What changed in this filing

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Item 1. Financial Statements

2025-05-07 compared with 2024-11-06 · 125 added, 115 removed, 215 unchanged (53% of the section changed)

3 unchanged sentences

(Amounts in thousands, except share data)

September 30, 2024

March 31, 2025

December 31, 2024

2 unchanged sentences

Accounts receivable, net of allowance for doubtful accounts of $ 166 and $ 188 as of

September 30, 2024 and December 31, 2023, respectively

March 31, 2025 and December 31, 2024, respectively

Prepaid expenses and other current assets

11 unchanged sentences

Deferred revenue

Dividend payable

Total current liabilities

Noncurrent operating lease liabilities

Other noncurrent liabilities

Total liabilities

1 unchanged sentence

Preferred stock—$ 0.001 par value, 10,000,000 shares authorized, and 0 shares

issued and outstanding, as of September 30, 2024 and December 31, 2023

issued and outstanding, as of March 31, 2025 and December 31, 2024

Common stock—$ 0.001 par value, 200,000,000 shares authorized, 13,950,797 and

13,980,274 shares issued, and 13,735,387 and 13,970,846 shares outstanding, as of

September 30, 2024 and December 31, 2023

Treasury stock, at cost, 0 and 9,428 shares as of September 30, 2024 and

13,936,329 shares issued and outstanding, as of March 31, 2025 and

December 31, 2024

Additional paid-in capital

Accumulated deficit

Retained earnings (accumulated deficit)

Total shareholders' equity

4 unchanged sentences

(Amounts in thousands, except share data)

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Costs and expenses:

5 unchanged sentences

Income from operations

Interest income, net

Interest income

Income before income taxes

Income tax expense (benefit)

Income tax expense

Earnings per share:

5 unchanged sentences

Treasury stock

Additional paid-in

Balance at June 30, 2023

Vesting of restricted stock units

Increase in treasury stock resulting

from shares withheld to cover

statutory taxes

Common stock repurchased

Retirement of treasury stock

Share-based compensation

Balance at September 30, 2023

Balance at June 30, 2024

Vesting of restricted stock units

Increase in treasury stock resulting

from shares withheld to cover

statutory taxes

Retirement of treasury stock

Share-based compensation

Balance at September 30, 2024

Treasury stock

Additional paid-in

Retained earnings

paid-in capital

(accumulated deficit)

Balance at December 31, 2023

6 unchanged sentences

Share-based compensation

Balance at September 30, 2023

Balance at March 31, 2024

Balance at December 31, 2024

3 unchanged sentences

statutory taxes

Common stock repurchased

Retirement of treasury stock

Share-based compensation

Balance at September 30, 2024

Balance at March 31, 2025

See notes to condensed consolidated financial statements.

2 unchanged sentences

(Amounts in thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

CASH FLOWS FROM OPERATING ACTIVITIES:

5 unchanged sentences

Noncash lease expenses

Deferred income tax expense (benefit)

Deferred income tax expense

Changes in assets and liabilities:

14 unchanged sentences

Repurchases of common stock

Dividend payable

Net cash used in financing activities

Net increase in cash and cash equivalents

Net (decrease) increase in cash and cash equivalents

Cash and cash equivalents at beginning of period

5 unchanged sentences

Retirement of treasury stock

Right-of -use assets obtained in exchange of operating lease liabilities

Operating lease liabilities arising from obtaining right-of-use assets

See notes to condensed consolidated financial statements.

7 unchanged sentences

The accompanying unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the financial position, results of operations, and cash flows for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for any future interim periods or for the full year ending December 31, 2025.

The information included in this quarterly report on Form 10-Q should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on March 7, 2024 (“Form 10-K”).

The information included in this quarterly report on Form 10-Q should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC on February 27, 2025 (“Form 10-K”).

The condensed consolidated balance sheet as of December 31, 2024 included herein was derived from the audited financial statements as of that date included in the Form 10-K, but does not include all disclosures required by US GAAP.

The Company has only one operating segment, as defined by Accounting Standards Codification (“ASC”) 280, “ Segment Reporting .”

Principles of consolidation

2 unchanged sentences

(b) Recently issued accounting standards

In November 2023, the Financial Accounting Standard Board (the “FASB”) issued Accounting Standard Updates (“ASU”) No.

