On August 10, Red Violet Inc. (NASDAQ:RDVT) reported second-quarter 2026 results for the period ended June 30 that showed the company converting growth into profit at an accelerating clip. Revenue rose 23% to $26.7 million, and net income nearly doubled to $5 million. For a company built on selling identity intelligence to businesses, watching net margin move from 12% to 19% says that growth is not costing more to produce.
Profit Growing Faster Than Sales
Gross profit climbed 29% to $20.2 million, pushing gross margin to 76% from 72%, while adjusted EBITDA jumped 48% to $11.2 million as its margin widened to 42% from 35%. Adjusted net income rose 58% to $7.2 million. Cash generation told the same story: operating cash flow increased 42% to a record $10.6 million for the quarter. None of that came from adding customers who barely move the needle. Red Violet signed on 447 new IDI customers in the quarter, a company record, ending with 10,869 customers on the platform.
FOREWARN, its product built for real estate agents, picked up 25,493 new users to reach 443,173, and 660 REALTOR Associations across the country are now under contract to use it. The company also closed an underwritten public offering in August that sold 1,916,667 shares, including 250,000 shares from the underwriters’ full exercise of their option, generating net proceeds of about $109.0 million. Between the funds already on hand and this new raise, Red Violet says it holds over $160 million in cash and carries no debt, money earmarked for working capital and possible acquisitions.
CEO Derek Dubner called it what he described as “the strongest pipeline of strategic initiatives” in the company’s history. The company also repurchased 74,500 shares by June 30, paying $41.87 per share on average, and had $15.5 million left on its buyback authorization.
Dilution Arrives At The Peak
The August offering that padded Red Violet’s cash balance also added 1,916,667 new shares to the count, arriving in the same year that per-share profit is climbing fastest. Diluted earnings came in a penny below basic at $0.34, and adjusted diluted earnings landed at $0.50 versus $0.51 on a basic basis, a gap new shares will only widen going forward. There is also a timing tension worth sitting with: Red Violet spent part of the quarter buying back its own stock at an average of $41.87 a share, then turned around weeks later and sold new shares to the public.
Whether that sequence nets out well for existing holders depends on where the new shares were priced, which the release does not spell out. And while management points to a record pipeline of initiatives, the $109.0 million in new proceeds is earmarked for possible acquisitions without a specific deal named yet. A large cash balance sitting idle until it is deployed is not automatically a problem, but it does put the burden on management to find uses for the money that justify the dilution it took to raise it.
Shorts And Funds Disagree
19 hedge funds held Red Violet heading into the most recent quarter, unchanged from the 19 that held it the quarter before, a flat reading that shows neither accumulation nor an exit. Short sellers tell a very different story: 38.06% of the float is sold short, a level associated with heavy organized skepticism and the kind of crowding that can fuel a sharp squeeze if sentiment turns. That gap between steady institutional ownership and heavy short positioning is the tension sitting on top of this stock right now.
What The Cash Must Prove
Red Violet closed the quarter with record revenue, record operating cash flow, and margins moving higher across gross profit, EBITDA, and net income all at once, while adding customers and users faster than ever before. It also just diluted shareholders by nearly two million shares to build a cash position north of $160 million, with only a general promise about acquisitions to show for it so far. For the growth story to keep compounding on the new, larger share count, that cash needs to turn into revenue rather than sit on the balance sheet earning little.
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