Red Violet, Inc 10-Q for FY2026 Q3
Red Violet, Inc. (RDVT)
About this 10-Q
Red Violet, Inc filed this 10-Q on November 4, 2026, covering the quarter ended September 30, 2026 (FY2026 Q3).
Red Violet reported third-quarter revenue increased 20% to $27.8 million and net income rose 29% to $5.4 million. An August 2026 offering generated net proceeds of $108.7 million, while cash and U.S. Treasury securities totaled $165.7 million with no debt. AI summary
Headline figures
Quarter ended September 30, 2026, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $27.75M
- up 20.2% from $23.08M a year earlier
- Net income
- $5.45M
- up 29.2% from net income of $4.21M a year earlier
- Diluted EPS
- $0.35
- up 20.7% from $0.29 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(Mark One)
For the quarterly period ended
or
For the transition period from to
Commission file number
(Exact Name of Registrant as Specified in Its Charter)
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(State or Other Jurisdiction of Incorporation or Organization) |
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(I.R.S. Employer Identification No.) |
(Address of Principal Executive Offices) (Zip Code)
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(Registrant’s Telephone Number, Including Area Code)
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
Trading Symbol (s) |
Name of each exchange on which registered |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
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Accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ☐ No
As of October 30, 2026, the registrant had
RED VIOLET, INC.
TABLE OF CONTENTS FOR FORM 10-Q
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Item 1. |
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Condensed consolidated balance sheets as of September 30, 2026 and December 31, 2025 |
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Item 2. |
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Management's Discussion and Analysis of Financial Condition and Results of Operations |
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Item 3. |
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29 |
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Item 4. |
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Item 1. |
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Item 1A. |
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Item 2. |
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Item 3. |
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Item 4. |
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Item 5. |
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Item 6. |
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33 |
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PART I - FINANCIAL INFORMATION
Unless otherwise indicated or required by the context, all references in this Quarterly Report on Form 10-Q to “we,” “us,” “our,” “red violet,” or the “Company,” refer to Red Violet, Inc. and its consolidated subsidiaries.
Item 1. Financial Statements.
RED VIOLET, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share data)
(unaudited)
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September 30, 2026 |
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December 31, 2025 |
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ASSETS: |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Short-term investments |
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Accounts receivable, net of allowance for doubtful accounts of $ |
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Prepaid expenses and other current assets |
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Total current assets |
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Long-term investments |
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Property and equipment, net |
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Intangible assets, net |
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Goodwill |
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Right-of-use assets |
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Deferred tax assets |
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Other noncurrent assets |
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Total assets |
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$ |
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$ |
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LIABILITIES AND SHAREHOLDERS' EQUITY: |
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Current liabilities: |
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Accounts payable |
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$ |
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$ |
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Accrued expenses and other current liabilities |
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Current portion of operating lease liabilities |
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Deferred revenue |
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Total current liabilities |
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Noncurrent operating lease liabilities |
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Other noncurrent liabilities |
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Total liabilities |
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Shareholders' equity: |
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Preferred stock—$ |
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Common stock—$ |
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Additional paid-in capital |
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Retained earnings |
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Accumulated other comprehensive loss |
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Total shareholders' equity |
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Total liabilities and shareholders' equity |
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$ |
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$ |
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See notes to condensed consolidated financial statements.
1
RED VIOLET, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except share data)
(unaudited)
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Three Months Ended September 30, |
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Nine Months Ended September 30, |
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2026 |
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2025 |
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2026 |
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2025 |
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Revenue |
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$ |
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$ |
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$ |
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$ |
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Costs and expenses: |
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Cost of revenue (exclusive of depreciation and amortization) |
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Sales and marketing expenses |
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General and administrative expenses |
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Depreciation and amortization |
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Total costs and expenses |
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Income from operations |
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Interest income |
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Income before income taxes |
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Income tax expense |
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Net income |
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$ |
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$ |
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$ |
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$ |
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Earnings per share: |
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Basic |
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$ |
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$ |
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$ |
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$ |
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Diluted |
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$ |
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$ |
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$ |
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$ |
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Weighted average shares outstanding: |
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Basic |
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Diluted |
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See notes to condensed consolidated financial statements.
2
RED VIOLET, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Amounts in thousands)
(unaudited)
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Three Months Ended September 30, |
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Nine Months Ended September 30, |
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2026 |
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2025 |
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2026 |
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2025 |
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Net income |
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$ |
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$ |
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$ |
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$ |
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Other comprehensive loss: |
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Change in unrealized loss on investments in U.S. Treasury |
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( |
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Comprehensive income |
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$ |
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$ |
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$ |
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$ |
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See notes to condensed consolidated financial statements.
3
RED VIOLET, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(Amounts in thousands, except share data)
(unaudited)
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Common stock |
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Treasury stock |
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Additional |
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Accumulated other |
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Shares |
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Amount |
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Shares |
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Amount |
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paid-in capital |
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Retained earnings |
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comprehensive loss |
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Total |
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Balance at June 30, 2025 |
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$ |
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- |
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$ |
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$ |
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$ |
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$ |
- |
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$ |
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Vesting of restricted stock units |
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- |
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- |
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- |
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- |
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- |
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- |
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- |
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Increase in treasury stock resulting |
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- |
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- |
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( |
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( |
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- |
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- |
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- |
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( |
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Common stock repurchased |
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- |
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- |
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( |
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( |
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- |
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- |
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- |
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( |
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Retirement of treasury stock |
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( |
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- |
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( |
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- |
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- |
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- |
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Share-based compensation |
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- |
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- |
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- |
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- |
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- |
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- |
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Net income |
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- |
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- |
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- |
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- |
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- |
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- |
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Balance at September 30, 2025 |
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$ |
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- |
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$ |
- |
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$ |
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$ |
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$ |
- |
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$ |
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Balance at June 30, 2026 |
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$ |
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- |
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$ |
- |
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$ |
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$ |
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$ |
- |
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$ |
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Vesting of restricted stock units |
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- |
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- |
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- |
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- |
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- |
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- |
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- |
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Increase in treasury stock resulting |
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- |
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- |
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( |
) |
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( |
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- |
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- |
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- |
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( |
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Retirement of treasury stock |
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( |
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- |
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( |
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- |
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- |
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- |
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Issuance of common stock in |
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- |
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- |
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- |
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- |
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Share-based compensation |
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- |
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- |
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- |
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- |
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- |
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- |
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Net income |
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- |
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- |
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- |
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- |
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- |
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- |
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Other comprehensive loss |
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- |
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- |
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- |
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- |
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- |
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- |
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( |
) |
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( |
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Balance at September 30, 2026 |
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$ |
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- |
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$ |
- |
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$ |
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$ |
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$ |
(352 |
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$ |
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Common stock |
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Treasury stock |
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Additional |
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Retained earnings |
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Accumulated other |
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Shares |
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Amount |
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Shares |
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Amount |
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paid-in capital |
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(accumulated deficit) |
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comprehensive loss |
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Total |
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Balance at December 31, 2024 |
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$ |
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- |
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$ |
- |
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$ |
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$ |
( |
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$ |
- |
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$ |
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Vesting of restricted stock units |
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- |
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- |
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- |
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- |
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- |
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- |
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- |
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Increase in treasury stock resulting |
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- |
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- |
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( |
) |
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( |
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- |
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- |
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- |
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( |
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Common stock repurchased |
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- |
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- |
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( |
) |
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( |
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- |
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- |
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- |
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( |
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Retirement of treasury stock |
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( |
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- |
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( |
) |
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- |
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- |
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- |
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Share-based compensation |
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- |
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- |
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- |
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- |
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- |
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- |
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Net income |
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- |
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- |
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- |
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- |
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- |
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- |
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Balance at September 30, 2025 |
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$ |
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- |
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$ |
- |
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$ |
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$ |
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$ |
- |
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$ |
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Balance at December 31, 2025 |
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$ |
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- |
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$ |
- |
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$ |
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$ |
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$ |
- |
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$ |
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Vesting of restricted stock units |
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- |
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- |
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- |
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- |
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- |
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- |
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- |
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Increase in treasury stock resulting |
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- |
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- |
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( |
) |
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( |
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- |
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- |
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- |
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( |
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Common stock repurchased |
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- |
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- |
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( |
) |
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( |
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- |
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- |
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- |
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( |
) |
Retirement of treasury stock |
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( |
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- |
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( |
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- |
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- |
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- |
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Issuance of common stock in |
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- |
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- |
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- |
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- |
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Share-based compensation |
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- |
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- |
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- |
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- |
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- |
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- |
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Net income |
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- |
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- |
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- |
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- |
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- |
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- |
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Other comprehensive loss |
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- |
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- |
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- |
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- |
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- |
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- |
|
|
|
( |
) |
|
|
( |
) |
Balance at September 30, 2026 |
|
|
|
|
$ |
|
|
|
- |
|
|
$ |
- |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||||
See notes to condensed consolidated financial statements.
