What changed in Red Violet, Inc.'s 2023 10-K compared to 2022?

Across the narrative sections we track, Red Violet, Inc. (RDVT) added 191 paragraphs, removed 192, and edited 162 between the 2022 and 2023 10-K filings. The biggest movers are Item 5. Market for Registrant's Common Equity (+95/−96), Item 1. Business (+48/−50), Item 1A. Risk Factors (+46/−45).

Did Red Violet, Inc. add new Risk Factors in the 2023 10-K?

Yes — Item 1A Risk Factors shows 46 new/edited paragraphs and 45 removed paragraphs versus the 2022 10-K.

Did Red Violet, Inc.'s Legal Proceedings (Item 3) change in 2023?

Item 3 shows 1 added/edited paragraphs and 1 removed paragraphs — usually indicating new litigation disclosed or settled cases removed.

Where does this RDVT 10-K diff come from?

The source filings are Red Violet, Inc.'s official 2022 and 2023 Form 10-K annual reports from SEC EDGAR. 10q10k.net parses each filing, aligns paragraphs by section (Item 1, 1A, 1C, 2, 3, 7, 7A), and highlights every added, removed and edited sentence side-by-side.

What changed in Red Violet, Inc.'s 10-K — 2022 vs 2023

Paragraph-level year-over-year comparison of Red Violet, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+191 added−192 removedSource: 10-K (2024-03-07) vs 10-K (2023-03-08)

Top changes in Red Violet, Inc.'s 2023 10-K

191 paragraphs added · 192 removed · 162 edited across 5 sections

Item 5. Market for Registrant's Common Equity+95 / −96 · 78 edited
Item 1. Business+48 / −50 · 44 edited
Item 1A. Risk Factors+46 / −45 · 39 edited
Item 2. Properties+1 / −0
Item 3. Legal Proceedings+1 / −1 · 1 edited

Item 1. Business

Business — how the company describes what it does

44 edited+4 added−6 removed60 unchanged

2022 filing

2023 filing

Biggest changeAdjusted EBITDA is a non-GAAP financial measure equal to net income, the most directly comparable financial measure based on accounting principles generally accepted in the United States (“US GAAP”), excluding interest (income) expense, net, income tax expense, depreciation and amortization, share-based compensation expense, gain on extinguishment of debt, litigation costs, and write-off of long-lived assets and others, as noted in the tables included in “Use and Reconciliation of Non-GAAP Financial Measures” of Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Our Markets The target market for our solutions today consists of public and private sector organizations where cloud-driven identity intelligence is primary to their daily workflow.

As we introduce greater functionality and additional products, it will serve to expand the applications of our solutions, and increase the opportunities whereby our customers can solve for existing and evolving problems generated by disparate and siloed data assets. Our Competition Competition in the data and analytics sector centers on innovation, product stability, pricing and customer service.

As we introduce greater functionality and additional products, it will serve to expand the applications of our solutions, and increase the opportunities whereby our customers can solve for existing and evolving problems generated by disparate and siloed data assets. 4 Our Competition Competition in the data and analytics sector centers on innovation, product stability, pricing, and customer service.

There can be no assurance that we will be able to compete successfully in the future with current or new competitors. 4 Concentration of Customers We have established relationships with a number of customers, many of whom could unilaterally terminate their relationship with us or materially reduce the amount of business they conduct with us at any time.

There can be no assurance that we will be able to compete successfully in the future with current or new competitors. Concentration of Customers We have established relationships with a number of customers, many of whom could unilaterally terminate their relationship with us or materially reduce the amount of business they conduct with us at any time.

These types of legislation or industry regulations could also prohibit us from collecting or disseminating certain types of data, which could adversely affect our ability to meet our customers’ requirements and our profitability and cash flow targets. 5 Seasonality Our results are subject to seasonal fluctuation. Historically, certain products experience seasonal pressure during the fourth quarter.

These types of legislation or industry regulations could also prohibit us from collecting or disseminating certain types of data, which could adversely affect our ability to meet our customers’ requirements and our profitability and cash flow targets. Seasonality Our results are subject to seasonal fluctuation. Historically, certain products experience seasonal pressure during the fourth quarter.

The SEC maintains an internet website located at http://www.sec.gov that contains the information we file or furnish electronically with the SEC. Information About Our Executive Officers Our executive officers are as follows: Name Position Derek Dubner James Reilly Chief Executive Officer and Chairman President Daniel MacLachlan Chief Financial Officer Jeff Dell Chief Information Officer 6 Mr.

MacLachlan served as the Chief Financial Officer of JARI Research Corporation (“JARI”), a partnership with the Mayo Clinic advancing proprietary cancer therapeutic technology using targeted radioactive therapy. Prior to JARI, Mr. MacLachlan served as a Special Agent in the Federal Bureau of Investigation (FBI) specializing in the criminal investigation of public corruption and civil rights violations. Mr.

According to the market research company MarketsAndMarkets, the risk analytics market is projected to grow to $70.5 billion by 2027, representing CAGR of 12.4% from 2022 through 2027, with North America expected to account for the largest market size in the risk analytics market.

According to the market research company MarketsAndMarkets TM , the risk analytics market is projected to grow to $70.5 billion by 2027, representing CAGR of 12.4% from 2022 through 2027, with North America expected to account for the largest market size in the risk analytics market.

Even if we introduce advanced products that meet evolving customer requirements in a timely manner, there can be no assurance that our new products will gain market acceptance. Certain companies in the data and analytics sector have expanded their product lines or technologies in recent years as a result of acquisitions.

Derek Dubner , 51, has served as the Chief Executive Officer and a director of the Company since its formation in August 2017 and continuing through the Spin-off from cogint on March 26, 2018. Mr. Dubner was appointed as Interim Chairman of our board of directors in September 2018 and as Chairman of our board of directors in April 2020.

Derek Dubner , 52, has served as the Chief Executive Officer and a director of the Company since its formation in August 2017 and continuing through the Spin-off from cogint on March 26, 2018. Mr. Dubner was appointed as Interim Chairman of our board of directors in September 2018 and as Chairman of our board of directors in April 2020.

The website address provided in this 2022 Form 10-K is not intended to function as a hyperlink and information obtained on the website is not and should not be considered part of this 2022 Form 10-K and is not incorporated by reference in this 2022 Form 10-K or any filing with the Securities and Exchange Commission (the “SEC”).

The website address provided in this 2023 Form 10-K is not intended to function as a hyperlink and information obtained on the website is not and should not be considered part of this 2023 Form 10-K and is not incorporated by reference in this 2023 Form 10-K or any filing with the Securities and Exchange Commission (the “SEC”).

Daniel MacLachlan , 44, has served as the Chief Financial Officer of the Company since its formation in August 2017 and continuing through its Spin-off from cogint. Mr. MacLachlan served as Chief Financial Officer of cogint from March 2016 until the Spin-off and brings over fifteen years of experience as the chief financial officer of data-driven technology companies. Mr.

Daniel MacLachlan , 45, has served as the Chief Financial Officer of the Company since its formation in August 2017 and continuing through its Spin-off from cogint. Mr. MacLachlan served as Chief Financial Officer of cogint from March 2016 until the Spin-off and brings over fifteen years of experience as the chief financial officer of data-driven technology companies. Mr.

Dell served as Chief Information Security Officer of Seisint, Inc., a leading provider in the data fusion industry. 7

Dell served as Chief Information Security Officer of Seisint, Inc., a leading provider in the data fusion industry.

We have also sought protection and registration of certain brands and trademarks internationally, such as in Europe and Canada. At present, we do not hold any issued patents. We use data acquired through licensing rights from approximately 20 providers.

Jeff Dell , 51, has served as the Chief Information Officer of the Company since its formation in August 2017 and continuing through its Spin-off from cogint. Mr. Dell served as Chief Information Officer of cogint from September 2016 until the Spin-off and served as the Interim Chief Information Officer of cogint from June 2016 through September 2016.

Jeff Dell , 52, has served as the Chief Information Officer of the Company since its formation in August 2017 and continuing through its Spin-off from cogint. Mr. Dell served as Chief Information Officer of cogint from September 2016 until the Spin-off and served as the Interim Chief Information Officer of cogint from June 2016 through September 2016.

During the years ended December 31, 2022 and 2021, no individual customer accounted for more than 10% of total revenue. As of December 31, 2022, one individual customer accounted for 11% of our accounts receivable, net. As of December 31, 2021, no individual customer accounted for more than 10% of our accounts receivable, net.

During the years ended December 31, 2023 and 2022, no individual customer accounted for more than 10% of total revenue. One individual customer accounted for 11% of our accounts receivable, net, as of December 31, 2023, and one individual customer accounted for 11% of our accounts receivable, net, as of December 31, 2022.

Customers demand full-suite, turn-key solutions that are agile, flexible, and available on-demand in order to gain the speed, scale and insight necessary to drive decisioning.

Customers demand full-suite, turn-key entity resolution solutions that are agile, flexible, and available on-demand in order to gain the speed, scale, and insight necessary to drive decisioning.

Item 1. B usiness. This business description should be read in conjunction with our audited consolidated financial statements and accompanying notes thereto appearing elsewhere in this Annual Report on Form 10-K for the year ended December 31, 2022 (the “2022 Form 10-K”), which are incorporated herein by this reference. Company Overview Red Violet, Inc.

Item 1. B usiness. This business description should be read in conjunction with our audited consolidated financial statements and accompanying notes thereto appearing elsewhere in this Annual Report on Form 10-K for the year ended December 31, 2023 (the “2023 Form 10-K”), which are incorporated herein by this reference. Company Overview Red Violet, Inc.

We believe the following competitive strengths will continue to deliver an unrivaled value proposition that further drives our differentiation: • Transformative and Innovative Cloud-Native Technology Platform —Through the power of our platform, CORE, we offer a comprehensive suite of information solutions.

We believe the following competitive strengths will continue to deliver an unrivaled value proposition that further drives our differentiation: • Transformative and Innovative Cloud-Native, AI/ML-Driven Technology Platform —Through the power of our platform, CORE, we offer a comprehensive suite of information solutions.

James Reilly , 48, has served as President of the Company since its formation in August 2017 and continuing through its Spin-off from cogint. Mr.

James Reilly , 49, has served as President of the Company since its formation in August 2017 and continuing through its Spin-off from cogint. Mr.

Our largest data supplier, with whom we have expanded our relationship while securing what we believe to be favorable business terms over the years, accounted for 49% of our total data acquisition costs for the years ended December 31, 2022 and 2021. The amended and renewed term of the agreement with this supplier ends June 30, 2026.

Our largest data supplier, with whom we have expanded our relationship while securing what we believe to be favorable business terms over the years, accounted for 48% and 49% of our total data acquisition costs for the years ended December 31, 2023 and 2022, respectively. The amended and renewed term of the agreement with this supplier ends June 30, 2026.

Our intelligent platform, CORE TM , is purpose-built for the enterprise, yet flexible enough for organizations of all sizes, bringing clarity to massive datasets by transforming data into intelligence. We drive workflow efficiency and enable organizations to make better data-driven decisions. Organizations are challenged by the structure, volume and disparity of data.

Our AI/ML-driven identity intelligence platform, CORE TM , is purpose-built for the enterprise, yet flexible enough for organizations of all sizes, bringing clarity to massive datasets by transforming data into intelligence. We drive workflow efficiency and enable organizations to make better data-driven decisions. Organizations are challenged by the structure, volume, and disparity of data.

We anticipate increased competition from data and analytics suppliers. Increased competition in the data and analytics sector could result in significant price competition, reduced profit margins or loss of market share, any of which could have a material adverse effect on our business, operating results and financial condition.

We believe our platform’s speed, power, extensibility and scalability are key differentiators in the marketplace. • Massive Unified Data Asset —Data is the lifeblood of our technology platform, and of modern society. We leverage our CORE platform to build massive proprietary datasets and apply analytics in real-time to provide actionable insights.

We believe our platform’s speed, power, extensibility, and scalability are key differentiators in the marketplace. • Massive Unified Data Asset —Data is the lifeblood of our technology platform, and of modern society. We leverage our CORE platform to build massive proprietary datasets and apply analytics in real-time to provide actionable insights from our leading core consumer identity graph.

IDI is a leading-edge, analytics and information solutions provider delivering actionable intelligence to the risk management industry in support of use cases such as the verification and authentication of consumer identities, due diligence, prevention of fraud and abuse, legislative compliance, and debt recovery. idiCORE is IDI's flagship product. idiCORE is a next-generation, investigative solution used to address a variety of organizational challenges including due diligence, risk mitigation, identity authentication and regulatory compliance, by financial services companies, insurance companies, healthcare companies, law enforcement and government, collections, law firms, retail, telecommunication companies, corporate security and investigative firms.

IDI is a leading-edge, analytics and information solutions provider delivering actionable intelligence to an expansive and diverse set of industries in support of use cases such as the verification and authentication of consumer identities, due diligence, prevention of fraud and abuse, legislative compliance, and debt recovery. idiCORE is IDI's flagship product. idiCORE is a next-generation, investigative solution used to address a variety of organizational challenges, including, but not limited to, due diligence, risk mitigation, identity authentication, and regulatory compliance, by financial services companies, insurance companies, healthcare companies, law enforcement and government, identity verification platforms, collections, law firms, retail, telecommunication companies, corporate security, and investigative firms.

For the years ended December 31, 2022 and 2021, 75% and 80% of total revenue was attributable to customers with pricing contracts, respectively, versus 25% and 20% attributable to transactional customers, respectively. 1 We endeavor to understand our customers’ needs at the moment of first engagement.

