Financial Data and Key Metrics Changes - Revenue for Q4 2025 increased by 7% to $54.9 million from $51.3 million in Q4 2024, with organic growth of 4.5% and $1.3 million from acquisitions [8] - Annual recurring revenue (ARR) grew over 9% in Q4 2025, outpacing overall revenue growth [5] - Adjusted EBITDA for Q4 2025 slightly declined to $14.4 million from $14.6 million in Q4 2024, with adjusted EBITDA as a percentage of revenues at 26.2% for Q4 2025 compared to 28.5% for Q4 2024 [9][10] - Adjusted diluted earnings per share from continuing operations was $0.27 for Q4 2025 and $1.05 for the fiscal year [10] Business Line Data and Key Metrics Changes - Recurring revenues increased by 9% to $41.3 million in Q4 2025, accounting for 75% of total revenues [8] - SaaS revenues grew by 25%, offsetting an 8% decline in maintenance revenues [8] - Professional services revenue increased by $1.8 million, partially offsetting the decline in software and license sales [8] Market Data and Key Metrics Changes - Justice is the largest market, representing approximately 25% of revenues, with utilities, transportation, education, and public administration contributing roughly equally [12] - The company expects revenue distribution for FY 2026 to be approximately 23% in Q1, 25.5% in Q2, 24.5% in Q3, and 27% in Q4 [13] Company Strategy and Development Direction - The company has divested its merchant services and healthcare revenue cycle management businesses, focusing on providing software solutions for the public sector [4][7] - Investments in justice and utility markets are expected to accelerate in 2026, with a focus on long-term recurring revenue growth [5] - The company aims to enhance its public sector vertical through strategic acquisitions and internal development [14] Management's Comments on Operating Environment and Future Outlook - Management expects recurring revenues to grow at a rate similar to FY 2025, in the range of 8%-10%, but anticipates a decline in non-recurring professional services [11] - The long-term expectation for organic revenue growth remains in the high single digits [11] - The company is experiencing increased demand for technology-forward platform solutions across the public sector [16][17] Other Important Information - The company has $67 million in cash and no debt, with $400 million of borrowing capacity under a revolving credit facility [10] - The adjusted EBITDA improvement for the year was driven mainly by lower corporate expenses following the divestitures [10] Q&A Session Summary Question: Clarification on 2026 organic growth outlook - Management indicated that they are focusing on recurring revenue and expect professional services to decline in 2026 due to timing and cadence of projects [21][22] Question: Details on dollar retention and pricing - The company has been conservative on price increases historically but expects to achieve a consistent range of 3%-5% price increases going forward [24][25] Question: Justice tech investment and expectations for 2026 - The investment primarily consists of personnel to accelerate development and implementation, with costs expected to continue into the next fiscal year [26][27] Question: Thoughts on buyback versus M&A - The company has refreshed a $50 million buyback authorization and is focused on being opportunistic, while also indicating that meaningful M&A activity is expected in 2026 [29][31]

Financial Data and Key Metrics Changes - Revenue for Q4 2025 increased by 7% to $54.9 million from $51.3 million in Q4 2024, with organic growth of 4.5% and $1.3 million from acquisitions [9] - Annual recurring revenue (ARR) grew over 9% in Q4, outpacing overall revenue growth [5] - Adjusted EBITDA for Q4 2025 slightly declined to $14.4 million from $14.6 million in Q4 2024, with adjusted EBITDA as a percentage of revenues at 26.2% for Q4 2025 compared to 28.5% for Q4 2024 [10][11] - Adjusted diluted earnings per share from continuing operations was $0.27 for Q4 2025 and $1.05 for the fiscal year [11] Business Line Data and Key Metrics Changes - Recurring revenues increased by 9% to $41.3 million in Q4 2025 compared to $37.8 million in Q4 2024, with 75% of revenues coming from recurring sources [9] - SaaS revenues grew by 25%, offsetting an 8% decline in maintenance revenues [9] - Professional services revenue increased by $1.8 million, partially offsetting the decline in software and license sales [9] Market Data and Key Metrics Changes - Justice is the largest market, representing approximately 25% of revenues, with utilities, transportation, education, and public administration being roughly equally weighted [13] - The company expects revenue distribution for FY 2026 to be approximately Q1: 23%, Q2: 25.5%, Q3: 24.5%, Q4: 27% [14] Company Strategy and Development Direction - The company has divested its merchant services and healthcare revenue cycle management businesses, focusing on providing software solutions for the public sector [4] - Investments in new products and markets are ongoing, particularly in justice and utility sectors, with expectations for accelerated growth in 2026 [5] - The company aims to enhance its public sector vertical through strategic acquisitions and internal development [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in revenue opportunities tied to investments, expecting durable recurring revenue growth over the long term [5] - Guidance for FY 2026 includes revenues of $217 million to $232 million and adjusted EBITDA of $58.5 million to $65 million, with recurring revenues expected to grow at 8%-10% [12] - The company anticipates a decline in non-recurring professional services in FY 2026, but expects a rebound in FY 2027 and beyond [12] Other Important Information - The company has $67 million in cash and no debt, with $400 million of borrowing capacity under a revolving credit facility [11] - The net dollar retention for fiscal 2025 was 104%, with expectations for modest price increases contributing to future growth [10][25] Q&A Session Summary Question: Clarification on 2026 organic growth outlook - Management indicated that they are focusing on recurring revenue and expect professional services to decline in 2026 due to timing and cadence of projects [22][24] Question: Inquiry about dollar retention and pricing - Management noted that historical price increases have been conservative, but they expect to achieve a consistent 3%-5% price increase range moving forward [25][26] Question: Discussion on justice tech investment - Management confirmed that investments in justice tech are in line with expectations and are aimed at accelerating development and implementation [27][28] Question: Thoughts on cash balance and buyback versus M&A - Management stated that they have refreshed a $50 million buyback authorization and are focused on being opportunistic, while also indicating ongoing M&A discussions [30][32] Question: Clarification on M&A strategy - Management clarified that they are looking for meaningful acquisitions, primarily in the $2 million-$5 million EBITDA range, but nothing transformative [34][35]

