i3 Verticals Reports Second Quarter 2025 Financial Results

NASHVILLE, Tenn.--(BUSINESS WIRE)-- i3 Verticals, Inc. (Nasdaq: IIIV) (“i3 Verticals” or the “Company”) today reported its financial results for the fiscal second quarter ended March 31, 2025.

Highlights from continuing operations¹ for the three and six months ended March 31, 2025 vs. 2024

• Second quarter revenue was $63.1 million, an increase of 8.8% over the prior year's second quarter. Revenue for the six months ended March 31, 2025, was $124.8 million, an increase of 10.4% over the prior year's first six months.
• Second quarter net income from continuing operations¹ was $1.1 million, compared to net loss from continuing operations¹ of $2.3 million in the prior year's second quarter. Net income for the six months ended March 31, 2025, was $4.4 million, compared to a net loss of $6.5 million in the prior year's first six months.
• Second quarter net income from continuing operations attributable to i3 Verticals, Inc.¹ was $0.1 million, compared to net loss from continuing operations attributable to i3 Verticals, Inc.¹ of $1.7 million in the prior year's second quarter. Net income from continuing operations attributable to i3 Verticals, Inc.¹ for the six months ended March 31, 2025, was $2.3 million, compared to net loss from continuing operations attributable to i3 Verticals, Inc.¹ of $4.6 million in the prior year's first six months.
• Second quarter adjusted EBITDA from continuing operations^1,2 was $17.1 million, an increase of 12.7% over the prior year's second quarter. Adjusted EBITDA from continuing operations^1,2 for the six months ended March 31, 2025, was $33.5 million, an increase of 14.8% over the prior year's first six months.
• Second quarter adjusted EBITDA from continuing operations^1,2 as a percentage of revenue was 27.2%, compared to 26.2% in the prior year's second quarter. Adjusted EBITDA from continuing operations¹ a percentage of revenue for the six months ended March 31, 2025, was 26.9%, compared to 25.8% in the prior year's first six months.
• Second quarter diluted net income per share attributable to Class A common stockholders from continuing operations^1,3 was $0.00, compared to diluted net loss per share attributable to Class A common stockholders from continuing operations^1,3 of $0.07 in the prior year's second quarter. Diluted net income per share attributable to Class A common stockholders from continuing operations^1,3 was $0.09 in the six months ended March 31, 2025, compared to diluted net loss per share attributable to Class A common stockholders from continuing operations^1,3 of $0.20 in the prior year's first six months.
• Second quarter non-GAAP adjusted diluted earnings per share from continuing operations^1,2,3, which gives effect to the Company's 25% estimated long-term effective tax rate⁴, was $0.32 compared to $0.12 for the prior year's second quarter. Non-GAAP adjusted diluted earnings per share from continuing operations^1,2,3 for the six months ended March 31, 2025, was $0.62 compared to $0.24 for the prior year's first six months.
• Annualized Recurring Revenue ("ARR") from continuing operations^1,5 for the three months ended March 31, 2025 and 2024 was $199.1 million and $186.8 million, respectively, representing a period-to-period growth rate of 6.5%.
• On April 1, 2025, the Company acquired a utility billing software company for $9.0 million in cash consideration, and an additional amount of contingent consideration (in an amount not to exceed $5.0 million), which is still being valued.
• On May 5, 2025, as previously disclosed, the Company sold its Healthcare Revenue Cycle Management business (the “Healthcare RCM Business”) to Infinx pursuant to the terms of a purchase agreement dated as of May 5, 2025, for $96.0 million in cash, subject to post-closing net working capital and other purchase price adjustments. The RCM business contributed $9.1 million and $18.9 million of revenue for the three and six months ended March 31, 2025, respectively.

See footnotes on the following page.

