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i3 Verticals Reports Second Quarter 2025 Financial Results

1. i3 Verticals reported Q2 revenue of $63.1 million, up 8.8% year-over-year. 2. Net income improved to $1.1 million, reversing a previous loss of $2.3 million. 3. Adjusted EBITDA rose by 12.7%, reaching $17.1 million for the quarter. 4. The company divested its Healthcare Revenue Cycle Management business for $96 million. 5. i3 Verticals acquired a utility billing software company for $9 million.

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Why Bullish?

The company's revenue growth and turnaround to profitability are strong indicators of future stability. Historical examples show companies with improved earnings often see stock price increases, especially after divestitures that improve focus.

How important is it?

The reported financial improvements and acquisition represent significant strategic moves that could attract investor interest.

Why Short Term?

The immediate financial performance improvements and M&A activity may positively impact stock in the upcoming quarters.

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INFINXCRMPAYC
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 operations1,2 was $17.1 million, an increase of 12.7% over the prior year's second quarter. Adjusted EBITDA from continuing operations1,2 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 operations1,2 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 operations1,3 was $0.00, compared to diluted net loss per share attributable to Class A common stockholders from continuing operations1,3 of $0.07 in the prior year's second quarter. Diluted net income per share attributable to Class A common stockholders from continuing operations1,3 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 operations1,3 of $0.20 in the prior year's first six months. Second quarter non-GAAP adjusted diluted earnings per share from continuing operations1,2,3, 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 operations1,2,3 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 operations1,5 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. 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. 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. 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. 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. 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. Greg Daily, Chairman and CEO of i3 Verticals, commented, “Two days ago, we announced the divestiture of our Healthcare Revenue Cycle Management (RCM) business. When we began our journey in vertical market software, healthcare was one of the end markets we specifically targeted, as it is in the midst of a long cycle of technological transformation which we were happy to be a part of. “We believe that the public sector is even earlier stages of a similar transformation cycle. Lately, there has been a significant focus on government efficiency. We believe that transforming government services with best-in-class enterprise software is a critical part of that effort. There is no shortage of what we want to accomplish in this space and we believe that there are tangible benefits to narrowing our focus. “We are grateful for all that our employees in the RCM business accomplished with us. They have a bright future with Infinx, an excellent partner who, with the help of their own scale and platforms, we believe will help the business realize its potential. “Looking ahead we will be completely focused on bringing the best possible enterprise software to our public sector clients. The divestiture of the RCM business primes us for additional M&A. There remain many great businesses in this space. On April 1 we were fortunate to complete the acquisition of one such company, a utility billing and accounting platform which will be a great fit with our existing utilities practices. We can’t wait to get to work.” 2025 Outlook The Company's practice is to provide annual guidance, excluding the impact of acquisitions, dispositions and transaction-related costs. The Company is providing the following outlook for RemainCo operations, which excludes the Healthcare RCM Business, for the fiscal year ended September 30, 2025 (including for the period prior to the completion of the disposition of the Healthcare RCM Business): 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. About i3 Verticals The Company delivers seamless enterprise software to customers in strategic vertical markets. Building on its sophisticated and diverse platform of software and services solutions, the Company creates and acquires software products to serve the specific needs of public and private organizations in the Public Sector. Forward-Looking Statements This release contains forward-looking statements that are subject to risks and uncertainties. All statements other than statements of historical fact or relating to present facts or current conditions included in this release are forward-looking statements, including any statements regarding the Company's fiscal 2025 and fiscal 2025 financial outlook for continuing operations and statements of a general economic or industry specific nature. Forward-looking statements give the Company's current expectations and projections relating to its financial condition, results of operations, guidance, plans, objectives, future performance and business. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as “anticipate,” “estimate,” “expect,” “project,” “plan,” “intend,” “believe,” “may,” “will,” “should,” “could have,” “exceed,” “significantly,” “likely” and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events. The forward-looking statements contained in this release are based on assumptions that we have made in light of the Company's industry experience and its perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances. As you review and consider information presented herein, you should understand that these statements are not guarantees of future performance or results. They depend upon future events and are subject to risks, uncertainties (many of which are beyond the Company's control) and assumptions. Factors that could cause actual results to differ from those expressed or implied by our forward-looking statements include, among other things: ongoing and future economic and geopolitical conditions, including the impact of inflation, elevated interest rates, and tariff and trade-related developments, competition in our industry and our ability to compete effectively, and regulatory developments; the successful integration of acquired businesses; our