i3 Verticals(IIIV)

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i3 Verticals (IIIV) to Reduce Debt Through New Divestiture
ZACKS· 2024-06-27 16:01
i3 Verticals (IIIV) recently entered into a definitive agreement to sell its merchant of record payments business to Payroc WorldAccess, LLC, in an all-cash deal worth $440 million. The proceedings from the transaction will provide i3 Verticals with a substantial infusion of liquidity that will help it meet immediate financial needs. IIIV's merchant of record payments business uses application programming interfaces ("API") to simplify transaction processes. These APIs eliminated the need for Payment card i ...
i3 Verticals(IIIV) - 2024 Q2 - Quarterly Report
2024-05-10 20:34
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, 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 i3 Verticals, Inc. (Exact name of registrant as specified in its charter) Delaware 82-4052852 (State or other jurisdiction of incorp ...
i3 Verticals(IIIV) - 2024 Q2 - Quarterly Results
2024-05-10 11:05
i3 VERTICALS REPORTS SECOND QUARTER 2024 FINANCIAL RESULTS NASHVILLE, Tenn. (May 10, 2024) – i3 Verticals, Inc. (Nasdaq: IIIV) ("i3 Verticals" or the "Company") today reported its financial results for the fiscal second quarter ended March 31, 2024. Highlights for the second quarter and six months ended March 31, 2024 vs. 2023 -MORE- • Second quarter revenue was $94.5 million, an increase of 0.7% over the prior year's second quarter. Revenue for the six months ended March 31, 2024, was $186.5 million, an in ...
i3 Verticals(IIIV) - 2024 Q1 - Quarterly Report
2024-02-09 21:03
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 December 31, 2023 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) Indicate by check mark whether the registrant (1) has f ...
i3 Verticals(IIIV) - 2023 Q4 - Annual Report
2023-11-22 22:07
Part I [Business](index=8&type=section&id=Item%201.%20Business) i3 Verticals provides integrated software and payment solutions to strategic vertical markets, primarily the Public Sector and Healthcare - The company builds, acquires, and grows software solutions in strategic vertical markets, with a focus on integrating payment platforms[20](index=20&type=chunk) - Revenue from software and related services grew to **50% of total revenue** for the twelve months ended September 30, 2023, a significant increase from **5%** in fiscal 2017[21](index=21&type=chunk) - A core growth strategy is disciplined acquisitions, with **48** completed since 2012, which have expanded market presence and solution capabilities[22](index=22&type=chunk) [Our Segments](index=10&type=section&id=Item%201.%20Business%23Segments) The company reports its operations in two primary segments: Software and Services, providing vertical market software solutions, and Merchant Services, offering comprehensive payment solutions - Software and Services segment: Delivers vertical market software solutions, often with embedded payments or recurring services[24](index=24&type=chunk) - Merchant Services segment: Provides comprehensive payment solutions, including third-party integrated and traditional merchant processing[25](index=25&type=chunk) [Our Products and Solutions](index=10&type=section&id=Item%201.%20Business%23Products%20and%20Solutions) i3 Verticals offers diverse software and payment technology solutions tailored to its strategic vertical markets, including Public Sector and Healthcare - Public Sector solutions include software for judiciary, motor vehicles, utility billing, finance/ERP, and public safety, often with embedded payments[28](index=28&type=chunk)[29](index=29&type=chunk)[35](index=35&type=chunk) - Healthcare solutions cater to providers and payers, offering EHR, practice management, revenue cycle management, and patient engagement tools[30](index=30&type=chunk)[31](index=31&type=chunk)[32](index=32&type=chunk) - The company's payment technology includes a proprietary platform with an API suite for merchant processing, ACH, and payment facilitation, featuring point-to-point encryption and PCI-compliant security[33](index=33&type=chunk)[34](index=34&type=chunk)[36](index=36&type=chunk) [Human Capital](index=14&type=section&id=Item%201.%20Business%23Human%20Capital) As of November 21, 2023, i3 Verticals employed approximately 1,663 people across 42 states and two countries, with none represented by unions - As of November 21, 2023, the company had approximately **1,663 employees** in 42 states and two countries[53](index=53&type=chunk) Workforce Demographics as of September 30, 2023 | Category | Percentage | | :--- | :--- | | **Gender** | | | Female | 48% | | Male | 52% | | **Ethnicity** | | | White | 66% | | Asian | 15% | | Black or African American | 8% | | Hispanic or Latino | 6% | | Other | 5% | [Government Regulation](index=14&type=section&id=Item%201.