Red Violet, Inc. (RDVT) - Q2 2026 10-Q Summary
Business Context and Reporting Period
This report covers the quarterly period ended June 30, 2026. Red Violet, Inc. is a provider of identity intelligence solutions, operating primarily through two brands: IDI (enterprise analytics) and FOREWARN (real estate risk mitigation). The company is classified as a non-accelerated filer and a smaller reporting company.
Key Financial Metrics
| Metric | Q2 2026 (3 Months) | Q2 2025 (3 Months) | YTD 2026 (6 Months) | YTD 2025 (6 Months) |
|---|---|---|---|---|
| Revenue | $26.7 million | $21.8 million | $52.5 million | $43.8 million |
| Gross Margin | 76% | 72% | 75% | 72% |
| Net Income | $5.0 million | $2.7 million | $9.3 million | $6.1 million |
| Diluted EPS | $0.34 | $0.18 | $0.65 | $0.42 |
| Operating Cash Flow | $10.6 million | $7.5 million | $17.2 million | $12.5 million |
| Free Cash Flow | $7.2 million | $4.8 million | $10.3 million | $7.3 million |
| Cash & Equivalents | $50.0 million (as of June 30, 2026) | |||
| Total Debt | $0 (No long-term debt reported) |
Material Changes vs. Prior Period
- Revenue Growth: Revenue increased 23% year-over-year in Q2 2026, driven by strong onboarding of new customers and volume expansion among existing clients. IDI billable customers grew to 10,869, and FOREWARN users reached 443,173.
- Profitability Expansion: Net income surged 85% to $5.0 million in Q2 2026. Net income margin improved to 19% from 12% in the prior year period.
- Expense Management: Cost of revenue as a percentage of revenue decreased to 14% (from 16%) due to the fixed-cost nature of primary data licensing agreements. General and administrative expenses rose 14% primarily due to higher personnel and share-based compensation costs.
- Capital Allocation: The company repurchased 74,500 shares of common stock YTD 2026 for approximately $3.1 million. Share-based compensation expense increased to $4.3 million YTD 2026 from $3.4 million in the prior year.
Outlook, Risks, and Unusual Items
- Subsequent Event (Capital Raise): On August 7, 2026, the company closed an underwritten public offering of 1,916,667 shares at $60.00 per share, raising approximately $108.6 million in net proceeds. Proceeds are intended for working capital and strategic acquisitions.
- Legal Contingency: The company is a defendant in a class action lawsuit filed by Atlas Data Privacy Corporation regarding compliance with New Jersey's "Daniel's Law." The company is vigorously defending the action and expects insurance coverage for defense costs and potential liability.
- Commitments: As of June 30, 2026, the company has material capital commitments of $35.5 million related to data licensing and cloud service agreements.
- Non-GAAP Measures: Management highlights Adjusted EBITDA of $11.2 million (42% margin) for Q2 2026 and Adjusted Net Income of $7.2 million.
Investor Verification Checklist
- Verify the utilization of the $108.6 million raised in the August 2026 offering, specifically regarding the timeline for potential strategic acquisitions.
- Monitor the status of the "Daniel's Law" litigation and confirm the extent of insurance coverage for potential judgments.
- Assess the sustainability of the 76% gross margin given the fixed-cost data licensing structure and potential future data cost inflation.
- Review the vesting conditions and probability of achievement for the significant performance-based RSUs granted in early 2026 (832,690 units).
- Confirm the remaining authorization under the $30.0 million stock repurchase program ($15.5 million remaining as of June 30, 2026).