ability to execute on our strategy and achieve our goals following the completion of the sale of our Healthcare RCM and merchant services businesses; and future decisions made by us and our competitors. All of these factors are difficult or impossible to predict accurately and many of them are beyond our control. For a further list and description of these and other important risks and uncertainties that may affect our future operations, see Part I, Item 1A - Risk Factors in our most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission, which we have updated and may further update in Part II, Item 1A - Risk Factors in Quarterly Reports on Form 10-Q we have filed or will file hereafter. Any forward-looking statement made by us in this release speaks only as of the date of this release and we undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law. See footnotes on the next page. Following the disposal of the Company's Merchant Services Business in the fourth quarter of fiscal year 2024, the Company’s core business is providing software solutions for key verticals. Given the change in the Company's business model following the sale of the Company's Merchant Services Business, the Company has reclassified certain expenses to better align with the primary industry in which it now operates. During the first quarter of fiscal year 2025, the Company revised its presentation of certain expenses in the Condensed Consolidated Statements of Operations from selling, general and administrative expenses to other costs of services. The Company reclassified personnel costs related to installation of the Company's software, conversion of client data, training client personnel, customer support activities and various other services provided directly to customers from selling, general and administrative to other costs of services. The Company also reclassified certain hosting and related software costs for directly supporting the Company's customers from selling, general and administrative to other costs of services. Prior period results have been reclassified to conform to the current 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. Reconciliation of GAAP to Non-GAAP Financial Measures The Company discloses the following non-GAAP financial measures in this earnings release: Adjusted Income Before Taxes from Continuing Operations. Adjusted income before taxes from continuing operations equals net income (loss) from continuing operations attributable to i3 Verticals Inc., adjusted to add back net income (loss) from continuing operations attributable to non-controlling interest and to exclude certain items on a pre-tax basis which the Company believes may not fully reflect our underlying operating performance. The Company believes that this non-GAAP measure provides useful information to investors in understanding and evaluating the Company’s results of continuing operations and ongoing operational performance on a pre-tax basis. Adjusted Net Income from Continuing Operations and Adjusted Diluted Earnings per Share from Continuing Operations. Adjusted net income from continuing operations equals adjusted income before taxes from continuing operations as described above, adjusted to give effect to an effective tax rate of 25%, which reflects our estimated long-term effective tax rate, considering blended federal and state tax rates. Adjusted diluted earnings per share from continuing operations equals adjusted net income from continuing operations divided by our adjusted weighted average shares of adjusted diluted Class A common stock outstanding. The Company believes that these non-GAAP measures provide useful information to investors in understanding and evaluating the Company’s results of continuing operations and ongoing operational performance on a post-tax basis after giving effect to this assumed tax rate. Adjusted Diluted Earnings per Share from Continuing Operations has also been utilized as a metric in connection with performance-based equity awards previously granted by the Company to executives. Adjusted EBITDA from Continuing Operations and Adjusted EBITDA Margin from Continuing Operations. Adjusted EBITDA from continuing operations equals net income (loss) from continuing operations attributable to i3 Verticals Inc., before interest, income taxes, depreciation and amortization, adjusted to add back net income (loss) from continuing operations attributable to non-controlling interest, and to exclude certain items which the Company believes do not fully reflect our underlying operating performance. Adjusted EBITDA margin represents adjusted EBITDA as a percentage of revenue. The Company believes that these non-GAAP measures provide useful information to investors in understanding and evaluating the Company’s results of continuing operations and ongoing operational performance. Adjusted EBITDA from continuing operations and Adjusted EBITDA margin as presented at a segment level are measures reported to the Company's management for purposes of making decisions about allocating resources and assessing the performance of our business segments, and these measures are presented in the Company's financial statement footnotes in accordance with ASC 280. Adjusted EBITDA and Adjusted EBITDA margin, as presented on a consolidated basis, are non-GAAP financial measures. In addition, Adjusted EBITDA and Adjusted EBITDA margin have been metrics utilized in connection with the Company’s short-term annual cash incentive program for executive management. The Company believes that the disclosure of these non-GAAP financial measures provides investors with useful information in connection with assessing the Company's financial results as described above. In addition, these non-GAAP financial measures are utilized by management to assess the Company's financial results, evaluate the Company's business, manage budgets, allocate resources, and make operational decisions. The Company believes that disclosure of these non-GAAP financial measures provides investors with additional information to help them better understand our financial results just as management utilizes these non-GAAP financial measures as described above. Although these non-GAAP financial measures assist in measuring the Company's financial results and assessing its financial performance, they are not necessarily comparable to similarly titled measures of other companies due to potential inconsistencies in the method of calculation. See below for reconciliations of the non-GAAP financial measures presented in this release. More News From i3 Verticals, Inc.

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