i3 Verticals(IIIV)2024-11-19 21:03Financial Data and Key Metrics Changes - Revenues for Q4 2024 increased 4% to 58.6 million for Q4 2023, reflecting organic growth of 2% and two months of revenue from a recent acquisition [13][12] - Annualized recurring revenues increased 7.5% to 175.1 million as of Q4 2023, with 77% of revenues coming from recurring sources [13] - Adjusted EBITDA increased 4% to 0.15 for Q4 2024 [17] Business Line Data and Key Metrics Changes - SaaS and payments revenue grew 8%, transaction-based revenues grew 11%, while maintenance and recurring software services grew 6% [13] - Non-recurring sales of software licenses declined 8%, and professional services revenue declined 7% due to implementation delays [14] - Revenues in the public sector vertical increased 6% to 11.4 million for Q4 2024, with expectations of low single-digit growth for fiscal 2025 [19] Market Data and Key Metrics Changes - The company anticipates high single-digit organic growth for fiscal 2025, with a guidance range for revenues set at 263 million [21] - The company expects to resume acquisitions regularly, with a strong acquisition pipeline focused on public sector deals [29] Company Strategy and Development Direction - The company is transitioning to a pure-play vertical market software business, focusing on operational efficiency and technology transformation [8][25] - New product development is underway, including a rewrite of the CAMA platform and the JusticeTech 3.0 platform [28] - The company aims to enhance its cybersecurity measures and streamline back-office technologies to improve efficiency [26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term guidance of high single-digit organic growth, supported by a strong sales funnel and product pipeline [10][21] - The company noted that the healthcare segment faces challenges due to consolidation, impacting revenue growth expectations [19][70] - Management highlighted consistent demand in the public sector for configurable web-native applications, indicating a positive outlook for that market [49] Other Important Information - Following the sale of the Merchant Services business, the company has a strong balance sheet with 86.5 million in cash [20] - The company will incur approximately 65 million in tax-related payments due to the sale of the Merchant Services business [20] Q&A Session Summary Question: Was there any delayed implementation affecting Q4 revenue? - Management indicated no significant delays impacted Q4 revenue, noting a 2 million license fee received as expected [36][37] Question: How should growth be modeled for 2025? - Management expects a combination of new logo growth and improved net revenue retention to achieve high single-digit organic growth [38][39] Question: Update on the utility initiative and rollout timeline? - The company is currently rolling out the initial project and anticipates sales activities to begin in Q1 2025 [44][45] Question: Insights on the M&A environment? - Management noted a strong acquisition pipeline with more realistic valuations from sellers, expecting to complete 3 to 5 acquisitions in 2025 [46][47] Question: General health of customers and macro outlook? - Management reported consistent demand in the public sector and positive trends in sales activity across various verticals [49][50] Question: Clarification on margin expansion expectations? - Management confirmed expectations of 50 to 100 basis points margin expansion for 2025, driven by revenue growth outpacing corporate overhead [55][56] Question: Seasonality and timing of software payments? - Management indicated that software license sales are the most variable line item, with a disproportionate amount expected in Q2 [61] Question: Revenue expectations from the Tier 1 utility project? - The project will generate a mix of revenue types, including professional services and recurring payments, with significant revenue expected in 2025 [63]