IIIV — i3 Verticals, Inc.

i3 Verticals Q1 2026 Earnings Call Summary

1. Key Financial Results and Metrics

• Revenue: Q1 2026 revenue was $52.7 million, a 1% increase from $52.2 million in Q1 2025.
• Recurring Revenue: Grew by 8% to $169.6 million, comprising 80% of total revenue.
• SaaS Revenue: Increased by 24%, marking the fourth consecutive quarter of over 20% growth.
• Adjusted EBITDA: Declined to $13.6 million from $14.6 million year-over-year, with a margin of 25.8% compared to 27.9% in Q1 2025.
• Adjusted Diluted EPS: Reported at $0.26.
• Cash Position: $37 million in cash with no debt.

2. Strategic Updates and Business Highlights

• Acquisition: Closed a $60 million acquisition of a software provider for driver and motor vehicle insurance verification, expected to enhance geographic reach and product offerings in the transportation market.
• Market Focus: Continued emphasis on SaaS and recurring revenue sources, with notable growth in transaction-based and payments revenue.
• Product Development: Strong focus on AI-enabled solutions and enhancements in JusticeTech and transportation markets, with new offerings like CourtOne gaining traction.

3. Forward Guidance and Outlook

• Revenue Guidance: Expected FY 2026 revenue between $223 million and $234 million, with recurring revenues projected to grow at a double-digit rate.
• Adjusted EBITDA Guidance: Forecasted between $61 million and $66.5 million for FY 2026.
• Long-Term Expectations: Anticipate organic revenue growth in the high single digits, with an adjusted EBITDA margin improvement of 50 to 100 basis points annually.

4. Challenges and Points of Concern

• Professional Services Revenue: Declined by $3 million, with projections for further reduction from $40 million to $31 million, impacting overall growth expectations.
• Adjusted EBITDA Decline: The decrease in adjusted EBITDA reflects investments in new markets and higher hosting costs, with expectations for recovery in margins later in the year.
• Market Headwinds: Potential delays in AI adoption within GovTech due to regulatory and operational challenges, which could slow down growth.

5. Notable Q&A Insights

• Organic Growth Concerns: Analysts noted a slight decline in organic growth expectations, primarily due to professional services revenue.
• Recurring Revenue Outlook: Management confirmed ongoing expectations of 8% to 10% growth in recurring revenue for the year.
• Capital Allocation: Discussion on balancing M&A with stock buybacks; management indicated a strong preference for opportunistic buybacks given the current stock valuation.
• AI Integration: Management acknowledged the slow adoption of AI in GovTech, citing the need for regulatory frameworks that could delay broader implementation.

This summary provides a balanced view of i3 Verticals' financial performance, strategic direction, and challenges as discussed in the Q1 2026 earnings call.