10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2023

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-38407

RED VIOLET, INC.

(Exact Name of Registrant as Specified in Its Charter)

Delaware	82-2408531
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

2650 North Military Trail, Suite 300, Boca Raton, Florida 33431

(Address of Principal Executive Offices) (Zip Code)

(561) 757-4000

(Registrant’s Telephone Number, Including Area Code)

None

(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
Common Stock, $0.001 par value per share	RDVT	The NASDAQ Stock Market LLC

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. ☒ Yes ☐ No

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). ☒ Yes ☐ No

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	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

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 May 5, 2023, the registrant had 13,917,225 shares of common stock outstanding.

RED VIOLET, INC.

TABLE OF CONTENTS FOR FORM 10-Q

		Page
PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited)
	Condensed consolidated balance sheets as of March 31, 2023 and December 31, 2022	1
	Condensed consolidated statements of operations for the three months ended March 31, 2023 and 2022	2
	Condensed consolidated statements of changes in shareholders' equity for the three months ended March 31, 2023 and 2022	3
	Condensed consolidated statements of cash flows for the three months ended March 31, 2023 and 2022	4
	Notes to condensed consolidated financial statements	5
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	11
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	16
Item 4.	Controls and Procedures	16
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	18
Item 1A.	Risk Factors	18
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	18
Item 3.	Defaults Upon Senior Securities	18
Item 4.	Mine Safety Disclosures	18
Item 5.	Other Information	19
Item 6.	Exhibits	19
SIGNATURES		20

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)

	March 31, 2023			December 31, 2022
ASSETS:
Current assets:
Cash and cash equivalents	$	30,818		$	31,810
Accounts receivable, net of allowance for doubtful accounts of $40 and $60 as of   March 31, 2023 and December 31, 2022, respectively		5,889			5,535
Prepaid expenses and other current assets		1,310			771
Total current assets		38,017			38,116
Property and equipment, net		692			709
Intangible assets, net		32,521			31,647
Goodwill		5,227			5,227
Right-of-use assets		969			1,114
Other noncurrent assets		894			601
Total assets	$	78,320		$	77,414
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current liabilities:
Accounts payable	$	2,345		$	2,229
Accrued expenses and other current liabilities		411			1,845
Current portion of operating lease liabilities		711			692
Deferred revenue		763			670
Total current liabilities		4,230			5,436
Noncurrent operating lease liabilities		413			598
Deferred tax liabilities		257			287
Total liabilities		4,900			6,321
Shareholders' equity:
Preferred stock—$0.001 par value, 10,000,000 shares authorized, and 0 shares   issued and outstanding, as of March 31, 2023 and December 31, 2022		-			-
Common stock—$0.001 par value, 200,000,000 shares authorized, 13,961,643 and   13,956,404 shares issued, and 13,950,706 and 13,956,404 shares outstanding, as of   March 31, 2023 and December 31, 2022		14			14
Treasury stock, at cost, 10,937 and 0 shares as of March 31, 2023 and   December 31, 2022		(201	)		-
Additional paid-in capital		94,293			92,481
Accumulated deficit		(20,686	)		(21,402	)
Total shareholders' equity		73,420			71,093
Total liabilities and shareholders' equity	$	78,320		$	77,414

See notes to condensed consolidated financial statements

1

RED VIOLET, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Amounts in thousands, except share data)

(unaudited)

	Three Months Ended March 31,
	2023			2022
Revenue	$	14,626		$	12,729
Costs and expenses:
Cost of revenue (exclusive of depreciation and amortization)		3,179			3,170
Sales and marketing expenses		3,889			2,391
General and administrative expenses		5,241			5,353
Depreciation and amortization		1,916			1,534
Total costs and expenses		14,225			12,448
Income from operations		401			281
Interest income, net		286			1
Income before income taxes		687			282
Income tax (benefit) expense		(29	)		175
Net income	$	716		$	107
Earnings per share:
Basic	$	0.05		$	0.01
Diluted	$	0.05		$	0.01
Weighted average number of shares outstanding:
Basic		13,997,154			13,543,607
Diluted		14,236,771			14,047,635

See notes to condensed consolidated financial statements

2

RED VIOLET, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(Amounts in thousands, except share data)

(unaudited)

	Common stock					Treasury stock						Additional paid-in			Accumulated
	Shares			Amount		Shares			Amount			capital			deficit			Total
Balance at December 31, 2021		13,488,540		$	13		-		$	-		$	91,434		$	(22,018	)	$	69,429
Vesting of restricted stock units		34,750			1		-			-			(1	)		-			-
Increase in treasury stock resulting   from shares withheld to cover   statutory taxes		-			-		(223	)		(6	)		-			-			(6	)
Retirement of treasury stock		(223	)		-		223			6			(6	)					-
Share-based compensation		-			-		-			-			1,688			-			1,688
Net income		-			-		-			-			-			107			107
Balance at March 31, 2022		13,523,067		$	14		-		$	-		$	93,115		$	(21,911	)	$	71,218
Balance at December 31, 2022		13,956,404		$	14		-		$	-		$	92,481		$	(21,402	)	$	71,093
Vesting of restricted stock units		6,800			-		-			-			-			-			-
Increase in treasury stock resulting   from shares withheld to cover   statutory taxes		-			-		(1,561	)		(31	)		-			-			(31	)
Common stock repurchased		-			-		(10,937	)		(201	)		-			-			(201	)
Retirement of treasury stock		(1,561	)		-		1,561			31			(31	)		-			-
Share-based compensation		-			-		-			-			1,843			-			1,843
Net income		-			-		-			-			-			716			716
Balance at March 31, 2023		13,961,643		$	14		(10,937	)	$	(201	)	$	94,293		$	(20,686	)	$	73,420

See notes to condensed consolidated financial statements

3

RED VIOLET, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(unaudited)

	Three Months Ended March 31,
	2023			2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	716		$	107
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		1,916			1,534
Share-based compensation expense		1,384			1,387
Write-off of long-lived assets		3			3
Provision for bad debts		668			37
Noncash lease expenses		145			132
Deferred income tax (benefit) expense		(30	)		175
Changes in assets and liabilities:
Accounts receivable		(1,022	)		(862	)
Prepaid expenses and other current assets		(539	)		(482	)
Other noncurrent assets		(293	)		-
Accounts payable		116			628
Accrued expenses and other current liabilities		(1,460	)		47
Deferred revenue		93			(128	)
Operating lease liabilities		(166	)		(148	)
Net cash provided by operating activities		1,531			2,430
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment		(44	)		(113	)
Capitalized costs included in intangible assets		(2,273	)		(1,794	)
Net cash used in investing activities		(2,317	)		(1,907	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Taxes paid related to net share settlement of vesting of restricted stock units		(31	)		(6	)
Repurchases of common stock		(175	)		-
Net cash used in financing activities		(206	)		(6	)
Net (decrease) increase in cash and cash equivalents	$	(992	)	$	517
Cash and cash equivalents at beginning of period		31,810			34,258
Cash and cash equivalents at end of period	$	30,818		$	34,775
SUPPLEMENTAL DISCLOSURE INFORMATION
Cash paid for interest	$	-		$	-
Cash paid for income taxes	$	1		$	-
Share-based compensation capitalized in intangible assets	$	459		$	301
Retirement of treasury stock	$	31		$	6

See notes to condensed consolidated financial statements

4

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, 2023.

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, 2022 (“Form 10-K”).

The condensed consolidated balance sheet as of December 31, 2022 included herein was derived from the audited financial statements as of that date included in the Form 10-K, but does not include all disclosures required by US GAAP.

The Company has only one operating segment, as defined by Accounting Standards Codification (“ASC”) 280, “Segment Reporting.”

Principles of consolidation

The condensed consolidated financial statements include the financial statements of the Company and its subsidiaries. All significant transactions among the Company and its subsidiaries have been eliminated upon consolidation.

(b) Recently issued accounting standards

As an emerging growth company, the Company has left open the opportunity to take advantage of the extended transition period provided to emerging growth companies in Section 13(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), however, it is the Company’s present intention to adopt any applicable new accounting standards timely.

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 or converted into common stock and is calculated using the treasury stock method for unvested shares.

	Three Months Ended March 31,
(In thousands, except share data)	2023		2022
Numerator:
Net income	$	716	$	107
Denominator:
Weighted average shares outstanding:
Basic		13,997,154		13,543,607
Diluted(1)		14,236,771		14,047,635
Earnings per share:
Basic	$	0.05	$	0.01
Diluted	$	0.05	$	0.01

(1)For the three months ended March 31, 2023 and 2022, diluted weighted average shares outstanding are calculated by the inclusion of unvested restricted stock units ("RSUs").

5

3. Intangible assets, net

Intangible assets other than goodwill consist of the following:

		March 31, 2023							December 31, 2022
(In thousands)	Amortization period	Gross amount		Accumulated amortization			Net		Gross amount		Accumulated amortization			Net
Software developed for internal use	5-10 years	$	55,410	$	(22,889	)	$	32,521	$	52,678	$	(21,031	)	$	31,647

The gross amount associated with software developed for internal use represents capitalized costs of internally-developed software, including eligible salaries and staff benefits, share-based compensation, travel expenses incurred by relevant employees, and other relevant costs.

