Red Violet, Inc. (RDVT): BCG Matrix [Dec-2025 Updated]

You're looking at Red Violet, Inc. (RDVT)'s portfolio health as of late 2025, and the picture is one of strategic tension: mature segments are printing cash, like the 75% contractual revenue base generating a 39% EBITDA margin, while the core IDI platform is a clear Star, growing revenue by 21% with an 84% gross margin. Still, the big question is whether the rapidly expanding FOREWARN platform, our main Question Mark, can mature fast enough to justify the investment needed to keep the whole engine running. Dive in to see the full breakdown of where Red Violet, Inc. is winning, holding, and needing to watch its back.

Background of Red Violet, Inc. (RDVT)

You're looking at Red Violet, Inc. (RDVT), which is a key player in the identity intelligence and data analytics space. Honestly, they build proprietary tech to turn massive, disparate datasets into actionable intelligence. Their core platform, called CORE™, is purpose-built to help organizations operate with confidence by enabling the real-time identification of people, businesses, and assets, and understanding their connections. This technology supports critical functions like identity verification, fraud prevention, and risk mitigation across various industries.

Red Violet, Inc. (RDVT) markets its solutions primarily through two distinct brands. First, there's IDI, which uses its idiCORE product to serve a diverse set of industries. As of September 30, 2025, IDI had added 304 new customers during the third quarter. Then you have FOREWARN, which is specifically tailored for the real estate industry. FOREWARN added over 25,000 users in Q3 2025, bringing its total user base to 372,209 users by the end of the quarter. Plus, over 590 REALTOR® Associations are now contracted to use FOREWARN.

The company reported a record-breaking performance for the third quarter of 2025, covering the three months ended September 30, 2025. Total revenue for the quarter hit $23.1 million, marking a 21% increase compared to the same period in 2024. That strong top-line growth flowed nicely to the bottom line; net income jumped a massive 145% to $4.2 million, pushing the net income margin up to 18% from 9% the prior year. The gross margin also improved to 73% from 70%.

Looking at the trailing twelve months ending September 30, 2025, Red Violet, Inc. (RDVT) posted revenue of $86.42 million, which was up 22.27% year-over-year. The company continues to manage its capital structure actively; in Q3 2025, management announced a $15.0 million increase to its share repurchase program, bringing the total authorized amount to $30.0 million. Operationally, the company maintained a robust cash position, reporting cash and cash equivalents of $45.4 million as of September 30, 2025.

Red Violet, Inc. (RDVT) - BCG Matrix: Stars

You're looking at the Stars quadrant for Red Violet, Inc. (RDVT), which is where high-growth, high-market-share business units live. These are the leaders in their space, but honestly, they still demand significant investment to keep that growth engine running hot.

The Core IDI platform is definitely positioned here. For the third quarter of 2025, this platform drove a 21% year-over-year increase in total revenue, hitting a record $23.1 million for the quarter. That kind of top-line growth suggests you are operating in a market that is expanding rapidly, which is the first requirement for a Star.

The financial performance of the IDI platform shows a strong competitive edge. We saw an exceptional adjusted gross margin of 84% for Q3 2025, which is up 1 percentage point from the prior year's 83%. This high margin, coupled with the growth, is what makes this unit a powerful cash generator, even if it consumes a lot of cash for reinvestment.

Here's a quick look at the key performance indicators that cement the IDI platform's Star status for the quarter ended September 30, 2025:

• Total Revenue Growth (YoY): 21%
• Adjusted Gross Margin: 84%
• Net Cash Provided by Operating Activities: $10.2 million
• Adjusted EBITDA Margin: 39%

Customer acquisition remains high, which is crucial for maintaining that relative market share. Red Violet, Inc. added 304 billable customers to the IDI platform during the third quarter. This brings the total customer count to 9,853 as of September 30, 2025. That's defintely a sign of strong execution in the market.

To keep this momentum, the company is making necessary investments. The platform's AI integration is a key focus area to maintain relative market leadership. Management specifically mentioned continued machine learning and enterprise-wide AI initiatives to drive productivity and improve the margin profile going forward. This investment is what keeps the unit from falling into the Dog quadrant.

To summarize the hard numbers supporting the Star classification for the Core IDI platform in Q3 2025, consider this breakdown:

Red Violet, Inc. (RDVT) - BCG Matrix: Cash Cows

You're looking at the core engine of Red Violet, Inc. (RDVT), the part of the business that reliably prints cash. These are the mature, high-market-share assets that don't require massive spending to maintain their position, so they feed the rest of the company.

The stability here is clear: contractual revenue makes up 75% of total revenue, providing predictable, stable cash flow. This recurring base is what allows management to plan with confidence, knowing a significant portion of the top line is locked in.

The operating performance in the third quarter of 2025 really highlights this strength. Red Violet, Inc. (RDVT) generated strong Q3 2025 cash flow from operations of $10.2 million. That's real money coming in the door, directly supporting corporate needs.

Also, the high adjusted EBITDA margin of 39% in Q3 2025 shows excellent operating leverage and maturity. When you see margins that high, it tells you the infrastructure is built, and each new dollar of revenue flows through to profit at a very high rate. This segment funds the high-growth investments; it's the engine, defintely.

