RDVT · Red Violet
Conviction · Medium · more likely to lead the S&P 500 over the next three months, by a modest margin
Wrong if: a daily close below $70.00
Note written ·
Price against the kill line
5.1% clear of its kill line on the 13 November 2026 close.
How to read this
The red mark is the price level of the published kill line: a close through it (a weekly close, on a weekly line) would prove the research note wrong on price. The dot is where the stock closed on 13 November 2026; a dot left of the mark has closed through its line.
The scale is stretched near the line, so close calls are easy to see. More than 8% from the line, the stock reads well clear, with a hollow dot to show the figure is off the drawn scale.
The kill line is the research note's own test. The portfolio sells on business facts, not on a price. How the portfolio decides
Three months against the kill line
Daily closes, to . Red: the kill line, a daily close below $70.00, on record since 10 November 2026. The shares are up 8.1% since the close; the S&P 500 is down 2.1% over the same sessions. Figures in the note can cover a different window.
Kill line
A daily close below $70.00, under the $70.10 post-report closing low of 6 November 2026, which would show the market rejecting the third-quarter report; or fourth-quarter 2026 revenue growth below 15%.
Research onlyNot in the portfolio.
Catalyst
Key figures from the filings · Technology
Quarter to 30 September 2026, filed 4 November 2026; valuation at the 13 November 2026 close
- Revenue, latest quarter ($M)
- 27.8
- Revenue, change on a year (%)
- +20.2
- Gross margin (%)
- 85.5
- Operating margin (%)
- 20.8
- Free cash flow, four quarters ($M)
- 36.2
- Net cash, cash less debt ($M)
- 104
- Price to earnings (×)
- 67.1
- Enterprise value to sales (×)
- 10.4
All filed numbers
What Red Violet reports to the SEC in its quarterly and annual filings. Each group states its period and filing date once; a figure dated otherwise says so. Built from the filings known on .
| Quarter to | Revenue ($M) | On a year (%) | Gross margin (%) | Operating margin (%) |
|---|---|---|---|---|
| first filed | 27.8 | +20.2 | 85.5 | 20.8 |
| first filed | 26.7 | +22.7 | 85.7 | 22.8 |
| first filed | 25.8 | +17.4 | 85.2 | 21.1 |
| first filed | 23.4 | +19.6 | 83.4 | 6.8 |
| first filed | 23.1 | +21.1 | 84.3 | 19.8 |
| first filed | 21.8 | +14.3 | 83.9 | 12.6 |
| Pre-tax income ($M) | 6.8 |
| Net income ($M) four quarters: 17.6 | 5.4 |
| Diluted shares, change on a year (%) against the quarter to 30 September 2025 | +7.8 |
| Operating cash flow ($M) | 36.6 |
| Capital spending ($M) | 0.4 |
| Free cash flow ($M) | 36.2 |
| Cash and short-term investments ($M) | 104 |
| Debt ($M) | None reported |
| Net cash, cash less debt ($M) no debt reported | 104 |
| Deferred revenue ($M) +90.2% on a year | 1.6 |
| Backlog, orders not yet delivered ($M) +20.6% on a year | 23.9 |
| Receivables ($M) | 13.6 |
| Inventory ($M) | Not reported |
| Shareholders' equity ($M) | 228 |
| Market value ($M) | 1,181 |
| Enterprise value, market value plus net debt ($M) no debt reported | 1,077 |
| Enterprise value to sales (×) no debt reported | 10.4 |
| Enterprise value to operating income (×) no debt reported | 56.9 |
| Price to earnings (×) | 67.1 |
| Price to book value (×) | 5.2 |
| Free-cash-flow yield (%) | 3.1 |
Short interest (FINRA, settled 15 October 2026, published 26 October 2026): 3.8% of shares outstanding sold short, 4.2 days of average trading to cover, −14.6% since the previous report.
| Window | Bought | Sold |
|---|---|---|
| 90 daysfrom | $143K | $0 |
| 12 monthsfrom | $143K | $2.6M |
The thesis
Red Violet's identity-data business still grows faster than its costs, which gives the shares modestly better than even odds of beating the S&P 500 over the next three months. The fourth-quarter report, estimated for early March 2027, decides whether real-estate weakness and slower customer additions slow revenue growth further. 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 4 November 2026 Form 8-K.
