Red Violet, Inc. (RDVT) DCF Valuation & Fundamental Primer
Red Violet, Inc. (RDVT) currently trades at $56.95 with an enterprise value of $694.6M. Our proprietary institutional model rates Red Violet, Inc. at 93/100 (Grade: A+ · Elite SaaS Compounder). The current market price prices in an implied 5-year revenue CAGR of 23.6% vs. historical growth of 21.4% (Fairly Priced to Fundamentals).
Institutional fundamental teardown of Red Violet, Inc. (RDVT) covering SEC 10-K/10-Q cash flow conversion, SBC dilution friction, and Reverse-DCF valuation hurdles.
Red Violet, Inc. (RDVT) 3-Scenario DCF Valuation Range
Stress-test RDVT's 5-year growth, target FCF margin, WACC, terminal methodology, and SBC/dilution friction in real time.
Split between 5-Year Explicit Cash Flows and Discounted Terminal Value
2D Institutional Valuation Sensitivity Heatmap
Implied share price & upside/downside spread across 25 valuation states (Current Price: $56.95).
| WACC \ Terminal | 1.5% | 2.0% | 2.5% | 3.0% | 3.5% |
|---|---|---|---|---|---|
| 8.5% | $58.34 +2% | $61.90 +9% | $66.05 +16% | $70.95 +25% | $76.83 +35% |
| 9.3% | $52.57 -8% | $55.37 -3% | $58.59 +3% | $62.32 +9% | $66.70 +17% |
| 10.0% | $47.83 -16% | $50.08 -12% | $52.63 -8% | $55.55 -2% | $58.92 +3% |
| 10.8% | $43.87 -23% | $45.71 -20% | $47.77 -16% | $50.10 -12% | $52.76 -7% |
| 11.5% | $40.51 -29% | $42.03 -26% | $43.73 -23% | $45.63 -20% | $47.76 -16% |
Institutional Software Quality Scorecard (93/100 · Grade A+)
Exceptional unit economics, disciplined equity dilution, and fortress balance sheet.
Elite deferred revenue float; FCF exceeds operating income by >20%
Disciplined equity compensation well below software industry average
Elite Tier-1 SaaS compounder with high gross margin and superior Rule of 40
Positive net cash cushion; self-funding operations with zero insolvency risk
Core Investment Strengths & Moats
- High-grade cash conversion: FCF is 300% of EBIT driven by upfront annual collections
- Top-quartile software unit economics: 81.4% gross margin and 53.1% Rule of 40 score
- Net cash positive: $42.5M balance sheet buffer
Key Operational & Dilution Risks
Reverse-DCF Solver: What Growth is Priced Into RDVT?
Market implies 23.6% annual revenue growth over next 5 years (28.6% dilution-adjusted), in line with company run-rate.
Headline Reverse-DCF ignores Stock-Based Compensation (7.9% of revenue) and annual share dilution (0.9%/yr). Accounting for both requires 28.6% 5-year revenue CAGR to justify $56.95/sh on a true per-share economic cash flow basis.
Red Violet, Inc. (RDVT) 5-Year Fundamental Forecast
| Statement Line Item | TTM Audited Base | TTM | Y1 | Y2 | Y3 | Y4 | Y5 |
|---|---|---|---|---|---|---|---|
| Revenue | $75.2M | $75.2M | $91.3M | $110.9M | $134.6M | $163.5M | $198.5M |
| Gross Profit | $61.2M | $61.2M | $74.3M | $90.2M | $109.6M | $133.0M | $161.5M |
| Operating Income (EBIT) | $7.9M | $7.9M | $9.6M | $11.7M | $14.2M | $17.2M | $20.9M |
| Stock-Based Compensation (SBC) | $5.9M | $5.9M | $7.2M | $8.8M | $10.6M | $12.9M | $15.7M |
| Unlevered Free Cash Flow (FCF) | $23.8M | $23.8M | $28.9M | $35.1M | $42.6M | $51.7M | $62.8M |
| SBC-Adjusted True Cash Flow | $17.8M | $17.8M | $21.7M | $26.3M | $31.9M | $38.8M | $47.1M |
Software & Cloud Services Peer Comparables & Rule of 40 Regression
Rule of 40 vs. EV / Revenue Multiple Regression
OLS Fit: EV/Rev = -29.7 + 0.80 × (Rule of 40) · R² = 75%Stocks below the gold regression line trade at a discount relative to their Rule of 40 compounding efficiency.
