Red Violet (RDVT) AI Stock Analysis

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Red Violet

(NASDAQ:RDVT)

80Outperform

Red Violet's strong financial performance and positive earnings call results are the most significant factors supporting its stock score. While technical indicators show positive momentum, they also caution against potential overbought conditions. Valuation concerns due to a high P/E ratio dampen the score slightly, but the strategic board appointment is a positive corporate event. Overall, Red Violet is positioned well for growth with certain risks to monitor.

Red Violet (RDVT) vs. S&P 500 (SPY)

Market Cap

$643.09M

Dividend YieldN/A

Average Volume (3M)105.70K

Price to Earnings (P/E)76.1

Beta (1Y)1.02

Revenue Growth26.30%

EPS Growth-40.35%

CountryUS

Employees215

SectorTechnology

Sector Strength65

IndustrySoftware - Application

Share Statistics

EPS (TTM)0.33

Shares Outstanding13,955,918

10 Day Avg. Volume164,230

30 Day Avg. Volume105,698

Financial Highlights & Ratios

PEG Ratio-0.74

Price to Book (P/B)5.97

Price to Sales (P/S)0.00

P/FCF Ratio36.15

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$52.00

Price Target Upside12.85% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering1

Red Violet Business Overview & Revenue Model

Company DescriptionRed Violet, Inc., a software and services company, specializes in proprietary technologies and applying analytical capabilities to deliver identity intelligence in the United States. It offers idiCORE, an investigative solution used to address various organizational challenges, which include due diligence, risk mitigation, identity authentication, and regulatory compliance; and FOREWARN, an app-based solution that provides instant knowledge before face-to-face engagement with a consumer, as well as helps professionals to identify and mitigate risk. The company serves financial services, insurance, healthcare, retail, and telecommunication companies; law enforcement and government agencies; and collections, corporate security, and investigative firms, as well as solutions used for purposes, such as risk mitigation, due diligence, fraud detection and prevention, regulatory compliance, and customer acquisition. It markets its products and services through value-added distributors, resellers, and strategic partners; and trade shows and seminars, advertising, public relations, distribution of sales literature, and product specifications and ongoing communication with prospective customers, distributors, resellers, strategic partners, and installed base of current customers, as well as through direct sales. Red Violet, Inc. was incorporated in 2017 and is headquartered in Boca Raton, Florida.

How the Company Makes MoneyRed Violet generates revenue primarily through subscription and usage-based fees for access to its data analytics platform and services. The company's key revenue streams include sales to businesses in industries such as finance, insurance, and government, which utilize its solutions for identity verification, fraud detection, and risk management. Additionally, significant partnerships with major industry players enhance its earnings potential by expanding its reach and customer base.

Red Violet Financial Statement Overview

Summary

Red Violet exhibits a strong financial performance with significant revenue growth, improved profitability margins despite increased operational costs, and robust cash flow generation. The company maintains a low leverage position, enhancing financial stability.

Income Statement

Very Positive

Red Violet demonstrates strong revenue growth and profitability improvements. The gross profit margin increased significantly, reaching 81.39% in 2024, up from 78.28% in 2023, indicating efficient cost management. The net profit margin improved from 22.47% in 2023 to 9.31% in 2024, despite a slight decrease due to increased operational costs. EBIT and EBITDA margins also saw positive trends, reflecting enhanced operating performance.

Balance Sheet

Positive

The company maintains a robust financial position with a low debt-to-equity ratio of 0.02 in 2024, indicating minimal leverage. ROE decreased to 8.08% from 15.71% in 2023, largely due to a decrease in net income. The equity ratio remains strong at 87.94%, suggesting financial stability and low reliance on debt financing.

Cash Flow

Very Positive

Red Violet shows strong cash flow generation, with a substantial increase in free cash flow from $5.93 million in 2023 to $23.79 million in 2024, indicating effective cash management and investment strategies. The operating cash flow to net income ratio remains healthy, demonstrating efficient conversion of earnings into cash.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
75.19M	60.20M	53.32M	44.02M	34.59M
	Gross Profit
61.19M	47.13M	41.11M	32.83M	23.31M
	EBIT
7.92M	2.50M	361.00K	-3.49M	-6.83M
	EBITDA
17.48M	10.86M	596.00K	4.08M	-2.62M
	Net Income Common Stockholders
7.00M	13.53M	616.00K	655.00K	-6.79M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
36.50M	32.03M	31.81M	34.26M	12.96M
	Total Assets
98.53M	92.99M	77.41M	74.38M	51.99M
	Total Debt
2.00M	2.57M	1.29M	1.91M	4.61M
	Net Debt
-34.51M	-29.46M	-30.52M	-32.35M	-8.35M
	Total Liabilities
11.90M	6.88M	6.32M	4.95M	8.65M
	Stockholders Equity
86.63M	86.11M	71.09M	69.43M	43.34M
Cash Flow		Free Cash Flow
23.79M	5.92M	3.63M	3.70M	857.00K
	Operating Cash Flow
23.96M	15.07M	12.46M	8.95M	6.52M
	Investing Cash Flow
-9.57M	-9.15M	-8.83M	-5.24M	-5.66M
	Financing Cash Flow
-9.92M	-5.70M	-6.08M	17.60M	324.00K

Red Violet Technical Analysis

Technical Analysis Sentiment

Positive

Last Price46.08

Price Trends

50DMA

38.28

Positive

100DMA

37.80

Positive

200DMA

33.87

Positive

Market Momentum

MACD

1.86

Negative

RSI

74.09

Negative

STOCH

91.61

Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For RDVT, the sentiment is Positive. The current price of 46.08 is above the 20-day moving average (MA) of 39.34, above the 50-day MA of 38.28, and above the 200-day MA of 33.87, indicating a bullish trend. The MACD of 1.86 indicates Negative momentum. The RSI at 74.09 is Negative, neither overbought nor oversold. The STOCH value of 91.61 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for RDVT.

