Cover Page
Cover Page - USD ($) $ in Millions | 12 Months Ended | ||
Sep. 30, 2020 | Nov. 20, 2020 | Mar. 31, 2020 | |
Document Information [Line Items] | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Sep. 30, 2020 | ||
Document Transition Report | false | ||
Entity File Number | 001-38532 | ||
Entity Registrant Name | i3 Verticals, Inc. | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Tax Identification Number | 82-4052852 | ||
Entity Address, Address Line One | 40 Burton Hills Blvd. | ||
Entity Address, Address Line Two | Suite 415 | ||
Entity Address, City or Town | Nashville | ||
Entity Address, State or Province | TN | ||
Entity Address, Postal Zip Code | 37215 | ||
City Area Code | 615 | ||
Local Phone Number | 465-4487 | ||
Title of 12(b) Security | Class A Common Stock, $0.0001 Par Value | ||
Trading Symbol | IIIV | ||
Security Exchange Name | NASDAQ | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | true | ||
Entity Ex Transition Period | false | ||
ICFR Auditor Attestation Flag | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 285.1 | ||
Documents Incorporated by Reference | Portions of the registrant’s definitive proxy materials for its 2021 Annual Meeting of Stockholders are incorporated by reference into Part III hereof. | ||
Entity Central Index Key | 0001728688 | ||
Current Fiscal Year End Date | --09-30 | ||
Document Fiscal Year Focus | 2020 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Class A Common Stock | |||
Document Information [Line Items] | |||
Entity Common Stock, Shares Outstanding | 18,921,273 | ||
Class B Common Stock | |||
Document Information [Line Items] | |||
Entity Common Stock, Shares Outstanding | 11,900,621 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2020 | Sep. 30, 2019 |
Current assets | ||
Cash and cash equivalents | $ 15,568 | $ 1,119 |
Accounts receivable, net | 17,538 | 15,335 |
Prepaid expenses and other current assets | 4,869 | 4,117 |
Total current assets | 37,975 | 20,571 |
Property and equipment, net | 5,339 | 5,026 |
Restricted cash | 5,033 | 2,081 |
Capitalized software, net | 16,989 | 15,454 |
Goodwill | 187,005 | 168,284 |
Intangible assets, net | 109,233 | 107,419 |
Deferred tax asset | 36,755 | 28,138 |
Other assets | 5,197 | 2,329 |
Total assets | 403,526 | 349,302 |
Current liabilities | ||
Accounts payable | 3,845 | 3,438 |
Accrued expenses and other current liabilities | 24,064 | 21,560 |
Deferred revenue | 10,986 | 10,237 |
Total current liabilities | 38,895 | 35,235 |
Long-term debt, less current portion and debt issuance costs, net | 90,758 | 139,298 |
Long-term tax receivable agreement obligations | 27,565 | 23,204 |
Other long-term liabilities | 6,140 | 9,124 |
Total liabilities | 163,358 | 206,861 |
Commitments and contingencies (see Note 14) | ||
Stockholders' equity | ||
Preferred stock, par value $0.0001 per share,10,000,000 shares authorized; 0 shares issued and outstanding as of September 30, 2020 and 2019 | 0 | 0 |
Additional paid-in-capital | 157,598 | 82,380 |
Accumulated deficit | (2,023) | (2,309) |
Total stockholders' equity | 155,578 | 80,073 |
Non-controlling interest | 84,590 | 62,368 |
Total equity | 240,168 | 142,441 |
Total liabilities and equity | 403,526 | 349,302 |
Class A Common Stock | ||
Stockholders' equity | ||
Common stock | 2 | 1 |
Class B Common Stock | ||
Stockholders' equity | ||
Common stock | $ 1 | $ 1 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2020 | Sep. 30, 2019 |
Preferred Stock, par value (in USD per share) | $ 0.0001 | $ 0.0001 |
Preferred Stock authorized (shares) | 10,000,000 | 10,000,000 |
Preferred Stock issued (shares) | 0 | 0 |
Preferred Stock outstanding (shares) | 0 | 0 |
Class A Common Stock | ||
Common Stock, par value (in USD per share) | $ 0.0001 | $ 0.0001 |
Common Stock authorized (shares) | 150,000,000 | 150,000,000 |
Common Stock issued (shares) | 18,864,143 | 14,444,115 |
Common Stock, outstanding (shares) | 18,864,143 | 14,444,115 |
Class B Common Stock | ||
Common Stock, par value (in USD per share) | $ 0.0001 | $ 0.0001 |
Common Stock authorized (shares) | 40,000,000 | 40,000,000 |
Common Stock issued (shares) | 11,900,621 | 12,921,637 |
Common Stock, outstanding (shares) | 11,900,621 | 12,921,637 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) $ in Thousands | 12 Months Ended | |||||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2018 | ||||
Income Statement [Abstract] | ||||||
Revenue | $ 150,134 | $ 376,307 | $ 323,508 | |||
Operating expenses | ||||||
Interchange and network fees | 0 | 242,867 | [1] | 214,543 | [1] | |
Other costs of services | 47,230 | 44,237 | 40,314 | |||
Selling general and administrative | 78,323 | 62,860 | 40,585 | |||
Depreciation and amortization | 18,217 | 16,564 | 11,839 | |||
Change in fair value of contingent consideration | (1,409) | 3,389 | 3,866 | |||
Total operating expenses | 142,361 | 369,917 | 311,147 | |||
Income from operations | 7,773 | 6,390 | 12,361 | |||
Other expenses | ||||||
Interest expense, net | 8,926 | 6,004 | 8,498 | |||
Change in fair value of warrant liability | 0 | 0 | 8,487 | |||
Other expense | 2,621 | 0 | 0 | |||
Total other expenses | 11,547 | 6,004 | 16,985 | |||
(Loss) income before income taxes | (3,774) | 386 | (4,624) | |||
(Benefit from) provision for income taxes | (2,795) | (177) | 337 | |||
Net (loss) income | (979) | 563 | (4,961) | |||
Net (loss) income attributable to non-controlling interest | (560) | 3,608 | 1,937 | |||
Net loss attributable to i3 Verticals, Inc. | $ (419) | $ (3,045) | $ (6,898) | |||
Net (loss) income per share attributable to Class A common stockholders | ||||||
Basic (in USD per share) | [2] | $ (0.03) | $ (0.29) | $ 0.08 | ||
Diluted (in USD per share) | [2] | $ (0.03) | $ (0.29) | $ 0.08 | ||
Weighted average shares of Class A common stock outstanding | ||||||
Basic (shares) | [1] | 14,833,378 | 10,490,981 | 8,812,630 | ||
Diluted (shares) | [1] | 27,429,801 | 10,490,981 | 26,873,878 | ||
[1] | Effective October 1, 2019, the Company's revenues are presented net of interchange and network fees in accordance with Accounting Standards Codification Topic 606, Revenue from Contracts with Customers . See Note 2 to our consolidated financial statements for a description of the recently adopted accounting pronouncement. | |||||
[2] | Basic and diluted net income per share of Class A common stock are presented only for the period after the Company’s Reorganization Transactions. See Note 1 for a description of the Reorganization Transactions. See Note 18 for the calculation of income per common share. |
Consolidated Statement of Chang
Consolidated Statement of Changes in Equity - USD ($) $ in Thousands | Total | Cumulative Effect, Period of Adoption, Adjustment | Class A | Class B | Class P | Common Stock | Common StockClass A | Common StockClass B | Additional Paid-In Capital | Accumulated Members' Deficit/Retained Earnings | Accumulated Members' Deficit/Retained EarningsCumulative Effect, Period of Adoption, Adjustment | Non-Controlling Interest | Non-Controlling InterestCumulative Effect, Period of Adoption, Adjustment |
Members' Equity, beginning at Sep. 30, 2017 | $ 3,146 | $ 0 | $ 1,240 | $ 34,924 | $ (33,018) | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||
Preferred return on Class A Units and Redeemable Class A Units | $ (2,522) | ||||||||||||
Purchase of common units in i3 Verticals, LLC from selling unitholder | 0 | ||||||||||||
Members' Equity, ending at Sep. 30, 2018 | $ 0 | $ 0 | $ 0 | 0 | |||||||||
Common Stock, Shares, Outstanding, beginning (in shares) at Sep. 30, 2017 | 0 | 0 | |||||||||||
Stockholders' Equity, beginning at Sep. 30, 2017 | $ 0 | $ 0 | $ 0 | 0 | $ 0 | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||
Distributions to non-controlling interest holders | 0 | ||||||||||||
Net (loss) income | (6,898) | 736 | |||||||||||
Net (loss) income attributable to non-controlling interests | (1,937) | (1,937) | |||||||||||
Net loss (income) | (4,961) | 2,673 | |||||||||||
Common Stock, Shares, Outstanding, ending (in shares) at Sep. 30, 2018 | 9,112,042 | 17,213,806 | |||||||||||
Stockholders' Equity, ending at Sep. 30, 2018 | 112,198 | $ 1 | $ 2 | 38,562 | 736 | 72,897 | |||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||
Preferred return on Class A Units and Redeemable Class A Units | 0 | ||||||||||||
Issuance of common stock | 21,660 | 21,660 | |||||||||||
Issuance of class A common stock (shares) | 1,000,000 | ||||||||||||
Purchase of common units in i3 Verticals, LLC from selling unitholder | (12,077) | ||||||||||||
Establishment of liabilities under tax receivable agreement and related changes to deferred tax assets associated with increases in tax basis | 3,959 | 3,959 | |||||||||||
Equity based compensation recognized | 6,124 | 6,124 | |||||||||||
Forfeitures of restricted Class A common stock (shares) | (36,113) | ||||||||||||
Forfeitures of restricted Class A common stock | 0 | ||||||||||||
Distributions to non-controlling interest holders | (2,060) | (2,060) | |||||||||||
Redemption of common units in i3 Verticals, LLC (shares) | 4,292,169 | (4,292,169) | |||||||||||
Redemption of common units in i3 Verticals, LLC | (1) | $ (1) | 12,077 | (12,077) | |||||||||
Capitalization of public offering costs | (899) | (899) | |||||||||||
Issuance of restricted Class A common stock under Equity Plan (shares) | 8,799 | ||||||||||||
Issuance of restricted Class A common stock under Equity Plan | 225 | 225 | |||||||||||
Exercise of equity-based awards (shares) | 67,218 | ||||||||||||
Exercise of equity-based awards | 672 | 672 | |||||||||||
Net (loss) income | (3,045) | (3,045) | (3,045) | ||||||||||
Net (loss) income attributable to non-controlling interests | (3,608) | (3,608) | 3,608 | ||||||||||
Net loss (income) | 563 | $ 563 | |||||||||||
Common Stock, Shares, Outstanding, ending (in shares) at Sep. 30, 2019 | 14,444,115 | 12,921,637 | 14,444,115 | 12,921,637 | |||||||||
Stockholders' Equity, ending at Sep. 30, 2019 | 142,441 | $ 1,345 | $ 1 | $ 1 | 82,380 | (2,309) | $ 705 | 62,368 | $ 640 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||
Preferred return on Class A Units and Redeemable Class A Units | $ 0 | ||||||||||||
Issuance of common stock | 72,557 | $ 1 | 72,556 | ||||||||||
Issuance of class A common stock (shares) | 3,250,000 | ||||||||||||
Purchase of common units in i3 Verticals, LLC from selling unitholder | (5,080) | ||||||||||||
Deferred tax asset adjustment | (941) | (941) | |||||||||||
Establishment of liabilities under tax receivable agreement and related changes to deferred tax assets associated with increases in tax basis | 896 | 896 | |||||||||||
Equity based compensation recognized | 10,452 | 10,452 | |||||||||||
Adjustment related to prior periods | 0 | (2,730) | 2,730 | ||||||||||
Distributions to non-controlling interest holders | (3) | (3) | |||||||||||
Redemption of common units in i3 Verticals, LLC (shares) | 1,021,016 | (1,021,016) | |||||||||||
Redemption of common units in i3 Verticals, LLC | 0 | 5,080 | (5,080) | ||||||||||
Capitalization of public offering costs | $ (697) | (697) | |||||||||||
Exercise of equity-based awards (shares) | 331,141 | 149,012 | |||||||||||
Exercise of equity-based awards | $ 254 | 254 | |||||||||||
Allocation of equity to non-controlling interests | 0 | (24,495) | 24,495 | ||||||||||
Equity component of exchangeable notes, net of issuance costs and deferred taxes | 27,578 | 27,578 | |||||||||||
Purchases of exchangeable note hedges | (28,676) | (28,676) | |||||||||||
Issuance of warrants | 14,669 | 14,669 | |||||||||||
Repurchases of exchangeable notes | 1,272 | 1,272 | |||||||||||
Net (loss) income | (419) | (419) | (419) | ||||||||||
Net (loss) income attributable to non-controlling interests | 560 | 560 | (560) | ||||||||||
Net loss (income) | (979) | $ (979) | |||||||||||
Common Stock, Shares, Outstanding, ending (in shares) at Sep. 30, 2020 | 18,864,143 | 11,900,621 | 18,864,143 | 11,900,621 | |||||||||
Stockholders' Equity, ending at Sep. 30, 2020 | $ 240,168 | $ 2 | $ 1 | $ 157,598 | $ (2,023) | $ 84,590 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2018 | |
Cash flows from operating activities: | |||
Net (loss) income | $ (979) | $ 563 | $ (4,961) |
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | |||
Depreciation and amortization | 18,217 | 16,564 | 11,839 |
Equity-based compensation | 10,452 | 6,124 | 1,567 |
Provision for doubtful accounts | 177 | 30 | 14 |
Amortization of debt discount and issuance costs | 3,703 | 721 | 1,072 |
Debt issuance cost write offs | 141 | 152 | 0 |
Loss on repurchase of exchangeable notes | 2,297 | 0 | 0 |
Amortization of capitalized client acquisition costs | 398 | 0 | 0 |
Loss on disposal of assets | 1 | 8 | 5 |
Benefit from deferred income taxes | (3,207) | (586) | (682) |
Non-cash change in fair value of warrant liability | 0 | 0 | 8,487 |
(Decrease) increase in non-cash contingent consideration expense from original estimate | (1,409) | 3,389 | 3,866 |
Changes in operating assets: | |||
Accounts receivable | (1,028) | 2,430 | (2,321) |
Prepaid expenses and other current assets | (984) | (817) | 1,017 |
Other assets | (1,544) | (2,769) | (3,182) |
Changes in operating liabilities: | |||
Accounts payable | 239 | (1,768) | 1,172 |
Accrued expenses and other current liabilities | 1,575 | 1,572 | 2,040 |
Deferred revenue | 617 | 2,588 | (123) |
Other long-term liabilities | 93 | (44) | 362 |
Contingent consideration paid in excess of original estimates | (5,039) | (1,560) | (2,092) |
Net cash provided by operating activities | 23,720 | 26,597 | 18,080 |
Cash flows from investing activities: | |||
Expenditures for property and equipment | (2,911) | (807) | (2,217) |
Expenditures for capitalized software | (2,893) | (2,227) | (1,092) |
Purchases of merchant portfolios and residual buyouts | (1,788) | (3,586) | (1,207) |
Acquisitions of businesses, net of cash acquired | (27,689) | (137,036) | (32,362) |
Acquisition of other intangibles | (150) | (72) | (1,177) |
Net cash used in investing activities | (35,431) | (143,728) | (38,055) |
Cash flows from financing activities: | |||
Proceeds from revolving credit facility | 172,123 | 188,491 | 27,250 |
Payments of revolving credit facility | (313,267) | (51,867) | (95,600) |
Proceeds from borrowings on exchangeable notes | 138,000 | 0 | 0 |
Payments for purchase of exchangeable senior note hedges | (28,676) | 0 | 0 |
Proceeds from issuance of warrants | 14,669 | 0 | 0 |
Payments for repurchase of exchangeable notes | (17,414) | 0 | 0 |
Proceeds from notes payable to banks | 0 | 0 | 24,671 |
Payments of notes payable to banks | 0 | (35,000) | (5,000) |
Payment of notes payable to Mezzanine Lenders | 0 | 0 | (10,486) |
Payment of unsecured notes payable to related and unrelated creditors | 0 | 0 | (5,489) |
Payments of debt issuance costs | (5,300) | (168) | (266) |
Proceeds from the exercise of Mezzanine Warrants and Junior Subordinated Notes Warrants | 0 | 0 | 270 |
Proceeds from issuance of Class A common | 82,901 | 111,687 | 0 |
Proceeds from issuance of Class A common stock sold in initial public offering, net of underwriting discounts and offering costs | 0 | 0 | 89,506 |
Payments for Common Units in i3 Verticals, LLC from selling unitholders | (10,883) | (90,027) | (4,635) |
Cash paid for contingent consideration | (3,492) | (2,634) | (977) |
Payments for required distributions to members for tax obligations | (3) | (2,060) | 0 |
Proceeds from stock option exercises | 764 | 672 | 0 |
Payments for employee's tax withholdings from net settled stock option exercises | (310) | 0 | 0 |
Net cash provided by financing activities | 29,112 | 119,094 | 19,244 |
Net increase (decrease) in cash, cash equivalents, and restricted cash | 17,401 | 1,963 | (731) |
Cash, cash equivalents, and restricted cash at beginning of period | 3,200 | 1,237 | 1,968 |
Cash, cash equivalents, and restricted cash at end of period | 20,601 | 3,200 | 1,237 |
Supplemental disclosure of cash flow information: | |||
Cash paid for interest | 5,250 | 4,911 | 7,881 |
Cash paid for income taxes | $ 792 | $ 1,420 | $ 483 |
Consolidated Statements of Ca_2
Consolidated Statements of Cash Flows (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2017 |
Statement of Cash Flows [Abstract] | ||||
Cash and cash equivalents | $ 15,568 | $ 1,119 | $ 572 | $ 955 |
Restricted cash | 5,033 | 2,081 | 665 | 1,013 |
Total cash, cash equivalents, and restricted cash | $ 20,601 | $ 3,200 | $ 1,237 | $ 1,968 |
Organization and Operations
Organization and Operations | 12 Months Ended |
