He also leads the investing group IPO Edge , which offers actionable information on growth stocks through first-look IPO filings, previews on upcoming IPOs, an IPO calendar for tracking what’s on the horizon, a database of U.S. IPOs, and a guide to IPO investing to walk you through the entire IPO lifecycle - from filing to listing to quiet period and lockup expiration dates.Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to init ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2025 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 001-38532 i3 Verticals, Inc. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organizat ...

i3 Verticals (IIIV) Q2 2025 Earnings Call May 09, 2025 08:30 AM ET Speaker0 Good day, everyone, and welcome to the i3 Vertical Second Quarter twenty twenty five Earnings Conference Call. Today's call is being recorded and a replay will be available starting today through May 16. The number for today's for the replay is (877) 344-7529 and the code is 500000899364. The replay may also be accessed for thirty days at the company's website. At this time, for opening remarks, I would like to turn the call over to ...

1 Revenue Composition(1) Q2 FISCAL YEAR 2025 Supplemental Information | ($ in thousands) | | | | | | | | | | Quarter Ended | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | March 31, 2025 | | December 31, 2024 | | September 30, 2024 | | June 30, 2024 | | March 31, 2024 | | December 31, 2023 | | September 30, 2023 | | June 30, 2023 | | March 31, 2023 | | Software and related service revenue | | | | | | | | | | | | | | | ...

i3 VERTICALS REPORTS SECOND QUARTER 2025 FINANCIAL RESULTS Completes Acquisition of Utility Billing Software Company Completes Divestiture of Healthcare RCM Business NASHVILLE, Tenn. (May 8, 2025) – i3 Verticals, Inc. (Nasdaq: IIIV) ("i3 Verticals" or the "Company") today reported its financial results for the fiscal second quarter ended March 31, 2025. Highlights from continuing operations for the three and six months ended March 31, 2025 vs. 2024 1 See footnotes on the following page. -MORE- • Second quar ...

For the quarterly period ended December 31, 2024 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 001-38532 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 i3 Verticals, Inc. Nashville, TN 37215 (Address of principal executive offices) (Zip Code) (615) 465-4487 (Registrant's telephone ...

Financial Data and Key Metrics Changes - Revenue increased by 12% year-over-year to $61.7 million from $55.1 million in Q1 2024, reflecting organic growth of 10% and approximately $1 million from a recent acquisition [14] - Adjusted EBITDA rose by 17% to $16.4 million for Q1 2025 from $14 million for Q1 2024, with adjusted EBITDA as a percentage of revenues increasing to 26.5% from 25.4% [17] - Annual recurring revenues (ARR) increased by 7.6% to $193.3 million for Q1 2025 compared to $179.6 million for Q1 2024 [14] Business Line Data and Key Metrics Changes - SaaS revenue grew by 16%, contributing significantly to the overall revenue growth [7] - Payments revenue increased by 7%, with expectations that SaaS and payments revenues will outpace other forms of revenue for the remainder of the year [15] - Non-recurring sales of software licenses increased to $2.7 million for Q1 2025 from $0.4 million for Q1 2024 [15] Market Data and Key Metrics Changes - Revenues in the public sector vertical increased by 12% to $48.8 million for Q1 2025 from $43.5 million for Q1 2024, representing 79% of total revenues [19] - Healthcare segment revenues increased by 14% to $13.2 million for Q1 2025 from $16.6 million for Q1 2024, driven by recurring software services and non-recurring sales of software licenses [20] Company Strategy and Development Direction - The company continues to focus on integrating payments within its vertical market software base, particularly in key markets such as utilities and permitting [9] - M&A remains a critical part of the company's strategy, with a strong pipeline focused on the public sector vertical [27] - The company is transitioning legacy contracts to a SaaS model and introducing new technology modules to meet current market demands [36] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the fiscal year 2025, highlighting strong revenue growth and the potential for continued ARR growth driven by SaaS [7] - The company anticipates high single-digit organic revenue growth with adjusted EBITDA margin improvement of 50 to 100 basis points per year [23] - Management noted that the competitive landscape for larger utilities is positive, with increasing demand for upgraded software solutions [59] Other Important Information - The company has a strong balance sheet post-sale of the Merchant Services business, with a cash balance of $85.6 million and $450 million of borrowing capacity on its revolving credit [21][22] - The company reaffirmed its guidance for FY 2025, projecting revenues between $243 million and $263 million and adjusted EBITDA between $63 million and $71.5 million [23] Q&A Session Summary Question: Any lumpiness in healthcare growth? - Management expects low single-digit growth for healthcare this year despite recent improvements [48] Question: Update on large utility customer project? - The project is progressing well, with expected revenue growth from approximately $3 million to $5 million this year [54] Question: Competitive landscape for larger utilities? - The landscape is positive, driven by the need to upgrade legacy software, with increasing demand for new technologies [59] Question: Differences between larger and smaller M&A opportunities? - The company continues to focus on deals between $2 million and $5 million in EBITDA, with no significant changes in the competitive environment [72] Question: Outlook on spending trends at the state or city level? - No pullback has been observed, and the company is focused on providing flexible deployment options for government agencies [75] Question: Drivers of high single-digit organic growth? - The growth is driven by a combination of new logos and existing projects, with expectations for inflation to contribute slightly in the future [93]