The market sold the report even though it beat estimates. The shares closed at $80.00 on 4 November 2026, $72.12 on 5 November 2026 and $70.10 on 6 November 2026, according to adjusted daily closes. Adjusted EPS of $0.47 beat the $0.41 estimate, and revenue of $27.751 million beat the $27.223 million estimate, according to Benzinga. The shares have since recovered to $75.14 on 11 November 2026.
The price reflects slower growth, not a broken business: at $75.14 on 11 November 2026 the shares are up 1.9% over three months, having given back the October gains that followed Fortune's list on 22 October 2026 and TIME's list on 27 October 2026. Revenue is more contractual, cash generation set a record and two analysts raised their targets after the report. Against that, real-estate revenue inside IDI is now falling and the gain in operating margin has narrowed.
Bullish and bearish views on Red Violet, Inc.
The bull case on Red Violet, Inc. (RDVT), in brief: revenue is becoming more contractual. The bear case: real-estate revenue inside IDI is falling.
Bull case
- Revenue is becoming more contractual. Contractual revenue was 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 4 November 2026 earnings call.
- Management described a strong exit rate. On the 4 November 2026 call, management said September was the highest revenue month in company history and October was just as strong. A new multi-year Secretary of State contract was signed in October, according to Earnings Whispers' 4 November 2026 summary of the call.
- 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. In the third quarter of 2025 it added 304 to reach 9,853, according to the company's releases.
- Cash generation set a record. Operating cash flow rose 25% to $12.7 million in the third quarter of 2026, and free cash flow rose 21% to a record $8.8 million, according to the earnings call.
- The balance sheet is large and debt-free. Cash and US Treasuries totalled $165.7 million on 30 September 2026, with no debt. The August 2026 offering brought in net proceeds of about $108.6 million, according to the second-quarter Form 10-Q, and $15.5 million remains under the repurchase program.
- A director bought shares in the open market. Director William Paul Livek bought 2,000 shares at $71.49 on 27 August 2026, according to his SEC Form 4.
- Analyst targets sit well above the price. On 5 November 2026, B. Riley raised its target to $110 from $85 and Needham raised its target to $100 from $90, both keeping Buy ratings, according to fiscal.ai and Benzinga.
Bear case
- Real-estate revenue inside IDI is falling. IDI's real-estate vertical outside FOREWARN declined at a high-single-digit rate in the third quarter of 2026, after a modest decline in the second, and management expects the softness to persist, according to Earnings Whispers on 4 November 2026.
- Operating leverage narrowed sharply. Adjusted EBITDA grew 22% on 20% revenue growth in the third quarter of 2026, against 48% on 23% in the second quarter. The adjusted EBITDA margin fell to 40% from 42%, and adjusted gross margin eased to 85% from a record 86%, according to Earnings Whispers.
- Additions slowed from the second quarter. IDI added 383 customers in the third quarter, against a record 447 in the second. FOREWARN, the safety app for real-estate agents, added 19,688 users to reach 462,861, against 25,493 in the second quarter and 25,538 in the third quarter of 2025.
- Costs are rising with investment. General and administrative expense rose 32% to $9.0 million in the third quarter of 2026, according to the company's results.
- Share count is larger. The company issued 1,916,667 new shares at $60.00 in August 2026, so per-share growth from that quarter onward runs behind net income growth.
Price setup
The shares closed at $75.14 on 11 November 2026, 9.6% below the 52-week intraday high of $83.15 set on 28 October 2026. The last close sits below the 50-day moving average of $77.15 and well above the 200-day moving average of $58.0, both as of 11 November 2026. The 52-week closing low is $34.40 on 30 March 2026.
The report session set the range the case now turns on. The $80.00 close on 4 November 2026 is the pre-report reference, and the $70.10 close on 6 November 2026 is the post-report low. Three higher closes followed: $72.47 on 9 November 2026, $73.29 on 10 November 2026 and $75.14 on 11 November 2026. A move back above the 50-day average would show the market treating the report's slowdown as priced in. The August 2026 offering price of $60.00 and the director's $71.49 purchase price on 27 August 2026 are the public reference points below.
No earnings date falls inside the next 30 days. Management presents at the Needham Virtual Tech Week on 18 November to 20 November 2026 and at the Southwest IDEAS Investor Conference on 19 November 2026, where comments on November trading or real-estate demand could move the shares.
Catalysts ahead
- 18 November 2026: Needham Virtual Tech Week, 18 November to 20 November 2026, with Red Violet participating. Management comments on November trading and real-estate demand show whether the strong September and October revenue months carried into the fourth quarter.