Sep. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Operations | ORGANIZATION AND OPERATIONS i3 Verticals, Inc. (the “Company”) was formed as a Delaware corporation on January 17, 2018. The Company was formed for the purpose of completing an initial public offering (“IPO”) of its Class A common stock and other related transactions in order to carry on the business of i3 Verticals, LLC and its subsidiaries. i3 Verticals, LLC was founded in 2012 and delivers seamlessly integrated payment and software solutions to small- and medium-sized businesses (“SMBs”) and organizations in strategic vertical markets. The Company’s headquarters are in Nashville, Tennessee, with operations throughout the United States. Unless the context otherwise requires, references to “we,” “us,” “our,” “i3 Verticals” and the “Company” refer to i3 Verticals, Inc. and its subsidiaries, including i3 Verticals, LLC. Initial Public Offering On June 25, 2018, the Company completed the IPO of 7,647,500 shares of its Class A common stock at a public offering price of $13.00 per share. The Company received approximately $92.5 million of net proceeds, after deducting underwriting discounts and commissions, which the Company used to purchase newly issued common units from i3 Verticals, LLC (the “Common Units”), and Common Units from a selling Common Unit holder, in each case at a price per Common Unit equal to the price per share paid by the underwriters for shares of the Company's Class A common stock in the IPO. Reorganization Transactions In connection with the IPO, the Company completed the following transactions (the “Reorganization Transactions”): • i3 Verticals, LLC amended and restated its existing limited liability company agreement to, among other things, (1) convert all existing Class A units, common units (including common units issued upon the exercise of existing warrants) and Class P units of ownership interest in i3 Verticals, LLC into either Class A voting common units of i3 Verticals, LLC (such holders of Class A voting common units referred to herein as the “Continuing Equity Owners”) or Class B non-voting common units of i3 Verticals, LLC (such holders of Class B non-voting common units referred to herein as the “Former Equity Owners”), and (2) appoint i3 Verticals, Inc. as the sole managing member of i3 Verticals, LLC upon its acquisition of Common Units in connection with the IPO; • the Company amended and restated its certificate of incorporation to provide for, among other things, Class A common stock and Class B common stock; • i3 Verticals, LLC and the Company consummated a merger among i3 Verticals, LLC, i3 Verticals, Inc. and a newly formed wholly-owned subsidiary of i3 Verticals, Inc. (“MergerSub”) whereby: (1) MergerSub merged with and into i3 Verticals, LLC, with i3 Verticals, LLC as the surviving entity; (2) Class A voting common units converted into newly issued Common Units in i3 Verticals, LLC together with an equal number of shares of Class B common stock of i3 Verticals, Inc., and (3) Class B non-voting common units converted into Class A common stock of i3 Verticals, Inc. based on a conversion ratio that provided an equitable adjustment to reflect the full value of the Class B non-voting common units; and • the Company issued shares of its Class A common stock pursuant to a voluntary private conversion of certain subordinated notes (the “Junior Subordinated Notes”) by certain related and unrelated creditors of i3 Verticals, LLC. Following the completion of the IPO and Reorganization Transactions, the Company became a holding company and its principal asset is the Common Units in i3 Verticals, LLC that it owns. i3 Verticals, Inc. operates and controls all of i3 Verticals, LLC's operations and, through i3 Verticals, LLC and its subsidiaries, conducts i3 Verticals, LLC's business. i3 Verticals, Inc. has a majority economic interest in i3 Verticals, LLC. Public Offerings On June 10, 2019, the Company completed a secondary public offering (the “June 2019 Secondary Public Offering”) of 5,165,527 shares of its Class A common stock, at a public offering price of $22.75 per share, which included a full exercise of the underwriters' option to purchase 673,764 additional shares of Class A Common Stock from the Company. The Company received approximately $111,640 of net proceeds, after deducting underwriting discounts and commissions, but before offering expenses. The Company used the net proceeds to purchase (1) 1,000,000 Common Units directly from i3 Verticals, LLC, and (2) 4,165,527 Common Units (including 673,764 Common Units due to the exercise of the underwriters' option to purchase additional shares in full) and an equivalent number of Class B common stock (which shares were then canceled) from certain Continuing Equity Owners, in each case at a price per Common Unit equal to the price per share paid by the underwriters for shares of the Company's Class A common stock in the offering. i3 Verticals, LLC received $20,870 in net proceeds from the sale of Common Units to the Company, which it used to repay outstanding indebtedness. On September 15, 2020, the Company completed a primary public offering (the “September 2020 Public Offering”) of 3,737,500 shares of its Class A common stock, at a public offering price of $23.50 per share, which included a full exercise of the underwriters' option to purchase 487,500 additional shares of Class A Common Stock from the Company. The Company received approximately $83,400 of net proceeds, after deducting underwriting discounts and commissions, but before offering expenses. The Company used the net proceeds to purchase (1) 3,250,000 Common Units directly from i3 Verticals, LLC, and (2) 487,500 Common Units pursuant to the exercise of the underwriters' option to purchase additional shares in full and an equivalent number of Class B common stock (which shares were then canceled) from certain Continuing Equity Owners, in each case at a price per Common Unit equal to the price per share paid by the underwriters for shares of the Company's Class A common stock in the offering. i3 Verticals, LLC received $72,018 in net proceeds from the sale of Common Units to the Company, which it used to repay outstanding indebtedness. i3 Verticals, Inc. is the sole managing member of i3 Verticals, LLC and as a result, consolidates the financial results of i3 Verticals, LLC and reports a non-controlling interest representing the Common Units of i3 Verticals, LLC held by the Continuing Equity Owners. As the Reorganization Transactions are considered transactions between entities under common control, the financial statements retroactively reflect the accounts of i3 Verticals, LLC for periods prior to the IPO and Reorganization Transactions. The Continuing Equity Owners who own Common Units in i3 Verticals, LLC may redeem at each of their options (subject in certain circumstances to time-based vesting requirements) their Common Units for, at the election of i3 Verticals, LLC, cash or newly-issued shares of the Company's Class A common stock. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the reporting and disclosure rules and regulations of the Securities and Exchange Commission (“SEC”). Principles of Consolidation These consolidated financial statements include the accounts of the Company and its subsidiary companies. All significant intercompany accounts and transactions have been eliminated in consolidation. Cash and Cash Equivalents For purposes of reporting cash flows, the Company considers cash on hand, checking accounts, and savings accounts to be cash and cash equivalents. At times, the balance in these accounts may exceed federal insured limits. Cash equivalents are defined as financial instruments readily transferrable into cash with an original maturity less than 90 days. Restricted Cash Restricted cash represents funds held-on-deposit with processing banks pursuant to agreements to cover potential merchant losses. It is presented as long-term assets on the accompanying consolidated balance sheets since the related agreements extend beyond the next twelve months. Following the adoption of Accounting Standards Update (“ASU”) 2016-18, Statement of Cash Flows: Restricted Cash (Topic 230), the Company includes restricted cash along with the cash and cash equivalents balance for presentation in the consolidated statements of cash flows. Accounts Receivable and Credit Policies Accounts receivable consist primarily of uncollateralized credit card processing residual payments due from processing banks requiring payment within thirty days following the end of each month. Accounts receivable also include amounts due from the sales of the Company’s technology solutions to its customers. The carrying amount of accounts receivable is reduced by an allowance for doubtful accounts, if necessary, which reflects management’s best estimate of the amounts that will not be collected. The allowance is estimated based on management’s knowledge of its customers, historical loss experience and existing economic conditions. Accounts receivable and the allowance are written-off when, in management’s opinion, all collection efforts have been exhausted. The Company’s allowance for doubtful accounts was $310 and $232 as of September 30, 2020 and 2019, respectively; however, actual write-offs may exceed estimated amounts. Inventories Inventories consist of point-of-sale equipment to be sold to customers and are stated at the lower of cost, determined on a weighted average basis, or net realizable value. Inventories were $1,309 and $1,294 at September 30, 2020 and 2019, respectively, and are included within prepaid expenses and other current assets on the accompanying consolidated balance sheets. Property and Equipment Property and equipment are stated at cost or, if acquired through a business combination or an asset acquisition, fair value at the date of acquisition. Depreciation and amortization are provided over the assets’ estimated useful lives (or, if obtained in connection with a business acquisition, over their estimated remaining useful lives) using the straight-line method, except for leasehold improvements, which are depreciated over the shorter of the estimated useful lives of the assets or the lease term. Expenditures for maintenance and repairs are expensed when incurred. Expenditures for renewals or betterments are capitalized. Management reviews long-lived assets for impairment when events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. The Company recognizes impairment when the sum of undiscounted estimated future cash flows expected to result from the use of the asset is less than the carrying value of the asset. There were no impairment charges during the years ended September 30, 2020, 2019 and 2018. Capitalized Software Development costs for software to be sold or leased to customers are capitalized once technological feasibility of the software product has been established. Costs incurred prior to establishing technological feasibility are expensed as incurred. Technological feasibility is established when the Company has completed a detailed program design and has determined that a product can be produced to meet its design specifications, including functions, features and technical performance requirements. Capitalization of costs ceases when the product is generally available to clients. Software development costs are amortized using the greater of the straight-line method or the usage method over its estimated useful life, which is generally estimated to be three years. Software development costs may become impaired in situations where development efforts are abandoned due to the viability of a planned project becoming doubtful or due to technological obsolescence of a planned software product. Management evaluates the remaining useful lives and carrying values of capitalized software at least annually or when events and circumstances warrant such a review, to determine whether significant events or changes in circumstances indicate that impairment in value may have occurred. To the extent estimated net realizable values, which are estimated to equal future undiscounted cash flows, exceed the carrying value, no impairment is necessary. If estimated net realizable values are less than the carrying values, an impairment charge is recorded. Impairment charges during the years ended September 30, 2020, 2019 and 2018 were nominal. Identifiable software technology intangible assets resulting from acquisitions are amortized using the straight-line method over periods not exceeding their remaining estimated useful lives. GAAP requires that intangible assets with estimated useful lives be amortized over their respective estimated useful lives to their residual values, and reviewed for impairment. Acquisition technology intangibles’ net book values are included in capitalized software, net in the accompanying consolidated balance sheets. Notes Receivable Notes receivable consist of loans made to unrelated entities. Notes receivable were $1,195 and $195 at September 30, 2020 and 2019, respectively, and are included within other assets on the accompanying consolidated balance sheets. Acquisitions Business acquisitions have been recorded using the acquisition method of accounting in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 805, Business Combinations (“ASC 805”), and, accordingly, the purchase price has been allocated to the assets acquired and liabilities assumed based on their estimated fair value as of the date of acquisition. Where relevant, the fair value of material contingent consideration included in an acquisition is calculated using a Monte Carlo simulation. The fair value of merchant relationships and non-compete assets acquired is identified using the Income Approach. The fair value of trade names acquired is identified using the Relief from Royalty Method. The fair value of deferred revenue is identified using the Adjusted Fulfillment Cost Method. After the purchase price has been allocated, goodwill is recorded to the extent the total consideration paid for the acquisition, including the acquisition date fair value of contingent consideration, if any, exceeds the sum of the fair values of the separately identifiable acquired assets and assumed liabilities. Acquisition costs for business combinations are expensed when incurred and recorded in selling general and administrative expenses in the accompanying consolidated statements of operations. Acquisitions not meeting the accounting criteria to be accounted for as a business combination are accounted for as an asset acquisition. An asset acquisition is recorded at its purchase price, inclusive of acquisition costs, which is allocated among the acquired assets and assumed liabilities based upon their relative fair values at the date of acquisition. The operating results of an acquisition are included in the consolidated statements of operations from the date of such acquisition. Acquisitions completed during the year ended September 30, 2020 contributed $1,275 and $327 of revenue and net income, respectively, to the results in the Company's consolidated statements of operations for the year then ended. Goodwill In accordance with ASC 350, Intangibles—Goodwill and Other, the Company tests goodwill for impairment for each reporting unit on an annual basis in the fourth quarter, or when events or circumstances indicate the fair value of a reporting unit is below its carrying value. The Company’s goodwill represents the excess of the purchase price over the fair value of the net identifiable assets acquired in business combinations. The goodwill generated from the business combinations is primarily related to the value placed on the employee workforce and expected synergies. Judgment is involved in determining if an indicator or change in circumstances relating to impairment has occurred. Such changes may include, among others, a significant decline in expected future cash flows, a significant adverse change in the business climate, and unforeseen competition. No goodwill impairment charges were recognized during the years ended September 30, 2020, 2019 and 2018. The Company has the option of performing a qualitative assessment of impairment to determine whether any further quantitative testing for impairment is necessary. The option of whether or not to perform a qualitative assessment is made annually and may vary by reporting unit. Factors the Company considers in the qualitative assessment include general macroeconomic conditions, industry and market conditions, cost factors, overall financial performance of the Company’s reporting units, events or changes affecting the composition or carrying amount of the net assets of its reporting units, sustained decrease in its share price, and other relevant