4
RED VIOLET, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(unaudited)
|
|
Nine Months Ended September 30, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
|
||
Net income |
|
$ |
|
|
$ |
|
||
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
||
Depreciation and amortization |
|
|
|
|
|
|
||
Share-based compensation expense |
|
|
|
|
|
|
||
Write-off of long-lived assets |
|
|
|
|
|
|
||
Provision for bad debts |
|
|
|
|
|
|
||
Noncash lease expenses |
|
|
|
|
|
|
||
Accretion of discount on investments in U.S. Treasury securities, net |
|
|
( |
) |
|
|
|
|
Deferred income tax expense |
|
|
|
|
|
|
||
Changes in assets and liabilities: |
|
|
|
|
|
|
||
Accounts receivable |
|
|
( |
) |
|
|
( |
) |
Prepaid expenses and other current assets |
|
|
( |
) |
|
|
( |
) |
Other noncurrent assets |
|
|
|
|
|
|
||
Accounts payable |
|
|
|
|
|
|
||
Accrued expenses and other current liabilities |
|
|
( |
) |
|
|
( |
) |
Deferred revenue |
|
|
|
|
|
|
||
Operating lease liabilities |
|
|
( |
) |
|
|
( |
) |
Net cash provided by operating activities |
|
|
|
|
|
|
||
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
|
|
||
Purchases of investments in U.S. Treasury securities |
|
|
( |
) |
|
|
|
|
Purchase of property and equipment |
|
|
( |
) |
|
|
( |
) |
Capitalized costs included in intangible assets |
|
|
( |
) |
|
|
( |
) |
Net cash used in investing activities |
|
|
( |
) |
|
|
( |
) |
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
|
|
||
Proceeds from issuance of common stock, net of issuance costs |
|
|
|
|
|
|
||
Taxes paid related to net share settlement of vesting of restricted stock units |
|
|
( |
) |
|
|
( |
) |
Repurchases of common stock |
|
|
( |
) |
|
|
( |
) |
Dividend payable |
|
|
|
|
|
( |
) |
|
Net cash provided by (used in) financing activities |
|
|
|
|
|
( |
) |
|
Net increase in cash and cash equivalents |
|
$ |
|
|
$ |
|
||
Cash and cash equivalents at beginning of period |
|
|
|
|
|
|
||
Cash and cash equivalents at end of period |
|
$ |
|
|
$ |
|
||
SUPPLEMENTAL DISCLOSURE INFORMATION: |
|
|
|
|
|
|
||
Cash paid for interest |
|
$ |
|
|
$ |
|
||
Cash paid for income taxes |
|
$ |
|
|
$ |
|
||
Share-based compensation capitalized in intangible assets |
|
$ |
|
|
$ |
|
||
Retirement of treasury stock |
|
$ |
|
|
$ |
|
||
Right-of-use assets obtained in exchange of operating lease liabilities |
|
$ |
|
|
$ |
|
||
See notes to condensed consolidated financial statements.
5
RED VIOLET, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share data)
(unaudited)
1. Summary of significant accounting policies
(a) Basis of preparation
The accompanying unaudited condensed consolidated financial statements of Red Violet, Inc., a Delaware corporation, and its consolidated subsidiaries (collectively, “red violet” or the “Company”), have been prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (the “SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in annual financial statements prepared in accordance with US GAAP have been condensed or omitted pursuant to those rules and regulations.
The accompanying unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the financial position, results of operations, and cash flows for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for any future interim periods or for the full year ending December 31, 2026.
The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 filed with the SEC on March 4, 2026 (the “2025 Form 10-K”).
The condensed consolidated balance sheet as of December 31, 2025 included herein was derived from the audited financial statements as of that date included in the 2025 Form 10-K, but does not include all disclosures required by US GAAP.
Except for the accounting policy for investments in available-for-sale debt securities adopted during the three months ended September 30, 2026, which is described in Note 3, "Investments," there have been no material changes to the Company’s significant accounting policies as described in Note 2 to the consolidated financial statements included in the 2025 Form 10-K.
Principles of consolidation
The condensed consolidated financial statements include the financial statements of the Company and its subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation.
(b) Recently issued accounting standards
In November 2024, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2024-03, "Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40), Disaggregation of Income Statement Expenses," which requires disclosure within the notes to financial statements of specific information about certain costs and expenses including more detailed disclosures of certain categories of expenses such as employee compensation, depreciation, and intangible asset amortization that are components of existing expense captions presented on the face of the income statement. The update is effective for annual periods for fiscal years beginning after December 15, 2026 and interim periods beginning after December 15, 2027 on a prospective or retrospective basis. Early adoption is permitted. The Company is currently evaluating the impact this ASU may have on its condensed consolidated financial statements.
In July 2025, the FASB issued ASU No. 2025-05, "Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets." The ASU provides a practical expedient permitting an entity to assume that conditions at the balance sheet date remain unchanged over the life of the asset when estimating expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under ASC 606. The Company adopted this ASU and elected the practical expedient permitted under this ASU on a prospective basis effective January 1, 2026. The adoption did not have a material impact on the Company's condensed consolidated financial statements.
6
In September 2025, the FASB issued ASU No. 2025-06, "Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software." This ASU removes all references to prescriptive and sequential software development stages (referred to as “project stages”) and instead requires an entity to start capitalizing software costs when management has authorized and committed to funding the software project and it is probable that the project will be completed and the software will be used to perform the function intended. Additional updates include changes to accounting for website development costs and certain disclosure requirements. This ASU will be effective for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. Early adoption is permitted as of the beginning of an annual reporting period. This ASU permits an entity to apply the new guidance using either a prospective transition approach, a modified transition approach that is based on the status of the project and whether software costs were capitalized before the date of adoption, or a retrospective transition approach. The Company is currently evaluating the impact this ASU may have on its condensed consolidated financial statements.
In December 2025, the FASB issued ASU No. 2025-11, "Interim Reporting (Topic 270): Narrow-Scope Improvements." The ASU clarifies interim disclosure requirements and the applicability of Topic 270. The objective of the amendments is to provide further clarity about the current interim disclosure requirements. The ASU is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. Adoption of this ASU can be applied using either a prospective or a retrospective approach. Early adoption is permitted. The Company is currently evaluating the impact this ASU may have on its condensed consolidated financial statements.
In December 2025, the FASB issued ASU No. 2025-12, "Codification Improvements." The ASU clarifies, corrects and makes minor improvements to various provisions of the Accounting Standards Codification. Among other amendments, the ASU clarifies that, upon the formal or constructive retirement of treasury stock, the excess of the repurchase price over par value may be recognized entirely as a deduction from additional paid-in capital, provided that additional paid-in capital does not become negative. The amendments are effective for annual reporting periods beginning after December 15, 2026, and interim periods within those annual reporting periods. Early adoption is permitted. The Company does not expect the adoption of this ASU to have a material effect on its condensed consolidated financial statements.
2. Earnings per share
Basic earnings per share is computed by dividing net income by the weighted average number of shares of common stock outstanding during the periods. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised, vested, or converted into common stock and is calculated using the treasury stock method and contingently issuable share guidance, as applicable.
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
(In thousands, except share data) |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Numerator: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Denominator: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Diluted(1) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Diluted |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
7
3. Investments
Available-for-sale investments
During the three months ended September 30, 2026, the Company began investing in U.S. Treasury securities with original maturities at the date of purchase of greater than three months. The Company classifies these debt securities as available-for-sale, as they may be sold prior to maturity. Available-for-sale investments are recorded at fair value, with unrealized gains and losses, net of tax, reported in accumulated other comprehensive income (loss) until realized. Investments with remaining maturities of one year or less are classified as short-term investments, and those with remaining maturities of more than one year as long-term investments. Premiums and discounts are amortized or accreted to interest income over the life of the security using the effective interest method. Realized gains and losses, if any, are determined using the specific-identification method.
For securities in an unrealized loss position, the Company assesses whether it intends to sell, or will more likely than not be required to sell, the security before recovery of its amortized cost basis, and whether any portion of the decline in fair value is due to credit losses. No allowance for credit losses has been recorded. The Company excludes accrued interest receivable from both the fair value and the amortized cost basis of its available-for-sale investments for purposes of identifying and measuring impairment, and presents accrued interest receivable within prepaid expenses and other current assets on the condensed consolidated balance sheets.
The following table summarizes the Company’s available-for-sale investments as of September 30, 2026:
(In thousands) |
|
Amortized cost |
|
|
Gross unrealized gains |
|
|
Gross unrealized losses |
|
|
Fair value |
|
||||
Short-term investments: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. Treasury securities |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
Long-term investments: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. Treasury securities |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Total available-for-sale investments |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
The Company did not hold any such investments as of December 31, 2025.