Red Violet Risk Analysis

Red Violet disclosed 32 risk factors in its most recent earnings report. Red Violet reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Red Violet Peers Comparison

Overall Rating

UnderperformOutperform

Sector (60)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
RDVT	80 Outperform	$643.09M	76.14	9.86%	―	26.30%	-40.35%
PUBM	74 Outperform	$559.19M	135.85	1.94%	―	3.62%	-53.21%
MITK	71 Outperform	$445.16M	34.55	6.11%	―	7.76%	―
RSKD	64 Neutral	$782.55M	―	-7.99%	―	10.05%	39.55%
Sector *	60 Neutral	$11.39B	10.50	-6.42%	2.97%	7.77%	-11.17%
PRCH	57 Neutral	$1.06B	―	75.95%	―	-6.81%	85.11%
LAW	48 Neutral	$243.84M	―	-33.75%	―	3.84%	-76.01%

* Technology Sector Average

Performance Comparison

RDVT

Red Violet

46.08

25.25

121.22%

MITK

Mitek Systems

9.77

-4.41

-31.10%

PRCH

Porch Group

10.59

7.82

282.31%

PUBM

PubMatic

11.52

-11.22

-49.34%

LAW

CS Disco

4.01

-2.75

-40.68%

RSKD

Riskified

4.84

-0.26

-5.10%

Red Violet Earnings Call Summary

Earnings Call Date:May 07, 2025

(Q1-2025)

% Change Since: 13.86%|

Next Earnings Date:Aug 06, 2025

Earnings Call Sentiment Positive

The earnings call highlighted significant growth in revenue, customer base, and vertical performance, along with strong cash flow and customer retention. However, there were some challenges, such as a decline in the real estate vertical, a decrease in the percentage of contractual revenue, and increased expenses. Despite these challenges, the overall performance and strategic initiatives indicate strong future potential.

Q1-2025 Updates

Positive Updates

Record-Breaking Revenue and Growth

Revenue for the quarter was up 26% to a record $22 million, producing a record adjusted gross profit of $18.3 million and a record adjusted gross margin of 83%. Adjusted EBITDA for the quarter was up 47% to a record $8.4 million, with a record adjusted EBITDA margin of 38%, up 6 percentage points. Adjusted net income increased 53% to a record $4.8 million, resulting in a record adjusted earnings of $0.33 per diluted share.

Increase in Customer Base

IDI billable customer base increased by 315 customers sequentially from the fourth quarter, ending the first quarter at 9,241 customers. Within FOREWARN, 21,918 users were added during the first quarter, ending the quarter with 325,336 users.

Strong Performance Across Verticals

Growth observed across IDI's verticals, with the emerging markets vertical delivering strong double-digit revenue growth and the investigative vertical driven by law enforcement growing sequentially since Q4 of 2021. Financial and corporate risk vertical showed strong double-digit revenue growth, and FOREWARN marked its 20th consecutive quarter of sequential revenue growth.

High Customer Retention

Gross revenue retention was 96% for the quarter, an increase of 3 percentage points over the prior year.

Strong Cash Flow and Dividends

Generated $5 million in cash from operating activities and $2.5 million in free cash flow in the first quarter. Paid out a special cash dividend of $0.30 per share, totaling $4.2 million.

Negative Updates

Decline in Real Estate Vertical

IDI's real estate vertical, excluding FOREWARN, declined by low single digits due to affordability issues of strong home prices and elevated interest rates.

Decrease in Contractual Revenue Percentage

Contractual revenue represented 74% of total revenue for the quarter, down 4 percentage points from the prior year due to $1.2 million in one-time transactional revenue.

Increase in Expenses

Sales and marketing expenses increased 46% to $5.4 million, and general and administrative expenses increased 7% to $6.2 million, both driven primarily by higher personnel-related expenses.

Company Guidance

During the first quarter of 2025, Red Violet demonstrated impressive financial performance with several record-setting metrics. The company's revenue increased by 26% year-over-year to $22 million, while adjusted gross profit rose 33% to $18.3 million, resulting in a record adjusted gross margin of 83%. Adjusted EBITDA surged 47% to $8.4 million, with an adjusted EBITDA margin reaching 38%, up 6 percentage points from the previous year. Adjusted net income saw a 53% increase, totaling $4.8 million, equating to $0.33 per diluted share. The IDI billable customer base grew by 315 sequentially, reaching 9,241 customers, while FOREWARN added 21,918 users, ending the quarter with 325,336 users. The company also reported strong cash generation, with $5 million in cash from operating activities and $2.5 million in free cash flow. Despite macroeconomic uncertainties, Red Violet's focus on innovation, efficiency, and strategic investment positions them well for continued growth and resilience through economic fluctuations.

Red Violet Corporate Events

Executive/Board ChangesBusiness Operations and Strategy

Red Violet Appoints Greg Strakosch to Board

Positive

Mar 5, 2025

On March 3, 2025, Peter Benz resigned from the Board of Directors of Red Violet, Inc. to pursue other business commitments, with no disagreements related to the company’s operations or policies. Greg Strakosch, a seasoned executive with a strong background in technology businesses, was appointed to fill the vacancy effective March 4, 2025. His appointment is expected to enhance Red Violet’s strategic initiatives and market presence.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.