The quarter cleared a modestly raised market bar. Published expectations were roughly $26.13 million of revenue and $0.33 of EPS; Red Violet delivered $26.7 million and $0.50 of adjusted diluted EPS, while GAAP diluted EPS was $0.34.
| Metric | Q2 2026 | Q2 2025 | Change | Versus expectation |
|---|---|---|---|---|
| Revenue | $26.7M | $21.8M | +23% | Above ~$26.13M consensus |
| GAAP diluted EPS | $0.34 | $0.18 | +89% | Roughly in line with ~$0.33 consensus |
| Adjusted diluted EPS | $0.50 | $0.31 | +61% | Above ~$0.33 published consensus |
| Adjusted EBITDA | $11.2M | $7.6M | +48% | Record result |
| Adjusted EBITDA margin | 42% | 35% | +7 pts | Above prior-year profile |
| Operating cash flow | $10.6M | $7.5M | +42% | Record result |
| IDI billable customers | 10,869 | 9,549 | +14% | 447 added, a company record |
| FOREWARN users | 443,173 | 346,671 | +28% | 25,493 added in Q2 |
The beat was driven more by operating leverage than by revenue alone. Revenue grew 23%, but adjusted EBITDA rose 48% and adjusted EBITDA margin expanded to 42% from 35% (Adjusted EBITDA reconciliation). Adjusted gross margin also reached a record 86%, up from 84%, while sales and marketing expense rose only 2% (Adjusted gross profit reconciliation; Income Statement). That combination makes this more substantive than a simple top-line beat.
Customer acquisition supplied evidence that the growth acceleration is broadening. IDI added 447 billable customers, up from 400 in Q1, ending at 10,869 (Supplemental metrics; Conference call — IDI customer additions). Four of five revenue verticals reached record quarterly revenue, while Collections grew more than 20% and Investigative posted strong double-digit growth (Conference call — vertical results). The weaker spot was IDI Real Estate, which declined modestly and remains exposed to housing-market headwinds (Conference call — vertical results).
Retention and recurring revenue remained solid, though not improving. Contractual revenue held at 77%, matching the prior year, while gross revenue retention slipped to 95% from 97% (Supplemental metrics; Conference call — revenue metrics). That is not a major deterioration, but it means the quarter's upside came from new customers, usage and mix rather than a clear improvement in customer retention.
The strategic picture expanded, but the financial impact is still prospective. FOREWARN added more than 25,000 users and expanded into home healthcare, an estimated market of 4 million workers and 12,000 agencies (Supplemental metrics; Conference call — FOREWARN expansion). The company also completed a $109 million net equity offering for working capital, product investment and potential acquisitions (Business highlights; Conference call — capital deployment). The cash gives Red Violet substantially more capacity, but no acquisition or home-healthcare revenue has yet been announced, so the upside is opportunity rather than delivered earnings.
Net read: a genuine beat with unusually strong margin execution. The revenue upside was modest, but adjusted earnings, cash generation, customer additions and margins all exceeded the prior operating trajectory; management also reaffirmed expectations for a full-year adjusted EBITDA margin in the high-thirties (Conference call — margin outlook). The main offset is that the new capital will increase the need to prove that acquisitions and new vertical investments can convert into growth without diluting the model's leverage.
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