Good day, ladies and gentlemen and welcome to Red Violet's First Quarter 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. As a reminder, this call is being recorded. I would now like to introduce your host for today's conference, Camilo Ramirez, Senior Vice President, Finance and Investor Relations. Please go ahead.

Good afternoon and welcome. Thank you for joining us today to discuss our first quarter 2025 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 the subsequent 10-Qs. During the call, we may present certain non-GAAP financial information relating to adjusted gross profit, adjusted gross margin, adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted earnings per share and free cash flow. Reconciliations of these non-GAAP financial measures to their most directly comparable U.S. GAAP financial measure 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 may be 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.

Good afternoon, everyone and thank you for joining us today to discuss our first quarter financial results. We are pleased to report another strong quarter, marked by solid execution and continued demand across our business. Our results reflect sustained strength across our diversified customer base with performance driven by both existing relationships and new customer wins. Despite the persistent volatility in the macroeconomic environment, volumes have remained solid, underscoring the durability and relevance of our solutions. Now let's briefly run through the numbers. Revenue for the quarter was up 26% to a record $22 million, producing a record adjusted gross profit of $18.3 million and a record adjusted gross margin of 83%. Adjusted EBITDA for the quarter was up 47% to a record $8.4 million, producing a record adjusted EBITDA margin of 38%, up 6 percentage points. Adjusted net income increased 53% to a record $4.8 million for the quarter, resulting in a record adjusted earnings of $0.33 per diluted share. Our IDI billable customer base increased by 315 customers sequentially from the fourth quarter, ending the first quarter at 9,241 customers. Within FOREWARN, we added 21,918 users during the first quarter, ending the quarter with 325,336 users. Over 545 realtor associations are now contracted to use FOREWARN. We continue to experience strong receptivity from prospective customers, which reinforces the value proposition of our platform. Clients are increasingly turning to us not just for innovation, but for cost effective scalable solutions that address mission critical needs. Our ability to simultaneously deliver innovation and efficiency is clearly resonating. As we look at the broader environment, specifically the economic volatility and uncertainty beginning in the first quarter, it is important to again underscore the durability of our business model, which has consistently proven its strength through multiple economic cycles from the dot-com…

Thank you, Derek, and good afternoon, everyone. We are excited to kick off 2025 with another record quarter building on the momentum we established throughout 2024. Our first quarter performance reflects solid execution, broad based demand across our verticals and the efficiency of our operating model. As we move into the year, we remain focused on our priorities, delivering consistent results, deepening customer relationships and continuing to invest where we see the greatest return. With a strong foundation and growing leverage in the business, we are well positioned to deliver another year of healthy, sustainable growth. Turning now to our first quarter results for clarity, all the comparisons I will discuss today will be against the first quarter of 2024, unless noted otherwise. Total revenue was a record $22 million, representing a 26% increase over the prior year. We generated a record $18.3 million in adjusted gross profit, resulting in a record adjusted gross margin of 83%, up 4 percentage points. Adjusted EBITDA for the quarter was also a record at $8.4 million, an increase of 47% over the prior year. Adjusted EBITDA margin reached a record 38%, up 6 percentage points. Adjusted net income increased 53% to a record $4.8 million, resulting in record adjusted earnings of $0.33 per diluted share. Moving through the details of our P&L, as mentioned, revenue was $22 million for the first quarter. This total includes $1.2 million in one-time transactional revenue associated with two significant opportunity wins from two new customers. Excluding this one-time transactional revenue, first quarter revenue growth would have still been a healthy 19%. Within IDI, we saw growth across verticals. IDI's billable customer base increased by over 300 customers sequentially from the fourth quarter, ending the quarter at over 9,200 customers. Our emerging markets vertical led all verticals on…

Thank you. [Operator Instructions] The first question comes from the line of Josh Nichols of B. Riley. Josh, please go ahead.

Yes, thank you for taking my question and great to see another quarter with a lot of records being set yet again. Quick question for me. I mean, quite strong growth when you look at like the IDI customers this quarter, is there any color that you could provide with a little bit more granularity on what's driving that specifically? Or how you think that those trends are going to play out through the remainder of the year.

Yes. Josh, hi, this is Dan and thanks for the questions. It kind of just builds on what we talked about last quarter that in the fourth quarter we saw just strong consistent volume across the customer base and across verticals, whether that be financial and corporate risk, collections, forewarn, investigative or emerging markets. And in the first quarter, we saw the same thing again. Obviously, there's a bit of uncertainty in the broader economic activity. But from our business perspective, we didn't see any impact from that whatsoever. We continued to see good onboarding across customer verticals and customer size, including medium and larger enterprise. And so we expect that to continue over the remainder of the year. And again just very excited about the opportunity pipeline that is built and our ability to convert that pipeline.

Thanks. And just to follow up because you mentioned it, just I know the company's been securing a growing number of larger customers. Any data or highlights that you could provide, are they slowing down, are they picking up with the macro uncertainty? Or what are you seeing in terms of large customers, whether it's like government or more some of these public sector awards that you're still in the early days of going after.

Yes, look, I mean from a pure kind of metric perspective we gave some color in fourth quarter just being right around 96 customers that were generating excess of 100,000 in revenue a year. I can say, after the first quarter that has grown nicely to well in excess of 100 customers. Close to 110 customers today in the trailing 12 months are spending over $100,000. So we continue to see that dynamic of the medium and larger enterprise customers and our investment to move up tier significantly pay off.

I appreciate the context, sir. Then last question for me, Derek, maybe you could provide a little bit more color on this since you've talked about it specifically if you had to touch on one or two of the areas that you think for like internal or external technology investments that you think could really help grow the business longer term beyond just like a quarter or two, what is it that you're most focused on doing as you continue to build out this core identity graph for the consumer?

Yes, thanks Josh. Great question. Well, we have a multiyear product roadmap that we're working on. We continue to invest in not only financially, but human resource in expanding the moat around the capabilities around our platform. It's highly differentiated against anything we've created in the past and against competition. And I think that's what you're seeing, it's translating to customer wins and receptivity around what we can bring. I would remark that in a time of volatility, we're seeing greater receptivity from prospective customers wanting to understand how we can process their workflows, which we can do and we believe better than the competition. But we can do so because of the construct of our platform, cloud, et cetera, in a much more efficient manner. And so they are definitely listening and wanting to understand the opportunity there. So we continue to invest in our identity graph. We're looking to enhance, as I mentioned, some of the strategic priorities, enhance the proprietary data generation and aggregation internally and that includes with some of our initiatives around artificial intelligence. We continue to expand our capabilities to be in, bring new solutions out in the way of know your business, KYB account monitoring and really driving more risk signals out of the data that we see, which is extremely helpful and informative for our customers. And, we want to be able to teach them what we're seeing and we believe it's those are insights that they are not seeing perhaps at that time. So really very current risk signals that alert them to risks. And so we're very excited and we continue to invest also in the strategic priorities I mentioned of enhancing our productivity and really increasing automation across the enterprise. So that as we scale in the out years, you're going to see even greater financial performance, even greater than what we're performing today.

Great to hear. Look forward to seeing you guys in a couple of weeks. I'll jump back in the queue.

Likewise. Thanks Josh.

This concludes the question-and-answer session. I would now like to turn it back over to Derek Dubner for closing remarks.

In closing, we're proud of our performance this quarter and encouraged by the momentum we're seeing across the business as we continue to execute upon our strategic priorities. We remain focused on delivering long-term value for our customers, our employees and our shareholders. Thank you for your continued support and for joining us today.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.