IIIV — i3 Verticals, Inc.

i3 Verticals (IIIV) Q4 2025 Earnings Call Summary

1. Key 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.

2. Strategic 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.

3. Forward 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.

4. Bad 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.

5. Notable 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.