponding measures used in our various agreements.
Results of Operations
Three months ended March 31, 2025 compared to three months ended March 31, 2024
Revenue
Revenue increased $4.5 million, or 26%, to $22.0 million for the three months ended March 31, 2025, compared to $17.5 million for the same period in 2024. The increase was driven by strong onboarding of new customers and stable recurring revenue from our existing customer base.
Revenue from new customers represents total monthly revenue generated from customers during their first six full calendar months of revenue contribution. Revenue from existing customers represents total monthly revenue generated from customers beginning in their seventh full calendar month of revenue contribution.
Beginning in the first quarter of 2025, we consolidated our prior base revenue and growth revenue categories into a single revenue from existing customers metric to provide a more streamlined and meaningful view of ongoing customer contribution.
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As of March 31, 2025, our IDI billable customer base increased to 9,241 customers, up from 8,241 customers a year earlier. Our FOREWARN user base increased to 325,336 users, up from 236,639 users a year earlier.
Cost of revenue (exclusive of depreciation and amortization)
Cost of revenue (exclusive of depreciation and amortization) decreased $0.1 million, or 3%, to $3.7 million for the three months ended March 31, 2025, compared to $3.8 million for the same period in 2024.
Our cost of revenue primarily consists of data acquisition costs, which includes the cost to acquire data under flat-fee licensing agreements, including unlimited usage arrangements, as well as purchases on a transactional basis. We continue to enhance the breadth and depth of our data by the addition and expansion of relationships with key data suppliers, including our largest data supplier, which accounted for 43% and 41% of our total data acquisition costs for the three months ended March 31, 2025 and 2024, respectively.
Additional components of our cost of revenue include cloud infrastructure fees and pertinent personnel-related costs.
Due to the fixed-cost nature of our primary data licensing structure, cost of revenue as a percentage of revenue decreased to 17% for the three months ended March 31, 2025, compared to 21% for the same period in 2024. We expect this percentage to continue to decline over time as our revenue increases.
Sales and marketing expenses
Sales and marketing expenses increased $1.7 million, or 46%, to $5.4 million for the three months ended March 31, 2025, compared to $3.7 million for the same period in 2024. The increase reflects our continued investment in expanding our go-to-market capabilities to support long-term revenue growth.
Sales and marketing expenses include personnel-related expenses, advertising, marketing and agency expenses, travel expenses, and share-based compensation expense incurred by our sales team, and provision for bad debts.
The increase was primarily driven by:
General and administrative expenses
General and administrative expenses increased $0.4 million, or 7%, to $6.2 million for the three months ended March 31, 2025, compared to $5.8 million for the same period in 2024. The increase reflects higher personnel-related expenses and share-based compensation expense to support the continued growth of the business.
For the three months ended March 31, 2025 and 2024, general and administrative expenses consisted primarily of:
Depreciation and amortization
Depreciation and amortization expenses increased $0.3 million, or 12%, to $2.6 million for the three months ended March 31, 2025, compared to $2.3 million for the same period in 2024.
The increase was primarily driven by the amortization of intangible assets that became ready for their intended use after March 31, 2024.
Interest income
Interest income decreased $0.1 million, or 16%, to $0.3 million for the three months ended March 31, 2025, compared to $0.4 million for the same period in 2024.
The decrease was primarily attributable to lower yields on money market fund investments during the quarter.
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Income before income taxes
Income before income taxes increased $2.2 million, or 92%, to $4.5 million for the three months ended March 31, 2025, compared to $2.3 million for the same period in 2024.
The increase was primarily driven by:
partially offset by:
Income tax expense
Income tax expense was $1.1 million for the three months ended March 31, 2025, compared to $0.6 million for the same period in 2024.
The increase in income tax expense was primarily attributable to higher pre-tax income, as the Company’s effective tax rate remained consistent at 24% in both periods.
For additional information, refer to Note 6, “Income taxes,” in the “Notes to Condensed Consolidated Financial Statements.”
Net income
Net income increased $1.6 million, or 93%, to $3.4 million for the three months ended March 31, 2025, compared to $1.8 million for the same period in 2024, as a result of the foregoing.
Effect of Inflation
We believe that persistent inflationary pressures throughout 2024 and into the first quarter of 2025 have contributed to a more challenging macroeconomic environment, increasing recessionary concerns and prompting some businesses to moderate discretionary spending. These conditions have resulted in — and may continue to contribute to — fluctuations in transaction volumes, pricing dynamics, and operating margins across our services.
In addition, elevated interest rates implemented to curb inflation may reduce the demand for credit, which could in turn lead to lower usage of our services by customers in the banking, financial services, and adjacent industries.
Despite these broader market dynamics, inflation has not had a material impact on our financial results to date. Where feasible, we have taken proactive steps to mitigate inflation-related cost increases, including implementing pricing adjustments where permitted under contract terms and competitive conditions.
Liquidity and Capital Resources
Cash flows provided by operating activities
For the three months ended March 31, 2025, net cash provided by operating activities was $5.0 million. This was primarily driven by:
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For the three months ended March 31, 2024, net cash provided by operating activities was $4.3 million. This was primarily driven by:
Cash flows used in investing activities
For the three months ended March 31, 2025 and 2024, net cash used in investing activities was $2.5 million and $2.4 million, respectively, primarily as a result of capitalized costs included in intangible assets.
Cash flows used in financing activities
For the three months ended March 31, 2025, net cash used in financing activities was $4.4 million. This was primarily driven by:
On December 3, 2024, we declared a special cash dividend of $0.30 per share on our common stock to shareholders of record as of January 31, 2025. The dividend, totaling $4.2 million, was paid on February 14, 2025.
For the three months ended March 31, 2024, net cash used in financing activities was $1.8 million. This was primarily driven by:
The Stock Repurchase Program was originally authorized by the Board of Directors on May 2, 2022, permitting repurchases of up to $5.0 million of the Company’s common stock. On December 19, 2023, and again on March 28, 2024, the Board approved additional authorizations of $5.0 million each, expanding the total program size.
Commitments
As of March 31, 2025, we had material commitments under certain data licensing agreements totaling $11.5 million.
We expect to fund these commitments, as well as our ongoing operating and capital requirements, using available cash on hand and cash flows generated from operations over the next twelve months.
Capital Resources
We reported net income of $3.4 million and $1.8 million for the three months ended March 31, 2025 and 2024, respectively. As of March 31, 2025, we had total shareholders’ equity of $91.8 million and cash and cash equivalents of $34.6 million.
Based on our projected growth in revenue and operating results over the next twelve months, and the available cash on hand, we believe that our existing resources will be sufficient to fund operations and expected capital expenditures for at least the next twelve months.
While we anticipate continuing to fund our business through internally generated cash flows, future capital needs may arise based on the pace of revenue growth, investment in technology, or strategic initiatives. In such cases, we may seek to raise additional capital through the issuance of equity and/or debt securities. However, any such financing, if available, could result in dilution to existing stockholders and may involve terms that are not favorable to the Company.
Off-Balance Sheet Arrangements
As of March 31, 2025, we did not have any off-balance sheet arrangements, as defined in Item 303 of Regulation S-K.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk.
As a smaller reporting company as defined in Rule 12b-2 of the Exchange Act, we are not required to include information required by this item.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d–15(e) of the Exchange Act) as of March 31, 2025. We maintain disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure.
Based on the evaluation of disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act), the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of March 31, 2025.
Changes in Internal Control Over Financial Reporting
There were no changes in the Company’s internal control over financial reporting identified in connection with management's evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act during the quarter ended March 31, 2025 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Limitations on Effectiveness of Controls and Procedures and Internal Control over Financial Reporting
In designing and evaluating the disclosure controls and procedures and internal control over financial reporting, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures and internal control over financial reporting must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
Information with respect to certain legal proceedings is included in Note 11, “Commitments and contingencies,” included in “Notes to Condensed Consolidated Financial Statements” contained in Part I, Item 1 of this Form 10-Q, and is incorporated herein by reference.
Item 1A. Risk Factors.
There have been no material changes to the risk factors previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC on February 27, 2025.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Issuer Purchases of Equity Securities
On May 2, 2022, the Board of Directors of the Company authorized the Stock Repurchase Program to repurchase the Company's common stock from time to time, which was subsequently amended on each of December 19, 2023 and March 28, 2024. The Stock Repurchase Program does not obligate the Company to repurchase any shares and it may be modified, suspended, or terminated at any time and for any reason at the discretion of the board of directors.
The Company did not repurchase any common stock during the three months ended March 31, 2025 pursuant to the Stock Repurchase Program, and the approximate dollar value of shares that may yet be purchased under the Stock Repurchase Program is $4.6 million.
Shares of common stock withheld as payment of withholding taxes in connection with the vesting of equity awards are also treated as common stock repurchases. Those withheld shares of common stock are not required to be disclosed under Item 703 of Regulation S-K and accordingly are excluded from the amounts mentioned above.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not Applicable.
Item 5. Other Information.
Rule 10b5-1 Trading Plans
No officers or directors had any contract, instruction, or written plan for the purchase or sale of our securities that was intended to satisfy the affirmative defense conditions of
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Item 6. Exhibits.
The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.
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Incorporated by Reference |
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Exhibit Description |
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File No. |
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Filing Date |
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Herewith |
31.1 |
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31.2 |
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32.1* |
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32.2* |
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101.INS |
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Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
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101.SCH |
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Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents. |
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104 |
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Cover Page Interactive Data File (embedded within the Inline XBRL document). |
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* This certification is deemed furnished and not filed for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
May 7, 2025 |
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Red Violet, Inc. |
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By: |
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/s/ Daniel MacLachlan |
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Daniel MacLachlan |
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Chief Financial Officer |
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(Principal Financial and Accounting Officer) |
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