Amortization expenses of $1,858 and $1,472 for the three months ended March 31, 2023 and 2022, respectively, were included in depreciation and amortization expense. As of March 31, 2023, intangible assets of $5,359, included in the gross amounts of software developed for internal use, have not started amortization, as they are not ready for their intended use.

The Company capitalized costs of software developed for internal use of $2,732 and $2,095 during the three months ended March 31, 2023 and 2022, respectively.

As of March 31, 2023, estimated amortization expense related to the Company’s intangible assets for the remainder of 2023 through 2028 and thereafter are as follows:

(In thousands)
Year	March 31, 2023
Remainder of 2023		6,033
2024		8,029
2025		6,863
2026		5,381
2027		3,755
2028 and thereafter		2,460
Total	$	32,521

4. Goodwill

Goodwill represents the cost in excess of the fair value of the net assets acquired in a business combination. As of March 31, 2023 and December 31, 2022, the balance of goodwill of $5,227 was as a result of the acquisition of Interactive Data, LLC, a wholly-owned subsidiary of red violet, effective on October 2, 2014.

In accordance with ASC 350, “Intangibles - Goodwill and Other,” goodwill is tested at least annually for impairment, or when events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable, by assessing qualitative factors or performing a quantitative analysis in determining whether it is more likely than not that its fair value exceeds the carrying value. The measurement date of the Company’s annual goodwill impairment test is October 1.

The Company did not record a goodwill impairment loss during the three months ended March 31, 2023 and 2022, and as of March 31, 2023, there was no accumulated goodwill impairment loss.

5. Revenue recognition

The Company recognized 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.

Available within 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.

6

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, available within 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 March 31, 2023, the current and noncurrent portion unbilled accounts receivable of $733 and $757, respectively, were included within accounts receivable and other noncurrent assets, respectively, on the condensed consolidated balance sheets. As of December 31, 2022, the current and noncurrent portion unbilled accounts receivable of $923 and $464, respectively, were included within accounts receivable and other noncurrent assets, respectively, on the condensed consolidated balance sheets. The Company's revenue arrangements do not contain significant financing components.

For the three months ended March 31, 2023 and 2022, 75% and 77% of total revenue was attributable to customers with pricing contracts, respectively, versus 25% and 23% attributable to transactional customers, respectively. Pricing contracts are generally annual contracts or longer, with auto renewal.

If a customer pays consideration before the Company transfers services to the customer, those amounts are classified as deferred revenue. As of March 31, 2023 and December 31, 2022, the balance of deferred revenue was $763 and $670, respectively, all of which is expected to be realized in the next 12 months. In relation to the deferred revenue balance as of December 31, 2022, $283 was recognized into revenue during the three months ended March 31, 2023.

As of March 31, 2023, $10,614 of revenue is expected to be recognized in the future for performance obligations that are unsatisfied or partially unsatisfied, related to pricing contracts that have a term of more than 12 months, of which, $5,904 of revenue will be recognized in the remainder of 2023, $3,858 in 2024, $708 in 2025, $136 in 2026, and $8 in 2027. The actual timing of recognition may vary due to factors outside of the Company’s control. The Company excludes variable consideration related entirely to wholly unsatisfied performance obligations and contracts and recognizes such variable consideration based upon the right to invoice the customer.

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.

6. 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. For the three months ended March 31, 2023 and 2022, the Company concluded that, due to a recent history of operating losses, a valuation allowance should be applied to reduce its deferred tax assets to the amount that is more likely than not to be realized.

The Company’s effective income tax rate was (4%) and 62% for the three months ended March 31, 2023 and 2022, respectively, differing from the U.S. corporate statutory federal income tax rate of 21%, and the difference is primarily the result of the valuation allowance applied to reduce the Company’s deferred tax assets to the amount that is more likely than not to be realized.

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 greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. For those income tax positions where it is not more-likely-than-not that a tax benefit will be sustained, no tax benefit has been recognized in the Company’s financial statements.

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 not have any material unrecognized tax benefits as of March 31, 2023 and December 31, 2022.

7

7. Common stock and treasury stock

As of March 31, 2023 and December 31, 2022, the number of issued shares of common stock was 13,961,643 and 13,956,404, respectively, which included shares of treasury stock of 10,937 and 0, respectively. The changes in the number of issued shares of common stock and treasury stock were due to the following factors:

•An aggregate of 6,800 shares of common stock were issued as a result of the vesting of RSUs, of which, 1,561 shares of common stock were withheld to pay withholding taxes upon such vesting, which were reflected in treasury stock, with a cost of $31. The treasury stock of 1,561 shares was then retired during the three months ended March 31, 2023.

•On May 2, 2022, the board of directors of the Company authorized the repurchase of up to $5.0 million of the Company's common stock from time to time (the “Stock Repurchase Program”). The Stock Repurchase Program does not obligate the Company to repurchase any shares and may be modified, suspended or terminated at any time and for any reason at the discretion of the board of directors. During the three months ended March 31, 2023, the Company repurchased 10,937 shares of common stock under the Stock Repurchase Program, which was reflected in treasury stock, with a cost of $201.

8. Share-based compensation

On March 22, 2018, the board of directors of the Company and Cogint, Inc. (“cogint”) (now known as Fluent, Inc.), in its capacity as sole stockholder of the Company prior to the Company’s spin-off from cogint on March 26, 2018 (the “Spin-off”), approved the Red Violet, Inc. 2018 Stock Incentive Plan (the “2018 Plan”), which became effective immediately prior to the Spin-off. A total of 3,000,000 shares of common stock were authorized to be issued under the 2018 Plan. On June 3, 2020, the Company’s stockholders approved an amendment to the 2018 Plan to increase the number of shares of common stock authorized for issuance under the 2018 Plan from 3,000,000 shares to 4,500,000 shares, and on May 25, 2022, the Company's stockholders approved an amendment to the 2018 Plan to increase the number of shares of common stock authorized for issuance under the 2018 Plan from 4,500,000 shares to 6,500,000 shares.

The primary purpose of the 2018 Plan, as amended, 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 expend maximum effort for 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 March 31, 2023, there were 2,299,607 shares of common stock available for future issuance under the 2018 Plan, as amended.

To date, all stock incentives issued under the 2018 Plan have been in the form of RSUs. RSUs granted under the 2018 Plan vest and settle upon the satisfaction of a time-based condition or with both time- and performance-based conditions. The time-based condition for these awards is generally satisfied over three or four years with annual vesting. Details of unvested RSU activity during the three months ended March 31, 2023 were as follows:

	Number of units			Weighted average grant-date fair value
Unvested as of December 31, 2022		1,044,132		$	20.64
Granted(1)		17,500		$	19.16
Vested and delivered		(5,239	)	$	26.18
Withheld as treasury stock(2)		(1,561	)	$	25.08
Forfeited		(27,750	)	$	20.20
Unvested as of March 31, 2023		1,027,082		$	20.59

(1)During the three months ended March 31, 2023, the Company granted an aggregate of 17,500 RSUs to certain employees at grant date fair values ranging from $18.59 to $19.59 per share, with a vesting period of four years.

(2)Withheld as treasury stock represents shares withheld to pay statutory taxes upon the vesting of RSUs. Refer to Note 7, "Common stock and treasury stock," for details.

As of March 31, 2023, unrecognized share-based compensation expense associated with the granted RSUs amounted to $15,809, which is expected to be recognized over a remaining weighted average period of 2.3 years.

8

Share-based compensation was allocated to the following accounts in the condensed consolidated financial statements for the three months ended March 31, 2023 and 2022:

	Three Months Ended March 31,
(In thousands)	2023		2022
Sales and marketing expenses	$	107	$	47
General and administrative expenses		1,277		1,340
Share-based compensation expense		1,384		1,387
Capitalized in intangible assets		459		301
Total	$	1,843	$	1,688

9. Leases

The Company leases its corporate headquarters of 21,020 rentable square feet in accordance with a non-cancelable 89-month operating lease agreement as amended and effective in January 2017, with an option to extend for an additional 60 months. The Company also leases an additional office space of 6,003 rentable square feet in accordance with a non-cancellable 90-month operating lease agreement entered into in April 2017, with an option to extend for an additional 60 months. The extension option is not included in the determination of the lease term as it is not reasonably certain to be exercised.

For the three months ended March 31, 2023 and 2022, a summary of the Company’s lease information is shown below:

	Three Months Ended March 31,
(In thousands)	2023		2022
Lease cost:
Operating lease costs	$	168	$	168
Other information:
Cash paid for operating leases	$	190	$	184

As of March 31, 2023, the weighted average remaining operating lease term was 1.6 years.

