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Earnings Beat Might Change The Case For Investing In Red Violet Stock (RDVT)

Simply Wall St · 1d ago
  • Red Violet reported third quarter 2026 sales of US$27.75 million and net income of US$5.45 million, with basic EPS from continuing operations at US$0.35. For the first nine months of the year, the company reported sales of US$80.3 million and net income of US$14.79 million.
  • The business crossed US$100 million in trailing twelve month revenue, added 383 IDI customers and 19,688 FOREWARN users, and finished the quarter with more than US$165 million in cash and no debt after a US$108.7 million equity raise.
  • We will now look at how Red Violet's record trailing revenue and cash rich balance sheet could reshape the existing investment narrative.

Scan beyond Red Violet and evaluate other data driven compounders with disciplined balance sheets by running the curated 19 high quality undiscovered gems alongside this earnings story.

Red Violet Investment Narrative Recap

To own Red Violet, you need to believe its identity intelligence platforms can keep pulling in more high value customers while maintaining solid profitability as it spends on AI and go to market. The latest quarter shows that volume driven revenue, earnings and adjusted EBITDA margins around 40% are still lining up with that thesis.

The key near term swing factor is execution on larger enterprise and public sector deals while keeping revenue retention stable after the recent move from 95% to 93%. The main risk is that stepped up investment in AI and product build increases costs faster than new usage ramps, which could compress margins and dull earnings momentum.

The most relevant fresh data point is Red Violet crossing US$100 million in trailing twelve month revenue while delivering record operating cash flow and a 40% adjusted EBITDA margin in the third quarter. That combination provides more evidence for the idea that the company can scale its identity graph and workflows without sacrificing financial discipline.

For catalysts, that revenue mark, together with record IDI customer adds and nearly 20,000 new FOREWARN users, matters because it shows demand across multiple verticals at the same time management is leaning into AI driven automation. If those usage trends remain healthy, the enlarged base and cash position above US$165 million give Red Violet room to continue funding product expansion while watching retention, real estate exposure and customer concentration risk closely.

Red Violet's analyst narrative points to forecast revenue of US$144.9 million and earnings of US$26.2 million by 2029, based on an assumed 13.5% yearly revenue growth rate and an earnings increase of about US$9.8 million from the current US$16.4 million baseline.

Uncover how Red Violet's fair value indicates a 6% potential upside to its current price before the discount to that estimate may not last much longer.

NasdaqCM:RDVT 1-Year Stock Price Chart
NasdaqCM:RDVT 1-Year Stock Price Chart

Exploring Other Perspectives

One alternate angle you may want to explore is the more cautious take on AI. Some of the lowest analysts worried that rapid AI adoption inside customer organizations could compress pricing power at Red Violet. They were pencilling in revenue of about US$146.5 million and earnings of US$25.1 million by 2029 before this latest quarterly update, so their models may evolve from here.

Explore another Red Violet fair value estimate, including one that suggests as much as 43% downside from the current price.

Form Your Own Verdict

Disagree with existing narratives? Extraordinary investment returns rarely come from following the herd, so consider conducting your own research and forming independent views.

  • A great starting point for your Red Violet research is our analysis highlighting 2 key rewards that could impact your investment decision.
  • See our latest analysis for Red Violet. The report includes a comprehensive fundamental analysis summarized in a single visual, the Snowflake, making it easier to evaluate Red Violet's overall financial health at a glance.

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