entity specific events. If the Company determines not to perform the qualitative assessment or if it determines, on the basis of qualitative factors, that the fair value of the reporting unit is more likely than not less than the carrying value, then the Company performs a quantitative test for that reporting unit. The fair value of each reporting unit is compared to the reporting unit’s carrying value, including goodwill. Subsequent to the adoption on January 1, 2017 of Accounting Standards Update (“ASU”) No. 2017-04, Intangibles—Goodwill and Other: Simplifying the Test for Goodwill Impairment, if the fair value of a reporting unit is less than its carrying value, the Company recognizes an impairment equal to the excess carrying value, not to exceed the total amount of goodwill allocated to that reporting unit. For a discussion of the estimation methodology, the qualitative factors considered when performing a qualitative assessment and the significance of various inputs, please see the subheading below titled “Use of Estimates.” The Company has determined that it has five reporting units as of the date of the most recent annual good impairment test. For each of the years ended September 30, 2020, 2019 and 2018 the Company performed a quantitative assessment for each of its reporting units. The Company determined that none of the reporting units were impaired. Intangible Assets Intangible assets include acquired merchant relationships, residual buyouts, referral agreements, trademarks, tradenames, website development costs and non-compete agreements. Merchant relationships represent the fair value of customer relationships purchased by the Company. Residual buyouts represent the right to not have to pay a residual to an independent sales agent related to certain future transactions with the agent’s referred merchants. Referral agreements represent the right to exclusively obtain referrals from a partner for their customers' credit card processing services. The Company amortizes definite lived identifiable intangible assets using a method that reflects the pattern in which the economic benefits of the intangible asset are expected to be consumed or otherwise utilized. The estimated useful lives of the Company’s customer-related intangible assets approximate the expected distribution of cash flows, whether straight-line or accelerated, generated from each asset. The useful lives of contract-based intangible assets are equal to the terms of the agreement. During the first quarter of fiscal year 2019, management determined it was appropriate to change the amortization rate of our merchant contract intangible assets to reflect the expected distribution of future cash flows. This change was applied prospectively beginning on October 1, 2018 and resulted in $1,290 in additional amortization expense recorded in the year ended September 30, 2019. Management evaluates the remaining useful lives and carrying values of long-lived assets, including definite lived intangible assets, at least annually, or when events and circumstances warrant such a review, to determine whether significant events or changes in circumstances indicate that a change in the useful life or impairment in value may have occurred. There were no impairment charges during the years ended September 30, 2020, 2019 and 2018. Income Taxes i3 Verticals, Inc. is taxed as a corporation and pays corporate federal, state and local taxes on income allocated to it from i3 Verticals, LLC based on i3 Verticals, Inc.'s economic interest in i3 Verticals, LLC. i3 Verticals, LLC's members, including the Company, are liable for federal, state and local income taxes based on their share of i3 Verticals, LLC's pass-through taxable income. i3 Verticals, LLC is not a taxable entity for federal income tax purposes, but is subject to and reports entity level tax in both Tennessee and Texas. In addition, certain subsidiaries of i3 Verticals, LLC are corporations that are subject to state and federal income taxes. The amount provided for state income taxes is based upon the amounts of current and deferred taxes payable or refundable at the date of the consolidated financial statements as a result of all events recognized in the financial statements as measured by the provisions of enacted tax laws. Under GAAP, a tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. The Company reports a liability for unrecognized tax positions taken or expected to be taken in a tax return. The Company recognizes interest and penalties, if any, related to unrecognized tax benefits as part of income tax expense. See additional discussion in Note 10. Valuation of Contingent Consideration On occasion, the Company may have acquisitions which include contingent consideration. Accounting for business combinations requires the Company to estimate the fair value of any contingent purchase consideration at the acquisition date. For a discussion of the estimate methodology and the significance of various inputs, please see the subheading below titled “Use of Estimates.” Changes in estimates regarding the fair value contingent purchase consideration are reflected as adjustments to the related liability and recognized within operating expenses in the consolidated statements of operations. Short and long-term contingent liabilities are presented within accrued expenses and other current liabilities and other long-term liabilities on the Company's consolidated balance sheets, respectively. Classification of Financial Instruments The Company classifies certain financial instruments issued as either equity or as liabilities. Determination of classification is based upon the underlying properties of the instrument. See specific discussion regarding the nature of instruments issued, the presentation on the consolidated financial statements and the related valuation method applied in Notes 9, 11, 12, and 13. Revenue Recognition and Deferred Revenue For the year ended September 30, 2020, revenue is recognized as each performance obligation is satisfied, in accordance with ASC 606, Revenue from Contracts with Customers (“ASC 606”). The Company accrues for rights of refund, processing errors or penalties, or other related allowances based on historical experience. The Company utilized the portfolio approach practical expedient within ASC 606-10-10-4 Revenue from Contracts with Customers—Objectives and the significant financing component practical expedient within ASC 606-10-32-18 Revenue from Contracts with Customers—The Existence of a Significant Financing Component in the Contract in performing the analysis. The Company adopted ASC 606 on October 1, 2019, using the modified retrospective method and applying the standard to all contracts not completed on the date of adoption. Results for the reporting period beginning October 1, 2019 are presented under ASC 606, while prior period amounts continue to be reported in accordance with the Company's historic accounting practices under previous guidance. The majority of the Company's revenue for the years ended September 30, 2020, 2019 and 2018 is derived from volume-based payment processing fees (“discount fees”) and other related fixed transaction or service fees. The remainder is comprised of sales of software licensing subscriptions, ongoing support, and other POS-related solutions the Company provides to its clients directly and through its processing bank relationships. Discount fees represent a percentage of the dollar amount of each credit or debit transaction processed or a specified per transaction amount, depending on the card type. The Company frequently enters into agreements with clients under which the client engages the Company to provide both payment authorization services and transaction settlement services for all of the cardholder transactions of the client, regardless of which issuing bank and card network to which the transaction relates. The Company’s core performance obligations are to stand ready to provide continuous access to the Company’s payment authorization services and transaction settlement services in order to be able to process as many transactions as its clients require on a daily basis over the contract term. These services are stand ready obligations, as the timing and quantity of transactions to be processed is not determinable. Under a stand-ready obligation, the Company’s performance obligation is defined by each time increment rather than by the underlying activities satisfied over time based on days elapsed. Because the service of standing ready is substantially the same each day and has the same pattern of transfer to the client, the Company has determined that its stand-ready performance obligation comprises a series of distinct days of service. Discount fees are recognized each day based on the volume or transaction count at the time the merchants’ transactions are processed. The Company follows the requirements of ASC 606-10-55 Revenue from Contracts with Customers—Principal versus Agent Considerations , which states that the determination of whether a company should recognize revenue based on the gross amount billed to a client or the net amount retained is a matter of judgment that depends on the facts and circumstances of the arrangement. The determination of gross versus net recognition of revenue requires judgment that depends on whether the Company controls the good or service before it is transferred to the merchant or whether the Company is acting as an agent of a third party. The assessment is provided separately for each performance obligation identified. Under its agreements, the Company incurs interchange and network pass-through charges from the third-party card issuers and card networks, respectively, related to the provision of payment authorization services. The Company has determined that it is acting as an agent with respect to these payment authorization services, based on the following factors: (1) the Company has no discretion over which card issuing bank will be used to process a transaction and is unable to direct the activity of the merchant to another card issuing bank, and (2) interchange and card network rates are pre-established by the card issuers or card networks, and the Company has no latitude in determining these fees. Therefore, revenue allocated to the payment authorization performance obligation is presented net of interchange and card network fees paid to the card issuing banks and card networks, respectively, for the year ended September 30, 2020, subsequent to the adoption of ASC 606. With regards to the Company's discount fees, generally, where the Company has control over merchant pricing, merchant portability, credit risk and ultimate responsibility for the merchant relationship, revenues are reported at the time of sale equal to the full amount of the discount charged to the merchant, less interchange and network fees. Revenues generated from merchant portfolios where the Company does not have control over merchant pricing, liability for merchant losses or credit risk or rights of portability are reported net of interchange and network fees as well as third-party processing costs directly attributable to processing and bank sponsorship costs. Revenues are also derived from a variety of fixed transaction or service fees, including authorization fees, convenience fees, statement fees, annual fees, gateway fees, which are charged for accessing our payment and software solutions, and fees for other miscellaneous services, such as handling chargebacks. Revenues derived from service fees are recognized at the time the services are performed and there are no further performance obligations. Revenue from fixed transactions, which principally relates to the sale of equipment, is recognized upon transfer of ownership and delivery to the client, after which there are no further performance obligations. Revenues from sales of the Company’s software are recognized when the related performance obligations are satisfied. Sales of software licenses are categorized into one of two categories of intellectual property in accordance with ASC 606, functional or symbolic. The key distinction is whether the license represents a right to use (functional) or a right to access (symbolic) intellectual property. The Company generates sales of one-time software licenses, which is functional intellectual property. Revenue from functional intellectual property is recognized at a point in time, when delivered to the client. The Company also offers access to its software under software-as-a-service (“SaaS”) arrangements, which represent services arrangements. Revenue from SaaS arrangements is recognized over time, over the term of the agreement. Arrangements may contain multiple performance obligations, such as payment authorization services, transaction settlement services, hardware, software products, maintenance, and professional installation and training services. Revenues are allocated to each performance obligation based on the standalone selling price of each good or service. The selling price for a deliverable is based on standalone selling price, if available, the adjusted market assessment approach, estimated cost plus margin approach, or residual approach. The Company establishes estimated selling price, based on the judgment of the Company's management, considering internal factors such as margin objectives, pricing practices and controls, client segment pricing strategies and the product life cycle. In arrangements with multiple performance obligations, the Company determines allocation of the transaction price at inception of the arrangement and uses the standalone selling prices for the majority of the Company's revenue recognition. Revenues from sales of the Company ’ s combined hardware and software element are recognized when each performance obligation has been satisfied which has been determined to be upon the delivery of the product. Revenues derived from service fees are recognized at the time the services are performed and there are no further performance obligations. The Company’s professional services, including training, installation, and repair services are recognized as revenue as these services are performed. The table below presents a disaggregation of the Company's revenue from contracts with clients by product by segment. Refer to Note 16 for discussion of the Company's segments. The Company's products are defined as follows: • Payments — Includes discount fees, gateway fees and other related fixed transaction or service fees. • Other — Includes sales of software, sales of equipment, professional services and other revenues. For the year ended September 30, 2020 Merchant Services Proprietary Software and Payments Other Total Payments revenue $ 82,913 $ 19,359 $ (1,757) $ 100,515 Other revenue 18,036 31,594 (11) 49,619 Total revenue $ 100,949 $ 50,953 $ (1,768) $ 150,134 The table below presents a disaggregation of the Company's revenue from contracts with clients by timing of transfer of goods or services by segment. The Company's revenue included in each category are defined as follows: • Revenue transferred over time — Includes discount fees, gateway fees, sales of SaaS and ongoing support contract revenue. • Revenue transferred at a point in time — Includes fixed service fees, software licenses sold as functional intellectual property, professional services and other equipment. For the year ended September 30, 2020 Merchant Services Proprietary Software and Payments Other Total Revenue earned over time $ 72,800 $ 35,222 $ (1,743) $ 106,279 Revenue earned at a point in time 28,149 15,731 (25) 43,855 Total revenue $ 100,949 $ 50,953 $ (1,768) $ 150,134 Contract Liabilities Deferred revenue represents amounts billed to clients by the Company for services contracts. Payment is typically collected at the start of the contract term. The initial prepaid contract agreement balance is deferred. The balance is then recognized as the services are provided over the contract term. Deferred revenue that is expected to be recognized as revenue within one year is recorded as short-term deferred revenue and the remaining portion is recorded as other long-term liabilities in the consolidated balance sheets. The terms for most of the Company's contracts with a deferred revenue component are one year. Substantially all of the Company's deferred revenue is anticipated to be recognized within the next year. The following table presents the changes in deferred revenue as of and for the year ended September 30, 2020: Balance at September 30, 2019 $ 10,237 Deferral of revenue 22,963 Recognition of unearned revenue (22,146) Balance at