Red Violet NASDAQ: RDVT reported record first-quarter 2026 results, highlighting revenue growth, expanding profitability, and strong new customer additions, as executives pointed to continued operating leverage in the company’s data and analytics platform and a growing opportunity set tied to artificial intelligence.
Record quarter driven by growth and margin expansion
Chairman and CEO Derek Dubner said the company delivered “record revenue, record margins, record EBITDA,” and one of its strongest quarters for new customer onboarding. Revenue rose 17% year-over-year to a record $25.8 million. Dubner and CFO Dan MacLachlan noted that the first quarter of 2025 included $1.2 million of one-time transactional revenue, meaning “the underlying growth this quarter is stronger than the headline suggests,” Dubner said.
On a non-GAAP basis, adjusted gross profit increased 20% to $22 million, producing a record adjusted gross margin of 85%. Adjusted EBITDA climbed 27% to $10.7 million, with a record adjusted EBITDA margin of 41%. Adjusted net income rose to $6.6 million, or $0.46 per diluted share, which management described as a quarterly high.
Cash generation also improved. Operating cash flow increased 32% to $6.6 million, and MacLachlan said free cash flow was $3.1 million, up 24% from $2.5 million a year earlier.
Crossing a $100 million revenue run rate milestone
MacLachlan emphasized that the quarter marked the company’s first time surpassing a $100 million annualized revenue run rate, based on quarterly revenue of $25.8 million. He referenced a framework Red Violet shared in March 2022, when the company’s annual run rate was about $45 million, adjusted gross margin was 75%, and adjusted EBITDA margin was 25%.
At that time, management said that at $100 million in annualized revenue, adjusted gross margin would exceed 80% and adjusted EBITDA margin would be 35% to 40%. “This quarter, we crossed that revenue threshold for the first time… We delivered adjusted gross margin of 85% and adjusted EBITDA margin of 41%,” MacLachlan said.
He added that, “At maturity, this business model is capable of adjusted gross margin in excess of 90% and adjusted EBITDA margins approaching 65%.” However, in response to a question from Lake Street Capital Markets analyst Eric Martinuzzi, MacLachlan declined to provide a timeline for reaching those levels, noting the company does not issue formal guidance and describing the 65% figure as a model output tied to scaling a “high fixed cost, low marginal cost platform.”
MacLachlan also said the company expects near-term adjusted EBITDA margins to “trend in the mid to high 30% range” as Red Violet invests in AI, product development, and go-to-market capabilities.
Customer growth and vertical performance
Management pointed to strong customer additions at its IDI business. Dubner said IDI added 400 new billable customers in the quarter—“one of the highest quarterly additions in our history”—bringing total customers to 10,422.
MacLachlan said growth within IDI was broad-based, with “particular strength in Financial and Corporate Risk and Investigative.” He described Financial and Corporate Risk as the fastest-growing vertical, with background screening “leading the way with exceptional growth,” benefiting from “targeted product development and go-to-market investments” over the past year. Financial services grew on “deeper customer integration and volume expansion,” and corporate risk and insurance also contributed, he said.
Investigative, MacLachlan added, posted “robust double-digit gains across every industry,” including law enforcement, private investigators, bail bonds, and process servers, with law enforcement continuing an “impressive trajectory.” He said the public sector is becoming a larger share of total revenue and that the company sees “significant runway ahead.”
Other vertical commentary included:
- Collections: MacLachlan said the “steady recovery” continued, with volume expansion as the industry works through elevated delinquency levels, which he called a “meaningful tailwind.”
- Emerging markets: He said underlying expansion was healthy, though year-over-year comparisons were affected because the prior-year one-time transactional revenue was concentrated in this vertical. He cited growth contributions from retail, government, legal, repossession, and marketing.
- IDI real estate (excluding FOREWARN): Modest growth and “signs of stabilization” after pressure from elevated rates and affordability constraints, with management still viewing the macro environment as a headwind.
At FOREWARN, Dubner said the platform grew to more than 417,000 users and had over 640 realtor associations under contract. MacLachlan said FOREWARN delivered “strong double-digit revenue expansion” and noted user growth from 325,000 a year ago to more than 417,000 exiting the quarter.
Across the company, MacLachlan said contractual revenue represented 75% of total revenue, up one percentage point from the prior year. Gross revenue retention was 95%, down one percentage point.
AI strategy and investment posture
Executives repeatedly framed AI as an accelerant to both product innovation and internal efficiency. Dubner said Red Violet’s “longitudinal identity graph” is foundational, enabling the company to generate “actionable signals, not just data outputs,” while AI enhances pattern recognition and speeds delivery of insights.
He also described AI as improving responsiveness and integration across customer workflows and said internal adoption is increasing across engineering, security, operations, and customer support. Within technology teams, Dubner said “development velocity has accelerated materially” through AI and agentic tools, allowing engineers to code, test, and deploy faster than before.
In response to a question from B. Riley Securities analyst Josh Nichols about agentic capabilities, Dubner said the company views AI as a “tailwind,” arguing that AI cannot replicate Red Violet’s data foundation. He described Red Violet as “cloud-native, AI-embedded from day one,” and said increased automation in customer workflows could drive higher usage in Red Violet’s volume-based model.
Share repurchases, expenses, and early view of Q2 momentum
Red Violet ended the quarter with $43.5 million in cash and cash equivalents, essentially flat with $43.6 million at the end of 2025. The company continued repurchasing shares, with Dubner and MacLachlan noting 73,250 shares were repurchased at an average price of $41.90 per share during the first quarter and through April 30, 2026. As of April 30, the company had $15.6 million remaining under its repurchase authorization.
On the expense side, MacLachlan said cost of revenue (excluding depreciation and amortization) increased 4% to $3.8 million, while sales and marketing expense rose 8% to $5.9 million, primarily due to higher personnel costs. General and administrative expense increased 28% to $7.9 million, driven by higher personnel costs and acquisition-related activity. Depreciation and amortization rose 10% to $2.8 million. GAAP net income was $4.4 million, up 28%.
Asked about seasonality and sequential expectations, MacLachlan said first quarters are typically strong for the company and reiterated that Red Violet does not provide formal guidance. He added that “April for the most part is closed” and described April as “just an extremely strong month,” saying the company was excited about performance heading into the rest of the year.
About Red Violet NASDAQ: RDVT
Red Violet, Inc NASDAQ: RDVT is a provider of advanced data, analytics and technology solutions designed to help organizations mitigate financial crime, fraud and security risks. The company’s cloud-native platform consolidates and enriches data from proprietary, public and third-party sources, applying artificial intelligence and machine learning to deliver insights across the risk-management lifecycle. Red Violet’s suite of services includes behavior-based transaction monitoring, automated watchlist and negative-news screening, enhanced due diligence and real-time geospatial threat intelligence.
Leveraging proprietary algorithms, Red Violet offers products that enable compliance teams to streamline anti-money laundering processes, improve fraud detection and respond swiftly to emerging threats.
Further Reading
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