2023-07, " Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures ("ASU 2023-07") ," which requires a public entity to disclose significant segment expenses that are regularly provided to the chief operating decision maker ("CODM"), a description of other segment items by reportable segment, and an explanation of any additional measures the CODM uses in deciding how to allocate resources, and extend nearly all annual segment reporting requirements to quarterly reporting requirements.

In addition, entities with a single reportable segment must now provide all segment disclosures required in Accounting Standard Codification ("ASC") 280, including the new disclosures for reportable segments under the amendments in ASU 2023-07.

The new guidance is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024, and early adoption is permitted.

The guidance will be applied on a retrospective basis, with such disclosures to be made in regard to all prior periods presented in the financial statements.

The Company is currently evaluating the impact of adopting this ASU on its condensed consolidated financial statements and related disclosures.

In December 2023, the FASB issued ASU No.

In December 2023, the Financial Accounting Standard Board (the “FASB”) issued Accounting Standard Updates (“ASU”) No.

2023-09, " Income Taxes (Topic 740):

4 unchanged sentences

Upon adoption, the guidance can be applied prospectively or retrospectively.

The Company is currently evaluating the guidance to determine its impact on our condensed consolidated financial statements and related disclosures.

The Company is currently evaluating the guidance to determine the impact on its condensed consolidated financial statements and related disclosures.

In November, 2024, the FASB issued ASU No.

2024-03, " Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-04), Disaggregation of Income Statement Expenses (ASU 2024-03), " which requires disclosure within the notes to financial statements of specific information about certain costs and expenses including more detailed disclosures of certain categories of expenses such as employee compensation, depreciation, and intangible asset amortization that are components of existing expense captions presented on the face of the income statement.

The update is effective for annual periods for fiscal years beginning after December 15, 2026 and interim periods beginning after December 15, 2027 on a prospective or retrospective basis.

Early adoption is permitted.

The Company is currently assessing the impact adopting this ASU will have on its condensed consolidated financial statements.

Earnings per share

1 unchanged sentence

Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock and is calculated using the treasury stock method for unvested shares.

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

(In thousands, except share data)

1 unchanged sentence

Earnings per share:

(1) For the three and nine months ended September 30, 2024 and 2023, diluted weighted average shares outstanding are calculated by the inclusion of unvested restricted stock units ("RSUs").

(1) For the three months ended March 31, 2025 and 2024, diluted weighted average shares outstanding are calculated by the inclusion of unvested restricted stock units ("RSUs").

Intangible assets, net

Intangible assets other than goodwill consist of the following:

September 30, 2024

March 31, 2025

December 31, 2024

3 unchanged sentences

Software developed for internal use

The gross amount associated with software developed for internal use represents capitalized costs of internally-developed software, including eligible salaries and staff benefits, share-based compensation, travel expenses incurred by relevant employees, and other relevant costs.

Amortization expenses of $ 2,382 and $ 2,112 for the three months ended September 30, 2024 and 2023, respectively, and $ 6,918 and $ 5,965 for the nine months ended September 30, 2024 and 2023, respectively, were included in depreciation and amortization expense.

As of September 30, 2024, intangible assets of $ 5,939 , included in the gross amounts of software developed for internal use, have not started amortization, as they are not ready for their intended use.

The Company capitalized costs of software developed for internal use of $ 2,708 and $ 2,929 during the three months ended September 30, 2024 and 2023, respectively, and $ 8,328 and $ 8,310 during the nine months ended September 30, 2024 and 2023, respectively .

As of September 30, 2024, estimated amortization expense related to the Company’s intangible assets for the remainder of 2024 through 2029 and thereafter are as follows:

Acquired intangible assets

The gross carrying amount of software developed for internal use includes capitalized costs related to the design, development, and testing of internal-use software.

These costs primarily consist of eligible personnel-related expenses, share-based compensation, travel expenses, and other directly attributable costs incurred during the application development stage.

The gross carrying amount of acquired intangible assets reflects the acquisition cost of certain data assets for which the Company has obtained perpetual usage rights .

Amortization expenses of $ 2,500 and $ 2,214 for the three months ended March 31, 2025 and 2024, respectively, were included in depreciation and amortization expense.

