8-K: i3 Verticals Reports Strong Q3, Boosts Share Buyback

i3 Verticals, Inc. reported significant revenue and Adjusted EBITDA growth for Q3 2025, driven by recurring revenue, and announced a new $50 million share repurchase program.

Summary

• Revenue from continuing operations for the third quarter ended June 30, 2025, increased by 12.4% to $51.9 million, compared to $46.183 million in the prior year's third quarter.
• Net loss from continuing operations significantly improved to $1.0 million, from a net loss of $14.4 million in the prior year's third quarter.
• Adjusted EBITDA from continuing operations grew by 18.0% to $12.7 million, up from $10.779 million in the prior year's third quarter, with Adjusted EBITDA margin increasing to 24.5% from 23.3%.
• Non-GAAP adjusted diluted earnings per share from continuing operations rose to $0.23, compared to $0.02 for the prior year's third quarter.
• Annualized Recurring Revenue (ARR) from continuing operations reached $160.8 million as of June 30, 2025, representing a 12.0% growth rate year-over-year.
• The Board of Directors approved a new share repurchase program authorizing the repurchase of up to $50 million of Class A common stock, replacing the prior program and terminating on September 30, 2026, or when the maximum amount is expended.
• The company reaffirmed its fiscal year 2025 outlook, projecting revenue between $207.0 million and $217.0 million, Adjusted EBITDA between $55.0 million and $61.0 million, and Adjusted diluted EPS between $0.96 and $1.06.

Sentiment

Score: 8

Explanation: The filing indicates strong operational performance with significant revenue and Adjusted EBITDA growth, improved profitability, and a healthy recurring revenue base. The new share repurchase program demonstrates a commitment to shareholder value. The strategic divestitures streamline the business focus. While there was net cash used in operating activities, it was primarily due to a one-time tax payment related to a prior divestiture, not ongoing operational weakness.

Positives

• Strong revenue growth of 12.4% in Q3 2025 from continuing operations.
• Significant improvement in net loss from continuing operations, reducing from $14.4 million to $1.0 million.
• Adjusted EBITDA from continuing operations increased by 18.0%, demonstrating improved operational efficiency.
• Adjusted EBITDA margin improved to 24.5% from 23.3% year-over-year.
• Non-GAAP adjusted diluted EPS saw substantial growth, rising from $0.02 to $0.23.
• Annualized Recurring Revenue (ARR) grew by 12.0% to $160.8 million, indicating a healthy recurring revenue base.
• SaaS revenue grew by 24% and payments revenue increased by 11% over the prior year quarter.
• The company maintains a strong cash position with over $50 million in cash on hand.
• Approval of a new $50 million share repurchase program signals confidence in the company's valuation and commitment to shareholder returns.
• Successful divestiture of the Healthcare Revenue Cycle Management Business, streamlining operations and focusing on the Public Sector segment.

Negatives

• Net cash used in operating activities for the nine months ended June 30, 2025, was $(8.276) million, primarily due to $35.112 million in cash paid for income taxes related to the sale of the Merchant Services Business.

Risks

• Ongoing and future economic and geopolitical conditions, including the impact of inflation, elevated interest rates, and tariff and trade-related developments.
• Competition within the industry and the company's ability to compete effectively.
• Regulatory developments affecting the company's operations.
• The successful integration of acquired businesses.
• Ability to execute on strategy and achieve goals following the completion of the sale of the Healthcare RCM Business and Merchant Services Business.
• Future decisions made by the company and its competitors.

Future Outlook

The company reaffirmed its previously issued outlook for the fiscal year ending September 30, 2025, projecting revenue between $207.0 million and $217.0 million, Adjusted EBITDA (non-GAAP) between $55.0 million and $61.0 million, and Adjusted diluted earnings per share (non-GAAP) between $0.96 and $1.06, assuming an effective tax rate of 25.0%.

Management Comments

• "We are excited about the revenue growth we achieved in Q3 of our fiscal 2025. Our overall revenue growth of 12% compared to the prior year quarter has been fueled by recurring contracts."
• "SaaS growth led the way and grew 24% this quarter over the prior year period. Additionally, revenue from payments increased by 11% compared to the prior year quarter."
• "The divestiture of our Healthcare Revenue Cycle Management Business has been smooth, and I want to complement all the people who have worked hard to make that process a success."
• "Looking forward, we remain well capitalized, with over $50 million in cash on hand, but have been disciplined. We plan to continue our investment in government technology and are excited about the mission in front of us: to enable state and local governments and related agencies to serve their constituents in an effective and efficient manner."

Industry Context

This announcement highlights i3 Verticals' strategic shift and focus on its Public Sector segment, following the divestitures of its Merchant Services and Healthcare RCM businesses. The strong growth in SaaS and payments revenue within its continuing operations aligns with broader industry trends favoring recurring revenue models and digital transformation in government services. The company's emphasis on government technology positions it to capitalize on the increasing demand for efficient digital solutions in state and local administrations.

Comparison to Industry Standards

• The filing does not provide specific comparable companies or industry benchmarks for direct comparison of financial results.
• Annualized Recurring Revenue (ARR) is presented as a key metric, but the company explicitly states that ARR does not have a standardized definition and is unlikely to be comparable to similarly titled measures presented by other companies.

Corporate Governance

Stakeholder Impact

• Shareholders: Potentially benefit from improved financial performance, increased earnings per share, and the new share repurchase program, which could enhance shareholder value.
• Employees: The smooth divestiture of the Healthcare RCM Business suggests a managed transition, though specific impacts on employees in that segment are not detailed.
• Customers: Public sector customers are expected to benefit from continued investment in government technology, leading to more effective and efficient services.
• Creditors: The company remains well capitalized with over $50 million in cash on hand, indicating a strong liquidity position.

Next Steps

• Host a conference call on August 8, 2025, to discuss financial results and operations.
• Continue investment in government technology to enable state and local governments to serve constituents effectively and efficiently.
• Update segment presentation in the upcoming Quarterly Report on Form 10-Q to reflect a single operating segment.

Key Dates

Recommendation

The company demonstrated strong operational performance with significant revenue and Adjusted EBITDA growth, coupled with a substantial improvement in net loss. The strategic divestitures have streamlined the business, allowing for a focused approach on the high-growth public sector software market. The new $50 million share repurchase program signals management's confidence and commitment to shareholder returns. These factors, combined with reaffirmed positive fiscal year guidance, suggest a favorable outlook for the stock.

Keywords

i3 Verticals, IIIV, SEC filing, financial results, Q3 2025, earnings, share repurchase, public sector software, SaaS, payments revenue, recurring revenue, Adjusted EBITDA, corporate governance