For the years ended December 31, 2023 and 2022, 79% and 75% of total revenue was attributable to customers with pricing contracts, respectively, versus 21% and 25% attributable to transactional customers, respectively. 1 We endeavor to understand our customers’ needs at the moment of first engagement.

FOREWARN is an app-based solution currently tailored for the real estate industry, providing instant knowledge prior to face-to-face engagement with a consumer, helping professionals identify and mitigate risk. As of December 31, 2022 and 2021, IDI had 7,021 and 6,548 billable customers and FOREWARN had 116,960 and 82,419 users, respectively.

FOREWARN is an app-based solution currently tailored for the real estate industry, providing instant knowledge prior to face-to-face engagement with a consumer, helping professionals identify and mitigate risk. As of December 31, 2023 and 2022, IDI had 7,875 and 7,021 billable customers and FOREWARN had 185,380 and 116,960 users, respectively.

We continue to expand this team to meet the demand of the markets. 3 Distributors, Resellers, and Strategic Partners — In conjunction with direct-to-customer sales efforts, we engage value-added distributors, resellers, and strategic partners that have a significant foothold in many of the industries that we have not historically served, as well as to further penetrate those industries that we do serve.

Distributors, Resellers, and Strategic Partners — In conjunction with direct-to-customer sales efforts, we engage value-added distributors, resellers, and strategic partners that have a significant foothold in many of the industries that we have not historically served, as well as to further penetrate those industries that we do serve.

Our Employees We employ a total of 186 full-time employees and one part-time employee as of December 31, 2022. None of our employees are represented by a labor organization, and none are party to any collective bargaining agreement. We have not experienced any work stoppages and consider our relations with our employees to be good.

Our Employees We employ a total of 183 employees, all full-time, as of December 31, 2023. None of our employees are represented by a labor organization, and none are party to any collective bargaining agreement. We have not experienced any work stoppages and consider our relations with our employees to be good.

Risk and fraud analytics and the information derived therefrom is now the primary service product for risk management associated with key purchasers such as banking and financial services companies, insurance companies, healthcare companies, law enforcement and government, collection agencies, law firms, retail, telecommunications companies and investigative firms.

Risk and fraud analytics and the information derived therefrom is now the primary service product for risk management associated with key purchasers such as financial services companies, insurance companies, healthcare companies, law enforcement and government, identity verification platforms, collections, law firms, retail, telecommunications companies, corporate security, and investigative firms.

Strategic Sales — While the majority of our direct sales efforts are supported through professional inside sales staff, major accounts within certain industries require a more personal, face-to-face strategic sales approach.

Fortune Business Insights TM projected the global big data analytics market to rise to $655.5 billion by 2029, exhibiting a CAGR of 13.4% during the forecast period from 2022 through 2029.

Fortune Business Insights TM projected the global big data analytics market to rise to $745.2 billion by 2030, exhibiting a CAGR of 13.5% during the forecast period from 2023 through 2030.

We are advancing our business through the following strategic approach: • Transform Data Into Intelligence —Our massive, unified data asset, integrated with our leading technology platform and solutions, delivers actionable intelligence to organizations across diverse industries. As the digital transformation accelerates, the data generated therefrom increases rapidly.

We are advancing our business through the following strategic approach: • Transform Data Into Intelligence —Our core consumer identity graph, integrated with our AI/ML-driven technology platform and solutions, delivers actionable intelligence to organizations across diverse industries. As the digital transformation accelerates, the data generated therefrom increases rapidly.

MacLachlan served in the roles of Director of Finance and Chief Financial Officer for TRADS, after it acquired substantially all of the assets of TLO, through a 363 sale process in December 2013. Mr. MacLachlan was the Chief Financial Officer of TLO from 2009 to December 2013. From 2005 to 2009, Mr.

MacLachlan served in the roles of Director of Finance and Chief Financial Officer for TRADS after it acquired TLO in December 2013. Mr. MacLachlan was the Chief Financial Officer of TLO from inception in 2009 to December 2013. From 2005 to 2009, Mr.

While our platform powers many diverse solutions for our customers, we presently market our solutions primarily through two brands, IDI and FOREWARN ® .

While our platform powers a vast array of solutions for our customers, we presently market our solutions primarily through two brands, IDI and FOREWARN ® .

As of December 31, 2022, the remaining minimum purchase commitments through the end of the amended and renewed term is $18.6 million.

As of December 31, 2023, the remaining minimum purchase commitments through the end of the amended and renewed term is $13.4 million.

Our cloud-native, data and industry agnostic platform enables us to assimilate, structure, and unify billions of disparate records to create comprehensive views that provide identity intelligence, and to present these insights in real-time via analytical interfaces.

Our cloud-native, AI/ML-driven, data and industry agnostic platform enables us to assimilate, structure, and unify billions of disparate records to create the leading core consumer identity graph to provide identity intelligence, and to present these insights in real-time via analytical interfaces.

Whether it is identity verification, managing risk, or regulatory compliance, customers are increasingly more sophisticated, requiring enhanced performance that provides fast, accurate, and cost-effective solutions to satisfy their business objectives.

Cost and Performance Pressures —As customers face constant cost pressures, they are increasingly dependent upon extracting greater value from information solutions. Whether it is identity verification, managing risk, or regulatory compliance, customers are increasingly more sophisticated, requiring enhanced performance that provides fast, accurate, and cost-effective solutions to satisfy their business objectives.

If we are unable to maintain our relationship with our largest data supplier, our ability to provide products and services could be negatively impacted, as we would need to secure comparable data on similar terms, which would require significant time, expense, and resources, and may in the short-term adversely affect our reputation, business, financial condition, and results of operations and, if we are unable to establish a similar relationship with other data suppliers over time, could have a long-term material impact on our business and financial condition. 5 Our Intellectual Property We avail ourself of applicable trade secret and unfair competition laws to protect our proprietary technology, trademark law to protect our trademarks and domain names, and copyright laws to protect our content relating to, among other things, websites and marketing materials.

As a result, customers are looking for flexible and efficient solutions to unify disparate and often siloed sets of not only transactional data but also demographic, ethnographic and behavioral data as well, in order to provide insights that are truly actionable. 2 Cost and Performance Pressures —As customers face constant cost pressures, they are increasingly dependent upon extracting greater value from information solutions.

As a result, customers are looking for flexible and efficient single-point solutions to unify disparate and often siloed sets of not only transactional data but also demographic, ethnographic, and behavioral data as well, in order to provide insights that are truly actionable.

Through next-generation technology and proprietary algorithms, we efficiently ingest these datasets, structure them into normalized form, and unify the data to resolve unique identities so as to create an actionable, real-time view of the information for various use cases, delivering greater intelligence to our customers and enhancing their decision-making capabilities across all markets and industries.

Through AI/ML-driven technology and proprietary algorithms, we efficiently ingest these datasets, structure them into normalized form, and unify the data to resolve unique identities so as to create an actionable, real-time view of the information for various use cases, delivering greater intelligence to our customers and enhancing their decision-making capabilities across all markets and industries. 3 Our Platform and Solutions Leveraging cloud-native proprietary technology and applying machine learning and advanced analytical capabilities, CORE provides essential solutions to public and private sector organizations through intuitive, easy-to-use analytical interfaces.

For the years ended December 31, 2022 and 2021, we had revenue of $53.3 million and $44.0 million, net income of $0.6 million and $0.7 million, and adjusted EBITDA of $12.9 million and $10.9 million, respectively.

For the years ended December 31, 2023 and 2022, we had revenue of $60.2 million and $53.3 million, net income of $13.5 million and $0.6 million, adjusted EBITDA of $16.4 million and $12.9 million, and adjusted net income of $8.1 million and $6.9 million, respectively.

Continued, rapid innovation and adoption of new technologies presents enormous challenges for organizations of all types to sort through this sea of data to glean actionable intelligence and address their mission-critical functions. These challenges serve as key drivers of the sector’s growth.

Corporate Information On March 26, 2018, Cogint, Inc. (“cogint”) (now known as Fluent, Inc.) spun off its risk management business by way of a distribution of all of the shares of common stock of its then wholly-owned subsidiary, red violet, to its stockholders as of the record date and certain warrant holders (the “Spin-off”).

(“cogint”) (now known as Fluent, Inc.) spun off its risk management business by way of a distribution of all of the shares of common stock of its then wholly-owned subsidiary, red violet, to its stockholders as of the record date and certain warrant holders (the “Spin-off”). 6 Available Information Our principal executive offices are located at 2650 North Military Trail, Suite 300, Boca Raton, Florida 33431 and our telephone number is (561) 757-4000.

Key Challenges Facing Our Customers We believe our solutions address the challenges that the industry faces today, which include: Actionable Insights Through a Single, Cloud-Native Platform —As the velocity and volume of data continues to grow exponentially, organizations have become overwhelmed with data and their inability to glean actionable insights from such data to derive successful decisions in real-time.

Primary use cases include, but are not limited to, obtaining information on consumers, businesses, assets, and their interrelationships, to facilitate the location of individuals and assets, identity verification, legislative compliance, and to support criminal, legal, financial, insurance, and corporate investigations, due diligence, and the assessment and mitigation of counterparty risk. 2 Key Challenges Facing Our Customers We believe our solutions address the challenges that the industry faces today, which include: Actionable Insights Through a Single, Cloud-Native, AI/ML-Driven Platform —As the velocity and volume of data continues to grow exponentially across various mediums, organizations have become overwhelmed with data and their inability to glean actionable insights from such data to enable informed decisions in real-time.

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International Data Corporation, a global provider of market intelligence and advisory services, estimates that worldwide revenue for data and business analytics services was $215.7 billion in the year 2021, and a compound annual growth rate (“CAGR”) from 2021 through 2025 will be 12.8%.

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Adjusted net income is a non-GAAP financial measure equal to net income, the most directly comparable financial measure based on US GAAP, excluding share-based compensation expense, amortization of share-based compensation capitalized in intangible assets, and discrete tax items, and including tax effect of adjustments.

Removed

Primary use cases include, but are not limited to, obtaining information on consumers, businesses and assets (and their interrelationships) to facilitate the location of individuals and assets, identity verification, legislative compliance and to support criminal, legal, financial, insurance, and corporate investigations, due diligence and the assessment and mitigation of counterparty risk.

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Refer to the tables included in “Use and Reconciliation of Non-GAAP Financial Measures” of Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Our Markets The target market for our solutions today consists of public and private sector organizations that are reliant on high confidence, AI/ML-driven identity intelligence in their daily workflow.

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Our Platform and Solutions Leveraging cloud-native proprietary technology and applying machine learning and advanced analytical capabilities, CORE provides essential solutions to public and private sector organizations through intuitive, easy-to-use analytical interfaces.

Added

Further, the digital transformation has created even greater fragmentation of data across multiple mediums, creating an inherent need for organizations to leverage scalable and unified data and analytics on a single platform. These challenges serve as key drivers of the sector’s growth.

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Further, more companies have developed products which conform to existing and emerging industry standards and have sought to compete on the basis of price. We anticipate increased competition from large data and analytics vendors.

Added

Corporate Information On March 26, 2018, Cogint, Inc.

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Our Intellectual Property We avail ourself of applicable trade secret and unfair competition laws to protect our proprietary technology, trademark law to protect our trademarks and domain names, and copyright laws to protect our content relating to, among other things, websites and marketing materials.

Removed

Available Information Our principal executive offices are located at 2650 North Military Trail, Suite 300, Boca Raton, Florida 33431 and our telephone number is (561) 757-4000. Our corporate website is www.redviolet.com .

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

39 edited+7 added−6 removed128 unchanged

2022 filing

2023 filing

Biggest changeIt is likely that additional laws pertaining to the use, access, accuracy, and security of personal information will be adopted in the future. In the United States, federal and state laws provide for more than 50 disparate data breach notification regimes, all of which we may be subject to.

Biggest changeA growing number of legislative and regulatory bodies have adopted consumer notification and other requirements in the event that a consumer's personal information is accessed by unauthorized persons. It is likely that additional laws pertaining to the use, access, accuracy, and security of personal information will be adopted in the future.

We face the risks associated with the business acquisition strategy, including: • the potential disruption of our existing businesses, including the diversion of management attention and the redeployment of resources; • entering new markets or industries in which we have limited prior experience; • our failure in due diligence to identify key issues specific to the businesses we seek to acquire or the industries or other environments in which they operate, or, failure to protect against contingent liabilities arising from those issues; • unforeseen, hidden or fraudulent liabilities; • our difficulties in integrating, aligning and coordinating organizations which will likely be geographically separated and may involve diverse business operations and corporate cultures; • our difficulties in integrating and retaining key management, sales, research and development, production and other personnel; • the potential loss of key employees, customers or distribution partners of the acquired business; • our difficulties in incorporating the acquired business into our organization; • the potential loss of customers, resellers, distributors, strategic business partners, or suppliers; • our difficulties in integrating or expanding information technology systems and other business processes to accommodate the acquired business; • the risks associated with integrating financial reporting and internal control systems, including the risk that significant deficiencies or material weaknesses may be identified in acquired entities; • the potential for future impairments of goodwill and other intangible assets if the acquired business does not perform as expected; 15 • the inability to obtain necessary government approvals for the acquisition, if any; and • our successfully operating the acquired business.