| Company | Ticker | Market Cap | TTM Revenue | Gross Margin | FCF Margin | Rule of 40 | SBC % Rev | EV / Rev |
|---|---|---|---|---|---|---|---|---|
| Red Violet, Inc. | RDVT | $795.7M | $75.2M | 81.4% | 31.6% | 53.1% | 7.9% | 10.0× |
| ServiceNow | NOW | $152.61B | $10.98B | 79.2% | 31.1% | 54.2% | 15.9% | 13.9× |
| Workday, Inc. | WDAY | $50.35B | $8.00B | 75.0% | 27.4% | 43.9% | 19.0% | 6.4× |
| Salesforce | CRM | $217.10B | $37.90B | 77.2% | 32.8% | 42.8% | 8.4% | 5.8× |
| Datadog | DDOG | $46.05B | $2.68B | 80.8% | 31.1% | 57.7% | 21.3% | 17.4× |
| Snowflake Inc. | SNOW | $71.79B | $3.63B | 66.5% | 25.2% | 57.7% | 40.8% | 20.0× |
| Hubspot | HUBS | $19.89B | $2.63B | 85.0% | 21.3% | 52.7% | 19.2% | 7.7× |
| Peer Cohort Median Benchmark (N=6) | 78.2% | 29.2% | 53.5% | 19.1% | 10.8× | |||
EV / Revenue Multiple Compression Stress Test
| Multiple Scenario | EV / Revenue | Implied Enterprise Value | Implied Equity Value | Implied Share Price | Delta vs Current |
|---|---|---|---|---|---|
| Current Multiple | 10.0× | $753.2M | $795.7M | $56.95 | 0.0% |
| -20% Multiple Compression | 8.0× | $602.6M | $645.1M | $46.17 | -20.0% |
| -35% Multiple Compression | 6.5× | $489.6M | $532.1M | $38.08 | -35.0% |
| Software Baseline Floor (5.0× EV/Rev) | 5.0× | $375.9M | $418.4M | $29.95 | -50.1% |
Frequently Asked Questions: Red Violet, Inc. (RDVT) Valuation
What is Red Violet, Inc. (RDVT)'s intrinsic DCF valuation and implied share price?
Based on audited SEC 10-K/10-Q filings and a 5-year 3-statement discounted cash flow (DCF) model, Red Violet, Inc. (RDVT) has a Base Case implied value of $52.75 per share (with a Bear Case of $23.97 and a Bull Case of $93.42), compared to its current price of $56.95. The model discounts projected free cash flows at a 10.0% WACC and a 2.5% terminal growth rate.
What is Red Violet, Inc. (RDVT)'s Rule of 40 score and Free Cash Flow margin?
Red Violet, Inc. achieves a Rule of 40 score of 53.1%, combining a 21.4% revenue growth run-rate with a 31.6% TTM free cash flow margin on $75.2M in trailing twelve-month revenue. In the Software & Cloud Services peer cohort, the median Rule of 40 benchmark is 53.5%.
What revenue growth rate is priced into RDVT stock according to Reverse-DCF analysis?
At $56.95 per share (Enterprise Value of $753.2M), our Reverse-DCF solver indicates the market is pricing in a 5-year implied revenue CAGR of 23.6%, compared to Red Violet, Inc.'s historical CAGR of 21.4%. Overall market expectations are rated as "Fairly Priced to Fundamentals".
How does Red Violet, Inc. compare to Software & Cloud Services software peers?
Red Violet, Inc. (RDVT) earns an institutional Software Quality Score of 93/100 (Grade A+ — Elite SaaS Compounder). Across its Software & Cloud Services peer group (NOW, WDAY, CRM, DDOG, SNOW), the cohort trades at a median EV/TTM Revenue multiple of 10.8× and a median gross margin of 78.2%.
How does Stock-Based Compensation (SBC) impact Red Violet, Inc. (RDVT)'s valuation?
Red Violet, Inc. recorded $5.9M in TTM stock-based compensation (7.9% of revenue). When treating SBC as a cash-equivalent compensation expense, Red Violet, Inc.'s SBC-adjusted free cash flow yield is 2.2%, scoring 21/25 on our Shareholder Dilution Friction pillar.