September 30, 2020 $ 11,054 Costs to Obtain and Fulfill a Contract The Company capitalizes incremental costs to obtain new contracts and contract renewals and amortizes these costs on a straight-line basis as an expense over the benefit period, which is generally the contract term, unless a commensurate payment is not expected at renewal. As of September 30, 2020, the Company had $3,140, of capitalized contract costs, which relates to commissions paid to obtain new sales, included within “Prepaid expenses and other current assets” and “Other assets" on the consolidated balance sheets. The Company recorded commissions expense related to these costs for the year ended September 30, 2020 of $398. The Company expenses sales commissions as incurred for the Company's sales commission plans that are paid on recurring monthly revenues, portfolios of existing clients, or have a substantive stay requirement prior to payment. Interchange and Network Fees and Other Cost of Services Interchange and network fees consist primarily of fees that are directly related to discount fee revenue. These include interchange fees paid to issuers and assessment fees payable to card associations, which are a percentage of the processing volume the Company generates from Visa and Mastercard, as well as fees charged by card-issuing banks. Other costs of services include costs directly attributable to processing and bank sponsorship costs, which may not be based on a percentage of volume. These costs also include related costs such as residual payments to sales groups, which are based on a percentage of the net revenues generated from merchant referrals. In certain merchant processing bank relationships the Company is liable for chargebacks against a merchant equal to the volume of the transaction. Losses resulting from chargebacks against a merchant are included in other cost of services on the accompanying consolidated statement of operations. The Company evaluates its risk for such transactions and estimates its potential loss from chargebacks based primarily on historical experience and other relevant factors. The reserve for merchant losses is included within accrued expenses and other current liabilities on the accompanying consolidated balance sheets. The cost of equipment sold is also included in other cost of services. Interchange and other costs of services are recognized at the time the merchant's transactions are processed. The Company accounts for all governmental taxes associated with revenue transactions on a net basis. Advertising and Promotion Costs Advertising and promotion costs are expensed as incurred. Advertising expense was $1,813, $1,443 and $926 for the years ended September 30, 2020, 2019 and 2018, respectively, and is included in selling, general and administrative expenses in the Consolidated Statements of Operations. Equity-based Compensation The Company accounts for grants of equity awards to employees in accordance with ASC 718, Compensation—Stock Compensation. This standard requires compensation expense to be measured based on the estimated fair value of the share-based awards on the date of grant and recognized as expense on a straight-line basis over the requisite service period, which is generally the vesting period. Equity-based compensation was $10,452, $6,124 and $1,567 for the years ended September 30, 2020, 2019 and 2018, respectively. Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Such estimates include, but are not limited to, the value of purchase consideration paid and identifiable assets acquired and assumed in acquisitions, goodwill and intangible asset impairment review, warrant valuation, revenue recognition for contracts with multiple performance obligations, loss reserves, assumptions used in the calculation of equity-based compensation and in the calculation of income taxes, and certain tax assets and liabilities as well as the related valuation allowances. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results could differ from those estimates. The impact of the COVID-19 pandemic on certain of the Company's estimates, including goodwill and intangible assets, is uncertain at this time. If general economic conditions continue to deteriorate or remain uncertain for an extended period of time, the trading price of our common stock, which has already declined in recent months, could decline further. If the stock price continues to be depressed or decreases further, it may cause a triggering event for impairment testing of fair-valued assets, including goodwill and intangible assets. During the year ended September 30, 2020, the Company has recorded a $2,668 reduction in the valuation allowance on the deferred tax asset related to the Company’s investment in partnership and a corresponding reduction in the Company's income tax expense for the year ended September 30, 2020. Management has determined an additional portion of the deferred tax asset will be more likely than not realized based off an evaluation of the four sources of taxable income. During the year ended Septe |
Credit Risk and Other Concentra
Credit Risk and Other Concentrations | 12 Months Ended |
Sep. 30, 2020 | |
Risks and Uncertainties [Abstract] | |
Credit Risk and Other Concentrations | CREDIT RISK AND OTHER CONCENTRATIONS The Company places its cash with high credit quality financial institutions which provide Federal Deposit Insurance Corporation insurance. The Company performs periodic evaluations of the relative credit standing of these institutions and does not expect any losses related to such concentrations. The Company’s revenues are earned by processing transactions for merchant businesses and other institutions under contract with the Company. The Company utilizes the funds settlement services of primarily six processing banks, from which most accounts receivable are remitted monthly. No single merchant accounted for more than 10.0% of the Company's revenue during the years ended September 30, 2020, 2019 and 2018. The Company believes that the loss of any single merchant would not have a material adverse effect on the Company's financial condition or results of operations. The Company uses third party payment processors, three of which facilitate more than 10% of our processing revenues for the years ended September 30, 2020, 2019, and 2018. |
Acquisitions
Acquisitions | 12 Months Ended |
Sep. 30, 2020 | |
Business Combinations [Abstract] | |
Acquisitions | ACQUISITIONS During the years ended September 30, 2020, 2019 and 2018 the Company acquired the following intangible assets and businesses: Residual Buyouts From time to time, the Company acquires future commission streams from sales agents in exchange for an upfront cash payment. This results in an increase in overall gross processing volume to the Company. The residual buyouts are treated as asset acquisitions, resulting in recording a residual buyout intangible asset at cost on the date of acquisition. These assets are amortized using a method of amortization that reflects the pattern in which the economic benefits of the intangible asset are expected to be utilized over their estimated useful lives. During the years ended September 30, 2020, 2019 and 2018, the Company purchased $1,788, $3,585 and $1,567, respectively, in residual buyouts using a combination of cash on hand and borrowings on the Company's revolving credit facility. The acquired residual buyout intangible assets have weighted average estimated amortization periods of eight seven Referral Agreements From time to time, the Company enters into referral agreements with agent banks or other organizations (“referral partner”). Under these agreements, the referral partner exclusively refers its customers to the Company for credit card processing services. Total consideration paid for these agreements in the years ended September 30, 2020, 2019 and 2018 was $0, $0 and $815, respectively, all of which was settled with cash on hand. Because the Company pays an up-front fee to compensate the referral partner, the amount is treated as an asset acquisition in which the Company has acquired an intangible stream of referrals. This asset is amortized over a straight-line period. The weighted-average amortization period for all intangibles acquired is five years. 2018 Business Combinations During the year ended September 30, 2018, the Company completed the acquisitions of businesses, including San Diego Cash Register Company, Inc., and additional unrelated businesses which were considered individually immaterial but collectively material. Purchase of San Diego Cash Register Company, Inc. On October 31, 2017, the Company closed an agreement to purchase all of the outstanding stock of San Diego Cash Register Company, Inc. (“SDCR, Inc.”). The acquisition was completed to expand the Company's revenue within the integrated POS market. Total purchase consideration was $20,834, which includes $104 of common units in i3 Verticals, LLC issued to the seller. The acquisition was funded using $20,000 in proceeds from the issuance of long-term debt from the 2017 Senior Secured Credit Facility (as defined in Note 9) and $730 of contingent cash consideration. The goodwill associated with the acquisition is not deductible for tax purposes. The acquired merchant relationships intangible asset has an estimated amortization period of twelve years. The non-compete agreement and trade name have amortization periods of two Acquisition-related costs for SDCR, Inc. were $293 and were expensed as incurred. Certain provisions in the purchase agreement provide for additional consideration of up to $2,400, in the aggregate, to be paid based upon the achievement of specified financial performance targets, as defined in the purchase agreement, through October 2019. The Company determined the acquisition date fair value of the liability for the contingent consideration based on a discounted cash flow analysis. In each subsequent reporting period the Company reassesses its current estimates of performance relative to the targets and adjusts the contingent liability to its fair value through earnings. See additional disclosures in Note 11. Other 2018 Business Combinations The Company completed the acquisitions of the other businesses to expand the Company's merchant base. Total purchase consideration for the other acquisitions was $15,604, including $13,700 in cash and revolving credit facility proceeds, $550 of restricted Class A common stock and $1,354 of contingent cash consideration. The goodwill associated with the acquisitions of the other businesses is deductible for tax purposes. The acquired merchant relationships intangible assets have estimated amortization periods of between twelve Acquisition-related costs for the other businesses amounted to approximately $233 and were expensed as incurred. Certain provisions in the purchase agreements for the other businesses provide for additional consideration of up to $11,800, in the aggregate, to be paid based upon the achievement of specified financial performance targets, as defined in the purchase agreements, through no later than January 2020. The Company determined the acquisition date fair values of the liabilities for the contingent consideration based on discounted cash flow analyses. In each subsequent reporting period, the Company will reassess its current estimates of performance relative to the targets and adjust the contingent liabilities to their fair values through earnings. See additional disclosures in Note 11. Summary of 2018 Business Combinations The fair values assigned to certain assets and liabilities assumed, as of the acquisition dates, during the year ended September 30, 2018 were as follows: SDCR, Inc. Other Total Cash and cash equivalents $ 1,338 $ — $ 1,338 Accounts receivable 1,008 — 1,008 Settlement assets — 350 350 Related party receivable 773 — 773 Inventories 1,318 — 1,318 Prepaid expenses and other current assets 1,176 8 1,184 Property and equipment 69 58 127 Capitalized software — 200 200 Acquired merchant relationships 5,500 5,100 10,600 Exclusivity Agreements — 100 100 Non-compete agreements 40 1,440 1,480 Trade name 1,340 200 1,540 Goodwill 16,523 8,914 25,437 Other assets — 4 4 Total assets acquired 29,085 16,374 45,459 Accounts payable 1,342 — 1,342 Accrued expenses and other current liabilities 3,123 431 3,554 Settlement obligations — 350 350 Deferred revenue, current 2,029 190 2,219 Other long-term liabilities 1,757 — 1,757 Net assets acquired $ 20,834 $ 15,403 $ 36,237 2019 Business Combinations During the year ended September 30, 2019, the Company completed the acquisitions of unrelated businesses, including Pace Payment Systems, Inc. Purchase of Pace Payment Systems, Inc. On May 31, 2019, i3-Holdings Sub, Inc. acquired all of the stock of Pace Payment Systems, Inc. (“Pace”) via a reverse triangular merger involving Pace and a special acquisition subsidiary of i3-Holdings Sub, Inc. The Company acquired Pace to expand its software offerings, primarily in the public sector and education verticals. The total purchase consideration was $56,053, including $52,492 in cash consideration, funded by proceeds from the Company's revolving credit facility, $3,336 of contingent consideration and $225 of restricted shares of Class A common stock in i3 Verticals. The goodwill associated with the acquisition is not deductible for tax purposes. The acquired merchant relationships intangible asset has an estimated amortization period of fifteen years. The non-compete agreement and trade name have estimated amortization periods of three operating losses and Section 163(j) carryforwards and deferred tax liabilities related to intangibles, which are presented as a total net deferred tax asset as of September 30, 2020. Acquisition-related costs for Pace amounted to approximately $507 ($444 during fiscal year 2019) and were expensed as incurred. Certain provisions in the merger agreement provide for additional consideration of up to $20,000 in the aggregate, to be paid based upon achievement of specified financial performance targets, as defined in the purchase agreement, in the 24 months from January 1, 2020 through December 31, 2021. The Company determined the acquisition date fair value of the liability for the contingent consideration based on a discounted cash flow analysis. In each subsequent reporting period, the Company will reassess the current estimates of performance relative to the targets and adjust the contingent liability to its fair value through earnings. See additional disclosures in Note 11. Other 2019 Business Combinations The Company completed the acquisitions of other businesses to expand the Company’s software offerings in the public sector vertical market, provide technology that enhances the Company’s Burton Platform and expand the Company's merchant base. Total purchase consideration was $98,887, including $89,191 in revolving credit facility proceeds and $9,696 of contingent consideration. For some of these businesses acquired, the goodwill associated with the acquisitions is deductible for tax purposes, and goodwill associated with the acquisitions of others of the businesses is not deductible for tax purposes. The acquired merchant relationships intangible assets have estimated amortization periods of between thirteen three Acquisition-related costs for these businesses amounted to approximately $1,299 ($1,179 during fiscal year 2019) and were expensed as incurred. Certain provisions in the purchase agreements provide for additional consideration of up to $34,900, in the aggregate, to be paid based upon the achievement of specified financial performance targets, as defined in the purchase agreements, through no later than September 2021. The Company determined the acquisition date fair values of the liabilities for the contingent consideration based on probability forecasts and discounted cash flow analyses. In each subsequent reporting period, the Company will reassess its current estimates of performance relative to the targets and adjust the contingent liabilities to their fair values through earnings. See additional disclosures in Note 11. Summary of 2019 Business Combinations The fair values assigned to certain assets and liabilities assumed, as of the acquisition dates, were as follows: Pace Other Total Cash and cash equivalents $ 108 $ 4,453 $ 4,561 Accounts receivable 545 4,907 5,452 Settlement assets — 18 18 Inventories 45 61 106 Prepaid expenses and other current assets 59 483 542 Property and equipment 527 1,929 2,456 Capitalized software 3,400 9,440 12,840 Acquired merchant relationships 13,400 34,480 47,880 Non-compete agreements 60 150 210 Trade name 500 1,540 2,040 Goodwill 35,589 47,483 83,072 Other assets 2,622 2 2,624 Total assets acquired 56,855 104,946 161,801 Accounts payable 722 369 1,091 Accrued expenses and other current liabilities 56 2,284 2,340 Settlement obligations — 18 18 Deferred revenue, current 24 2,698 2,722 Other long-term liabilities — 690 690 Net assets acquired $ 56,053 $ 98,887 $ 154,940 During the year ended September 30, 2020, the Company finalized the purchase price allocations for the 2019 business combinations, which resulted in additional adjustments to increase current assets by $153, increase other assets by $933, decrease liabilities by $258 and decrease goodwill by $1,227. The table above reflects the adjusted amounts. 