During the three and nine months ended September 30, 2026, the Company recognized gross unrealized losses on investments in U.S. Treasury securities of $
As of September 30, 2026, all of the Company’s available-for-sale investments had been in a continuous unrealized loss position for less than 12 months. The unrealized losses are attributable to changes in market interest rates subsequent to purchase and not to credit quality. The Company does not intend to sell these securities, and it is not more likely than not that it will be required to sell them before recovery of their amortized cost basis, which may be at maturity. Accordingly, no allowance for credit losses was recognized.
There were
The Company’s investments consist of U.S. Treasury securities, and its cash equivalents include government money market funds. Management believes these investments do not expose the Company to significant concentrations of credit risk.
4. Fair value measurements
The Company measures certain financial assets at fair value on a recurring basis. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy prioritizes the inputs used to measure fair value into three levels:
8
The following table presents the Company’s financial assets measured at fair value on a recurring basis as of September 30, 2026:
(In thousands) |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
||||
Cash equivalents |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Money market funds |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Short-term investments: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. Treasury securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Long-term investments: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. Treasury securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total assets measured at fair value |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
As of December 31, 2025, the Company’s financial assets measured at fair value on a recurring basis consisted of money market funds of $
The Company’s money market funds and available-for-sale investments in U.S. Treasury securities are measured at fair value on a recurring basis. Money market funds are classified within Level 1. U.S. Treasury securities are classified within Level 2 because they are valued using prices from a third-party pricing service based on observable market inputs. The carrying amounts of the Company’s cash deposits, receivables, accrued interest receivable and payables approximate their fair values because of the short-term nature of these instruments. The fair value of the noncurrent portion of unbilled accounts receivable included in other noncurrent assets approximates its carrying amount.
5. Intangible assets, net
Intangible assets other than goodwill consist of the following:
|
|
|
|
September 30, 2026 |
|
|
December 31, 2025 |
|
||||||||||||||||||
(In thousands) |
|
Amortization |
|
Gross amount |
|
|
Accumulated amortization |
|
|
Net |
|
|
Gross amount |
|
|
Accumulated amortization |
|
|
Net |
|
||||||
Software developed for internal use |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||||
Acquired intangible assets |
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||||
Total |
|
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||
The gross carrying amount of software developed for internal use includes capitalized costs related to the design, development, and testing of internal-use software. These costs primarily consist of eligible personnel-related expenses, share-based compensation, and travel expenses incurred by relevant employees, and other directly attributable costs incurred during the application development stage. The gross carrying amount of acquired intangible assets reflects the acquisition cost of certain data assets for which the Company has obtained perpetual usage rights.
Amortization expenses of $
The Company capitalized costs of intangible assets of $
As of September 30, 2026, estimated amortization expense related to the Company’s intangible assets for the remainder of 2026 through 2031 and thereafter is as follows:
9
(In thousands) |
|
|
|
|
Year |
|
September 30, 2026 |
|
|
Remainder of 2026 |
|
$ |
|
|
2027 |
|
|
|
|
2028 |
|
|
|
|
2029 |
|
|
|
|
2030 |
|
|
|
|
2031 and thereafter |
|
|
|
|
Total |
|
$ |
|
|
6. Revenue recognition
The Company recognizes revenue in accordance with ASC 606, “Revenue from Contracts with Customers” (“Topic 606”). Under this standard, revenue is recognized when control of goods or services is transferred to the Company’s customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. The Company’s performance obligation is to provide on-demand information and identity intelligence solutions to its customers by leveraging its proprietary technology and applying machine learning and advanced analytics to its massive data repository. The pricing for the customer contracts is based on usage, a monthly fee, or a combination of both.
Permitted under Topic 606, the Company has applied the portfolio approach practical expedient in accounting for customer revenue as one collective group, rather than individual contracts. Based on the Company’s historical knowledge of the contracts contained in this portfolio and the similar nature and characteristics of the customers, the Company has concluded the financial statement effects are not materially different than if accounting for revenue on a contract-by-contract basis.
Revenue is recognized over a period of time. The Company’s customers simultaneously receive and consume the benefits provided by the Company’s performance as and when provided. Furthermore, the Company has elected the “right to invoice” practical expedient, permitted under Topic 606, as its measure of progress, since it has a right to payment from a customer in an amount that corresponds directly with the value of its performance completed-to-date. In some arrangements, a right to consideration for the Company's performance under the customer contract may occur before invoicing to the customer, resulting in an unbilled accounts receivable. As of September 30, 2026, the current and noncurrent portions of unbilled accounts receivable of $
For the three months ended September 30, 2026 and 2025,
If a customer pays consideration before the Company transfers services to the customer, those amounts are classified as deferred revenue. As of September 30, 2026 and December 31, 2025, the balance of deferred revenue was $
As of September 30, 2026, $
Sales commissions are incurred and recorded on an ongoing basis over the term of the customer relationship. These costs are recorded in sales and marketing expenses.
In addition, the Company elected the practical expedient to not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which the Company recognizes revenue at the amount to which it has the right to invoice for services performed.
10
7. Income taxes
The Company is subject to federal and state income taxes in the United States. The Company’s tax provision for interim periods is determined using an estimate of its annual effective tax rate, adjusted for discrete items arising in that quarter, unless a reliable estimate of ordinary income or the related tax expense/benefit cannot be made or the Company is in cumulative losses for which the benefit cannot be realized. In each quarter, the Company updates its estimate of the annual effective tax rate, and if its estimated annual tax rate changes, the Company makes a cumulative adjustment in that quarter. The Company concluded that, due to its established historical cumulative positive income before income taxes plus permanent differences for recent years, projections of future taxable income, and the reversal of taxable temporary differences, the realization of deferred tax assets as of September 30, 2026 was more likely than not. As of September 30, 2026, deferred tax assets included $
The Company’s effective income tax rate was
For the three months ended September 30, 2026, the effective tax rate was lower than the statutory rate primarily due to the benefit of research and development tax credits and excess tax benefits from share-based compensation, partially offset by state income taxes and nondeductible executive compensation. For the nine months ended September 30, 2026, the effective tax rate was higher than the statutory rate primarily due to state income taxes and nondeductible executive compensation, partially offset by the benefit of research and development tax credits and excess tax benefits from share-based compensation.
For the three and nine months ended September 30, 2025, the effective tax rates were lower than the statutory rate primarily due to the benefit of research and development tax credits and excess tax benefits from share-based compensation, partially offset by state income taxes and nondeductible executive compensation.
The Company assesses its income tax positions and records tax benefits for all years subject to examination based upon its evaluation of the facts, circumstances and information available at the reporting date. For those tax positions where it is more-likely-than-not that a tax benefit will be sustained, the Company has recorded the largest amount of tax benefit with a
The Company continually evaluates expiring statutes of limitations, audits, proposed settlements, changes in tax law and new authoritative rulings. Due to the existence of net operating loss carryforwards since inception, all of the Company’s income tax filings remain open for tax examinations.
The Company does
8. Shareholders' equity
Common stock and treasury stock
As of September 30, 2026 and December 31, 2025, the number of issued shares of common stock was
11
Stock Repurchase Program
On May 2, 2022, the Company's Board of Directors authorized a stock repurchase program to repurchase the Company's common stock from time to time through open market purchases, privately negotiated transactions or other means, including pursuant to Rule 10b5-1 trading plans, which was subsequently amended on each of December 19, 2023, March 28, 2024, and November 3, 2025, bringing the total authorization to $
Accumulated other comprehensive loss
As of September 30, 2026, accumulated other comprehensive loss was $
During the three and nine months ended September 30, 2026, the Company recorded other comprehensive loss of $
9. Share-based compensation
Under the Red Violet, Inc. 2018 Stock Incentive Plan, as amended and restated (the “2018 Plan”), 7,500,000 shares of the Company’s common stock are authorized for issuance. The current amended and restated form of the 2018 Plan was approved by the Company’s stockholders on June 10, 2025 and, among other things, increased the number of shares authorized for issuance from
The primary purpose of the 2018 Plan is to attract, retain, reward and motivate certain individuals by providing them with an opportunity to acquire or increase a proprietary interest in the Company and to incentivize them to contribute to the growth and success of the Company, so as to strengthen the mutuality of the interests between such individuals and the stockholders of the Company.
As of September 30, 2026, there were
To date, all share-based awards granted under the 2018 Plan have been in the form of RSUs. RSUs granted under the 2018 Plan vest upon the satisfaction of either service-based vesting conditions or both service-based and performance-based vesting conditions.