As of March 31, 2025, intangible assets of $ 6,692 , included in the gross carrying amounts of software developed for internal use, have not started amortization, as they are not ready for their intended use.

The Company capitalized costs of intangible assets of $ 3,991 and $ 2,773 during the three months ended March 31, 2025 and 2024, respectively.

As of March 31, 2025, estimated amortization expense related to the Company’s intangible assets for the remainder of 2025 through 2030 and thereafter are as follows:

(In thousands)

September 30, 2024

March 31, 2025

Remainder of 2025

1 unchanged sentence

Goodwill represents the cost in excess of the fair value of the net assets acquired in a business combination.

As of September 30, 2024 and December 31, 2023, the balance of goodwill of $ 5,227 was as a result of the acquisition of Interactive Data, LLC, a wholly-owned subsidiary of red violet, effective on October 2, 2014.

As of March 31, 2025 and December 31, 2024, the balance of goodwill of $ 5,227 was as a result of the acquisition of Interactive Data, LLC, a wholly-owned subsidiary of red violet, effective on October 2, 2014.

In accordance with ASC 350, “Intangibles - Goodwill and Other,” goodwill is tested at least annually for impairment, or when events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable, by assessing qualitative factors or performing a quantitative analysis in determining whether it is more likely than not that its fair value exceeds the carrying value.

The measurement date of the Company’s annual goodwill impairment test is October 1 .

The Company did no t record a goodwill impairment loss during the three and nine months ended September 30, 2024 and 2023, and there was no accumulated goodwill impairment loss as of September 30, 2024.

The Company did no t record a goodwill impairment loss during the three months ended March 31, 2025 and 2024, and there was no accumulated goodwill impairment loss as of March 31, 2025.

Revenue recognition

9 unchanged sentences

In some arrangements, a right to consideration for the Company's performance under the customer contract may occur before invoicing to the customer, resulting in an unbilled accounts receivable.

As of September 30, 2024, the current and noncurrent portion unbilled accounts receivable of $ 918 and $ 892 , respectively, were included within accounts receivable and other noncurrent assets, respectively, on the condensed consolidated balance sheets .

As of March 31, 2025, the current and noncurrent portion unbilled accounts receivable of $ 1,334 and $ 1,484 , respectively, were included within accounts receivable and other noncurrent assets, respectively, on the condensed consolidated balance sheets .

As of December 31, 2024, the current and noncurrent portion unbilled accounts receivable of $ 937 and $ 1,080 , respectively, were included within accounts receivable and other noncurrent assets, respectively , on the consolidated balance sheets.

The Company's revenue arrangements do not contain significant financing components.

For the three months ended September 30, 2024 and 2023, 77 % and 79 % of total revenue was attributable to customers with pricing contracts, respectively, versus 23 % and 21 % attributable to transactional customers, respectively.

For the nine months ended September 30, 2024 and 2023, 76 % and 78 % of total revenue was attributable to customers with pricing contracts, respectively, versus 24 % and 22 % attributable to transactional customers, respectively.

For the three months ended March 31, 2025 and 2024, 74 % and 78 % of total revenue was attributable to customers with pricing contracts, respectively, versus 26 % and 22 % attributable to transactional customers, respectively.

Pricing contracts are generally annual contracts or longer, with auto renewal.

If a customer pays consideration before the Company transfers services to the customer, those amounts are classified as deferred revenue.

As of September 30, 2024 and December 31, 2023, the balance of deferred revenue was $ 565 and $ 690 , respectively, all of which is expected to be realized in the next 12 months.

In relation to the deferred revenue balance as of December 31, 2023, $ 147 and $ 577 was recognized into revenue during the three and nine months ended September 30, 2024, respectively.

As of September 30, 2024, $ 22,098 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, $ 3,284 of revenue will be recognized in the remainder of 2024, $ 9,946 in 2025, $ 5,207 in 2026, $ 3,252 in 2027, $ 364 in 2028, and $ 45 in 2029.

As of March 31, 2025 and December 31, 2024, the balance of deferred revenue was $ 754 and $ 712 , respectively, all of which is expected to be realized in the next 12 months.