%20Business%23Government%20Regulation) The company operates in a complex regulatory environment, subject to laws governing financial services, data privacy, and healthcare - Subject to the Dodd-Frank Act, including the Durbin Amendment which caps debit card interchange fees for large issuers[56](index=56&type=chunk) - Compliance with numerous federal and state privacy laws is required, including GLBA, FCRA, and state-specific laws like CCPA/CPRA, which regulate the collection, use, and security of personal information[58](index=58&type=chunk)[59](index=59&type=chunk) - As a 'business associate' in the Healthcare vertical, the company is directly liable under HIPAA for protecting patient health information (PHI) and is also subject to the AKS, FCA, and the Cures Act's information blocking rules[63](index=63&type=chunk)[64](index=64&type=chunk)[69](index=69&type=chunk) - Must adhere to payment network rules from Visa, Mastercard, and NACHA, and is registered through sponsor banks. This includes compliance with PCI DSS and EMV standards[89](index=89&type=chunk)[90](index=90&type=chunk)[91](index=91&type=chunk) [Risk Factors](index=21&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks across its business, regulatory environment, debt structure, and organization [Risks Related to Our Business and Industry](index=23&type=section&id=Item%201A.%20Risk%20Factors%23Business%20and%20Industry) The company is exposed to significant business and industry risks including cybersecurity threats, intense competition, and reliance on third-party partners - Cybersecurity threats, including ransomware, pose a significant risk. The company is currently a defendant in a lawsuit filed by the State of Louisiana related to a third-party software product and alleged cybersecurity inadequacies[102](index=102&type=chunk)[103](index=103&type=chunk)[104](index=104&type=chunk) - The company operates in a highly competitive environment against peers like Tyler Technologies, Global Payments, and EverCommerce, which may have greater financial and marketing resources[119](index=119&type=chunk)[120](index=120&type=chunk)[121](index=121&type=chunk) - A core growth strategy of acquisitions carries risks, including difficulty identifying targets, integration challenges, and uncovering unforeseen liabilities during due diligence[146](index=146&type=chunk)[149](index=149&type=chunk) - The company faces potential for significant chargeback liability if its customers are unable to reimburse chargebacks, a risk heightened for its smaller customers who conduct more card-not-present transactions[134](index=134&type=chunk)[135](index=135&type=chunk)[136](index=136&type=chunk) [Risks Related to Regulation](index=36&type=section&id=Item%201A.%20Risk%20Factors%23Regulation) Extensive and evolving government regulations, including financial, healthcare, and data privacy laws, impose significant compliance costs and risks - Failure to comply with extensive government regulations can lead to penalties, suspension of services, and increased costs[164](index=164&type=chunk) - Healthcare operations are subject to laws like HIPAA, the federal Anti-Kickback Statute (AKS), and the False Claims Act (FCA), where violations can lead to substantial civil and criminal penalties[170](index=170&type=chunk)[173](index=173&type=chunk)[174](index=174&type=chunk) - The 21st Century Cures Act and its Information Blocking Rule impose significant requirements on the company's HIT developer subsidiary, with penalties up to **$1 million** per violation[182](index=182&type=chunk)[184](index=184&type=chunk) - Evolving data privacy laws at the federal and state levels, such as the CCPA/CPRA, increase compliance costs and litigation risk, particularly regarding data breaches[201](index=201&type=chunk)[203](index=203&type=chunk)[205](index=205&type=chunk) [Risks Related to Our Indebtedness](index=46&type=section&id=Item%201A.%20Risk%20Factors%23Indebtedness) The company's debt, including its Senior Secured Credit Facility and Exchangeable Notes, poses risks to financial health and operational flexibility - The 2023 Senior Secured Credit Facility imposes restrictive covenants, including maintaining specified financial ratios (interest coverage and total leverage), which limit the company's ability to incur liens, take on more debt, and make certain investments[213](index=213&type=chunk)[218](index=218&type=chunk) - The company may not have the ability to raise the necessary funds to repurchase its Exchangeable Notes upon a fundamental change or to settle exchanges in cash, which could constitute a default under the indenture[220](index=220&type=chunk)[221](index=221&type=chunk) - If the conditional exchange feature of the Exchangeable Notes is triggered, the company may be required to settle in cash, which could adversely affect liquidity and require reclassification of the debt as a current liability[222](index=222&type=chunk) [Risks Related to Our Organizational Structure](index=49&type=section&id=Item%201A.