Good day, ladies and gentlemen and welcome to Red Violet’s Second Quarter 2021 Earnings Conference Call. [Operator Instructions] As a reminder, this call is being recorded. I would now like to introduce your host for today’s conference, Camilo Ramirez, Director of Finance and Investor Relations. Please go ahead.

Good afternoon and welcome. Thank you for joining us today to discuss our second quarter 2021 financial results. With me today is Derek Dubner, our Chairman and Chief Executive Officer and Dan MacLachlan, our Chief Financial Officer. Our call today will begin with comments from Derek and Dan followed by a question-and-answer session. I would like to remind you that this call is being webcast live and recorded. A replay of the event will be available following the call on our website. To access the webcast, please visit our Investors page on our website, www.redviolet.com. Before we begin, I would like to advise listeners that certain information discussed by management during this conference call are forward-looking statements covered under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Actual results could differ materially from those stated or implied by our forward-looking statements due to risks and uncertainties associated with the company’s business. The company undertakes no obligation to update the information provided on this call. For a discussion of risks and uncertainties associated with Red Violet’s business, I encourage you to review the company’s filings with the Securities and Exchange Commission, including the most recent Annual Report on Form 10-K and subsequent 10-Qs. During the call, we may present certain non-GAAP financial information relating to adjusted gross profit, adjusted gross margin, adjusted EBITDA margins and adjusted EBITDA. Reconciliations of these non-GAAP financial measures to their most directly comparable GAAP financial measures are provided in the earnings press release issued earlier today. In addition, certain supplemental metrics that are not necessarily derived from any underlying financial statement amounts maybe discussed and these metrics and their definitions can also be found in the earnings press release issued earlier today. With that, I am pleased to introduce Red Violet’s Chairman and Chief Executive Officer, Derek Dubner.

Thanks, Camilo. Good afternoon to those joining us today to discuss the results of our second quarter 2021. We are pleased to report yet another terrific quarter, delivering our highest quarterly revenue in our history and breaking our previous record achieved last quarter. With improving economic conditions, we experienced continued increased demand for our innovative solutions driven by our cloud-native platform, differentiated data assets and analytic capabilities. Thank you to our dedicated team who seized upon these opportunities moving up and across customer markets and to all members across the organization for their hard work and dedication in support of these results. Of particular importance, we have a strong balance sheet and cash generation, which as I will discuss in a bit is enabling us to invest in the business to further expand our capabilities and seize upon opportunities. Now to our quarterly results, we generated record revenue of $10.9 million, a 54% increase over the second quarter of last year. Platform revenue increased 54% to $10.6 million. Services revenue increased 46% to $0.3 million. Adjusted gross profit increased 83% to $8.2 million and adjusted gross margin increased to 75% from 63% compared to the same period of 2020. Adjusted EBITDA increased 245% to a record $3.1 million. We set another new record for contractual revenue at 81%. We generated $2.3 million in cash from operating activities in the second quarter. And as of June 30, 2021, we had $13.9 million in cash and cash equivalents on our balance sheet. We added 239 new IDI customers during the second quarter, ending the quarter with 6,141 customers. FOREWARN added over 8,700 users, ending the quarter with 67,578 users. Over 150 realtor associations throughout the U.S. are now contracted to use FOREWARN. I would like to switch gears to cite two examples,…

Thank you, Derek and good afternoon. It was another great quarter for the company, again, hitting records in nearly every key financial metric. As Derek mentioned, with improving economic conditions, we continue to see increasing demand for our solutions. We are pleased with our new customer growth and strong growth revenue from existing customers. Contractual revenue continues to trend nicely, and revenue attrition returned to its pre-COVID norms. Across the board, the business is performing well, so let’s dive into the second quarter results. For clarity, all the comparisons I will discuss today will be against the second quarter of 2020, unless noted otherwise. Total revenue was $10.9 million, a 54% increase over prior year, and our highest quarterly revenue ever. Platform revenue increased 54% to a record $10.6 million. Services revenue was up $0.1 million or 46% to $0.3 million. Our services revenue continues to be impacted by COVID-related government-imposed collections moratoria and forbearance programs. However, this is the first COVID-normalized year-over-year comparable period we have reported. Our adjusted gross margin was the highest it has ever been at 75%, up 12 percentage points, which translated nicely into a record $3.1 million in adjusted EBITDA, up 245% over prior year. Our adjusted EBITDA margin was 29% for the quarter compared to 13% in prior year. Continuing through the details of our P&L, as mentioned, revenue was $10.9 million for the second quarter, consisting of revenue from new customers of $0.9 million, base revenue from existing customers of $8.4 million and growth revenue from existing customers of $1.6 million. Our idiCORE billable customer base grew by 239 customers sequentially from the first quarter, ending the second quarter at 6,141 customers. FOREWARN added over 8,700 users during the second quarter. Our contractual revenue was 81% for the quarter, a 2 percentage…

[Operator Instructions] Your first question comes from the line of Pamela Carter [ph] from Carter Management. Your line is open.

Hi, first, congratulations on the quarter. Very impressive.

Thank you.

You – so speaking to that, your continued ability to drive gross margin has been impressive. Today, you’re at 75%, but what I’m wondering is can you really drive the margin materially higher from where it is today? What does your adjusted gross margin look like a year or 2 from now?

Great. Pamela, thanks. This is Dan. Thank you for the question. So the short answer is yes. We can continue to drive adjusted gross margin materially higher from here. The great thing about the business model and where we’re at today because our cost of revenue is relatively fixed, each incremental dollar of growth provides nearly 100% contribution. So – as many of our shareholders know, we have previously created two companies in the space, which we sold to global information technology providers. And we know those two companies, due to their maturity, are generating gross margins in excess of 90%. So for us, when we talk about a year or 2 from now, we’re going to be trending and approaching that 90% number. So we’re really excited about being able to leverage the business at this point.

Wonderful. Okay, very helpful. Thank you.

Thank you.

There are no further questions at this time. I would now like to turn the conference back to Mr. Derek Dubner.

Thank you again for joining us today. We posted a very strong second quarter and first half of the year, and we feel great about our positioning going forward. We are making aggressive moves in executing upon our strategy in order to continue disruption of the status quo in the marketplace. Our customers are realizing the benefits of our competitive advantages in technology, data assets and analytics. The health of our business has never been stronger, and we are very optimistic about our future. Good afternoon.

Ladies and gentlemen, this concludes today’s conference. Thank you for your participation, and have a wonderful day. You may all disconnect.