In relation to the deferred revenue balance as of December 31, 2024, $ 311 was recognized into revenue during the three months ended March 31, 2025.

As of March 31, 2025, $ 22,035 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, $ 8,888 of revenue will be recognized in the remainder of 2025, $ 7,800 in 2026, $ 4,322 in 2027, $ 875 in 2028, $ 145 in 2029, and $ 5 in 2030.

The actual timing of recognition may vary due to factors outside of the Company’s control.

6 unchanged sentences

In each quarter, the Company updates its estimate of the annual effective tax rate, and if its estimated annual tax rate changes, the Company makes a cumulative adjustment in that quarter.

Prior to the third quarter of 2023, primarily due to cumulative pre-tax losses, management determined a full valuation allowance was necessary to reduce the deferred tax assets to the amount that is more likely than not to be realized.

During the third quarter of 2023, the Company released the valuation allowance previously recorded on its deferred tax assets.

The Company concluded that, due to its established historical cumulative positive income before income taxes plus permanent differences for the recent years, projections of future taxable income, and the reversal of taxable temporary differences, the realization of deferred tax assets as of September 30, 2024 was more likely than not.

The Company’s effective income tax rate was 40 % and ( 492 %) for the three months ended September 30, 2024 and 2023, respectively, and 28 % and ( 236 %) for the nine months ended September 30, 2024 and 2023, respectively, differing from the U.S.

The Company’s effective income tax rate was 24 % for the three months ended March 31, 2025 and 2024, differing from the U.S.

corporate statutory federal income tax rate of 21 %.

T he difference for the three and nine months ended September 30, 2024 was primarily the effect of state income taxes and certain nondeductible permanent differences, partially offset by the utilization of research and development tax credits.

The difference for the three and nine months ended September 30, 2023 was primarily the result of release of the valuation allowance, recognition of research and development tax credit, state income taxes and permanent differences.

T he differences for the three months ended March 31, 2025 and 2024 were primarily the effect of state income taxes and certain nondeductible permanent differences, partially offset by the utilization of research and development tax credits.

The Company assesses its income tax positions and records tax benefits for all years subject to examination based upon its evaluation of the facts, circumstances and information available at the reporting date.

3 unchanged sentences

Due to the existence of net operating loss carryforwards since inception, all of the Company’s income tax filings remain open for tax examinations.

The Company does no t have any material unrecognized tax benefits as of September 30, 2024 and December 31, 2023.

The Company does no t have any material unrecognized tax benefits as of March 31, 2025 and December 31, 2024.

Shareholders' equity

Common stock and treasury stock

As of September 30, 2024 and December 31, 2023, the number of issued shares of common stock was 13,735,387 and 13,980,274 , respectively, which included shares of treasury stock of 0 and 9,428 , respectively.

The changes in the number of issued shares of common stock and treasury stock were due to the following factors:

As of March 31, 2025 and December 31, 2024, the number of issued shares of common stock was 13,950,797 and 13,936,329 , respectively.

The Company held no shares of treasury stock as of either date.

The changes in the number of issued shares of common stock and treasury stock were due to the following factor:

an aggregate of 19,500 shares of common stock were issued as a result of the vesting of RSUs, of which, 5,032 shares of common stock were withheld to pay withholding taxes upon such vesting, which were reflected in treasury stock, with a cost of $202.

Related treasury stock of 22,902 shares was then retired during the nine months ended September 30, 2024.

• 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 each of December 19, 2023 and March 28, 2024, the board of directors authorized the repurchase of an additional $ 5.0 million of the Company's common stock (the "Stock Repurchase Program").

The Stock Repurchase Program does not obligate the Company to repurchase any shares and may be modified, suspended, or terminated at any time and for any reason at the discretion of the board of directors.

During the nine months ended September 30, 2024, the Company repurchased 292,744 shares of common stock under the Stock Repurchase Program, which was reflected in treasury stock, with a cost of $ 5,809 .

Related treasury stock of 302,172 shares as a result of the repurchases, with a cost of $ 5,997 , was retired during the nine months ended September 30, 2024, resulting in no treasury stock balance as of September 30, 2024.

The Company has $ 4,577 remaining under the Stock Repurchase Program as of September 30, 2024.

All 5,032 shares of treasury stock were retired during the period.