2020 Business Combinations During the year ended September 30, 2020, the Company completed the acquisitions of three unrelated businesses. Two expand the Company's geographic reach and software capabilities in the public sector vertical. The other adds text-to-pay capabilities and other software solutions in the Company's non-profit vertical. Total purchase consideration was $32,633, including $27,885 in revolving credit facility proceeds and $4,748 of contingent consideration. Certain of the purchase price allocations assigned for these acquisitions are preliminary. For some of these business acquired, the goodwill associated with the acquisitions is deductible for tax purposes, and goodwill associated with the acquisitions of others of the businesses is not deductible for tax purposes. The acquired merchant relationships intangible assets have estimated amortization periods of between fifteen Acquisition-related costs for these businesses amounted to approximately $547 and were expensed as incurred. Certain provisions in the purchase agreements provide for additional consideration of up to $18,600, in the aggregate, to be paid based upon the achievement of specified financial performance targets, as defined in the purchase agreements, through no later than September 2022. The Company determined the acquisition date fair values of the liabilities for the contingent consideration based on probability forecasts and discounted cash flow analyses. In each subsequent reporting period, the Company will reassess its current estimates of performance relative to the targets and adjust the contingent liabilities to their fair values through earnings. See additional disclosures in Note 11. Summary of 2020 Business Combinations The fair values assigned to certain assets and liabilities assumed, as of the acquisition dates, during the year ended September 30, 2020 were as follows: Cash and cash equivalents $ 313 Accounts receivable 709 Prepaid expenses and other current assets 54 Property and equipment 122 Capitalized software 1,970 Acquired merchant relationships 11,900 Non-compete agreements 90 Trade name 300 Goodwill 19,948 Other assets 17 Total assets acquired 35,423 Accounts payable 168 Accrued expenses and other current liabilities 623 Deferred revenue, current 200 Other long-term liabilities 1,799 Net assets acquired $ 32,633 Pro Forma Results of Operations for 2020 Business Combinations The following unaudited supplemental pro forma results of operations have been prepared as though each of the acquired businesses in the year ended September 30, 2020 had occurred on October 1, 2018. Pro forma adjustments were made to reflect the impact of depreciation and amortization, changes to executive compensation and the revised debt load, all in accordance with ASC 805. This supplemental pro forma information does not purport to be indicative of the results of operations that would have been attained had the acquisitions been made on these dates, or of results of operations that may occur in the future. Year ended September 30, 2020 2019 Revenue (1) $ 156,036 $ 383,546 Net (loss) income $ (1,170) $ 472 __________________________ 1. Effective October 1, 2019, our revenues are presented net of interchange and network fees in accordance with Accounting Standards Codification Topic 606, Revenue from Contracts with Customers . See Note 2 for a description of the recently adopted accounting pronouncement. |
Property and Equipment, Net
Property and Equipment, Net | 12 Months Ended |
Sep. 30, 2020 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment, Net | PROPERTY AND EQUIPMENT, NET A summary of the Company's property and equipment as of September 30, 2020 and 2019 is as follows: Estimated Useful Life 2020 2019 Computer equipment and software (1) 2 to 7 years $ 2,382 $ 1,990 Furniture and fixtures 2 to 7 years 1,867 1,639 Terminals 2 to 3 years 584 429 Office equipment 2 to 5 years 942 940 Automobiles 3 years 366 307 Leasehold improvements 2 to 7 years 2,194 1,665 Accumulated depreciation (2,996) (1,944) Property and equipment, net $ 5,339 $ 5,026 ____________________ 1. Includes computer software of $694 and $674 as of September 30, 2020 and 2019, respectively. Depreciation expense for the years ended September 30, 2020, 2019 and 2018 amounted to $1,825, $1,195 and $802, respectively. |
Capitalized Software, Net
Capitalized Software, Net | 12 Months Ended |
Sep. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Capitalized Software, Net | CAPITALIZED SOFTWARE, NET A summary of the Company's capitalized software as of September 30, 2020 and 2019 is as follows: Estimated Useful Life 2020 2019 Software development costs 1 to 7 years $ 21,485 $ 20,347 Development in progress 2,638 833 Accumulated amortization (7,134) (5,726) Capitalized software, net $ 16,989 $ 15,454 The Company capitalized software development costs (including acquisitions) totaling $5,756 and $15,067 during the years ended September 30, 2020 and 2019, respectively. Amortization expense for capitalized software development costs amounted to $3,978, $2,977 and $1,696 during the years ended September 30, 2020, 2019 and 2018, respectively. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 12 Months Ended |
Sep. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | GOODWILL AND INTANGIBLE ASSETS Changes in the carrying amount of goodwill are as follows: Merchant Services Proprietary Software and Payments Other Total Balance at September 30, 2018 (net of accumulated impairment losses of $11,458, $0 and $0, respectively) $ 70,936 $ 13,018 $ — $ 83,954 Goodwill attributable to preliminary purchase price adjustments and acquisition activity during the year ended September 30, 2019 46,398 37,932 — 84,330 Balance at September 30, 2019 117,334 50,950 — 168,284 Goodwill reassigned in segment realignment (1) (419) 419 — — Goodwill attributable to preliminary purchase price adjustments and acquisition activity during the year ended September 30, 2020 (933) 19,654 — 18,721 Balance at September 30, 2020 $ 115,982 $ 71,023 $ — $ 187,005 ____________________ 1. Represents the reallocation of goodwill related to a component which was realigned from the Proprietary Software and Payments segment to the Merchant Services segment as of July 1, 2020. See Note 16 for additional information. Intangible assets consisted of the following as of September 30, 2020: Cost Accumulated Amortization Carrying Value Amortization Life and Method Finite-lived intangible assets: Merchant relationships $ 154,571 $ (53,388) $ 101,183 12 to 20 years – accelerated or straight-line Non-compete agreements 1,700 (851) 849 3 to 5 years – straight-line Website and brand development costs 215 (65) 150 3 to 4 years – straight-line Trade names 3,880 (1,538) 2,342 3 to 7 years – straight-line Residual buyouts 5,373 (1,172) 4,201 2 to 8 years – straight-line Referral and exclusivity agreements 900 (434) 466 5 to 10 years – straight-line Total finite-lived intangible assets 166,639 (57,448) 109,191 Indefinite-lived intangible assets: Trademarks 42 — 42 Total identifiable intangible assets $ 166,681 $ (57,448) $ 109,233 Intangible assets consisted of the following as of September 30, 2019: Cost Accumulated Amortization Carrying Value Amortization Life and Method Finite-lived intangible assets: Merchant relationships $ 142,671 $ (43,579) $ 99,092 12 to 20 years – accelerated or straight-line Non-compete agreements 1,770 (619) 1,151 2 to 5 years – straight-line Website development costs 77 (22) 55 3 years – straight-line Trade names 4,292 (1,307) 2,985 3 to 7 years – straight-line Residual buyouts 5,346 (1,882) 3,464 2 to 8 years – straight-line Referral and exclusivity agreements 900 (264) 636 5 to 10 years – straight-line Total finite-lived intangible assets 155,056 (47,673) 107,383 Indefinite-lived intangible assets: Trademarks 36 — 36 Total identifiable intangible assets 155,092 (47,673) 107,419 Amortization expense for intangible assets amounted to $12,414, $12,394 and $9,341 during the years ended September 30, 2020, 2019 and 2018, respectively. Based on gross carrying amounts at September 30, 2020, the Company's estimate of future amortization expense for intangible assets are presented in this table as follows for each fiscal year ending September 30: 2021 $ 11,645 2022 10,500 2023 9,428 2024 8,702 2025 8,495 Thereafter 60,421 $ 109,191 |
Accrued Expenses and Other Liab
Accrued Expenses and Other Liabilities | 12 Months Ended |
Sep. 30, 2020 | |
Payables and Accruals [Abstract] | |
Accrued Expenses and Other Liabilities | ACCRUED EXPENSES AND OTHER LIABILITIES A summary of the Company's accrued expenses and other current liabilities as of September 30, 2020 and 2019 is as follows: 2020 2019 Accrued wages, bonuses, commissions and vacation $ 3,867 $ 4,256 Accrued interest 141 254 Accrued contingent consideration — current portion 10,062 10,223 Escrow liabilities 4,363 1,414 Tax receivable agreement liability — current portion — 24 Customer deposits 1,828 1,968 Other current liabilities 3,803 3,421 Accrued expenses and other current liabilities $ 24,064 $ 21,560 A summary of the Company's long-term liabilities as of September 30, 2020 and 2019 is as follows: 2020 2019 Accrued contingent consideration — long-term portion $ 2,972 $ 8,003 Deferred tax liability — long-term 2,212 516 Other long-term liabilities 956 605 Total other long-term liabilities $ 6,140 $ 9,124 |
Long-Term Debt, Net
Long-Term Debt, Net | 12 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
Long-Term Debt, Net | LONG-TERM DEBT, NET A summary of long-term debt, net as of September 30, 2020 and September 30, 2019 is as follows: Maturity 2020 2019 Revolving lines of credit to banks under the Senior Secured Credit Facility May 9, 2024 $ — $ 141,144 1.0% Exchangeable Senior Notes due 2025 February 15, 2025 95,325 — Debt issuance costs, net (4,567) (1,846) Total long-term debt, net of issuance costs $ 90,758 $ 139,298 2020 Exchangeable Notes Offering On February 18, 2020, i3 Verticals, LLC issued $138,000 aggregate principal amount of 1.0% Exchangeable Senior Notes due 2025 (the “Exchangeable Notes”) in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”). The Company received approximately $132,762 in net proceeds from the sale of the Exchangeable Notes, as determined by deducting estimated offering expenses paid to third-parties from the aggregate principal amount. The Exchangeable Notes are senior secured notes and are guaranteed solely by the Company. The Exchangeable Notes bear interest at a fixed rate of 1.00% per year, payable semiannually in arrears on February 15 and August 15 of each year, beginning on August 15, 2020. The Exchangeable Notes will mature on February 15, 2025, unless converted or repurchased at an earlier date. i3 Verticals, LLC issued the Exchangeable Notes pursuant to an Indenture, dated as of February 18, 2020 (the “Indenture”), among i3 Verticals, LLC, the Company and U.S. Bank National Association, as trustee. Prior to August 15, 2024, the Exchangeable Notes are exchangeable only upon satisfaction of certain conditions and during certain periods described in the Indenture, and thereafter, the Exchangeable Notes are exchangeable at any time until the close of business on the second scheduled trading day immediately preceding the maturity date. The Exchangeable Notes are exchangeable on the terms set forth in the Indenture into cash, shares of Class A common stock, or a combination thereof, at i3 Verticals, LLC’s election. The exchange rate is initially 24.4666 shares of Class A common stock per $1,000 principal amount of Exchangeable Notes (equivalent to an initial exchange price of approximately $40.87 per share of Class A common stock). The exchange rate is subject to adjustment in certain circumstances. In addition, following certain corporate events that occur prior to the maturity date or i3 Verticals, LLC’s delivery of a notice of redemption, i3 Verticals, LLC will increase, in certain circumstances, the exchange rate for a holder who elects to exchange its Exchangeable Notes in connection with such a corporate event or notice of redemption, as the case may be. If the Company or i3 Verticals, LLC undergoes a fundamental change, holders may require i3 Verticals, LLC to repurchase all or part of their Exchangeable Notes at a repurchase price equal to 100% of the principal amount of the Exchangeable Notes to be repurchased, plus accrued and unpaid interest to, but not including, the fundamental change repurchase date. As of September 30, 2020, none of the conditions permitting the holders of the Exchangeable Notes to early convert have been met. i3 Verticals, LLC may not redeem the Exchangeable Notes prior to February 20, 2023. On or after February 20, 2023, and prior to the 47th scheduled trading day immediately preceding the maturity date, if the last reported sale price per share of Class A common stock has been at least 130% of the exchange price for the Exchangeable Notes for at least 20 trading days (whether or not consecutive), i3 Verticals, LLC may redeem all or any portion of the Exchangeable Notes at a cash redemption price equal to 100% of the principal amount of the Exchangeable Notes to be redeemed plus accrued and unpaid interest on such note to, but not including, the redemption date. The Exchangeable Notes are general senior unsecured obligations of i3 Verticals, LLC and the guarantee is the Company’s senior unsecured obligation and rank senior in right of payment to all of i3 Verticals, LLC’s and the Company’s future indebtedness that is expressly subordinated in right of payment to the Exchangeable Notes or the guarantee, as applicable. The Exchangeable Notes and the guarantee rank equally in right of payment with all of i3 Verticals, LLC’s and the Company’s existing and future unsecured indebtedness that is not so expressly subordinated in the right of payment to the Exchangeable Notes or the guarantee, as applicable. The Exchangeable Notes and the guarantee are effectively subordinated to any of the Companies’ existing and future secured indebtedness to the extent of the value of the assets securing such indebtedness (including obligations under the credit agreement governing the Senior Secured Credit Facility, defined below). The Exchangeable Notes and the guarantee will be structurally subordinated to all indebtedness and other liabilities and obligations (including the debt and trade payables) of the Company’s subsidiaries, other than i3 Verticals, LLC. In accounting for the issuance of the Exchangeable Notes, the Company separated the Exchangeable Notes into liability and equity components. The carrying amount of the liability component before the allocation of any transaction costs was calculated by measuring the fair value of a similar liability that does not have an associated exchangeable feature. The carrying amount of the equity component (before the allocation of any transaction costs), representing the conversion option, which does not require separate accounting as a derivative as it meets a scope exception for certain contracts involving an entity's own equity, was determined by deducting the fair value of the liability component from the par value of the Exchangeable Notes. The difference between the principal amount of the Exchangeable Notes and the liability component represents the debt discount, which is recorded as a direct deduction from the related debt liability in the consolidated balance sheet and accreted over the period from the date of issuance to the contractual maturity date, resulting in the recognition of non-cash interest expense. The equity component of the Exchangeable Notes of approximately $28,662 is included in additional paid-in capital in the consolidated balance sheet and is not remeasured as longs as it continues to meet the conditions for equity classification. Transaction costs were allocated to the liability and equity components in the same proportion as the allocation of the