Here's a quick look at the key numbers that define this cash-generating machine as of the third quarter of 2025:

We can see the results of this efficiency across several other key financial points from that quarter:

• High gross revenue retention remained strong at 96%.
• The company ended Q3 2025 with $45.4 million in cash and cash equivalents.
• Generated $5.8 million in Adjusted Net Income for the quarter.
• The Board authorized an incremental $15.0 million increase to the Stock Repurchase Program.

This cash flow is critical. It's what lets Red Violet, Inc. (RDVT) fund the Question Marks-those newer, high-growth areas-without needing to constantly tap external capital markets or dilute existing shareholders too much. You want to protect these margins and keep the operational efficiency high.

Red Violet, Inc. (RDVT) - BCG Matrix: Dogs

You're looking at the portfolio of Red Violet, Inc. (RDVT) and trying to figure out which pieces aren't pulling their weight. In the BCG framework, the Dogs quadrant houses units with low market share in low-growth areas. These are the businesses that tie up capital without offering much return.

The Transactional Customers revenue stream fits this profile because it's inherently less predictable and more variable, unlike the stickier Pricing Contracts. For the three months ended September 30, 2025, total revenue hit a record $23.1 million, but the nature of this transactional piece means that portion requires defintely careful management to avoid it turning into a cash drain on the overall operation.

Valuation metrics also hint at Dog-like characteristics for the overall entity, which can be a risk factor for any segment. The Price-to-Earnings (P/E) ratio as of November 26, 2025, was reported at 70.53, and other reports place it near 63.0 (TTM). A P/E ratio over 70 suggests a significant valuation risk if the expected growth rate slows, which is a classic indicator of a potential Dog facing market skepticism about future performance.

Furthermore, the broader data analytics space is tough. Red Violet, Inc. faces intense competition from larger, well-established players in the identity intelligence market. While the company is growing-with TTM revenue reaching $86.43M as of September 30, 2025-the transactional segment operates in a highly contested area where scale matters immensely.

Here's a quick look at how the two reported revenue streams compare based on recent data and analyst segmentation:

The core issue for a Dog is that capital is better deployed elsewhere. You want to minimize exposure here, as expensive turn-around plans rarely work when the market itself isn't growing fast enough to lift the unit.

Key characteristics aligning this segment with the Dog quadrant include:

• Transactional Customers revenue is less predictable and more variable.
• High P/E ratio suggests valuation risk if growth decelerates.
• Intense competition from larger, established data analytics firms.
• Requires careful management to prevent becoming a cash drain.

For the three months ended June 30, 2025, Net cash provided by operating activities was $7.5 million. You need to ensure the cash generated by the Cash Cows and Stars is not being disproportionately funneled into trying to resuscitate a low-share, low-growth unit like this transactional segment.

If we look at the P/E history, the median over the last five years was 299.69, making the current 70.53 look relatively low, but the high historical median itself points to prior periods of high growth expectations that are now tempered. The goal here is divestiture or aggressive cost containment, not major investment.

Finance: draft 13-week cash view by Friday.

Red Violet, Inc. (RDVT) - BCG Matrix: Question Marks

You're looking at the Question Marks quadrant for Red Violet, Inc. (RDVT), which means we're focused on business units or products operating in high-growth markets but currently holding a low market share. These areas consume cash to fuel rapid expansion, hoping to transition into Stars. Honestly, the data from the third quarter of 2025 shows this dynamic clearly in several key areas.

The FOREWARN platform is definitely expanding rapidly, adding 25,538 users during Q3 2025 alone. This growth pushed the total user count to 372,209 users by September 30, 2025. The expansion into the real estate vertical is fast, with over 590 REALTOR® Associations contracted to use the service. While this adoption rate is impressive, the overall market share in the broader identity intelligence space remains small, which is the classic Question Mark profile.

Here's a quick look at the growth metrics that define these high-potential, high-cash-consumption areas as of the end of Q3 2025:

The new focus on Public Sector and Enterprise deals is showing strong promise. Management described the enterprise pipeline as the strongest we've seen to date, signaling high demand potential. However, winning these larger, more complex deals requires heavy upfront investment in go-to-market capabilities and sales cycles, which means these units are currently cash-intensive relative to the revenue they've locked in so far. Jonathan MacDonald is leading the public sector vertical, targeting revenue contribution in 2026, which underscores the long-term investment horizon required for these segments.

Continued investment in enterprise-wide AI initiatives is another key area consuming capital now to secure future Star status. Red Violet, Inc. is leveraging its technology advantage to integrate AI across its platform, aiming to drive operational efficiency and improve margin profiles. The company reported a record Adjusted EBITDA margin of 39% in Q3 2025, and the CEO noted the Rule of 40 score hit an impressive 60%. Still, for these AI investments to truly graduate this segment to Star status, the return on investment must translate into sustained, outsized growth and margin expansion, proving they've created a structural advantage that competitors can't easily replicate.

The strategy for these Question Marks boils down to resource allocation, you see. Red Violet, Inc. must decide where to pour in the necessary capital to quickly gain market share, or risk these high-growth areas stagnating into Dogs. The current financial health, with cash and cash equivalents at $45.4 million as of September 30, 2025, and a recent $15.0 million increase to the Stock Repurchase Program, suggests the company has the balance sheet flexibility to make those heavy investments now.

• FOREWARN user growth: +25,538 in Q3 2025.
• Contractual revenue mix: 75% of total revenue in Q3 2025.
• Gross Revenue Retention: 96% in Q3 2025.
• AI-driven efficiency goal: Translating to a stronger margin profile.