On December 3, 2024, the Company declared a special cash dividend on its common stock of $ 0.30 per share (the “Dividend”) to shareholders of record as of January 31, 2025, and the aggregate amount of approximately $ 4.2 million was paid on February 14, 2025.

Share-based compensation

4 unchanged sentences

Subsequently on June 3, 2020 and May 25, 2022, the Company’s stockholders approved amendments to the 2018 Plan to increase the number of shares of common stock authorized for issuance under the 2018 Plan to 4,500,000 shares and 6,500,000 shares, respectively.

On April 17, 2025, the Board of Directors of the Company approved, subject to stockholder approval at the Company's 2025 Annual Meeting, an amendment and restatement to the 2018 Plan to, among other things, further increase the number of shares of common stock authorized for issuance under the 2018 Plan from 6,500,000 shares to 7,500,000 shares.

The primary purpose of the 2018 Plan, as amended, is to attract, retain, reward and motivate certain individuals by providing them with an opportunity to acquire or increase a proprietary interest in the Company and to incentivize them to expend maximum effort for the growth and success of the Company, so as to strengthen the mutuality of the interests between such individuals and the stockholders of the Company.

As of September 30, 2024, there were 1,908,864 shares of common stock available for future issuance under the 2018 Plan, as amended.

As of March 31, 2025, there were 1,655,452 shares of common stock available for future issuance under the 2018 Plan, as amended.

To date, all stock incentives issued under the 2018 Plan, as amended, have been in the form of RSUs.

1 unchanged sentence

The time-based condition for these awards is generally satisfied over three or four years with annual vesting.

Details of unvested RSU activity during the nine months ended September 30, 2024 were as follows:

Details of unvested RSU activity during the three months ended March 31, 2025 were as follows:

Number of units

4 unchanged sentences

Withheld as treasury stock (2)

Unvested as of September 30, 2024

(1) In March 2024, the Company granted 130,000 RSUs, subject to performance-based requirements, to one non-executive employee at a grant date fair value of $ 18.30 per share.

Such RSU grant shall not vest unless and until the Company has achieved certain revenue for a portion of its business prior to December 31, 2030, the last achievement date deadline.

No amortization of share-based compensation expense has been recognized for 95,000 RSUs among the above-mentioned grant, because, as of September 30, 2024, the Company determined that it is not probable that related performance criteria will be met.

In addition to the 130,000 RSUs discussed above, the Company granted, during the nine months ended September 30, 2024, an aggregate of 133,985 RSUs to certain employees and directors at grant date fair values ranging from $ 17.00 to $ 28.50 per share, with a vesting period ranging from one to four years .

Unvested as of March 31, 2025

(1) During the three months ended March 31, 2025, the Company granted an aggregate of 95,650 RSUs to certain employees and directors at grant date fair values ranging from $ 34.18 to $ 38.72 per share, with a vesting period ranging from three to four years .

(2) Withheld as treasury stock represents shares withheld to pay statutory taxes upon the vesting of RSUs.

Refer to Note 7, "Common stock and treasury stock," for details.

As of September 30, 2024, unrecognized share-based compensation expense associated with the granted RSUs amounted to $ 12,770 , which is expected to be recognized over a remaining weighted average period of 2.7 years.

Share-based compensation was allocated to the following accounts in the condensed consolidated financial statements for the three and nine months ended September 30, 2024 and 2023:

Three Months Ended September 30,

Nine Months Ended September 30,

Refer to Note 7 for details.

As of March 31, 2025, unrecognized share-based compensation expense associated with the granted RSUs amounted to $ 17,364 , which is expected to be recognized over a remaining weighted average period of 2.7 years.

Share-based compensation was allocated to the following accounts in the condensed consolidated financial statements for the three months ended March 31, 2025 and 2024:

Three Months Ended March 31,

(In thousands)

3 unchanged sentences

Capitalized in intangible assets

The Company leases its corporate headquarters of 21,020 rentable square feet in accordance with a non-cancellable 89 -month operating lease agreement as amended and effective in January 2017, with an option to extend for an additional 60 months .

On September 20, 2023, the Company entered into an amendment to its corporate headquarters lease agreement to exercise the extension option for an additional 60 months through June 30, 2029 (the "Amended Lease"), with an option to further extend for an additional 60 months .

