SEC Filing | Red Violet, Inc.

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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 September 30, 2022

☐ 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 November 3, 2022, the registrant had 13,893,803 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 September 30, 2022 and December 31, 2021	1
	Condensed consolidated statements of operations for the three and nine months ended September 30, 2022 and 2021	2
	Condensed consolidated statements of changes in shareholders' equity for the three and nine months ended September 30, 2022 and 2021	3
	Condensed consolidated statements of cash flows for the nine months ended September 30, 2022 and 2021	4
	Notes to condensed consolidated financial statements	5
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	12
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	18
Item 4.	Controls and Procedures	18

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	20
Item 1A.	Risk Factors	20
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	20
Item 3.	Defaults Upon Senior Securities	20
Item 4.	Mine Safety Disclosures	21
Item 5.	Other Information	21
Item 6.	Exhibits	21

SIGNATURES		22

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)


	September 30, 2022			December 31, 2021
ASSETS:
Current assets:
Cash and cash equivalents	$	31,273		$	34,258
Accounts receivable, net of allowance for doubtful accounts of $39 and $28 as of September 30, 2022 and December 31, 2021, respectively		6,473			3,736
Prepaid expenses and other current assets		849			599
Total current assets		38,595			38,593
Property and equipment, net		664			577
Intangible assets, net		30,831			28,181
Goodwill		5,227			5,227
Right-of-use assets		1,255			1,661
Other noncurrent assets		137			137
Total assets	$	76,709		$	74,376
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current liabilities:
Accounts payable	$	1,596		$	1,605
Accrued expenses and other current liabilities		562			395
Current portion of operating lease liabilities		674			617
Deferred revenue		539			841
Total current liabilities		3,371			3,458
Noncurrent operating lease liabilities		778			1,291
Deferred tax liabilities		405			198
Total liabilities		4,554			4,947
Shareholders' equity:
Preferred stock—$0.001 par value, 10,000,000 shares authorized, and 0 shares issued and outstanding, as of September 30, 2022 and December 31, 2021		-			-
Common stock—$0.001 par value, 200,000,000 shares authorized, 13,874,406 and 13,488,540 shares issued, 13,873,406 and 13,488,540 shares outstanding, as of September 30, 2022 and December 31, 2021		14			13
Treasury stock, at cost, 1,000 and 0 shares as of September 30, 2022 and December 31, 2021		(18	)		-
Additional paid-in capital		92,017			91,434
Accumulated deficit		(19,858	)		(22,018	)
Total shareholders' equity		72,155			69,429
Total liabilities and shareholders' equity	$	76,709		$	74,376

See notes to condensed consolidated financial statements

RED VIOLET, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Amounts in thousands, except share data)

(unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Revenue	$	15,026	$	11,668	$	40,249	$	32,764
Costs and expenses:
Cost of revenue (exclusive of depreciation and amortization)		3,067		2,787		9,157		8,268
Sales and marketing expenses		2,623		2,154		7,836		6,724
General and administrative expenses		5,465		4,127		16,118		13,567
Depreciation and amortization		1,713		1,345		4,860		3,933
Total costs and expenses		12,868		10,413		37,971		32,492
Income from operations		2,158		1,255		2,278		272
Interest income (expense), net		125		1		126		(8	)
Gain on extinguishment of debt		-		-		-		2,175
Income before income taxes		2,283		1,256		2,404		2,439
Income tax expense		25		-		244		-
Net income	$	2,258	$	1,256	$	2,160	$	2,439
Earnings per share:
Basic	$	0.16	$	0.10	$	0.16	$	0.20
Diluted	$	0.16	$	0.09	$	0.16	$	0.19
Weighted average number of shares outstanding:
Basic		13,748,587		12,741,723		13,690,309		12,408,152
Diluted		13,764,262		13,645,208		13,872,596		13,140,854

See notes to condensed consolidated financial statements

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 June 30, 2021		12,248,794		$	13		-		$	-		$	70,911		$	(21,490	)	$	49,434
Vesting of restricted stock units		742,101			-		-			-			-			-			-
Increase in treasury stock resulting from shares withheld to cover statutory taxes		-			-		(127,871	)		(2,785	)		-			-			(2,785	)
Retirement of treasury stock		(127,871	)		-		127,871			2,785			(2,785	)		-			-
Share-based compensation		-			-		-			-			1,314			-			1,314
Net income		-			-		-			-			-			1,256			1,256
Balance at September 30, 2021		12,863,024		$	13		-		$	-		$	69,440		$	(20,234	)	$	49,219

Balance at June 30, 2022		13,702,796		$	14		(7,031	)	$	(134	)	$	92,178		$	(22,116	)	$	69,942
Vesting of restricted stock units		285,389			-		-			-			-			-			-
Increase in treasury stock resulting from shares withheld to cover statutory taxes		-			-		(93,779	)		(1,539	)		-			-			(1,539	)
Common stock repurchased		-			-		(13,969	)		(249	)		-			-			(249	)
Retirement of treasury stock		(113,779	)		-		113,779			1,904			(1,904	)		-			-
Share-based compensation		-			-		-			-			1,743			-			1,743
Net income		-			-		-			-			-			2,258			2,258
Balance at September 30, 2022		13,874,406		$	14		(1,000	)	$	(18	)	$	92,017		$	(19,858	)	$	72,155

	Common stock					Treasury stock						Additional paid-in			Accumulated
	Shares			Amount		Shares			Amount			capital			deficit			Total
Balance at December 31, 2020		12,167,327		$	13		-		$	-		$	66,005		$	(22,673	)	$	43,345
Vesting of restricted stock units		823,568			-		-			-			-			-			-
Increase in treasury stock resulting from shares withheld to cover statutory taxes		-			-		(127,871	)		(2,785	)		-			-			(2,785	)
Retirement of treasury stock		(127,871	)		-		127,871			2,785			(2,785	)		-			-
Share-based compensation		-			-		-			-			6,220			-			6,220
Net income		-			-		-			-			-			2,439			2,439
Balance at September 30, 2021		12,863,024		$	13		-		$	-		$	69,440		$	(20,234	)	$	49,219

Balance at December 31, 2021		13,488,540		$	13		-		$	-		$	91,434		$	(22,018	)	$	69,429
Vesting of restricted stock units		605,899			1		-			-			(1	)		-			-
Increase in treasury stock resulting from shares withheld to cover statutory taxes		-			-		(200,033	)		(4,310	)		-			-			(4,310	)
Common stock repurchased		-			-		(21,000	)		(383	)		-			-			(383	)
Retirement of treasury stock		(220,033	)		-		220,033			4,675			(4,675	)		-			-
Share-based compensation		-			-		-			-			5,259			-			5,259
Net income		-			-		-			-			-			2,160			2,160
Balance at September 30, 2022		13,874,406		$	14		(1,000	)	$	(18	)	$	92,017		$	(19,858	)	$	72,155

See notes to condensed consolidated financial statements

RED VIOLET, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(unaudited)


	Nine Months Ended September 30,
	2022		2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	2,160	$	2,439
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		4,860		3,933
Share-based compensation expense