Service-based vesting conditions are generally satisfied over periods ranging from one to four years with annual vesting. Unvested activity related to RSUs subject solely to service-based vesting conditions for the nine months ended September 30, 2026 was as follows:
|
|
Number of units |
|
|
Weighted average |
|
||
Unvested as of December 31, 2025 |
|
|
|
|
$ |
|
||
Granted(1) |
|
|
|
|
$ |
|
||
Vested and delivered |
|
|
( |
) |
|
$ |
|
|
Withheld as treasury stock(2) |
|
|
( |
) |
|
$ |
|
|
Forfeited |
|
|
( |
) |
|
$ |
|
|
Unvested as of September 30, 2026 |
|
|
|
|
$ |
|
||
As of September 30, 2026, unrecognized share-based compensation expense associated with the granted RSUs subject solely to service-based vesting conditions amounted to $
12
Performance-based awards
In addition to RSUs subject solely to service-based vesting conditions as described above, all RSUs granted by the Company that are subject to performance-based vesting conditions also carry service-based vesting conditions.
|
|
Number of units |
|
|
Weighted average |
|
||
Unvested as of December 31, 2025 |
|
|
|
|
$ |
|
||
Granted |
|
|
|
|
$ |
|
||
Vested and delivered |
|
|
( |
) |
|
$ |
|
|
Withheld as treasury stock |
|
|
( |
) |
|
$ |
|
|
Unvested as of September 30, 2026 |
|
|
|
|
$ |
|
||
On March 18, 2024, the Company granted
On January 9, 2026, the Company granted an aggregate of
On April 7, 2026, the Company granted
As of September 30, 2026 and December 31, 2025, the number of unvested RSUs subject to both service-based and performance-based vesting conditions that were considered probable of achievement was
As of September 30, 2026, the unrecognized share-based compensation expense associated with the granted RSUs subject to both service-based and performance-based vesting conditions amounted to $
13
Summary of share-based compensation
Share-based compensation was allocated to the following accounts in the condensed consolidated financial statements for the three and nine months ended September 30, 2026 and 2025:
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
(In thousands) |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Cost of revenue (exclusive of depreciation and amortization) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Sales and marketing expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
General and administrative expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Share-based compensation expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Capitalized in intangible assets |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
10. Leases
The Company leases its corporate headquarters of
For the three and nine months ended September 30, 2026 and 2025, a summary of the Company’s lease information is shown below:
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
(In thousands) |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Lease cost: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating lease costs |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Other information: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash paid for operating leases |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Right-of-use assets obtained in exchange for operating |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
As of September 30, 2026 and December 31, 2025, the weighted average remaining operating lease term was
14
As of September 30, 2026, scheduled future maturities and present value of the operating lease liabilities are as follows:
(In thousands) |
|
|
|
|
Year |
|
September 30, 2026 |
|
|
Remainder of 2026 |
|
$ |
|
|
2027 |
|
|
|
|
2028 |
|
|
|
|
2029 |
|
|
|
|
2030 |
|
|
|
|
2031 |
|
|
|
|
Total maturities |
|
$ |
|
|
Present value included in condensed consolidated balance sheet: |
|
|
|
|
Current portion of operating lease liabilities |
|
$ |
|
|
Noncurrent operating lease liabilities |
|
|
|
|
Total operating lease liabilities |
|
$ |
|
|
Difference between the maturities and related present value of operating lease liabilities |
|
$ |
|
|
11. Segment information
The Company operates as a operating and reportable segment, identity and information solutions, as defined under ASC 280, “Segment Reporting.” There have been no significant changes in the basis of segmentation or in the basis of measurement of segment profit since the last annual report.
The Company’s chief operating decision maker (the “CODM”) is a group consisting of its Chief Executive Officer, President, and Chief Financial Officer. The CODM assesses performance for the identity and information solutions segment and decides how to allocate resources based on net income that also is reported on the condensed consolidated statements of operations as net income. The measure of segment assets is reported on the condensed consolidated balance sheet as total assets.
Information about reported segment revenue, segment net income, and significant segment expenses is shown as follows:
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
(Dollars in thousands) |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cost of revenue (exclusive of depreciation and |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Personnel-related expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Advertising, marketing and agency expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Provision for bad debts |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Share-based compensation expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Occupancy expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Professional fees(2) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other segment items(3) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest income |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Income tax expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Segment net income |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Consolidated net income |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
(1)
(2)
15
(3)
12. Commitments and contingencies
(a) Capital commitment
The Company incurred data costs, included within cost of revenue (exclusive of depreciation and amortization), of $
In April 2025, the Company entered into a five-year, non-cancellable cloud services agreement with a third-party provider. The agreement includes a minimum annual purchase commitment of $
As of September 30, 2026, the total material capital commitments under certain data licensing agreements and the cloud services agreement amounted to $
(In thousands) |
|
|
|
|
Year |
|
September 30, 2026 |
|
|
Remainder of 2026 |
|
$ |
|
|
2027 |
|
|
|
|
2028 |
|
|
|
|
2029 |
|
|
|
|
2030 |
|
|
|
|
2031 |
|
|
|
|
Total |
|
$ |
|
|
(b) Contingencies
Other than as described below, the Company is not currently a party to any legal proceeding, investigation or claim which, in the opinion of management, is likely to have a material adverse effect on the business, financial condition, results of operations, or cash flows. Legal fees associated with such legal proceedings are expensed as incurred. The Company reviews legal proceedings and claims on an ongoing basis and follows appropriate accounting guidance, including ASC 450, when making accrual and disclosure decisions. The Company establishes accruals for those contingencies where the incurrence of a loss is probable and can be reasonably estimated, and it discloses the amount accrued and the amount of a reasonably possible loss in excess of the amount accrued, if such disclosure is necessary for its financial statements to not be misleading. To estimate whether a loss contingency should be accrued by a charge to income, the Company evaluates, among other factors, the degree of probability of an unfavorable outcome and the ability to make a reasonable estimate of the amount of the loss. The Company does not record liabilities when the likelihood that the loss has been incurred is probable, but the amount cannot be reasonably estimated.
On
16
The Company is one of over 150 companies sued by Atlas and a combination of individual plaintiffs in actions containing nearly identical allegations and seeking similar damages. The Company removed the matter to the United States District Court for the District of New Jersey, but it was remanded to the Superior Court of New Jersey, Law Division, Monmouth County by order dated November 21, 2024, where the Action is pending. On May 1, 2026, the acting Administrative Director of the Courts denied Atlas’s application to consolidate all cases against various defendants in the Superior Court of New Jersey. No trial date has been scheduled. Each plaintiff and Atlas seek to recover actual damages that are not less than liquidated damages under Daniel’s Law, punitive damages, pre- and post-judgment interest, attorneys’ fees and costs and injunctive relief. The Company is vigorously defending itself in the Action. Should the case be tried, an adverse ruling could have an immediate near-term impact on the Company's business, financial position, and/or operations. The Company has notified its insurer of the Action and has confirmed that the claim falls within the scope of its insurance coverage. As such, the Company anticipates that the insurer will cover defense costs and any potential liability, subject to policy limits and customary exclusions.
In addition to the foregoing, the Company may be involved in litigation from time to time in the ordinary course of business. The Company does not believe that the ultimate resolution of any such matter will have a material adverse effect on its business, financial condition, results of operations, or cash flows. However, the results of such matters cannot be predicted with certainty, and the Company cannot assure you that the ultimate resolution of any legal or administrative proceeding or dispute will not have a material adverse effect on its business, financial condition, results of operations, and cash flows.
17
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
You should read the following discussion and analysis in conjunction with our condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q (“Form 10-Q”). This Form 10-Q contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (“PSLRA”), Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), about our expectations, beliefs, or intentions regarding our business, financial condition, results of operations, strategies, or prospects. You can identify forward-looking statements by the fact that these statements do not relate strictly to historical or current matters. Rather, forward-looking statements relate to anticipated or expected events, activities, trends, or results as of the date they are made. Because forward-looking statements relate to matters that have not yet occurred, these statements are inherently subject to risks and uncertainties that could cause our actual results to differ materially from any future results expressed or implied by the forward-looking statements. Many factors could cause our actual activities or results to differ materially from the activities and results anticipated in forward-looking statements. These factors include those contained in this Form 10-Q, as well as the disclosures made in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 filed on March 4, 2026 (the “2025 Form 10-K”), and other filings we make with the Securities and Exchange Commission (the "SEC"). We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. We intend that all forward-looking statements be subject to the safe harbor provisions of PSLRA. These forward-looking statements are only predictions and reflect our views as of the date they are made with respect to future events and financial performance.
References in this discussion and analysis to “we,” “us,” “our,” “red violet,” or the “Company,” refer to Red Violet, Inc. and its consolidated subsidiaries.