The Company also leases an additional office space of 6,003 rentable square feet in accordance with a non-cancellable 90 -month operating lease agreement entered into in April 2017, with an option to extend for an additional 60 months .

The extension option is not included in the determination of the lease term as it is not reasonably certain to be exercised.

For the three and nine months ended September 30, 2024 and 2023, a summary of the Company’s lease information is shown below:

Three Months Ended September 30,

Nine Months Ended September 30,

The Company leases its corporate headquarters of 21,020 rentable square feet in accordance with a non-cancellable operating lease agreement as amended and effective in January 2017, and the Company entered into a further amendment on September 20, 2023 to exercise the extension option for an additional 60 months through June 30, 2029, with an option to further extend for an additional 60 months .

The Company also leases an additional office space of 6,003 rentable square feet in accordance with a non-cancellable operating lease agreement entered into in April 2017, which expired in March 2025.

The extension options of such agreements were not included in the determination of the lease terms.

On December 20, 2024, the Company entered into a non-cancellable 80-month operating lease agreement for its new Seattle office space of 6,709 rentable square feet (the "New Seattle Lease Agreement"), with the lease term preliminarily set to commence on May 1, 2025.

For the three months ended March 31, 2025 and 2024, a summary of the Company’s lease information is shown below:

Three Months Ended March 31,

(In thousands)

2 unchanged sentences

Cash paid for operating leases

Right-of-use assets obtained in exchange for operating

lease liabilities (1)

Weighted average discount rate for operating leases (2)

(1) The Amended Lease resulted in an addition of $ 1,919 to right-of-use assets and operating lease liabilities, as of September 20, 2023 (the "Remeasurement Date").

(2) The Company used 10 %, its estimated incremental borrowing rate for similar secured assets, as the discount rate for the Amended Lease to determine the present value of the lease payments because the implicit rate in each lease is not readily determinable.

The discount rate was calculated on the basis of information available as of the Remeasurement Date.

As of September 30, 2024, the weighted average remaining operating lease term was 4.5 years.

As of September 30, 2024, scheduled future maturities and present value of the operating lease liabilities are as follows:

As of March 31, 2025, the weighted average remaining operating lease term was 4.2 years.

As of March 31, 2025, scheduled future maturities and present value of the operating lease liabilities are as follows:

(In thousands)

September 30, 2024

March 31, 2025

Remainder of 2025

1 unchanged sentence

Total maturities

Present value included in condensed consolidated balance sheet:

Lease not yet commenced (1)

Total maturities, excluding lease not yet commenced

Present value included in consolidated balance sheet:

Current portion of operating lease liabilities

1 unchanged sentence

Total operating lease liabilities

Difference between the maturities and the present value of operating lease liabilities

Difference between the maturities, excluding lease not yet commenced, and

related present value of operating lease liabilities

(1) On December 20, 2024, the Company entered into the New Seattle Lease Agreement, with the lease term preliminarily set to commence on May 1, 2025, at which point the Company will recognize a right-of-use asset and a corresponding lease liability on its consolidated balance sheet under ASC 842.

The right-of-use asset and lease liability will be determined based on the pertinent information available as of the commencement date.

As of March 31, 2025, the total undiscounted future lease payments for this lease are included into total maturities as presented in the table above, but its lease liability has not been recognized.

Segment information

The Company currently has one single operating and reporting segment, identity and information solutions, as defined by ASC 280, “Segment Reporting.” The Company adopted ASU 2023-07 as of December 31, 2024.

There have been no significant changes in the basis of segmentation or in the basis of measurement of segment profit since the last annual report.

The Company’s chief operating decision maker (the “CODM”) assesses performance for the identity and information solutions segment and decides how to allocate resources based on net income that also is reported on the condensed consolidated statements of operations as net income.

The measure of segment assets is reported on the condensed consolidated balance sheet as total assets.