As of March 31, 2023, scheduled future maturities and present value of the operating lease liabilities are as follows:

(In thousands)
Year	March 31, 2023
Remainder of 2023		575
2024		542
2025		77
Total maturities	$	1,194
Present value included in condensed consolidated balance sheet:
Current portion of operating lease liabilities	$	711
Noncurrent operating lease liabilities		413
Total operating lease liabilities	$	1,124
Difference between the maturities and the present value of operating lease liabilities	$	70

10. Commitments and contingencies

(a) Capital commitment

The Company incurred data costs of $2,361 and $2,248 for the three months ended March 31, 2023 and 2022, respectively, under certain data licensing agreements. As of March 31, 2023, material capital commitments under certain data licensing agreements were $24,983, shown as follows:

(In thousands)
Year	March 31, 2023
Remainder of 2023		6,108
2024		7,548
2025		7,507
2026		3,820
Total	$	24,983

9

(b) Contingencies

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 liability has been incurred is probable, but the amount cannot be reasonably estimated.

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 matters 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.

10

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, 2022 filed on March 8, 2023 (“Form 10-K”), and other filings we make with the Securities and Exchange Commission. We do not undertake any obligation to update forward-looking statements, 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 risk mitigation, due diligence, fraud detection and prevention, regulatory compliance, and customer acquisition. Our intelligent 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.

Organizations are challenged by the structure, volume and disparity of data. Our platform and applications transform the way our customers interact with information, 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 massive 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, to ensure safety, and to reduce fraud and the concomitant expense borne by society.

While our platform powers many diverse 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 the risk management industry 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 due diligence, risk mitigation, identity authentication and regulatory compliance, by financial services companies, insurance companies, healthcare companies, law enforcement and government, 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 March 31, 2023 and 2022, IDI had 7,256 and 6,592 billable customers and FOREWARN had 131,348 and 91,490 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.

11

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 March 31, 2023 and 2022, 75% and 77% of total revenue was attributable to customers with pricing contracts, respectively, versus 25% and 23% 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 free 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, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to the 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 Form 10-K. There have been no material changes to Critical Accounting Policies and Estimates disclosed in our Form 10-K.

Recently issued accounting standards

See Note 1(b), “Recently issued accounting standards,” in “Notes to Condensed Consolidated Financial Statements.”

First Quarter Financial Results

For the three months ended March 31, 2023, as compared to the three months ended March 31, 2022:

•Total revenue increased 15% to $14.6 million.

•Gross profit increased 19% to $9.6 million. Gross margin increased to 66% from 64%.

•Adjusted gross profit increased 20% to $11.4 million. Adjusted gross margin increased to 78% from 75%.

•Net income increased 569% to $0.7 million, which resulted in $0.05 per basic and diluted share.

•Adjusted EBITDA increased 15% to $3.7 million.

•Net cash from operating activities decreased 37% to $1.5 million.

•Cash and cash equivalents were $30.8 million as of March 31, 2023.

First Quarter and Recent Business Highlights

•Added 235 customers to IDI during the first quarter, ending the quarter with 7,256 customers.

12

•Added 14,388 users to FOREWARN during the first quarter, ending the quarter with 131,348 users. Over 255 REALTOR® Associations throughout the U.S. are now contracted to use FOREWARN.

•Launched redesigned corporate websites, www.redviolet.com, www.ididata.com, and www.forewarn.com, providing a more valuable user experience with modern design, improved functionality, easier navigation, and greater detail on the breadth and applicability of our identity solutions.

•Purchased 44,766 shares of the Company’s common stock year to date through May 5, 2023, at an average price of $16.88 per share pursuant to the Company’s $5.0 million Stock Repurchase Program that was authorized on May 2, 2022. The Company has $3.4 million remaining under the Stock Repurchase Program.

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 gross profit, adjusted gross margin and free cash flow ("FCF"). Adjusted EBITDA is a financial measure equal to net income, the most directly comparable financial measure based on US GAAP, excluding interest income, net, income tax (benefit) expense, depreciation and amortization, share-based compensation expense, litigation costs, and write-off of long-lived assets and others, as noted in the tables below. We define adjusted EBITDA margin as adjusted EBITDA as a percentage of revenue. We define adjusted gross profit as revenue less cost of revenue (exclusive of depreciation and amortization), 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.

	Three Months Ended March 31,
(In thousands)	2023			2022
Net income	$	716		$	107
Interest income, net		(286	)		(1	)
Income tax (benefit) expense		(29	)		175
Depreciation and amortization		1,916			1,534
Share-based compensation expense		1,384			1,387
Litigation costs		3			15
Write-off of long-lived assets and others		2			3
Adjusted EBITDA	$	3,706		$	3,220
Revenue	$	14,626		$	12,729
Net income margin		5	%		1	%
Adjusted EBITDA margin		25	%		25	%

The following is a reconciliation of gross profit, the most directly comparable US GAAP financial measure, to adjusted gross profit:

	Three Months Ended March 31,
(In thousands)	2023			2022
Revenue	$	14,626		$	12,729
Cost of revenue (exclusive of depreciation and amortization)		(3,179	)		(3,170	)
Depreciation and amortization of intangible assets		(1,858	)		(1,472	)
Gross profit		9,589			8,087
Depreciation and amortization of intangible assets		1,858			1,472
Adjusted gross profit	$	11,447		$	9,559
Gross margin		66	%		64	%
Adjusted gross margin		78	%		75	%

The following is a reconciliation of net cash provided by operating activities, the most directly comparable US GAAP measure, to FCF:

13

	Three Months Ended March 31,
(In thousands)	2023			2022
Net cash provided by operating activities	$	1,531		$	2,430
Less:
Purchase of property and equipment		(44	)		(113	)
Capitalized costs included in intangible assets		(2,273	)		(1,794	)
Free cash flow	$	(786	)	$	523

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 gross profit, adjusted gross margin and FCF as supplemental measures of our operating performance. 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.

We believe adjusted EBITDA, adjusted EBITDA margin, 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, share-based compensation expense and the impact of other non-recurring items, providing useful comparisons versus prior periods or forecasts. Adjusted EBITDA margin is calculated as adjusted EBITDA as a percentage of revenue. 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 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. Our adjusted gross profit is calculated by using revenue, less cost of revenue (exclusive of depreciation and amortization). We believe adjusted gross profit provides useful information to our investors by eliminating the impact of non-cash depreciation and amortization, and specifically 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 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 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 March 31, 2023 compared to three months ended March 31, 2022

Revenue. Revenue increased $1.9 million or 15% to $14.6 million for the three months ended March 31, 2023 from $12.7 million for the three months ended March 31, 2022. Revenue from new customers increased $0.9 million or 84%, and base revenue from existing customers increased $1.4 million or 14%, while growth revenue from existing customers decreased $0.4 million or 18%. Our IDI billable customer base grew from 6,592 customers as of March 31, 2022 to 7,256 customers as of March 31, 2023, and our FOREWARN user base grew from 91,490 users to 131,348 users during that same period. Revenue from new customers represents the total monthly revenue generated from new customers in a given period. A customer is defined as a new customer during the first six months of revenue generation. Base revenue from existing customers represents the total monthly revenue generated from existing customers in a given period that does not exceed the customers' trailing six-month average revenue. A customer is defined as an existing customer six months after their initial month of revenue. Growth revenue from existing customers represents the total monthly revenue generated from existing customers in a given period in excess of the customers' trailing six-month average revenue.

14

Cost of revenue (exclusive of depreciation and amortization). Cost of revenue remained consistent at $3.2 million for the three months ended March 31, 2023 and 2022. Our cost of revenue primarily includes data acquisition costs. Data acquisition costs consist primarily of the costs to acquire data either on a transactional basis or through flat-fee data licensing agreements, including unlimited usage agreements. We continue to enhance the breadth and depth of our data through the addition and expansion of relationships with key data suppliers, including our largest data supplier, which accounted for 48% and 47% of our total data acquisition costs for the three months ended March 31, 2023 and 2022, respectively. Other cost of revenue items include expenses related to third-party infrastructure fees.

As the construct of our data costs is primarily a flat-fee, unlimited usage model, the cost of revenue as a percentage of revenue decreased to 22% for the three months ended March 31, 2023 from 25% for the three months ended March 31, 2022. We expect that cost of revenue as a percentage of revenue will continue to decrease over the coming years as our revenue increases. Historically, at scale, the industry business model’s cost of revenue will trend between 15% and 30% as a percentage of revenue.

Sales and marketing expenses. Sales and marketing expenses increased $1.5 million or 63% to $3.9 million for the three months ended March 31, 2023 from $2.4 million for the three months ended March 31, 2022. Sales and marketing expenses consist of salaries and benefits, advertising and marketing, travel expenses, and share-based compensation expense, incurred by our sales team, and provision for bad debts. The increase during the three months ended March 31, 2023 was primarily attributable to the increase of $0.7 million in salaries and benefits, and sales commissions, resulting from increased revenue, and $0.6 million in provision for bad debts.

General and administrative expenses. General and administrative expenses decreased $0.2 million or 2% to $5.2 million for the three months ended March 31, 2023 from $5.4 million for the three months ended March 31, 2022. For the three months ended March 31, 2023 and 2022, our general and administrative expenses consisted primarily of employee salaries and benefits of $2.8 million and $2.5 million, share-based compensation expense of $1.3 million and $1.3 million, and professional fees of $0.6 million and $1.0 million, respectively.

Depreciation and amortization. Depreciation and amortization expenses increased $0.4 million or 25% to $1.9 million for the three months ended March 31, 2023 from $1.5 million for the three months ended March 31, 2022. The increase in depreciation and amortization for the three months ended March 31, 2023 resulted primarily from the amortization of software developed for internal use that became ready for its intended use after March 31, 2022.