Overview
Red Violet, Inc., a Delaware corporation, is dedicated to making the world a safer place and reducing the cost of doing business. We build proprietary technologies and apply analytical capabilities to deliver identity intelligence. Our technology powers critical solutions, which empower organizations to operate with confidence. Our solutions enable the real-time identification and location of people, businesses, assets, and their interrelationships. These solutions are used for purposes including identity verification, risk mitigation, due diligence, fraud detection and prevention, regulatory compliance, and customer acquisition. Our cloud-native, AI-embedded identity intelligence platform, CORETM, is purpose-built for the enterprise, yet flexible enough for organizations of all sizes, bringing clarity to massive datasets by transforming data into intelligence. We drive workflow efficiency and enable organizations to make better data-driven decisions.
With artificial intelligence and machine learning embedded directly into CORE’s architecture from inception, and integrated with extensive proprietary data assets and regulated workflows, the platform enables customers to uncover actionable insights, accelerate decision-making, and operate at enterprise scale with materially reduced manual effort and operating costs. These AI-driven capabilities support the streamlining of labor-intensive workflows through automated, intelligence-driven processes that materially enhance efficiency and outcomes across risk management, compliance, and investigative functions.
Organizations are challenged by the structure, volume, velocity, and disparity of data. Our platform and applications provide real-time analytics, transforming the way our customers interact with information by presenting connections and relevance of information otherwise unattainable, which drives actionable insights and better outcomes. Leveraging cloud-native proprietary technology and applying machine learning and advanced analytical capabilities, CORE provides essential solutions to public and private sector organizations through intuitive, easy-to-use analytical interfaces. With extensive data assets consisting of public record, proprietary, and publicly-available data, our differentiated information and innovative platform and solutions deliver identity intelligence – entities, relationships, affiliations, interactions, and events. Our solutions are used today to enable frictionless commerce, enhance safety, and mitigate fraud and the related financial losses across the markets we serve.
18
While our platform powers a vast array of solutions for our customers, we presently market our solutions primarily through two brands, IDI™ and FOREWARN®. IDI is a leading-edge, analytics and information solutions provider delivering actionable intelligence to an expansive and diverse set of industries in support of use cases such as the verification and authentication of consumer identities, due diligence, prevention of fraud and abuse, legislative compliance, and debt recovery. idiCORE™ is IDI's flagship product. idiCORE is a next-generation, investigative solution used to address a variety of organizational challenges, including, but not limited to, due diligence, risk mitigation, identity authentication, and regulatory compliance, by financial services companies, insurance companies, healthcare companies, law enforcement and government, identity verification platforms, collections, law firms, retail, telecommunication companies, corporate security, and investigative firms. FOREWARN is an app-based solution currently tailored for the real estate industry, providing instant knowledge prior to face-to-face engagement with a consumer, helping professionals identify and mitigate risk. As of September 30, 2026 and 2025, IDI had 11,252 and 9,853 billable customers, respectively, and FOREWARN had 462,861 and 372,209 users, respectively. We define a billable customer of IDI as a single entity that generated revenue during the last three months of the period. Billable customers are typically corporate organizations. In most cases, corporate organizations will have multiple users and/or departments purchasing our solutions; however, we count the entire organization as a discrete customer. We define a user of FOREWARN as a unique person that has a subscription to use the FOREWARN service as of the last day of the period. A unique person can only have one user account.
We generate substantially all of our revenue from licensing our solutions. Customers access our solutions through a hosted environment using an online interface, batch processing, API, and custom integrations. We recognize revenue from licensing fees (a) on a transactional basis determined by the customer’s usage, (b) via a monthly fee or (c) from a combination of both. Revenue pursuant to pricing contracts containing a monthly fee is recognized ratably over the contract period. Pricing contracts are generally annual contracts or longer, with auto renewal. For the three months ended September 30, 2026 and 2025, 78% and 75% of total revenue was attributable to customers with pricing contracts, respectively, versus 22% and 25% attributable to transactional customers, respectively. For the nine months ended September 30, 2026 and 2025, 77% and 75% of total revenue was attributable to customers with pricing contracts, respectively, versus 23% and 25% attributable to transactional customers, respectively.
We endeavor to understand our customers’ needs at the moment of first engagement. We continuously engage with our customers and evaluate their usage of our solutions throughout their life cycle, to maximize utilization of our solutions and, hence, their productivity. Our go-to-market strategy leverages (a) an inside sales team that cultivates relationships, and ultimately closes business, with their end-user markets, (b) a strategic sales team that provides a more personal, face-to-face approach for major accounts within certain industries, and (c) distributors, resellers, and strategic partners that have a significant foothold in many of the industries that we have not historically served, as well as to further penetrate those industries that we do serve. We employ a “land and expand” approach. Our sales model generally begins with a trial followed by an initial purchase on a transactional basis or minimum-committed monthly spend. As organizations derive benefits from our solutions, we are able to expand within organizations as additional use cases are presented across departments, divisions, and geographic locations, and customers become increasingly reliant on our solutions in their daily workflow.
In order for us to continue to develop new products, grow our existing business and expand into additional markets, we must generate and sustain sufficient operating profits and cash flow in future periods. This will require us to generate additional sales from current products and new products currently under development. We continue to build out our sales organization to drive current products and to introduce new products into the marketplace.
Critical Accounting Policies and Estimates
Management’s discussion and analysis of financial condition and results of operations are based upon our condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”). The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to revenue recognition, allowance for doubtful accounts, useful lives of intangible assets, recoverability of the carrying amounts of goodwill and intangible assets, share-based compensation, and income tax provision. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
For additional information, please refer to our 2025 Form 10-K. There have been no material changes to Critical Accounting Policies and Estimates disclosed in our 2025 Form 10-K.
Recently issued accounting standards
See Note 1(b), “Recently issued accounting standards,” in “Notes to Condensed Consolidated Financial Statements.”
19
Third Quarter Financial Results
For the three months ended September 30, 2026 as compared to the three months ended September 30, 2025:
Third Quarter and Recent Business Highlights
Use and Reconciliation of Non-GAAP Financial Measures
Management evaluates the financial performance of our business on a variety of key indicators, including non-GAAP metrics of adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted earnings per share, adjusted gross profit, adjusted gross margin, and free cash flow ("FCF"). Adjusted EBITDA is a non-GAAP financial measure equal to net income, the most directly comparable financial measure based on US GAAP, excluding interest income, income tax expense, depreciation and amortization, share-based compensation expense, acquisition-related costs, litigation costs, and write-off of long-lived assets. We define adjusted EBITDA margin as adjusted EBITDA as a percentage of revenue. Adjusted net income is a non-GAAP financial measure equal to net income, the most directly comparable financial measure based on US GAAP, adjusted to exclude share-based compensation expense, amortization of share-based compensation capitalized in intangible assets, acquisition-related costs, litigation costs, and write-off of long-lived assets, and to include the tax effect of adjustments. We define adjusted earnings per share as adjusted net income divided by the weighted average shares outstanding. We define adjusted gross profit as gross profit plus depreciation and amortization of certain intangible assets, and adjusted gross margin as adjusted gross profit as a percentage of revenue. We define FCF as net cash provided by operating activities reduced by purchase of property and equipment and capitalized costs included in intangible assets.
