Red Violet (NASDAQ:RDVT) reported record second-quarter results for 2026, with revenue, profitability and operating cash flow all reaching new highs as demand for identity intelligence solutions increased across its customer base.
Revenue rose 23% year over year to $26.7 million, while adjusted EBITDA increased 48% to $11.2 million. The company’s adjusted EBITDA margin expanded seven percentage points to a record 42%. Adjusted net income grew 58% to $7.2 million, or $0.50 per diluted share, and cash flow from operations climbed 42% to $10.6 million.
“Q2 was our strongest quarter across every financial metric,” Dubner said, citing revenue, gross margins, adjusted EBITDA, net income and operating cash flow.
Record Customer Additions and Broad-Based Demand
Red Violet added 447 billable IDI customers during the second quarter, its highest quarterly customer-addition total, following 400 additions in the first quarter. The company ended the period with 10,869 IDI customers.
Dubner said the gains reflected both new-market opportunities and customer wins from competitors. Chief Financial Officer Dan MacLachlan said the company has been moving toward medium-sized and larger enterprise customers, with growth occurring across several customer spending cohorts.
Four of Red Violet’s five revenue verticals reached all-time quarterly revenue highs, according to management. MacLachlan highlighted several areas of growth:
- Financial and corporate risk: Growth was led in part by background screening, while financial services increased through expanded usage among existing customers. Insurance also posted gains as the company expanded dedicated sales efforts.
- Investigative: This was Red Violet’s fastest-growing vertical on a percentage basis, with double-digit growth across law enforcement, private investigators, bail bond and process servers.
- Collections: Revenue grew more than 20%, driven by recurring demand as consumer delinquencies remained elevated and clients used the company’s tools at higher volumes to locate and recover accounts.
- Emerging markets: Retail, repossession and legal led growth, with additional contributions from marketing and education.
IDI real estate revenue, excluding the company’s FOREWARN offering, declined modestly. MacLachlan said Red Violet remains cautious about a near-term rebound in that market because of limited housing inventory, elevated interest rates and high home prices.
Contractual revenue represented 77% of total revenue, unchanged from the prior-year period. Gross revenue retention was 95%, down two percentage points year over year.
FOREWARN Expands Into Home Healthcare
FOREWARN, Red Violet’s proactive safety platform for identity verification before face-to-face encounters, added 25,493 users during the quarter and ended June with 443,173 users. The company said 660 Realtor associations were contracted to use the service, representing more than half of the approximately 1,300 Realtor associations nationwide.
MacLachlan said FOREWARN maintained a 100% renewal rate among association customers and delivered strong double-digit revenue growth in the quarter.
During the quarter, the company announced its expansion into home healthcare through FOREWARN for Home Healthcare. The offering is intended to provide caregivers and agencies with pre-visit household information and safety intelligence before visits to patients’ residences.
Dubner said the company estimates that the U.S. market includes about 4 million home health aides and more than 12,000 Medicare-certified home health agencies. He said the company sees applications both for individual caregivers using a mobile app and for agencies integrating the service through application programming interfaces into scheduling or workforce-management systems.
Management did not provide a specific revenue opportunity estimate or pricing outlook for the home healthcare expansion. Dubner said the company has developed its own estimates but intends to remain “close to vest” as it begins entering the market.
Margins, Cash Flow and Capital Position
Adjusted gross profit rose 25% to $22.9 million, producing an adjusted gross margin of 86%, up two percentage points. Sales and marketing expense increased 2% to $5.8 million, while general and administrative expense rose 14% to $8.3 million, primarily because of higher personnel costs.
GAAP net income increased 85% to $5 million. Free cash flow rose 50% to $7.2 million.
As of June 30, Red Violet had $50 million in cash and cash equivalents, up from $43.6 million at the end of 2025. Current assets totaled $65.2 million, while current liabilities were $6 million.
The company also recently completed a public offering that generated approximately $109 million in net proceeds from new and existing investors. Management said the proceeds are intended for working capital, general corporate purposes and possible strategic acquisitions.
Red Violet repurchased 74,500 shares year to date through June 30 at an average price of $41.87 per share. It had $15.5 million remaining under its stock repurchase authorization at quarter-end.
Investment and Acquisition Priorities
Management said it expects to continue investing in product development, AI engineers, infrastructure and go-to-market capabilities. MacLachlan said Red Violet has historically added roughly 30 to 40 team members annually and believes it can continue investing while expanding margins because of the company’s operating leverage.
Dubner said Red Violet is pursuing a multiyear product roadmap that includes vertical-specific application layers, natural-language interfaces and expanded data capabilities. He outlined three potential acquisition priorities: unique data assets that expand the company’s identity graph, enabling technology that accelerates development, and assets that deepen the company’s presence in targeted vertical markets.
Management emphasized that acquisition decisions would be based first on strategic fit and synergies rather than a need to deploy capital. The company said it expects full-year adjusted EBITDA margin to remain in the high 30% range, noting that the fourth quarter typically carries higher year-end incentive compensation expenses.
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.