%20Risk%20Factors%23Organizational%20Structure) The company's holding company structure and Tax Receivable Agreement create unique financial and operational risks - i3 Verticals, Inc. is a holding company with no independent operations, relying on distributions from i3 Verticals, LLC to pay taxes and expenses. These distributions could be restricted by debt agreements[224](index=224&type=chunk)[225](index=225&type=chunk) - The Tax Receivable Agreement (TRA) requires payments to Continuing Equity Owners that may be accelerated in a change of control, potentially forcing payments greater than the actual tax benefits realized and impacting liquidity[228](index=228&type=chunk)[229](index=229&type=chunk) - Failure to maintain effective internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act, could lead to a loss of investor confidence and a decline in stock price[232](index=232&type=chunk)[233](index=233&type=chunk) [Properties](index=52&type=section&id=Item%202.%20Properties) The company's corporate headquarters is in Nashville, Tennessee, and it leases numerous other offices across various states - Corporate headquarters are in Nashville, Tennessee, with a lease for approximately **16,000 square feet** expiring in 2027[250](index=250&type=chunk) - The company leases properties in multiple states for operational, sales, and administrative purposes and believes its facilities are adequate for its needs[250](index=250&type=chunk)[251](index=251&type=chunk) [Legal Proceedings](index=52&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in legal proceedings, notably the S&S Litigation concerning a third-party software product and cybersecurity practices - The company is a defendant in a lawsuit filed by the State of Louisiana and a putative class of law enforcement districts against its subsidiary, i3-Software & Services, LLC ("S&S"), concerning a third-party software product and cybersecurity practices[596](index=596&type=chunk) - The S&S litigation seeks monetary damages for network remediation, return of purchase prices, and other expenses. The case was remanded to state court, and the company's petition for rehearing is pending[596](index=596&type=chunk) - Management believes that ongoing legal matters, including the S&S litigation, will not have a material impact on the company's consolidated balance sheet, results of operations, or cash flows[594](index=594&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=53&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) i3 Verticals' Class A common stock trades on Nasdaq, with no cash dividends paid or planned due to growth strategy and debt restrictions - Class A common stock is traded on the Nasdaq Global Select Market under the symbol 'IIIV'[256](index=256&type=chunk) - The company has never declared or paid a cash dividend and intends to retain earnings to finance growth. The 2023 Senior Secured Credit Facility also restricts dividend payments[264](index=264&type=chunk) - No shares of Class A or Class B common stock were repurchased during the quarter ended September 30, 2023[263](index=263&type=chunk) Cumulative Total Shareholder Return Comparison | Date | i3 Verticals, Inc. | S&P 500 | S&P 500 Information Technology | | :--- | :--- | :--- | :--- | | Sep 30, 2018 | $100.00 | $100.00 | $100.00 | | Sep 30, 2019 | $87.55 | $102.15 | $106.91 | | Sep 30, 2020 | $109.88 | $115.41 | $155.40 | | Sep 30, 2021 | $105.35 | $147.82 | $198.46 | | Sep 30, 2022 | $87.16 | $123.05 | $157.32 | | Sep 30, 2023 | $91.99 | $147.15 | $219.78 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=54&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management's discussion highlights revenue growth driven by acquisitions and organic expansion, resulting in a narrowed net loss and strong liquidity for fiscal year 2023 [Acquisitions](index=58&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%23Acquisitions) Acquisitions are a core component of the company's growth strategy, with significant purchases in FY2023 and FY2022 expanding Public Sector and Healthcare offerings - In FY 2023, acquired Celtic Cross Holdings, Inc. and Celtic Systems Pvt. Ltd. for **$85.0 million** in cash[270](index=270&type=chunk) - Completed two other acquisitions in FY 2023 for **$19.8 million** (**$17.0M** cash, **$2.0M** stock, **$0.8M** contingent consideration)[271](index=271&type=chunk) - In FY 2022, acquired three businesses for **$107.7 million** (**$101.4M** cash, **$6.3M** contingent consideration)[272](index=272&type=chunk) [Key Performance Indicators](index=59&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%23Key%20Performance%20Indicators) Key indicators show positive trends, including 11.3% ARR growth, 50% software revenue, and 8% payment volume increase in FY2023 Key Performance Indicators (FY2023 vs FY2022) | Indicator | FY 2023 | FY 2022 | Growth | | :--- | :--- | :--- | :--- | | Annualized Recurring Revenue (ARR) (as of Q4) | $312.9 million | $281.2 million | 11.3% | | Software & Related Services as % of Total Revenue | 50% | 49% | +1 ppt | | Payment Volume | $24.4 billion | $22.6 billion | 8.0% | | Processing Margin | $333.3 million | $282.7 million | 17.9% | [Results of Operations (FY2023 vs FY2022)](index=62&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%23Results%20of%20Operations) Revenue increased 16.5% to $370.2 million, with operating income turning positive and net loss significantly narrowing Consolidated Results of Operations (in millions) | | Year ended Sep 30, 2023 | Year ended Sep 30, 2022 | Change (%) | | :--- | :--- | :--- | :--- | | **Revenue** | **$370.2 million** | **$317.9 million** | **16.5%** | | Income (loss) from operations | $22.7 million | ($2.4 million) | n/m | | Interest expense, net | $25.1 million | $14.8 million | 70.1% | | Net loss | ($2.7 million) | ($23.2 million) | (88.6)% | | **Net loss attributable to i3 Verticals** | **($0.8 million)** | **($17.1 million)** | **(95.3)%** | - Revenue growth of **$52.4 million** was driven by **$21.5 million** from acquisitions completed in FY2023 and FY2022, with the remainder from organic growth in software services and increased payment volume[289](index=289&type=chunk) - Selling, general and administrative expenses increased by **$25.9 million** (**13.4%**), mainly due to a **$22.4 million** rise in employment expenses from increased headcount and stock compensation[295](index=295&type=chunk) - The change in fair value of contingent consideration was a charge of **$10.8 million**, significantly lower than the **$23.7 million** charge in the prior year, contributing to improved operating income[297](index=297&type=chunk) [Liquidity and Capital Resources](index=64&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%23Liquidity%20and%20Capital%20Resources) As of September 30, 2023, the company had $3.1 million in cash and $177.5 million available under its $450 million 2023 Senior Secured Credit Facility, with primary cash needs for working capital and acquisitions - As of September 30, 2023, liquidity included **$3.1 million** in cash and **$177.5 million** available under the 2023 Senior Secured Credit Facility[303](index=303&type=chunk) Cash Flow Summary (in millions) | | Year ended Sep 30, 2023 | Year ended Sep 30, 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $34.5 million | $45.8 million | | Net cash used in investing activities | ($121.5 million) | ($113.0 million) | | Net cash provided by financing activities | $75.7 million | $73.0 million | - Entered into a new **$450 million** 2023 Senior Secured Credit Facility in May 2023. As of September 30, 2023, the company was in compliance with its financial covenants (total leverage ratio of **3.77x** vs. limit of **5.0x**)[314](index=314&type=chunk)[315](index=315&type=chunk) Material Cash Requirements as of September 30, 2023 (in millions) | Material Cash Requirements | Total | Less than 1 year | 1 to 3 years | 3 to 5 years | More than 5 years | | :--- | :--- | :--- | :--- | :--- | :--- | | 2023 Senior Secured Credit Facility and interest | $386.4 million | $23.9 million | $48.0 million | $314.5 million | $— | | Exchangeable Notes and interest | $118.6 million | $1.2 million | $117.4 million | $— | $— | | Facility leases | $16.6 million | $5.1 million | $7.9 million | $2.4 million | $1.3 million | | Contingent consideration | $8.2 million | $6.8 million | $1.4 million | $— | $— | | **Total** | **$534.9 million** | **$41.5 million** | **$175.2 million** | **$316.8 million** | **$1.3 million** | [Quantitative and Qualitative Disclosures About Market Risk](index=67&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate fluctuations on its variable-rate debt, with minor foreign currency exposure - The company is exposed to interest rate risk on its 2023 Senior Secured Credit Facility, which has a variable interest rate based on Term SOFR or a base rate[345](index=345&type=chunk)[346](index=346&type=chunk) - As of September 30, 2023, a **1.0%** increase or decrease in the **$272.5 million** of outstanding borrowings would have a **$2.7 million** impact on the business[347](index=347&type=chunk) - Exposure to foreign currency exchange rate risk is not considered material to the consolidated results of operations[348](index=348&type=chunk) [Financial Statements and Supplementary Data](index=68&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section contains the company's audited consolidated financial statements and the independent auditor's report [Consolidated Financial Statements](index=71&type=section&id=Item%208.