1. As a result of the sale of the Company’s merchant services business (the "Merchant Services Business"), which was completed on September 20, 2024, the historical results of the Merchant Services Business have been reflected in discontinued operations in the consolidated statement of operations included in this earnings release, and continuing operations reflect the Company's remaining operations after giving effect to such classification. Prior period results have been recast to reflect this presentation. In addition, the Healthcare RCM Business was not classified as held for sale according to GAAP as of March 31, 2025. Accordingly, the current period and historical results of the Healthcare RCM Business are presented within results from continuing operations.
2. Represents a non-GAAP financial measure. In addition, adjusted diluted earnings per share from continuing operations, a non-GAAP financial measure, is the same measure as pro forma adjusted diluted earnings per share from continuing operations as was disclosed by the Company in prior earnings releases. There has not been any change in the manner in which adjusted diluted earnings per share has been calculated in comparison to the calculation of pro forma adjusted diluted earnings per share from continuing operations as previously disclosed by the Company. For additional information regarding non-GAAP financial measures (including reconciliation information), see the attached schedules to this release.
3. Diluted net income per share attributable to Class A common stock from continuing operations and adjusted diluted earnings per share from continuing operations both exclude discontinued operations of the Merchant Services Business but include the consolidated cash interest expense.
4. Corporate income tax expense is based on non-GAAP adjusted income before taxes from continuing operations and is calculated using a tax rate of 25.0% for both the six months ended March 31, 2025 and 2024, based on the estimated long-term effective tax rate, considering blended federal and state tax rates.
5. Annualized Recurring Revenue (ARR) is the annualized revenue derived from recurring sources where the Company has an ongoing contract with its customers. The Company believes revenue from recurring sources is a strategic priority. ARR is comprised of software-as-a-service (“SaaS”) arrangements, transaction-based software-revenue, software maintenance, recurring software-based services, payments revenue and other recurring revenue sources within the quarter. The sum of these revenue categories is multiplied by four to calculate ARR. ARR excludes revenue that is not recurring or is one-time in nature. The Company's management believes this metric provides useful information to investors by providing visibility regarding the ongoing revenue potential of the Company's business model and providing a clearer picture of its sustainable revenue base. Further, the Company's management uses ARR as a metric because it helps to assess the health and trajectory of the Company's business. The Company's management believes that focusing on ARR can orient the Company's sales and operations management towards long-term, reliable revenue growth. This focus on recurring revenue is particularly relevant for businesses operating under a subscription model, where customer retention and contract renewals play a significant role in long-term financial performance. ARR does not have a standardized definition and is therefore unlikely to be comparable to similarly titled measures presented by other companies. It should be reviewed independently of revenue and it is not a forecast. Additionally, ARR does not take into account seasonality. The active contracts at the end of a reporting period used in calculating ARR may or may not be extended or renewed by the Company's customers.

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With respect to the “2025 Outlook” above, reconciliations of adjusted EBITDA from continuing operations and adjusted diluted earnings per share from continuing operations guidance to the closest corresponding GAAP measure on a forward-looking basis are not available without unreasonable efforts. This inability results from the inherent difficulty in forecasting generally and quantifying certain projected amounts that are necessary for such reconciliations. In particular, sufficient information is not available to calculate certain adjustments required for such reconciliations, including changes in the fair value of contingent consideration, income tax expense of i3 Verticals, Inc. and equity-based compensation expense. The Company expects these adjustments may have a potentially significant impact on future GAAP financial results.

Conference Call

The Company will host a conference call on Friday, May 9, 2025, at 8:30 a.m. ET, to discuss financial results and operations. To listen to the call live via telephone, participants should dial (844) 887-9399 approximately 10 minutes prior to the start of the call. A telephonic replay will be available from 11:30 a.m. ET on May 9, 2025, through May 16, 2025, by dialing (877) 344-7529 and entering Confirmation Code 5899364.

To listen to the call live via webcast, participants should visit the “Investors” section of the Company’s website, www.i3verticals.com, and go to the “Events” page approximately 10 minutes prior to the start of the call. The online replay will be available on this page of the Company’s website beginning shortly after the conclusion of the call and will remain available for 30 days.

Non-GAAP Measures

This press release contains information prepared in conformity with GAAP as well as non-GAAP information. It is management’s intent to provide non-GAAP financial information to enhance understanding of the Company's consolidated financial information as prepared in accordance with GAAP. This non-GAAP information should be considered by the reader in addition to, but not instead of, the financial statements prepared in accordance with GAAP. Each non-GAAP financial measure and the most directly comparable GAAP financial measure are presented for historical periods so as not to imply that more emphasis should be placed on the non-GAAP measure. The non-GAAP financial information presented may be determined or calculated differently by other companies.

Additional information about non-GAAP financial measures, and a reconciliation of those measures to the most directly comparable GAAP measures, is included in the financial schedules of this release.