We face the risks associated with the business acquisition strategy, including: • the potential disruption of our existing businesses, including the diversion of management attention and the redeployment of resources; • entering new markets or industries in which we have limited prior experience; • our failure in due diligence to identify key issues specific to the businesses we seek to acquire or the industries or other environments in which they operate, or, failure to protect against contingent liabilities arising from those issues; • unforeseen, hidden, or fraudulent liabilities; • our difficulties in integrating, aligning and coordinating organizations which will likely be geographically separated and may involve diverse business operations and corporate cultures; • our difficulties in integrating and retaining key management, sales, research and development, production, and other personnel; • the potential loss of key employees, customers, or distribution partners of the acquired business; • our difficulties in incorporating the acquired business into our organization; • the potential loss of customers, resellers, distributors, strategic business partners, or suppliers; • our difficulties in integrating or expanding information technology systems and other business processes to accommodate the acquired business; • the risks associated with integrating financial reporting and internal control systems, including the risk that significant deficiencies or material weaknesses may be identified in acquired entities; • the potential for future impairments of goodwill and other intangible assets if the acquired business does not perform as expected; • the inability to obtain necessary government approvals for the acquisition, if any; and • our successfully operating the acquired business.

Furthermore, we may not be able to immediately address the consequences of a cybersecurity incident because a successful breach of our computer systems, software, networks or other technology assets could occur and persist for an extended period of time before being detected due to, among other things: • the breadth and complexity of our operations and the high volume of transactions that we process; • the large number of customers, counterparties and third-party service providers with which we do business; • the proliferation and increasing sophistication of cyberattacks; and • the possibility that a third party, after establishing a foothold on an internal network without being detected, might obtain access to other networks and systems.

Furthermore, we may not be able to immediately address the consequences of a cybersecurity incident because a successful breach of our computer systems, software, networks, or other technology assets could occur and persist for an extended period of time before being detected due to, among other things: • the breadth and complexity of our operations and the high volume of transactions that we process; • the large number of customers, counterparties and third-party service providers with which we do business; 9 • the proliferation and increasing sophistication of cyberattacks; and • the possibility that a third party, after establishing a foothold on an internal network without being detected, might obtain access to other networks and systems.

Acquisitions of vendors or other companies with whom we have a strategic relationship by our competitors may limit our access to commercially significant technologies. Further, business combinations are creating companies with larger market shares, customer bases, sales forces, product offerings and technology and marketing expertise, which may make it more difficult for us to compete.

Acquisitions of vendors or other companies with whom we have a strategic relationship by our competitors may limit our access to commercially significant technologies and/or data. Further, business combinations are creating companies with larger market shares, customer bases, sales forces, product offerings and technology and marketing expertise, which may make it more difficult for us to compete.

If our environmental practices, reporting, and performance do not meet expectations, or are perceived as not meeting expectations, we may be subject to government investigations, lawsuits, or other legal actions. Our reputation and customer retention may also be negatively affected. We depend, in part, on strategic alliances and joint ventures to grow our business.

If our environmental practices, reporting, and performance do not meet expectations, or are perceived as not meeting expectations, we may be subject to government investigations, lawsuits, or other legal actions. Our reputation and customer retention may also be negatively affected. 14 We depend, in part, on strategic alliances and joint ventures to grow our business.

If our service providers and vendors do not perform their service obligations, it could adversely affect our reputation, business, financial condition and results of operations. Consolidation in the data and analytics sector may limit market acceptance of our products and services. Several of our competitors have acquired companies with complementary technologies in the past.

If our service providers and vendors do not perform their service obligations, it could adversely affect our reputation, business, financial condition, and results of operations. 18 Consolidation in the data and analytics sector may limit market acceptance of our products and services. Several of our competitors have acquired companies with complementary technologies in the past.

If businesses in these industries experience economic hardship, we cannot assure you that we will be able to generate future revenue growth and these types of disruptions could negatively impact our revenue and results of operations. 16 We could lose our access to data sources which could prevent us from providing our services.

If businesses in these industries experience economic hardship, we cannot assure you that we will be able to generate future revenue growth and these types of disruptions could negatively impact our revenue and results of operations. We could lose our access to data sources which could prevent us from providing our services.

If an actual or perceived breach were to occur, we cannot assure you that we would not lose revenue or not sustain operating losses as a result. We also rely heavily on large information technology databases and the ability to provide services using that information from those databases.

If an actual or perceived breach were to occur, we cannot assure you that we would not lose revenue or not sustain operating losses as a result. 8 We also rely heavily on large information technology databases and the ability to provide services using that information from those databases.

Any security incident could result in legal, regulatory, and financial liability, as well as harm to our reputation. 8 We may be required to expend significant capital and other resources to protect against such threats or to alleviate problems caused by breaches in security.

Any security incident could result in legal, regulatory, and financial liability, as well as harm to our reputation. We may be required to expend significant capital and other resources to protect against such threats or to alleviate problems caused by breaches in security.

Item 1A. Risk Factors . Our business, financial condition, operating results, and cash flows may be impacted by a number of factors, many of which are beyond our control, including those set forth below and elsewhere in this 2022 Form 10-K, the occurrence of any one of which could have a material adverse effect on our actual results.

Item 1A. Risk Factors . Our business, financial condition, operating results, and cash flows may be impacted by a number of factors, many of which are beyond our control, including those set forth below and elsewhere in this 2023 Form 10-K, the occurrence of any one of which could have a material adverse effect on our actual results.

If we fail to maintain and improve our systems, our certifications, our technology, and our interfaces with data sources and customers, demand for our services could be adversely affected.

If we fail to maintain and improve our systems, our certifications, our technology, and our interfaces with data and customers, demand for our services could be adversely affected.

Our principal competitors in the data and analytics sector include Palantir, RELX Group (LexisNexis), TransUnion, and Thomson Reuters. Current and potential competitors may have one or more of the following significant advantages: 17 • greater financial, technical and marketing resources; • better name recognition; • more comprehensive solutions; • better or more extensive cooperative relationships; and • larger customer base.

Our principal competitors in the data and analytics sector include RELX Group (LexisNexis), TransUnion, and Thomson Reuters. Current and potential competitors may have one or more of the following significant advantages: • greater financial, technical, and marketing resources; • better name recognition; • more comprehensive solutions; • better or more extensive cooperative relationships; and • larger customer base.

Our data providers could stop providing data, provide untimely data or increase the costs for their data for a variety of reasons, including a perception that our systems are insecure as a result of a data security breach, budgetary constraints, a desire to generate additional revenue or for regulatory or competitive reasons.

Our data suppliers could stop providing data, provide untimely data or increase the costs for their data for a variety of reasons, including a perception that our systems are insecure as a result of a data security breach, budgetary constraints, a desire to generate additional revenue, or for regulatory or competitive reasons.

Our products and services depend extensively upon continued access to and receipt of data from external sources, including data received from strategic partners and various government and public record databases. In some cases, we compete with our data providers.

Our products have been in the market place for a limited period of time and may have longer sales cycles than competitive products. Accordingly, we may not achieve the meaningful revenue growth needed to sustain operations. We cannot provide any assurances that sales of our newer products will continue to grow or generate sufficient revenues to sustain our business.

Our products have been in the marketplace for a limited period of time and may have longer sales cycles than competitive products. Accordingly, we may not achieve the meaningful revenue growth needed to sustain operations. We cannot provide any assurances that sales of our newer products will continue to grow or generate sufficient revenues to sustain our business.

If we are unable to develop and maintain these strategic alliances and joint ventures, our growth may be adversely affected. An important focus of our business is to identify business partners who can enhance our services, enable us to develop solutions that differentiate us from our competitors, drive users to our websites and monetize our data.

If we are unable to develop and maintain these strategic alliances and joint ventures, our growth may be adversely affected. An important focus of our business is to identify business relationships that can enhance our services, enable us to develop solutions that differentiate us from our competitors, drive users to our websites and monetize our data.

Changes in the economy have resulted, and may continue to result, in fluctuations in volumes, pricing and operating margins for our services. Recent inflation, and higher interest rates imposed to combat inflation, may reduce the demand for credit.

Changes in the economy have resulted, and may continue to result, in fluctuations in volumes, pricing, and operating margins for our services. Recent inflation, and higher interest rates imposed to combat inflation, may reduce the demand for various commercial transactions.

For example, the following state privacy laws have recently taken effect, or will take effect on a future date: (i) the California Privacy Rights Act (the “CPRA”), effective January 2023, with some provisions applying retroactively, amending the California Consumer Privacy Act (the “CCPA”); (ii) the Virginia Consumer Data Protection Act (the “VCDPA”), effective January 2023; (iii) the Colorado Privacy Act (the “CPA”), effective July 2023; (iv) the Connecticut Data Privacy Act (the “CTDPA”), effective July 2023; and (v) the Utah Consumer Privacy Act (the “UCPA”), effective December 2023.

For example, the following state privacy laws have taken effect: (i) the California Privacy Rights Act (the “CPRA”), effective January 2023, with some provisions applying retroactively, amending the California Consumer Privacy Act (the “CCPA”); (ii) the Virginia Consumer Data Protection Act (the “VCDPA”), effective January 2023; (iii) the Colorado Privacy Act (the “CPA”), effective July 2023; (iv) the Connecticut Data Privacy Act (the “CTDPA”), effective July 2023; and (v) the Utah Consumer Privacy Act (the “UCPA”), effective December 2023.

We cannot provide assurance that we will be successful in maintaining our relationships with these external data source providers or that we will be able to continue to obtain data from them on acceptable terms or at all. Furthermore, we cannot provide assurance that we will be able to obtain data from alternative sources if our current sources become unavailable.

Since the Spin-off and through December 31, 2022, we issued an aggregate of 3,126,377 shares of our common stock in connection with vesting of awards made under the Red Violet, Inc. 2018 Stock Incentive Plan, as amended (the “2018 Plan”), 620,501 shares of which were retired and cancelled.

Since the Spin-off and through December 31, 2023, we issued an aggregate of 3,435,793 shares of our common stock in connection with vesting of awards made under the Red Violet, Inc. 2018 Stock Incentive Plan, as amended (the “2018 Plan”), 719,735 shares of which were retired and cancelled.

Any debt financing, if available, may restrict our operations. If we are unable to raise additional capital when required or on acceptable terms, we may have to significantly delay, scale back or discontinue certain operations. Any of these events could significantly harm our business and prospects and could cause our stock price to decline.

If we are unable to raise additional capital when required or on acceptable terms, we may have to significantly delay, scale back or discontinue certain operations. Any of these events could significantly harm our business and prospects and could cause our stock price to decline. We do not currently intend to pay dividends on our common stock.

This, in turn, may result in increased compliance costs and increased legal exposure. Any climate-related disclosures would likely be based on certain assumptions, estimates and third-party data, and our reports may not meet the expectations of regulators, investors, or other third parties.

Additionally, the SEC is considering enhancing and standardizing climate-related disclosure rules for publicly traded companies. This, in turn, may result in increased compliance costs and increased legal exposure. Any climate-related disclosures would likely be based on certain assumptions, estimates and third-party data, and our reports may not meet the expectations of regulators, investors, or other third parties.

The interests of these stockholders may not always coincide with the interests of other stockholders, and these stockholders may act in a manner that advances their interests and not necessarily those of other stockholders, and might affect the prevailing market price for our securities. 13 We are an “emerging growth company,” and we cannot be certain if the reduced reporting requirements available to emerging growth companies will make our shares of common stock less attractive to investors.

The interests of these stockholders may not always coincide with the interests of other stockholders, and these stockholders may act in a manner that advances their interests and not necessarily those of other stockholders, and might affect the prevailing market price for our securities. 13 We are no longer an “emerging growth company,” however, we are still a “smaller reporting company,” and the reduced disclosure requirements applicable to smaller reporting companies may make our common stock less attractive to investors.

As of December 31, 2022, officers and directors of the Company owned approximately 10% of our common stock (approximately 12% on a fully diluted basis). In addition, one other significant stockholder of the Company owned in aggregate approximately 11% of our common stock (approximately 10% on a fully diluted basis).

As of December 31, 2023, officers and directors of the Company owned approximately 10% of our common stock (approximately 12% on a fully diluted basis). In addition, two other significant stockholders of the Company owned approximately 14% and 11% of our common stock (approximately 13% and 10% on a fully diluted basis), respectively.

Also, as of December 31, 2022, 40,134 shares underlying awards made under the 2018 Plan have vested but have not been delivered, and an additional 1,044,132 shares underlying awards made under the 2018 Plan are scheduled to vest and be delivered through 2026.

Also, as of December 31, 2023, 49,034 shares underlying awards made under the 2018 Plan have vested but have not been delivered, and an additional 1,017,718 shares underlying awards made under the 2018 Plan are scheduled to vest and be delivered through 2027.

As a result, these competitors may be able to more quickly develop or adapt to new or emerging technologies and changes in customer requirements, or devote greater resources to the development, promotion and sale of their products and services. Additionally, it is likely that new competitors or alliances among existing competitors could emerge and rapidly acquire significant market share.

While such an investigation is ongoing, we may not necessarily know the extent of the harm or how best to remediate it, and certain errors or actions could be repeated or compounded before they are discovered and remediated, any or all of which could further increase the costs and consequences of a cybersecurity incident. 9 A growing number of legislative and regulatory bodies have adopted consumer notification and other requirements in the event that a consumer's personal information is accessed by unauthorized persons.

We cannot predict if investors will find our shares of common stock to be less attractive because we may rely on these exemptions. If some investors find our shares of common stock less attractive as a result, there may be a less active trading market for our shares of common stock and our share price may be more volatile.

If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.

As a result, sales and implementation cycles for our products and services can be lengthy, and we may expend significant time and resources before we receive any revenues from a customer or potential customer. Our quarterly and annual operating results could be adversely affected if orders forecast for a specific customer and for a particular period are not realized.