Interest income, net. Interest income of $0.3 million for the three months ended March 31, 2023 was primarily due to interest income earned on investments in certain money market funds. There was no significant interest income, net for the three months ended March 31, 2022.

Income before income taxes. Income before income taxes was $0.7 million and $0.3 million for the three months ended March 31, 2023 and 2022, respectively. The increase in income before income taxes for the three months ended March 31, 2023 was primarily attributable to the increase in revenue, decrease in our cost of revenue as a percentage of revenue, and increase in interest income, which was partially offset by the increase in employee salaries and benefits and sales commissions of $1.0 million, provision for bad debts of $0.6 million, and depreciation and amortization of $0.4 million.

Income taxes. Income tax benefit of $0.03 million and income tax expense of $0.2 million was recognized for the three months ended March 31, 2023 and 2022, respectively. A valuation allowance on the deferred tax assets was recognized as of March 31, 2023 and 2022, to reduce the deferred tax assets to the amount that is more likely than not to be realized. See Note 6, “Income Taxes,” included in “Notes to Condensed Consolidated Financial Statements.”

Net income. Net income was $0.7 million for the three months ended March 31, 2023 compared to $0.1 million for the three months ended March 31, 2022, as a result of the foregoing.

Effect of Inflation

We believe that the persistent inflationary pressure throughout 2022 and up to March 31, 2023 has contributed to deteriorating macroeconomic conditions and increased recession fears, causing businesses to slow their spending over the last several months, which have resulted, and may continue to result, in fluctuations in volumes, pricing and operating margins for our services. Also, higher interest rates imposed to combat inflation, may reduce the demand for credit, which may lead to a decline in the volume of services we provide to our customers in the banking or financial industry, or other industries that are affected by these types of disruptions. However, the rates of inflation experienced in recent years have had no material impact on our financial statements as we have attempted to recover increased costs by increasing prices for our services, to the extent permitted by contracts and competition.

15

Liquidity and Capital Resources

Cash flows provided by operating activities. For the three months ended March 31, 2022, net cash provided by operating activities was $1.5 million, primarily the result of the net income of $0.7 million, adjusted for certain non-cash items (consisting of share-based compensation expense, depreciation and amortization, write-off of long-lived assets, provision for bad debts, noncash lease expenses, and deferred income tax (benefit) expense) totaling $4.1 million, and the cash used as a result of changes in assets and liabilities of $3.3 million, primarily the result of the increase in accounts receivable, prepaid expenses and other current assets and other noncurrent assets, and the decrease in accrued expenses and other current liabilities, and operating lease liabilities. For the three months ended March 31, 2022, net cash provided by operating activities was $2.4 million, primarily the result of the net income of $0.1 million, adjusted for certain non-cash items, as mentioned above, totaling $3.3 million, and the cash used as a result of changes in assets and liabilities of $0.9 million, primarily the result of the increase in accounts receivable and prepaid expenses and other current assets, and the decrease in deferred revenue and operating lease liabilities, which was offset by the increase in accounts payable.

Cash flows used in investing activities. For the three months ended March 31, 2023 and 2022, net cash used in investing activities was $2.3 million and $1.9 million, respectively, primarily as a result of capitalized costs included in intangible assets.

Cash flows used in financing activities. For the three months ended March 31, 2023, net cash used in financing activities was $0.2 million, mainly the result of $0.2 million paid in aggregate for the repurchase of common stock pursuant to a stock repurchase program that the board of directors authorized on May 2, 2022 (the "Stock Repurchase Program"), authorizing the repurchase of up to $5.0 million of our common stock. There were no significant financing activities for the three months ended March 31, 2022.

As of March 31, 2023, we had material commitments under certain data licensing agreements of $25.0 million. We anticipate funding our operations using available cash and cash flow generated from operations within the next twelve months.

We reported net income of $0.7 million and $0.1 million for the three months ended March 31, 2023 and 2022, respectively. As of March 31, 2023, we had a total shareholders’ equity balance of $73.4 million.

As of March 31, 2023, we had cash and cash equivalents of approximately $30.8 million. Based on projections of growth in revenue and operating results in the next twelve months, and the available cash and cash equivalents held by us, we believe that we will have sufficient cash resources to finance our operations and expected capital expenditures for the next twelve months.

Subject to revenue growth and our ability to generate positive cash flow, we may have to raise capital through the issuance of additional equity and/or debt, which, if we are able to obtain, could have the effect of diluting stockholders. Any equity or debt financings, if available at all, may be on terms which are not favorable to us.

Off-Balance Sheet Arrangements

As of March 31, 2023, we did not have any off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) 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 March 31, 2023. 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.

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 March 31, 2023.

16

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 fiscal quarter ended March 31, 2023 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.

17

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

The Company is not currently a party to any legal proceeding, investigation or claim which, in the opinion of the management, is likely to have a material adverse effect on the business, financial condition, results of operations or cash flows. Legal fees associated with any legal proceedings, are expensed as incurred. We review legal proceedings and claims on an ongoing basis and follow appropriate accounting guidance, including Accounting Standards Codification 450, when making accrual and disclosure decisions. We establish accruals for those contingencies where the incurrence of a loss is probable and can be reasonably estimated, and we disclose the amount accrued and the amount of a reasonably possible loss in excess of the amount accrued, if such disclosure is necessary for our financial statements to not be misleading. To estimate whether a loss contingency should be accrued by a charge to income, we evaluate, 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. We do not record liabilities when the likelihood that the liability has been incurred is probable, but the amount cannot be reasonably estimated.

We may be involved in litigation from time to time in the ordinary course of business. We do not believe that the ultimate resolution of any such matters will have a material adverse effect on our business, financial condition, results of operations or cash flows. However, the results of such matters cannot be predicted with certainty and we cannot assure you that the ultimate resolution of any legal or administrative proceeding or dispute will not have a material adverse effect on our business, financial condition, results of operations and cash flows.

Item 1A. Risk Factors.

There have been no material changes to the risk factors previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on March 8, 2023.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Issuer Purchases of Equity Securities

The following table provides information relating to the Company's repurchase of common stock during the three months ended March 31, 2023 pursuant to the Stock Repurchase Program:

Period(1)	Total number of shares purchased		Average price paid per share(2)		Total number of shares purchased as part of publicly announced plans or programs		Approximate dollar value of shares that may yet be purchased under the plans or programs
January 1, 2023 - January 31, 2023		-	$	-		-	$	4,123,914
February 1, 2023 - February 28, 2023		-	$	-		-	$	4,123,914
March 1, 2023 - March 31, 2023		10,937	$	18.34		10,937	$	3,923,311
Total		10,937	$	18.34		10,937

(1)From April 1, 2023 to April 30, 2023, the Company purchased an additional 21,430 shares at an average price of $16.20 per share pursuant to the Stock Repurchase Program.

(2)Exclusive of commission fees incurred in relation to the repurchase of common stock.

On May 2, 2022, the Company's board of directors authorized the repurchase of up to $5.0 million of the Company's common stock pursuant to the Stock Repurchase Program. The Stock Repurchase Program does not obligate the Company to repurchase any shares and it may be modified, suspended or terminated at any time and for any reason at the discretion of the board of directors.

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 in the table above.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not Applicable.

18

Item 5. Other Information.

On May 8, 2023, the Company and each of Derek Dubner, Chief Executive Officer, James Reilly, President, Daniel MacLachlan, Chief Financial Officer, and Jeffrey Dell, Chief Information Officer, entered into an amendment to their respective employment agreements which extended the term expiration date by three years, from March 26, 2024, to March 26, 2027.

Item 6. Exhibits.

The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.

		Incorporated by Reference				Filed
Exhibit No.	Exhibit Description	Form	File No.	Exhibit	Filing Date	Herewith
31.1	Certification of Chief Executive Officer filed pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.					X
31.2	Certification of Chief Financial Officer filed pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.					X
32.1*	Certification by Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.					X
32.2*	Certification by Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.					X
101.INS	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.					X
101.SCH	Inline XBRL Taxonomy Extension Schema Document.					X
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document.					X
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document.					X
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document.					X
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document.					X
104	Cover Page Interactive Data File (embedded within the Inline XBRL document).					X

* This certification is deemed 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.

19

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.

May 9, 2023		Red Violet, Inc.
	By:	/s/ Daniel MacLachlan
		Daniel MacLachlan
		Chief Financial Officer
		(Principal Financial and Accounting Officer)

20

EX-31

Exhibit 31.1

CERTIFICATIONS

I, Derek Dubner, certify that:

(1)I have reviewed this Quarterly Report on Form 10-Q of Red Violet, Inc.;

(2)Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

(3)Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

(4)The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

(5)The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

May 9, 2023	By:	/s/ Derek Dubner
		Derek Dubner
		Chief Executive Officer (Principal Executive Officer)

EX-31

Exhibit 31.2

CERTIFICATIONS

I, Daniel MacLachlan, certify that:

(1)I have reviewed this Quarterly Report on Form 10-Q of Red Violet, Inc.;

(2)Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

(3)Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

(4)The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

(5)The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

May 9, 2023	By:	/s/ Daniel MacLachlan
		Daniel MacLachlan
		Chief Financial Officer (Principal Financial and Accounting Officer)

EX-32

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 March 31, 2023 (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:

(1)the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Red Violet, Inc.