%20Financial%20Statements%23Financial%20Statements) The consolidated financial statements present the company's financial position and results, showing total assets of $881.5 million and a net loss attributable to i3 Verticals, Inc. of $0.8 million for fiscal year 2023 Consolidated Balance Sheet Data (in millions) | | Sep 30, 2023 | Sep 30, 2022 | | :--- | :--- | :--- | | Total Current Assets | $85.5 million | $83.8 million | | Goodwill | $409.6 million | $353.6 million | | Total Assets | $881.5 million | $770.3 million | | Total Current Liabilities | $93.5 million | $111.3 million | | Long-term debt, net | $385.1 million | $287.0 million | | Total Liabilities | $553.2 million | $462.6 million | | Total Equity | $328.3 million | $307.7 million | Consolidated Statement of Operations Data (in millions) | | FY 2023 | FY 2022 | FY 2021 | | :--- | :--- | :--- | :--- | | Revenue | $370.2 million | $317.9 million | $224.1 million | | Income (loss) from operations | $22.7 million | ($2.4 million) | ($0.0 million) | | Net loss | ($2.7 million) | ($23.2 million) | ($7.8 million) | | Net loss attributable to i3 Verticals, Inc. | ($0.8 million) | ($17.1 million) | ($4.5 million) | [Notes to Consolidated Financial Statements](index=77&type=section&id=Item%208.%20Financial%20Statements%23Notes%20to%20Financial%20Statements) The notes provide detailed explanations of the company's accounting policies and financial data, covering acquisitions, debt, income taxes, and segment performance - Note 4 (Acquisitions): In FY2023, the company acquired Celtic for **$85.0 million** in cash and two other businesses for **$19.8 million**. In FY2022, it acquired three businesses for **$107.7 million**[457](index=457&type=chunk)[462](index=462&type=chunk)[469](index=469&type=chunk) - Note 10 (Long-Term Debt): As of Sep 30, 2023, long-term debt included **$272.5 million** outstanding on the 2023 Senior Secured Credit Facility and **$117.0 million** in **1.0%** Exchangeable Senior Notes due 2025[505](index=505&type=chunk) - Note 11 (Income Taxes): The company has a Tax Receivable Agreement (TRA) with Continuing Equity Owners, resulting in a liability of **$40.1 million** as of Sep 30, 2023[552](index=552&type=chunk)[558](index=558&type=chunk)[601](index=601&type=chunk) Segment Processing Margin (in millions) | Segment | FY 2023 | FY 2022 | FY 2021 | | :--- | :--- | :--- | :--- | | Software and Services | $219.1 million | $181.2 million | $107.0 million | | Merchant Services | $114.3 million | $101.5 million | $90.5 million | | **Total** | **$333.3 million** | **$282.7 million** | **$195.3 million** | [Controls and Procedures](index=119&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal control over financial reporting were effective as of September 30, 2023 - The CEO and CFO concluded that disclosure controls and procedures were effective as of September 30, 2023[630](index=630&type=chunk) - Management assessed internal control over financial reporting based on the COSO framework and concluded it was effective as of September 30, 2023[632](index=632&type=chunk) - The independent auditor, Deloitte & Touche LLP, issued an unqualified opinion on the effectiveness of the company's internal control over financial reporting[633](index=633&type=chunk)[638](index=638&type=chunk) Part III [Directors, Executive Compensation, Security Ownership, and Related Transactions](index=122&type=section&id=Item%2010-14) Information for these items is incorporated by reference from the forthcoming 2024 Proxy Statement - Information for Items 10, 11, 12, 13, and 14 is incorporated by reference from the forthcoming 2024 Proxy Statement[648](index=648&type=chunk)[650](index=650&type=chunk)[651](index=651&type=chunk)[652](index=652&type=chunk)[653](index=653&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=123&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists exhibits filed with the Form 10-K, with financial statement schedules omitted as information is included elsewhere - All required financial statement schedules have been omitted as the information is not applicable or is included elsewhere in the report[656](index=656&type=chunk) - A list of exhibits filed with the report is provided, including key agreements such as the 2023 Senior Secured Credit Facility and the Indenture for the Exchangeable Notes[657](index=657&type=chunk)[658](index=658&type=chunk)
i3 Verticals(IIIV) - 2023 Q3 - Quarterly Report
2023-08-09 20:09
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 June 30, 2023 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) Delaware 82-4052852 (State or other jurisdiction of incorpo ...