- 19 November 2026: Presentation at the Southwest IDEAS Investor Conference in Dallas. A second public update after the report; any change in tone on IDI real-estate revenue or customer additions would bear on fourth-quarter growth.
- ~3 March 2027 (est.): Fourth-quarter and full-year 2026 results. Shows whether revenue growth stays above 15%, whether IDI and FOREWARN additions recover, and where the full-year adjusted EBITDA margin lands against the mid-to-high-30% framework.
What would change the view
A daily close below $70.00, under the $70.10 post-report closing low of 6 November 2026, which would show the market rejecting the third-quarter report; or fourth-quarter 2026 revenue growth below 15%.
The risks this note tracks, each with what would confirm it:
- Revenue growth keeps slowing after the move to 20% in the third quarter of 2026 from 23% in the second. Confirmed by: quarterly revenue growth below 15%, or management backing away from its description of October 2026 as being as strong as the record September.
- Real-estate weakness deepens inside IDI and spreads to FOREWARN. Confirmed by: a steeper decline in IDI's real-estate vertical than the high-single-digit Q3 2026 rate, or FOREWARN revenue growth falling below double digits.
- Investment spending outpaces revenue and margins fall. Confirmed by: a 2026 adjusted EBITDA margin below the mid-to-high-30% framework, or adjusted EBITDA growth below revenue growth in the next report.
- Slower customer and user additions feed into later revenue. Confirmed by: IDI additions below 383 or FOREWARN additions below 19,688 in the fourth quarter of 2026.
- A large acquisition funded by the $165.7M of cash and Treasuries dilutes margins or per-share earnings. Confirmed by: a deal at a high revenue multiple, or an acquired business with margins well below Red Violet's 40% third-quarter adjusted EBITDA margin.
What it trades with
Red Violet is a small-cap data and analytics company listed on Nasdaq. Its shares tend to trade with US small-cap growth software, and the Russell 2000 is the natural market comparison. Part of its revenue depends on real-estate activity through FOREWARN and IDI's real-estate customers, so a weak US housing market is a shared risk with housing-linked stocks; IDI's real-estate vertical was already declining in the third quarter of 2026. Few analysts cover the stock, so single-firm target changes and thin trading can move the shares more than they would move a larger peer.
The evidence, claim by claim (8)
- Q3 2026 revenue $27.8M, up 20%; adjusted EBITDA $11.0M, up 22%; adjusted EBITDA margin 40% versus 39% a year earlier. Red Violet Q3 2026 Form 8-K, Exhibits 99.1 and 99.2 · as of
- Q3 2026 adjusted EPS $0.47 versus a $0.41 estimate; revenue $27.751M versus a $27.223M estimate. Benzinga, 4 November 2026 · as of
- IDI added 383 billable customers in Q3 2026, ending the quarter at 11,252; FOREWARN added 19,688 users to reach 462,861. Red Violet Q3 2026 Form 8-K · as of
- IDI's real-estate vertical outside FOREWARN declined at a high-single-digit rate in Q3 2026, after a modest decline in Q2; management expects the softness to persist. Earnings Whispers via Finviz, 4 November 2026 · as of
- Q3 2026 operating cash flow $12.7M, up 25%; free cash flow a record $8.8M, up 21%. Red Violet Q3 2026 earnings call transcript, Form 8-K Exhibit 99.2 · as of
- Cash and US Treasuries totalled $165.7M with no debt; $15.5M remained under the share repurchase program. Red Violet Q3 2026 earnings call transcript, Form 8-K Exhibit 99.2 · as of
- Contractual revenue was 78% of Q3 2026 revenue, up 3 points; gross revenue retention was 96%. Red Violet Q3 2026 earnings call transcript · as of
- B. Riley raised its target to $110 from $85 and Needham raised its target to $100 from $90, each keeping a Buy rating. fiscal.ai and Benzinga company news; Investing.com on Needham · as of
Sources
- Red Violet, Inc. - Form 8-K - FY2026 · sec.gov
- Red Violet, Inc. - Form 8-K - FY2026 · sec.gov
- Finviz ·
- Revenue Increases 20% to a Record $27.8 Million Producing a Record $12.7 Million in Cash Flow from Operations · finviz.com
- red violet Reports Third Quarter 2026 Financial Results · morningstar.com
- Needham raises Red Violet stock price target on strong Q3 growth · investing.com
- Red Violet (NASDAQ:RDVT) Issues Earnings Results · marketbeat.com ·
- Red Violet, Inc. - Form 10-Q - FY2026 · sec.gov