20
The following is a reconciliation of net income, the most directly comparable US GAAP financial measure, to adjusted EBITDA:
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
(Dollars in thousands) |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Net income |
|
$ |
5,445 |
|
|
$ |
4,213 |
|
|
$ |
14,793 |
|
|
$ |
10,339 |
|
Interest income |
|
|
(1,069 |
) |
|
|
(386 |
) |
|
|
(1,807 |
) |
|
|
(1,033 |
) |
Income tax expense |
|
|
1,389 |
|
|
|
749 |
|
|
|
4,318 |
|
|
|
2,232 |
|
Depreciation and amortization |
|
|
2,837 |
|
|
|
2,706 |
|
|
|
8,434 |
|
|
|
7,903 |
|
Share-based compensation expense |
|
|
2,079 |
|
|
|
1,706 |
|
|
|
6,365 |
|
|
|
5,129 |
|
Acquisition-related costs |
|
|
225 |
|
|
|
(12 |
) |
|
|
533 |
|
|
|
358 |
|
Litigation costs |
|
|
84 |
|
|
|
60 |
|
|
|
269 |
|
|
|
73 |
|
Write-off of long-lived assets |
|
|
11 |
|
|
|
- |
|
|
|
12 |
|
|
|
3 |
|
Adjusted EBITDA |
|
$ |
11,001 |
|
|
$ |
9,036 |
|
|
$ |
32,917 |
|
|
$ |
25,004 |
|
Revenue |
|
$ |
27,751 |
|
|
$ |
23,083 |
|
|
$ |
80,299 |
|
|
$ |
66,860 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income margin |
|
|
20 |
% |
|
|
18 |
% |
|
|
18 |
% |
|
|
15 |
% |
Adjusted EBITDA margin |
|
|
40 |
% |
|
|
39 |
% |
|
|
41 |
% |
|
|
37 |
% |
The following is a reconciliation of net income, the most directly comparable US GAAP financial measure, to adjusted net income:
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
(Dollars in thousands, except share data) |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Net income |
|
$ |
5,445 |
|
|
$ |
4,213 |
|
|
$ |
14,793 |
|
|
$ |
10,339 |
|
Share-based compensation expense |
|
|
2,079 |
|
|
|
1,706 |
|
|
|
6,365 |
|
|
|
5,129 |
|
Amortization of share-based compensation |
|
|
411 |
|
|
|
413 |
|
|
|
1,231 |
|
|
|
1,235 |
|
Acquisition-related costs |
|
|
225 |
|
|
|
(12 |
) |
|
|
533 |
|
|
|
358 |
|
Litigation costs |
|
|
84 |
|
|
|
60 |
|
|
|
269 |
|
|
|
73 |
|
Write-off of long-lived assets |
|
|
11 |
|
|
|
- |
|
|
|
12 |
|
|
|
3 |
|
Tax effect of adjustments(1) |
|
|
(915 |
) |
|
|
(423 |
) |
|
|
(2,098 |
) |
|
|
(1,529 |
) |
Adjusted net income |
|
$ |
7,340 |
|
|
$ |
5,957 |
|
|
$ |
21,105 |
|
|
$ |
15,608 |
|
Earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic |
|
$ |
0.35 |
|
|
$ |
0.30 |
|
|
$ |
1.01 |
|
|
$ |
0.74 |
|
Diluted |
|
$ |
0.35 |
|
|
$ |
0.29 |
|
|
$ |
0.99 |
|
|
$ |
0.71 |
|
Adjusted earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic |
|
$ |
0.48 |
|
|
$ |
0.42 |
|
|
$ |
1.45 |
|
|
$ |
1.11 |
|
Diluted |
|
$ |
0.47 |
|
|
$ |
0.41 |
|
|
$ |
1.42 |
|
|
$ |
1.07 |
|
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic |
|
|
15,342,614 |
|
|
|
14,027,994 |
|
|
|
14,575,079 |
|
|
|
14,014,993 |
|
Diluted |
|
|
15,754,154 |
|
|
|
14,618,657 |
|
|
|
14,914,635 |
|
|
|
14,567,167 |
|
(1) The tax effect of adjustments is calculated using the expected combined federal and state statutory tax rate, which was approximately 26.00% for each of the three and nine months ended September 30, 2026 and 2025. The resulting tax effect may differ from applying such rate to total adjustments due to the tax treatment of certain items. Beginning with the 2025 Form 10-K, we updated the methodology for determining the income tax effects of adjustments in calculating non-GAAP adjusted net income. Prior-period amounts have been revised to conform to the current methodology and presentation. These revisions did not affect our previously reported GAAP financial statements.
21
The following is a reconciliation of gross profit, the most directly comparable US GAAP financial measure, to adjusted gross profit:
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
(Dollars in thousands) |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Revenue |
|
$ |
27,751 |
|
|
$ |
23,083 |
|
|
$ |
80,299 |
|
|
$ |
66,860 |
|
Cost of revenue (exclusive of depreciation and |
|
|
(4,018 |
) |
|
|
(3,622 |
) |
|
|
(11,655 |
) |
|
|
(10,784 |
) |
Depreciation and amortization related to cost of revenue |
|
|
(2,765 |
) |
|
|
(2,651 |
) |
|
|
(8,227 |
) |
|
|
(7,746 |
) |
Gross profit |
|
|
20,968 |
|
|
|
16,810 |
|
|
|
60,417 |
|
|
|
48,330 |
|
Depreciation and amortization of certain intangible |
|
|
2,702 |
|
|
|
2,615 |
|
|
|
8,080 |
|
|
|
7,627 |
|
Adjusted gross profit |
|
$ |
23,670 |
|
|
$ |
19,425 |
|
|
$ |
68,497 |
|
|
$ |
55,957 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Gross margin |
|
|
76 |
% |
|
|
73 |
% |
|
|
75 |
% |
|
|
72 |
% |
Adjusted gross margin |
|
|
85 |
% |
|
|
84 |
% |
|
|
85 |
% |
|
|
84 |
% |
(1) Depreciation and amortization of certain intangible assets primarily consists of the amortization of capitalized internal-use software development costs, which are included within intangible assets and amortized over their estimated useful lives.
The following is a reconciliation of net cash provided by operating activities, the most directly comparable US GAAP financial measure, to FCF:
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
(Dollars in thousands) |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Net cash provided by operating activities |
|
$ |
12,671 |
|
|
$ |
10,172 |
|
|
$ |
29,893 |
|
|
$ |
22,660 |
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Purchase of property and equipment |
|
|
(95 |
) |
|
|
(187 |
) |
|
|
(263 |
) |
|
|
(439 |
) |
Capitalized costs included in intangible assets |
|
|
(3,752 |
) |
|
|
(2,695 |
) |
|
|
(10,555 |
) |
|
|
(7,679 |
) |
Free cash flow |
|
$ |
8,824 |
|
|
$ |
7,290 |
|
|
$ |
19,075 |
|
|
$ |
14,542 |
|
In order to assist readers of our condensed consolidated financial statements in understanding the operating results that management uses to evaluate the business and for financial planning purposes, we present non-GAAP measures of adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted earnings per share, adjusted gross profit, adjusted gross margin, and FCF as supplemental measures of our operating performance and liquidity. We believe they provide useful information to our investors as they eliminate the impact of certain items that we do not consider indicative of our cash operations and ongoing operating performance. In addition, we use them as an integral part of our internal reporting to measure the performance and operating strength of our business.
22
We believe adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted earnings per share, adjusted gross profit, adjusted gross margin, and FCF are relevant and provide useful information frequently used by securities analysts, investors and other interested parties in their evaluation of the operating performance of companies similar to ours and are indicators of the operational strength of our business. We believe adjusted EBITDA eliminates the uneven effect of considerable amounts of non-cash depreciation and amortization, and share-based compensation expense, and the impact of other items not indicative of our ongoing operating performance. Adjusted EBITDA margin is calculated as adjusted EBITDA as a percentage of revenue. We believe adjusted net income provides additional means of evaluating period-over-period operating performance by eliminating certain non-cash expenses and other items that might otherwise make comparisons of our ongoing business with prior periods more difficult and obscure trends in ongoing operations. Adjusted net income is a non-GAAP financial measure equal to net income, adjusted to exclude share-based compensation expense, amortization of share-based compensation capitalized in intangible assets, and other items not indicative of our ongoing operating performance, and to include the tax effect of adjustments. We define adjusted earnings per share as adjusted net income divided by the weighted average shares outstanding. Our adjusted gross profit is a measure used by management in evaluating the business’s current operating performance by excluding the impact of prior historical costs of certain assets that are expensed systematically and allocated over the estimated useful lives of the assets, which may not be indicative of the current operating activity. We define adjusted gross profit as gross profit plus depreciation and amortization of certain intangible assets. We believe adjusted gross profit provides useful information to our investors by eliminating the impact of certain non-cash depreciation and amortization, and primarily the amortization of software developed for internal use, providing a baseline of our core operating results that allow for analyzing trends in our underlying business consistently over multiple periods. Adjusted gross margin is calculated as adjusted gross profit as a percentage of revenue. We believe FCF is an important liquidity measure of the cash that is available, after capital expenditures, for operational expenses and investment in our business. FCF is a measure used by management to understand and evaluate the business’s operating performance and trends over time. FCF is calculated by using net cash provided by operating activities, less purchase of property and equipment and capitalized costs included in intangible assets.
Adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted earnings per share, adjusted gross profit, adjusted gross margin, and FCF are not intended to be performance measures that should be regarded as an alternative to, or more meaningful than, financial measures presented in accordance with US GAAP. In addition, FCF is not intended to represent our residual cash flow available for discretionary expenses and is not necessarily a measure of our ability to fund our cash needs. The way we measure adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted earnings per share, adjusted gross profit, adjusted gross margin, and FCF may not be comparable to similarly titled measures presented by other companies, and may not be identical to corresponding measures used in our various agreements.
Results of Operations
Three months ended September 30, 2026 compared to three months ended September 30, 2025
Revenue
Revenue increased $4.7 million, or 20%, to $27.8 million for the three months ended September 30, 2026, compared to $23.1 million for the same period in 2025. The increase was driven by strong onboarding of new customers and volume expansion across the existing customer base.