i3 Verticals(IIIV) - 2023 Q3 - Earnings Call Presentation
2023-08-09 17:45
VERTICALS Revenue Composition See footnotes continued on the next slide Annualized Recurring Revenue ("ARR") 3 Although these non-GAAP financial measures assist in measuring the Company's operating results and assessing its financial performance, they are not necessarily comparable to similarly titled measures of other companies due to potential inconsistencies in the method of calculation. The Company believes that its provision of these non-GAAP financial measures provides investors with important key fin ...
i3 Verticals(IIIV) - 2023 Q2 - Earnings Call Transcript
2023-05-13 14:59
Financial Data and Key Metrics Changes - Revenues for Q2 2023 increased by 20% to $93.9 million from $78.1 million in Q2 2022, driven by organic growth and acquisitions [12] - Adjusted EBITDA rose by 27% to $24.7 million for Q2 2023 from $19.5 million for Q2 2022, reflecting continued momentum in the Software & Services segment [51] - Annual recurring revenues (ARR) grew by 20% to $305.7 million for Q2 2023 compared to $254.5 million for Q2 2022 [12] Business Line Data and Key Metrics Changes - Software & Services segment revenues increased by 24% to $60.8 million for Q2 2023 from $49 million for Q2 2022, primarily due to growth in the public sector vertical [36] - Merchant Services segment revenues increased by 13% to $33.1 million for Q2 2023 from $29.2 million for Q2 2022, driven by growth in ISO, ISV, and B2B channels [52] Market Data and Key Metrics Changes - The education sub-vertical within the public sector saw a strong rebound, benefiting from organic sales to new school districts and higher fees at existing districts [36] - Over 80% of revenues in the quarter continued to come from recurring sources, indicating a stable revenue base [12] Company Strategy and Development Direction - The company is focusing on enhancing its software and services offerings, which now represent over 50% of total revenue, and aims to increase this percentage to 60-65% over the next few years [94] - The acquisition strategy remains active, with discussions ongoing for larger deals than historically pursued, targeting businesses with $10 million to $12 million in EBITDA [60][91] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the public sector's demand for technology modernization, driven by positive budget levels and the need for improved infrastructure [106] - The company anticipates that the strong first half of the fiscal year will support its guidance for fiscal year 2023, with revenues projected between $360 million and $380 million [53] Other Important Information - The company successfully upsized its revolving credit facility to $450 million, providing greater flexibility for future acquisitions [49][80] - Adjusted EBITDA as a percentage of revenues improved to 26.3% for Q2 2023 from 25% for Q2 2022, reflecting margin improvement [51] Q&A Session Summary Question: Did you disclose organic growth in the second quarter? - Yes, organic growth for the quarter was approximately 12%, benefiting from strong software license sales [86] Question: What defines larger deals in your acquisition strategy? - The company is looking at deals as high as $10 million or $12 million in EBITDA, compared to historical targets of $2 million to $5 million [60] Question: How sustainable are the strong public sector budgets? - The company sees continued demand for technology upgrades in local governments, but the sustainability may be affected by the expiration of American rescue plan dollars by the end of 2024 [106] Question: How is the integrated software and payment solutions helping win deals? - The integration of software and payment solutions is crucial for winning contracts, as local governments seek comprehensive solutions to modernize their operations [106] Question: What is the expected impact of the new unified RFP team on bookings and revenue? - The timing for new bookings can vary significantly, but the company aims to improve response times and win rates through a more structured approach to RFPs [110]
i3 Verticals(IIIV) - 2023 Q2 - Quarterly Report
2023-05-10 20:08
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, 2023 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) Delaware 82-4052852 (State or other jurisdiction of incorp ...
i3 Verticals(IIIV) - 2023 Q1 - Quarterly Report
2023-02-09 21:24
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 December 31, 2022 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) Delaware 82-4052852 (State or other jurisdiction of inc ...