May 9, 2023	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.

EX-32

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 March 31, 2023 (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:

(1)the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Red Violet, Inc.

May 9, 2023	By:	/s/ Daniel MacLachlan
		Daniel MacLachlan
		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.

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2023	May 05, 2023
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2023
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q1
Trading Symbol	RDVT
Entity Registrant Name	RED VIOLET, INC.
Entity Central Index Key	0001720116
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Common Stock, Shares Outstanding		13,917,225
Entity Current Reporting Status	Yes
Entity Shell Company	false
Entity File Number	001-38407
Entity Tax Identification Number	82-2408531
Entity Address, Address Line One	2650 North Military Trail
Entity Address, Address Line Two	Suite 300
Entity Address, City or Town	Boca Raton
Entity Address, State or Province	FL
Entity Address, Postal Zip Code	33431
City Area Code	561
Local Phone Number	757-4000
Entity Information, Former Legal or Registered Name	None
Document Transition Report	false
Document Quarterly Report	true
Entity Interactive Data Current	Yes
Entity Incorporation, State or Country Code	DE
Title of 12(b) Security	Common Stock, $0.001 par value per share
Security Exchange Name	NASDAQ

XML

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Current assets:
Cash and cash equivalents	$ 30,818	$ 31,810
Accounts receivable, net of allowance for doubtful accounts of $40 and $60 as of March 31, 2023 and December 31, 2022, respectively	5,889	5,535
Prepaid expenses and other current assets	1,310	771
Total current assets	38,017	38,116
Property and equipment, net	692	709
Intangible assets, net	32,521	31,647
Goodwill	5,227	5,227
Right-of-use assets	969	1,114
Other noncurrent assets	894	601
Total assets	78,320	77,414
Current liabilities:
Accounts payable	2,345	2,229
Accrued expenses and other current liabilities	411	1,845
Current portion of operating lease liabilities	711	692
Deferred revenue	763	670
Total current liabilities	4,230	5,436
Noncurrent operating lease liabilities	413	598
Deferred tax liabilities	257	287
Total liabilities	4,900	6,321
Shareholders' equity:
Preferred stock-$0.001 par value, 10,000,000 shares authorized, and 0 shares issued and outstanding, as of March 31, 2023 and December 31, 2022	0	0
Common stock-$0.001 par value, 200,000,000 shares authorized, 13,961,643 and 13,956,404 shares issued, and 13,950,706 and 13,956,404 shares outstanding, as of March 31, 2023 and December 31, 2022	14	14
Treasury stock, at cost, 10,937 and 0 shares as of March 31, 2023 and December 31, 2022	(201)	0
Additional paid-in capital	94,293	92,481
Accumulated deficit	(20,686)	(21,402)
Total shareholders' equity	73,420	71,093
Total liabilities and shareholders' equity	$ 78,320	$ 77,414

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Statement of Financial Position [Abstract]
Allowance for doubtful accounts	$ 40	$ 60
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	200,000,000	200,000,000
Common stock, shares issued	13,961,643	13,956,404
Common stock, shares outstanding	13,950,706	13,956,404
Treasury stock shares	10,937	0

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) $ in Thousands		3 Months Ended
		Mar. 31, 2023	Mar. 31, 2022
Revenue		$ 14,626	$ 12,729
Costs and expenses:
Sales and marketing expenses		3,889	2,391
General and administrative expenses		5,241	5,353
Depreciation and amortization		1,916	1,534
Total costs and expenses		14,225	12,448
Income from operations		401	281
Interest income, net		286	1
Income before income taxes		687	282
Income tax (benefit) expense		(29)	175
Net income		$ 716	$ 107
Earnings per share:
Basic		$ 0.05	$ 0.01
Diluted		$ 0.05	$ 0.01
Weighted average number of shares outstanding:
Basic		13,997,154	13,543,607
Diluted	[1]	14,236,771	14,047,635
Service [Member]
Costs and expenses:
Cost of revenue (exclusive of depreciation and amortization)		$ 3,179	$ 3,170

[1] For the three months ended March 31, 2023 and 2022, diluted weighted average shares outstanding are calculated by the inclusion of unvested restricted stock units ("RSUs").

XML

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Unaudited) - USD ($) $ in Thousands	Total	Common Stock	Treasury Stock	Additional Paid- in Capital	Accumulated Deficit
Beginning balance at Dec. 31, 2021	$ 69,429	$ 13		$ 91,434	$ (22,018)
Beginning balances, shares at Dec. 31, 2021		13,488,540
Vesting of restricted stock units		$ 1		(1)
Vesting of restricted stock units, Shares		34,750
Increase in treasury stock resulting from shares withheld to cover statutory taxes	(6)		$ 6
Increase in treasury stock resulting from shares withheld to cover statutory taxes, Shares			223
Retirement of treasury stock	6		$ 6	(6)
Retirement of treasury stock, Shares		(223)	223
Share-based compensation	1,688			1,688
Net income (loss)	107				107
Ending balance at Mar. 31, 2022	71,218	$ 14		93,115	(21,911)
Ending balances, shares at Mar. 31, 2022		13,523,067
Beginning balance at Dec. 31, 2022	71,093	$ 14		92,481	(21,402)
Beginning balances, shares at Dec. 31, 2022		13,956,404
Vesting of restricted stock units		$ 0		(0)
Vesting of restricted stock units, Shares		6,800
Increase in treasury stock resulting from shares withheld to cover statutory taxes	(31)		$ 31
Increase in treasury stock resulting from shares withheld to cover statutory taxes, Shares			(1,561)
Retirement of treasury stock	31		$ 31	(31)
Retirement of treasury stock, Shares		(1,561)	1,561
Common stock repurchased	(201)		$ 201
Common stock repurchased, shares			(10,937)
Share-based compensation	1,843			1,843
Net income (loss)	716				716
Ending balance at Mar. 31, 2023	$ 73,420	$ 14	$ (201)	$ 94,293	$ (20,686)
Ending balances, shares at Mar. 31, 2023		13,961,643	(10,937)

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 716	$ 107
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	1,916	1,534
Share-based compensation expense	1,384	1,387
Write-off of long-lived assets	3	3
Provision for bad debts	668	37
Noncash lease expenses	145	132
Deferred income tax (benefit) expense	(30)	175
Changes in assets and liabilities:
Accounts receivable	(1,022)	(862)
Prepaid expenses and other current assets	(539)	(482)
Other noncurrent assets	(293)	0
Accounts payable	116	628
Accrued expenses and other current liabilities	(1,460)	47
Deferred revenue	93	(128)
Operating lease liabilities	(166)	(148)
Net cash provided by operating activities	1,531	2,430
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment	(44)	(113)
Capitalized costs included in intangible assets	(2,273)	(1,794)
Net cash used in investing activities	(2,317)	(1,907)
CASH FLOWS FROM FINANCING ACTIVITIES:
Taxes paid related to net share settlement of vesting of restricted stock units	(31)	(6)
Repurchases of common stock	(175)	0
Net cash used in financing activities	(206)	(6)
Net (decrease) increase in cash and cash equivalents	(992)	517
Cash and cash equivalents at beginning of period	31,810	34,258
Cash and cash equivalents at end of period	30,818	34,775
SUPPLEMENTAL DISCLOSURE INFORMATION
Cash paid for interest	0	0
Cash paid for income taxes	1	0
Share-based compensation capitalized in intangible assets	459	301
Retirement of treasury stock	$ 31	$ 6

XML

Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2023

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

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, 2023.

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, 2022 (“Form 10-K”).

The condensed consolidated balance sheet as of December 31, 2022 included herein was derived from the audited financial statements as of that date included in the Form 10-K, but does not include all disclosures required by US GAAP.

The Company has only one operating segment, as defined by Accounting Standards Codification (“ASC”) 280, “Segment Reporting.”

Principles of consolidation

The condensed consolidated financial statements include the financial statements of the Company and its subsidiaries. All significant transactions among the Company and its subsidiaries have been eliminated upon consolidation.

(b) Recently issued accounting standards

As an emerging growth company, the Company has left open the opportunity to take advantage of the extended transition period provided to emerging growth companies in Section 13(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), however, it is the Company’s present intention to adopt any applicable new accounting standards timely.

XML

Earnings Per Share

3 Months Ended

Mar. 31, 2023

Earnings Per Share [Abstract]

Earnings per share

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 or converted into common stock and is calculated using the treasury stock method for unvested shares.

	Three Months Ended March 31,
(In thousands, except share data)	2023		2022
Numerator:
Net income	$	716	$	107
Denominator:
Weighted average shares outstanding:
Basic		13,997,154		13,543,607
Diluted(1)		14,236,771		14,047,635
Earnings per share:
Basic	$	0.05	$	0.01
Diluted	$	0.05	$	0.01

(1)For the three months ended March 31, 2023 and 2022, diluted weighted average shares outstanding are calculated by the inclusion of unvested restricted stock units ("RSUs").

XML

Intangible Assets, Net

3 Months Ended

Mar. 31, 2023

Intangible Assets, Net (Excluding Goodwill) [Abstract]

Intangible Assets, Net

3. Intangible assets, net

Intangible assets other than goodwill consist of the following:

		March 31, 2023							December 31, 2022
(In thousands)	Amortization period	Gross amount		Accumulated amortization			Net		Gross amount		Accumulated amortization			Net
Software developed for internal use	5-10 years	$	55,410	$	(22,889	)	$	32,521	$	52,678	$	(21,031	)	$	31,647

The gross amount associated with software developed for internal use represents capitalized costs of internally-developed software, including eligible salaries and staff benefits, share-based compensation, travel expenses incurred by relevant employees, and other relevant costs.

Amortization expenses of $1,858 and $1,472 for the three months ended March 31, 2023 and 2022, respectively, were included in depreciation and amortization expense. As of March 31, 2023, intangible assets of $5,359, included in the gross amounts of software developed for internal use, have not started amortization, as they are not ready for their intended use.

The Company capitalized costs of software developed for internal use of $2,732 and $2,095 during the three months ended March 31, 2023 and 2022, respectively.

As of March 31, 2023, estimated amortization expense related to the Company’s intangible assets for the remainder of 2023 through 2028 and thereafter are as follows:

(In thousands)
Year	March 31, 2023
Remainder of 2023		6,033
2024		8,029
2025		6,863
2026		5,381
2027		3,755
2028 and thereafter		2,460
Total	$	32,521

XML

Goodwill

3 Months Ended

Mar. 31, 2023

Goodwill Disclosure [Abstract]

Goodwill

4. Goodwill

Goodwill represents the cost in excess of the fair value of the net assets acquired in a business combination. As of March 31, 2023 and December 31, 2022, the balance of goodwill of $5,227 was as a result of the acquisition of Interactive Data, LLC, a wholly-owned subsidiary of red violet, effective on October 2, 2014.

In accordance with ASC 350, “Intangibles - Goodwill and Other,” goodwill is tested at least annually for impairment, or when events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable, by assessing qualitative factors or performing a quantitative analysis in determining whether it is more likely than not that its fair value exceeds the carrying value. The measurement date of the Company’s annual goodwill impairment test is October 1.

The Company did not record a goodwill impairment loss during the three months ended March 31, 2023 and 2022, and as of March 31, 2023, there was no accumulated goodwill impairment loss.

XML

Revenue Recognition

3 Months Ended

Mar. 31, 2023

Revenue from Contract with Customer [Abstract]

Revenue Recognition

5. Revenue recognition

The Company recognized 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.

Available within 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, available within 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 March 31, 2023, the current and noncurrent portion unbilled accounts receivable of $733 and $757, respectively, were included within accounts receivable and other noncurrent assets, respectively, on the condensed consolidated balance sheets. As of December 31, 2022, the current and noncurrent portion unbilled accounts receivable of $923 and $464, respectively, were included within accounts receivable and other noncurrent assets, respectively, on the condensed consolidated balance sheets. The Company's revenue arrangements do not contain significant financing components.

For the three months ended March 31, 2023 and 2022, 75% and 77% of total revenue was attributable to customers with pricing contracts, respectively, versus 25% and 23% attributable to transactional customers, respectively. Pricing contracts are generally annual contracts or longer, with auto renewal.

If a customer pays consideration before the Company transfers services to the customer, those amounts are classified as deferred revenue. As of March 31, 2023 and December 31, 2022, the balance of deferred revenue was $763 and $670, respectively, all of which is expected to be realized in the next 12 months. In relation to the deferred revenue balance as of December 31, 2022, $283 was recognized into revenue during the three months ended March 31, 2023.

As of March 31, 2023, $10,614 of revenue is expected to be recognized in the future for performance obligations that are unsatisfied or partially unsatisfied, related to pricing contracts that have a term of more than 12 months, of which, $5,904 of revenue will be recognized in the remainder of 2023, $3,858 in 2024, $708 in 2025, $136 in 2026, and $8 in 2027. The actual timing of recognition may vary due to factors outside of the Company’s control. The Company excludes variable consideration related entirely to wholly unsatisfied performance obligations and contracts and recognizes such variable consideration based upon the right to invoice the customer.

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.

XML

Income Taxes

3 Months Ended

Mar. 31, 2023

Income Tax Disclosure [Abstract]

Income Taxes

6. 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. For the three months ended March 31, 2023 and 2022, the Company concluded that, due to a recent history of operating losses, a valuation allowance should be applied to reduce its deferred tax assets to the amount that is more likely than not to be realized.

The Company’s effective income tax rate was (4%) and 62% for the three months ended March 31, 2023 and 2022, respectively, differing from the U.S. corporate statutory federal income tax rate of 21%, and the difference is primarily the result of the valuation allowance applied to reduce the Company’s deferred tax assets to the amount that is more likely than not to be realized.

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 greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. For those income tax positions where it is not more-likely-than-not that a tax benefit will be sustained, no tax benefit has been recognized in the Company’s financial statements.

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 not have any material unrecognized tax benefits as of March 31, 2023 and December 31, 2022.

XML

Common Stock And Treasury Stock

3 Months Ended

Mar. 31, 2023

Equity [Abstract]

Common Stock

7. Common stock and treasury stock

As of March 31, 2023 and December 31, 2022, the number of issued shares of common stock was 13,961,643 and 13,956,404, respectively, which included shares of treasury stock of 10,937 and 0, respectively. The changes in the number of issued shares of common stock and treasury stock were due to the following factors:

•An aggregate of 6,800 shares of common stock were issued as a result of the vesting of RSUs, of which, 1,561 shares of common stock were withheld to pay withholding taxes upon such vesting, which were reflected in treasury stock, with a cost of $31. The treasury stock of 1,561 shares was then retired during the three months ended March 31, 2023.

•On May 2, 2022, the board of directors of the Company authorized the repurchase of up to $5.0 million of the Company's common stock from time to time (the “Stock Repurchase Program”). The Stock Repurchase Program does not obligate the Company to repurchase any shares and may be modified, suspended or terminated at any time and for any reason at the discretion of the board of directors. During the three months ended March 31, 2023, the Company repurchased 10,937 shares of common stock under the Stock Repurchase Program, which was reflected in treasury stock, with a cost of $201.

XML

Share-based Compensation

3 Months Ended

Mar. 31, 2023

Share-Based Payment Arrangement [Abstract]

Share-based Compensation

8. Share-based compensation

On March 22, 2018, the board of directors of the Company and Cogint, Inc. (“cogint”) (now known as Fluent, Inc.), in its capacity as sole stockholder of the Company prior to the Company’s spin-off from cogint on March 26, 2018 (the “Spin-off”), approved the Red Violet, Inc. 2018 Stock Incentive Plan (the “2018 Plan”), which became effective immediately prior to the Spin-off. A total of 3,000,000 shares of common stock were authorized to be issued under the 2018 Plan. On June 3, 2020, the Company’s stockholders approved an amendment to the 2018 Plan to increase the number of shares of common stock authorized for issuance under the 2018 Plan from 3,000,000 shares to 4,500,000 shares, and on May 25, 2022, the Company's stockholders approved an amendment to the 2018 Plan to increase the number of shares of common stock authorized for issuance under the 2018 Plan from 4,500,000 shares to 6,500,000 shares.

The primary purpose of the 2018 Plan, as amended, 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 expend maximum effort for 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 March 31, 2023, there were 2,299,607 shares of common stock available for future issuance under the 2018 Plan, as amended.

To date, all stock incentives issued under the 2018 Plan have been in the form of RSUs. RSUs granted under the 2018 Plan vest and settle upon the satisfaction of a time-based condition or with both time- and performance-based conditions. The time-based condition for these awards is generally satisfied over three or four years with annual vesting. Details of unvested RSU activity during the three months ended March 31, 2023 were as follows:

	Number of units			Weighted average grant-date fair value
Unvested as of December 31, 2022		1,044,132		$	20.64
Granted(1)		17,500		$	19.16
Vested and delivered		(5,239	)	$	26.18
Withheld as treasury stock(2)		(1,561	)	$	25.08
Forfeited		(27,750	)	$	20.20
Unvested as of March 31, 2023		1,027,082		$	20.59

(1)During the three months ended March 31, 2023, the Company granted an aggregate of 17,500 RSUs to certain employees at grant date fair values ranging from $18.59 to $19.59 per share, with a vesting period of four years.

(2)Withheld as treasury stock represents shares withheld to pay statutory taxes upon the vesting of RSUs. Refer to Note 7, "Common stock and treasury stock," for details.

As of March 31, 2023, unrecognized share-based compensation expense associated with the granted RSUs amounted to $15,809, which is expected to be recognized over a remaining weighted average period of 2.3 years.