Revenue from new customers represents total monthly revenue generated from customers during their first six full calendar months of revenue contribution. Revenue from existing customers represents total monthly revenue generated from customers beginning in their seventh full calendar month of revenue contribution.
As of September 30, 2026, our IDI billable customer base increased to 11,252 customers, up from 9,853 customers a year earlier. Our FOREWARN user base increased to 462,861 users, up from 372,209 users a year earlier.
Cost of revenue (exclusive of depreciation and amortization)
Cost of revenue (exclusive of depreciation and amortization) increased $0.4 million, or 11%, to $4.0 million for the three months ended September 30, 2026, compared to $3.6 million for the same period in 2025.
23
Our cost of revenue primarily consists of data acquisition costs, which include the cost to acquire data under flat-fee licensing agreements, including unlimited usage arrangements, as well as purchases on a transactional basis. We continue to enhance the breadth and depth of our data by the addition and expansion of relationships with key data suppliers, including our largest data supplier, which accounted for 44% and 46% of our total data acquisition costs for the three months ended September 30, 2026 and 2025, respectively. Effective on May 1, 2025, we entered into an amendment with our largest data supplier, extending the term of the agreement through April 30, 2031.
Additional components of our cost of revenue include cloud infrastructure fees, and pertinent personnel-related costs and share-based compensation expense.
Due to the fixed-cost nature of our primary data licensing structure, cost of revenue as a percentage of revenue decreased to 14% for the three months ended September 30, 2026, compared to 16% for the same period in 2025. We expect this percentage to continue to decline over time as our revenue increases.
Sales and marketing expenses
Sales and marketing expenses increased $0.8 million, or 14%, to $6.2 million for the three months ended September 30, 2026, compared to $5.4 million for the same period in 2025. We continued to invest in expanding our go-to-market capabilities to support long-term revenue growth.
Sales and marketing expenses include personnel-related expenses, advertising, marketing and agency expenses, travel expenses, and share-based compensation expense incurred by our sales team, and provision for bad debts.
For the three months ended September 30, 2026 and 2025, sales and marketing expenses consisted primarily of:
General and administrative expenses
General and administrative expenses increased $2.2 million, or 32%, to $9.0 million for the three months ended September 30, 2026, compared to $6.8 million for the same period in 2025. The increase reflects higher personnel-related expenses and share-based compensation expense to support the continued growth of the business, as well as higher professional fees.
For the three months ended September 30, 2026 and 2025, general and administrative expenses consisted primarily of:
Depreciation and amortization
Depreciation and amortization expenses increased $0.1 million, or 5%, to $2.8 million for the three months ended September 30, 2026, compared to $2.7 million for the same period in 2025.
The increase was primarily driven by the amortization of intangible assets that became ready for their intended use after September 30, 2025.
Interest income
Interest income increased $0.7 million, or 177%, to $1.1 million for the three months ended September 30, 2026, compared to $0.4 million for the three months ended September 30, 2025.
The increase in interest income was primarily attributable to higher average balances invested in money market funds and U.S. Treasury securities, reflecting the net proceeds from the Underwritten Public Offering in August 2026 and cash generated from operations.
24
Income before income taxes
Income before income taxes increased $1.8 million, or 38%, to $6.8 million for the three months ended September 30, 2026, compared to $5.0 million for the same period in 2025.
The increase was primarily driven by:
partially offset by:
Income tax expense
Income tax expense was $1.4 million for the three months ended September 30, 2026, compared to $0.7 million for the same period in 2025.
The increase in income tax expense was primarily attributable to higher pre-tax income and the increase in the Company’s effective tax rate to 20% for the three months ended September 30, 2026 from 15% for the same period in 2025.
For additional information, refer to Note 7, “Income taxes,” in “Notes to Condensed Consolidated Financial Statements.”
Net income
Net income increased $1.2 million, or 29%, to $5.4 million for the three months ended September 30, 2026, compared to $4.2 million for the same period in 2025, as a result of the foregoing.
Nine months ended September 30, 2026 compared to nine months ended September 30, 2025
Revenue
Revenue increased $13.4 million, or 20%, to $80.3 million for the nine months ended September 30, 2026, compared to $66.9 million for the same period in 2025. The increase was driven by volume expansion across the existing customer base, partially offset by the decrease in revenue from new customers.
Revenue from new customers represents total monthly revenue generated from customers during their first six full calendar months of revenue contribution. Revenue from existing customers represents total monthly revenue generated from customers beginning in their seventh full calendar month of revenue contribution.
As of September 30, 2026, our IDI billable customer base increased to 11,252 customers, up from 9,853 customers a year earlier. Our FOREWARN user base increased to 462,861 users, up from 372,209 users a year earlier.
Cost of revenue (exclusive of depreciation and amortization)
Cost of revenue (exclusive of depreciation and amortization) increased $0.9 million, or 8%, to $11.7 million for the nine months ended September 30, 2026, compared to $10.8 million for the same period in 2025.
25
Our cost of revenue primarily consists of data acquisition costs, which include the cost to acquire data under flat-fee licensing agreements, including unlimited usage arrangements, as well as purchases on a transactional basis. We continue to enhance the breadth and depth of our data by the addition and expansion of relationships with key data suppliers, including our largest data supplier, which accounted for 45% of our total data acquisition costs for each of the nine months ended September 30, 2026 and 2025. Effective on May 1, 2025, we entered into an amendment with our largest data supplier, extending the term of the agreement through April 30, 2031.
Additional components of our cost of revenue include cloud infrastructure fees, and pertinent personnel-related costs and share-based compensation expense.
Due to the fixed-cost nature of our primary data licensing structure, cost of revenue as a percentage of revenue decreased to 15% for the nine months ended September 30, 2026, compared to 16% for the same period in 2025. We expect this percentage to continue to decline over time as our revenue increases.
Sales and marketing expenses
Sales and marketing expenses increased $1.4 million, or 8%, to $17.8 million for the nine months ended September 30, 2026, compared to $16.4 million for the same period in 2025. We continued to invest in expanding our go-to-market capabilities to support long-term revenue growth.
Sales and marketing expenses include personnel-related expenses, advertising, marketing and agency expenses, travel expenses, and share-based compensation expense incurred by our sales team, and provision for bad debts.
For the nine months ended September 30, 2026 and 2025, sales and marketing expenses consisted primarily of:
General and administrative expenses
General and administrative expenses increased $4.9 million, or 24%, to $25.1 million for the nine months ended September 30, 2026, compared to $20.2 million for the same period in 2025. The increase reflects higher personnel-related expenses and share-based compensation expense to support the continued growth of the business, as well as higher professional fees.
For the nine months ended September 30, 2026 and 2025, general and administrative expenses consisted primarily of:
Depreciation and amortization
Depreciation and amortization expenses increased $0.5 million, or 7%, to $8.4 million for the nine months ended September 30, 2026, compared to $7.9 million for the same period in 2025.
The increase was primarily driven by the amortization of intangible assets that became ready for their intended use after September 30, 2025.
Interest income
Interest income increased $0.8 million, or 75%, to $1.8 million for the nine months ended September 30, 2026, compared to $1.0 million for the nine months ended September 30, 2025.
The increase in interest income was primarily attributable to higher average balances invested in money market funds and U.S. Treasury securities, reflecting the net proceeds from the Underwritten Public Offering in August 2026 and cash generated from operations.
26
Income before income taxes
Income before income taxes increased $6.5 million, or 52%, to $19.1 million for the nine months ended September 30, 2026, compared to $12.6 million for the same period in 2025.
The increase was primarily driven by:
partially offset by:
Income tax expense
Income tax expense was $4.3 million for the nine months ended September 30, 2026, compared to $2.2 million for the same period in 2025.
The increase in income tax expense was primarily attributable to higher pre-tax income and the increase in the Company’s effective tax rate to 23% for the nine months ended September 30, 2026 from 18% for the same period in 2025.
For additional information, refer to Note 7, “Income taxes,” in “Notes to Condensed Consolidated Financial Statements.”
Net income
Net income increased $4.5 million, or 43%, to $14.8 million for the nine months ended September 30, 2026, compared to $10.3 million for the same period in 2025, as a result of the foregoing.
Effect of Inflation
While the pace of inflation has shown signs of moderation more recently, macroeconomic uncertainty and higher interest rates have continued to influence business sentiment and spending patterns in certain sectors. These conditions have resulted in — and may continue to contribute to — fluctuations in transaction volumes, pricing dynamics, and operating margins across our services.
In addition, elevated interest rates implemented to curb inflation may reduce demand for credit, which could in turn lead to lower usage of our services by customers in the banking, financial services, and adjacent industries.
Despite these broader market dynamics, inflation has not had a material impact on our financial results to date. Where feasible, we have taken proactive steps to mitigate inflation-related cost increases, including implementing pricing adjustments where permitted under contract terms and competitive conditions.