Financial Performance - Revenue from continuing operations for Q1 2025 was $61.7 million, a 12.1% increase compared to $55.1 million in Q1 2024[4] - Net income from continuing operations was $3.3 million, a significant improvement from a net loss of $4.2 million in the prior year's first quarter[4] - Adjusted EBITDA from continuing operations was $16.4 million, reflecting a 17.0% increase year-over-year[4] - Annualized Recurring Revenue (ARR) for Q1 2025 was $193.3 million, up 7.6% from $179.6 million in Q1 2024[4] - Total revenue for the three months ended December 31, 2024, was $61,691,000, an increase of 12% compared to $55,054,000 for the same period in 2023[22] - Adjusted EBITDA for the same period was $16,372,000, representing a 17% increase from $13,988,000 year-over-year[22] - The adjusted EBITDA margin for the total segment was 27%, compared to 25% in the prior year[22] - Net income from continuing operations attributable to i3 Verticals, Inc. was $2,194,000, a significant improvement from a loss of $2,885,000 in the same quarter of 2023[38] - Pro forma adjusted net income from continuing operations was $10,460,000, up from $4,138,000 in the prior year, reflecting a 153% increase[42] Earnings Projections - The company expects fiscal year 2025 revenue to be between $243 million and $263 million[7] - Pro forma adjusted diluted earnings per share for fiscal year 2025 is projected to be between $1.05 and $1.25[7] - The company reported a diluted net income per share of $0.09 from continuing operations, compared to a diluted net loss per share of $0.12 in the prior year[4] - Pro forma adjusted diluted earnings per share from continuing operations increased to $0.31 from $0.12 year-over-year[42] Revenue Growth - Payments revenue grew by 7% in Q1 2025, with expectations for continued growth alongside SaaS[6] - SaaS revenue growth was reported at 16% year-over-year, indicating strong momentum moving forward[5] Financial Ratios and Cash Flow - The consolidated interest coverage ratio as of December 31, 2024, was 3.7x, and the total leverage ratio was 0.1x[4] - Cash and cash equivalents as of December 31, 2024, were $85,552,000, slightly down from $86,541,000 at the end of September 2024[24] - Total assets decreased to $726,229,000 from $730,675,000 in the previous quarter[24] - Total liabilities remained relatively stable at $215,095,000 compared to $215,316,000 in the prior quarter[24] - The company reported net cash provided by operating activities of $11,495,000, down from $14,405,000 in the same quarter last year[27]