Our quarterly and annual operating results could be adversely affected if orders forecast for a specific customer and for a particular period are not realized. 18 If our outside service providers and key vendors are not able to or do not fulfill their service obligations, our operations could be disrupted and our operating results could be harmed.

If our outside service providers and key vendors are not able to or do not fulfill their service obligations, our operations could be disrupted and our operating results could be harmed.

Complying with such numerous and complex regulations in the event of unauthorized access would be expensive and difficult, and failure to comply with these regulations could subject us to regulatory scrutiny and additional liability.

In the United States, federal and state laws provide for more than 50 disparate data breach notification regimes, all of which we may be subject to. Complying with such numerous and complex regulations in the event of unauthorized access would be expensive and difficult, and failure to comply with these regulations could subject us to regulatory scrutiny and additional liability.

If we cannot overcome these challenges, we may not realize actual benefits from past and future acquisitions, which will impair our overall business results. If we complete an investment or acquisition, we may not realize the anticipated benefits from the transaction. Our relationships with key customers may be materially diminished or terminated.

If we complete an investment or acquisition, we may not realize the anticipated benefits from the transaction. 15 Our relationships with key customers may be materially diminished or terminated, which could adversely affect our business, financial condition, and results of operations.

The foregoing risks are heightened with respect to our largest data supplier, with whom we have expanded our relationship while securing favorable business terms over the years.

Furthermore, we cannot provide assurance that we will be able to obtain data from alternative sources if our current sources become unavailable. 16 The foregoing risks are heightened with respect to our largest data supplier, with whom we have expanded our relationship while securing favorable business terms over the years.

If we are unable to generate greater revenue, we may not be able to continue to achieve profitability and generate positive cash flow from operations in the future. The ongoing and developing Covid-19 pandemic or future pandemics may adversely impact our business, our future results of operations and our overall financial performance.

If we are unable to generate greater revenue, we may not be able to continue to achieve profitability and generate positive cash flow from operations in the future. Environmental issues, including any future reporting obligations in connection with environmental issues, may adversely impact our business and operations.

Even if we are unaffected by an extreme weather event or natural disaster, or recover from one quickly, our customers or suppliers may be more severely impacted, thereby affecting their ability to continue to do business with us. 14 Additionally, the SEC is considering enhancing and standardizing climate-related disclosure rules for publicly traded companies.

While we maintain business continuity and disaster recovery plans, we cannot be certain that those plans will be effective. Even if we are unaffected by an extreme weather event or natural disaster, or recover from one quickly, our customers or suppliers may be more severely impacted, thereby affecting their ability to continue to do business with us.

There may be further consolidation in our end-customer markets, which may adversely affect our revenue. There has been, and we expect there will continue to be, merger, acquisition and consolidation activity in our customer markets.

Additionally, it is likely that new competitors or alliances among existing competitors could emerge and rapidly acquire significant market share. 17 There may be further consolidation in our end-customer markets, which may adversely affect our revenue. There has been, and we expect there will continue to be, merger, acquisition, and consolidation activity in our customer markets.

If we issue additional shares of our common stock or other securities that may be convertible into, or exercisable or exchangeable for, our common stock, our existing stockholders would experience further dilution. While we may need additional capital in the future, we cannot be certain that it will be available to us on acceptable terms when required, or at all.

Since the Spin-off and through December 31, 2022, we issued an aggregate of 1,233,915 shares of our common stock in connection with registered direct offerings. To the extent that we raise additional funds by issuing equity securities, our shareholders would experience dilution, which may be significant and could cause the market price of our common stock to decline significantly.

To the extent that we raise additional funds by issuing equity securities, our shareholders would experience dilution, which may be significant and could cause the market price of our common stock to decline significantly. Any debt financing, if available, may restrict our operations.

These events may become more frequent and more severe as a result of climate change, and the long-term impacts to the economy and our industry are unknown. While we maintain business continuity and disaster recovery plans, we cannot be certain that those plans will be effective.

Extreme weather events and natural disasters may disrupt our operations or those of our customers and suppliers. These events may become more frequent and more severe as a result of climate change, and the long-term impacts to the economy and our industry are unknown.

Removed

We are an “emerging growth company,” as defined in Section 2(a) of the Securities Act. For as long as we continue to be an emerging growth company, we may take advantage of exemptions from various reporting requirements that are applicable to other public companies.

Added

Although we ceased to be an “emerging growth company,” on December 31, 2023, as defined in the Jumpstart Our Business Startups Act of 2012, or JOBS Act, we remain a “smaller reporting company.” We may continue to be a smaller reporting company if either (i) the market value of our stock held by non-affiliates is less than $250.0 million or (ii) our annual revenue is less than $100.0 million during the most recently completed fiscal year and the market value of our stock held by non-affiliates is less than $700.0 million.

Removed

Although we expect that we may need additional capital in the future, we cannot be certain that it will be available to us on acceptable terms when required, or at all. Disruptions in the global equity and credit markets may limit our ability to access capital.

Added

As a smaller reporting company, we may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies.

Removed

The global spread of Covid-19, and the various responses to it have created significant volatility, uncertainty and economic disruption. Covid-19 caused us, as well as many of our customers and vendors, to change certain aspects of operations and curtail travel at times.

Added

Specifically, we may choose to present only the two most recent fiscal years of audited financial statements in our Annual Report on Form 10-K and, similar to emerging growth companies, smaller reporting companies have reduced disclosure obligations regarding executive compensation. We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions.

Removed

The extent to which the Covid-19 pandemic or any other pandemic may affect us in the future is uncertain and will depend on numerous evolving factors that we may not be able to accurately predict, including: the duration and scope of the pandemic and any resurgences of the pandemic; the emergence and severity of new variants; governmental, business and individuals’ actions that have been and continue to be taken in response to the pandemic; vaccination rates and the effectiveness of vaccines against new variants; the availability and cost to access the capital markets; the effect on our customers and customer demand for and ability to pay for our services; and disruptions or restrictions on our employees’ ability to work and travel.

Added

Disruptions in the global equity and credit markets may limit our ability to access capital. Since the Spin-off and through December 31, 2023, we issued an aggregate of 1,233,915 shares of our common stock in connection with registered direct offerings.

Removed

If new variants cause severe illness or existing vaccines prove ineffective against new variants, resulting in renewed travel restrictions or stay-at-home orders, that may also interfere with the conduct of our business. Such results could have a material adverse effect on our operations, business, financial condition, results of operations, or cash flows.

Added

We do not currently expect to pay cash dividends on our common stock and have not paid cash dividends on our common stock to date.

Removed

Environmental issues, including any future reporting obligations in connection with environmental issues, may adversely impact our business and operations. Extreme weather events and natural disasters may disrupt our operations or those of our customers and suppliers.

Added

Any future dividend payments are within the discretion of our board of directors and will depend upon, among other things, our results of operations, working capital requirements, capital expenditure requirements, financial condition, level of indebtedness, any contractual restrictions with respect to payment of dividends, business opportunities, anticipated cash needs, provisions of applicable law, and other factors that our board of directors may deem relevant.

Added

If we cannot overcome these challenges, we may not realize actual benefits from past and future acquisitions, which will impair our overall business results.

Item 2. Properties

Properties — owned and leased real estate

0 edited+1 added−0 removed2 unchanged

2022 filing

2023 filing

Added

On September 20, 2023, we entered into an amendment to our corporate headquarters lease agreement to exercise an extension option for an additional 60 months through June 30, 2029.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed6 unchanged

2022 filing

2023 filing

Biggest changeWe do not record liabilities when the likelihood that the liability has been incurred is probable, but the amount cannot be reasonably estimated. 19 In addition to the foregoing, we may be involved in litigation from time to time in the ordinary course of business.

Biggest changeWe do not record liabilities when the likelihood that the liability has been incurred is probable, but the amount cannot be reasonably estimated. In addition to the foregoing, we may be involved in litigation from time to time in the ordinary course of business.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

78 edited+17 added−18 removed73 unchanged

2022 filing

2023 filing

Biggest changeThe results of historical periods are not necessarily indicative of the results for any future period. 30 Three Months Ended (In thousands, except share data) (Unaudited) 3/31/2021 6/30/2021 9/30/2021 12/31/2021 3/31/2022 6/30/2022 9/30/2022 12/31/2022 Revenue $ 10,217 $ 10,879 $ 11,668 $ 11,258 $ 12,729 $ 12,494 $ 15,026 $ 13,069 Costs and expenses: Cost of revenue (exclusive of depreciation and amortization) 2,761 2,720 2,787 2,927 3,170 2,920 3,067 3,054 Sales and marketing expenses 2,221 2,349 2,154 2,208 2,391 2,822 2,623 2,998 General and administrative expenses 4,550 4,890 4,127 6,244 5,353 5,300 5,465 7,119 Depreciation and amortization 1,258 1,330 1,345 1,466 1,534 1,613 1,713 1,815 Total costs and expenses 10,790 11,289 10,413 12,845 12,448 12,655 12,868 14,986 (Loss) income from operations (573 ) (410 ) 1,255 (1,587 ) 281 (161 ) 2,158 (1,917 ) Interest (expense) income, net (5 ) (4 ) 1 1 1 - 125 225 Gain on extinguishment of debt - 2,175 - - - - - - (Loss) income before income taxes (578 ) 1,761 1,256 (1,586 ) 282 (161 ) 2,283 (1,692 ) Income tax expense (benefit) - - - 198 175 44 25 (148 ) Net (loss) income $ (578 ) $ 1,761 $ 1,256 $ (1,784 ) $ 107 $ (205 ) $ 2,258 $ (1,544 ) (Loss) earnings per share: Basic $ (0.05 ) $ 0.14 $ 0.10 $ (0.14 ) $ 0.01 $ (0.01 ) $ 0.16 $ (0.11 ) Diluted $ (0.05 ) $ 0.13 $ 0.09 $ (0.14 ) $ 0.01 $ (0.01 ) $ 0.16 $ (0.11 ) Weighted average number of shares outstanding: Basic 12,207,193 12,269,412 12,741,723 13,158,638 13,543,607 13,776,479 13,748,587 13,964,010 Diluted 12,207,193 13,560,714 13,645,208 13,158,638 14,047,635 13,776,479 13,764,262 13,964,010 Three Months Ended (In thousands) (Unaudited) 3/31/2021 6/30/2021 9/30/2021 12/31/2021 3/31/2022 6/30/2022 9/30/2022 12/31/2022 Net (loss) income $ (578 ) $ 1,761 $ 1,256 $ (1,784 ) $ 107 $ (205 ) $ 2,258 $ (1,544 ) Interest expense (income), net 5 4 (1 ) (1 ) (1 ) - (125 ) (225 ) Income tax expense (benefit) - - - 198 175 44 25 (148 ) Depreciation and amortization 1,258 1,330 1,345 1,466 1,534 1,613 1,713 1,815 Share-based compensation expense 2,046 2,165 986 1,418 1,387 1,406 1,273 1,439 Gain on extinguishment of debt - (2,175 ) - - - - - - Litigation costs 120 6 - - 15 76 37 4 Write-off of long-lived assets and others 20 41 34 9 3 - 4 171 Adjusted EBITDA $ 2,871 $ 3,132 $ 3,620 $ 1,306 $ 3,220 $ 2,934 $ 5,185 $ 1,512 Revenue $ 10,217 $ 10,879 $ 11,668 $ 11,258 $ 12,729 $ 12,494 $ 15,026 $ 13,069 Net (loss) income margin (6 %) 16 % 11 % (16 %) 1 % (2 %) 15 % (12 %) Adjusted EBITDA margin 28 % 29 % 31 % 12 % 25 % 23 % 35 % 12 % Three Months Ended (In thousands) (Unaudited) 3/31/2021 6/30/2021 9/30/2021 12/31/2021 3/31/2022 6/30/2022 9/30/2022 12/31/2022 Revenue $ 10,217 $ 10,879 $ 11,668 $ 11,258 $ 12,729 $ 12,494 $ 15,026 $ 13,069 Cost of revenue (exclusive of depreciation and amortization) (2,761 ) (2,720 ) (2,787 ) (2,927 ) (3,170 ) (2,920 ) (3,067 ) (3,054 ) Depreciation and amortization of intangible assets (1,203 ) (1,272 ) (1,288 ) (1,407 ) (1,472 ) (1,551 ) (1,659 ) (1,758 ) Gross profit 6,253 6,887 7,593 6,924 8,087 8,023 10,300 8,257 Depreciation and amortization of intangible assets 1,203 1,272 1,288 1,407 1,472 1,551 1,659 1,758 Adjusted gross profit $ 7,456 $ 8,159 $ 8,881 $ 8,331 $ 9,559 $ 9,574 $ 11,959 $ 10,015 Gross margin 61 % 63 % 65 % 62 % 64 % 64 % 69 % 63 % Adjusted gross margin 73 % 75 % 76 % 74 % 75 % 77 % 80 % 77 % Three Months Ended (In thousands) (Unaudited) 3/31/2021 6/30/2021 9/30/2021 12/31/2021 3/31/2022 6/30/2022 9/30/2022 12/31/2022 Net cash provided by operating activities $ 1,232 $ 2,301 $ 3,464 $ 1,951 $ 2,430 $ 2,525 $ 3,145 $ 4,359 Less: Purchase of property and equipment (46 ) (109 ) (68 ) (57 ) (113 ) (108 ) (50 ) (102 ) Capitalized costs included in intangible assets (1,247 ) (1,173 ) (1,129 ) (1,415 ) (1,794 ) (2,099 ) (2,246 ) (2,317 ) Free cash flow $ (61 ) $ 1,019 $ 2,267 $ 479 $ 523 $ 318 $ 849 $ 1,940 31 Results of Operations Year ended December 31, 2022 compared to year ended December 31, 2021 Revenue .

