Red Violet, Inc. (RDVT) stock intrinsic value fair value estimate & owner earnings analysis

Red Violet sells access to identity and public-record data. Its platform, CORE, is marketed mainly under two brands. IDI (flagship product idiCORE) serves banks, insurers, collections firms, law enforcement, investigators and others for identity verification, fraud prevention and due diligence; it had 10,022 billable customers at the end of 2025, up from 8,926. FOREWARN is an app for real estate professionals that checks who they are about to meet; it had 390,018 users, up from 303,418. Revenue was $90.3 million in 2025, up 20% from $75.2 million. About 76% of revenue comes from pricing contracts (generally annual or longer, with auto-renewal) and no single customer was more than 10% of revenue. The company has a large cash balance ($43.6 million) and paid a one-time $0.30 per share dividend in February 2025. How we measured earnings. We start from cash generated by operations, remove the swings from working capital (receivables, payables and similar items), subtract all share-based pay as a real cost, and subtract the capital spending needed to keep the business running. Red Violet's main investment is capitalized software and data development (about $10.6 million in 2025, versus only $0.6 million on equipment), and we treat that as capital spending; we counted the portion above what scaled with revenue growth as growth spending and excluded it. On this basis owner earnings per share were about $1.19 in 2025, $0.87 in 2024, $0.40 in 2023, $0.06 in 2022 and $0.07 in 2021; earlier years were negative (-$0.54 in 2020, -$1.03 in 2019) when the company was still small and paying heavy stock compensation. We start the series in 2019 because 2018 was the spin-off year. Because the company only recently became consistently profitable on this measure, we anchor on the median of 2023 through 2025, $0.87 per share, rather than the latest and highest year. Independent check: net income plus non-cash charges less maintenance capital spending matches the cash-flow build for 2025 ($23.6 million) and 2024 ($18.2 million). About $1.6 million of 2025 share compensation was capitalized into software rather than expensed and is not deducted, a small unreconciled item. Growth we credit. Owner earnings per share grew about 37% in 2025 (from $0.87 to $1.19); our base case assumes only 12% in the first year. Revenue has grown every year since 2019, including 21% in 2022, 13% in 2023, and 25% in 2024 and 20% in 2025. The growth comes from adding customers and from existing customers using more (revenue from customers past their first six months rose 21% to $83.0 million in 2025). Because the data license costs are largely fixed, cost of revenue fell from 19% to 16% of revenue in 2025. We credit growth at well below that record and tapering, and we do not credit further margin expansion, new products or acquisitions, because none of these is contracted or already proven. Base case: about $18.00 per share. Owner earnings grow 12% in each of the first two years, 10% for two years, 8% for two years, 6% for two years and 4% for the last two years of the ten-year period, reaching about $1.87 per share. We then hold that level flat for ten more years, reflecting the auto-renewing contracts that make up about three-quarters of revenue, and assign nothing after that because nothing we can point to extends beyond it. Bear case: about $7.70 per share. The largest data supplier provides about 45% of data acquisition costs and its agreement runs through April 30, 2031, with $23.2 million of remaining payments. If the terms worsen on renewal, or the data cannot be replaced on similar terms, the filing says the business could be harmed. We model 4% growth for three years, flat earnings to 2030, a 30% drop in earnings from 2031, and only five more years of that lower level. That 30% is our judgement of a plausible cost reset, not a figure from the filing. The balance sheet shows no borrowings, so leverage does not add to this downside. Bull case: about $27.40 per share. Growth continues near the recent record: 20% for three years, 15% for two, 12% for two and 8% for three, taking owner earnings to about $3.13 per share, held for ten further years. Nothing outside the company's own execution is assumed. What could make this wrong. Loss of or repricing by the main data supplier, tighter privacy or credit-reporting regulation of data sellers, slower demand from banking and financial customers, and the short profit history (owner earnings were near zero in 2021 and 2022). A single strong year is not treated as the new normal, which is why the base is anchored on the three-year median. The company incurred $0.4 million of due-diligence costs on potential acquisitions in 2025; any acquisition is not included. Margin-of-safety price: about $10.50 per share, roughly 42% below our base value and about 36% above the bear case, reflecting a small company with supplier concentration and a short profit record.