Business Segments - The company has two reportable segments: Public Sector and Healthcare, with an Other category after the sale of the Merchant Services Business[28] - The Public Sector segment serves state and local customers across the U.S. and parts of Canada, focusing on efficient information flow and responsive services[29] - The Public Sector segment includes five sub-verticals: JusticeTech and Public Safety, Transportation, Utilities, Enterprise Resource Planning (ERP), and Education[30] - The Healthcare segment focuses on integrated solutions for providers and payers, emphasizing process efficiency and compliance[33] - The Healthcare segment includes two sub-verticals: Provider Software Solutions and Payer Software Solutions[34][35] Payment Technology and Platforms - The company’s proprietary payment facilitator platform integrates payments across various products, enabling efficient processing of court, tax, registration, utility, and school payments[31] - The company’s payment technology platform supports ACH, EMV, PayPal, and Venmo payments, with unified APIs and PCI-compliant security[46] - The company has invested significant resources to ensure compliance with the EMV mandate, which requires chip-enabled card processing and sets new data security standards[105] - The company must be registered with payment networks through a sponsor bank and is subject to network operating rules and guidelines, including those from NACHA[106] Cloud and Technology Strategy - The company’s cloud-first strategy leverages AWS and Azure, with AWS cloud consolidation nearing completion, enhancing scalability and flexibility[40][41] Workforce Demographics - As of September 30, 2024, the company’s workforce is 54% female and 46% male, with 62% White, 22% Asian, 8% Black or African American, 4% Hispanic or Latino, and 4% Other[59] Regulatory Compliance - The company operates in a complex regulatory environment, including compliance with the Dodd-Frank Act and privacy laws such as the Gramm-Leach-Bliley Act[60][63] - All 50 states, Puerto Rico, and the U.S. Virgin Islands have enacted data breach notification laws requiring businesses to notify affected individuals, consumer reporting agencies, and governmental agencies in case of a security breach[66] - Many states have implemented comprehensive data privacy and security laws, including restrictions on collecting personal information like Social Security and driver's license numbers[66] - The California Consumer Privacy Act of 2018 (CCPA), amended by the California Privacy Rights Act of 2020 (CPRA), creates a private right of action for data breaches[66] - HIPAA regulations require covered entities and business associates to implement safeguards to protect protected health information (PHI), with a Notice of Proposed Rulemaking to strengthen HIPAA security rules expected by the end of 2024[73] - Business associates handling PHI on behalf of covered entities are subject to direct liability for HIPAA violations, with potential civil monetary penalties and criminal penalties[74] - The 21st Century Cures Act and Information Blocking Rule prohibit information blocking by healthcare providers, health information exchanges (HIEs), and developers of Certified Health Information Technology, with civil penalties up to $1 million per violation[79][80] - The Centers for Medicare & Medicaid Services (CMS) Interoperability and Patient Access Final Rule requires hospitals with certain EHR capabilities to send admission, discharge, and transfer notifications to other providers[82] - The Trusted Exchange Framework, Common Agreement - Version 1 (TEFCA) aims to establish a universal floor for interoperability across the country, with seven Qualified Health Information Networks (QHINs) currently live[83] - The Health Data, Technology, and Interoperability: Certification Program Updates, Algorithm Transparency, and Information Sharing (HTI-1) Final Rule became effective on February 8, 2024, advancing health IT interoperability and establishing transparency requirements for AI algorithms[86] - The federal Anti-Kickback Statute (AKS) prohibits offering, paying, soliciting, or receiving anything of value to generate referrals for Medicare, Medicaid, or other federal healthcare programs, with severe penalties including imprisonment and exclusion from federal healthcare programs[87] - The company may face significant consequences if it employs or contracts with an excluded individual or entity, including civil penalties, exclusion from federal healthcare programs, and treble damages[94] - The company is subject to U.S. federal anti-money laundering laws, including the Bank Secrecy Act, and must comply with risk-based anti-money laundering programs, suspicious activity reporting, and transaction record maintenance[95] - The company could be subject to enforcement actions, fines, and disgorgement of funds if deemed to have facilitated illegal or improper activities of customers through its services[96] - The company may need to register with FinCEN as a "money services business-provider of prepaid access" if it expands its prepaid card products and services[101] - The company is subject to payment network rules and standards, including PCI DSS, which govern transaction processing, data security, and liability allocation[103] - The company is subject to money transmitter licensing requirements in all U.S. states except Montana, which regulate funds transmission and payment instrument issuance[108] - The company is subject to U.S. federal and state unclaimed property laws, requiring remittance of unclaimed customer balances to government authorities[110] Intellectual Property - The company relies on intellectual property protections, including copyrights, trademarks, and trade secrets, to maintain its proprietary software and payment systems[112] Financial and Credit Facilities - The company entered into a $450 million senior secured revolving credit facility (Revolver) with JPMorgan Chase Bank, N.A., replacing the prior credit facility[286] - The Exchangeable Notes issued by the company have an outstanding principal amount of $26.2 million as of September 30, 2024, down from the original $138.0 million[287] - The company's ability to generate cash is dependent on successful execution of its business strategy, including acquisition activity, and external economic factors[289] - The 2023 Senior Secured Credit Facility contains restrictive covenants that limit the company's ability to engage in certain activities, such as incurring additional debt or making distributions[290] - The company must maintain specified financial ratios under the 2023 Senior Secured Credit Facility, and failure to comply could result in an event of default[291] - The company may face challenges in securing additional financing on favorable terms due to restrictive covenants in the 2023 Senior Secured Credit Facility[292] - The company's ability to repurchase Exchangeable Notes or pay cash upon exchanges is limited by existing indebtedness agreements, including the 2023 Senior Secured Credit Facility[296] - The company is a holding company with no operations of its own and relies on distributions from i3 Verticals, LLC to pay taxes and other expenses[298] - The Continuing Equity Owners hold approximately 31% of the combined voting power of the company's common stock as of November 22, 2024[303] - The company may not realize all expected tax benefits from future redemptions or exchanges of common units, which could negatively impact cash flows and stockholders' equity[305] - i3 Verticals, LLC is expected to make a substantial tax distribution in the first half of 2025 due to the taxable income from the sale of the Merchant Services Business in September 2024, with the company holding a 70.4% ownership interest as of September 30, 2024[311] - The company may receive distributions significantly in excess of its tax liabilities, with potential uses for excess cash including reinvestment in the business, recapitalization, or payment of a cash dividend on Class A common stock[312] - The company has 126,117,965 shares of Class A common stock authorized but unissued as of September 30, 2024, with 10,032,676 shares issuable upon redemption of common units held by Continuing Equity Owners[329] - Future issuances of Class A common stock or preferred stock could dilute existing stockholders and adversely affect the market price of Class A common stock[332][334] - Sales of Class A common stock under the Registration Rights Agreement could materially impact the market price and impair the company's ability to raise capital through future equity sales[337]

