[Executive Summary & Financial Highlights](index=1&type=section&id=1.%20Executive%20Summary%20%26%20Financial%20Highlights) [Third Quarter & Nine Months Financial Highlights (Continuing Operations)](index=1&type=section&id=1.1%20Third%20Quarter%20%26%20Nine%20Months%20Financial%20Highlights%20(Continuing%20Operations)) i3 Verticals reported strong revenue growth and significant improvements in profitability from continuing operations for both the third quarter and the first nine months of fiscal year 2025, driven by recurring contracts, particularly SaaS and payments revenue. The company also saw a substantial reduction in net loss and an increase in adjusted EBITDA | Metric (Continuing Operations) | Q3 2025 | Q3 2024 | YoY Change | 9M 2025 | 9M 2024 | YoY Change | | :----------------------------- | :------ | :------ | :--------- | :------ | :------ | :--------- | | Revenue ($M) | 51.9 | 46.2 | 12.4% | 158.3 | 139.9 | 13.1% | | Net Loss ($M) | (1.0) | (14.4) | (93.1)% | 4.1 | (22.4) | N/A | | Net Loss Attributable to i3 Verticals, Inc. ($M) | (0.4) | (11.8) | (96.6)% | 2.5 | (17.7) | N/A | | Adjusted EBITDA ($M) | 12.7 | 10.8 | 18.0% | 43.1 | 35.9 | 20.3% | | Adjusted EBITDA as % of Revenue| 24.5% | 23.3% | 1.2 pp | 27.3% | 25.6% | 1.7 pp | | Diluted Net Loss Per Share ($) | (0.03) | (0.50) | (94.0)% | 0.10 | (0.76) | N/A | | Non-GAAP Adjusted Diluted EPS ($) | 0.23 | 0.02 | 1050.0% | 0.78 | 0.18 | 333.3% | | Annualized Recurring Revenue (ARR) ($M) | 160.8 | 143.6 | 12.0% | N/A | N/A | N/A | - The company's historical results have been recast to reflect the sale of the Merchant Services Business (completed September 20, 2024) and the Healthcare RCM Business (completed May 5, 2025) as discontinued operations[6](index=6&type=chunk) [Management Commentary](index=4&type=section&id=1.2%20Management%20Commentary) CEO Greg Daily expressed satisfaction with Q3 fiscal 2025 revenue growth, attributing it to recurring contracts, particularly strong SaaS and payments growth. He also noted the smooth divestiture of the Healthcare RCM Business and reaffirmed the company's focus on investing in government technology - Overall revenue growth of **12% in Q3 2025** was fueled by recurring contracts[7](index=7&type=chunk) - SaaS growth led the way, increasing **24%** over the prior year period[7](index=7&type=chunk) - Revenue from payments increased by **11%** compared to the prior year quarter[7](index=7&type=chunk) - The divestiture of the Healthcare Revenue Cycle Management Business was smooth[8](index=8&type=chunk) - The company remains well capitalized with over **$50 million in cash on hand** and plans to continue investment in government technology[9](index=9&type=chunk) [2025 Outlook](index=4&type=section&id=1.3%202025%20Outlook) i3 Verticals reaffirmed its previously issued annual guidance for the fiscal year ending September 30, 2025, for revenue, adjusted EBITDA, and adjusted diluted earnings per share, excluding future acquisitions and transaction-related costs | Metric | Fiscal Year Ending September 30, 2025 Outlook Range | | :----------------------------- | :-------------------------------------------------- | | Revenue | $207,000 - $217,000 (in thousands) | | Adjusted EBITDA (non-GAAP) | $55,000 - $61,000 (in thousands) | | Adjusted diluted earnings per share (non-GAAP) | $0.96 - $1.06 | - Reconciliations of adjusted EBITDA and adjusted diluted EPS guidance to GAAP measures are not available without unreasonable efforts due to difficulties in forecasting certain adjustments[11](index=11&type=chunk) [Business Updates & Corporate Information](index=4&type=section&id=2.%20Business%20Updates%20%26%20Corporate%20Information) [Change in Segment Presentation](index=4&type=section&id=2.1%20Change%20in%20Segment%20Presentation) Following the disposition of the Healthcare RCM Business, i3 Verticals has transitioned from two operating segments (Public Sector and Healthcare) to a single operating and reportable segment as of June 30, 2025 - The company previously had two operating segments: Public Sector and Healthcare Segment[12](index=12&type=chunk) - After the disposition of the Healthcare RCM Business, the company now has **one operating and reportable segment**[12](index=12&type=chunk) [About i3 Verticals](index=5&type=section&id=2.2%20About%20i3%20Verticals) i3 Verticals specializes in providing mission-critical, cloud-native enterprise software solutions to public sector customers across all 50 states and Canada, aiming to enhance the efficiency and effectiveness of state and local governments - The company provides mission-critical enterprise software solutions to public sector customers[17](index=17&type=chunk) - Solutions are cloud-native and address various government functions including courts, transportation, utilities, revenue, and schools[17](index=17&type=chunk) - i3 Verticals is a leader in the public sector vertical with thousands of software installations across all **50 states and Canada**[17](index=17&type=chunk) [Conference Call Details](index=4&type=section&id=2.3%20Conference%20Call%20Details) i3 Verticals will host a conference call on August 8, 2025, to discuss its financial results and operations, with both live telephone and webcast options available, along with replays - A conference call will be held on **Friday, August 8, 2025, at 8:30 a.m. EDT**[13](index=13&type=chunk) - Participants can listen live via telephone or webcast through the company's website[13](index=13&type=chunk)[14](index=14&type=chunk) - A telephonic replay will be available until **August 15, 2025**, and an online replay for **30 days**[13](index=13&type=chunk)[14](index=14&type=chunk) [Forward-Looking Statements](index=5&type=section&id=2.4%20Forward-Looking%20Statements) The release contains forward-looking statements regarding future financial performance and business plans, which are subject to various risks and uncertainties, including economic conditions, competition, regulatory developments, and integration of acquired businesses. The company does not undertake to update these statements publicly - Statements regarding fiscal 2025 financial outlook and future performance are forward-looking and subject to risks and uncertainties[18](index=18&type=chunk) - Factors that could cause actual results to differ include economic and geopolitical conditions, competition, regulatory developments, successful integration of acquired businesses, and the ability to execute strategy post-divestitures[19](index=19&type=chunk) - The company does not undertake to publicly update any forward-looking statements, except as required by law[20](index=20&type=chunk) [Consolidated Financial Statements](index=7&type=section&id=3.%20Consolidated%20Financial%20Statements) [Consolidated Statements of Operations](index=7&type=section&id=3.1%20Consolidated%20Statements%20of%20Operations) The Consolidated Statements of Operations show a significant increase in revenue from continuing operations for both the three and nine months ended June 30, 2025, alongside a substantial reduction in net loss from continuing operations. The company also reported considerable net income from discontinued operations | Metric (Continuing Operations) | Three Months Ended June 30, 2025 ($M) | Three Months Ended June 30, 2024 ($M) | % Change | Nine Months Ended June 30, 2025 ($M) | Nine Months Ended June 30, 2024 ($M) | % Change | | :----------------------------- | :------------------------------------ | :------------------------------------ | :------- | :----------------------------------- | :----------------------------------- | :------- | | Revenue | 51,901 | 46,183 | 12% | 158,257 | 139,909 | 13% | | Total operating expenses | 56,714 | 47,493 | 19% | 155,956 | 138,964 | 12% | | (Loss) income from operations | (4,813) | (1,310) | 267% | 2,301 | 945 | 143% | | Net (loss) income from continuing operations | (996) | (14,407) | N/A | 4,117 | (22,365) | N/A | | Net income from discontinued operations, net of income taxes | 19,421 | 6,109 | N/A | 18,185 | 18,951 | N/A | | Net income (loss) | 18,425 | (8,298) | N/A | 22,302 | (3,414) | N/A | | Net (loss) income attributable to i3 Verticals, Inc. | 12,882 | (7,545) | N/A | 14,784 | (4,569) | N/A | - Certain personnel costs and hosting/software costs were reclassified from selling, general and administrative expenses to other costs of services in fiscal year 2025 to align with the company's core software solutions business model[24](index=24&type=chunk) [Consolidated Balance Sheets](index=9&type=section&id=3.2%20Consolidated%20Balance%20Sheets) The Consolidated Balance Sheets show a decrease in total assets and liabilities from September 30, 2024, to June 30, 2025, primarily due to the divestiture of businesses, while total stockholders' equity saw a slight increase | Metric | June 30, 2025 ($M) | September 30, 2024 ($M) | | :----------------------------- | :----------------- | :---------------------- | | Cash and cash equivalents | 55,544 | 86,525 | | Total current assets | 117,777 | 153,393 | | Total assets | 623,274 | 730,675 | | Total current liabilities | 58,211 | 164,731 | | Total liabilities | 112,153 | 215,316 | | Total stockholders' equity | 383,295 | 379,735 | | Total equity | 511,121 | 515,359 | | Total liabilities and equity | 623,274 | 730,675 | [Consolidated Cash Flow Data](index=10&type=section&id=3.3%20Consolidated%20Cash%20Flow%20Data) For the nine months ended June 30, 2025, i3 Verticals reported net cash used in operating activities, a significant increase in net cash provided by investing activities, and continued net cash used in financing activities | Metric | Nine Months Ended June 30, 2025 ($M) | Nine Months Ended June 30, 2024 ($M) | | :------------------------------------ | :----------------------------------- | :----------------------------------- | | Net cash (used in) provided by operating activities | (8,276) | 33,266 | | Net cash provided by (used in) investing activities | 78,774 | (16,755) | | Net cash used in financing activities | (104,283) | (15,215) | - Cash used in operating activities for the nine months ended June 30, 2025, included **$35.1 million in cash paid for income taxes**, primarily from the sale of the Merchant Services Business[28](index=28&type=chunk) [Non-GAAP Financial Measures & Reconciliations](index=10&type=section&id=4.%20Non-GAAP%20Financial%20Measures%20%26%20Reconciliations) [Explanation of Non-GAAP Measures](index=10&type=section&id=4.1%20Explanation%20of%20Non-GAAP%20Measures) i3 Verticals provides several non-GAAP financial measures, including Adjusted Income Before Taxes, Adjusted Net Income, Adjusted Diluted EPS, Adjusted EBITDA, and Adjusted EBITDA Margin, to offer investors and management a clearer view of the company's underlying operational performance, excluding certain non-recurring or non-cash items - Non-GAAP measures are provided to enhance understanding of the company's financial results and are used by management for assessment, evaluation, budgeting, resource allocation, and operational decisions[29](index=29&type=chunk) - Adjusted Income Before Taxes from Continuing Operations adjusts net income (loss) from continuing operations for non-controlling interest and certain pre-tax items not reflective of underlying performance[30](index=30&type=chunk) - Adjusted Net Income and Adjusted Diluted Earnings per Share from Continuing Operations apply an estimated long-term effective tax rate of **25%** to adjusted income before taxes[30](index=30&type=chunk) - Adjusted EBITDA from Continuing Operations excludes interest, income taxes, depreciation, amortization, non-controlling interest, and other items not reflective of underlying operating performance[30](index=30&type=chunk) [Reconciliation of GAAP Net Income (Loss) from Continuing Operations to Non-GAAP Adjusted Net Income and Adjusted EBITDA](index=12&type=section&id=4.2%20Reconciliation%20of%20GAAP%20Net%20Income%20(Loss)%20from%20Continuing%20Operations%20to%20Non-GAAP%20Adjusted%20Net%20Income%20and%20Adjusted%20EBITDA) The reconciliation tables detail the adjustments made to GAAP net income (loss) from continuing operations to arrive at non-GAAP adjusted income before taxes, adjusted net income, and adjusted EBITDA, highlighting the impact of items such as equity-based compensation, M&A-related activity, and acquisition intangible amortization | Metric (Continuing Operations) | Three Months Ended June 30, 2025 ($M) | Three Months Ended June 30, 2024 ($M) | Nine Months Ended June 30, 2025 ($M) | Nine Months Ended June 30, 2024 ($M) | | :----------------------------- | :------------------------------------ | :------------------------------------ | :----------------------------------- | :----------------------------------- | | Net (loss) income from continuing operations | (996) | (14,407) | 4,117 | (22,365) | | Non-GAAP adjusted income before taxes from continuing operations | 10,249 | 1,038 | 35,537 | 8,049 | | Adjusted net income from continuing operations | 7,687 | 778 | 26,652 | 6,037 | | Adjusted EBITDA from continuing operations | 12,724 | 10,779 | 43,136 | 35,851 | - Key adjustments include equity-based compensation, M&A-related activity (net impact of professional services and revenue from post-sale non-recurring activities), acquisition intangible amortization, and non-cash interest expense[30](index=30&type=chunk)[34](index=34&type=chunk)[37](index=37&type=chunk) - Estimated taxes for non-GAAP adjusted income are calculated using a **25.0% effective tax rate** for both periods[38](index=38&type=chunk) [GAAP Diluted EPS from Continuing Operations and Non-GAAP Adjusted Diluted EPS from Continuing Operations](index=14&type=section&id=4.3%20GAAP%20Diluted%20EPS%20from%20Continuing%20Operations%20and%20Non-GAAP%20Adjusted%20Diluted%20EPS%20from%20Continuing%20Operations) This section presents both GAAP diluted EPS and non-GAAP adjusted diluted EPS from continuing operations, with the non-GAAP measure reflecting adjustments for non-controlling interest, an assumed 25% tax rate, and the hypothetical exchange of all Common Units and Class B common stock into Class A common stock | Metric (Continuing Operations) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :----------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Diluted net (loss) income per share attributable to Class A common stockholders | (0.03) | (0.50) | 0.10 | (0.76) | | Adjusted diluted earnings per share | 0.23 | 0.02 | 0.78 | 0.18 | | Adjusted net income | 7,687 | 778 | 26,652 | 6,037 | | Adjusted weighted average shares of adjusted diluted Class A common stock outstanding | 33,936,121 | 33,707,331 | 34,183,267 | 33,781,826 | - Adjusted diluted EPS assumes all net income from continuing operations is available to Class A common stockholders and that all Common Units and Class B common stock are exchanged for Class A common stock on a one-for-one basis[42](index=42&type=chunk) - Adjusted weighted average shares include shares issuable upon exchange of Common Units in i3 Verticals, LLC and shares from estimated stock option exercises and restricted stock units vesting[43](index=43&type=chunk)

Summary of i3 Verticals (IIIV) 2025 Conference Call Company Overview - i3 Verticals was founded by Greg Daily, who has taken three companies public, with the current CFO being Jeff Smith [2] - The company went public in 2018, initially comprising 95% payments and 5% software [2] - The company has shifted focus towards software, now consisting of 26 software acquisitions primarily in the public sector, with payments now representing 26% of revenues [3] Financial Performance - i3 Verticals reported over $200 million in revenues with an adjusted EBITDA margin in the high 20s [4] - The company targets high single-digit revenue growth and aims for 50 to 100 basis points margin improvement annually [4] - The company is currently debt-free with approximately $64 million in cash and 75% of revenues being recurring, growing at 9% [5] Strategic Focus - The company divested its merchant services and healthcare RCM businesses to narrow its focus and improve leverage [3][11] - i3 Verticals aims to integrate payments capabilities into its vertical market software acquisitions, enhancing monetization opportunities [8][10] - The public sector is identified as a vast and fragmented market with significant transactional revenue opportunities [12][40] Competitive Landscape - Tyler Technologies is identified as a major competitor, but i3 Verticals believes the public sector is highly fragmented, with many niche players [13][46] - The company competes against founder-controlled and private equity-controlled businesses, which often have aggressive pricing strategies [46][47] Market Opportunities - The company sees significant growth potential in various public sector verticals, including Justice Tech, Transportation, Utilities, ERP, and Education [15][20][24][30][35] - i3 Verticals is focused on cloud-based solutions, with a majority of new sales being cloud solutions [51] - The company is exploring AI integration into its software solutions, enhancing efficiency and customer service [56][58] M&A Strategy - i3 Verticals plans to continue making acquisitions, primarily in the $10 million to $30 million range, focusing on founder-owned businesses [54][55] - The company has a $400 million untapped credit facility, providing flexibility for future acquisitions [41] Investor Perspective - The company believes it is undervalued compared to larger competitors like Tyler Technologies, despite having similar growth profiles and margins [60][61] - i3 Verticals is working to clarify its story to investors, moving away from its previous perception as primarily a payments company [62][64] Conclusion - i3 Verticals is positioned for growth in the public sector software market, leveraging its software acquisitions and payments integration strategy while maintaining a strong financial position and exploring new technologies like AI. The company is focused on disciplined capital allocation and strategic acquisitions to enhance its market presence and shareholder value.

Group 1 - The article discusses the services provided by IPO Edge, which includes actionable information on growth stocks, first-look IPO filings, previews on upcoming IPOs, an IPO calendar, a database of U.S. IPOs, and a comprehensive guide to IPO investing [1]

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20%28Unaudited%29) Unaudited financials for March 31, 2025, reflect the Merchant Services Business sale and subsequent operational shifts [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets decreased to **$646.4 million** from **$730.7 million**, driven by reduced cash, with liabilities also down Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | September 30, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $7,749 | $86,541 | | Total current assets | $79,999 | $153,393 | | Goodwill | $280,678 | $280,678 | | Intangible assets, net | $156,331 | $162,816 | | **Total assets** | **$646,359** | **$730,675** | | **Liabilities & Equity** | | | | Total current liabilities | $67,688 | $164,731 | | Long-term debt, less current portion | $12,000 | $0 | | **Total liabilities** | **$132,700** | **$215,316** | | **Total equity** | **$513,659** | **$515,359** | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Revenue from continuing operations grew **8.8%** to **$63.1 million**, with income from operations up **59.5%** Statement of Operations Summary (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | 6 Months 2025 | 6 Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $63,059 | $57,968 | $124,750 | $113,022 | | Income from operations | $3,964 | $2,486 | $6,663 | $3,971 | | Interest expense | $446 | $7,714 | $1,126 | $14,401 | | Net income (loss) from continuing operations | $1,095 | $(2,302) | $4,417 | $(6,517) | | Net (loss) income from discontinued operations | $(326) | $5,650 | $(540) | $11,401 | | **Net income** | **$769** | **$3,348** | **$3,877** | **$4,884** | | Diluted EPS from continuing operations | $0.00 | $(0.07) | $0.09 | $(0.20) | [Condensed Consolidated Statement of Changes in Equity](index=6&type=section&id=Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) Total equity slightly decreased to **$513.7 million**, driven by net income, equity compensation, and stock repurchases - Key drivers of equity changes include **net income**, **equity-based compensation**, **LLC common unit redemption**, and **stock repurchases**[19](index=19&type=chunk) - The company repurchased **510,155 shares** of Class A Common Stock for **$11.6 million**[19](index=19&type=chunk)[151](index=151&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow shifted to a **$15.6 million** use, primarily due to a **$34.2 million** tax payment from the Merchant Services sale Cash Flow Summary (in thousands) | Cash Flow Activity | Six months ended Mar 31, 2025 | Six months ended Mar 31, 2024 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(15,627) | $25,147 | | Net cash used in investing activities | $(3,675) | $(12,369) | | Net cash used in financing activities | $(60,029) | $(17,885) | | **Net decrease in cash** | **$(79,331)** | **$(5,107)** | - Negative operating cash flow was primarily driven by a **$34.2 million** income tax payment, up from **$5.4 million** prior year[28](index=28&type=chunk)[327](index=327&type=chunk) [Notes to the Unaudited Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20the%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) Notes detail the **Merchant Services Business sale**, cost reclassifications, segment updates, and subsequent **Healthcare RCM business sale** - On September 20, 2024, the company sold its Merchant Services Business for approximately **$437.3 million**, now presented as discontinued operations[36](index=36&type=chunk) - Post-Merchant Services sale, the company reclassified certain costs from SG&A to 'Other costs of services' to align with its software-centric model[51](index=51&type=chunk)[52](index=52&type=chunk) - Reporting segments were updated to **Public Sector** and **Healthcare** after the Merchant Services Business sale[207](index=207&type=chunk) - Subsequent to quarter-end, on May 5, 2025, the company sold its Healthcare RCM Business for **$96.0 million** in cash[251](index=251&type=chunk) - On April 1, 2025, the company acquired a Public Sector utility billing software business for **$9.0 million** in cash[246](index=246&type=chunk)[248](index=248&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=51&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's strategic shift to a focused enterprise software provider, highlighting divestitures and strong liquidity [Results of Operations](index=57&type=section&id=Results%20of%20Operations) Revenue increased **8.8%** to **$63.1 million**, driven by **Public Sector** growth, with operating income up **59.5%** Revenue by Segment - Three Months Ended March 31 (in millions) | Segment | 2025 | 2024 | % Change | | :--- | :--- | :--- | :--- | | Public Sector | $52.4 | $47.1 | 11.3% | | Healthcare | $10.9 | $11.1 | (1.8)% | | **Total Revenue** | **$63.1** | **$58.0** | **8.8%** | - Public Sector revenue growth was driven by **$1.2 million** from an acquisition, **$2.9 million** in recurring revenues, and **$1.3 million** in software license revenue[293](index=293&type=chunk) - Interest expense decreased by **$7.3 million (94.2%)** due to lower debt balances after the Merchant Services sale[299](index=299&type=chunk) [Liquidity and Capital Resources](index=62&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity with **$7.7 million** cash and **$438.0 million** credit facility, bolstered by post-quarter divestiture proceeds - As of March 31, 2025, the company had **$7.7 million** in cash and **$438.0 million** available under its 2023 Senior Secured Credit Facility[319](index=319&type=chunk)[331](index=331&type=chunk) - The company fully repaid its **$26.4 million** 1.0% Exchangeable Senior Notes upon maturity on February 15, 2025[321](index=321&type=chunk) - The company repurchased **510,155 shares** for **$11.6 million** under its **$50 million** share repurchase program[151](index=151&type=chunk)[354](index=354&type=chunk) - The company has a Tax Receivable Agreement (TRA) liability of **$33.5 million**, with payments expected over 26 years[356](index=356&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=69&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Primary market risk is interest rate fluctuations on the **2023 Senior Secured Credit Facility**, with a **1.0%** rate increase impacting by **$0.1 million** - The main market risk is interest rate risk on the 2023 Senior Secured Credit Facility; a **1.0%** rate change on **$12.0 million** outstanding would impact by **$0.1 million**[363](index=363&type=chunk) [Controls and Procedures](index=69&type=section&id=Item%204.%20Controls%20and%20Procedures) CEO and CFO concluded disclosure controls were effective, with no material changes in internal control over financial reporting - The CEO and CFO concluded that disclosure controls and procedures were effective as of March 31, 2025[365](index=365&type=chunk) - No material changes in internal control over financial reporting occurred during the quarter[366](index=366&type=chunk) [PART II. OTHER INFORMATION](index=70&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Legal Proceedings](index=70&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in the S&S Litigation regarding a third-party software product, not expected to have a material adverse effect - The company is a defendant in the S&S Litigation by the State of Louisiana concerning a third-party remote access software product[195](index=195&type=chunk)[197](index=197&type=chunk) - Management does not believe the S&S Litigation will have a material adverse effect on the business or financial condition[199](index=199&type=chunk) [Risk Factors](index=70&type=section&id=Item%201A.%20Risk%20Factors) Updated risk factors include volatile global conditions, risks from the Healthcare RCM Business sale, and non-comparable future financials - Risks include volatile global conditions, such as U.S.-Canada trade relations and the India-Pakistan dispute, impacting operations[370](index=370&type=chunk)[371](index=371&type=chunk)[372](index=372&type=chunk) - Risks from the Healthcare RCM Business sale include strategy execution, potential liabilities, and increased Public Sector business dependence[376](index=376&type=chunk) - Future financial statements will not be comparable due to the Healthcare RCM Business reclassification to discontinued operations[377](index=377&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=71&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company issued **813,782** unregistered Class A common shares and repurchased **13,370** shares for **$0.4 million** - An aggregate of **813,782 shares** of Class A common stock were issued in exchange for LLC units, exempt from registration[378](index=378&type=chunk) Issuer Purchases of Equity Securities (Q2 2025) | Period | Total Shares Purchased | Average Price Paid per Share | Approx. Dollar Value Remaining in Program | | :--- | :--- | :--- | :--- | | Jan 2025 | 13,370 | $22.99 | $38,519,000 | | Feb 2025 | 0 | N/A | $38,519,000 | | Mar 2025 | 0 | N/A | $38,519,000 | | **Total** | **13,370** | **$22.99** | **$38,519,000** | [Defaults Upon Senior Securities](index=72&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities were reported for the period - No defaults upon senior securities were reported for the period[382](index=382&type=chunk) [Mine Safety Disclosures](index=72&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - This item is not applicable to the company[383](index=383&type=chunk) [Other Information](index=72&type=section&id=Item%205.%20Other%20Information) No other information was reported, and no director or officer adopted or terminated a Rule 10b5-1 trading arrangement - No other information was reported; no director or officer adopted or terminated a Rule 10b5-1 trading plan during the quarter[384](index=384&type=chunk) [Exhibits](index=73&type=section&id=Item%206.%20Exhibits) This section provides an index of exhibits filed, including agreements for recent transactions, debt amendments, and officer certifications

Financial Data and Key Metrics Changes - The company reported RemainCo revenues for Q2 fiscal 2025 increased 11.6% to $54.1 million from $48.5 million in Q2 fiscal 2024, reflecting $4.4 million of organic growth or 9% and $1.2 million from an acquisition in the public sector [11] - Annual recurring revenues for RemainCo increased 9.2% to $164.5 million for Q2 fiscal 2025 compared to $150.6 million for Q2 fiscal 2024 [12] - Adjusted EBITDA for RemainCo increased 17% to $15.8 million for Q2 fiscal 2025 from $13.5 million for Q2 fiscal 2024, with adjusted EBITDA as a percentage of revenues rising to 29.3% from 27.9% [13] Business Line Data and Key Metrics Changes - The public sector vertical market experienced a revenue growth of 12% in Q2 fiscal 2025, with SaaS revenue growth at 23% [6] - Non-recurring sales of software licenses for RemainCo increased to $2.8 million for Q2 fiscal 2025 from $1 million for Q2 fiscal 2024 [12] Market Data and Key Metrics Changes - The company anticipates high single-digit organic revenue growth for RemainCo, excluding the healthcare RCM business [16] - The revenue distribution for the remaining two quarters is expected to be approximately 40.8% for Q3 and 50.2% for Q4, with Q3 expected to be the low point for revenue and margins [17] Company Strategy and Development Direction - The company is focused on the public sector vertical market following the divestiture of its Healthcare RCM business, aiming to enhance efficiency and service delivery through better software solutions [6][7] - The recent acquisition in the utility billing space is expected to expand the company's market presence and enhance its offerings in the utilities market [18][20] - The company is committed to a domain-specific approach across targeted markets, which is expected to drive organic growth over time [25] Management's Comments on Operating Environment and Future Outlook - Management noted that the geopolitical landscape presents opportunities at the state and local levels, particularly tied to evolving efficiency requirements [24] - The company has removed approximately $2.5 million of revenues from its fiscal 2025 outlook due to trade friction and delays with a Manitoba contract, indicating a conservative approach based on customer discussions [16][49] Other Important Information - The company has a strong balance sheet with a net debt of $4 million and a cash position of approximately $64 million, with plans to use cash and borrowings for acquisitions and potential stock repurchases [14] - The company expects adjusted EBITDA margin improvement of 50 to 100 basis points per year [16] Q&A Session Summary Question: What is the size of the remaining healthcare business after the divestiture? - The remaining healthcare business is focused on workflow software for providers, with expected revenue of approximately $8 million for the fiscal year [32] Question: What is the margin profile of the remaining healthcare business? - The margin profile is expected to be consistent with the public sector, in the low-forty percent range [34] Question: What is the expected free cash flow conversion for RemainCo? - The free cash flow conversion is expected to be well in excess of two-thirds of EBITDA, driven by a strong balance sheet and reduced interest expenses [36] Question: What is the revenue and margin cadence expected for Q3 and Q4? - Q3 revenue is expected to be about 48% of remaining revenue, with margins dipping into the mid-20s, while Q4 should see revenue at about 52% and margins recovering into the high 20s [37] Question: Is the small utility billing acquisition included in the updated guidance? - Yes, the small utility billing acquisition is included in the updated guidance [42] Question: What is the status of the Manitoba contract and its impact on guidance? - The removal of $2.5 million from guidance is based on conservatism due to delays and sequencing issues with the customer [49]

Financial Data and Key Metrics Changes - The company reported a revenue increase of 11.6% for RemainCo, reaching $54.1 million in Q2 2025 compared to $48.5 million in Q2 2024, driven by $4.4 million of organic growth and $1.2 million from an acquisition [12] - Annual recurring revenues for RemainCo increased by 9.2% to $164.5 million for Q2 2025, compared to $150.6 million for Q2 2024, with 76% of revenues coming from recurring sources [13] - Adjusted EBITDA for RemainCo increased by 17% to $15.8 million for Q2 2025, with an adjusted EBITDA margin of 29.3%, up from 27.9% in Q2 2024 [14] Business Line Data and Key Metrics Changes - The public sector vertical market experienced a revenue growth of 12%, with SaaS revenue growing at 23% [7] - Non-recurring sales of software licenses for RemainCo increased to $2.8 million for Q2 2025, compared to $1 million for Q2 2024 [13] Market Data and Key Metrics Changes - The company anticipates high single-digit organic revenue growth for RemainCo, excluding the healthcare RCM business, and expects adjusted EBITDA margin improvement of 50 to 100 basis points per year [16] - The revenue distribution for the remaining two quarters is expected to be approximately 48% for Q3 and 52% for Q4, with Q3 anticipated to be the low point for revenue and margins [37] Company Strategy and Development Direction - The company is focused on the public sector vertical market following the divestiture of its Healthcare RCM business, aiming to enhance efficiency and service delivery through better software solutions [7][8] - The recent acquisition in the utility billing space is expected to expand the company's market presence and enhance its offerings in the utilities market [18][20] - The company is committed to a domain-specific approach, creating tailored solutions that foster long-term relationships with customers [23] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the opportunities emerging at the state and local levels, particularly in response to evolving efficiency requirements [24] - The company is monitoring the geopolitical landscape and sees potential for growth despite current challenges, such as trade friction and project delays [16][50] Other Important Information - The company has a strong balance sheet with a net debt of $4 million and a cash position of approximately $64 million, with plans for acquisitions and potential stock repurchases [15] - The company has removed about $2.5 million of revenues from its outlook due to ongoing delays with a Manitoba contract, reflecting a conservative approach based on customer discussions [16][50] Q&A Session Summary Question: What is the size of the remaining healthcare business? - The remaining healthcare business is focused on workflow software for providers, with expected revenue of approximately $8 million for the fiscal year [33] Question: What is the margin profile of the remaining healthcare business? - The margin profile is expected to be consistent with the public sector, in the low-forty percent range [34] Question: What is the expected free cash flow conversion for RemainCo? - The free cash flow conversion is expected to be well in excess of two-thirds of EBITDA, driven by a strong balance sheet and reduced interest expenses [35][36] Question: What is the revenue and margin cadence for Q3 and Q4? - Q3 is expected to account for about 48% of remaining revenue, with margins dipping into the mid-20s, while Q4 should see a recovery into the high 20s [37] Question: Is the utility billing acquisition included in the updated guidance? - Yes, the utility billing acquisition is included in the updated guidance [42] Question: What is the status of the Manitoba contract? - The revenue removal from guidance is based on conservative discussions with the customer, reflecting delays in their project timelines [50]

Financial Data and Key Metrics Changes - The company reported RemainCo revenues for Q2 2025 increased 11.6% to $54.1 million from $48.5 million in Q2 2024, reflecting $4.4 million of organic growth or 9% and $1.2 million from an acquisition in the public sector [13] - Annual recurring revenues for RemainCo increased 9.2% to $164.5 million for Q2 2025 compared to $150.6 million for Q2 2024, with 76% of revenues coming from recurring sources [14] - Adjusted EBITDA for RemainCo increased 17% to $15.8 million for Q2 2025 from $13.5 million for Q2 2024, with adjusted EBITDA as a percentage of revenues rising to 29.3% from 27.9% [15] Business Line Data and Key Metrics Changes - The public sector vertical market experienced a revenue growth of 12% and SaaS revenue growth of 23% [7] - Non-recurring sales of software licenses for RemainCo increased to $2.8 million for Q2 2025 from $1 million for Q2 2024, although software license sales are expected to be lower in the second half of the fiscal year [14] Market Data and Key Metrics Changes - The company anticipates high single-digit organic revenue growth for RemainCo, excluding the healthcare RCM business, and expects adjusted EBITDA margin improvement of 50 to 100 basis points per year [17] - The revenue distribution for the remaining two quarters is expected to be approximately 40.8% for Q3 and 50.2% for Q4, with public sector payments and software services revenues declining seasonally during Q3 [18] Company Strategy and Development Direction - The company is focused on the public sector vertical market following the divestiture of its RCM business, aiming to enhance efficiency and service delivery through better software solutions [7][8] - The recent acquisition in the utility billing space is expected to expand the company's market presence and enhance its offerings in the utilities market [20][22] - The company is committed to a domain-specific approach, leveraging tailored solutions and deep expertise to foster long-term relationships with customers [25] Management's Comments on Operating Environment and Future Outlook - Management noted that while there are opportunities emerging at the state and local levels, it is too early to determine if these represent a trend [26] - The company is optimistic about its ability to monetize software systems through various pricing models, which lowers barriers to entry and accelerates implementation timelines [27] - Management expressed confidence in the strong acquisition pipeline, focusing on smaller tuck-in deals within the public sector [48] Other Important Information - The company has a strong balance sheet with a net debt of $4 million and a cash position of approximately $64 million, with $400 million of borrowing capacity under its revolving credit facility [16] - The company expects to use cash and borrowings for acquisitions and potential stock repurchases [16] Q&A Session Summary Question: What is the size of the remaining healthcare business? - The remaining healthcare business is focused on workflow software for providers, with revenue approximately $8 million for the fiscal year [34] Question: What is the expected free cash flow conversion for RemainCo? - The free cash flow conversion is expected to be well in excess of two-thirds of EBITDA, driven by the absence of interest expense and increased investment in software development [37][38] Question: What is the revenue and margin cadence for Q3 and Q4? - Q3 revenue is expected to be about 48% of remaining revenue, with margins dipping into the mid-20s, while Q4 should see revenue at about 52% and margins recovering into the high 20s [39] Question: Is the utility billing acquisition included in the updated guidance? - Yes, the utility billing acquisition is included in the updated guidance [43] Question: What is the status of the Manitoba contract? - The revenue from the Manitoba contract has been conservatively removed from guidance due to delays and sequencing issues with the customer [49][51]

Financial Performance Highlights - Total revenue for Q2 Fiscal Year 2025 reached $63059 thousand, a 9% year-over-year increase[4] - Software and related service revenue totaled $46223 thousand, with a 10% year-over-year growth[4] - Payments revenue amounted to $14141 thousand, reflecting a 4% year-over-year increase[4] - Total Annualized Recurring Revenue (ARR) reached $199052 thousand, a 7% increase compared to the previous year[4] Segment Performance - Public Sector revenue from continuing operations for the three months ended March 31, 2025, was $52405 thousand, an 11% increase[15] - Healthcare revenue from continuing operations for the same period was $10857 thousand, a decrease of 2%[15] - Adjusted EBITDA from continuing operations was $17142 thousand, a 13% increase[15] - Adjusted diluted earnings per share from continuing operations was $032[18] Strategic Business Changes - The company sold its healthcare revenue cycle management business (the "Healthcare RCM Business") on May 5, 2025[5] - Historical results of the Merchant Services Business have been reflected in discontinued operations following its sale on September 20, 2024[5] Non-GAAP Measures - Adjusted EBITDA from continuing operations equals net income (loss) from continuing operations attributable to i3 Verticals Inc, before interest, income taxes, depreciation and amortization, adjusted to add back net income (loss) from continuing operations attributable to non-controlling interest, and to exclude certain items which the Company believes do not fully reflect our underlying operating performance[14]

[i3 Verticals Q2 2025 Financial Report](index=1&type=section&id=i3%20VERTICALS%20REPORTS%20SECOND%20QUARTER%202025%20FINANCIAL%20RESULTS) [Second Quarter 2025 Financial Highlights](index=1&type=section&id=Highlights%20from%20continuing%20operations) The company reported strong Q2 growth from continuing operations, driven by increased revenue and adjusted EBITDA Q2 & H1 2025 Financial Performance (from Continuing Operations) | Metric | Q2 2025 | Q2 2024 | % Change | H1 2025 | H1 2024 | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **Revenue** | $63.1M | $58.0M | +8.8% | $124.8M | $113.0M | +10.4% | | **Net Income (Loss)** | $1.1M | ($2.3M) | n/m | $4.4M | ($6.5M) | n/m | | **Adjusted EBITDA** | $17.1M | $15.2M | +12.7% | $33.5M | $29.2M | +14.8% | | **Adjusted Diluted EPS** | $0.32 | $0.12 | +167% | $0.62 | $0.24 | +158% | - Adjusted EBITDA margin from continuing operations **improved to 27.2%** in Q2 2025, up from 26.2% in the prior year's second quarter[4](index=4&type=chunk) - Annualized Recurring Revenue (ARR) from continuing operations **grew by 6.5% to $199.1 million** for the three months ended March 31, 2025[4](index=4&type=chunk) [Corporate Developments](index=1&type=section&id=Corporate%20Developments) The company divested its Healthcare RCM business and acquired a utility billing software company to focus on the public sector - On May 5, 2025, the company **sold its Healthcare RCM Business for $96.0 million** in cash, which had contributed $9.1 million in revenue for Q2 2025[4](index=4&type=chunk)[6](index=6&type=chunk) - On April 1, 2025, the company **acquired a utility billing software company for $9.0 million** in cash, with up to an additional $5.0 million in contingent consideration[4](index=4&type=chunk)[9](index=9&type=chunk) [CEO Commentary and 2025 Outlook](index=3&type=section&id=CEO%20Commentary%20and%202025%20Outlook) The CEO highlighted a sharpened focus on the public sector market, supported by recent M&A and a revised 2025 outlook - The company will be completely focused on bringing enterprise software to its public sector clients, viewing this market as being in the **early stages of a long transformation cycle**[7](index=7&type=chunk)[9](index=9&type=chunk) - The divestiture of the RCM business primes the company for **additional M&A**, with a continued focus on acquiring great businesses in the public sector space[9](index=9&type=chunk) Revised Fiscal Year 2025 Outlook (RemainCo Operations) | Metric | Previous Outlook | Revised Outlook | | :--- | :--- | :--- | | **Revenue** | $243.0M - $263.0M | $207.0M - $217.0M | | **Adjusted EBITDA** | $63.0M - $71.5M | $55.0M - $61.0M | | **Adjusted Diluted EPS** | $1.05 - $1.25 | $0.96 - $1.06 | [Consolidated Financial Statements](index=5&type=section&id=Consolidated%20Financial%20Statements) The statements reflect improved operating income, lower liabilities, and cash flow impacted by a large tax payment [Consolidated Statements of Operations](index=5&type=section&id=i3%20Verticals%2C%20Inc.%20Consolidated%20Statements%20of%20Operations) Revenue grew 9% in Q2, while a 94% drop in interest expense drove a significant turnaround in net income Q2 Statement of Operations Highlights (Continuing Operations) | Metric (in thousands) | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | **Revenue** | $63,059 | $57,968 | 9% | | **Income from operations** | $3,964 | $2,486 | 59% | | **Interest expense** | $446 | $7,714 | (94)% | | **Net income (loss) from continuing operations** | $1,095 | ($2,302) | n/m | Six-Month Statement of Operations Highlights (Continuing Operations) | Metric (in thousands) | H1 2025 | H1 2024 | % Change | | :--- | :--- | :--- | :--- | | **Revenue** | $124,750 | $113,022 | 10% | | **Income from operations** | $6,663 | $3,971 | 68% | | **Interest expense** | $1,126 | $14,401 | (92)% | | **Net income (loss) from continuing operations** | $4,417 | ($6,517) | n/m | [Consolidated Balance Sheets](index=7&type=section&id=i3%20Verticals%2C%20Inc.%20Consolidated%20Balance%20Sheets) Total assets and liabilities decreased, primarily due to changes in cash and the repayment of long-term debt Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | September 30, 2024 | | :--- | :--- | :--- | | **Cash and cash equivalents** | $7,749 | $86,541 | | **Total assets** | $646,359 | $730,675 | | **Long-term debt, less current portion** | $12,000 | $0 | | **Total liabilities** | $132,700 | $215,316 | | **Total equity** | $513,659 | $515,359 | [Consolidated Cash Flow Data](index=8&type=section&id=i3%20Verticals%2C%20Inc.%20Consolidated%20Cash%20Flow%20Data) Operating cash flow turned negative due to a large tax payment related to a prior divestiture Six-Month Cash Flow Summary (in thousands) | Activity | H1 2025 | H1 2024 | | :--- | :--- | :--- | | **Net cash (used in) provided by operating activities** | ($15,627) | $25,147 | | **Net cash used in investing activities** | ($3,675) | ($12,369) | | **Net cash used in financing activities** | ($60,029) | ($17,885) | - Cash used in operating activities for the six months ended March 31, 2025, included a significant **$34.2 million payment for income taxes**, mainly driven by the sale of the Merchant Services Business in fiscal 2024[26](index=26&type=chunk) [Reconciliation of GAAP to Non-GAAP Financial Measures](index=8&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Financial%20Measures) The company reconciles GAAP to non-GAAP measures by adjusting for items like amortization and equity-based compensation [Reconciliation to Adjusted EBITDA and Adjusted Net Income](index=10&type=section&id=i3%20Verticals%2C%20Inc.%20Reconciliation%20of%20GAAP%20Net%20Income%20(Loss)%20from%20Continuing%20Operations%20to%20Non-GAAP%20Adjusted%20Net%20Income%20from%20Continuing%20Operations%20and%20Non-GAAP%20Adjusted%20EBITDA%20from%20Continuing%20Operations) GAAP net income of $1.1M was reconciled to a non-GAAP Adjusted EBITDA of $17.1M through several key adjustments Q2 2025 Reconciliation to Adjusted EBITDA (in thousands) | Line Item | Q2 2025 | | :--- | :--- | | **Net income from continuing operations** | $1,095 | | Provision for income taxes | $3,054 | | Equity-based compensation | $3,932 | | Acquisition intangible amortization | $4,913 | | Cash interest (income) expense, net | $64 | | Depreciation and internally developed software amortization | $2,927 | | Other adjustments | $1,157 | | **Adjusted EBITDA from continuing operations** | **$17,142** | Q2 2025 Reconciliation to Adjusted Net Income (in thousands) | Line Item | Q2 2025 | | :--- | :--- | | **Net income (loss) from continuing operations** | $1,095 | | Total Non-GAAP adjustments (pre-tax) | $13,056 | | **Non-GAAP adjusted income before taxes** | **$14,151** | | Estimated taxes at 25% | ($3,537) | | **Adjusted net income from continuing operations** | **$10,614** | [Reconciliation of GAAP to Non-GAAP Diluted EPS](index=12&type=section&id=i3%20Verticals%2C%20Inc.%20GAAP%20Diluted%20EPS%20from%20Continuing%20Operations%20and%20Non-GAAP%20Adjusted%20Diluted%20EPS%20from%20Continuing%20Operations) GAAP diluted EPS of $0.00 was adjusted to a non-GAAP figure of $0.32, reflecting non-cash and non-recurring items EPS Comparison (from Continuing Operations) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | **GAAP Diluted EPS** | $0.00 | ($0.07) | $0.09 | ($0.20) | | **Non-GAAP Adjusted Diluted EPS** | $0.32 | $0.12 | $0.62 | $0.24 |

Financial Position - As of December 31, 2024, the company had $85.6 million in cash and cash equivalents and $450.0 million available under its 2023 Senior Secured Credit Facility, maintaining compliance with financial covenants with a consolidated interest coverage ratio of 3.7x and total leverage ratio of 0.1x[248]. - Cash and cash equivalents as of December 31, 2024, were $85.6 million, with available borrowing capacity of $450.0 million under the 2023 Senior Secured Credit Facility[281]. - The company expects cash flow from operations and available borrowing capacity to be sufficient to fund cash needs for at least the next twelve months[282]. - As of December 31, 2024, total material cash requirements amount to $41.975 million, with $31.253 million due within one year[309]. - The 2023 Senior Secured Credit Facility provides for aggregate commitments of $450 million in the form of a senior secured revolving credit facility[292]. - The 2023 Senior Secured Credit Facility consists of a $450 million revolving credit facility, with no borrowings outstanding as of December 31, 2024[323]. - The company is in compliance with financial covenants, maintaining a minimum consolidated interest coverage ratio of 3.0 to 1.0 and a maximum total leverage ratio of 5.0 to 1.0[323]. Revenue and Growth - Annualized recurring revenue (ARR) from continuing operations for the three months ended December 31, 2024, was $193.3 million, an 8% increase from $179.6 million in the same period of 2023[264]. - Revenue increased by $6.6 million, or 12.1%, to $61.7 million for the three months ended December 31, 2024, compared to $55.1 million for the same period in 2023[268]. - Revenue within the Public Sector increased by $5.3 million, or 12.2%, to $48.8 million for the three months ended December 31, 2024[269]. - Revenue within Healthcare increased by $1.6 million, or 13.7%, to $13.2 million for the three months ended December 31, 2024[270]. Profitability - Net income attributable to i3 Verticals, Inc. was $2.1 million for the three months ended December 31, 2024, compared to $1.1 million for the same period in 2023, representing an increase of 87.2%[267]. - The company's net income increased from $1.5 million for the three months ended December 31, 2023, to $3.1 million for the same period in 2024[288]. - Adjusted EBITDA margin for the public sector segment was 39% for the three months ended December 31, 2024, compared to 40% for the same period in 2023[265]. - Adjusted EBITDA margin for the healthcare segment increased to 28% for the three months ended December 31, 2024, from 24% for the same period in 2023[265]. Expenses and Cash Flow - Interest expense decreased by $6.0 million, or 89.8%, to $0.7 million for the three months ended December 31, 2024, from $6.7 million for the same period in 2023[275]. - Other income was $1.8 million for the three months ended December 31, 2024, compared to other expense of $0.1 million for the same period in 2023[276]. - Net cash provided by operating activities decreased by $2.9 million to $11.5 million for the three months ended December 31, 2024, compared to $14.4 million for the same period in 2023[288]. - Net cash used in investing activities decreased by $5.8 million to $1.4 million for the three months ended December 31, 2024, from $7.2 million for the same period in 2023[289]. - Net cash used in financing activities increased by $1.9 million to $10.5 million for the three months ended December 31, 2024, compared to $8.6 million for the same period in 2023[290]. Strategic Initiatives - The company completed the sale of its Merchant Services Business for approximately $438 million on September 20, 2024, which included the equity interests of certain subsidiaries and associated proprietary technology[249]. - The company emphasizes a disciplined approach to acquisitions as a core component of its growth strategy, enhancing its proprietary payment facilitator platform and software solutions[250]. - The company has reclassified certain expenses to align with its new business model following the disposal of the Merchant Services Business, impacting the presentation of costs in its financial statements[255][256]. - The company anticipates using net proceeds from the sale of its Merchant Services Business for general corporate purposes, including share repurchases[284]. Risks and Challenges - Economic uncertainties, including inflation and elevated interest rates, may impact the company's financial results, although the extent of this impact is difficult to predict[247]. - The company faces various risks, including cybersecurity threats, competition, and regulatory challenges, which could affect its ability to achieve its strategic goals[242]. Share Repurchase and Debt - The company has a share repurchase program authorized for up to $50.0 million of Class A common stock, set to expire on August 8, 2025[313]. - During the three months ended December 31, 2024, the company repurchased 496,785 shares of Class A Common Stock at an average price of $22.49[315]. - The company paid $87.4 million to repurchase $90.8 million in aggregate principal amount of its Exchangeable Notes on January 18, 2024[307]. - As of December 31, 2024, $26.2 million of the original aggregate principal amount of $138.0 million of Exchangeable Notes was outstanding[306][308]. - The total amount due under the Tax Receivable Agreement as of December 31, 2024, is $39.2 million, with expected payments ranging from $0 to $9.9 million per year over the next 22 years[317]. Other Information - A 10% change in foreign currency exchange rates would not have had a material impact on the company's consolidated results for the three months ended December 31, 2024[324]. - The company utilizes a Monte Carlo simulation to assess the fair value of contingent consideration related to acquisitions[311].