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- **Recurring revenue outperforms**: 8% growth in recurring streams (24% SaaS), offsetting 1% overall revenue growth.
- **Strategic acquisition**: $60 million purchase of transportation software provider with >20% growth and 50% margins, expanding i3's market leadership.
- **Margin improvement ahead**: EBITDA margin expected to recover after Q1 decline, driven by cost control and recurring revenue mix.
- **AI adoption cautious**: GovTech customers moving slowly due to regulatory uncertainty, though i3 is leveraging AI internally.
- **Share buybacks active**: Management views stock as undervalued, with Q1 buybacks and plans to continue.

**【CEO Summary Section】**
- Q1 2026 revenue grew 1% YoY to $52.7 million, with recurring revenue up 8% (80% of total) driven by 24% SaaS growth. The company has achieved 20%+ SaaS growth for four consecutive quarters.
- Announced $60 million acquisition of a transportation software provider, growing at >20% with 50% EBITDA margin. The acquisition fits the company's focus on recurring, sticky niche solutions.
- Professional services and license revenue declined, but management emphasizes long-term focus on recurring streams.

**【CFO Financial Commentary】**
- Adjusted EBITDA declined $1 million to $13.6 million (25.8% margin), due to investments in justice/utility markets and lower professional services. Margins expected to improve for the remainder of the year.
- Balance sheet strong with $37 million cash and no debt. Completed $60 million acquisition with 15x EBITDA multiple, leveraging $400 million credit facility.
- FY 2026 guidance: Revenue $223-234 million, EBITDA $61-66.5 million, EPS $1.08-1.16. Recurring revenue growth expected to offset professional services decline.

**【President's Remarks】**
- Acquisition provides seamless integration with state motor vehicle systems, expanding i3's transportation platform to 30 U.S. states and 4 Canadian provinces. The company sees opportunities to cross-sell motor carrier solutions.
- Highlighted strong retention (no lost customers) and product differentiation, including real-time insurance verification and MFA capabilities.

**【Q&A Highlights】**
- Professional services revenue expected to decline from $40 million in FY25 to $31 million in FY26 due to project cadence. Recurring revenue growth remains strong despite this headwind.
- Share buybacks occurred in Q1, with management viewing the stock as undervalued. Buybacks will continue opportunistically.
- AI adoption in GovTech is slow due to regulatory uncertainty, but i3 is integrating AI internally to accelerate product development.
- The company is open to paying higher multiples (e.g., 15x EBITDA) for high-growth, strategically aligned acquisitions like the recent deal.
- Product investments are proceeding as planned, with no changes to the FY26 spend outlook.

i3 Verticals, Inc. (IIIV) Q1 2026 Earnings Call Transcript

- **Revenue Growth**: Q4 2025 revenue up 7% YoY to $54.9 million, with 8.4% organic growth for the year. ARR grew 9%, outpacing revenue.
- **Strategic Shift**: Transition to SaaS and recurring revenue, with 75% of Q4 revenue from recurring sources. West Virginia deal highlights bundled solutions with ancillary services.
- **Financial Health**: $67 million cash, no debt. 2026 guidance: $217-232 million revenue, 8-10% recurring growth, and 104% net dollar retention.
- **M&A Focus**: Targeting $2-5 million EBITDA deals, with 2026 expected to see 'meaningful' tuck-in acquisitions.
- **Investment in Justice Tech**: ~$1 million/Q4 investments to accelerate product development, supporting long-term growth.


**【CEO Summary Section】**
- **Revenue Growth and Transformation**: Q4 2025 revenue grew 7% YoY to $54.9 million, with 8.4% organic growth for the year. The company has transitioned to a pure-play public sector software provider, divesting non-core businesses. ARR increased 9% in Q4, outpacing revenue growth.
- **Strategic Investments**: Emphasized investments in Justice and Utility markets, with a focus on recurring revenue. The West Virginia court management deal exemplifies the shift to bundled, SaaS-based solutions with ancillary services.
- **Financial Position**: $67 million in cash with no debt, and $400 million borrowing capacity. Plans to use capital for M&A and buybacks, with $50 million buyback authorization refreshed.

**【CFO Financial Commentary】**
- **Q4 2025 Financials**: Adjusted EBITDA of $14.4 million (26.2% margin), down slightly from prior year due to lower-margin professional services growth. SaaS revenue grew 25%, offsetting an 8% decline in maintenance.
- **2026 Guidance**: Revenue $217-232 million (8-10% recurring growth), with a potential decline in professional services due to project timing. Net dollar retention of 104% reflects modest price increases (1-3% YoY).
- **Long-Term Outlook**: Organic revenue growth expected in the high single digits, driven by recurring revenue and market expansion.

**【M&A and Revenue Strategy】**
- **Acquisition Pipeline**: Focused on $2-5 million EBITDA targets, with 13-year pipeline activity. Expect 2026 to see 'meaningful' tuck-in deals aligning with strategic goals.
- **Revenue Model Shift**: Shifting from one-time license sales to SaaS, with 75% of Q4 revenue from recurring sources. Cross-selling solutions across markets (e.g., Justice Tech, Utilities) drives customer engagement.

**【Q&A Highlights】**
- **2026 Professional Services Decline**: Due to delayed project recognition (e.g., Manitoba), but strong pipeline for 2027+. Justice Tech investments (~$1 million/Q4) will continue, supporting long-term growth.
- **Pricing Strategy**: Conservative price increases (1-3% YoY) to offset inflation, contributing ~1.5% to retention in 2026.
- **Capital Allocation**: Prioritize M&A for market expansion, with buybacks as opportunistic补充.


i3 Verticals, Inc. (IIIV) Q4 2025 Earnings Call Transcript

- **Revenue Growth**: Q3 2025 revenue up 12% YoY to $51.9M, SaaS +24%, driven by public sector demand.
- **AI and Efficiency**: AI tools boost dev efficiency by 30-50%, with Justice Tech AI solutions generating incremental revenue.
- **Financial Strength**: $55M cash, no debt, and FY25 EBITDA guidance of $55-61M.
- **Strategic Focus**: Investments in Justice Tech (~$700K Q4) and M&A pipeline targeting public sector growth.
- **Margin Outlook**: EBITDA margin expansion of 50-100bps annually, offsetting incremental costs.

**【Management Opening Remarks】**
- i3 Verticals has completed the divestiture of its healthcare and merchant services businesses, becoming a pure-play public sector software provider.
- The company emphasizes forward-looking statements and caution regarding potential risks.

**【CEO Commentary】**
- Q3 2025 revenue grew 12% YoY to $51.9M, with SaaS revenue up 24%.
- Strong balance sheet with $55M cash and no debt, supporting M&A and stock buybacks.
- Investment in AI and Justice Tech expected to drive future growth, with Q4 seeing incremental costs (~$700K).

**【CFO Financial Commentary】**
- Adjusted EBITDA rose 18% to $12.7M, with 24.5% margin, driven by cost control and recurring revenue (77% of total).
- FY25 guidance: $207-217M revenue, $55-61M EBITDA, $0.96-1.06 EPS.
- Organic growth expected at high single digits, with EBITDA margin improving 50-100bps annually.

**【Strategic Approach to AI and M&A】**
- AI initiatives enhance product features (e.g., Agentch AI for document analysis) and internal efficiency (30-50% dev speed boost).
- Active M&A pipeline focused on public sector verticals, with no immediate deals announced.

**【Revenue Discussion】**
- Strong sales across all markets, including new Justice Tech wins (e.g., Ohio expansion) and transportation deployments (e.g., i3 kiosk in a southern state).
- Education expansion into 4 new states, with Texas and Florida showing strong growth.

**【Q&A Highlights】**
- Q4 organic growth may slow due to lapping $2.5M in Q3 2024 license sales, but ARR growth (~10%) remains stable.
- Justice Tech investments (~$700K in Q4) aim to capture statewide deals, with FY26 revenue impact expected.
- Partnerships with integration firms are rare (~1/5 deals), with no significant gatekeeper trends noted.
- Margin expansion targets (50-100bps) remain intact, with people costs offset by revenue growth.

i3 Verticals, Inc. (IIIV) Q3 2025 Earnings Call Transcript

- **Strategic Restructuring Success**: RCM divestiture yielded $96 million, positioning RemainCo for 11.6% YoY revenue growth with 23% SaaS expansion.
- **Financial Strength**: $64 million cash, 29.3% EBITDA margin, and >2/3 free cash flow conversion highlight strong liquidity and profitability.
- **AI-Driven Growth**: Generative AI bots and SaaS solutions are driving cross-selling success in education and utilities, with Q2 ARR growth of 9.2%.
- **Public Sector Focus**: 76% recurring revenue and high single-digit organic growth underscore resilience in state/local government markets.
- **M&A Momentum**: $9 million utility acquisition and pipeline of small tuck-in deals support long-term expansion.

**【CEO Summary Section】**
- **Divestiture of RCM Business**: Sold for $96 million (pre-tax) with $39 million in annual revenue and $8 million EBITDA. RemainCo (core public sector business) reported Q2 2025 revenue of $54.1 million (+11.6% YoY), driven by 9% organic growth and $1.2 million from prior acquisitions.
- **Public Sector Focus**: SaaS revenue grew 23%, transaction-based revenue +8%, and recurring software services +12%. 76% of revenue came from recurring sources. Education segment growth aligned with overall organic growth.
- **Acquisition Strategy**: Completed $9 million utility billing software acquisition, expanding into new states and enhancing SaaS offerings. Integration with internal payments platform expected to improve margins.

**【CFO Financial Commentary】**
- **RemainCo Financials**: Q2 2025 Adjusted EBITDA $15.8 million (+17% YoY), margin 29.3% (vs. 27.9% YoY). Non-recurring software license sales $2.8 million (vs. $1 million YoY). Free cash flow conversion expected >2/3 of EBITDA post-divestitures.
- **Balance Sheet**: $64 million cash post-RCM sale, $4 million net debt, and $400 million revolving credit facility. Repurchased convertible notes at maturity and used cash for M&A and potential buybacks.
- **Guidance**: FY2025 RemainCo revenue $207-217 million, EBITDA $56-61 million. Q3 revenue expected to be 48% of annual run rate (seasonal low), with margins dipping to mid-20s before rebounding in Q4.

**【M&A & AI Innovation】**
- **Utility Acquisition**: Adds cloud-based billing, inventory management, and mobile capabilities. Transitioning to SaaS model and integrating with i3's payments platform to reduce costs.
- **AI Applications**: Launched generative AI bots for transportation and ERP markets, with features like automated indexing and customer engagement dashboards. AI adoption driven by domain-specific solutions and quick implementation timelines.
- **Cross-Selling Success**: New contracts in public education (Idaho, Texas, Oklahoma, NC, DE) and JusticeTech market. AI and SaaS solutions are key growth drivers.

**【Q&A Highlights】**
- **Manitoba Contract Delay**: Removed $2.5 million from FY2025 guidance due to customer sequencing delays. RemainCo organic growth target remains high single digits.
- **Free Cash Flow**: Post-divestiture, free cash flow conversion >2/3 of EBITDA due to reduced interest expense and tax tailwinds.
- **M&A Pipeline**: Focused on small tuck-in deals in public sector verticals, with potential for occasional mid-sized acquisitions.
- **AI Adoption**: Customers value applied AI solutions for specific pain points, leading to high interest and quick implementations.

i3 Verticals (IIIV)-9 May 25-2025 Q2 Earnings call transcript

- **Revenue Growth Strong**: 12% YoY total revenue, 16% SaaS, 7% payments. Adjusted EBITDA up 17% to $16.4M.
- **SaaS & Payments Strategic Focus**: Intra-vertical bundling driving ARR, payments integration unlocking $500M+ utility market.
- **M&A Pipeline Active**: 3-5 deals/year targeting 10%+ growth, <10x EBITDA, 1-2yr integration to meet 30%+ margin targets.
- **Utility Expansion Momentum**: 2025 portal revenue ramping to $5M, full implementation benefits in 2026-2027.
- **Healthcare Caution**: Q1 license sales boost 14% growth, but guided to low single-digit annual expansion.


