i3 Verticals(US:IIIV)2026-02-06 21:12Financial Position - As of December 31, 2025, the company had $37.5 million in cash and cash equivalents and $400.0 million available under its 2023 Senior Secured Credit Facility, maintaining compliance with financial covenants[258]. - Cash and cash equivalents as of December 31, 2025, were $37.5 million, with available borrowing capacity of $400.0 million under the 2023 Senior Secured Credit Facility[293]. - The consolidated interest coverage ratio was 94.9x and the total leverage ratio was 0.0x as of December 31, 2025, indicating strong financial health[319]. - The company maintained a consolidated interest coverage ratio of 94.9x and a total leverage ratio of 0.0x as of December 31, 2025, in compliance with financial covenants[295]. - The 2023 Senior Secured Credit Facility provides aggregate commitments of $400.0 million, with the ability to seek additional commitments based on consolidated EBITDA[306]. - The 2023 Senior Secured Credit Facility consists of a $400 million revolving credit facility, with no borrowings outstanding as of December 31, 2025[344]. - The interest rate on the 2023 Senior Secured Credit Facility is based on Term SOFR plus an applicable margin of 2.00% to 3.00%[343]. - 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[344]. - As of December 31, 2025, the company had contractual obligations totaling $26.645 million, with $12.391 million due within one year[324]. Revenue and Income - The company generates revenue from software and related services, including subscriptions, recurring services, and volume-based payment processing fees[268]. - Annualized recurring revenue (ARR) for the three months ended December 31, 2025, was $169.6 million, an increase of 8.4% from $156.4 million in the same period of 2024[278]. - Total revenue for the three months ended December 31, 2025, was $52.7 million, a 0.9% increase from $52.2 million in the same period of 2024, driven by a $3.3 million increase in recurring revenues[282]. - Net income from continuing operations for the three months ended December 31, 2025, was $1.1 million, a decrease of 61.1% from $2.8 million in the same period of 2024[281]. - The company’s net income decreased from $3.1 million for the three months ended December 31, 2024, to $0.9 million for the same period in 2025[302]. Expenses - Operating expenses for the three months ended December 31, 2025, totaled $51.1 million, an increase of 1.8% from $50.2 million in the same period of 2024[281]. - Selling, general and administrative expenses encompass salaries, professional services, and other operational costs[271]. - Selling, general and administrative expenses rose by 1.9% to $27.0 million for the three months ended December 31, 2025, driven by increased personnel costs[284]. - Other costs of services include personnel costs for software installation and customer support, as well as losses from chargebacks[270]. - Other costs of services increased by 12.9% to $17.6 million for the three months ended December 31, 2025, primarily due to a $1.6 million increase in software costs[283]. Cash Flow - Net cash provided by operating activities increased by $2.6 million to $14.1 million for the three months ended December 31, 2025, compared to $11.5 million for the same period in 2024[300]. - Net cash used in financing activities increased by $30.0 million to $40.5 million for the three months ended December 31, 2025, from $10.5 million for the same period in 2024, primarily due to a $26.7 million increase in stock repurchase payments[304]. - Net cash used in investing activities increased by $0.4 million to $1.8 million for the three months ended December 31, 2025, compared to $1.4 million for the same period in 2024[303]. - The company’s net cash provided by operating activities was impacted by a $4.9 million increase in cash from changes in net operating assets and liabilities during the three months ended December 31, 2025[301]. Business Transactions - The company completed the sale of its Healthcare RCM Business for $96.3 million in cash on May 5, 2025, reclassifying the results as discontinued operations[259][260]. - The sale of the Merchant Services Business was finalized on September 20, 2024, for approximately $439.5 million in cash, also reflected as discontinued operations[261][263]. - A recent acquisition effective January 1, 2026, involved a business in the transportation market for $60.0 million in cash, with potential contingent consideration of up to $20.0 million based on financial performance[265]. - The company repurchased $90.8 million in aggregate principal amount of its Exchangeable Notes for $87.4 million on January 18, 2024[321]. - The company announced a new share repurchase program authorizing the repurchase of up to $60.0 million of Class A common stock[329]. - The previous share repurchase program, which authorized up to $50.0 million, has been fully expended[332]. - Under the August 2025 Share Repurchase Program, the company repurchased 1,522,838 shares at an average price of $24.88, totaling $38.3 million[334]. - The August 2024 Share Repurchase Program resulted in the repurchase of 1,573,881 shares at an average price of $23.86, totaling $38.0 million[337]. Economic Environment - The company operates in a challenging economic environment characterized by inflationary pressures and elevated interest rates, impacting financial results[257]. - 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, 2025[345]. Valuation and Fair Value - The company uses a Monte Carlo simulation to assess the fair value of contingent consideration related to acquisitions[326].