{
  "@context": "https://frontierpicks.com/schemas/dossier.v1.json",
  "ticker": "RDVT",
  "name": "Red Violet, Inc.",
  "url": "https://frontierpicks.com/dossiers/RDVT/",
  "json_url": "https://frontierpicks.com/dossiers/RDVT.json",
  "status": "WATCHLIST",
  "current_conviction": "MEDIUM",
  "archetype": {
    "code": "a7",
    "n": 7
  },
  "current_thesis": "Red Violet's identity-data business is still outgrowing its costs, with third-quarter 2026 revenue up 20% and a 40% adjusted EBITDA margin; the report estimated for early March 2027 shows whether slower customer additions become slower revenue growth.",
  "invalidation_trigger": "A daily close below $70, the level in the previous note and under the $72.12 close that followed the third-quarter report; or a later report with revenue growth below 15% or a 2026 adjusted EBITDA margin below the high-30% range.",
  "catalyst_date": null,
  "pick": {
    "id": "P-2026-11-02-RDVT",
    "conviction": "MEDIUM",
    "status": "open",
    "opened": "2026-11-02",
    "open_close": 77.73,
    "kill_level": 70,
    "kill_basis": "daily",
    "horizon_end": "2027-02-03",
    "last_date": "2026-11-05",
    "last_close": 72.12,
    "return_pct": -7.22,
    "spy_return_pct": -2.54,
    "excess_pp": -4.68,
    "kill_distance_pct": 3.028571428571425,
    "closed": null,
    "close_reason": null,
    "outcome": null,
    "scoreboard": "https://frontierpicks.com/track-record/"
  },
  "themes": [],
  "tags": [],
  "sources": [],
  "notes": [
    "The company issued 1,916,667 new shares at $60.00 in August 2026, so per-share figures from that quarter onward reflect a larger share count.",
    "Few analysts cover the stock, and published consensus targets vary widely between aggregators.",
    "Management gave no formal revenue, margin or earnings guidance on the 2026-11-04 call, so forward estimates rest on analysts' own models."
  ],
  "source_links": [
    {
      "title": "Red Violet, Inc. - Form 8-K - FY2026",
      "url": "https://www.sec.gov/Archives/edgar/data/0001720116/000119312526449969/rdvt-ex99_2.htm",
      "date": null
    },
    {
      "title": "Red Violet, Inc. - Form 8-K - FY2026",
      "url": "https://www.sec.gov/Archives/edgar/data/0001720116/000119312526449969/rdvt-ex99_1.htm",
      "date": null
    },
    {
      "title": "Needham raises Red Violet stock price target on strong Q3 growth By Investing.com",
      "url": "https://www.investing.com/news/analyst-ratings/needham-raises-red-violet-stock-price-target-on-strong-q3-growth-93CH-5003789",
      "date": null
    },
    {
      "title": "Red Violet (NASDAQ:RDVT) Issues Earnings Results",
      "url": "https://www.marketbeat.com/instant-alerts/earnings-red-violet-nasdaq-rdvt-issues-earnings-results-2026-11-04/",
      "date": "2026-11-04"
    },
    {
      "title": "red violet Announces Third Quarter 2025 Financial Results",
      "url": "https://www.nasdaq.com/press-release/red-violet-announces-third-quarter-2025-financial-results-2025-11-05",
      "date": "2025-11-05"
    },
    {
      "title": "red violet Reports Second Quarter 2026 Financial Results",
      "url": "https://www.redviolet.com/company/news/red-violet-reports-second-quarter-2026-financial-results/",
      "date": null
    },
    {
      "title": "www.quiverquant.com",
      "url": "https://www.quiverquant.com/news/Red+Violet+Announces+Third+Quarter+2026+Earnings+Release+and+Conference+Call+Schedule",
      "date": null
    }
  ],
  "body_markdown": "## Current Thesis\n\nRed Violet's identity-data business is still growing faster than its costs, but the pace slowed in the third quarter, and the next quarterly report, estimated for early March 2027, decides whether that slowdown continues. Third-quarter 2026 revenue rose 20% to a record $27.8 million, and adjusted EBITDA (earnings before interest, taxes, depreciation and amortisation, excluding certain items) rose 22% to $11.0 million, according to the company's 2026-11-04 Form 8-K.\n\nThe shares closed at $72.12 on 2026-11-05, the first session after the report, against $80.00 on 2026-10-30, according to adjusted daily closes. Revenue and adjusted earnings beat estimates, according to Benzinga, so the decline points to concern about slower growth rates. The business tests in the previous note held: revenue growth stayed above 15%, and management gave no formal guidance on the call.\n\nThe narrative is maturing: Fortune's list on 2026-10-22 and TIME's list on 2026-10-27 widened attention, and the 2026-11-04 report then showed growth slowing from the second quarter's 23%. The evidence supports a modestly positive read. Revenue is more contractual, cash generation hit a record and analyst targets rose, while the margin gain narrowed sharply.\n\n## Bull Case\n\n- **Revenue is becoming more contractual.** Contractual revenue reached 78% of the total in the third quarter of 2026, up 3 points from a year earlier, and gross revenue retention was 96%, according to the 2026-11-04 earnings call. Management said one-time transactional revenue made no meaningful contribution.\n- **Management described a strong exit rate.** The CEO said on the 2026-11-04 call that September was the highest revenue month in company history and \"October was just as good.\" Trailing twelve-month revenue passed $100 million for the first time.\n- **IDI additions beat last year's pace.