Share-based compensation was allocated to the following accounts in the condensed consolidated financial statements for the three months ended March 31, 2023 and 2022:

	Three Months Ended March 31,
(In thousands)	2023		2022
Sales and marketing expenses	$	107	$	47
General and administrative expenses		1,277		1,340
Share-based compensation expense		1,384		1,387
Capitalized in intangible assets		459		301
Total	$	1,843	$	1,688

XML

Leases

3 Months Ended

Mar. 31, 2023

Leases [Abstract]

Leases

. Leases

The Company leases its corporate headquarters of 21,020 rentable square feet in accordance with a non-cancelable 89-month operating lease agreement as amended and effective in January 2017, with an option to extend for an additional 60 months. The Company also leases an additional office space of 6,003 rentable square feet in accordance with a non-cancellable 90-month operating lease agreement entered into in April 2017, with an option to extend for an additional 60 months. The extension option is not included in the determination of the lease term as it is not reasonably certain to be exercised.

For the three months ended March 31, 2023 and 2022, a summary of the Company’s lease information is shown below:

	Three Months Ended March 31,
(In thousands)	2023		2022
Lease cost:
Operating lease costs	$	168	$	168
Other information:
Cash paid for operating leases	$	190	$	184

As of March 31, 2023, the weighted average remaining operating lease term was 1.6 years.

As of March 31, 2023, scheduled future maturities and present value of the operating lease liabilities are as follows:

(In thousands)
Year	March 31, 2023
Remainder of 2023		575
2024		542
2025		77
Total maturities	$	1,194
Present value included in condensed consolidated balance sheet:
Current portion of operating lease liabilities	$	711
Noncurrent operating lease liabilities		413
Total operating lease liabilities	$	1,124
Difference between the maturities and the present value of operating lease liabilities	$	70

XML

Commitments and Contingencies

3 Months Ended

Mar. 31, 2023

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

10. Commitments and contingencies

(a) Capital commitment

The Company incurred data costs of $2,361 and $2,248 for the three months ended March 31, 2023 and 2022, respectively, under certain data licensing agreements. As of March 31, 2023, material capital commitments under certain data licensing agreements were $24,983, shown as follows:

(In thousands)
Year	March 31, 2023
Remainder of 2023		6,108
2024		7,548
2025		7,507
2026		3,820
Total	$	24,983

(b) Contingencies

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 liability has been incurred is probable, but the amount cannot be reasonably estimated.

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 matters 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.

XML

Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2023

Accounting Policies [Abstract]

Basis of Preparation

(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, 2023.

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, 2022 (“Form 10-K”).

The condensed consolidated balance sheet as of December 31, 2022 included herein was derived from the audited financial statements as of that date included in the Form 10-K, but does not include all disclosures required by US GAAP.

The Company has only one operating segment, as defined by Accounting Standards Codification (“ASC”) 280, “Segment Reporting.”

Principles of consolidation

The condensed consolidated financial statements include the financial statements of the Company and its subsidiaries. All significant transactions among the Company and its subsidiaries have been eliminated upon consolidation.

Recently Issued Accounting Standards

(b) Recently issued accounting standards

As an emerging growth company, the Company has left open the opportunity to take advantage of the extended transition period provided to emerging growth companies in Section 13(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), however, it is the Company’s present intention to adopt any applicable new accounting standards timely.

XML

Earnings per share (Tables)

3 Months Ended

Mar. 31, 2023

Earnings Per Share [Abstract]

Schedule of Basic and Diluted 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 or converted into common stock and is calculated using the treasury stock method for unvested shares.

	Three Months Ended March 31,
(In thousands, except share data)	2023		2022
Numerator:
Net income	$	716	$	107
Denominator:
Weighted average shares outstanding:
Basic		13,997,154		13,543,607
Diluted(1)		14,236,771		14,047,635
Earnings per share:
Basic	$	0.05	$	0.01
Diluted	$	0.05	$	0.01

(1)For the three months ended March 31, 2023 and 2022, diluted weighted average shares outstanding are calculated by the inclusion of unvested restricted stock units ("RSUs").

XML

Intangible Assets, Net (Tables)

3 Months Ended

Mar. 31, 2023

Intangible Assets, Net (Excluding Goodwill) [Abstract]

Intangible Assets Other than Goodwill

Intangible assets other than goodwill consist of the following:

		March 31, 2023							December 31, 2022
(In thousands)	Amortization period	Gross amount		Accumulated amortization			Net		Gross amount		Accumulated amortization			Net
Software developed for internal use	5-10 years	$	55,410	$	(22,889	)	$	32,521	$	52,678	$	(21,031	)	$	31,647

Schedule of Estimated Amortization Expense

As of March 31, 2023, estimated amortization expense related to the Company’s intangible assets for the remainder of 2023 through 2028 and thereafter are as follows:

(In thousands)
Year	March 31, 2023
Remainder of 2023		6,033
2024		8,029
2025		6,863
2026		5,381
2027		3,755
2028 and thereafter		2,460
Total	$	32,521

XML

Share-based Compensation (Tables)

3 Months Ended

Mar. 31, 2023

Share-Based Payment Arrangement [Abstract]

Schedule of Unvested Restricted Stock Units

Details of unvested RSU activity during the three months ended March 31, 2023 were as follows:

	Number of units			Weighted average grant-date fair value
Unvested as of December 31, 2022		1,044,132		$	20.64
Granted(1)		17,500		$	19.16
Vested and delivered		(5,239	)	$	26.18
Withheld as treasury stock(2)		(1,561	)	$	25.08
Forfeited		(27,750	)	$	20.20
Unvested as of March 31, 2023		1,027,082		$	20.59

Summary of Allocated Share-based Compensation

Share-based compensation was allocated to the following accounts in the condensed consolidated financial statements for the three months ended March 31, 2023 and 2022:

	Three Months Ended March 31,
(In thousands)	2023		2022
Sales and marketing expenses	$	107	$	47
General and administrative expenses		1,277		1,340
Share-based compensation expense		1,384		1,387
Capitalized in intangible assets		459		301
Total	$	1,843	$	1,688

XML

Leases (Tables)

3 Months Ended

Mar. 31, 2023

Leases [Abstract]

Summary of Company's Lease Information

For the three months ended March 31, 2023 and 2022, a summary of the Company’s lease information is shown below:

	Three Months Ended March 31,
(In thousands)	2023		2022
Lease cost:
Operating lease costs	$	168	$	168
Other information:
Cash paid for operating leases	$	190	$	184

Scheduled Future Maturities and Present Value of Operating Lease Liabilities

As of March 31, 2023, scheduled future maturities and present value of the operating lease liabilities are as follows:

(In thousands)
Year	March 31, 2023
Remainder of 2023		575
2024		542
2025		77
Total maturities	$	1,194
Present value included in condensed consolidated balance sheet:
Current portion of operating lease liabilities	$	711
Noncurrent operating lease liabilities		413
Total operating lease liabilities	$	1,124
Difference between the maturities and the present value of operating lease liabilities	$	70

XML

Commitments and Contingencies (Tables)

3 Months Ended

Mar. 31, 2023

Commitments and Contingencies Disclosure [Abstract]

Future Minimum Capital Payments under Certain Data Licensing Agreements

The Company incurred data costs of $2,361 and $2,248 for the three months ended March 31, 2023 and 2022, respectively, under certain data licensing agreements. As of March 31, 2023, material capital commitments under certain data licensing agreements were $24,983, shown as follows:

(In thousands)
Year	March 31, 2023
Remainder of 2023		6,108
2024		7,548
2025		7,507
2026		3,820
Total	$	24,983

XML

Summary of Significant Accounting Policies - Additional Information (Details)	3 Months Ended
	Mar. 31, 2023 Segment
Accounting Policies [Abstract]
Operating segments	1

XML

Earnings Per Share - Schedule of Basic and Diluted Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands		3 Months Ended
		Mar. 31, 2023	Mar. 31, 2022
Earnings Per Share [Abstract]
Net income		$ 716	$ 107
Weighted average shares outstanding:
Basic		13,997,154	13,543,607
Diluted	[1]	14,236,771	14,047,635
Earnings per share:
Basic		$ 0.05	$ 0.01
Diluted		$ 0.05	$ 0.01

[1] For the three months ended March 31, 2023 and 2022, diluted weighted average shares outstanding are calculated by the inclusion of unvested restricted stock units ("RSUs").

XML

Intangible Assets, Net - Intangible Assets Other than Goodwill (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Dec. 31, 2022
Finite Lived Intangible Assets [Line Items]
Intangible Assets, Net	$ 32,521	$ 31,647
Software Developed for Internal Use
Finite Lived Intangible Assets [Line Items]
Intangible Assets, Gross Amount	55,410	52,678
Intangible Assets, Accumulated Amortization	(22,889)	(21,031)
Intangible Assets, Net	$ 32,521	$ 31,647
Software Developed for Internal Use | Minimum
Finite Lived Intangible Assets [Line Items]
Amortization Period	5 years
Software Developed for Internal Use | Maximum
Finite Lived Intangible Assets [Line Items]
Amortization Period	10 years

XML

Intangible Assets, Net - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Finite Lived Intangible Assets [Line Items]
Amortization expenses	$ 1,858	$ 1,472
Software Developed for Internal Use
Finite Lived Intangible Assets [Line Items]
Intangible assets that have not started amortization	5,359
Capitalized costs of internally-developed software	$ 2,732	$ 2,095

XML

Intangible Assets, Net - Schedule of Estimated Amortization Expense (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Intangible Liability Disclosure [Abstract]
Remainder of 2023	$ 6,033
2024	8,029
2025	6,863
2026	5,381
2027	3,755
2028 and thereafter	2,460
Intangible Assets, Net	$ 32,521	$ 31,647

XML

Goodwill - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Dec. 31, 2022
Goodwill Disclosure [Abstract]
Goodwill	$ 5,227		$ 5,227
Date of annual goodwill impairment test	October 1
Goodwill impairment charges	$ 0	$ 0
Accumulated goodwill impairment loss	$ 0

XML

Revenue Recognition - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Dec. 31, 2022
Revenue Recognition [Line Items]
Deferred revenue	$ 763		$ 670
Deferred revenue realization period	12 months
Revenue For Future Outstanding Performance Obligations	$ 10,614
Estimated revenue expected to be recognized in the future			283
Period over which subscription contract terms exceed	12 months
Accounts receivable current portion	$ 733		923
Accounts receivable noncurrent	757		$ 464
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-04-01
Revenue Recognition [Line Items]
Estimated revenue expected to be recognized in the future	$ 5,904
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period	9 months
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-01-01
Revenue Recognition [Line Items]
Estimated revenue expected to be recognized in the future	$ 3,858
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-01-01
Revenue Recognition [Line Items]
Estimated revenue expected to be recognized in the future	$ 708
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2026-01-01
Revenue Recognition [Line Items]
Estimated revenue expected to be recognized in the future	$ 136
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2027-01-01
Revenue Recognition [Line Items]
Estimated revenue expected to be recognized in the future	$ 8
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period	1 year
Customers With Pricing Contracts
Revenue Recognition [Line Items]
Percentage of Revenue	75.00%	77.00%
Transactional Customers
Revenue Recognition [Line Items]
Percentage of Revenue	25.00%	23.00%

XML

Income Taxes - Additional Information (Details) - USD ($)	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Dec. 31, 2022
Income Tax Disclosure [Abstract]
Effective income tax rate, percentage	4.00%	62.00%
Statutory federal income tax rate	21.00%	21.00%
Percentage of tax benefits likelihood of being realized upon settlement of tax authority	greater than 50%
Unrecognized tax benefits	$ 0		$ 0

XML

Common Stock And Treasury Stock - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Dec. 31, 2022	May 04, 2022
Equity [Line Items]
Common Stock, Shares, Issued	13,961,643		13,956,404
Treasury Stock Issued Shares	10,937		0
Treasury Stock, Value	$ 201		$ 0
Stock Repurchase Program, Authorized Amount				$ 5,000
Stock Repurchase Program
Equity [Line Items]
Treasury Stock, Value				$ 201
Treasury Stock, Common, Shares				10,937
Common Stock
Equity [Line Items]
Vesting of restricted stock units, Shares	6,800	34,750
Treasury Stock
Equity [Line Items]
Increase in treasury stock resulting from shares withheld to cover statutory taxes, Shares	1,561	(223)
Treasury Stock, Value	$ 31
Retirement of treasury stock, Shares	1,561

XML

Share-based Compensation - Additional Information (Details) - USD ($) $ in Thousands		3 Months Ended
		Mar. 31, 2023	May 22, 2022	Jun. 03, 2020	Mar. 22, 2018
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of common stock authorized				3,000,000
Restricted Stock Units (RSUs)
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Unrecognized share-based compensation costs in respect of granted RSUs		$ 15,809
Unrecognized share-based compensation remaining weighted average period		2 years 3 months 18 days
Withheld as treasury stock, Number of units	[1]	(1,561)
2018 Stock Incentive Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of common stock authorized					3,000,000
Common stock available for future issuance		2,299,607
2018 Stock Incentive Plan | Minimum [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of common stock authorized			4,500,000
2018 Stock Incentive Plan | Maximum [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of common stock authorized			6,500,000	4,500,000

[1] Withheld as treasury stock represents shares withheld to pay statutory taxes upon the vesting of RSUs. Refer to Note 7, "Common stock and treasury stock," for details.

XML

Share-based Compensation - Schedule of Unvested RSU Activity (Detail) - Restricted Stock Units (RSUs)	3 Months Ended
	Mar. 31, 2023 $ / shares shares
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Unvested, Number of units Beginning balance | shares	1,044,132
Granted, Number of units | shares	17,500	[1]
Vested and delivered, Number of units | shares	(5,239)
Withheld as treasury stock, Number of units | shares	(1,561)	[2]
Forfeited, Number of units | shares	(27,750)
Unvested, Number of units Ending balance | shares	1,027,082
Unvested, Weighted average grant-date fair value, Beginning balance | $ / shares	$ 20.64
Granted, Weighted average grant-date fair value | $ / shares	19.16	[1]
Vested and delivered, Weighted average grant-date fair value | $ / shares	26.18
Withheld as treasury stock, Weighted average grant-date fair value | $ / shares	25.08	[2]
Forfeited, Weighted average grant-date fair value | $ / shares	20.20
Unvested, Weighted average grant-date fair value, Ending balance | $ / shares	$ 20.59

[1] During the three months ended March 31, 2023, the Company granted an aggregate of 17,500 RSUs to certain employees at grant date fair values ranging from $18.59 to $19.59 per share, with a vesting period of four years.

[2] Withheld as treasury stock represents shares withheld to pay statutory taxes upon the vesting of RSUs. Refer to Note 7, "Common stock and treasury stock," for details.

XML

Share-based Compensation - Schedule of Restricted Stock Units Granted (Parenthetical) (Details) - USD ($) $ / shares in Units, $ in Thousands		3 Months Ended
		Mar. 31, 2023	Mar. 31, 2022
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based compensation expense		$ 1,384	$ 1,387
Retirement of treasury stock		$ 31	$ 6
Maximum
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Vesting period		4 years
Restricted Stock Units (RSUs) [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Granted, Number of units	[1]	17,500
Grant date fair value	[1]	$ 19.16
Withheld as treasury stock, Number of units	[2]	(1,561)
Performance Based Restricted Stock Units | Employees And Directors
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Granted, Number of units		17,500
Performance Based Restricted Stock Units | Employees And Directors | Minimum
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Grant date fair value		$ 18.59
Performance Based Restricted Stock Units | Employees And Directors | Maximum
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Grant date fair value		$ 19.59

[1] During the three months ended March 31, 2023, the Company granted an aggregate of 17,500 RSUs to certain employees at grant date fair values ranging from $18.59 to $19.59 per share, with a vesting period of four years.

[2] Withheld as treasury stock represents shares withheld to pay statutory taxes upon the vesting of RSUs. Refer to Note 7, "Common stock and treasury stock," for details.

XML

Share-based Compensation - Summary of Allocated Share-based Compensation (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Share-based compensation recognized
Share-based compensation expense	$ 1,384	$ 1,387
Capitalized in intangible assets	459	301
Total	1,843	1,688
Sales and Marketing Expenses
Share-based compensation recognized
Share-based compensation expense	107	47
General and Administrative Expenses
Share-based compensation recognized
Share-based compensation expense	$ 1,277	$ 1,340

XML

Related Party Transactions - Additional Information (Details) - USD ($) $ in Thousands		3 Months Ended
		Mar. 31, 2023	Mar. 31, 2022
Related Party Transaction [Line Items]
Share-based compensation expense		$ 1,384	$ 1,387
Restricted Stock Units (RSUs)
Related Party Transaction [Line Items]
Unvested shares granted in accodance with 2018 RSU agreement	[1]	17,500

[1] During the three months ended March 31, 2023, the Company granted an aggregate of 17,500 RSUs to certain employees at grant date fair values ranging from $18.59 to $19.59 per share, with a vesting period of four years.

XML

Leases - Additional Information (Details) - ft²	Mar. 31, 2023	Apr. 30, 2017	Jan. 31, 2017
Leases [Abstract]
Operating leases rentable square feet		6,003	21,020
Operating lease agreement		90 months	89 months
Operating lease, extended term		60 months	60 months
Weighted average remaining operating lease	1 year 7 months 6 days

XML

Leases - Summary of Company's Lease Information (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Lease cost:
Operating lease costs	$ 168	$ 168
Other information:
Cash paid for operating leases	$ 190	$ 184

XML

Leases - Scheduled Future Maturities and Present Value of Operating Lease Liabilities (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Leases [Abstract]
Remainder of 2023	$ 575
2024	542
2025	77
Total maturities	1,194
Present value included in consolidated balance sheet:
Current portion of operating lease liabilities	711	$ 692
Noncurrent operating lease liabilities	413	$ 598
Total operating lease liabilities	1,124
Difference between the maturities and the present value of operating lease liabilities	$ 70

XML

Commitments and Contingencies - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Commitments and Contingencies Disclosure [Abstract]
Data cost incurred	$ 2,361	$ 2,248
Total capital commitment under certain data licensing agreements	$ 24,983

XML

Commitments and Contingencies - Future Minimum Capital Payments under Certain Data Licensing Agreements (Details) $ in Thousands	Mar. 31, 2023 USD ($)
Commitments and Contingencies Disclosure [Abstract]
Remainder of 2023	$ 6,108
2024	7,548
2025	7,507
2026	3,820
Total	$ 24,983