Q4 2024 Red Violet Inc Earnings Call

March 4, 2026

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

Speaker #1: Later, we'll be conducting a question-and-answer session, and instructions will follow at that time. As a reminder, this call is being recorded. Now, I would like to introduce your host for today's conference call, Camilo Ramirez, Senior Vice President, Finance and Investor Relations.

Speaker #1: Please go ahead.

Speaker #2: Good afternoon and welcome. Thank you for joining us today to discuss our fourth quarter and full year 2025 financial results. With me today is Derek Dubner, our Chairman and Chief Executive Officer, and Dan McLachlan, our Chief Financial Officer.

Camilo Ramirez: Good afternoon, and welcome. Thank you for joining us today to discuss our Q4 and full year 2025 financial results. With me today is Derek Dubner, our Chairman and Chief Executive Officer, and Dan MacLachlan, our Chief Financial Officer. Our call today will begin with comments from Derek and Dan, followed by a question and answer session. I would like to remind you that this call is being webcast live and recorded. A replay of the event will be available following the call on our website. To access the webcast, please visit our investors page on our website, www.redviolet.com. Before we begin, I would like to advise listeners that certain information discussed by management during this conference call are forward-looking statements covered under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.

Speaker #2: Our call today will begin with comments from Derek and Dan, followed by a question-and-answer session. I would like to remind you that this call is being webcast live and recorded.

Speaker #2: A replay of the event will be available following the call on our website. To access the webcast, please visit our Investors page on our website: www.redviolet.com.

Speaker #2: Before we begin, I would like to advise listeners that certain information discussed by management during this conference call are forward-looking statements, covered under the Safe Harbor provision of the Private Securities Litigation Reform Act of 1995.

Speaker #2: Actual results could differ materially from those stated or implied by our forward-looking statements due to risks and uncertainties associated with the company's business. The company undertakes no obligation to update the information provided on this call.

Camilo Ramirez: Actual results could differ materially from those stated or implied by our forward-looking statements due to risks and uncertainties associated with the company's business. The company undertakes no obligation to update the information provided on this call. For a discussion of risks and uncertainties associated with Red Violet's business, I encourage you to review the company's filings with the Securities and Exchange Commission, including the most recent annual report on Form 10-K and subsequent 10-Qs. During the call, we may present certain non-GAAP financial information relating to adjusted gross profit, adjusted gross margin, adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted earnings per share, and free cash flow. Reconciliations of these non-GAAP financial measures to their most directly comparable US GAAP financial measure are provided in the earnings press release issued earlier today.

Speaker #2: Forward discussion of risk and uncertainties associated with Red Violet's business, I encourage you to review the company's filings with the Security Exchange Commission, including the most recent annual report on Form 10-K and subsequent 10-Qs.

Speaker #2: During the call, we may present certain non-GAAP financial information relating to adjusted gross profit, adjusted gross margin, adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted earnings per share, and free cash flow.

Speaker #2: Reconciliation is of these non-GAAP financial measures to their most directly comparable US GAAP financial measure, are provided in the earnings press release issued earlier today.

Speaker #2: In addition, certain supplemental metrics that are not necessarily derived from any underlying financial statement amounts may be discussed, and these metrics and their definitions can also be found in the earnings press release issued earlier today.

Camilo Ramirez: In addition, certain supplemental metrics that are not necessarily derived from any underlying financial statement amounts may be discussed. These metrics and their definitions can also be found in the earnings press release issued earlier today. With that, I am pleased to introduce Red Violet's Chairman and Chief Executive Officer, Derek Dubner.

Speaker #2: With that, I am pleased to introduce Red Violet's Derek Dubner.

Speaker #3: Good afternoon and thank you for joining us today to discuss our fourth quarter and full year 2025 financial results. We are pleased to report a record fourth quarter and a strong finish to 2025.

Derek Dubner: Good afternoon, thank you for joining us today to discuss our Q4 and full year 2025 financial results. We are pleased to report a record Q4 and a strong finish to 2025. The year was defined by disciplined execution, sustained momentum, and broad-based demand across our markets. Adoption of our solutions remained robust, driven by the strength of our cloud-native intelligence platform and the expanding integration of our identity graph within customer workflows. Our team executed at a high level, and the strategic investments we have made over the past two years are translating into measurable operating performance. We enter 2026 from a position of strength with confidence in our architecture, our trajectory, and the opportunity ahead. Let's briefly run through the numbers.

Speaker #3: The year was defined by disciplined execution, sustained momentum, and broad-based demand across our markets. Adoption of our solutions remained robust, driven by the strength of our cloud-native intelligence platform and the expanding integration of our identity graph within customer workflows.

Speaker #3: Our team executed at a high level, and the strategic investments we have made over the past two years are translating into measurable operating performance.

Speaker #3: We enter 2026 from a position of strength, with confidence in our architecture, our trajectory, and the opportunity ahead. Let's briefly run through the numbers.

Speaker #3: Revenue for the quarter was up 20% to a record 23.4 million dollars, producing record adjusted gross profit of 19.5 million dollars, translating to adjusted gross margin of 83%.

Derek Dubner: Revenue for the quarter was up 20% to a record $23.4 million, producing record adjusted gross profit of $19.5 million, translating to adjusted gross margin of 83%. Adjusted EBITDA for the quarter was up 33% to $5.9 million, producing an adjusted EBITDA margin of 25%. Adjusted net income increased 53% to $3.1 million, resulting in adjusted earnings of $0.21 per diluted share. We generated free cash flow of $3.7 million during the quarter. For the second consecutive year, we bucked the Q4 seasonality we had traditionally experienced, delivering sequential revenue growth and establishing a new record quarter. Our IDI billable customer base grew by 169 customers sequentially from the Q3, ending the Q4 at 10,022 customers.

Speaker #3: Adjusted EBITDA for the quarter was up 33% to 5.9 million dollars, producing an adjusted EBITDA margin of 25%. Adjusted net income increased 53% to 3.1 million dollars, resulting in adjusted earnings of 21 cents per diluted share.

Speaker #3: We generated free cash flow of 3.7 million dollars during the quarter. For the second consecutive year, we bucked the fourth quarter seasonality we had traditionally experienced, delivering sequential revenue growth and establishing a new record quarter.

Speaker #3: Our IDI billable customer base grew by 169 customers sequentially from the third quarter, ending the fourth quarter at 10,022 customers. Forward added 17,809 users during the fourth quarter.

Derek Dubner: FOREWARN added 17,809 users during the Q4, ending the quarter at 390,018 users. Over 620 realtor associations are now contracted to use FOREWARN. For the year, revenue increased 20% to $90.3 million, producing adjusted gross profit of $75.4 million and adjusted EBITDA of $31 million. Adjusted EBITDA margin was 34% for the year. We saw continued growth in the onboarding of top-tier customers, with 127 customers contributing over $100,000 of revenue in 2025 compared to 96 customers in 2024. We generated $18.2 million in free cash flow in 2025 compared to generating $14.4 million in 2024.

Speaker #3: Ending the quarter at 390,018 users. Over 620 realtor associations are now contracted to use Forward. For the year, revenue increased 20% to $90.3 million, producing adjusted gross profit of $75.4 million and adjusted EBITDA of $31 million.

Speaker #3: Adjusted EBITDA margin was 34% for the year.

Speaker #2: We saw continued growth in the onboarding of top-tier customers, with 127 customers contributing over 100,000 dollars of revenue in 2025, compared to 96 customers in 2024.

Speaker #3: We generated $18.2 million in free cash flow in 2025, compared to generating $14.4 million in 2024. The momentum we generated in the first three quarters extended through the fourth quarter and capped a strong year overall.

Derek Dubner: The momentum we generated in Q1, Q2, and Q3 extended through Q4 and capped a strong year overall. Demand was well-balanced across our verticals, underscoring the versatility of our platform and its growing integration into regulated and mission-critical environments. We continue to see expanding enterprise adoption as customers embed our intelligence more deeply into core operational workflows, further strengthening the durability and visibility of our revenue base. Throughout the year, we continued to execute against a robust product roadmap, advancing capabilities across our cloud-native AI-enabled platform. We made targeted investments in data science, product development, and go-to-market resources to support innovation and long-term growth. At the same time, we executed upon our strategic plan announced last year of increased automation across key areas of the organization, enhancing efficiency and productivity while maintaining operating discipline.

Speaker #3: Demand was well balanced across our verticals, underscoring the versatility of our platform and its growing integration into regulated and mission-critical environments. We continue to see expanding enterprise adoption as customers embed our intelligence more deeply into core operational workflows.

Speaker #3: Further strengthening the durability and visibility of our revenue base. Throughout the year, we continued to execute against a robust product roadmap, advancing capabilities across our cloud-native, AI-enabled platform.

Speaker #3: We made targeted investments in data science, product development, and go-to-market resources to support innovation and long-term growth. At the same time, we executed upon our strategic plan announced last year of increased automation across key areas of the organization, enhancing efficiency and productivity while maintaining operating discipline.

Speaker #3: We believe there remains meaningful opportunities to further automate and optimize workflows across the business, which we expect will continue to improve performance and scalability over time.

Derek Dubner: We believe there remains meaningful opportunities to further automate and optimize workflows across the business, which we expect will continue to improve performance and scalability over time. On the pervasive topic of AI, there has been significant discussion in the market about artificial intelligence potentially commoditizing software. We believe it's important to distinguish between AI as a capability and the infrastructure required to deliver mission-critical intelligence at scale. Our platform is not a front-end application layered on top of a model. It is a full technology stack, a purpose-built cloud infrastructure, distributed and parallel computing architecture, proprietary data ingestion and normalization systems, rigorous validation frameworks, governance and security controls, API layers, and embedded machine learning workflows, all integrated to create and continuously refine a longitudinal identity graph developed and validated over many years. Our management team has been building platforms and companies in this sector for nearly three decades.

Speaker #3: On the pervasive topic of AI, there has been significant discussion in the market about artificial intelligence potentially commoditizing software. We believe it's important to distinguish between AI as a capability and the infrastructure required to deliver mission-critical intelligence at scale.

Speaker #3: Our platform is not a front-end application layered on top of a model. It is a full technology stack—a purpose-built cloud infrastructure, distributed and parallel computing architecture, proprietary data ingestion and normalization systems, rigorous validation frameworks, governance and security controls, API layers, and embedded machine learning workflows.

Speaker #3: All integrated to create and continuously refine a longitudinal identity graph, developed and validated over many years. Our management team has been building platforms and companies in this sector for nearly three decades.

Speaker #3: This is our third platform in the identity and analytics space, and throughout that time, we've repeatedly been asked how we compete with larger incumbents, or what prevents new entrants from replicating what we build.

Derek Dubner: This is our third platform in the identity and analytics space, and throughout that time, we've repeatedly been asked how we compete with larger incumbents or what prevents new entrants from replicating what we build. The answer has never been a single model or a single dataset. It has been the integration of architectural design, proprietary engineering, accumulated data intelligence, regulatory alignment, and disciplined execution over time. From the earliest days of our first company in the late nineties, we recognized that solving identity at scale required parallel computing and proprietary processing frameworks. We developed our own internal language and systems to ingest, normalize, validate, and unify large volumes of structured and unstructured data. CORE is our proprietary entity resolution, data processing, and machine learning framework, purpose-built to resolve identities with precision, scalability, and computational efficiency that generic frameworks cannot easily replicate.

Speaker #3: The answer has never been a single model or a single data set. It has been the integration of architectural design, proprietary engineering, accumulated data intelligence, regulatory alignment, and disciplined execution over time.

Speaker #3: From the earliest days of our first company in the late '90s, we recognized that solving identity at scale required parallel computing and proprietary processing frameworks.

Speaker #3: We developed our own internal language and systems to ingest, normalize, validate, and unify large volumes of structured and unstructured data. IARN is our proprietary entity resolution, data processing, and machine learning framework.

Speaker #3: Purpose-built to resolve identities with precision, scalability, and computational efficiency that generic frameworks cannot easily replicate. It serves as the core intelligence layer within our architecture, enabling high confidence identity resolution across complex and fragmented data environments.

Derek Dubner: It serves as the core intelligence layer within our architecture, enabling high-confidence identity resolution across complex and fragmented data environments. Our AI-assisted development capabilities operate natively within this framework, allowing us to further optimize performance and accelerate innovation. This intellectual property is not publicly available and remains foundational to the construction and continuous refinement of our identity graph. These capabilities were not developed in response to the current AI cycle. They've been embedded in our architecture and our operating philosophy from inception. Artificial intelligence, including generative AI, is a powerful accelerator. It can shorten development cycles, enhance automation, and improve analytical precision. AI alone does not create a durable platform, a unified longitudinal identity graph, or the regulatory-grade workflows that our customers depend on, environments where accuracy, consistency, and auditability are essential.

Speaker #3: Our AI-assisted development capabilities operate natively within this framework, allowing us to further optimize performance and accelerate innovation. This intellectual property is not publicly available and remains foundational to the construction and continuous refinement of our identity graph.

Speaker #3: These capabilities were not developed in response to the current AI cycle. They've been embedded in our architecture and our operating philosophy from inception. Artificial intelligence, including generative AI, is a powerful accelerator.

Speaker #3: It can shorten development cycles, enhance automation, and improve analytical precision. But AI alone does not create a durable platform, a unified longitudinal identity graph, or the regulatory-grade workflows that our customers depend on.

Speaker #3: Environments where accuracy, consistency, and auditability are essential. As AI capabilities continue to evolve, we believe the platforms that will benefit most are those already architected with embedded AI, deep analytical frameworks, and secure cloud-native infrastructure.

Derek Dubner: As AI capabilities continue to evolve, we believe the platforms that will benefit most are those already architected with embedded AI, deep analytical frameworks, and secure cloud-native infrastructure. In that respect, AI strengthens and extends the advantages we have built. It does not replace them. Moreover, certain competitors continue to operate on legacy on-premises or hybrid architectures that were not designed for modern cloud-native dev deployment or deeply embedded machine learning. Because our platform was architected from inception as a cloud-native system with AI integrated directly into core workflows, we believe we are structurally better positioned to incorporate new advancements rapidly and continue widening our competitive moat. Much of the current AI discussion has centered on agent-based automation and what that could mean for traditional per-seat software models. It's important to understand that our revenue model is, and always has been, usage-based, supported by contractual minimums.

Speaker #3: In that respect, AI strengthens and extends the advantages we have built; it does not replace them. Moreover, certain competitors continue to operate on legacy on-premises or hybrid architectures that were not designed for modern cloud-native deployment or deeply embedded machine learning.

Speaker #3: Because our platform was architected from inception as a cloud-native system, with AI integrated directly into core workflows, we believe we are structurally better positioned to incorporate new advancements rapidly and continue widening our competitive moat.

Speaker #3: Much of the current AI discussion has centered on agent-based automation, and what that could mean for traditional per-seat software models. It's important to understand that our revenue model is, and always has been, usage-based, supported by contractual minimums.

Derek Dubner: Approximately 90% of our revenue is volume-driven. The limited portion that is seat-based exists primarily in regulated environments, including law enforcement and collections, where seats are limited to direct human interaction, and any automated use is converted to volume-based pricing. Importantly, we view increasing AI adoption by our customers, including agent-based automation and workflow augmentation, as a productivity enhancer. As automation reduces manual effort and accelerates decision-making, we expect transaction volumes and data velocity across our platform to increase. In that context, AI is not a substitute for our solutions. It's a catalyst for greater utilization of them. Expanding the depth and breadth of data within our intelligence engine to serve additional use cases and industries has long been a core element of our strategy.

Speaker #3: Approximately 90% of our revenue is volume-driven. The limited portion that is seat-based exists primarily in regulated environments, including law enforcement and collections, where seats are limited to direct human interaction, and any automated use is converted to volume-based pricing.

Speaker #3: Importantly, we view increasing AI adoption by our customers, including agent-based automation and workflow augmentation, as a productivity enhancer, as automation reduces manual effort and accelerates decision-making.

Speaker #3: We expect transaction volumes and data velocity across our platform to increase. In that context, AI is not a substitute for our solutions. It's a catalyst for greater utilization of them.

Speaker #3: Expanding the depth and breadth of data within our intelligence engine to serve additional use cases and industries has long been a core element of our strategy.

Speaker #3: We have consistently enriched our identity graph with new data attributes and analytical capabilities to broaden its applicability across verticals. As AI reduces the cost and time required to build application layers and orchestration tools, we believe competitive advantage increasingly shifts toward platforms that control the intelligence engine.

Derek Dubner: We have consistently enriched our identity graph with new data attributes and analytical capabilities to broaden its applicability across verticals. As AI reduces the cost and time required to build application layers and orchestration tools, we believe competitive advantage increasingly shifts toward platforms that control the intelligence engine. Because we control that engine via our cloud-native platform and longitudinal identity graph, we are now positioned not only to continue expanding horizontally across industries, but also to expand vertically by building and integrating more workflow, case management, and application layer capabilities directly on top of our platform, allowing us to internalize key orchestration layers and further embed our intelligence at the center of customer operations.

Speaker #3: Because we control that engine via our cloud-native platform and longitudinal identity graph, we are now positioned not only to continue expanding horizontally across industries, but also to expand vertically workflow, case management, and application layer capabilities directly on top of our platform, allowing us to internalize key orchestration layers and further embed our intelligence at the center of customer operations.

Speaker #3: At the same time, we continue to deploy AI-enabled capabilities to aggregate and contextualize fragmented data across our identity graph, uncover deeper relational linkages between entities, identify and structure—excuse me—surface risk signals with greater precision, and deliver more intuitive, workflow-driven interfaces.

Derek Dubner: At the same time, we continue to deploy AI-enabled capabilities to aggregate and contextualize fragmented data across our identity graph, uncover deeper relational linkages between entities, surface risk signals with greater precision, and deliver more intuitive workflow-driven interfaces. Advancements in AI-assisted development are accelerating our roadmap, compressing development cycles, and broadening the solutions we can deliver. In that respect, AI is not simply enhancing our existing capabilities, it is expanding the strategic scope of our platform and deepening our integration within customer workflows. Now I'll turn it over to Dan to discuss the financials.

Speaker #3: Advancements in AI-assisted development are accelerating our roadmap, compressing development cycles, and broadening the solutions we can deliver. In that respect, AI is not simply enhancing our existing capabilities.

Speaker #3: It is expanding the strategic scope of our platform and deepening our integration within customer workflows. Now I'll turn it over to Dan to discuss the financials.

Speaker #2: Thank you, Derek. And good afternoon, everyone. The fourth quarter marked a record finish to an exceptional year for Red Violet. Defined by strong revenue growth, expanding margins, and meaningful cash generation.

Dan MacLachlan: Thank you, Derek, and good afternoon, everyone. The Q4 marked a record finish to an exceptional year for Red Violet, defined by strong revenue growth, expanding margins, and meaningful cash generation. Importantly, we accomplished this while continuing to invest in the business for the long term, adding more than 30 team members during the year with a focus on product development and go-to-market expansion. These investments were deliberate and strategic, expanding our AI-driven capabilities and broadening our market reach, all without compromising financial performance. We continue to scale the business both vertically, deepening adoption across existing markets, customers, and use cases, and horizontally by introducing new products and expanding into new industries.

Speaker #2: Importantly, we accomplished this while continuing to invest in the business for the long term, adding more than 30 team members during the year, with a focus on product development and go-to-market expansion.

Speaker #2: These investments were deliberate and strategic—expanding our AI-driven capabilities and broadening our market reach, all without compromising financial performance. We continue to scale the business both vertically—deepening adoption across existing markets, customers, and use cases—and horizontally by introducing new products and expanding into new industries.

Speaker #2: That strategy is translating into larger and more valuable customer relationships, with 127 customers now contributing over $100,000 in annual revenue in 2025, up 31 customers from the prior year.

Dan MacLachlan: That strategy is translating into larger and more valuable customer relationships, with 127 customers now contributing over $100,000 in annual revenue in 2025, up 31 customers from the prior year. It is also expanding the reach of our platform as we surpassed 10,000 customers on IDI and more than 620 realtor associations contracted to use FOREWARN. Collectively, these results position us with strong momentum as we enter 2026, supported by a larger and more diversified customer base, expanding platform adoption, and continued operating leverage. Turning now to our Q4 results. For clarity, all the comparisons I will discuss today will be against the Q4 of 2024, unless noted otherwise. Total revenue was a record $23.4 million, up 20% over the prior year.

Speaker #2: It is also expanding the reach of our platform as we, IDI, and more than 620 realtor associations contracted to use for WARM. Collectively, these results position us with strong momentum as we enter 2026.

Speaker #2: Supported by a larger and more diversified customer base, expanding platform adoption, and continued operating momentum, we surpassed 10,000 customers on Leverage. Turning now to our fourth quarter results—for clarity, all the comparisons I will discuss today will be against the fourth quarter of 2024, unless noted otherwise.

Speaker #2: Total revenue was a record $23.4 million, up 20% over the prior year. We generated a record $19.5 million in adjusted gross profit, delivering an adjusted gross margin of 83%, up 1 percentage point.

Dan MacLachlan: We generated a record $19.5 million in adjusted gross profit, delivering adjusted gross margin of 83%, up one percentage point. As is typical in Q4, personnel costs include year-end incentive compensation tied to annual performance. Even with this seasonal expense, adjusted EBITDA increased 33% to $5.9 million, producing adjusted EBITDA margin of 25%, up two percentage points. Adjusted net income increased 53% to $3.1 million, resulting in adjusted earnings of $0.21 per diluted share. Turning to the details of our P&L, revenue for Q4 was a record $23.4 million. For the second consecutive year, we outperformed the typical Q4 seasonality, delivering sequential revenue growth and establishing a new quarterly high.

Speaker #2: As is typical in the fourth quarter, personnel costs include year-end incentive compensation tied to annual performance. Even with this seasonal expense, adjusted EBITDA increased 33% to $5.9 million, producing an adjusted EBITDA margin of 25%, up 2 percentage points.

Speaker #2: Adjusted net income increased 53% to $3.1 million, resulting in adjusted earnings of $0.21 per diluted share. Turning to the details of our P&L, revenue for the fourth quarter was a record $23.4 million. For the second consecutive year, we outperformed the typical fourth-quarter seasonality, delivering sequential revenue growth and establishing a new quarterly high.

Speaker #2: Within IDI, we continue to see strong demand for our solutions and healthy customer expansion, adding 169 billable customers sequentially to end the quarter with 10,00022 customers.

Dan MacLachlan: Within IDI, we continue to see strong demand for our solutions and healthy customer expansion, adding 169 billable customers sequentially to end the quarter with 10,022 customers. Our financial and corporate risk vertical continues to deliver consistent, strong revenue performance driven by solid results across our core financial services customers, including banking, insurance, and broader corporate risk. The background screening industry also continues to perform exceptionally well, supported by the introduction of additional products, enhanced functionality, and new integrations over the past year, driving meaningful growth and momentum in Q4. Our investigative vertical delivered another strong quarter, supported by continued demand across state and local law enforcement agencies, as well as broader investigative customers. We added approximately 200 law enforcement customers in 2025, reflecting the growing reliance on our platform within the public safety community.

Speaker #2: Our financial and corporate risk vertical continues to deliver consistent strong revenue performance. Driven by solid results across our core financial services customers, including banking, insurance, and broader corporate risk.

Speaker #2: The background screening industry also continues to perform exceptionally well, supported by the introduction of additional products, enhanced functionality, and new integrations over the past year.

Speaker #2: Driving meaningful growth and momentum in the fourth quarter. Our investigative vertical delivered another strong quarter, supported by continued demand across state and local law enforcement agencies as well as broader investigative customers.

Speaker #2: We added approximately 200 law enforcement customers in 2024, reflecting the growing reliance on our platform within the public safety community. Performance in the quarter was driven by increased transaction volumes, new agency wins, and the further embedding of day-to-day investigative workflows.

Dan MacLachlan: Performance in the quarter was driven by increased transaction volumes, new agency wins, and the further embedding of our solutions into day-to-day investigative workflows. Our emerging markets vertical was an important contributor to revenue growth in Q4, generating meaningful expansion across a broad and diverse set of customer segments. While we remain in the early stages of penetration within many of these markets, adoption continues to build, providing clear runway for sustained growth. Collections maintained its positive trajectory in the quarter, delivering another period of high teens revenue growth. The continued recovery in this vertical is translating into sustained demand and improved activity levels, reinforcing our competitive position and long-term opportunity in the market. Lastly, IDI's real estate vertical, excluding FOREWARN, declined modestly year-over-year as elevated home prices and interest rates continued to constrain affordability and dampen overall housing activity.

Speaker #2: Our emerging markets vertical was an important contributor to revenue growth in the fourth quarter. Generating meaningful expansion across a broad and diverse set of customer segments.

Speaker #2: While we remain in the early stages of penetration within many of these markets, adoption continues to build, providing clear runway for sustained growth. Collections maintained its positive trajectory in the quarter, delivering another period of high teams revenue growth.

Speaker #2: The continued recovery in this vertical is translating into sustained demand and improved activity levels, reinforcing our competitive position and long-term opportunity in the market.

Speaker #2: Lastly, IDI's real estate vertical, excluding WARM, declined modestly year over year as elevated home prices and interest rates continued to constrain affordability and dampen overall housing activity.

Speaker #2: Turning to for WARM, revenue growth remained robust in the fourth quarter, driven by the platform's increasing adoption within the daily workflows of real estate professionals.

Dan MacLachlan: Turning to FOREWARN, revenue growth remained robust in the Q4, driven by the platform's increasing adoption within the daily workflows of real estate professionals. We ended the year with over 620 realtor associations under contract and more than 390,000 users on the platform. Contractual revenue represented 77% of total revenue in the quarter, consistent with the prior year. Gross revenue retention remains strong at 95%, down 1 percentage point. Moving back to the P&L, our cost of revenue exclusive of depreciation and amortization increased $0.4 million or 12% to $3.9 million. adjusted gross profit increased 21% to a record $19.5 million, resulting in an adjusted gross margin of 83%, up 1 percentage point from the prior year.

Speaker #2: We ended the year with over 620 Realtor associations under contract and more than 390,000 users on the platform. Contractual revenue represented 77% of total revenue in the quarter.

Speaker #2: Consistent with the prior year. Gross revenue retention remained strong at 95%, down 1 percentage point. Moving back to the P&L, our cost of revenue exclusive of depreciation and amortization increased 0.4 million or 12% to $3.9 million.

Speaker #2: Adjusted gross profit increased 21% to a record $19.5 million. Resulting in an adjusted gross margin of 83%, up 1 percentage point from the prior year.

Speaker #2: Our sales and marketing expenses increased 0.4 million or 9% to $5.3 million for the quarter. Driven primarily by higher personnel-related expenses. General and administrative expenses increased 1.5 million or 18% to $9.8 million.

Dan MacLachlan: Our sales and marketing expenses increased $0.4 million or 9% to $5.3 million for the Q4, driven primarily by higher personnel-related expenses. General and administrative expenses increased $1.5 million or 18% to $9.8 million, primarily reflecting higher personnel-related costs. Personnel expenses are typically elevated in the Q4 due to year-end incentive compensation and bonus accruals tied to annual performance for the executive leadership team. Depreciation and amortization increased $0.3 million or 12% to $2.8 million for the Q4. Net income increased $1.9 million or 226% to $2.8 million for the Q4. Adjusted net income increased $1.1 million or 53% to $3.1 million, resulting in adjusted earnings of $0.21 per diluted share.

Speaker #2: Primarily reflecting higher personnel-related costs. Personnel expenses are typically elevated in the fourth quarter due to year-end incentive compensation and bonus accruals tied to annual performance for the executive leadership team.

Speaker #2: Depreciation and amortization increased $0.3 million, or 12%, to $2.8 million for the quarter. Net income increased $1.9 million, or 226%, to $2.8 million for the quarter.

Speaker #2: Adjusted net income increased $1.1 million, or 53%, to $3.1 million, resulting in adjusted earnings of $0.21 per diluted share. Moving on to the balance sheet, cash and cash equivalents were $43.6 million at December 31, 2025, compared to $36.5 million at December 31, 2024.

Dan MacLachlan: Moving on to the balance sheet, cash and cash equivalents were $43.6 million at 31 December 2025, compared to $36.5 million at 31 December 2024. Current assets totaled $56.5 million compared to $46.2 million, while current liabilities were $7.9 million, down from $10.3 million. We generated $6.7 million in cash from operating activities in the Q4, unchanged over prior year. Free cash flow for the quarter was $3.7 million compared to $4.4 million in the same period last year. In the Q4 and through 27 February 2026, we purchased 57,812 shares of company stock at an average price of $0.4401 per share.

Speaker #2: Current assets totaled $56.5 million, compared to $46.2 million, while current liabilities were $7.9 million, down from $10.3 million. We generated $6.7 million in cash from operating activities in the fourth quarter, unchanged over the prior year.

Speaker #2: Free cash flow for the quarter was $3.7 million compared to $4.4 million in the same period last year. In the fourth quarter and through February 27, 2026, we purchased 57,812 shares of company stock at an average price of $44.01 per share.

Dan MacLachlan: In total, we have purchased 611,733 shares at an average price of $22.26 per share under our stock repurchase program. As of 27 February 2026, we had $16.4 million remaining under the repurchase program. In closing, 2025 marked another year of disciplined execution and record financial performance for Red Violet. We delivered 20% revenue growth, expanded adjusted gross margin to 84%, adjusted EBITDA margin to 34%, and generated $18.2 million in free cash flow. This performance reflects the consistent execution of our team and the increasing efficiency of the business. We believe the scale and financial strength we have built provide a durable base for continued profitable growth. With that, our operator will now open the line for Q&A.

Speaker #2: In total, we have purchased 611,733 shares at an average price of $22.26 per share under our stock repurchase program. As of February 27, 2026, we had 16.4 million remaining under the repurchase program.

Speaker #2: In closing, 2025 marked another year of disciplined execution and record financial performance for Red Violet. We delivered 20% revenue growth, expanded adjusted gross margin to 84%, adjusted EBITDA margin to 34%, and generated $18.2 million in free cash flow.

Speaker #2: This performance reflects the consistent execution of our team and the increasing efficiency of the business. We believe the scale and financial strength we have built provide a durable base for continued profitable growth.

Speaker #2: With that, our operator will now open the line for Q&A.

Speaker #1: Thank you. At this time, if you would like to ask a question, please press star one one on your telephone. You will then hear an automated message advising your hand is raised.

Operator: Thank you. At this time, if you would like to ask a question, please press star one on your telephone. You will then hear an automated message advising your hand is raised. To remove yourself from the queue, press star one again. We also ask that you wait for your name and company to be announced before proceeding with your question. One moment while we compile the Q&A roster. Our first question today will be coming from the line of Josh Nichols of B. Riley Securities. Your line is open.

Speaker #1: To remove yourself from the queue, press star one one again. We also ask that you wait for your name and company to be announced before proceeding with your question.

Speaker #1: One moment while we compile the Q&A roster. Our first question for today will be coming from the line of Josh Nichols of B. Riley Securities. Your line is open.

Speaker #3: Yeah, thanks. Great to see the company bucking the four Q's seasonality trend yet again. Looking at the enterprise pipeline, I know you secured a couple of wins.

Josh Nichols: Yeah, thanks. Great to see the company bucking the poor Q seasonality trend, yet again. Looking at the enterprise pipeline, I know you secured a couple wins. You mentioned like a toll authority and payroll processor, I think, the other quarter. Just any update on how that's progressing or generally what you're seeing in terms of, like, the enterprise customer pipeline when we look at 2026?

Speaker #3: You mentioned a toll authority and payroll processor. I think the other question is just any update on how that's progressing, or generally what you're seeing in terms of the enterprise customer pipeline when we look at 2026?

Speaker #4: Yeah, thanks, Josh. This is Dan, and I'll take that question. So yeah, I mean, when we look at that enterprise pipeline and specifically kind of that higher-tier customer we've been excited and we've given some color on some recent wins.

Dan MacLachlan: Yeah. Thanks, Josh. This is Dan, and I'll take that question. Yeah, I mean, when we look at that enterprise pipeline and specifically kind of that higher-tier customer, you know, we've been excited, and we've given some color on some, you know, recent wins. Obviously, we just announced record number of, you know, customers in excess of $100,000 a year, almost a 30% increase, just over a 30% increase in that customer cohort. That's really representative of how that pipeline has developed and how that pipeline continues to develop.

Speaker #4: Obviously, we just announced record number of customers in excess of 100,000 a year, almost a 30% increase just over a 30% increase in that customer cohort.

Speaker #4: And that's really representative of how that pipeline has developed and how that pipeline continues to develop. So we're excited about the investments we've made that continued execution to move from lower to medium to higher-tier customers.

Dan MacLachlan: you know, we're excited about the investments we've made, the continued execution to move from lower to medium to higher-tier customers, and it's reflected in, you know, the cohort as announced today, 127 customers in excess of $100,000 in revenue a year. That pipeline continues to develop well, and we're converting into real meaningful customer wins.

Speaker #4: And it's reflected in the cohort, as announced today: 127 customers in excess of $100,000 in revenue a year. And so, that pipeline continues to develop well.

Speaker #4: And we're converting into real, meaningful customer wins.

Speaker #3: Thanks. And then just a follow-up, a lot of additions continue to see in the law enforcement agency vertical, 200-plus this year. When you look at the 2026 growth trajectory, what are the top one or two opportunities that you think are going to move the needle specifically in those end markets?

Josh Nichols: Thanks. A lot of additions, you know, continue to see in, like, the law enforcement agency vertical, 200+ this year. When you look at, like, the 2026 growth trajectory, like, what are the top 1 or 2 opportunities that you think are gonna move the needle specifically in those end markets 'cause you serve so many?

Speaker #3: Because you served so many.

Speaker #4: Yeah, thanks, Josh. Derek here. Great to talk to you. The end markets that I think, today at least, we are most excited about continue to be public sector and background screening support.

Dan MacLachlan: Yeah. Thanks, Josh. Derek here. Great to talk to you. The end markets that I think that today, at least, we are most excited about continue to be public sector and background screening support. I think as Dan mentioned, you know, we announced we won the largest payroll processor, I think, in Q3 last year. That contract kicks in this year. We're very excited about that. That proves our differentiation in the marketplace, testing and winning against very strong competition out there. In public sector, we continue to make very nice traction, as Dan talked about, and you talked about in law enforcement. We are seeing some great progress at the state level as well, with a number of use cases in the way of eligibility requirements and identity verification.

Derek Dubner: Yeah. Thanks, Josh. Derek here. Great to talk to you. The end markets that I think that today, at least, we are most excited about continue to be public sector and background screening support. I think as Dan mentioned, you know, we announced we won the largest payroll processor, I think, in Q3 last year. That contract kicks in this year. We're very excited about that. That proves our differentiation in the marketplace, testing and winning against very strong competition out there. In public sector, we continue to make very nice traction, as Dan talked about, and you talked about in law enforcement. We are seeing some great progress at the state level as well, with a number of use cases in the way of eligibility requirements and identity verification.

Speaker #4: And I think, as Dan mentioned, we announced we've won the largest payroll processor in Q3 last year, that contract kicks in this year. And so we're very excited about that.

Speaker #4: That proves our differentiation in the marketplace, testing and winning against very strong competition out there. And then in public sector, we continue to make very nice traction, as Dan talked about, and you talked about in law enforcement.

Speaker #4: And we are seeing some great progress at the state level as well with a number of use cases in the way of eligibility requirements and identity verification.

Speaker #4: And those use cases really are so broad. They capture so many of various state agencies, if you will, use cases so we continue to see progress there.

Dan MacLachlan: Those use cases really are so broad, they capture so many of various state agencies, if you will, use cases. We continue to see progress there, and we continue to win those. Again, I think we've got a model that's very replicable, and we can replicate it across, you know, every state, given the uptake there.

Derek Dubner: Those use cases really are so broad, they capture so many of various state agencies, if you will, use cases. We continue to see progress there, and we continue to win those. Again, I think we've got a model that's very replicable, and we can replicate it across, you know, every state, given the uptake there.

Speaker #4: And we continue to win those. And again, I think we've got a model that's very replicable, and we can replicate it across every state, given the uptake there.

Speaker #3: Appreciate it. Thank you.

Josh Nichols: Appreciate it. Thank you.

Speaker #4: Thanks, Josh.

Dan MacLachlan: Thanks, Josh.

Derek Dubner: Thanks, Josh.

Speaker #1: Thank you. One moment for the next question. And our next question is coming from the line of Eric Martinezi, of Lake Street Capital Markets, your line is open.

Operator: Thank you. One moment for the next question. Our next question is coming from the line of Eric Martinuzzi of Lake Street Capital Markets. Your line is open.

Speaker #5: I also wanted to focus on the higher-tier customers. That is very substantial growth there in those accounts that are doing over 100,000 annually. I know you've talked when you're asked the question about, "Hey, are let's call them whale-sized accounts in the 5 to 10 million dollars annually.

Eric Martinuzzi: I also wanted to focus on the higher-tier customers. That is very substantial growth there in those accounts that are doing over $100,000 annually. I know you've talked when you're asked the question about, hey, where can the business go? That there are, let's call them whale-sized accounts, you know, in the $5 to 10 million annually. Are there any of those prospects, those types of whale prospects in the pipeline that, you know, you guys feel are closer, could happen in 2026, or is it still too soon to consider them in the funnel?

Speaker #5: Are there any of those prospects, those types of whale prospects, in the pipeline that you guys feel are closer—could happen in 2026—or is it still too soon to consider them in the funnel? Where can the business go from there?

Speaker #3: Hi, Eric. This is Dan. I appreciate the question. And yeah, I mean, we have those opportunities now in the pipeline. We also have those opportunities as customers.

Dan MacLachlan: Hi, Eric. This is Dan. I appreciate the question. Yeah, I mean, we have those opportunities now in the pipeline. We also have those opportunities as customers. You know, the Q3 reference we made to one of the largest payroll processors in the country that we won. Ultimately, the volume of that customer over time as we continue to expand that relationship can be a multimillion-dollar a year customer. You know, the minimum commitment is probably around low to mid six figures starting in 2026, which is great. We think the opportunity to expand that relationship, you know, goes into the, you know, seven figures and plus.

Speaker #3: The third quarter reference we made to one of the largest payroll processors in the country that we won ultimately, the volume of that customer over time as we continue to expand that relationship can be a multi-million dollar a year customer.

Speaker #3: The minimum commitment is probably around low to mid-six figures, starting in 2026, which is great. But we think the opportunity to expand that relationship goes into the seven figures.

Speaker #3: And plus, so yeah, we're really excited about the pipeline, but we're also excited about some of these recent large wins that are really representative of those type of customers you're talking about.

Dan MacLachlan: Yeah, we're really excited about the pipeline, but we're also excited about some of these recent large wins that are really representative of those type of customers you're talking about.

Speaker #5: Okay. And I know it was probably last summer you had a pretty substantial data rights agreement that you're able to renew on favorable terms.

Eric Martinuzzi: Okay. I know it was probably last summer, you had a pretty substantial data rights agreement that you're able to renew on favorable terms. As far as 2026 goes, do we have anything of that nature, you know, a substantial data rights exposure that we're working on, or is it all relatively small in comparison?

Speaker #5: As far as 2026 goes, do we have anything of that nature, a substantial data rights exposure that we're working on, or is it all relatively small in comparison?

Dan MacLachlan: Yeah, there's really no material, you know, licensing renewal agreement that is coming up. I mean, we structure these agreements, as you know, long-term, unlimited use, you know, fixed fee structures. We have obviously entered into a renewal for another six years at the time, which would bring us, you know, past 2030 of our largest data provider, and we announced that, of course, you know, mid-year this year, which was great. No, at this time, in the near term, there really is no material license agreements that are coming up for renewal.

Speaker #3: Yeah, there's really no material licensing, renewal agreement that is coming up. I mean, we structure these agreements, as you know, long-term, unlimited use, fixed fee structures.

Speaker #3: We obviously entered into a renewal for another six years at the time, which would bring us past 2030 with our largest data provider. And we announced that, of course, mid-year this year, which was great.

Speaker #3: But no, at this time, in the near term, there really is no material license agreements that are coming up for renewal.

Speaker #5: Okay. And then as far as the 2026 outlook goes, you just finished a year where you grew 20% and a quarter where you grew 20%.

Eric Martinuzzi: Okay. Then as far as the 2026 outlook goes, you know, you just finished a year where you grew 20% and a quarter where you grew 20%. I know you're not in the guidance business, but right now I've got kind of a mid-teens growth rate for 2026. Is that a good place to start out or are you confident that it's gonna be 20% plus?

Speaker #5: I know you're not in the guidance business, but right now, I've got kind of a mid-teens growth rate for 2026. Is that a good place to start out, or are you confident that it's going to be 20% plus?

Speaker #3: Yeah, Eric. No, look, I appreciate the question. And as you know, we don't provide formal guidance. Going back to the start of 2024, our goal really, and we publicly disclosed, was to re-accelerate revenue growth and sustain that momentum over the next several years.

Dan MacLachlan: Yeah, Eric, no. Look, I appreciate the question, and as you know, we don't provide formal guidance. You know, going back to the start of 2024, our goal really, and we publicly disclosed, was to re-accelerate revenue growth and sustain that momentum over the next several years. 2024 was a great year of growth. As you mentioned, 2025 was a strong 20% growth, and we would expect 2026 to continue to deliver healthy top-line expansion. Yeah, I mean, our goal for the business is to continue to accelerate and drive the business and what you've seen consistently the last couple years. You know, we're not gonna provide any formal guidance as it sits today.

Speaker #3: 2024 was a great year of growth. As you mentioned, 2025 was a strong 20% growth. And we would expect 2026 to continue to deliver healthy top-line expansion.

Speaker #3: So yeah, I mean, our goal for the business is to continue to accelerate and drive the business. And what you've seen consistently the last couple of years, but we're not going to provide any formal guidance as it sits today.

Speaker #5: All right. And then you generated cash in the quarter. You did put some cash to work on your share repurchase program. A number of different levers you can pull there.

Eric Martinuzzi: All right. Then you generated cash in the quarter. You did put some cash to work on your share repurchase program. number of different levers you can pull there. You've done things like a one-time dividend in the past. You've used it to invest in data rights, M&A. Just here in the next six months, what's the likely use of cash?

Speaker #5: You've done things like a one-time dividend in the past. You've used it to invest in data rights, M&A. What's the just here in the next six months, what's the likely use of cash?

Dan MacLachlan: Thanks, Eric. It's Derek. The likely use of cash is definitely gonna be investing in this business. There are just, as I mentioned in my commentary, so much opportunity. And the AI-enabled development that's occurring, which is accelerating deployments and creating such opportunities across any of everybody's environment, it's especially true for us. That horizontal expansion I talked about, that was always part of our key strategic plan, has now become also a vertical expansion, where we know how our customers interact with us and we can provide them better tools, and we can do that, we believe, in rather fast fashion in the development world as far as time goes, so that we can get even further ingrained in their workflows. That is our priority number one.

Speaker #3: Thanks, Eric. It's Derek. The likely use of cash is definitely going to be investing in this business. There are just, as I mentioned in my commentary, so much opportunity and the AI-enabled development that's occurring which is accelerating deployments and creating such opportunities across everybody's environment.

Derek Dubner: Thanks, Eric. It's Derek. The likely use of cash is definitely gonna be investing in this business. There are just, as I mentioned in my commentary, so much opportunity. And the AI-enabled development that's occurring, which is accelerating deployments and creating such opportunities across any of everybody's environment, it's especially true for us. That horizontal expansion I talked about, that was always part of our key strategic plan, has now become also a vertical expansion, where we know how our customers interact with us and we can provide them better tools, and we can do that, we believe, in rather fast fashion in the development world as far as time goes, so that we can get even further ingrained in their workflows. That is our priority number one.

Speaker #3: It's especially true for us. So that horizontal expansion I talked about, that was always part of our key strategic plan, has now become also a vertical expansion, where we know how our customers interact with us.

Speaker #3: And we can provide them better tools and we can do that, we believe, and rather fast fashion in the development world as far as time goes.

Speaker #3: So that we can get even further ingrained in their workflows. So that is our priority number one.

Eric Martinuzzi: Got it. Thanks for taking my questions.

Speaker #5: Got it. Thanks for taking my questions.

Speaker #3: Thank you.

Dan MacLachlan: Thank you.

Derek Dubner: Thank you.

Speaker #1: Thank you. One moment for the next question. And our next question will come from the line of David Polanski, of Emerson Investments. Please go ahead.

Operator: Thank you. One moment for the next question. Our next question will come from the line of David Glauser of Emerson Investments. Please go ahead.

David Glauser: Hey, guys. Thanks for taking my question. Just to put a finer point on it, I think, Dan, you mentioned payroll processor. There was none of that in Q4. What about the toll authority? Was there any of that revenue in the Q4 number?

David Polansky: Hey, guys. Thanks for taking my question. Just to put a finer point on it, I think, Dan, you mentioned payroll processor. There was none of that in Q4. What about the toll authority? Was there any of that revenue in the Q4 number?

Speaker #6: Hey, guys. Thanks for taking my question. Just to put a finer point on it, I think, Dan, you mentioned payroll processor there was none of that in Q4.

Speaker #6: What about the toll authority? Was there any of that revenue in the Q4 number?

Dan MacLachlan: There was some revenue from the payroll processor in Q4. The contractual minimum commitment of that processor, which is a multi-year agreement, does not start until 2026. We did see some of that revenue, but just early stages. Nothing meaningful. The toll authority at this point has been working on integration and some volume expansion, very minimal revenue as a result of that win in Q4.

Speaker #3: So there was some revenue from the payroll processor. In Q4, the contractual minimum commitment of that processor, which is a multi-year agreement, does not start into 2026.

Speaker #3: So we did see some of that revenue. But just early stages, nothing meaningful. And the toll authority at this point has been working on integration and some volume expansion.

Speaker #3: So very minimal revenue as a result of that win in Q4.

Speaker #6: Great. Thank you. And I was hoping it was nice to see the growth and high spending customers. But could you help us understand, is that coming from new customer wins at high initial commitments?

David Glauser: Great. Thank you. I was hoping it was nice to see the growth in high-spending customers, but could you help us understand, is that coming from new customer wins of high initial commitments, or is that from growth in existing customer spend?

David Polansky: Great. Thank you. I was hoping it was nice to see the growth in high-spending customers, but could you help us understand, is that coming from new customer wins of high initial commitments, or is that from growth in existing customer spend?

Speaker #6: Or is that from growth in existing customer spend?

Speaker #3: So it's a combination of both, which is great. And it's not only just growth in that cohort. We're seeing that growth across other cohorts, not just moving from one to the other, but expanding in each, right?

Dan MacLachlan: It's a combination of both, which is great. It's not only just growth in that cohort. We're seeing that growth across other cohorts, not just moving from one to the other, but expanding in each, right? Whether it's the $10 to $25,000 a year customer, the $25 to $100,000 a year customer, or the $100,000-plus customer, each of those cohorts are expanding nicely as we look at them. It's a combination of both. It's some customers increasing volume, right? When we win a big customer, they don't necessarily move all their volume at once, but slowly over time, we get the majority of their volume.

Speaker #3: So whether it's the 10 to 25 thousand a year customer, the 25 to 100 thousand dollar a year customer, or the 100 thousand dollar plus customer.

Speaker #3: Each of those cohorts are expanding nicely as we look at them. But it's a combination of both. It's some customers increasing volume, right? So when we win a big customer, they don't necessarily move all their volume at once.

Speaker #3: But slowly over time, we get the majority of their volume. Or it's a new customer win that happens to be a large six-figure plus year customer that we initially win.

Dan MacLachlan: or it's, you know, a new customer win that happens to be, you know, a large, you know, six-figure-plus a year customer that we initially win. It's been a good combination of both existing customer and new higher-tier customers.

Speaker #3: So, it's been a good combination of both existing customers and new higher-tier customers.

David Glauser: When I think about... I know you don't provide a breakdown of Forewarn revenue versus IDI revenue. If I were to say, you know, revenue per IDI customer were to grow, I mean, I have it growing at a high single-digit rate, I'm also mixing in some new high initial commitment customers in there. Is it safe to assume that existing customers are growing spend at sort of a mid-single digit rate, like 5% to 6%, maybe a little bit more?

Speaker #6: So when I think about I know you don't provide a breakdown of forewarned revenue versus IDI revenue. But if I were to say revenue per IDI customer were to grow I mean, I have a growing at a high single-digit rate.

David Polansky: When I think about... I know you don't provide a breakdown of Forewarn revenue versus IDI revenue. If I were to say, you know, revenue per IDI customer were to grow, I mean, I have it growing at a high single-digit rate, I'm also mixing in some new high initial commitment customers in there. Is it safe to assume that existing customers are growing spend at sort of a mid-single digit rate, like 5% to 6%, maybe a little bit more?

Speaker #6: But then I'm also mixing in some new high initial commitment customers in there. Are you—is it safe to assume that existing customers are growing spend at sort of a mid-single-digit rate, like 5 to 6 percent, maybe a little bit more?

Dan MacLachlan: It's safe to assume a little bit more than that, yes.

Speaker #3: It's safe to assume a little bit more than that, yes.

Dan MacLachlan: It's safe to assume a little bit more than that, yes.

Speaker #6: Okay. Great. And then on headcount, I was a little bit surprised to see the sales and marketing headcount come down. I think we had initially discussed you'd be hiring a little bit more aggressively.

David Glauser: Okay, great. Then on headcount, I was a little bit surprised to see the sales and marketing headcount come down. I think we had initially discussed you'd be hiring a little bit more aggressively, I don't know if there was some shuffling there or maybe phasing out less productive salespeople. Can you discuss that a little bit? Then what should we think about hiring and overall headcount for 2026?

David Polansky: Okay, great. Then on headcount, I was a little bit surprised to see the sales and marketing headcount come down. I think we had initially discussed you'd be hiring a little bit more aggressively, I don't know if there was some shuffling there or maybe phasing out less productive salespeople. Can you discuss that a little bit? Then what should we think about hiring and overall headcount for 2026?

Speaker #6: So I don't know if there was some shuffling there, maybe phasing out less productive salespeople. Can you discuss that a little bit? And then what should we think about hiring and overall headcount for '26?

Speaker #3: Yeah. You're absolutely right in pointing out it's kind of a little bit of end-of-the-year, right? You're going to see a little ebb and flow.

Dan MacLachlan: Yeah. You're absolutely right in pointing out. It's kind of, you know, a little bit of end of the year, right? You're gonna see a little ebb and flow. We always, as an organization, has focused on doing a really good job of, you know, bringing what I would say the C and D players up to A and B levels. Unfortunately, if those C and D players are not able to kind of get to that level, to churn out the bottom, so to speak. We had a little bit of that at the end of the year. It makes sense, especially as you're kind of ending the year looking at final MBOs looking into next year and what your growth model and expectations should be for reps.

Speaker #3: We always, as an organization, have focused on doing a really good job of bringing what I would say the C&D players up to A and B levels.

Speaker #3: And unfortunately, if those C and D players are not able to kind of get to that level—to churn out the bottom, so to speak—so we had a little bit of that at the end of the year.

Speaker #3: It makes sense, especially as you're kind of ending the year looking at final MBOs and then looking into next year and what your growth model and expectations should be for reps.

Dan MacLachlan: We had a little bit of that, but you'll see, I'm assuming here after, you know, we report the Q1, you know, kind of the reversion back in that sales and marketing line for some of those employees that just kind of, you know, we netted out at the end of the year. I think as we look at 2026 from an overall growth perspective, I think it would be very consistent with what we saw in 2025. You know, in 2025, we added, you know, just over 30 new team members, mostly around product development and then go-to-market. The expectation would be very similar to that in 2026. You know, a focus on product development AI as well as go-to-market initiatives.

Speaker #3: So we had a little bit of that. But you'll see I'm assuming here after we report the first quarter, kind of the reversion back in that sales and marketing line for some of those employees that just kind of we netted out at the end of the year.

Speaker #3: I think as we look at 2026 from an overall growth perspective, I think it would be very consistent with what we saw in 2025.

Speaker #3: In 2025, we added just over 30 new team members, mostly around product development and then go-to-market. The expectation would be very similar to that in 2026—a focus on product development, AI, as well as go-to-market initiatives.

Speaker #3: So I think it'd be consistent with prior year.

Dan MacLachlan: I think it'd be consistent with prior year.

Speaker #6: All right. Great. And could you just highlight because you mentioned AI? I know it's embedded in the core engine, but just in terms of operational things, whether it's back office, finance, sales, function, are you utilizing AI to help the business at all and maybe to keep headcount growth less than where it's been?

David Glauser: All right, great. Could you just highlight, 'cause you mentioned AI. I know it's embedded in the CORE engine, but just in terms of operational things, whether it's back office, finance, sales function, are you utilizing AI to help the business at all and maybe to keep headcount growth less than where it's been?

David Polansky: All right, great. Could you just highlight, 'cause you mentioned AI. I know it's embedded in the CORE engine, but just in terms of operational things, whether it's back office, finance, sales function, are you utilizing AI to help the business at all and maybe to keep headcount growth less than where it's been?

Speaker #3: Absolutely, David. Yeah. This is Derek. And what I would say is that we announced in 2025 our strategic initiative to automate more and so we've been doing that since.

Dan MacLachlan: Absolutely, David. Yeah, this is Derek. What I would say is that, you know, we announced in 2025 our strategic initiative to, you know, automate more. We've been doing that since. We've been looking across the enterprise to understand where we can automate in using AI. There's so many tools that we could be using. We've been making good progress. As I stated in my comments, that we would expect, there's a lot more to do there. You know, we're not a mature company. We didn't hire heavily during the pandemic. We're not looking to cut back. We're not citing AI for that. We are growing very quickly. We're investing in the business and that investment is for growth.

Derek Dubner: Absolutely, David. Yeah, this is Derek. What I would say is that, you know, we announced in 2025 our strategic initiative to, you know, automate more. We've been doing that since. We've been looking across the enterprise to understand where we can automate in using AI. There's so many tools that we could be using. We've been making good progress. As I stated in my comments, that we would expect, there's a lot more to do there. You know, we're not a mature company. We didn't hire heavily during the pandemic. We're not looking to cut back. We're not citing AI for that. We are growing very quickly. We're investing in the business and that investment is for growth.

Speaker #3: We've been looking across the enterprise to understand where we can automate. And using AI, there's so many tools that we can be using. And so we've been making good progress.

Speaker #3: But as I stated in my comments, we would expect that there is a lot more to do there. We're not a mature company. We didn't hire heavily during the pandemic.

Speaker #3: We're not looking to cut back. We're not citing AI for that. We are growing very quickly, and we're investing in the business. And that investment is for growth.

Speaker #3: And so as we continue to increase automation by hiring to do that and increase productivity, then we would expect the out years, if you will, or at least later, that you're going to see all of that efficiency and productivity.

Dan MacLachlan: As we continue to increase automation by hiring to do that and increase productivity, then we would expect the out years, if you will, or at least later that you're gonna see all of that efficiency and productivity. Right now it's a little bit more investment, but then we will bear the fruit of that investment.

Derek Dubner: As we continue to increase automation by hiring to do that and increase productivity, then we would expect the out years, if you will, or at least later that you're gonna see all of that efficiency and productivity. Right now it's a little bit more investment, but then we will bear the fruit of that investment.

Speaker #3: So right now, it's a little bit more investment. But then we will bear the fruit of that investment.

Speaker #6: All right. Thanks, guys. I appreciate it.

David Glauser: All right. Thanks guys. I appreciate it.

David Polansky: All right. Thanks guys. I appreciate it.

Operator: Thank you. That concludes today's Q&A session. I would like to turn the call back over to Derek Dubner for closing remarks. Please go ahead.

Speaker #1: Thank you. And that concludes today's Q&A session. I would like to turn the call back over to excuse me, to Derek Dubner for closing remarks.

Speaker #1: Please go ahead.

Speaker #3: Thank you. As we look ahead, we're still in the early innings of a much larger opportunity. The digital transformation of identity, risk, and decisioning continues to accelerate.

Dan MacLachlan: Thank you. As we look ahead, we're still in the early innings of a much larger opportunity. The digital transformation of identity, risk, and decisioning continues to accelerate, and we've built the infrastructure and intelligence engine to serve as a foundational platform in that evolution. Our momentum, expanding enterprise relationships, and continued innovation around AI-enabled capabilities position us to extend our reach both horizontally, excuse me, across industries and vertically within customer workflows. We're building for scale, deepening our integration in mission-critical environments and strengthening the long-term economics of the business. We are excited about where we stand today and even more excited about where this platform can go.

Speaker #3: And we've built the infrastructure and intelligence engine to serve as a foundational platform in that evolution. Our momentum expanding enterprise relationships and continued innovation around AI-enabled capabilities position us to extend our reach both horizontally across industries and vertically within customer workflows.

Speaker #3: We're building for scale. Deepening our integration and mission-critical environments. And strengthening the long-term economics of the business. We are excited about where we stand today and even more excited about where this platform can go.

Operator: Thank you for joining today's program. You may all now disconnect. This does conclude today's conference call.

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