proceeds. Transaction costs attributable to the liability component were recorded as debt issuance costs in the consolidated balance sheet and are amortized to interest expense using the effective interest method over the term of the Exchangeable Notes, and transaction costs attributable to the equity component were netted with the equity component in stockholders' equity. The Company incurred third-party issuance costs totaling $5,238, in connection with the issuance of the Exchangeable Notes. The Company capitalized $4,150 of debt issuance costs in connection with the Exchangeable Notes and allocated $1,088 of the third-party issuance costs to equity. Non-cash interest expense, including amortization of debt issuance costs, related to the Exchangeable Notes for the year ended September 30, 2020 was $365, respectively. The Company also wrote off a portion of the debt issuance costs in connection with the repurchase transactions in April and September 2020, as described below. Total unamortized debt issuance costs related to the Exchangeable Notes were $3,193 as of September 30, 2020. The estimated fair value of the Exchangeable Notes was $102,064 as of September 30, 2020. The estimated fair value of the Exchangeable Notes was determined through consideration of quoted market prices for similar instruments. The fair value is classified as Level 2, as defined in Note 11. The Company can choose to purchase its Exchangeable Notes on the open market. In April and September 2020, the Company paid $17,414 in aggregate to repurchase $21,000 in aggregate principal amount of the Exchangeable Notes and to repay approximately $24 in accrued interest on the repurchased portion of the Exchangeable Notes. The Company recorded a loss on retirement of debt of $2,297 due to the carrying value exceeding the fair value of the repurchased portion of the Exchangeable Notes at the dates of repurchases. The Company wrote off $592 of debt issuance costs in connection with the repurchase transactions. Exchangeable Note Hedge Transactions On February 12, 2020, concurrently with the pricing of the Exchangeable Notes, and on February 13, 2020, concurrently with the exercise by the initial purchasers of their right to purchase additional Exchangeable Notes, i3 Verticals, LLC entered into exchangeable note hedge transactions with respect to Class A common stock (the “Note Hedge Transactions”) with certain financial institutions (collectively, the “Counterparties”). The Note Hedge Transactions cover, subject to anti-dilution adjustments substantially similar to those applicable to the Exchangeable Notes, the same number of shares of Class A common stock that initially underlie the Exchangeable Notes in the aggregate and are exercisable upon exchange of the Exchangeable Notes. The Note Hedge Transactions are intended to reduce potential dilution to the Class A common stock upon any exchange of the Exchangeable Notes. The Note Hedge Transactions will expire upon the maturity of the Exchangeable Notes, if not earlier exercised. The Note Hedge Transactions are separate transactions, entered into by i3 Verticals, LLC with the Counterparties, and are not part of the terms of the Exchangeable Notes. Holders of the Exchangeable Notes will not have any rights with respect to the Note Hedge Transactions. i3 Verticals, LLC used approximately $28,676 of the net proceeds from the offering of the Exchangeable Notes (net of the premiums received for the warrant transactions described below) to pay the cost of the Note Hedge Transactions. The Note Hedge Transactions do not require separate accounting as a derivative as they meet a scope exception for certain contracts involving an entity's own equity. The premiums paid for the Note Hedge Transactions have been included as a net reduction to additional paid-in capital within stockholders' equity. Warrant Transactions On February 12, 2020, concurrently with the pricing of the Exchangeable Notes, and on February 13, 2020, concurrently with the exercise by the initial purchasers of their right to purchase additional Exchangeable Notes, the Company entered into warrant transactions to sell to the Counterparties warrants (the “Warrants”) to acquire, subject to customary adjustments, up to initially 3,376,391 shares of Class A common stock in the aggregate at an initial exercise price of $62.88 per share. The Company offered and sold the Warrants in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act. The Warrants will expire over a period beginning on May 15, 2025. The Warrants are separate transactions, entered into by the Company with the Counterparties, and are not part of the terms of the Exchangeable Notes. Holders of the Exchangeable Notes will not have any rights with respect to the Warrants. The Company received approximately $14,669 from the offering and sale of the Warrants. The Warrants do not require separate accounting as a derivative as they meet a scope exception for certain contracts involving an entity's own equity. The premiums paid for the Warrants have been included as a net increase to additional paid-in capital within stockholders' equity. Senior Secured Credit Facility On May 9, 2019, the Company replaced its existing 2017 Senior Secured Credit Facility (defined below) with a new credit agreement (the “Senior Secured Credit Facility”). The Company concluded that the replacement of the 2017 Senior Secured Credit Facility should be accounted for as a debt modification based on the guidance in ASC 470-50. In connection with the replacement of the 2017 Senior Secured Credit Facility, the Company recorded a debt extinguishment charge of $152 for the write-off of deferred financing costs, which was recorded in interest expense in the consolidated statements of operations. The Senior Secured Credit Facility, as amended on February 18, 2020 in connection with our offering of Exchangeable Notes, consists of a $275,000 revolving credit facility, together with an option to increase the revolving credit facility and/or obtain incremental term loans in an additional principal amount of up to $50,000 in the aggregate (subject to the receipt of additional commitments for any such incremental loan amounts). The Senior Secured Credit Facility accrues interest at LIBOR (based upon an interest period of one, two, three or six months or, under some circumstances, up to twelve months) plus an applicable margin of 2.25% to 3.25% (3.25% as of September 30, 2020), or the base rate (defined as the highest of (x) the Bank of America prime rate, (y) the federal funds rate plus 0.50% and (z) LIBOR plus 1.00%), plus an applicable margin of 0.25% to 1.25% (1.25% as of September 30, 2020), in each case depending upon the consolidated total leverage ratio, as defined in the agreement. Interest is payable at the end of the selected interest period, but no less frequently than quarterly. Additionally, the Senior Secured Credit Facility requires the Company to pay unused commitment fees of 0.15% to 0.30% (0.30% as of September 30, 2020) on any undrawn amounts under the revolving credit facility and letter of credit fees of up to 3.25% on the maximum amount available to be drawn under each letter of credit issued under the agreement. The Senior Secured Credit Facility requires maintenance of certain financial ratios on a quarterly basis as follows: (i) a minimum consolidated interest coverage ratio of 3.00 to 1.00, (ii) a maximum total leverage ratio of 5.00 to 1.00, provided, that for each of the four fiscal quarters immediately following a qualified acquisition (each a “Leverage Increase Period”), the required ratio set forth above may be increased by up to 0.25, subject to certain limitations and (iii) a maximum consolidated senior secured leverage ratio of 3.25 to 1.00, provided, that for each Leverage Increase Period, the consolidated senior leverage ratio may be increased by up to 0.25, subject to certain limitations. The maturity date of the Senior Secured Credit Facility is May 9, 2024. As of September 30, 2020, there was $275,000 available for borrowing under the revolving credit facility, subject to the financial covenants. The Senior Secured Credit Facility is secured by substantially all assets of the Company. The lenders under the Senior Secured Credit Facility hold senior rights to collateral and principal repayment over all other creditors. The provisions of the Senior Secured Credit Facility place certain restrictions and limitations upon the Company. These include, among others, restrictions on liens, investments, indebtedness, fundamental changes and dispositions; maintenance of certain financial ratios; and certain non-financial covenants pertaining to the activities of the Company during the period covered. The Company was in compliance with such covenants as of September 30, 2020. In addition, the Senior Secured Credit Facility restricts the Company's ability to make dividends or other distributions to the holders of the Company's equity. The Company is permitted to (i) make cash distributions to the holders of the Company's equity in order to pay taxes incurred by owners of equity in i3 Verticals, LLC, by reason of such ownership, (ii) move intercompany cash between subsidiaries that are joined to the Senior Secured Credit Facility, (iii) repurchase equity from employees, directors, officers or consultants in an aggregate amount not to exceed $3,000 per year, (iv) make certain payments in connection with the Tax Receivable Agreement, and (v) make other dividends or distributions in an aggregate amount not to exceed 5% of the net cash proceeds received from any additional common equity issuance. The Company is also permitted to make non-cash dividends in the form of additional equity issuances. Each subsidiary may make ratable distributions to persons that own equity interests in such subsidiary. All other forms of dividends or distributions are prohibited under the Senior Secured Credit Facility. 2017 Senior Secured Credit Facility On October 30, 2017, the Company replaced its then-existing credit facility with the 2017 Senior Secured Credit Facility (the “2017 Senior Secured Credit Facility”). The 2017 Senior Secured Credit Facility consisted of term loans in the original principal amount of $40,000 and a $110,000 revolving line of credit. The 2017 Senior Secured Credit Facility accrued interest, payable monthly, at the prime rate plus a margin of 0.50% to 2.00% or at the 30-day LIBOR rate plus a margin of 2.75% to 4.00%, in each case depending on the ratio of consolidated debt-to-EBITDA, as defined in the agreement. Additionally, the 2017 Senior Secured Credit Facility required the Company to pay unused commitment fees of up to 0.15% to 0.30% on any undrawn amounts under the revolving line of credit. The maturity date of the 2017 Senior Secured Credit Facility is October 30, 2022. Principal payments of $1,250 were due on the last day of each calendar quarter until the maturity date, when all outstanding principal and accrued and unpaid interest were due. The 2017 Senior Secured Credit Facility was secured by substantially all assets of the Company. The lenders under the 2017 Senior Secured Credit Facility held senior rights to collateral and principal repayment over all other creditors. As previously mentioned, on May 9, 2019, the Company replaced its existing 2017 Senior Secured Credit Facility with the Senior Secured Credit Facility. Notes to Mezzanine Lenders During 2013, the Company issued notes payable in the aggregate principal amount of $10,500 (the “Mezzanine Notes”) to three creditors. The Mezzanine Notes accrued interest at a fixed rate of 12.0%, payable monthly, and initially were due to mature in February 2018. In April 2016, the Mezzanine Notes were amended and restated and the maturity dates were extended to November 29, 2020, when all outstanding principal and accrued and unpaid interest was due. The amendment was accounted for as a modification under the guidance at ASC 470-50. The Mezzanine Notes were secured by substantially all assets of the Company in accordance with the terms of a security agreement and were subordinate to the Senior Secured Credit Facility. The provisions of the Mezzanine Notes placed certain restrictions and limitations upon the Company. These included restrictions on additional borrowings, capital expenditures, maintenance of certain financial ratios, and certain non-financial covenants pertaining to the activities of the Company during the period covered. The Company was in compliance with such covenants as of September 30, 2017. The Mezzanine Lenders participated in the July 2017 Class A unit offerings (see Note 13). In June 2018, all of the outstanding aggregate principal balance and accrued interest on the Mezzanine Notes was repaid with proceeds from the Company’s IPO. As part of the extinguishment of the Mezzanine Notes, $78 of unamortized debt issuance costs were written off. Mezzanine Warrants During 2013, the Company issued notes payable in the aggregate principal amount of $10,500 (the “Mezzanine Notes”) to three creditors. In June 2018, all of the outstanding aggregate principal balance and accrued interest on the Mezzanine Notes was repaid with proceeds from the Company’s IPO. In connection with the issuance of the Mezzanine Notes, the Company granted the Mezzanine Warrants to purchase 1,423,688 common units in i3 Verticals, LLC. The Mezzanine Warrants were determined to have no material value as of the grant date. The intrinsic value of the Mezzanine Warrants was $767 as of September 30, 2017, and they had an exercise price of $0.01. On June 25, 2018, in conjunction with the Reorganization Transactions described in Note 1, all existing Mezzanine Warrants were exercised for common units in i3 Verticals, LLC. The intrinsic value of the Mezzanine Warrants at that date was $9,241. The change in the fair market value of the warrants for the year ended September 30, 2018 is reflected within the consolidated statement of operations. Unsecured notes payable to related and unrelated creditors During 2014, the Company issued the Junior Subordinated Notes in the aggregate principal amount of $17,608 to unrelated and related creditors. The Junior Subordinated Notes accrued interest, payable monthly, at a fixed rate of 10.0% and were due to mature on February 14, 2019, when all outstanding principal and accrued and unpaid interest was due. However, the unsecured notes were subordinate to the Mezzanine Notes and the Senior Secured Credit Facility, which both had maturities beyond the Junior Subordinated Notes, and the provisions of the Mezzanine Notes and Senior Secured Credit Facility did not permit the payment of any subordinated debt prior to its maturity. Should the Junior Subordinated Notes have reached maturity and the terms of the Mezzanine Notes and Senior Secured Credit Facility remained in place, the term of the Junior Subordinated Notes would have been extended until after the maturity of the Mezzanine Notes and Senior Secured Credit Facility, in accordance with the terms of the Junior Subordinated Notes. In connection with the issuance of the Junior Subordinated Notes, the Company granted detachable warrants (“Junior Subordinated Notes Warrants”) to purchase 1,433,920 common units in i3 Verticals, LLC. Management determined that the warrants had no material value as of the grant date, and none of the proceeds from the notes was attributed to the warrants. The warrants were accounted for as equity. See additional disclosures in Note 13. In July 2017, $500 of the Junior Subordinated Notes were retired and exchanged for 148 Class A units of the Company. The fair value of the Class A units issued approximated the carrying amount of the Junior Subordinated Notes, so no extinguishment gain or loss was recognized. See additional disclosures in Note 13 and Note 15. In June 2018, in connection with the Company's IPO and as part of the Reorganization Transactions, $8,054 of the Junior Subordinated Notes were converted to newly issued shares of the Company's Class A common stock, as described in Note 1, and the remaining $8,054 of the Junior Subordinated Notes was repaid with proceeds from the Company's IPO. As part of the extinguishment of the Junior Subordinated Notes, $43 of unamortized debt issuance costs were written off. Debt issuance costs During the year ended September 30, 2020, the Company capitalized $4,212 in connection with the issuance of the Exchangeable Notes, the Note Hedge Transactions and the Warrants and in connection with entering into the second amendment to the Senior Secured Credit Facility. During the year ended September 30, 2019, the Company incurred debt issuance costs totaling $1,245 in connection with the issuance of long-term debt. The debt issuance costs are being amortized over the related term of the debt using the effective interest rate method, and are presented net against long-term debt in the consolidated balance sheets. The amortization of debt issuance costs is included in interest expense and amounted to approximately $758, $721 and $1,072 during the years ended September 30, 2020, 2019 and 2018, respectively. |
Income Taxes
Income Taxes | 12 Months Ended |
Sep. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | INCOME TAXESi3 Verticals, Inc. is taxed as a corporation and pays corporate federal, state and local taxes on income allocated to it from i3 Verticals, LLC based on i3 Verticals, Inc.'s economic interest in i3 Verticals, LLC. i3 Verticals, LLC's members, including the Company, are liable for federal, state and local income taxes based on their share of i3 Verticals, LLC's pass-through taxable income. i3 Verticals, LLC is not a taxable entity for federal income tax purposes, but is subject to and reports entity level tax in both Tennessee and Texas. In addition, certain subsidiaries of i3 Verticals, LLC are corporations that are subject to state and federal income taxes. Year ended September 30, 2020 2019 2018 Current: Federal tax (benefit) expense $ (34) $ 220 $ 668 State tax expense 446 189 351 Deferred: Federal tax benefit (3,018) (487) (685) State tax (benefit) expense (189) (99) 3 Income tax (benefit) expense $ (2,795) $ (177) $ 337 A reconciliation of income tax expense from operations computed at the U.S. federal statutory income tax rate to the Company’s effective income tax rate is as follows: Year ended September 30, 2020 2019 2018 Expected U.S. federal income taxes at statutory rate $ (792) 21.0 % $ 81 21.0 % $ (1,139) 24.6 % Partnership income not taxed at federal level 85 (2.3) % (1,007) (260.9) % 294 (6.4) % Valuation allowance (2,694) 71.4 % 251 65.0 % 965 (20.9) % State and local income taxes, net of federal benefit 244 (6.5) % 104 26.9 % 295 (6.4) % Nondeductible expenses and other permanent items 496 (13.1) % 582 150.8 % 66 (1.4) % Revaluation of debt and other debt transaction differences 222 (5.9) % (189) (49.0) % 332 (7.2) % Federal tax rate change — — % — — % (471) 10.2 % Change in liability for uncertain tax positions 108 (2.9) % — — % — — % Federal tax credits (431) 11.4 % — — % — — % Other (33) 0.9 % 1 0.3 % (5) 0.1 % Income tax (benefit) expense $ (2,795) 74.1 % $ (177) (45.9) % $ 337 (7.3) % Deferred income taxes are provided for the temporary differences between the financial reporting basis and tax basis of the Company’s assets and liabilities. Net deferred taxes spanning multiple jurisdictions as of September 30, 2020 and 2019 were as follows: September 30, 2020 2019 Deferred tax assets: Investment in partnership $ 47,897 $ 40,880 Stock-based compensation 1187 811 Deferred revenue 525 564 Accrued expenses 181 110 Net operating loss carryforwards 10,969 6,360 Section 163j carryforward 2,498 2,006 Federal tax credits 901 — Other 73 42 Gross deferred tax assets 64,231 50,773 Valuation allowance (20,230) (16,609) Deferred tax liabilities: Intangible assets $ (9,167) $ (6,257) Other (291) (285) Net deferred tax asset $ 34,543 $ 27,622 Federal net operating loss carryforwards as of September 30, 2020 were $26,984 and federal tax credits were $901, resulting in a deferred tax benefit of $6,568. The federal net operating loss carryforwards will begin to expire in 2034 and the federal tax credits will begin to expire in 2033. The use of federal net operating losses and credits are limited to the future taxable income of separate legal entities. As a result, a valuation allowance of $388 has been provided for certain federal deferred tax assets, an increase of $383 during the year ended September 30, 2020. State net operating loss carryforwards as of September 30, 2020 totaled $81,827, resulting in a deferred tax benefit of $5,302. The state net operating loss carryforwards will begin to expire in 2024. The use of certain state net operating losses are limited to future taxable earnings of separate legal entities. As a result, a valuation allowance of $3,571 has been provided for state loss carryforwards, an increase of $1,094 during the year ended September 30, 2020. The Company also considered a valuation allowance on its $47,897 outside basis of investment in i3 Verticals, LLC deferred tax benefit as of September 30, 2020. The Company has recorded a valuation allowance of $16,271 against the portion of the deferred tax benefit that is capital in nature, resulting in an increase in valuation allowance of $2,143 during the year ended September 30, 2020. Management believes that it is more likely than not that the results of operations will generate sufficient taxable income to realize the deferred tax assets after giving consideration to the valuation allowance. The components of the Company’s liability for uncertain tax benefits are as follows: Gross unrecognized tax benefits as of September 30, 2019 $ — Increase in current year tax positions 108 Increase in prior year tax positions 76 Gross unrecognized tax benefits as of September 30, 2020 $ 184 As of September 30, 2020 and 2019, the Company had accrued interest of $7 and $0, respectively, and no accrued penalties in either period related to uncertain tax positions. It is the Company’s policy to recognize interest and/or penalties related to income tax matters in income tax expense. The Company is no longer subject to U.S. federal, state, or local examinations by tax authorities for years before 2016. As of September 30, 2020 and 2019, there were unrecognized tax benefits of $184 and $0 that if recognized would affect the annual effective tax rate. On December 22, 2017, the Tax Cuts and Jobs Act was enacted into law. The legislation contains several key tax provisions, including the reduction of the federal corporate income tax rate to 21% effective January 1, 2018, as well as a variety of other changes, including limitation of the tax deductibility of interest expense, acceleration of expensing of certain business assets and reductions in the amount of executive pay that could qualify as a tax deduction. The SEC staff issued Staff Accounting Bulletin No. 118, which allowed the Company to record provisional amounts during a measurement period not to extend beyond one year after the enactment date. As of December 22, 2018, the Company completed its accounting for all of the enactment-date income tax effects of the Tax Cuts and Jobs Act. The Company made no material adjustments to the provisional amounts recorded. Tax Receivable Agreement On June 25, 2018, the Company entered into a Tax Receivable Agreement with i3 Verticals, LLC and each of the Continuing Equity Owners (the “Tax Receivable Agreement”) that provides for the payment by the Company to the Continuing Equity Owners of 85% of the amount of certain tax benefits, if any, that it actually realizes, or in some circumstances, is deemed to realize in its tax reporting, as a result of (i) future redemptions funded by the Company or exchanges, or deemed exchanges in certain circumstances, of Common Units of i3 Verticals, LLC for Class A common stock of i3 Verticals, Inc. or cash, and (ii) certain additional tax benefits attributable to payments made under the Tax Receivable Agreement. These tax benefit payments are not conditioned upon one or more of the Continuing Equity Owners maintaining a continued ownership interest in i3 Verticals, LLC. If a Continuing Equity Owner transfers Common Units but does not assign to the transferee of such units its rights under the Tax Receivable Agreement, such Continuing Equity Owner generally will continue to be entitled to receive payments under the Tax Receivable Agreement arising in respect of a subsequent exchange of such Common Units. In general, the Continuing Equity Owners’ rights under the Tax Receivable Agreement may not be assigned, sold, pledged or otherwise alienated to any person, other than certain permitted transferees, without (a) the Company's prior written consent, which should not be unreasonably withheld, conditioned or delayed, and (b) such persons becoming a party to the Tax Receivable Agreement and agreeing to succeed to the applicable Continuing Equity Owner’s interest therein. The Company expects to benefit from the remaining 15% of the tax benefits, if any, that the Company may realize. During the year ended September 30, 2018, in conjunction with the Company's IPO, i3 Verticals, Inc. purchased Class B common stock from a Continuing Equity Owner for $4,635. This transaction triggered an increase in the tax basis of the Company's Common Units in i3 Verticals, LLC subject to the provisions of the Tax Receivable Agreement. The Company recognized a deferred tax asset in the amount of $960 and a corresponding liability of $816, representing 85% of the tax benefits due to the Continuing Equity Owners related to exchanges in the year ended September 30, 2018. During the year ended September 30, 2019, the Company acquired an aggregate of 4,292,169 common units of i3 Verticals, LLC in connection with the redemption of common units, which resulted in an increase in the tax basis of our investment in i3 Verticals, LLC subject to the provisions of the Tax Receivable Agreement. Primarily as a result of these exchanges, during the year ended September 30, 2019, the Company recognized an increase to its net deferred tax assets in the amount of $25,776, and corresponding Tax Receivable Agreement liabilities of $22,413, representing 85% of the tax benefits due to the Continuing Equity Owners. The results of these transactions brought the deferred tax asset and corresponding Tax Receivable Agreement liability balances to $26,736 and $23,229, respectively, as of September 30, 2019. During the year ended September 30, 2020, the Company acquired an aggregate of 1,021,016 common units of i3 Verticals, LLC in connection with the redemption of common units, which resulted in an increase in the tax basis of our investment in i3 Verticals, LLC subject to the provisions of the Tax Receivable Agreement. As a result of these exchanges, during the year ended September 30, 2020, the Company recognized an increase to its net deferred tax assets in the amount of $6,307, and corresponding Tax Receivable Agreement liabilities of $5,361, representing 85% of the tax benefits due to the Continuing Equity Owners. The deferred tax asset and corresponding Tax Receivable Agreement liability balances were $31,626 and $27,565, respectively, as of September 30, 2020. Payments to the Continuing Equity Owners related to exchanges through September 30, 2020 will range from $0 to $2,460 per year and are expected to be paid over the next 25 years. The amounts recorded as of September 30, 2020, approximate the current estimate of expected tax savings and are subject to change after the filing of the Company’s U.S. federal and state income tax returns. Future payments under the Tax Receivable Agreement with respect to subsequent exchanges would be in addition to these amounts. |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Sep. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | FAIR VALUE MEASUREMENTS The Company applies the provisions of ASC 820, Fair Value Measurement , which defines fair value, establishes a framework for its measurement and expands disclosures about fair value measurements. Fair value is the price that would be received to sell an asset or the price paid to transfer a liability as of the measurement date. A three-tier, fair-value reporting hierarchy exists for disclosure of fair value measurements based on the observability of the inputs to the valuation of financial assets and liabilities. The three levels are: Level 1 — Quoted prices for identical instruments in active markets. Level 2 — Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. Level 3 — Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable in active exchange markets. The carrying value of the Company’s financial instruments, including cash and cash equivalents, restricted cash, accounts receivable, other assets, accounts payable, and accrued expenses, approximated their fair values as of September 30, 2020 and 2019, because of the relatively short maturity dates on these instruments. The carrying amount of debt approximates fair value as of September 30, 2020 and 2019, because interest rates on these instruments approximate market interest rates. The Company has no Level 1 or Level 2 financial instruments measured at fair value on a recurring basis. The following tables present the changes in the Company's Level 3 financial instruments that are measured at fair value on a recurring basis. Accrued Contingent Consideration Balance at September 30, 2018 $ 5,999 Contingent consideration accrued at time of business combination 13,032 Change in fair value of contingent consideration included in Operating expenses 3,389 Contingent consideration paid (4,194) Balance at September 30, 2019 $ 18,226 Contingent consideration accrued at time of business combination 4,748 Change in fair value of contingent consideration included in Operating expenses (1,409) Contingent consideration paid (8,531) Balance at September 30, 2020 $ 13,034 The fair value of contingent consideration obligations includes inputs not observable in the market and thus represents a Level 3 measurement. The amount to be paid under these obligations is contingent upon the achievement of certain growth metrics related to the financial performance of the entities subsequent to acquisition. The fair value of material contingent consideration included in an acquisition is calculated using a Monte Carlo simulation. The contingent consideration is revalued each period until it is settled. Management reviews the historical and projected performance of each acquisition with contingent consideration and uses an income probability method to revalue the contingent consideration. The revaluation requires management to make certain assumptions and represent management's best estimate at the valuation date. The probabilities are determined based on a management review of the expected likelihood of triggering events that would cause a change in the contingent consideration paid. The Company develops the projected future financial results based on an analysis of historical results, market conditions, and the expected impact of anticipated changes in the Company's overall business and/or product strategies. Approximately $10,062 and $10,223 of contingent consideration was recorded in accrued expenses and other current liabilities as of September 30, 2020 and 2019, respectively. Approximately $2,972 and $8,003 of contingent consideration was recorded in other long-term liabilities as of September 30, 2020 and 2019, respectively. Disclosure of Fair Values |
Equity-Based Compensation
Equity-Based Compensation | 12 Months Ended |