Information about reported segment revenue, segment net income, and significant segment expenses is shown as follows:

Three Months Ended March 31,

(Dollars in thousands)

Cost of revenue (exclusive of depreciation and amortization)

Personnel-related expenses

Advertising, marketing and agency expenses

Provision for bad debts

Share-based compensation expense

Occupancy expenses

Professional fees

Other segment items (1)

Depreciation and amortization

Interest income

Income tax expense

Segment net income

Consolidated net income

(1) Other segment items included in segment net income includes primarily travel and entertainments, acquisition costs, write-off of long-lived assets, and other selling, general and administrative expenses.

Commitments and contingencies

(a) Capital commitment

The Company incurred data costs of $ 2,328 and $ 2,367 for the three months ended September 30, 2024 and 2023, respectively , and $ 7,168 and $ 7,086 for the nine months ended September 30, 2024 and 2023, under certain data licensing agreements.

As of September 30, 2024, material capital commitments under certain data licensing agreements were $ 15,215 , shown as follows:

The Company incurred data costs of $ 2,542 and $ 2,434 for the three months ended March 31, 2025 and 2024, respectively , under certain data licensing agreements.

As of March 31, 2025, material capital commitments under certain data licensing agreements were $ 11,533 , shown as follows:

(In thousands)

September 30, 2024

March 31, 2025

Remainder of 2025

In April 2025, the Company entered into a five-year , non-cancellable cloud services agreement with a third-party provider.

The agreement includes a minimum annual purchase commitment of $ 3.0 million, beginning May 1, 2025.

Costs incurred under this agreement are either (i) expensed as infrastructure fees and included in cost of revenue (exclusive of depreciation and amortization) when used in the delivery of our services to customers, or (ii) capitalized as internal-use software costs within intangible assets when consumed in the development or enhancement of the Company’s internal-use software.

(b) Contingencies

Other than as described below, the Company is not currently a party to any legal proceeding, investigation or claim which, in the opinion of management, is likely to have a material adverse effect on the business, financial condition, results of operations, or cash flows.

Legal fees associated with such legal proceedings are expensed as incurred.

The Company reviews legal proceedings and claims on an ongoing basis and follow appropriate accounting guidance, including ASC 450, when making accrual and disclosure decisions.

The Company establishes accruals for those contingencies where the incurrence of a loss is probable and can be reasonably estimated, and it discloses the amount accrued and the amount of a reasonably possible loss in excess of the amount accrued, if such disclosure is necessary for its financial statements to not be misleading.

1 unchanged sentence

The Company does not record liabilities when the likelihood that the liability has been incurred is probable, but the amount cannot be reasonably estimated.

On February 7, 2024 , the Company was named as a defendant by Atlas Data Privacy Corporation (“Atlas”), Jane Doe-1, Jane Doe-2, Edwin Maldonado, Scott Maloney, Justyna Maloney, Patrick Colligan, and William Sullivan in an action filed in the Superior Court of New Jersey, Law Division, Monmouth County (the “Action”).

Each plaintiff, other than Atlas, alleges that they are a covered person under a New Jersey state statute known as “Daniel’s Law”;

Atlas alleges it is the assignee of claims from covered persons who allege Daniel’s Law was violated as to them.

Each plaintiff, on their own behalf, and Atlas, on behalf of the alleged assignors, alleges the Company failed to comply with Daniel’s Law by not suppressing their home address and unpublished telephone number within 10 business days of receiving a suppression request.

The Company is one of over 150 companies sued by Atlas and a combination of individual plaintiffs in actions containing nearly identical allegations and seeking similar damages.

The Company removed the matter to the United States District Court for the District of New Jersey, but the matter was remanded back to the Superior Court of New Jersey, Law Division, Monmouth County by order dated November 21, 2024, where the Action is pending.

No trial date has been scheduled.

Each plaintiff and Atlas seek to recover actual damages that are not less than liquidated damages under Daniel’s Law, punitive damages, pre- and post-judgment interest, attorneys’ fees and costs and injunctive relief.

The Company is vigorously defending itself in the Action.

Should the case be tried, an adverse ruling could have an immediate near-term impact on the Company's business, financial position, and/or operations.

The Company has notified its insurer of the Action and has confirmed that the claim falls within the scope of its insurance coverage.

As such, the Company anticipates that the insurer will cover defense costs and any potential liability, subject to policy limits and customary exclusions.

In addition to the foregoing, the Company may be involved in litigation from time to time in the ordinary course of business.

2 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements