RDVT 10-Q — Smart Summary

• Basis of preparation: The unaudited condensed consolidated financial statements are prepared under US GAAP; the condensed balance sheet as of December 31, 2025 was derived from audited financials included in the Form 10-K filed with the SEC on March 4, 2026, but does not include all disclosures required by US GAAP.
• ASU 2024-03 (expense disaggregation): FASB ASU No. 2024-03, issued November 2024, requires more detailed note disclosures of expense categories such as employee compensation, depreciation, and intangible asset amortization; effective for annual periods beginning after December 15, 2026 and interim periods beginning after December 15, 2027; the Company is currently evaluating the impact.
• ASU 2025-06 (internal-use software): FASB ASU No. 2025-06, issued September 2025, removes prescriptive project-stage guidance and instead requires capitalization when management has authorized and committed to funding and it is probable the project will be completed; effective for annual periods beginning after December 15, 2027, with prospective, modified, or retrospective transition permitted; the Company is currently evaluating the impact.
• ASU 2025-11 (interim reporting): FASB ASU No. 2025-11, issued December 2025, clarifies interim disclosure requirements under Topic 270; effective for interim periods within annual periods beginning after December 15, 2027; the Company is currently evaluating the impact.

Dilutive securities: For both the three months ended March 31, 2026 and 2025, diluted weighted average shares outstanding reflect the dilutive effect of certain unvested restricted stock units (RSUs), computed using the treasury stock method and contingently issuable share guidance.

• Intangible asset composition: As of March 31, 2026, net intangibles totaled $40.2M, comprising software developed for internal use (5–10 year amortization period; gross $89.5M, accumulated amortization ($51.4M), net $38.1M) and acquired intangible assets (10-year amortization period; gross $2.3M, accumulated amortization ($194,000), net $2.1M); acquired intangibles reflect the acquisition cost of certain data assets for which the Company has obtained perpetual usage rights.
• Not-yet-amortizing assets: As of March 31, 2026, $7.2M of intangible assets included in gross carrying amounts have not yet commenced amortization as they are not ready for their intended use.
• Amortization and capitalization activity: Amortization expense was $2.7M for the three months ended March 31, 2026 vs. $2.5M for the three months ended March 31, 2025; capitalized costs were $3.7M and $4M for the same respective periods, primarily consisting of eligible personnel-related expenses, share-based compensation, travel expenses, and other directly attributable costs incurred during the application development stage.
• Future amortization schedule: Estimated amortization expense totals $40.2M in aggregate: $8.3M for the remainder of 2026, $10.2M in 2027, $7.7M in 2028, $5.8M in 2029, $3.7M in 2030, and $4.4M in 2031 and thereafter.

• Goodwill balance: The $5.2M goodwill balance as of both March 31, 2026 and December 31, 2025 stems entirely from the acquisition of Interactive Data, LLC, a wholly-owned subsidiary of red violet, effective October 2, 2014, and has remained unchanged.
• Impairment status: No goodwill impairment loss was recorded during the three months ended March 31, 2026 and 2025, and there was no accumulated goodwill impairment loss as of March 31, 2026; the annual impairment test date is October 1.

• Revenue mix: For the three months ended March 31, 2026 and 2025, 75% and 74% of total revenue was attributable to customers with pricing contracts, respectively, versus 25% and 26% attributable to transactional customers, respectively; pricing contracts are generally annual or longer with auto renewal.
• Unbilled receivables: As of March 31, 2026, current and noncurrent portions of unbilled accounts receivable were $1,408 and $964, respectively (vs. $1,137 and $880 as of December 31, 2025), included within accounts receivable and other noncurrent assets on the condensed consolidated balance sheets.
• Deferred revenue: As of March 31, 2026 and December 31, 2025, deferred revenue balances were $956 and $1,028, respectively, all expected to be realized within 12 months; $440 of the December 31, 2025 balance was recognized into revenue during the three months ended March 31, 2026.
• Remaining performance obligations: As of March 31, 2026, $22,177 of revenue is expected to be recognized for unsatisfied or partially unsatisfied performance obligations on pricing contracts with terms exceeding 12 months, with $9,507 to be recognized in the remainder of 2026, $8,750 in 2027, $2,986 in 2028, $814 in 2029, and $120 in 2030 and thereafter.

• Effective tax rate: The Company's effective income tax rate was 24% for each of the three months ended March 31, 2026 and 2025, above the U.S. federal statutory rate of 21% primarily due to state income taxes and certain nondeductible expenses, partially offset by research and development tax credits and excess tax benefits related to share-based compensation.
• Deferred tax assets: Management concluded that realization of deferred tax assets as of March 31, 2026 was more likely than not, based on historical cumulative positive income before income taxes plus permanent differences, projections of future taxable income, and the reversal of taxable temporary differences.
• Unrecognized tax benefits: The Company does not have any material unrecognized tax benefits as of March 31, 2026 and December 31, 2025; all income tax filings remain open for examination due to net operating loss carryforwards since inception.

• Issued shares: As of March 31, 2026, issued shares of common stock totaled 14,112,391 (including 500 shares of treasury stock), down from 14,151,350 issued shares (with 0 treasury shares) as of December 31, 2025.
• RSU vesting: 34,659 shares were issued upon RSU vesting during the three months ended March 31, 2026; 10,618 shares were withheld for withholding taxes at a cost of $498,000, reflected as treasury stock and subsequently retired during the quarter.
• Share repurchases: Under the Stock Repurchase Program, 63,500 shares were repurchased at a cost of $2.7M during the three months ended March 31, 2026; 63,000 of those shares (cost of $2.7M) were retired during the quarter, leaving a treasury stock balance of $17,000 as of March 31, 2026.
• Repurchase program authorization: Originally authorized May 2, 2022, and subsequently amended on December 19, 2023, March 28, 2024, and November 3, 2025, bringing the total authorization to $30M; the program does not obligate any repurchases and may be modified, suspended, or terminated at the Board's discretion.

• 2018 Plan capacity: 7,500,000 shares are authorized under the 2018 Plan (increased from 6,500,000 on June 10, 2025), with 1,636,286 shares available for future issuance as of March 31, 2026; all awards to date have been RSUs.
• Service-based RSU activity: Unvested service-based RSUs decreased from 654,227 (weighted average grant-date fair value $34.41) at December 31, 2025 to 634,934 ($35.27) at March 31, 2026, after 22,657 granted at $42.39–$52.81 per share, 24,041 vested, 10,618 withheld as treasury stock, and 7,291 forfeited; unrecognized compensation expense on these awards is $18.1M to be recognized over a remaining weighted average period of 2.3 years.
• 2024 performance-based grant: 130,000 RSUs granted March 18, 2024 at $18.30 per share tied to revenue targets through December 31, 2030; 15,000 vested prior to December 31, 2025, and no expense has been recognized on 70,000 RSUs because achievement of the applicable 2024 Performance Criteria is not considered probable as of March 31, 2026.
• 2026 performance-based grant: 832,690 RSUs granted January 9, 2026 at $52.77 per share to key executive officers, vesting upon achievement of revenue and adjusted EBITDA margin targets on or prior to March 31, 2030; no expense has been recognized because the 2026 Performance Criteria are not probable as of March 31, 2026; total unrecognized expense across all performance-based awards is $45.6M, of which $360,000 (for the 45,000 probable shares) is expected to be recognized over 2.2 years.

Lease portfolio: The Company leases its corporate headquarters of 21,020 rentable square feet under a non-cancellable operating lease extended on September 20, 2023 through June 30, 2029 (with an option for a further 60-month extension), and entered into a new 80-month non-cancellable operating lease on December 20, 2024 for a Seattle office of 6,709 rentable square feet, commencing May 1, 2025 (replacing a prior 6,003 sq ft Seattle lease that expired March 2025).

• Lease cost and cash: Operating lease costs were $185,000 for the three months ended March 31, 2026 vs. $194,000 for the three months ended March 31, 2025; cash paid for operating leases was $128,000 vs. $201,000 for the same periods.
• Lease metrics: As of March 31, 2026, weighted average remaining operating lease term was 4.4 years and weighted average discount rate was 8.16%, compared to 4.6 years and 8.23% as of December 31, 2025.
• Lease liabilities: Total operating lease liabilities as of March 31, 2026 were $2.7M ($391,000 current, $2.3M noncurrent), against total undiscounted maturities of $3.2M, with a discount of $526,000.

• Single segment: The Company operates as a single operating and reportable segment called 'identity and information solutions' under ASC 280. There have been no significant changes in the basis of segmentation or measurement of segment profit since the last annual report.
• CODM definition: The chief operating decision maker (CODM) is a group consisting of the Chief Executive Officer, President, and Chief Financial Officer; segment performance is assessed based on net income as reported on the condensed consolidated statements of operations, and segment assets are measured as total assets on the condensed consolidated balance sheet.
• Acquisition-related costs: Professional fees for the three months ended March 31, 2026 included $259,000 of acquisition-related costs incurred in connection with due diligence of potential strategic targets; no such costs were incurred during the three months ended March 31, 2025.
• Cost of revenue footnote: Cost of revenue (exclusive of depreciation and amortization) includes certain personnel-related expenses and share-based compensation expense, which are not included in the related line items below it in the segment table.

Commitments

• Capital commitments ($39.8M as of March 31, 2026): Data licensing agreements and a five-year non-cancellable cloud services agreement ($3M minimum annual purchase beginning May 1, 2025); maturities: $7,578 (remainder 2026), $8,723 (2027), $8,039 (2028), $7,950 (2029), $5,973 (2030), $1,550 (2031).

Legal Proceedings

• Atlas Data Privacy Corporation et al. v. Company (filed February 7, 2024): Alleges failure to suppress home addresses and unpublished phone numbers within 10 business days under New Jersey's Daniel's Law; pending in Superior Court of New Jersey after remand (November 21, 2024); no trial date scheduled; insurer confirmed coverage subject to policy limits.

• Platform and brands: Red Violet operates a cloud-native, AI-embedded identity intelligence platform called CORE, marketed primarily through two brands — IDI (flagship product: idiCORE, serving financial services, insurance, healthcare, law enforcement, government, collections, and other industries) and FOREWARN (app-based, currently tailored for the real estate industry).
• Customer growth: As of March 31, 2026, IDI had 10,422 billable customers (vs. 9,241 as of March 31, 2025) and FOREWARN had 417,680 users (vs. 325,336 as of March 31, 2025).
• Revenue mix: For the three months ended March 31, 2026, 75% of total revenue was attributable to customers with pricing contracts and 25% to transactional customers, compared to 74% and 26%, respectively, for the three months ended March 31, 2025.
• Growth requirements: Management states that continued development of new products and expansion into additional markets will require generating and sustaining sufficient operating profits and cash flow, driven by additional sales from current and new products under development.

• IDI customer growth: Added 400 customers to IDI during the first quarter, ending the quarter with 10,422 customers.
• FOREWARN user growth: Added 27,662 users to FOREWARN during the first quarter, ending the quarter with 417,680 users; over 640 REALTOR® Associations throughout the U.S. are now contracted to use FOREWARN.
• Share repurchases: Purchased 73,250 shares of the Company's common stock year to date through April 30, 2026, at an average price of $41.90 per share pursuant to the Company's Stock Repurchase Program, with $15.6M remaining under the program as of April 30, 2026.