Liquidity and Capital Resources
Cash flows provided by operating activities
For the nine months ended September 30, 2026, net cash provided by operating activities was $29.9 million. This was primarily driven by:
27
For the nine months ended September 30, 2025, net cash provided by operating activities was $22.7 million. This was primarily driven by:
Cash flows used in investing activities
For the nine months ended September 30, 2026, net cash used in investing activities was $109.8 million. This was primarily driven by:
Purchases of investments in U.S. Treasury securities included $0.9 million of accrued interest purchased. No investments matured during the period, and the first maturity is in March 2027.
For the nine months ended September 30, 2025, net cash used in investing activities was $8.1 million. This was primarily driven by the capitalized costs included in intangible assets totaling $7.7 million.
Cash flows provided by (used in) financing activities
For the nine months ended September 30, 2026, net cash provided by financing activities was $104.4 million. This was primarily driven by:
partially offset by:
On August 7, 2026, we closed an underwritten public offering of 1,916,667 shares of common stock at a public offering price of $60.00 per share (the "Underwritten Public Offering"), which included the exercise in full by the underwriters of their option to purchase 250,000 additional shares. The gross proceeds were $115.0 million, and the net proceeds were $108.7 million, after deducting underwriting discounts and commissions and offering expenses. See Note 8, “Shareholders' equity,” in “Notes to Condensed Consolidated Financial Statements” for additional information.
On May 2, 2022, our Board of Directors authorized a stock repurchase program to repurchase our common stock from time to time, which was subsequently amended on each of December 19, 2023, March 28, 2024, and November 3, 2025, bringing the total authorization to $30.0 million (the "Stock Repurchase Program"). See Note 8, “Shareholders’ equity,” in “Notes to Condensed Consolidated Financial Statements” for additional information.
28
For the nine months ended September 30, 2025, net cash used in financing activities was $5.7 million. This was primarily driven by:
On December 3, 2024, we declared a special cash dividend of $0.30 per share on our common stock to shareholders of record as of January 31, 2025. The dividend, totaling $4.2 million, was paid on February 14, 2025.
Commitments
As of September 30, 2026, we had material commitments under data licensing agreements and a cloud services agreement totaling $32.4 million.
We expect to fund these commitments, as well as our ongoing operating and capital requirements over the next twelve months, using available cash and cash equivalents, investments in U.S. Treasury securities, and cash flows generated from operations.
Capital Resources
We reported net income of $5.4 million and $4.2 million for the three months ended September 30, 2026 and 2025, respectively, and $14.8 million and $10.3 million for the nine months ended September 30, 2026 and 2025, respectively. As of September 30, 2026, we had total shareholders’ equity of $227.6 million, cash and cash equivalents of $68.1 million, and investments in U.S. Treasury securities of $97.6 million.
In August 2026, we closed the Underwritten Public Offering (as defined above) with net proceeds to us of $108.7 million, after deducting underwriting discounts and commissions and offering expenses. Following the offering, we invested a portion of our excess cash in U.S. Treasury securities, of which $36.3 million will mature within one year. See Note 3, “Investments,” in “Notes to Condensed Consolidated Financial Statements.”
Based on our projected growth in revenue and operating results, together with our available cash and cash equivalents and investments in U.S. Treasury securities, we believe that our existing resources will be sufficient to fund our operations and expected capital expenditures for at least the next twelve months.
While we anticipate continuing to fund our business through internally generated cash flows and our existing cash and investment balances, future capital needs may arise based on the pace of revenue growth, investment in technology, or strategic initiatives, including potential acquisitions. In such cases, we may seek to raise additional capital through the issuance of equity and/or debt securities. However, any such financing, if available, could result in dilution to existing shareholders and may involve terms that are not favorable to the Company.
Off-Balance Sheet Arrangements
As of September 30, 2026, we did not have any off-balance sheet arrangements, as defined in Item 303 of Regulation S-K.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
As a smaller reporting company as defined in Rule 12b-2 of the Exchange Act, we are not required to include information required by this item.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d–15(e) of the Exchange Act) as of September 30, 2026. We maintain disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure.
29
Based on the evaluation of disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act), the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of September 30, 2026.
Changes in Internal Control Over Financial Reporting
There were no changes in the Company’s internal control over financial reporting identified in connection with management's evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act during the quarter ended September 30, 2026 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Limitations on Effectiveness of Controls and Procedures and Internal Control over Financial Reporting
In designing and evaluating the disclosure controls and procedures and internal control over financial reporting, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures and internal control over financial reporting must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.
30
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
Information with respect to certain legal proceedings is included in Note 12, “Commitments and contingencies,” included in “Notes to Condensed Consolidated Financial Statements” contained in Part I, Item 1 of this Form 10-Q, and is incorporated herein by reference.
Item 1A. Risk Factors.
There have been no material changes to the risk factors previously disclosed in the Company’s 2025 Form 10-K.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Issuer Purchases of Equity Securities
On May 2, 2022, the Company's Board of Directors authorized the Stock Repurchase Program to repurchase the Company's common stock from time to time through open market purchases, privately negotiated transactions or other means, including pursuant to Rule 10b5-1 trading plans, which was subsequently amended on each of December 19, 2023, March 28, 2024, and November 3, 2025, bringing the total authorization to $30.0 million. The Stock Repurchase Program does not obligate the Company to repurchase any shares and may be modified, suspended, or terminated at any time at the discretion of the Company's Board of Directors.
During the three months ended September 30, 2026, the Company did not repurchase any common stock pursuant to the Stock Repurchase Program.
Since the inception of the Stock Repurchase Program and through September 30, 2026, the Company has purchased a total of $14.5 million of common stock at an average price of $22.82 per share.
Shares of common stock withheld as payment of withholding taxes in connection with the vesting of equity awards are also treated as common stock repurchases. Those withheld shares of common stock are not required to be disclosed under Item 703 of Regulation S-K and accordingly are excluded from the amounts mentioned above.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not Applicable.
Item 5. Other Information.
Rule 10b5-1 Trading Plans
No officers or directors had any contract, instruction, or written plan for the purchase or sale of our securities that was intended to satisfy the affirmative defense conditions of
31
Item 6. Exhibits.
The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.
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Incorporated by Reference |
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Filed |
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Exhibit No. |
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Exhibit Description |
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Form |
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File No. |
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Exhibit |
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Filing Date |
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Herewith |
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31.1
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X
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31.2 |
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X |
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32.1* |
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X |
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32.2* |
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X |
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101.INS |
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Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
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X |
101.SCH |
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Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents. |
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X |
104 |
|
Cover Page Interactive Data File (embedded within the Inline XBRL document). |
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X |
* This certification is deemed furnished and not filed for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act.
32
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
November 4, 2026 |
|
|
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Red Violet, Inc. |
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By: |
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/s/ Daniel MacLachlan |
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|
|
Daniel MacLachlan |
|
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|
Chief Financial Officer |
|
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|
|
(Principal Financial and Accounting Officer) |
33
Exhibit 31.1
CERTIFICATIONS
I, Derek Dubner, certify that:
November 4, 2026 |
By: |
|
/s/ Derek Dubner |
|
|
|
Derek Dubner |
|
|
|
Chief Executive Officer (Principal Executive Officer) |
Exhibit 31.2
CERTIFICATIONS
I, Daniel MacLachlan, certify that:
November 4, 2026 |
By: |
|
/s/ Daniel MacLachlan |
|
|
|
Daniel MacLachlan |
|
|
|
Chief Financial Officer (Principal Financial and Accounting Officer) |
Exhibit 32.1
CERTIFICATION PURSUANT
TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the accompanying Quarterly Report on Form 10-Q of Red Violet, Inc. for the quarter ended September 30, 2026 (the “Report”), the undersigned hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to my knowledge and belief, that:
November 4, 2026 |
By: |
|
/s/ Derek Dubner |
|
|
|
Derek Dubner |
|
|
|
Chief Executive Officer |
|
|
|
(Principal Executive Officer) |
The certification set forth above is being furnished as an Exhibit solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and is not being filed as part of the Report or as a separate disclosure document of Red Violet, Inc. or the certifying officers.
Exhibit 32.2
CERTIFICATION PURSUANT
TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the accompanying Quarterly Report on Form 10-Q of Red Violet, Inc. for the quarter ended September 30, 2026 (the “Report”), the undersigned hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to my knowledge and belief, that:
November 4, 2026 |
By: |
|
/s/ Daniel MacLachlan |
|
|
|
Daniel MacLachlan |
|
|
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Chief Financial Officer |
|
|
|
(Principal Financial and Accounting Officer) |
The certification set forth above is being furnished as an Exhibit solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and is not being filed as part of the Report or as a separate disclosure document of Red Violet, Inc. or the certifying officers.