IIIV — i3 Verticals, Inc.

i3 Verticals (IIIV) Q2 2026 Earnings Call Summary

1. Key Financial Results and Metrics

• Revenue: Increased 6% year-over-year to $57.5 million, up from $54.1 million in Q2 2025, primarily due to two acquisitions.
• Organic Revenue: Flat, with a $2.2 million decline in professional services, particularly in the utilities market.
• Annual Recurring Revenue (ARR): Grew 12% to $183.5 million compared to $164.5 million in Q2 2025.
• SaaS Revenue: Increased 37%, while transaction-based revenue grew 7%.
• Adjusted EBITDA: Rose 5% to $16.6 million, with an adjusted EBITDA margin of 28.8%, down from 29.3% due to investments in Justice Tech and higher hosting costs.
• Adjusted Diluted EPS: Increased 10% to $0.32 from $0.29 in Q2 2025.
• Balance Sheet: Debt stood at $81 million with a cash balance of $7.1 million; $319 million available under the revolving credit facility.

2. Strategic Updates and Business Highlights

• Focus on investing in the Justice Tech market to modernize court systems and enhance revenue opportunities.
• Continued development of AI-powered capabilities to improve operational efficiency and customer experience.
• New tools released for data analysis and document management, enhancing client engagement and operational insights.
• Strong demand across core markets, particularly in Justice Tech, transportation, and education, with increased multi-module evaluations from clients.
• Expansion of AI capabilities is expected to enhance product development and customer relationships.

3. Forward Guidance and Outlook

• Revenue Guidance for FY 2026: Expected to be between $221 million and $229 million, reflecting a downward adjustment due to professional services headwinds.
• Adjusted EBITDA Guidance: Projected between $61 million and $65 million.
• Adjusted Diluted EPS Guidance: Expected to be between $1.09 and $1.15.
• Anticipated continued double-digit growth in recurring revenues for the remainder of FY 2026.
• Long-term organic revenue growth expected to remain in the high single digits, with improved growth anticipated in 2027.

4. Bad News, Challenges, or Points of Concern

• Professional Services Decline: Ongoing weakness in professional services, particularly in the utilities market, has led to a downward revision in revenue expectations.
• Organic Revenue Flatness: Organic revenue growth was flat, indicating challenges in certain segments.
• Margin Pressure: Adjusted EBITDA margin decreased slightly, attributed to investments and higher costs.
• Market Risks: Professional services are expected to remain volatile, impacting overall revenue stability.

5. Notable Q&A Insights

• Management expressed confidence in the long-term growth trajectory, particularly in the Justice Tech and transportation markets, which are expected to drive ARR growth.
• The recent acquisition in auto insurance verification is anticipated to provide significant organic growth opportunities, with 100% market share in states won.
• AI capabilities are expected to enhance revenue through improved operational efficiency and customer engagement, with early signs of increased maintenance fees and pricing related to AI deployments.
• Approximately 50% of new sales in the education sector are from new customers, indicating a strong pipeline and market interest compared to historical averages.

Overall, i3 Verticals reported solid growth in recurring revenue but faced challenges in professional services, prompting a cautious outlook for the remainder of FY 2026. The company remains focused on strategic investments and leveraging AI to drive future growth.