• Non-GAAP definitions: Adjusted EBITDA excludes interest income, income tax expense, depreciation and amortization, share-based compensation expense, acquisition-related costs, litigation costs, and write-off of long-lived assets from net income; adjusted net income applies the same exclusions (plus amortization of share-based compensation capitalized in intangible assets) and includes the tax effect of adjustments at an approximately 26.00% combined federal and state statutory rate; adjusted gross profit adds back depreciation and amortization of certain intangible assets (primarily amortization of capitalized internal-use software) to gross profit; FCF is net cash from operations less purchase of property and equipment and capitalized costs included in intangible assets.
• Methodology update: Beginning with the Form 10-K, the company updated its methodology for determining income tax effects of adjustments in calculating adjusted net income; prior-period amounts have been revised to conform to current methodology and presentation, with no effect on previously reported GAAP financial statements.
• Adjusted EBITDA: Rose from $8.4M in Q1 2025 to $10.7M in Q1 2026, with adjusted EBITDA margin expanding from 38% to 41% against revenue of $25.8M (2026) vs. $22M (2025).
• FCF: Increased from $2.5M to $3.1M year-over-year, with operating cash flow of $6.6M (2026) vs. $5M (2025) reduced by capitalized costs in intangible assets of $3.4M (2026) vs. $2.5M (2025) and property and equipment purchases of $63,000 (2026) vs. $50,000 (2025).

• Revenue growth: Revenue increased $3.8M, or 17%, to $25.8M for the three months ended March 31, 2026, compared to $22M for the same period in 2025, driven by volume expansion across the existing customer base, partially offset by a decrease in revenue from new customers.
• Customer cohort split: Revenue from existing customers (those past their seventh full calendar month) increased $4.6M, or 24%, to $23.7M, while revenue from new customers (first six full calendar months) decreased $800,000, or 28%, to $2.1M.
• Customer base growth: As of March 31, 2026, IDI billable customers grew to 10,422 (up from 9,241 a year earlier) and FOREWARN users grew to 417,680 (up from 325,336 a year earlier).

• Cost of revenue: Increased $100,000, or 4%, to $3.8M for the three months ended March 31, 2026, compared to $3.7M for the same period in 2025; as a % of revenue, declined to 15% from 17% due to the fixed-cost nature of the primary data licensing structure.
• Composition: Primarily data acquisition costs under flat-fee licensing agreements (including unlimited usage arrangements) and transactional purchases, plus cloud infrastructure fees and personnel-related costs including share-based compensation expense.
• Largest supplier concentration: The largest data supplier accounted for 46% of total data acquisition costs for the three months ended March 31, 2026 (vs. 43% for the same period in 2025); effective May 1, 2025, the company entered into an amendment extending that agreement through April 30, 2031.
• Forward view: Management expects cost of revenue as a % of revenue to continue to decline over time as revenue increases.

• Overall increase: Sales and marketing expenses increased $500,000, or 8%, to $5.9M for the three months ended March 31, 2026, compared to $5.4M for the same period in 2025, driven by continued investment in expanding go-to-market capabilities to support long-term revenue growth.
• Cost composition: For the three months ended March 31, 2026 and 2025, the expense base consisted primarily of personnel-related expenses of $4.7M and $4.6M, respectively; share-based compensation expense of $200,000 and $200,000, respectively; and advertising, marketing and agency expenses of $300,000 and $200,000, respectively.
• Category definition: Sales and marketing expenses include personnel-related expenses, advertising, marketing and agency expenses, travel expenses, share-based compensation expense incurred by the sales team, and provision for bad debts.

• Overall increase: General and administrative expenses increased $1.7M, or 28%, to $7.9M for the three months ended March 31, 2026, compared to $6.2M for the same period in 2025, driven by higher personnel-related expenses and share-based compensation expense to support continued growth.
• Personnel and comp: Personnel-related expenses were $4M (vs. $3.1M in 2025) and share-based compensation expense was $1.8M (vs. $1.4M in 2025).
• Professional fees: Professional fees were $1.5M (vs. $1.1M in 2025), including $300,000 of acquisition-related costs incurred in connection with the due diligence of potential strategic targets in the 2026 period, versus $0 in the prior-year period.

• D&A increase: Depreciation and amortization expenses increased $200,000, or 10%, to $2.8M for the three months ended March 31, 2026, compared to $2.6M for the same period in 2025, primarily driven by the amortization of intangible assets that became ready for their intended use after March 31, 2025.

Interest income: Interest income was $300,000 for each of the three months ended March 31, 2026 and 2025, primarily attributable to yields on money market fund investments.

