i3 Verticals(IIIV) - 2025 Q3 - Quarterly Results

Executive Summary & Financial Highlights Third Quarter & Nine Months Financial Highlights (Continuing Operations) 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] Management Commentary 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] - SaaS growth led the way, increasing 24% over the prior year period[7] - Revenue from payments increased by 11% compared to the prior year quarter[7] - The divestiture of the Healthcare Revenue Cycle Management Business was smooth[8] - The company remains well capitalized with over $50 million in cash on hand and plans to continue investment in government technology[9] 2025 Outlook 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] Business Updates & Corporate Information Change in Segment Presentation 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] - After the disposition of the Healthcare RCM Business, the company now has one operating and reportable segment[12] About i3 Verticals 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] - Solutions are cloud-native and address various government functions including courts, transportation, utilities, revenue, and schools[17] - i3 Verticals is a leader in the public sector vertical with thousands of software installations across all 50 states and Canada[17] Conference Call Details 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] - Participants can listen live via telephone or webcast through the company's website[13][14] - A telephonic replay will be available until August 15, 2025, and an online replay for 30 days[13][14] Forward-Looking Statements 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] - 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] - The company does not undertake to publicly update any forward-looking statements, except as required by law[20] Consolidated Financial Statements Consolidated Statements of Operations 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 ($M) | % Change | | :----------------------------- | :------------------------------------ | :------------------------------------ | :------- | :----------------------------------- | :----------------------------------- | :------- | | Revenue | 51,901 | 46,183 | 12% | 158,257 | 139,909 | 13% | | Total operating expenses | 56,714 | 47,493 | 19% | 155,956 | 138,964 | 12% | | (Loss) income from operations | (4,813) | (1,310) | 267% | 2,301 | 945 | 143% | | Net (loss) income from continuing operations | (996) | (14,407) | N/A | 4,117 | (22,365) | N/A | | Net income from discontinued operations, net of income taxes | 19,421 | 6,109 | N/A | 18,185 | 18,951 | N/A | | Net income (loss) | 18,425 | (8,298) | N/A | 22,302 | (3,414) | N/A | | Net (loss) income attributable to i3 Verticals, Inc. | 12,882 | (7,545) | N/A | 14,784 | (4,569) | N/A | - Certain personnel costs and hosting/software costs were reclassified from selling, general and administrative expenses to other costs of services in fiscal year 2025 to align with the company's core software solutions business model[24] Consolidated Balance Sheets The Consolidated Balance Sheets show a decrease in total assets and liabilities from September 30, 2024, to June 30, 2025, primarily due to the divestiture of businesses, while total stockholders' equity saw a slight increase | Metric | June 30, 2025 ($M) | September 30, 2024 ($M) | | :----------------------------- | :----------------- | :---------------------- | | Cash and cash equivalents | 55,544 | 86,525 | | Total current assets | 117,777 | 153,393 | | Total assets | 623,274 | 730,675 | | Total current liabilities | 58,211 | 164,731 | | Total liabilities | 112,153 | 215,316 | | Total stockholders' equity | 383,295 | 379,735 | | Total equity | 511,121 | 515,359 | | Total liabilities and equity | 623,274 | 730,675 | Consolidated Cash Flow Data For the nine months ended June 30, 2025, i3 Verticals reported net cash used in operating activities, a significant increase in net cash provided by investing activities, and continued net cash used in financing activities | Metric | Nine Months Ended June 30, 2025 ($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 $35.1 million in cash paid for income taxes, primarily from the sale of the Merchant Services Business[28] Non-GAAP Financial Measures & Reconciliations Explanation of Non-GAAP Measures i3 Verticals provides several non-GAAP financial measures, including Adjusted Income Before Taxes, Adjusted Net Income, Adjusted Diluted EPS, Adjusted EBITDA, and Adjusted EBITDA Margin, to offer investors and management a clearer view of the company's underlying operational performance, excluding certain non-recurring or non-cash items - Non-GAAP measures are provided to enhance understanding of the company's financial results and are used by management for assessment, evaluation, budgeting, resource allocation, and operational decisions[29] - Adjusted Income Before Taxes from Continuing Operations adjusts net income (loss) from continuing operations for non-controlling interest and certain pre-tax items not reflective of underlying performance[30] - Adjusted Net Income and Adjusted Diluted Earnings per Share from Continuing Operations apply an estimated long-term effective tax rate of 25% to adjusted income before taxes[30] - Adjusted EBITDA from Continuing Operations excludes interest, income taxes, depreciation, amortization, non-controlling interest, and other items not reflective of underlying operating performance[30] Reconciliation of GAAP Net Income (Loss) from Continuing Operations to Non-GAAP Adjusted Net Income and Adjusted EBITDA The reconciliation tables detail the adjustments made to GAAP net income (loss) from continuing operations to arrive at non-GAAP adjusted income before taxes, adjusted net income, and adjusted EBITDA, highlighting the impact of items such as equity-based compensation, M&A-related activity, and acquisition intangible amortization | Metric (Continuing Operations) | Three Months Ended June 30, 2025 ($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][34][37] - Estimated taxes for non-GAAP adjusted income are calculated using a 25.0% effective tax rate for both periods[38] GAAP Diluted EPS from Continuing Operations and Non-GAAP Adjusted Diluted EPS from Continuing Operations 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] - 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]