Biggest changeThree Months Ended (In thousands, except share data) (Unaudited) 3/31/2022 6/30/2022 9/30/2022 12/31/2022 3/31/2023 6/30/2023 9/30/2023 12/31/2023 Revenue $ 12,729 $ 12,494 $ 15,026 $ 13,069 $ 14,626 $ 14,680 $ 15,837 $ 15,061 Costs and expenses: Cost of revenue (exclusive of depreciation and amortization) 3,170 2,920 3,067 3,054 3,179 3,240 3,313 3,337 Sales and marketing expenses 2,391 2,822 2,623 2,998 3,889 3,078 3,365 3,501 General and administrative expenses 5,353 5,300 5,465 7,119 5,241 5,075 5,223 6,907 Depreciation and amortization 1,534 1,613 1,713 1,815 1,916 2,054 2,171 2,211 Total costs and expenses 12,448 12,655 12,868 14,986 14,225 13,447 14,072 15,956 Income (loss) from operations 281 (161 ) 2,158 (1,917 ) 401 1,233 1,765 (895 ) Interest income, net 1 - 125 225 286 315 346 387 Income (loss) before income taxes 282 (161 ) 2,283 (1,692 ) 687 1,548 2,111 (508 ) Income tax expense (benefit) 175 44 25 (148 ) (29 ) 160 (10,384 ) 562 Net income (loss) $ 107 $ (205 ) $ 2,258 $ (1,544 ) $ 716 $ 1,388 $ 12,495 $ (1,070 ) Earnings (loss) per share: Basic $ 0.01 $ (0.01 ) $ 0.16 $ (0.11 ) $ 0.05 $ 0.10 $ 0.90 $ (0.08 ) Diluted $ 0.01 $ (0.01 ) $ 0.16 $ (0.11 ) $ 0.05 $ 0.10 $ 0.87 $ (0.08 ) Weighted average shares outstanding: Basic 13,543,607 13,776,479 13,748,587 13,964,010 13,997,154 13,961,862 13,952,426 13,985,426 Diluted 14,047,635 13,776,479 13,764,262 13,964,010 14,236,771 14,172,024 14,329,878 13,985,426 Three Months Ended (In thousands) (Unaudited) 3/31/2022 6/30/2022 9/30/2022 12/31/2022 3/31/2023 6/30/2023 9/30/2023 12/31/2023 Net income (loss) $ 107 $ (205 ) $ 2,258 $ (1,544 ) $ 716 $ 1,388 $ 12,495 $ (1,070 ) Interest income, net (1 ) - (125 ) (225 ) (286 ) (315 ) (346 ) (387 ) Income tax expense (benefit) 175 44 25 (148 ) (29 ) 160 (10,384 ) 562 Depreciation and amortization 1,534 1,613 1,713 1,815 1,916 2,054 2,171 2,211 Share-based compensation expense 1,387 1,406 1,273 1,439 1,384 1,305 1,369 1,328 Litigation costs 15 76 37 4 3 45 1 - Write-off of long-lived assets and others 3 - 4 171 2 - 56 19 Adjusted EBITDA $ 3,220 $ 2,934 $ 5,185 $ 1,512 $ 3,706 $ 4,637 $ 5,362 $ 2,663 Revenue $ 12,729 $ 12,494 $ 15,026 $ 13,069 $ 14,626 $ 14,680 $ 15,837 $ 15,061 Net income (loss) margin 1 % (2 %) 15 % (12 %) 5 % 9 % 79 % (7 %) Adjusted EBITDA margin 25 % 23 % 35 % 12 % 25 % 32 % 34 % 18 % Three Months Ended (In thousands, except share data) (Unaudited) 3/31/2022 6/30/2022 9/30/2022 12/31/2022 3/31/2023 6/30/2023 9/30/2023 12/31/2023 Net income (loss) $ 107 $ (205 ) $ 2,258 $ (1,544 ) $ 716 $ 1,388 $ 12,495 $ (1,070 ) Share-based compensation expense 1,387 1,406 1,273 1,439 1,384 1,305 1,369 1,328 Amortization of share-based compensation capitalized in intangible assets 174 184 198 210 222 235 249 263 Discrete tax items - - - - - - (10,272 ) - Tax effect of adjustments - - - - - - (1,275 ) (251 ) Adjusted net income $ 1,668 $ 1,385 $ 3,729 $ 105 $ 2,322 $ 2,928 $ 2,566 $ 270 Earnings (loss) per share: Basic $ 0.01 $ (0.01 ) $ 0.16 $ (0.11 ) $ 0.05 $ 0.10 $ 0.90 $ (0.08 ) Diluted $ 0.01 $ (0.01 ) $ 0.16 $ (0.11 ) $ 0.05 $ 0.10 $ 0.87 $ (0.08 ) Adjusted earnings per share: Basic $ 0.12 $ 0.10 $ 0.27 $ 0.01 $ 0.17 $ 0.21 $ 0.18 $ 0.02 Diluted $ 0.12 $ 0.10 $ 0.27 $ 0.01 $ 0.16 $ 0.21 $ 0.18 $ 0.02 Weighted average shares outstanding: Basic 13,543,607 13,776,479 13,748,587 13,964,010 13,997,154 13,961,862 13,952,426 13,985,426 Diluted 14,047,635 14,109,243 13,764,262 14,205,633 14,236,771 14,172,024 14,329,878 14,307,797 31 Three Months Ended (In thousands) (Unaudited) 3/31/2022 6/30/2022 9/30/2022 12/31/2022 3/31/2023 6/30/2023 9/30/2023 12/31/2023 Revenue $ 12,729 $ 12,494 $ 15,026 $ 13,069 $ 14,626 $ 14,680 $ 15,837 $ 15,061 Cost of revenue (exclusive of depreciation and amortization) (3,170 ) (2,920 ) (3,067 ) (3,054 ) (3,179 ) (3,240 ) (3,313 ) (3,337 ) Depreciation and amortization of intangible assets (1,472 ) (1,551 ) (1,659 ) (1,758 ) (1,858 ) (1,995 ) (2,112 ) (2,154 ) Gross profit 8,087 8,023 10,300 8,257 9,589 9,445 10,412 9,570 Depreciation and amortization of intangible assets 1,472 1,551 1,659 1,758 1,858 1,995 2,112 2,154 Adjusted gross profit $ 9,559 $ 9,574 $ 11,959 $ 10,015 $ 11,447 $ 11,440 $ 12,524 $ 11,724 Gross margin 64 % 64 % 69 % 63 % 66 % 64 % 66 % 64 % Adjusted gross margin 75 % 77 % 80 % 77 % 78 % 78 % 79 % 78 % Three Months Ended (In thousands) (Unaudited) 3/31/2022 6/30/2022 9/30/2022 12/31/2022 3/31/2023 6/30/2023 9/30/2023 12/31/2023 Net cash provided by operating activities $ 2,430 $ 2,525 $ 3,145 $ 4,359 $ 1,531 $ 3,547 $ 5,789 $ 4,204 Less: Purchase of property and equipment (113 ) (108 ) (50 ) (102 ) (44 ) (7 ) (47 ) (24 ) Capitalized costs included in intangible assets (1,794 ) (2,099 ) (2,246 ) (2,317 ) (2,273 ) (2,236 ) (2,412 ) (2,103 ) Free cash flow $ 523 $ 318 $ 849 $ 1,940 $ (786 ) $ 1,304 $ 3,330 $ 2,077 32 Results of Operations Year ended December 31, 2023 compared to year ended December 31, 2022 Revenue .

You can identify forward-looking statements by the fact that these statements do not relate strictly to historical or current matters. Rather, forward-looking statements relate to anticipated or expected events, activities, trends or results as of the date they are made.

Because forward-looking statements relate to matters that have not yet occurred, these statements are inherently subject to risks and uncertainties that could cause our actual results to differ materially from any future results expressed or implied by the forward-looking statements.

When these industries or the broader financial markets experience a downturn, demand for our services and revenue may be adversely affected. • We could lose our access to data sources which could prevent us from providing our services. • We must adequately protect our intellectual property in order to prevent loss of valuable proprietary information. • We face intense competition from both start-up and established companies that may have significant advantages over us and our products. • There may be further consolidation in our end-customer markets, which may adversely affect our revenue. • To the extent the availability of free or relatively inexpensive consumer and/or business information increases, the demand for some of our services may decrease. • If our newer products do not achieve market acceptance, revenue growth may suffer. • Our products and services can have long sales and implementation cycles, which may result in substantial expenses before realizing any associated revenue. • If our outside service providers and key vendors are not able to or do not fulfill their service obligations, our operations could be disrupted and our operating results could be harmed. • Consolidation in the data and analytics sector may limit market acceptance of our products and services. • We may incur substantial expenses defending against claims of infringement. 35 It em 7A.

The actual timing of recognition may vary due to factors outside of our control. We exclude variable consideration related entirely to wholly unsatisfied performance obligations and contracts and recognizes such variable consideration based upon the right to invoice the customer. Sales commissions are incurred and recorded on an ongoing basis over the term of the customer relationship.

The actual timing of recognition may vary due to factors outside of our control. We exclude variable consideration related entirely to wholly unsatisfied performance obligations and contracts and recognizes such variable consideration based upon the right to invoice the customer. 24 Sales commissions are incurred and recorded on an ongoing basis over the term of the customer relationship.

Many factors could cause our actual activities or results to differ materially from the activities and results anticipated in forward-looking statements. These factors include those contained in Part I, “Item 1A. Risk Factors” of this 2022 Form 10-K. We do not undertake any obligation to update forward-looking statements, except as required by law.

Many factors could cause our actual activities or results to differ materially from the activities and results anticipated in forward-looking statements. These factors include those contained in Part I, “Item 1A. Risk Factors” of this 2023 Form 10-K. We do not undertake any obligation to update forward-looking statements, except as required by law.

Even if we introduce advanced products that meet evolving customer requirements in a timely manner, there can be no assurance that our new products will gain market acceptance. • Certain companies in the data and analytics sector have expanded their product lines or technologies in recent years as a result of acquisitions.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This 2022 Form 10-K contains certain “forward-looking statements” within the meaning of the PSLRA, Section 27A of the Securities Act, and Section 21E of the Exchange Act. Such forward-looking statements contain information about our expectations, beliefs or intentions regarding our product development and commercialization efforts, business, financial condition, results of operations, strategies or prospects.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This 2023 Form 10-K contains certain “forward-looking statements” within the meaning of the PSLRA, Section 27A of the Securities Act, and Section 21E of the Exchange Act. Such forward-looking statements contain information about our expectations, beliefs or intentions regarding our product development and commercialization efforts, business, financial condition, results of operations, strategies or prospects.

Any equity or debt financings, if available at all, may be on terms which are not favorable to us. 33 Off-Balance Sheet Arrangements We do not have any outstanding off-balance sheet guarantees, interest rate swap transactions or foreign currency forward contracts. In addition, we do not engage in trading activities involving non-exchange traded contracts.

Any equity or debt financings, if available at all, may be on terms which are not favorable to us. 34 Off-Balance Sheet Arrangements We do not have any outstanding off-balance sheet guarantees, interest rate swap transactions or foreign currency forward contracts. In addition, we do not engage in trading activities involving non-exchange traded contracts.

The Company has prepared the quarterly unaudited consolidated statements of operations data on a basis consistent with the audited consolidated financial statements included elsewhere in this 2022 Form 10-K. In the opinion of management, the financial information in these tables reflects all adjustments, consisting only of normal recurring adjustments, which management considers necessary for a fair presentation of this data.

The Company has prepared the quarterly unaudited consolidated statements of operations data on a basis consistent with the audited consolidated financial statements included elsewhere in this 2023 Form 10-K. In the opinion of management, the financial information in these tables reflects all adjustments, consisting only of normal recurring adjustments, which management considers necessary for a fair presentation of this data.

This 2022 Form 10-K contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the “PSLRA”), Section 27A of the Securities Act, and Section 21E of the Exchange Act, about our expectations, beliefs, or intentions regarding our business, financial condition, results of operations, strategies, or prospects.

This 2023 Form 10-K contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the “PSLRA”), Section 27A of the Securities Act, and Section 21E of the Exchange Act, about our expectations, beliefs, or intentions regarding our business, financial condition, results of operations, strategies, or prospects.

These factors include the following: • Our products and services are highly technical and if they contain undetected errors, our business could be adversely affected and we may have to defend lawsuits or pay damages in connection with any alleged or actual failure of our products and services. • If we fail to respond to rapid technological changes in the data and analytics sector, we may lose customers and/or our products and/or services may become obsolete. • Because our networks and information technology systems are critical to our success, if unauthorized persons access our systems or our systems otherwise cease to function properly, our operations could be adversely affected and we could lose revenue or proprietary information, all of which could materially adversely affect our business. • Data security and integrity are critically important to our business, and breaches of security, unauthorized access to or disclosure of confidential information, disruption, including distributed denial of service (“DDoS”) attacks or the perception that confidential information is not secure, could result in a material loss of business, substantial legal liability or significant harm to our reputation. • If we fail to maintain and improve our systems, our certifications, our technology, and our interfaces with data sources and customers, demand for our services could be adversely affected. • Our business is subject to various governmental regulations, laws and orders, compliance with which may cause us to incur significant expenses or reduce the availability or effectiveness of our solutions, and the failure to comply with which could subject us to civil or criminal penalties or other liabilities. • The outcome of litigation, inquiries, investigations, examinations or other legal proceedings in which we are involved, in which we may become involved, or in which our customers or competitors are involved could subject us to significant monetary damages or restrictions on our ability to do business. • Our bylaws designate the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain actions, including derivative actions, which could limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with the Company and its directors, officers, other employees, or the Company's stockholders and may discourage lawsuits with respect to such claims. • Our stock price has been and may continue to be volatile, and the value of an investment in our common stock may decline. • Future issuances of shares of our common stock in connection with acquisitions or pursuant to our stock incentive plan could have a dilutive effect on your investment. 34 • The concentration of our stock ownership may limit individual stockholder ability to influence corporate matters. • We are an “emerging growth company,” and we cannot be certain if the reduced reporting requirements available to emerging growth companies will make our shares of common stock less attractive to investors. • We expect that we may need additional capital in the future; however, such capital may not be available to us on reasonable terms, if at all, when or as we require additional funding.