• Income before income taxes: Increased $1.3M, or 28%, to $5.8M for the three months ended March 31, 2026, compared to $4.5M for the same period in 2025.
• Primary driver: An increase of $3.8M in revenue was the principal contributor to the improvement.
• Offsetting increases: The revenue gain was partially offset by an increase of $1M in personnel-related expenses, an increase of $500,000 in share-based compensation expense, an increase of $400,000 in professional fees, and an increase of $200,000 in depreciation and amortization expense.

• Income tax expense: Income tax expense was $1.4M for the three months ended March 31, 2026, compared to $1.1M for the same period in 2025, with the increase primarily attributable to higher pre-tax income; the effective tax rate remained consistent at 24% in both periods.
• Net income: Net income increased $1M, or 28%, to $4.4M for the three months ended March 31, 2026, compared to $3.4M for the same period in 2025.

• Inflation impact: Inflation has not had a material impact on financial results to date, though macroeconomic uncertainty and higher interest rates have continued to influence business sentiment, transaction volumes, pricing dynamics, and operating margins across services.
• Interest rate risk: Elevated interest rates implemented to curb inflation may reduce demand for credit, which could lead to lower usage of services by customers in banking, financial services, and adjacent industries.
• Mitigation actions: Where feasible, the company has implemented pricing adjustments where permitted under contract terms and competitive conditions to offset inflation-related cost increases.

• Operating cash flow, Q1 2026: Net cash provided by operating activities was $6.6M for the three months ended March 31, 2026, driven by net income of $4.4M and non-cash adjustments totaling $6.1M (including share-based compensation expense, depreciation and amortization, write-off of long-lived assets, provision for bad debts, noncash lease expenses, and deferred income tax expense), partially offset by a net use of cash of $4M from changes in operating assets and liabilities, primarily due to an increase in accounts receivable and a decrease in accrued expenses and other current liabilities.
• Operating cash flow, Q1 2025: Net cash provided by operating activities was $5M for the three months ended March 31, 2025, driven by net income of $3.4M and non-cash adjustments totaling $5.3M, partially offset by a net use of cash of $3.7M from changes in operating assets and liabilities, primarily due to an increase in accounts receivable and other noncurrent assets and a decrease in accrued expenses and other current liabilities.

Investing cash outflows: Net cash used in investing activities was $3.5M for the three months ended March 31, 2026, compared to $2.5M for the three months ended March 31, 2025, with both periods driven primarily by capitalized costs included in intangible assets.

• Q1 2026 financing outflows: Net cash used in financing activities was $3.2M for the three months ended March 31, 2026, comprised of $2.7M in common stock repurchases under the Stock Repurchase Program and $500,000 in taxes paid for net share settlement of vesting RSUs.
• Stock Repurchase Program: Originally authorized by the Board of Directors on May 2, 2022 and subsequently amended on December 19, 2023, March 28, 2024, and November 3, 2025, bringing the total authorization to $30M.
• Q1 2025 financing outflows: Net cash used in financing activities was $4.4M for the three months ended March 31, 2025, driven by a $4.2M special cash dividend (declared December 3, 2024 at $0.30 per share, paid February 14, 2025 to shareholders of record as of January 31, 2025) and $200,000 in RSU net share settlement taxes.

• Material commitments: As of March 31, 2026, commitments under data licensing agreements and a cloud service agreement totaled $39.8M.
• Funding outlook: Management expects to fund these commitments, as well as ongoing operating and capital requirements, using available cash on hand and cash flows generated from operations over the next twelve months.

• Net income and equity position: Net income was $4.4M for the three months ended March 31, 2026 (vs. $3.4M for the three months ended March 31, 2025), with total shareholders' equity of $104.5M and cash and cash equivalents of $43.5M as of March 31, 2026.
• Liquidity adequacy: Management believes existing resources will be sufficient to fund operations and expected capital expenditures for at least the next twelve months, based on projected growth in revenue and operating results and available cash on hand.
• Potential future capital needs: While the company anticipates funding operations through internally generated cash flows, future capital needs may arise from the pace of revenue growth, investment in technology, or strategic initiatives, potentially requiring additional capital through equity and/or debt securities issuances that could dilute existing stockholders or involve unfavorable terms.