i3 Verticals (IIIV) Q4 2025 Earnings Call Summary

1Key Financial Results and Metrics

Q4 Revenue: $54.9 million, up 7% year-over-year from $51.3 million.

Organic Growth: 4.5% in Q4; annual organic growth at 8.4%.

Recurring Revenue: Increased 9% to $41.3 million, constituting 75% of total revenue.

Adjusted EBITDA: Slight decline to $14.4 million (26.2% of revenue) from $14.6 million (28.5% of revenue) in Q4 2024.

Adjusted Diluted EPS: $0.27 for Q4 2025; $1.05 for the fiscal year.

Cash Position: $67 million in cash with no debt; $400 million borrowing capacity available.

2Strategic Updates and Business Highlights

i3 Verticals has transitioned to a pure-play software solutions provider for the public sector following the divestiture of its Merchant Services and healthcare revenue cycle management businesses.

The company is focusing on growth in recurring revenue, particularly in the justice and utility sectors, with ongoing investments expected to yield long-term benefits.

Notable contract win in West Virginia for court management solutions, showcasing the company’s commitment to enhancing public sector services.

The company is pursuing a disciplined M&A strategy, with ongoing discussions for potential acquisitions that align with strategic goals.

3Forward Guidance and Outlook

FY 2026 Revenue Guidance: Expected between $217 million and $232 million.

Adjusted EBITDA Guidance: Projected between $58.5 million and $65 million.

Recurring Revenue Growth: Anticipated to be in the range of 8% to 10%, while nonrecurring professional services are expected to decline due to timing of revenue recognition.

Long-term organic revenue growth is expected to remain in the high single digits.

4Bad News, Challenges, or Points of Concern

Professional Services Decline: Anticipated decrease in nonrecurring professional services revenue due to project timing, particularly in Q1 2026.

Adjusted EBITDA Margin Pressure: Slight decline in margins due to lower-margin professional services growth and reduced high-margin software license sales.

Market Conditions: The company faces uncertainties regarding the timing of revenue recognition for certain projects, which may impact short-term performance.

5Notable Q&A Insights

Organic Growth Clarification: Management acknowledged a conservative approach to forecasting organic growth, particularly due to expected declines in professional services.

Pricing Strategy: The company plans to implement modest price increases (1.5% to 3% range) moving forward, which may contribute positively to revenue.

Investment in Justice Tech: Ongoing investments in Justice Tech are expected to continue impacting margins but are viewed as necessary for long-term growth.

M&A vs. Buyback Strategy: Management indicated a balanced approach to capital deployment, with a focus on M&A opportunities while maintaining a $50 million buyback authorization for opportunistic repurchases. Overall, i3 Verticals demonstrated solid revenue growth and a strong cash position, while navigating challenges related to professional services and margin pressures. The strategic focus on recurring revenue and potential acquisitions positions the company for future growth despite short-term headwinds.