These factors include the following: • Our products and services are highly technical and if they contain undetected errors, our business could be adversely affected and we may have to defend lawsuits or pay damages in connection with any alleged or actual failure of our products and services. • If we fail to respond to rapid technological changes in the data and analytics sector, we may lose customers and/or our products and/or services may become obsolete. • Because our networks and information technology systems are critical to our success, if unauthorized persons access our systems or our systems otherwise cease to function properly, our operations could be adversely affected and we could lose revenue or proprietary information, all of which could materially adversely affect our business. • Data security and integrity are critically important to our business, and breaches of security, unauthorized access to or disclosure of confidential information, disruption, including distributed denial of service (“DDoS”) attacks or the perception that confidential information is not secure, could result in a material loss of business, substantial legal liability or significant harm to our reputation. • If we fail to maintain and improve our systems, our certifications, our technology, and our interfaces with data and customers, demand for our services could be adversely affected. • Our business is subject to various governmental regulations, laws, and orders, compliance with which may cause us to incur significant expenses or reduce the availability or effectiveness of our solutions, and the failure to comply with which could subject us to civil or criminal penalties or other liabilities. • The outcome of litigation, inquiries, investigations, examinations, or other legal proceedings in which we are involved, in which we may become involved, or in which our customers or competitors are involved, could subject us to significant monetary damages or restrictions on our ability to do business. • Our bylaws designate the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain actions, including derivative actions, which could limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with the Company and its directors, officers, other employees, or the Company's stockholders, and may discourage lawsuits with respect to such claims. • Our stock price has been and may continue to be volatile, and the value of an investment in our common stock may decline. • Future issuances of shares of our common stock in connection with acquisitions or pursuant to our stock incentive plan could have a dilutive effect on your investment. 35 • The concentration of our stock ownership may limit individual stockholder ability to influence corporate matters. • We are no longer an “emerging growth company,” however, we are still a “smaller reporting company,” and the reduced disclosure requirements applicable to smaller reporting companies may make our common stock less attractive to investors. • We expect that we may need additional capital in the future; however, such capital may not be available to us on reasonable terms, if at all, when or as we require additional funding.

It em 6. [Reserved]. 21 It em 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. You should read the following discussion in conjunction with our consolidated financial statements and related notes included in this 2022 Form 10-K.

On an ongoing basis, we evaluate our estimates, including those related to the allowance for doubtful accounts, useful lives of intangible assets, recoverability of the carrying amounts of goodwill and intangible assets, share-based compensation and income tax provision.

On an ongoing basis, we evaluate our estimates, including those related to the revenue recognition, allowance for doubtful accounts, useful lives of intangible assets, recoverability of the carrying amounts of goodwill and intangible assets, share-based compensation and income tax provision.

If we are unable to develop and maintain these strategic alliances and joint ventures, our growth may be adversely affected. • If we consummate any future acquisitions, we will be subject to the risks inherent in identifying, acquiring and operating a newly acquired business. • Our relationships with key customers may be materially diminished or terminated. • If we lose the services of key personnel, it could adversely affect our business. • Our revenue is concentrated in the U.S. market across a broad range of industries.

If we are unable to develop and maintain these strategic alliances and joint ventures, our growth may be adversely affected. • If we consummate any future acquisitions, we will be subject to the risks inherent in identifying, acquiring, and operating a newly acquired business. • Our relationships with key customers may be materially diminished or terminated, which could adversely affect our business, financial condition, and results of operations. • If we lose the services of key personnel, it could adversely affect our business. • Our revenue is concentrated in the U.S. market across a broad range of industries.

We did not record a goodwill impairment loss during the years ended December 31, 2022 and 2021, and as of December 31, 2022, there was no accumulated goodwill impairment loss.

We did not record a goodwill impairment loss during the years ended December 31, 2023 and 2022, and as of December 31, 2023, there was no accumulated goodwill impairment loss.

If a customer pays consideration before we transfer services to the customer, those amounts are classiﬁed as deferred revenue. As of December 31, 2022 and 2021, the balance of deferred revenue was $0.7 million and $0.8 million, respectively, all of which is expected to be realized in the next 12 months.

If a customer pays consideration before we transfer services to the customer, those amounts are classiﬁed as deferred revenue. As of December 31, 2023 and 2022, the balance of deferred revenue was $0.7 million, all of which is expected to be realized in the next 12 months.

We did not record an impairment loss of long-lived assets during the years ended December 31, 2022 and 2021.

We did not record an impairment loss of long-lived assets during the years ended December 31, 2023 and 2022.

Effect of Inflation We believe the persistent inflationary pressure throughout 2022 has contributed to deteriorating macroeconomic conditions and increased recession fears, causing businesses to slow their spending over the last several months, which have resulted in, and may continue to result, in fluctuations in volumes, pricing and operating margins for our services.

Effect of Inflation We believe the persistent inflationary pressure throughout 2023 and 2022 has contributed to deteriorating macroeconomic conditions and increased recession fears, causing businesses to slow their spending, which have resulted in, and may continue to result, in fluctuations in volumes, pricing and operating margins for our services.

We believe the following critical accounting policies govern our more significant judgments and estimates used in the preparation of our consolidated financial statements. Revenue recognition We recognize revenue in accordance with ASC 606, “Revenue from Contracts with Customers” (“Topic 606”).

We believe the following critical accounting policies govern our more significant judgments and estimates used in the preparation of our consolidated financial statements. Revenue recognition We recognize revenue in accordance with ASC 606, “ Revenue from Contracts with Customers ” (“Topic 606”).

We believe adjusted EBITDA, adjusted EBITDA margin, adjusted gross profit, adjusted gross margin and FCF are relevant and provide useful information frequently used by securities analysts, investors and other interested parties in their evaluation of the operating performance of companies similar to ours and are indicators of the operational strength of our business.

We believe adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted earnings per share, adjusted gross profit, adjusted gross margin, and FCF are relevant and provide useful information frequently used by securities analysts, investors and other interested parties in their evaluation of the operating performance of companies similar to ours and are indicators of the operational strength of our business.

For the years ended December 31, 2022 and 2021, our general and administrative expenses consisted primarily of employee salaries and benefits of $11.8 million and $8.4 million, share-based compensation expense of $5.2 million and $6.1 million, and professional fees of $3.7 million and $3.2 million, respectively. Depreciation and amortization .

For the years ended December 31, 2023 and 2022, our general and administrative expenses consisted primarily of employee salaries and benefits of $11.8 million and $11.8 million, share-based compensation expense of $4.9 million and $5.2 million, and professional fees of $3.2 million and $3.7 million, respectively. Depreciation and amortization .

The way we measure adjusted EBITDA, adjusted EBITDA margin, adjusted gross profit, adjusted gross margin and FCF may not be comparable to similarly titled measures presented by other companies, and may not be identical to corresponding measures used in our various agreements. 29 Quarterly Financial Data (unaudited) The following tables set forth the Company's unaudited quarterly consolidated statements of operations data and reconciliations of certain directly comparable US GAAP financial measures to non-GAAP financial measures, including adjusted EBITDA, adjusted EBITDA margin, adjusted gross profit, adjusted gross margin, and FCF for each of the eight quarters in the two-year period ended December 31, 2022.

The way we measure adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted earnings per share, adjusted gross profit, adjusted gross margin, and FCF may not be comparable to similarly titled measures presented by other companies, and may not be identical to corresponding measures used in our various agreements. 30 Quarterly Financial Data (unaudited) The following tables set forth the Company's unaudited quarterly consolidated statements of operations data and reconciliations of certain directly comparable US GAAP financial measures to non-GAAP financial measures, including adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted earnings per share, adjusted gross profit, adjusted gross margin, and FCF for each of the eight quarters in the two-year period ended December 31, 2023.

The amount of the allowance for doubtful accounts was $0.06 million and $0.03 million as of December 31, 2022 and 2021, respectively, which was included within accounts receivable, net, in the consolidated balance sheets.

The amount of the allowance for doubtful accounts was $0.2 million and $0.06 million as of December 31, 2023 and 2022, respectively, which was included within accounts receivable, net, in the consolidated balance sheets.

IDI is a leading-edge, analytics and information solutions provider delivering actionable intelligence to the an expansive and diverse set of industries in support of use cases such as the verification and authentication of consumer identities, due diligence, prevention of fraud and abuse, legislative compliance, and debt recovery. idiCORE is IDI's flagship product. idiCORE is a next-generation, investigative solution used to address a variety of organizational challenges, including, but not limited to, due diligence, risk mitigation, identity authentication, and regulatory compliance, by financial services companies, insurance companies, healthcare companies, law enforcement and government, identity verification platforms, collections, law firms, retail, telecommunication companies, corporate security, and investigative firms.

As of December 31, 2022, $8.0 million of revenue is expected to be recognized in the future for performance obligations that are unsatisfied or partially unsatisfied, related to pricing contracts that have a term of more than 12 months, of which $6.0 million of revenue will be recognized in 2023, $1.8 million in 2024, and $0.2 million in 2025.

As of December 31, 2023, $15.8 million of revenue is expected to be recognized in the future for performance obligations that are unsatisfied or partially unsatisfied, related to pricing contracts that have a term of more than 12 months, of which $8.7 million of revenue will be recognized in 2024, $4.6 million in 2025, $1.7 million in 2026, and $0.8 million in 2027.

For the years ended December 31, 2022 and 2021, 75% and 80% of total revenue was attributable to customers with pricing contracts, respectively, versus 25% and 20% attributable to transactional customers, respectively. 22 We endeavor to understand our customers’ needs at the moment of first engagement.

For the years ended December 31, 2023 and 2022, 79% and 75% of total revenue was attributable to customers with pricing contracts, respectively, versus 21% and 25% attributable to transactional customers, respectively. 22 We endeavor to understand our customers’ needs at the moment of first engagement.

Cost of revenue increased $1.0 million or 9% to $12.2 million for the year ended December 31, 2022 from $11.2 million for the year ended December 31, 2021. Our cost of revenue primarily includes data acquisition costs.

Cost of revenue increased $0.9 million or 7% to $13.1 million for the year ended December 31, 2023 from $12.2 million for the year ended December 31, 2022. Our cost of revenue primarily includes data acquisition costs.

In relation to the deferred revenue balance as of December 31, 2021, $0.8 million was recognized into revenue during the year ended December 31, 2022.

In relation to the deferred revenue balance as of December 31, 2022, $0.7 million was recognized into revenue during the year ended December 31, 2023.

For the year ended December 31, 2022, net cash used in financing activities was $6.1 million, mainly the result of $5.2 million in taxes paid related to the net share settlement of vesting of RSUs during the year and $0.9 million paid in aggregate for the repurchase of common stock pursuant to the Stock Repurchase Program that the board of directors authorized on May 4, 2022, authorizing the repurchase of up to $5.0 million of our common stock.

For the year ended December 31, 2023, net cash used in financing activities was $5.7 million, mainly the result of $2.0 million in taxes paid related to the net share settlement of vesting of RSUs, and $3.7 million paid in aggregate for the repurchase of common stock pursuant to a stock repurchase program that the board of directors authorized on May 2, 2022 (the "Stock Repurchase Program"), authorizing the repurchase of up to $5.0 million of our common stock.

FOREWARN is an app-based solution currently tailored for the real estate industry, providing instant knowledge prior to face-to-face engagement with a consumer, helping professionals identify and mitigate risk. As of December 31, 2023 and 2022, IDI had 7,875 and 7,021 billable customers and FOREWARN had 185,380 and 116,960 users, respectively.

As of December 31, 2022, we had material commitments under certain data licensing agreements of $27.2 million. We anticipate funding our operations using available cash and cash flow generated from operations within the next twelve months. We reported net income of $0.6 million and $0.7 million for the years ended December 31, 2022 and 2021, respectively.

As of December 31, 2023, we had material commitments under certain data licensing agreements of $19.8 million. We anticipate funding our operations using available cash and cash flow generated from operations within the next twelve months. We reported net income of $13.5 million and $0.6 million for the years ended December 31, 2023 and 2022, respectively.

Our IDI billable customer base grew from 6,548 customers as of December 31, 2021 to 7,021 customers as of December 31, 2022, and our FOREWARN user base grew from 82,419 users to 116,960 users during that same period. Revenue from new customers represents the total monthly revenue generated from new customers in a given period.

Our IDI billable customer base grew from 7,021 customers as of December 31, 2022 to 7,875 customers as of December 31, 2023, and our FOREWARN user base grew from 116,960 users to 185,380 users during that same period. Revenue from new customers represents the total monthly revenue generated from new customers in a given period.