**【CEO Summary Section】**
- Q1 2025 revenue increased 12% YoY to $61.7 million, driven by 16% growth in SaaS revenue and 7% in payments. Adjusted EBITDA rose 17% to $16.4 million.
- Emphasis on SaaS and intra-vertical bundling is key to ARR growth. New opportunities in integrating payments into vertical market software (e.g., utilities, permitting) are strategic priorities.
- Recent acquisition in public sector permitting exceeded expectations, with cross-sell opportunities leveraging existing payment platform.

**【CFO Financial Commentary】**
- 78% of Q1 revenue came from recurring sources, up from 75% last year. Public sector vertical contributed 79% of total revenue, with 12% growth driven by SaaS and transaction-based streams.
- Adjusted EBITDA margin improved to 26.5% (vs. 25.4% YoY), driven by higher-margin software sales and cost control. Corporate expenses as a % of revenue declined to 10.7%.
- FY 2025 guidance: Revenue $243-263M, adjusted EBITDA $63-71.5M, with 50-100bps margin expansion. Q2-Q4 revenue distribution: 25.3%, 24.6%, 25.7%.

**【M&A Strategy】**
- M&A pipeline remains strong, focused on Public Sector vertical. Deal criteria: 10%+ revenue growth, EBITDA margins >25%, and <10x EBITDA valuation. Recent acquisition in permitting achieved pipeline creation 6x faster than internal build.
- 3-5 acquisitions expected annually, with 1-2 year integration timelines to meet corporate margin targets.

**【Product & Market Expansion】**
- Transitioning legacy contracts to SaaS model, with new modules launched in Justice Tech (public safety/jury management) and ERP (government fund accounting/licensing).
- i3 customer engagement portal wins J.D. Power #1 ranking in West for utility use case. 5 new portal contracts displaced Tier 1 providers.
- Utility subvertical: 2025 revenue ramping from $3M to $5M, with full implementation benefits materializing in 2026-2027.

**【Q&A Highlights】**
- **Healthcare Segment**: 14% Q1 growth driven by software license sales, but guided to low single-digit annual growth. 
- **License Sales Timing**: $1.8M of Q2 license revenue moved to Q1, no impact on full-year outlook.
- **Margin Expansion**: Full-year target 120bps improvement, with Q2 typically lowest margin due to school closures.
- **Utility Expansion**: Addressable market of ~500 Tier 1-4 utilities, with 2025 portal adoption accelerating cross-sell opportunities.
- **Gov Spending Risk**: Minimal exposure to federal grants; transaction-based revenue models mitigate budget constraints.
- **Payment Integration**: Proactively approaching existing customers to add payment capabilities in public sector software.
- **Organic Growth**: 100% net dollar retention (excluding payments), with 2-3% inflation-driven price increases expected in future.


Actual								0.2	0.13	0.2	0.22	0.23	0.26	0.33	0.35	0.37	0.37	0.39	0.37	0.38	0.38	0.4	0.36	0.34	0.07	0.15	0.221	0.32	0.23	0.27	0.26
Forecast								0.1816	0.0617	0.1817	0.2165	0.209	0.277	0.2897	0.3229	0.3543	0.3586	0.3583	0.36	0.38	0.372	0.4033	0.365	0.3771	0.3486	0.1717	0.255	0.2967	0.204	0.2417	0.24
Surprise	0.00%	0.00%	0.00%	0.00%	0.00%	0.00%	0.00%	+10.13%	+110.70%	+10.07%	+1.62%	+10.05%	-6.14%	+13.91%	+8.39%	+4.43%	+3.18%	+8.85%	+2.78%	0.00%	+2.15%	-0.82%	-1.37%	-9.84%	-79.92%	-12.64%	-13.33%	+7.85%	+12.75%	+11.71%	+8.33%

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