VERTICALS Q1 Fiscal 2021 Supplemental Information Q1 Fiscal 2021 Segment Performance(1) | --- | --- | --- | --- | --- | --- | |--------------------------------------------------------------|-------|----------------------------------------|-------|------------------------------|----------------------------| | ($ in thousands) \nAdjusted Net Revenue (2) | | Three months ended December 31, \n2020 | | 2019 (3) | Period over period growth | | Merchant Services, excluding Purchased Portfolios | | | | $ 24,126 $ 2 ...

VERTICALS Q4 Fiscal 2020 Supplemental Information Q4 Fiscal 2020 Segment Performance(1)(3) | --- | --- | --- | --- | --- | --- | |--------------------------------------------------------------|-------|-----------------------------------------|-------|------------------------------|----------------------------| | ($ in thousands) | | Three months ended September 30, \n2020 | | 2019 | Period over period growth | | Adjusted Net Revenue (2) | | | | | | | Merchant Services, excluding Purchased Portfolios | | | | ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended September 30, 2020 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 incorporat ...

i3 Verticals Inc (NASDAQ:IIIV) Q4 2020 Results Conference Call November 20, 2020 8:30 AM ET Company Participants Scott Meriwether - Chief Operating Officer Gregory Daily - Chief Executive Officer Clay Whitson - Chief Financial Officer Rick Stanford - President Conference Call Participants John Davis - Raymond James & Associates George Mihalos - Cowen & company Jason Kupferberg - Bank of America Peter Heckman - DA Davidson Josh Beck - KeyBanc Capital Market Operator Good day, everyone, and welcome to i3 Vert ...

VERTICALS Q3 Fiscal 2020 Supplemental Information Q3 Fiscal 2020 Segment Performance(1) | --- | --- | --- | --- | --- | --- | |--------------------------------------------------------------|-------|------------------------------------|-------|-------------------------------|----------------------------| | ($ in thousands) | | Three months ended June 30, \n2020 | | 2019 | Period over period growth | | Adjusted Net Revenue (2) | | | | | | | Merchant Services, excluding Purchased Portfolios | | | | $ 20,676 $ ...

i3 Verticals, Inc. (NASDAQ:IIIV) Q3 2020 Earnings Conference Call August 11, 2020 8:30 AM ET Company Participants Scott Meriwether – Chief Operating Officer Greg Daily – Chairman and Chief Executive Officer Clay Whitson – Chief Financial Officer Rick Stanford – President Conference Call Participants John Davis – Raymond James Peter Heckmann – D.A. Davidson Josh Beck – KeyBanc George Mihalos – Cowen Operator Good day, everyone, and welcome to i3 Verticals Third Quarter 2020 Earnings Conference Call. Today's ...

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, 2020 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) (615) 465-4497 (Registrant's telephone number, including ar ...

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section presents the unaudited condensed consolidated financial statements and related disclosures for i3 Verticals, Inc [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20%28Unaudited%29) This section presents the unaudited condensed consolidated financial statements for i3 Verticals, Inc. as of March 31, 2020, and for the three and six-month periods then ended [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets slightly increased to $351.2 million, while total liabilities decreased due to reduced long-term debt, leading to higher equity Condensed Consolidated Balance Sheet Highlights (in thousands) | Metric | March 31, 2020 | September 30, 2019 | | :--- | :--- | :--- | | **Total Assets** | **$351,182** | **$349,302** | | Cash and cash equivalents | $1,591 | $1,119 | | Goodwill | $167,054 | $168,284 | | **Total Liabilities** | **$184,401** | **$206,861** | | Long-term debt, net | $123,226 | $139,298 | | **Total Equity** | **$166,781** | **$142,441** | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Net income for the quarter was $1.9 million, a turnaround from a prior-year loss, with reported revenue of $39.2 million reflecting ASC 606 adoption Statement of Operations Summary (in thousands, except per share data) | Metric | Three Months Ended Mar 31, 2020 | Three Months Ended Mar 31, 2019 | Six Months Ended Mar 31, 2020 | Six Months Ended Mar 31, 2019 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $39,178 | $85,394 | $80,289 | $170,262 | | Income (loss) from operations | $2,041 | $(203) | $6,138 | $3,327 | | Net income (loss) | $1,919 | $(1,222) | $3,853 | $1,129 | | Diluted EPS | $0.05 | $(0.12) | $0.04 | $(0.10) | - Effective October 1, 2019, the company adopted ASC 606, presenting revenues net of interchange and network fees, which were previously reported as an operating expense[15](index=15&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow decreased to $8.8 million, while investing cash outflow significantly reduced to $3.9 million due to fewer acquisitions Cash Flow Summary (in thousands) | Activity | Six Months Ended Mar 31, 2020 | Six Months Ended Mar 31, 2019 | | :--- | :--- | :--- | | Net cash provided by operating activities | $8,847 | $11,424 | | Net cash used in investing activities | $(3,881) | $(44,945) | | Net cash (used in) provided by financing activities | $(4,994) | $34,343 | - The significant decrease in cash used for investing activities was due to no business acquisitions in the first six months of fiscal 2020, compared to **$41.2 million** spent on acquisitions in the same period of 2019[26](index=26&type=chunk) [Notes to the Unaudited Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20the%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) Notes detail accounting policies, ASC 606 impact, $138 million exchangeable notes, segment performance, and initial COVID-19 effects - The company adopted the new revenue standard ASC 606 on October 1, 2019, using a modified retrospective basis, with the most significant impact being the presentation of revenue net of interchange and network fees[52](index=52&type=chunk)[84](index=84&type=chunk) Impact of ASC 606 Adoption on Revenue (in thousands) | Period | As Reported Revenue | Adjustment | Revenue without ASC 606 Adoption | | :--- | :--- | :--- | :--- | | Three months ended Mar 31, 2020 | $39,178 | $63,199 | $102,377 | | Six months ended Mar 31, 2020 | $80,289 | $132,301 | $212,590 | - In February 2020, the company issued **$138 million** in 1.0% Exchangeable Senior Notes due 2025, receiving net proceeds of approximately **$132.7 million**[111](index=111&type=chunk) - The company's two reportable segments are Merchant Services, providing comprehensive payment solutions, and Proprietary Software and Payments, delivering embedded payment solutions via company-owned software[181](index=181&type=chunk)[182](index=182&type=chunk) - The outbreak of COVID-19 was declared a pandemic in March 2020, causing significant business disruption, a decline in payment volume, and a decline in revenue, with the long-term impact unpredictable at the time of the report[205](index=205&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=49&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial performance, COVID-19 impact, company responses, liquidity, and operational results, noting ASC 606 masked underlying revenue growth [COVID-19 Recent Developments](index=50&type=section&id=COVID-19%20Recent%20Developments) The section details the initial, material impact of COVID-19, including steep declines in payment volume and revenue, and the company's workforce reduction response - The COVID-19 pandemic caused a significant disruption in business, including a steep decline in payment volume and revenue, particularly in the education and public sector verticals[214](index=214&type=chunk)[216](index=216&type=chunk) - In April 2020, the company responded by temporarily furloughing a portion of its employees and implementing a workforce reduction impacting approximately **12%** of its workforce[217](index=217&type=chunk) - As of March 31, 2020, the company had **$1.6 million** in cash and **$256.0 million** available under its Senior Secured Credit Facility, and was in compliance with all debt covenants[218](index=218&type=chunk) [Key Operating Metrics](index=54&type=section&id=Key%20Operating%20Metrics) Key metrics show significant payment volume growth and increased integrated payments, though volume attrition rose in March 2020 due to the pandemic Key Operating Metrics Performance | Metric | Q2 2020 | Q2 2019 | YoY Growth | | :--- | :--- | :--- | :--- | | Payment Volume (in billions) | $3.6 | $2.9 | 21.6% | | Integrated Payments (% of Volume) | 55% | 49% | +6 p.p. | - Net volume attrition rose to **2.0-2.5%** in March 2020 due to COVID-19, though the average for the six-month period remained below **1%**[240](index=240&type=chunk) [Results of Operations](index=55&type=section&id=Results%20of%20Operations) This section details financial results, explaining reported revenue decreases were due to ASC 606, while underlying revenue grew from acquisitions and volume - For the three months ended March 31, 2020, reported revenue decreased **54.1%** to **$39.2 million**, driven by the adoption of ASC 606, but without this accounting change, revenue would have increased by **19.9%** to **$102.4 million**, primarily due to acquisitions[243](index=243&type=chunk)[244](index=244&type=chunk) - For the six months ended March 31, 2020, reported revenue decreased **52.8%** to **$80.3 million**, but without the effect of ASC 606, revenue increased **24.9%** to **$212.6 million**, driven by acquisitions (**$31.3 million**) and organic growth[261](index=261&type=chunk)[262](index=262&type=chunk) - Selling, general and administrative (SG&A) expenses increased **45.2%** for the quarter, primarily due to higher employment expenses from increased headcount related to acquisitions and higher stock compensation[255](index=255&type=chunk) [Liquidity and Capital Resources](index=61&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains a strong liquidity position, bolstered by $138 million in exchangeable notes, with management re-evaluating capital expenditures due to COVID-19 - As of March 31, 2020, the company had **$1.6 million** in cash and **$256.0 million** of available borrowing capacity under its Senior Secured Credit Facility[279](index=279&type=chunk) - The company's liquidity profile was strengthened by the February 2020 offering of **$138.0 million** in Exchangeable Senior Notes, with proceeds used to pay down the revolving credit facility[283](index=283&type=chunk) - The company was in compliance with all financial covenants as of March 31, 2020, including a total leverage ratio of **3.41x** (against a maximum of **5.00x**)[284](index=284&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=66&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate fluctuations on its variable-rate Senior Secured Credit Facility, with foreign currency risk deemed insignificant - The company is exposed to interest rate risk through its Senior Secured Credit Facility, which accrues interest at a variable rate based on LIBOR[310](index=310&type=chunk) - As of March 31, 2020, a **1.0%** change in the applicable interest rate would impact the business by approximately **$0.2 million**[313](index=313&type=chunk) [Item 4. Controls and Procedures](index=68&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective as of March 31, 2020, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that as of March 31, 2020, the company's disclosure controls and procedures were effective[315](index=315&type=chunk) - There were no changes in internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, internal controls[316](index=316&type=chunk) [PART II. OTHER INFORMATION](index=68&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section provides additional information including legal proceedings, updated risk factors, and details on equity security sales [Item 1. Legal Proceedings](index=68&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in ordinary course legal proceedings not expected to materially impact its financial position, results, or cash flows - The company states that ongoing legal proceedings are part of the ordinary course of business and are not expected to have a material impact[173](index=173&type=chunk)[318](index=318&type=chunk) [Item 1A. Risk Factors](index=68&type=section&id=Item%201A.%20Risk%20Factors) This section updates risk factors, focusing on COVID-19 impacts and new risks related to the Exchangeable Notes, including financial reporting and liquidity challenges - The COVID-19 pandemic is highlighted as a significant risk, affecting operations, business, and financial condition due to customer closures, reduced consumer spending, and increased fraud risk[320](index=320&type=chunk)[327](index=327&type=chunk) - New risks are introduced related to the Exchangeable Notes, including the accounting method (ASC 470-20) which requires recording higher non-cash interest expense, potentially lowering reported net income[327](index=327&type=chunk)[328](index=328&type=chunk) - The company may not have the ability to raise the necessary funds to settle exchanges of the Exchangeable Notes in cash or to repurchase them upon a fundamental change, which could lead to a default[330](index=330&type=chunk) [Item 2. 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) During the quarter, the company issued 510,016 Class A common shares in exchange for Class B common stock and Common Units, exempt from registration - In Q2 2020, the company issued an aggregate of **510,016** shares of Class A common stock in exchange for Class B common stock and Common Units from existing members[332](index=332&type=chunk) [Other Items (Items 3, 4, 5, 6)](index=72&type=section&id=Other%20Items) This section confirms no defaults on senior securities, no mine safety disclosures, no other material information, and lists filed exhibits - The company reports no defaults upon senior securities (Item 3), no mine safety disclosures (Item 4), and no other information (Item 5)[333](index=333&type=chunk)[334](index=334&type=chunk)[335](index=335&type=chunk)

Financial Data and Key Metrics Changes - The company reported a 25% increase in net revenue, rising to $39.3 million in Q2 2020 from $31.4 million in Q2 2019, primarily driven by growth in the Public Sector vertical [10][23] - Pro forma adjusted EBITDA increased to $10 million in Q2 2020 from $8.7 million in Q2 2019, reflecting a 14% growth [10][26] - Adjusted EBITDA as a percentage of net revenues was 25.3% for Q2 2020, down from 27.8% for Q2 2019, due to fixed costs spread over lower net revenues [27] Business Line Data and Key Metrics Changes - In the proprietary software and payments segment, net revenues grew 93% to $14.8 million for Q2 2020 from $7.7 million for Q2 2019, mainly due to acquisitions in the Public Sector and Education verticals [28] - The Merchant Services segment saw net revenues increase by 5% to $25 million for Q2 2020 from $23.8 million for Q2 2019, driven by growth in the Pace Payments business [29] - The purchase portfolios declined by 33% to $1 million, aligning with expectations [30] Market Data and Key Metrics Changes - The company experienced a 66% decline in net revenue run rate in the education sector from April 2019 to April 2020, with payment revenues down 90% [12][35] - Payment volumes for the same set of companies were down approximately 30% on a year-over-year consolidated basis as of the end of April [25] - The Public Sector and B2B customers experienced less impact on payment volumes compared to other sectors [14] Company Strategy and Development Direction - The company is focused on delivering contactless payment solutions across all verticals, responding to increased customer awareness of their needs due to COVID-19 [15] - The company has paused acquisition activity due to economic uncertainty but continues to build its acquisition pipeline [18] - The company anticipates that the COVID-19 pandemic will accelerate the migration from cash to electronic payments, particularly in the Public Sector and Education verticals [16] Management's Comments on Operating Environment and Future Outlook - Management expects a greater impact from COVID-19 in the financials for the third fiscal quarter, particularly affecting education and hospitality customers [12] - The company believes that local governance and K-12 schools will rebound to their historic activity and growth rates despite short-term budget pressures [17] - Management is optimistic about economic recovery and the potential to gain market share as states begin to reopen [20] Other Important Information - The company has a strong balance sheet, with a senior leverage ratio of 0.4 times and a total leverage ratio of 3.4 times [32] - The company executed a convertible notes offering in February, bringing in $138 million to repay borrowings under its revolving credit facility [31] Q&A Session Summary Question: What percentage of revenue will be impacted by COVID-19? - Management indicated that all revenue is currently impacted, but expects government and education sectors to bounce back 100% [49] Question: How did payment volumes trend throughout April? - Payment volumes improved sequentially throughout April, with the worst decline occurring at the end of March [50][52] Question: Is it feasible to close an M&A transaction by the end of the fiscal year? - Management expressed confidence in closing some deals by year-end and is closely monitoring market multiples [53] Question: What is the capacity for M&A in the current environment? - The company has significant capacity under its credit line and strong cash flow, allowing for strategic acquisitions [56] Question: How has the education business been impacted geographically? - Management noted that states like Ohio, Colorado, and California have a strong presence, and they expect schools to reopen on time [58] Question: What has been the impact on the healthcare vertical? - The healthcare vertical has held up well, showing resilience during the pandemic [60] Question: Have there been any changes in ISV partnerships? - There have been no changes in terms or revenue share, and the company continues to sign new ISVs [78]

VERTICALS Q2 Fiscal 2020 Supplemental Segment Information Q2 Fiscal 2020 Segment Performance(1) | --- | --- | --- | --- | --- | --- | |---------------------------------------------------|-------|-------------------------------------|-------|-----------|----------------------------| | ($ in thousands) | | Three months ended March 31, \n2020 | | 2019 | Period over period growth | | Adjusted Net Revenue (2) | | | | | | | Merchant Services, excluding Purchased Portfolios | $ | 23,984 | $ | 22,213 | 8% | | Purch ...