Sales and marketing expenses increased $1.9 million or 21% to $10.8 million for the year ended December 31, 2022 from $8.9 million for the year ended December 31, 2021. Sales and marketing expenses consist of salaries and benefits, advertising and marketing, travel expenses, and share-based compensation expense, incurred by our sales team, and provision for bad debts.

Sales and marketing expenses increased $3.0 million or 28% to $13.8 million for the year ended December 31, 2023 from $10.8 million for the year ended December 31, 2022. Sales and marketing expenses consist of salaries and benefits, advertising and marketing, travel expenses, and share-based compensation expense, incurred by our sales team, and provision for bad debts.

Cash flows used in investing activities . For the years ended December 31, 2022 and 2021, net cash used in investing activities was $8.8 million and $5.2 million, respectively, primarily as a result of capitalized costs included in intangible assets. Cash flows (used in) provided by financing activities .

Cash flows used in investing activities . For the years ended December 31, 2023 and 2022, net cash used in investing activities was $9.1 million and $8.8 million, respectively, primarily as a result of capitalized costs included in intangible assets. Cash flows used in financing activities .

If we issue additional shares of our common stock or other securities that may be convertible into, or exercisable or exchangeable for, our common stock, our existing stockholders would experience further dilution. • We have a history of losses which makes our future results uncertain. • The ongoing and developing Covid-19 pandemic or future pandemics may adversely impact our business, our future results of operations and our overall financial performance. • Environmental issues, including any future reporting obligations in connection with environmental issues, may adversely impact our business and operations. • We depend, in part, on strategic alliances and joint ventures to grow our business.

If we issue additional shares of our common stock or other securities that may be convertible into, or exercisable or exchangeable for, our common stock, our existing stockholders would experience further dilution. • We do not currently intend to pay dividends on our common stock. • We have a history of losses which makes our future results uncertain. • Environmental issues, including any future reporting obligations in connection with environmental issues, may adversely impact our business and operations. • We depend, in part, on strategic alliances and joint ventures to grow our business.

Adjusted EBITDA is a financial measure equal to net (loss) income, the most directly comparable financial measure based on US GAAP, excluding interest (income) expense, net, income tax (benefit) expense, depreciation and amortization, share-based compensation expense, gain on extinguishment of debt, litigation costs, and write-off of long-lived assets and others, as noted in the tables below.

Adjusted EBITDA is a non-GAAP financial measure equal to net income (loss), the most directly comparable financial measure based on US GAAP, excluding interest income, net, income tax expense (benefit), depreciation and amortization, share-based compensation expense, litigation costs, and write-off of long-lived assets and others. We define adjusted EBITDA margin as adjusted EBITDA as a percentage of revenue.

For the year ended December 31, 2021, net cash provided by operating activities was $8.9 million, primarily the result of the net income of $0.7 million, adjusted for certain non-cash items (consisting of share-based compensation expense, depreciation and amortization, write-off of long-lived assets, provision for bad debts, noncash lease expenses, gain on extinguishment of debt, and deferred income tax expense) totaling $10.7 million, and the cash used as a result of changes in assets and liabilities of $2.4 million, primarily the result of the increase in accounts receivable, and the decrease in accounts payable, accrued expenses and other current liabilities, and operating lease liabilities.

For the year ended December 31, 2023, net cash provided by operating activities was $15.1 million, primarily the result of the net income of $13.5 million, adjusted for certain non-cash items (consisting of share-based compensation expense, depreciation and amortization, write-off of long-lived assets, provision for bad debts, noncash lease expenses, and deferred income tax benefit) totaling $5.6 million, and the cash used as a result of changes in assets and liabilities of $4.1 million, primarily the result of the increase in accounts receivable, and prepaid expenses and other current assets, and the decrease in accounts payable and operating lease liabilities.

Depreciation and amortization expenses increased $1.3 million or 24% to $6.7 million for the year ended December 31, 2022 from $5.4 million for the year ended December 31, 2021.

Depreciation and amortization expenses increased $1.7 million or 25% to $8.4 million for the year ended December 31, 2023 from $6.7 million for the year ended December 31, 2022.

While our platform powers many diverse solutions for our customers, we presently market our solutions primarily through two brands, IDI and FOREWARN ® .

While our platform powers a vast array of solutions for our customers, we presently market our solutions primarily through two brands, IDI and FOREWARN ® .

In some arrangements, a right to consideration for our performance under the customer contract may occur before invoicing to the customer.

In some arrangements, a right to consideration for our performance under the customer contract may occur before invoicing to the customer. Our revenue arrangements do not contain significant financing components.

We have not paid any dividends or made any other distributions in respect of our common stock since March 27, 2018, and we have no plans to pay any dividends or make any other distributions in the future. As of March 3, 2023, there were 13,958,504 shares of our common stock issued and outstanding.

We have not paid any dividends or made any other distributions in respect of our common stock since March 27, 2018, and we do not currently expect to pay any dividends or make any other distributions in the future. As of March 4, 2024, there were 13,964,028 shares of our common stock issued and outstanding.

As of March 3, 2023, there were 28 record holders of our common stock. Recent Sale of Unregistered Securities None.

As of March 4, 2024, there were 25 record holders of our common stock. Recent Sale of Unregistered Securities None.

General and administrative expenses increased $3.4 million or 17% to $23.2 million for the year ended December 31, 2022 from $19.8 million for the year ended December 31, 2021.

General and administrative expenses decreased $0.8 million or 3% to $22.4 million for the year ended December 31, 2023 from $23.2 million for the year ended December 31, 2022.

The Company’s accounting policy is to accrue interest and penalties related to uncertain tax positions, if and when required, as interest expense and a component of other expenses, respectively, in the consolidated statements of operations. 25 Intangible assets other than goodwill Our intangible assets are initially recorded at the capitalized actual costs incurred, their acquisition cost, or fair value if acquired as part of a business combination, and amortized on a straight-line basis over their respective estimated useful lives, which are the periods over which the assets are expected to contribute directly or indirectly to the future cash flows of the Company.

Intangible assets other than goodwill Our intangible assets are initially recorded at the capitalized actual costs incurred, their acquisition cost, or fair value if acquired as part of a business combination, and amortized on a straight-line basis over their respective estimated useful lives, which are the periods over which the assets are expected to contribute directly or indirectly to the future cash flows of the Company.

As of December 31, 2022, we had a total shareholders’ equity balance of $71.1 million. As of December 31, 2022, we had cash and cash equivalents of $31.8 million.

As of December 31, 2023, we had a total shareholders’ equity balance of $86.1 million. As of December 31, 2023, we had cash and cash equivalents of $32.0 million.

We continue to enhance the breadth and depth of our data through the addition and expansion of relationships with key data suppliers, including our largest data supplier, which accounted for 49% of our total data acquisition costs for the years ended December 31, 2022 and 2021. Other cost of revenue items include expenses related to third-party infrastructure fees.

We continue to enhance the breadth and depth of our data through the addition and expansion of relationships with key data suppliers, including our largest data supplier, which accounted for 49% and 48% of our total data acquisition costs for the years ended December 31, 2023 and 2022, respectively.

As the construct of our data costs is primarily a flat-fee, unlimited usage model, the cost of revenue as a percentage of revenue decreased to 23% for the year ended December 31, 2022 from 25% for the year ended December 31, 2021.

Other cost of revenue items include expenses related to third-party infrastructure fees. As the construct of our data costs is primarily a flat-fee, unlimited usage model, the cost of revenue as a percentage of revenue decreased to 22% for the year ended December 31, 2023 from 23% for the year ended December 31, 2022.

Our revenue arrangements do not contain significant financing components. 24 For the years ended December 31, 2022 and 2021, 75% and 80% of total revenue was attributable to customers with pricing contracts, respectively, versus 25% and 20% attributable to transactional customers, respectively. Pricing contracts are generally annual contracts or longer, with auto renewal.

For the years ended December 31, 2023 and 2022, 79% and 75% of total revenue was attributable to customers with pricing contracts, respectively, versus 21% and 25% attributable to transactional customers, respectively. Pricing contracts are generally annual contracts or longer, with auto renewal.

Revenue increased $9.3 million or 21% to $53.3 million for the year ended December 31, 2022 from $44.0 million for the year ended December 31, 2021. Revenue from new customers increased $1.4 million or 37%, base revenue from existing customers increased $7.3 million or 21%, and growth revenue from existing customers increased $0.6 million or 10%.

Revenue increased $6.9 million or 13% to $60.2 million for the year ended December 31, 2023 from $53.3 million for the year ended December 31, 2022. Revenue from new customers increased $0.5 million or 11%, base revenue from existing customers increased $6.1 million or 15%, and growth revenue from existing customers increased $0.3 million or 4%.

Income tax expense of $0.1 million and $0.2 million was recognized for the years ended December 31, 2022 and 2021, respectively. A valuation allowance on the deferred tax assets was recognized as of December 31, 2022 and 2021, to reduce the deferred tax assets to the amount that is more likely than not to be realized.

A full valuation allowance on the deferred tax assets was recognized as of December 31, 2022 to reduce the deferred tax assets to the amount that is more likely than not to be realized.

On October 1, 2022 and 2021, we performed qualitative assessments on the reporting unit and, based on this assessment, no events have occurred to indicate that it is more likely than not that the fair value of the reporting unit is less than its carry amount.

An entity should recognize an impairment charge for the amount by which the carrying amount of a reporting unit exceeds its fair value up to the amount of goodwill allocated to that reporting unit. 25 On October 1, 2023 and 2022, we performed qualitative assessments on the reporting unit and, based on this assessment, no events have occurred to indicate that it is more likely than not that the fair value of the reporting unit is less than its carry amount.

On May 4, 2022, the Company announced that the board of directors authorized the repurchase of up to $5.0 million of the Company's common stock from time to time (the "Stock Repurchase Program").

On May 2, 2022, the board of directors of the Company authorized the repurchase of up to $5.0 million of the Company's common stock from time to time, and subsequently on December 19, 2023, the board of directors authorized the repurchase of an additional $5.0 million of the Company's common stock (the "Stock Repurchase Program").

Increased competition in the data and analytics sector could result in significant price competition, reduced profit margins or loss of market share, any of which could have a material adverse effect on our business, operating results and financial condition. There can be no assurance that we will be able to compete successfully in the future with current or new competitors.

The cost of services revenue, which consists primarily of third-party servicer costs, is variable. Use and Reconciliation of Non-GAAP Financial Measures Management evaluates the financial performance of our business on a variety of key indicators, including non-GAAP metrics of adjusted EBITDA, adjusted EBITDA margin, adjusted gross profit, adjusted gross margin and free cash flow ("FCF").

Use and Reconciliation of Non-GAAP Financial Measures Management evaluates the financial performance of our business on a variety of key indicators, including non-GAAP metrics of adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted earnings per share, adjusted gross profit, adjusted gross margin, and free cash flow ("FCF").

This information should be read in conjunction with the audited consolidated financial statements and related notes included elsewhere in this 2022 Form 10-K.

This information should be read in conjunction with the audited consolidated financial statements and related notes included elsewhere in this 2023 Form 10-K. The results of historical periods are not necessarily indicative of the results for any future period.

Critical Accounting Policies and Estimates Management’s discussion and analysis of financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with US GAAP.

There can be no assurance that we will be able to compete successfully in the future with current or new competitors. 23 Critical Accounting Policies and Estimates Management’s discussion and analysis of financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with US GAAP.

In the period that achievement of the performance-based criteria is deemed probable, US GAAP requires the immediate recognition of all previously unrecognized compensation since the original grant date. As a result, compensation expense recorded in the period that achievement is deemed probable could include a substantial amount of previously unrecorded compensation expense related to the prior periods.

When the performance-based vesting criteria is considered probable, we begin to recognize compensation expense at that time. In the period that achievement of the performance-based criteria is deemed probable, US GAAP requires the immediate recognition of all previously unrecognized compensation since the original grant date.

We define adjusted EBITDA margin as adjusted EBITDA as a percentage of revenue. We define adjusted gross profit as revenue less cost of revenue (exclusive of depreciation and amortization), and adjusted gross margin as adjusted gross profit as a percentage of revenue.

We define adjusted earnings per share as adjusted net income divided by the weighted average shares outstanding. We define adjusted gross profit as revenue less cost of revenue (exclusive of depreciation and amortization), and adjusted gross margin as adjusted gross profit as a percentage of revenue.

Recently Issued Accounting Standards See Item 8 of Part II, “Financial Statements and Supplementary Data – Note 2. Summary of significant accounting policies - (s) Recently issued accounting standards. ” Fourth Quarter Financial Results For the three months ended December 31, 2022 as compared to the three months ended December 31, 2021: • Total revenue increased 16% to $13.1 million.

Summary of significant accounting policies - (r) Recently issued accounting standards. ” 26 Fourth Quarter Financial Results For the three months ended December 31, 2023 as compared to the three months ended December 31, 2022: • Total revenue increased 15% to $15.1 million. • Gross profit increased 16% to $9.6 million.

These types of legislation or industry regulations could also prohibit us from collecting or disseminating certain types of data, which could adversely affect our ability to meet our customers’ requirements and our profitability and cash flow targets. 23 Company Specific Trends and Uncertainties Our operating results are also directly affected by company-specific factors, including the following: • Some of our competitors have substantially greater financial, technical, sales and marketing resources, better name recognition and a larger customer base.

Company Specific Trends and Uncertainties Our operating results are also directly affected by company-specific factors, including the following: • Some of our competitors have substantially greater financial, technical, sales and marketing resources, better name recognition, and a larger customer base.