Financial Data and Key Metrics Changes - For Q4 2025, revenues increased by 7% to $54.9 million from $51.3 million in Q4 2024, with organic growth of 4.5% and $1.3 million from acquisitions [9] - Recurring revenues rose by 9% to $41.3 million in Q4 2025 compared to $37.8 million in Q4 2024, accounting for 75% of total revenues [9] - Adjusted EBITDA slightly declined to $14.4 million for Q4 2025 from $14.6 million for Q4 2024, with adjusted EBITDA as a percentage of revenues at 26.2% for Q4 2025, down from 28.5% in Q4 2024 [10][11] - Adjusted diluted earnings per share from continuing operations was $0.27 for Q4 2025 and $1.05 for the fiscal year [11] Business Line Data and Key Metrics Changes - SaaS revenues grew by 25%, offsetting an 8% decline in maintenance revenues [9] - Transactional-based revenues and recurring software services increased by 10%, while payments revenue grew by 11% [9] - Non-recurring sales of software licenses declined by $1.9 million, reflecting a shift to SaaS [9] Market Data and Key Metrics Changes - Justice is the largest market, representing approximately 25% of revenues, with utilities, transportation, education, and public administration contributing equally [13] - The company expects revenue distribution for FY 2026 to be approximately Q1: 23%, Q2: 25.5%, Q3: 24.5%, Q4: 27% [13] Company Strategy and Development Direction - The company has divested its merchant services and healthcare revenue cycle management businesses, focusing on providing software solutions for the public sector [4][8] - Investments in new products and markets are underway, particularly in justice and utility sectors, expected to accelerate in 2026 [5] - The company aims to enhance its public sector vertical through strategic acquisitions and internal development [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in revenue opportunities tied to investments, anticipating durable recurring revenue growth in the long term [5] - For FY 2026, the company expects revenues between $217 million and $232 million, with recurring revenues projected to grow at 8%-10% [12] - Despite a decline in non-recurring professional services, management believes these markets are well-positioned for recovery in FY 2027 and beyond [12] Other Important Information - The company has $85 million in cash on hand with no debt and a $400 million borrowing capacity under its revolving credit facility [11] - The net dollar retention rate for fiscal 2025 was 104%, with expectations for modest price increases contributing to future growth [10][24] Q&A Session Summary Question: Clarification on 2026 organic growth outlook - Management indicated a focus on recurring revenue and expects professional services to decline in 2026 due to timing and cadence of projects [21][22] Question: Details on dollar retention and pricing - Management noted that historical price increases have been conservative, with expectations for a gradual increase in the contribution from price increases moving forward [24][25] Question: Justice tech investment and expectations for 2026 - Management confirmed that investments in justice tech are in line with expectations and will continue into the next fiscal year [26][27] Question: M&A versus buyback strategy - Management refreshed the buyback authorization to $50 million, emphasizing a disciplined approach to both M&A and buybacks, with potential for meaningful acquisitions in 2026 [28][31]

Core Insights - i3 Verticals, Inc. is focusing on modernization and solution bundling across its five primary markets: Justice tech, transportation, public administration, education, and utilities, aiming to enhance customer engagement and revenue growth [1][5][6] - The company is actively pursuing acquisition opportunities that align with its strategic goals, particularly in the public sector, which is seen as a significant area for growth and innovation [2][4] - The revenue distribution for the upcoming quarters is projected to be approximately 23% in Q1, 25.5% in Q2, 24.5% in Q3, and 27% in Q4, indicating a seasonal pattern in revenue recognition [3] Market Position and Strategy - i3 Verticals, Inc. is well-positioned to address the modernization needs of state and local government agencies, offering scalable solutions from single agencies to entire state systems [5][7] - The company is experiencing increased demand for technology-forward platform solutions, which are designed to streamline processes and improve efficiency in public sector operations [6][8] - A shift towards SaaS models is changing budgeting paradigms for government clients, allowing i3 Verticals, Inc. to bundle services and reduce upfront costs while delivering integrated solutions [7] Financial Outlook - The long-term expectation for organic revenue growth remains in the high single digits, with utilities, transportation, education, and public administration contributing roughly equally to revenues [4] - The company anticipates a slight decline in professional services revenue in 2026 due to timing and cadence of project fulfillment, but remains optimistic about future growth opportunities [10][12] - i3 Verticals, Inc. has a cash balance of $85 million and has refreshed its buyback authorization to $50 million, indicating a balanced approach between buybacks and M&A activities [15][17]