Financial Data and Key Metrics Changes - Revenues for Q4 2024 increased 4% to $60.9 million from $58.6 million for Q4 2023, reflecting organic growth of 2% and two months of revenue from a recent acquisition [13][12] - Annualized recurring revenues increased 7.5% to $188.2 million as of Q4 2024 compared to $175.1 million as of Q4 2023, with 77% of revenues coming from recurring sources [13] - Adjusted EBITDA increased 4% to $16.2 million for Q4 2024, with adjusted EBITDA as a percentage of revenues slightly declining to 26.7% from 26.8% in Q4 2023 [16][12] - Pro forma adjusted diluted earnings per share from continuing operations was $0.15 for Q4 2024 [17] Business Line Data and Key Metrics Changes - SaaS and payments revenue grew 8%, transaction-based revenues grew 11%, while maintenance and recurring software services grew 6% [13] - Non-recurring sales of software licenses declined 8%, and professional services revenue declined 7% due to implementation delays [14] - Revenues in the public sector vertical increased 6% to $49.6 million for Q4 2024, representing 81% of total revenues [18] - Revenue from the healthcare segment declined 3% to $11.4 million for Q4 2024, with expectations of low single-digit growth for fiscal 2025 [19] Market Data and Key Metrics Changes - The company anticipates high single-digit organic growth for fiscal 2025, with a guidance range for revenues set at $243 million to $263 million [21] - The company expects to resume acquisitions regularly, with a strong acquisition pipeline focused on public sector deals [29] Company Strategy and Development Direction - The company is transitioning to a pure-play vertical market software business, focusing on operational efficiency and technology transformation [8][25] - New product development is underway, including a rewrite of the CAMA platform and the JusticeTech 3.0 platform [28] - The company aims to enhance its cybersecurity measures and streamline back-office technologies to improve efficiency [26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term guidance of high single-digit organic growth, supported by a strong sales funnel and product pipeline [10][21] - The company noted that the healthcare segment faces challenges due to consolidation, impacting revenue growth expectations [19][70] - Management highlighted consistent demand in the public sector for configurable web-native applications, indicating a positive outlook for that market [49] Other Important Information - Following the sale of the Merchant Services business, the company has a strong balance sheet with $26.2 million in debt and $86.5 million in cash [20] - The company will incur approximately $65 million in tax-related payments due to the sale of the Merchant Services business [20] Q&A Session Summary Question: Was there any delayed implementation affecting Q4 revenue? - Management indicated no significant delays impacted Q4 revenue, noting a $2 million license fee received as expected [36][37] Question: How should growth be modeled for 2025? - Management expects a combination of new logo growth and improved net revenue retention to achieve high single-digit organic growth [38][39] Question: Update on the utility initiative and rollout timeline? - The company is currently rolling out the initial project and anticipates sales activities to begin in Q1 2025 [44][45] Question: Insights on the M&A environment? - Management noted a strong acquisition pipeline with more realistic valuations from sellers, expecting to complete 3 to 5 acquisitions in 2025 [46][47] Question: General health of customers and macro outlook? - Management reported consistent demand in the public sector and positive trends in sales activity across various verticals [49][50] Question: Clarification on margin expansion expectations? - Management confirmed expectations of 50 to 100 basis points margin expansion for 2025, driven by revenue growth outpacing corporate overhead [55][56] Question: Seasonality and timing of software payments? - Management indicated that software license sales are the most variable line item, with a disproportionate amount expected in Q2 [61] Question: Revenue expectations from the Tier 1 utility project? - The project will generate a mix of revenue types, including professional services and recurring payments, with significant revenue expected in 2025 [63]