** IDI, the identity-data platform, added 383 billable customers in the third quarter of 2026 to reach 11,252, against 304 additions and 9,853 customers in the third quarter of 2025, according to the company's releases.\n- **Cash generation reached a record.** Operating cash flow rose 25% to $12.7 million, and free cash flow rose 21% to a record $8.8 million in the third quarter of 2026, according to the earnings call.\n- **The balance sheet is large and debt-free.** Cash and US Treasuries totalled $165.7 million on 2026-09-30, with no debt, according to the earnings call. The company made no share repurchases in the quarter, and $15.5 million remains under its program.\n- **Analyst targets moved well above the price.** On 2026-11-05, B. Riley raised its target to $110 from $85, and Needham raised its target to $100 from $90, according to company news reports. The $72.12 close sits below both.\n\n## Bear Case\n\n- **Operating leverage narrowed sharply.** Adjusted EBITDA grew 22% in the third quarter of 2026 on 20% revenue growth, against 48% on 23% in the second quarter. Adjusted EBITDA of $11.0 million was below the second quarter's $11.2 million, and the margin was 40% against 42%.\n- **Additions slowed from the second quarter.** IDI added 383 customers against a record 447 in the second quarter. FOREWARN, the real-estate safety app, added 19,688 users to reach 462,861, against 25,493 in the second quarter and 25,538 in the third quarter of 2025.\n- **Costs are rising with investment.** General and administrative expense rose 32% to $9.0 million, on personnel costs and acquisition-related activity, and sales and marketing rose 14% to $6.2 million, including a higher bad-debt provision. Management said on the 2026-11-04 call that margins can vary from quarter to quarter while it invests.\n- **Housing is weighing on one business line.** Management said on the 2026-11-04 call that IDI's real-estate revenue declined by a high-single-digit percentage and should stay soft until housing conditions improve.\n- **The earnings beat depends on the measure.** Benzinga compared adjusted earnings of $0.47 per share with a $0.41 estimate on 2026-11-04. MarketBeat reported earnings of $0.37 per share against a $0.41 consensus the same day.\n- **Acquisitions add execution risk.** Management said on the 2026-11-04 call that it is evaluating small deals for data assets or technology, as a second priority after organic investment. No deal has been announced.\n\n## Setup & Price Structure\n\nThe shares closed at $72.12 on 2026-11-05, 12.5% below the 52-week high of $82.40 and up 9.9% over three months, according to adjusted daily closes. The 14-day relative strength index, a momentum gauge running from 0 to 100, stood at 46.3 on the same date. That reading is in the middle of the range and shows neither stretched buying nor heavy selling.\n\nThree price levels frame the case: the $80.00 close on 2026-10-30, the $70 invalidation level from the previous note and the $60.00 price of the August 2026 share offering. The $72.12 close sits just above the $70 level.\n\nCrowding has eased on the observable measures. The earnings date has passed, and the shares are further below their high than they were on 2026-10-30. The most recent share issuance was the sale of 1,916,667 new shares at $60.00 in August 2026, which raised about $109 million of net proceeds.\n\n## Catalyst Calendar (next 30 days)\n\n- **No dated event inside the window.** Company news through 2026-11-05 shows no scheduled results or product date in the 30 days to 2026-12-06.\n- **~2027-03-03, est.: fourth-quarter and full-year 2026 results.** The date is an estimate from the early-March timing of last year's report. The report shows whether revenue growth stays above 15% and whether year-end incentive pay pulls the full-year adjusted EBITDA margin below the high-30% range management described in August 2026.\n\n## What Would Change Our Mind\n\nThe case breaks if revenue growth falls below 15% in the next report, or if the 2026 adjusted EBITDA margin lands below the high-30% range management described in August 2026. A contractual share of revenue falling back from 78%, or gross revenue retention falling below 96%, would also weaken it.\n\nAn expensive acquisition would change the read too, especially one at margins well below the 40% reported for the third quarter of 2026. On price, a daily close below $70 would end the thesis, because the shares would have extended their decline after a report that beat estimates.\n\nThe bearish reading would be wrong if IDI additions return to the second quarter's 447 or more and adjusted EBITDA grows clearly faster than revenue again.\n\n## Correlation Notes\n\nCompany results are the main driver of these shares, as the move to $72.12 after the 2026-11-04 report showed. Housing is the clearest outside link: FOREWARN sells to real-estate professionals, and management tied the high-single-digit decline in IDI's real-estate revenue to housing conditions. Demand is spread across other markets, with management reporting strong growth in financial and corporate risk, investigative and collections customers on the same call, so housing weakness affects only part of revenue.",
  "first_seen": "2026-10-30",
  "last_analyzed": "2026-11-06T09:25:44+00:00",
  "last_synthesized": "2026-11-06",
  "last_update_source": "watchlist_research",
  "license": "Content © FrontierPicks. Cite the canonical URL."
}