Adjusted EBITDA, adjusted EBITDA margin, adjusted gross profit, adjusted gross margin and FCF are not intended to be performance measures that should be regarded as an alternative to, or more meaningful than, financial measures presented in accordance with US GAAP.

FCF is calculated by using net cash provided by operating activities, less purchase of property and equipment and capitalized costs included in intangible assets. 29 Adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted earnings per share, adjusted gross profit, adjusted gross margin, and FCF are not intended to be performance measures that should be regarded as an alternative to, or more meaningful than, financial measures presented in accordance with US GAAP.

The increase in depreciation and amortization for the year ended December 31, 2022 resulted primarily from the amortization of software developed for internal use that became ready for its intended use after December 31, 2021. Gain on extinguishment of debt . On May 5, 2020, we received the CARES Act Loan in the principal amount of $2.2 million.

The increase in depreciation and amortization for the year ended December 31, 2023 resulted primarily from the amortization of software developed for internal use that became ready for its intended use after December 31, 2022. Interest income, net .

Net income was $0.6 million for the year ended December 31, 2022 compared to $0.7 million, inclusive of a one-time gain of $2.2 million on the extinguishment of debt from the forgiveness of the CARES Act Loan, for the year ended December 31, 2021, as a result of the foregoing.

Net income was $13.5 million for the year ended December 31, 2023 compared to $0.6 million for the year ended December 31, 2022, as a result of the foregoing.

Repurchases of Equity Securities The following table provides information relating to the Company's repurchase of common stock during the three months ended December 31, 2022 pursuant to the Stock Repurchase Program (as defined below): Period Total number of shares purchased Average price paid per share (1) Total number of shares purchased as part of publicly announced plans or programs Approximate dollar value of shares that may yet be purchased under the plans or programs October 1, 2022 - October 31, 2022 28,527 $ 17.04 28,527 $ 4,132,148 November 1, 2022 - November 30, 2022 473 $ 17.41 473 $ 4,123,914 December 1, 2022 - December 31, 2022 - $ - - $ 4,123,914 Total 29,000 $ 17.04 29,000 (1) Exclusive of commission fees incurred in relation to the repurchase of common stock.

Repurchases of Equity Securities The following table provides information relating to the Company's repurchase of common stock during the three months ended December 31, 2023 pursuant to the Stock Repurchase Program (as defined below): Period (1) Total number of shares purchased Average price paid per share (2) Total number of shares purchased as part of publicly announced plans or programs Approximate dollar value of shares that may yet be purchased under the plans or programs October 1, 2023 - October 31, 2023 22,904 $ 19.56 22,904 $ 2,428,650 November 1, 2023 - November 30, 2023 73,252 $ 19.92 73,252 $ 969,320 December 1, 2023 - December 31, 2023 29,547 $ 20.06 29,547 $ 5,376,613 Total 125,703 $ 19.89 125,703 (1) From January 1, 2024 to February 29, 2024, the Company purchased an additional 43,600 shares at an average price of $18.28 per share pursuant to the Stock Repurchase Program.

The increase during the year ended December 31, 2022 was primarily attributable to an increase of $1.7 million in salaries and benefits, and sales commissions, resulting from increased revenue. General and administrative expenses .

The increase during the year ended December 31, 2023 was primarily attributable to an increase of $1.4 million in salaries and benefits and sales commissions, $0.9 million in provision for bad debts, $0.3 million in advertising and marketing, and $0.2 million in share-based compensation expense. General and administrative expenses .

Adjusted gross margin increased to 77% from 74%. • Net loss narrowed 13% to $1.5 million, which resulted in a loss of $0.11 per basic and diluted share. • Adjusted EBITDA increased 16% to $1.5 million. • Cash from operating activities increased 123% to $4.4 million. • Cash and cash equivalents were $31.8 million as of December 31, 2022.

Adjusted EBITDA margin increased to 18% from 12%. • Adjusted net income increased 157% to $0.3 million, which resulted in adjusted earnings of $0.02 per basic and diluted share. • Cash from operating activities decreased 4% to $4.2 million. • Cash and cash equivalents were $32.0 million as of December 31, 2023.

The significant improvement in income before income taxes to $0.7 million for the year ended December 31, 2022 from a loss of $1.3 million, exclusive of the one-time gain on extinguishment of debt, for the year ended December 31, 2021, was primarily attributable to the increase in revenue, decrease in our cost of revenue as a percentage of revenue, and decrease in share-based compensation expense, which was partially offset by the increase in employee salaries and benefits and sales commissions of $5.1 million, and depreciation and amortization of $1.3 million. 32 Income taxes .

The increase was primarily attributable to the increase in revenue, decrease in our cost of revenue as a percentage of revenue, and decrease in professional fees, which was partially offset by the increase in employee salaries and benefits and sales commissions of $1.4 million, depreciation and amortization of $1.7 million, and $0.9 million in provision for bad debts. 33 Income taxes .

Three Months Ended December 31, Year Ended December 31, (In thousands) 2022 2021 2022 2021 Net (loss) income $ (1,544 ) $ (1,784 ) $ 616 $ 655 Interest (income) expense, net (225 ) (1 ) (351 ) 7 Income tax (benefit) expense (148 ) 198 96 198 Depreciation and amortization 1,815 1,466 6,675 5,399 Share-based compensation expense 1,439 1,418 5,505 6,615 Gain on extinguishment of debt - - - (2,175 ) Litigation costs 4 - 132 126 Write-off of long-lived assets and others 171 9 178 104 Adjusted EBITDA $ 1,512 $ 1,306 $ 12,851 $ 10,929 Revenue $ 13,069 $ 11,258 $ 53,318 $ 44,022 Net income margin (12 %) (16 %) 1 % 1 % Adjusted EBITDA margin 12 % 12 % 24 % 25 % The following is a reconciliation of gross profit, the most directly comparable US GAAP financial measure, to adjusted gross profit: Three Months Ended December 31, Year Ended December 31, (In thousands) 2022 2021 2022 2021 Revenue $ 13,069 $ 11,258 $ 53,318 $ 44,022 Cost of revenue (exclusive of depreciation and amortization) (3,054 ) (2,927 ) (12,211 ) (11,195 ) Depreciation and amortization of intangible assets (1,758 ) (1,407 ) (6,440 ) (5,170 ) Gross profit 8,257 6,924 34,667 27,657 Depreciation and amortization of intangible assets 1,758 1,407 6,440 5,170 Adjusted gross profit $ 10,015 $ 8,331 $ 41,107 $ 32,827 Gross margin 63 % 62 % 65 % 63 % Adjusted gross margin 77 % 74 % 77 % 75 % 28 The following is a reconciliation of net cash provided by operating activities, the most directly comparable US GAAP measure, to FCF: Three Months Ended December 31, Year Ended December 31, (In thousands) 2022 2021 2022 2021 Net cash provided by operating activities $ 4,359 $ 1,951 $ 12,459 $ 8,948 Less: Purchase of property and equipment (102 ) (57 ) (373 ) (280 ) Capitalized costs included in intangible assets (2,317 ) (1,415 ) (8,456 ) (4,964 ) Free cash flow $ 1,940 $ 479 $ 3,630 $ 3,704 In order to assist readers of our consolidated financial statements in understanding the operating results that management uses to evaluate the business and for financial planning purposes, we present non-GAAP measures of adjusted EBITDA, adjusted EBITDA margin, adjusted gross profit, adjusted gross margin and FCF as supplemental measures of our operating performance.

(3) For the three months ended December 31, 2023 and 2022, diluted weighted average shares outstanding for adjusted diluted earnings per share are calculated by the inclusion of unvested RSUs, which were not included in US GAAP diluted weighted average shares outstanding due to the Company's net loss position for such periods. 28 The following is a reconciliation of gross profit, the most directly comparable US GAAP financial measure, to adjusted gross profit: Three Months Ended December 31, Year Ended December 31, (Dollars in thousands) 2023 2022 2023 2022 Revenue $ 15,061 $ 13,069 $ 60,204 $ 53,318 Cost of revenue (exclusive of depreciation and amortization) (3,337 ) (3,054 ) (13,069 ) (12,211 ) Depreciation and amortization of intangible assets (2,154 ) (1,758 ) (8,119 ) (6,440 ) Gross profit 9,570 8,257 39,016 34,667 Depreciation and amortization of intangible assets 2,154 1,758 8,119 6,440 Adjusted gross profit $ 11,724 $ 10,015 $ 47,135 $ 41,107 Gross margin 64 % 63 % 65 % 65 % Adjusted gross margin 78 % 77 % 78 % 77 % The following is a reconciliation of net cash provided by operating activities, the most directly comparable US GAAP measure, to FCF: Three Months Ended December 31, Year Ended December 31, (Dollars in thousands) 2023 2022 2023 2022 Net cash provided by operating activities $ 4,204 $ 4,359 $ 15,071 $ 12,459 Less: Purchase of property and equipment (24 ) (102 ) (122 ) (373 ) Capitalized costs included in intangible assets (2,103 ) (2,317 ) (9,024 ) (8,456 ) Free cash flow $ 2,077 $ 1,940 $ 5,925 $ 3,630 In order to assist readers of our consolidated financial statements in understanding the operating results that management uses to evaluate the business and for financial planning purposes, we present non-GAAP measures of adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted earnings per share, adjusted gross profit, adjusted gross margin, and FCF as supplemental measures of our operating performance.

For any share-based awards where performance-based vesting criteria is no longer considered probable, previously recognized compensation cost would be reversed.

As a result, compensation expense recorded in the period that achievement is deemed probable could include a substantial amount of previously unrecorded compensation expense related to the prior periods. For any share-based awards where performance-based vesting criteria is no longer considered probable, previously recognized compensation cost would be reversed.

For the year ended December 31, 2021, net cash provided by financing activities was $17.6 million, mainly the result of the net proceeds of $20.9 million in a registered direct offering on November 19, 2021, offset by $3.3 million in taxes paid related to the net share settlement of vesting of RSUs during the year.

For awards with performance and service conditions, we begin recording share-based compensation when achieving the performance criteria is probable and we recognize the costs using the accelerated attribution method. 26 The fair value of RSUs is determined based on the number of shares granted and the quoted price of our common stock.

For awards with performance and service conditions, we begin recording share-based compensation when achieving the performance criteria is probable and we recognize the costs using the accelerated attribution method. We account for forfeitures as they occur. We have issued share-based awards with performance-based vesting criteria. Achievement of the milestones must be probable before we begin recording share-based compensation expense.

A quantitative assessment involves determining the fair value of each reporting unit using market participant assumptions. An entity should recognize an impairment charge for the amount by which the carrying amount of a reporting unit exceeds its fair value up to the amount of goodwill allocated to that reporting unit.

A quantitative assessment involves determining the fair value of each reporting unit using market participant assumptions.

Full Year Financial Results For the year ended December 31, 2022 as compared to the year ended December 31, 2021: • Total revenue increased 21% to $53.3 million. Platform revenue increased 22% to $52.0 million. Services revenue decreased 16% to $1.3 million. • Gross profit increased 25% to $34.7 million.

Full Year Financial Results For the year ended December 31, 2023 as compared to the year ended December 31, 2022: • Total revenue increased 13% to $60.2 million. • Gross profit increased 13% to $39.0 million. Gross margin remained consistent at 65%. • Adjusted gross profit increased 15% to $47.1 million.

As of December 31, 2022, we have achieved the performance-based criteria for all share-based awards with performance-based vesting criteria, except for the Criteria Four award, as defined in Note 10, “Share-based compensation,” included in “Notes to Consolidated Financial Statements.” We apply Accounting Standards Update 2018-07, “ Improvements to Nonemployee Share-Based Payment Accounting ,” which generally expands the scope of ASC 718, Compensation—Stock Compensation , to include share-based payment transactions for acquiring goods and services from nonemployees and supersedes the guidance in ASC 505-50, Equity-Based Payments to Non-employees , which previously included the accounting for nonemployee awards.

As of December 31, 2023, we have achieved the performance-based criteria for all share-based awards with performance-based vesting criteria, except for the Criteria Four and Five awards, as defined in Note 10, “Share-based compensation,” included in “Notes to Consolidated Financial Statements.” Recently Issued Accounting Standards See Item 8 of Part II, “Financial Statements and Supplementary Data – Note 2.

Income before income taxes was $0.7 million for the year ended December 31, 2022 compared to $0.9 million, inclusive of a one-time gain of $2.2 million on the extinguishment of debt from the forgiveness of the CARES Act Loan, for the year ended December 31, 2021.

Income tax benefit of $9.7 million was recognized for the year ended December 31, 2023 compared to income tax expense of $0.1 million for the year ended December 31, 2022.

See Note 8, “Income Taxes,” included in “Notes to Consolidated Financial Statements.” Net income .

During the year ended December 31, 2023, the Company released the valuation allowance as the Company concluded that the realization of the deferred tax assets as of December 31, 2023 is more likely than not. See Note 8, “Income Taxes,” included in “Notes to Consolidated Financial Statements.” Net income .

Removed

During 2020, we experienced significantly reduced commercial activity in numerous aspects of our business as a result of the preventative and protective actions taken by federal, state and local governments to combat Covid-19, including the implementation of stay-at-home orders, social distancing policies and certain temporary government-imposed moratoria on collection customers’ activities.

Added

(2) Exclusive of commission fees incurred in relation to the repurchase of common stock.

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Top changes in Red Violet, Inc.'s 2023 10-K

Item 1. Business

Item 1A. Risk Factors

Item 2. Properties

Item 3. Legal Proceedings

Item 5. Market for Registrant's Common Equity

Other RDVT 10-K year-over-year comparisons