Sep. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Equity-Based Compensation | EQUITY-BASED COMPENSATION A summary of equity-based compensation expense recognized during the years ended September 30, 2020, 2019 and 2018 is as follows: Year ended September 30, 2020 2019 2018 TRA non-participation compensatory shares $ — $ — $ 741 Stock options 10,452 6,124 826 Equity-based compensation expense $ 10,452 $ 6,124 $ 1,567 Amounts are included in general and administrative expense on the consolidated statements of operations. Income tax benefits of $604 and $160 were recognized related to equity-based compensation during the years ended September 30, 2020 and 2019, respectively. No income tax benefits were recognized related to equity-based compensation during the year ended September 30, 2018. TRA Non-Participation Compensatory Shares On June 25, 2018, the Company entered into the Tax Receivable Agreement as described in Note 10. The Former Equity Owners did not participate in the Tax Receivable Agreement. Therefore, as part of the Reorganization Transactions, the Class B common units held by the Former Equity Owners were converted into shares of Class A common stock based on a conversion ratio that provided an equitable adjustment to reflect the full value of the Class B common units. For employees who are Former Equity Owners, this arrangement was a modification under ASC 718. The Company recognized stock-based compensation expense of $741 as part of the Reorganization Transactions as a result of this conversion. Stock Options In May 2018, the Company adopted the 2018 Equity Incentive Plan (the “2018 Plan”) under which the Company may grant up to 3,500,000 stock options and other equity-based awards to employees, directors and officers. The number of shares of Class A common stock available for issuance under the 2018 Plan includes an annual increase on the first day of each year, beginning with the 2019 calendar year, equal to 4.0% of the outstanding shares of all classes of the Company's common stock as of the last day of the immediately preceding calendar year, unless the Company’s board of directors determines prior to the last trading day of December of the immediately preceding calendar year that the increase shall be less than 4%. As of September 30, 2020, there were 205,151 options available to grant under the 2018 Plan. The fair value of stock option awards during the years ended September 30, 2020, and 2019, and from June 20, 2018 through September 30, 2018 was determined on the grant date using the Black-Scholes valuation model based on the following weighted-average assumptions: September 30, 2020 September 30, 2019 Expected volatility (1) 28.5 % 26.7 % Expected dividend yield (2) — % — % Expected term (3) 6 years 6 years Risk-free interest rate (4) 1.2 % 2.5 % _________________ 1. Expected volatility is based on the historical volatility of a selected peer group over a period equivalent to the expected term. 2. The Company has assumed a dividend yield of zero as management has no plans to declare dividends in the foreseeable future. 3. Expected term represents the estimated period of time until an award is exercised and was determined using the simplified method as details of employee exercise behavior are limited due to limited historical data. 4. The risk-free rate is an interpolation of yields on U.S. Treasury securities with maturities equivalent to the expected term. A summary of stock option activity for the year ended September 30, 2020 is as follows: Stock Options Weighted Average Exercise Price Outstanding at beginning of period 4,240,695 $ 18.33 Granted 1,438,900 30.37 Exercised (331,141) 15.85 Forfeited (137,888) 21.56 Outstanding at end of period 5,210,566 $ 21.73 The weighted-average grant date fair value of stock options granted during the year ended September 30, 2020 was $9.07. As of September 30, 2020, there were 5,210,566 stock options outstanding, of which 1,686,957 were exercisable. As of September 30, 2020, total unrecognized compensation expense related to unvested stock options, including an estimate for pre-vesting forfeitures, was $18,620, which is expected to be recognized over a weighted-average period of 1.9 years. The Company's policy is to account for forfeitures of stock-based compensation awards as the occur. The total fair value of stock options that vested during the year ended September 30, 2020 was $8,100. |
Stockholders' _ Members' Equity
Stockholders' / Members' Equity and Redeemable Class A Units | 12 Months Ended |
Sep. 30, 2020 | |
Equity [Abstract] | |
Stockholders' / Members' Equity and Redeemable Class A Units | STOCKHOLDERS' / MEMBERS' EQUITY AND REDEEMABLE CLASS A UNITS In connection with the Company’s IPO, the Company’s board of directors approved an amended and restated certificate of incorporation (the “Amended and Restated Certificate of Incorporation”), which became effective on June 25, 2018. The Amended and Restated Certificate of Incorporation authorizes the issuance of up to 150,000,000 shares of Class A common stock, up to 40,000,000 shares of Class B common stock and 10,000,000 shares of preferred stock, each having a par value of $0.0001 per share. Shares of Class A common stock have both economic and voting rights. Shares of Class B common stock have no economic rights, but do have voting rights. Holders of shares of Class A common stock and Class B common stock are entitled to one vote per share on all matters presented to stockholders generally. The Company’s board of directors has the discretion to determine the rights, preferences, privileges, and restrictions of any series of preferred stock. On June 25, 2018, the Company completed the IPO of 7,647,500 shares of its Class A common stock. In connection with the IPO, the Company and i3 Verticals, LLC completed the Reorganization Transactions, pursuant to which all outstanding vested and non-vested Class A units, Class P units and common units were converted into new Common Units. Former Equity Owners' Common Units were converted into newly issued shares of Class A common stock. Continuing Equity Owners received newly issued shares of Class B common stock. For further descriptions of the IPO and Reorganization Transactions, see Note 1. i3 Verticals, LLC Recapitalization As noted above, the i3 Verticals, LLC Limited Liability Company Agreement, among other things, appointed the Company as i3 Verticals, LLC’s sole managing member and reclassified all outstanding membership interests in i3 Verticals, LLC as non-voting common units. As the sole managing member of i3 Verticals, LLC, the Company controls the management of i3 Verticals, LLC. As a result, the Company consolidates i3 Verticals, LLC’s financial results and reports a non-controlling interest related to the economic interest of i3 Verticals, LLC held by the Continuing Equity Owners. The Amended and Restated Certificate of Incorporation and the i3 Verticals, LLC Limited Liability Company Agreement discussed above require i3 Verticals, LLC and the Company, at all times, to maintain (i) a one-to-one ratio between the number of shares of Class A common stock issued by the Company and the number of Common Units owned by the Company and (ii) a one-to-one ratio between the number of shares of Class B common stock owned by the Continuing Equity Owners and the number of Common Units owned by the Continuing Equity Owners (other than shares of the Company's Class A common stock under unvested options the Company issues, treasury stock and preferred stock (the “Excluded Common Units”)). The Company may issue shares of Class B common stock only to the extent necessary to maintain the one-to-one ratio between the number of Common Units of i3 Verticals, LLC held by the Continuing Equity Owners (other than the Excluded Common Units) and the number of shares of Class B common stock issued to the Continuing Equity Owners. Shares of Class B common stock are transferable only together with an equal number of Common Units of i3 Verticals, LLC. Only permitted transferees of Common Units held by the Continuing Equity Owners will be permitted transferees of Class B common stock. The Continuing Equity Owners may from time to time at each of their options (subject, in certain circumstances, to time-based vesting requirements) require i3 Verticals, LLC to redeem all or a portion of their Common Units in exchange for, at i3 Verticals, LLC’s election, newly-issued shares of our Class A common stock on a one-for-one basis or a cash payment equal to a volume weighted average market price of one share of Class A common stock for each Common Unit redeemed, in each case in accordance with the terms of the i3 Verticals, LLC Limited Liability Company Agreement; provided that, at the Company’s election, the Company may effect a direct exchange of such Class A common stock or such cash, as applicable, for such Common Units. The Continuing Equity Owners may exercise such redemption right for as long as their Common Units remain outstanding. Simultaneously with the payment of cash or shares of Class A common stock, as applicable, in connection with a redemption or exchange of Common Units pursuant to the terms of the i3 Verticals, LLC Limited Liability Company Agreement, a number of shares of the Company's Class B common stock registered in the name of the redeeming or exchanging Continuing Equity Owner will be canceled for no consideration on a one-for-one basis with the number of Common Units so redeemed or exchanged. Redeemable Class A Units Prior to the Company's recapitalization, as of September 30, 2017, there were 4,900,000 redeemable Class A units issued and outstanding. Upon receipt of a redemption request following the termination of employment of the current Chief Executive Officer of the Company (the redemption event), the Company was required to redeem all of the outstanding redeemable Class A units held by certain members. The redemption price of the redeemable Class A units was equal to the greater of (i) the fair value of the redeemable Class A unit or (ii) original issue price per redeemable Class A unit plus any preferred returns through the date of the redemption request. Holders of redeemable Class A units had preferred return rights in preference to any declaration or distribution to holders of Class P units or common units, and equal to other Class A units. Preferred returns on the redeemable Class A units accrued at an amount equal to 10.0% per unit per annum of the original issue price, compounded annually, whether or not declared by the board of directors, and were cumulative. After preferential payment to the holder of redeemable Class A units and other Class A units, any additional distributions declared were distributed pro-rata to the holders of Class A units, common units and Class P units, in proportion to their respective units. Total cumulative preferred returns included within the carrying amount of the redeemable Class A units amounted to $3,376 and $2,823 as of June 25, 2018, the date of the Reorganization Transactions, and September 30, 2017, respectively. During 2017, as obligated under the provisions of its member agreements, the Company declared distributions of approximately $131 to its redeemable Class A unit holders in connection with the members’ estimated tax liabilities. As described in Note 1, the redeemable Class A units were converted into Common Units in i3 Verticals, LLC in connection with the Reorganization Transactions. Class A Units, Class P Units and Common Units Prior to the Company's recapitalization, as of September 30, 2017, the Company had authorized the issuance of Class A units, Class P units and common units. As described in Note 1, the Class A units, Class P units and Common Units were converted to Common Units in i3 Verticals, LLC in connection with the Reorganization Transactions. Class A Units As of September 30, 2017, there were 13,892,129 Class A units issued and outstanding. Holders of Class A units had preferred return rights in preference to any declaration or distribution to holders of Class P units or common units. Preferred returns on the Class A units accrued at an amount equal to 10.0% per unit per annum of the original issue price, compounded annually, whether or not declared by the board of directors, and were cumulative. After preferential payment to the holder of Class A units, any additional distributions declared were distributed pro-rata to the holders of Class A units, common units and Class P units, in proportion to their respective units. Total cumulative preferred returns included within the carrying amount of the Class A units amounted to $7,627 and $5,105 as of June 25, 2018, the date of the Reorganization Transactions, and September 30, 2017, respectively. During 2017, as obligated under the provisions of its member agreements, the Company declared distributions of approximately $625 to its Class A unit holders in connection with the members’ estimated tax liabilities. Common Units As of September 30, 2017, there were 1,548,722 common units issued and outstanding. Common units were generally issued in association with acquisitions. Junior Subordinated Notes Warrants As of September 30, 2017, there were in the aggregate 1,433,920 warrants outstanding and exercisable to purchase common units which are classified as equity instruments. The warrants were issued in connection with the issuance of the Junior Subordinated Notes (Note 9). As of September 30, 2017, the intrinsic value of the junior subordinated warrants was $0. Warrants Expiration Exercise Price Junior Subordinated Notes Warrants 1,433,920 February 14, 2024 $ 2.095 The Junior Subordinated Notes Warrants were issued at zero value and were reflected within members’ equity within the accompanying Consolidated Balance Sheets. On June 25, 2018, in conjunction with the Reorganization Transactions described in Note 1, all existing Junior Subordinated Notes Warrants were exercised for common units in i3 Verticals, LLC. Mezzanine Warrants As of September 30, 2017, there were in the aggregate 1,423,688 warrants outstanding and exercisable to purchase Common Units which are classified as long-term liabilities. The warrants were issued in connection with the issuance of the Mezzanine Notes. See additional disclosures in Note 9. Restricted Class P Units As of September 30, 2017, there were 7,647,350 restricted Class P units issued and outstanding to certain members of the Company's Board of Directors and employees. All Class P units were issued at a participation threshold above the valuation of the Company at the grant date. As a result, they had a nominal value, individually and in the aggregate, at the grant date. Using an option-pricing model and considering liquidation preferences of the Class P units, as well as the lack of marketability, management determined that any compensation expense related to the restricted units was immaterial to the consolidated financial statements. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Sep. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | COMMITMENTS AND CONTINGENCIES Leases The Company utilizes office space and equipment under operating leases. Rent expense under these leases amounted to $2,820, $2,302 and $1,555 during the years ended September 30, 2020, 2019 and 2018, respectively. A summary of approximate future minimum payments under these leases as of September 30, 2020 is as follows: Years ending September 30: 2021 $ 2,726 2022 2,397 2023 2,096 2024 1,469 2025 968 Thereafter 1,221 Total $ 10,877 Minimum Processing Commitments The Company has non-exclusive agreements with several processors to provide its services related to transaction processing and transmittal, transaction authorization and data capture, and access to various reporting tools. Certain of these agreements require the Company to submit a minimum monthly number of transactions for processing. If the Company submits a number of transactions that is lower than the minimum, it is required to pay to the processor the fees it would have received if it had submitted the required minimum number of transactions. As of September 30, 2020, such minimum fee commitments were as follows: Years ending September 30: 2021 $ 3,334 2022 2,818 2023 2,645 2024 450 2025 — Thereafter — Total $ 9,247 Loan to Third Party Sales Organization The Company has entered into an agreement as of March 2020, as amended in October 2020, to provide a secured loan to a third party sales organization of up to $3,500 in the future, dependent on their achievement of certain financial metrics. Additionally, the Company has conditionally committed to a future buyout of the third party's business at the earlier of (a) the 60th day following the date upon which the founder of the third party sales organization dies or becomes disabled or (b) the 60th day following July 1, 2023. The buyout amount is dependent on certain financial metrics but is capped at $29,000, which would be net of repayment of the secured loans. The buyout also contains certain provisions to provide additional consideration of up to $9,000, in the aggregate, to be paid based on the achievement of specified financial performance targets, following the buyout. As the eventual financial metrics are not known, the amount of the buyout transaction as well as the additional consideration are not able to be estimated at this time. As of September 30, 2020, such knowable loan commitments, dependent on the third party sales organization's achievement of certain financial metrics, were $3,500 for fiscal year 2021. Litigation With respect to all legal, regulatory and governmental proceedings, and in accordance with ASC 450-20, Contingencies—Loss Contingencies , the Company considers the likelihood of a negative outcome. If the Company determines the likelihood of a negative outcome with respect to any such matter is probable and the amount of the loss can be reasonably estimated, the Company records an accrual for the estimated amount of loss for the expected outcome of the matter. If the likelihood of a negative outcome with respect to material matters is reasonably possible and the Company is able to determine an estimate of the amount of possible loss or a range of loss, whether in excess of a related accrued liability or where there is no accrued liability, the Company discloses the estimate of the amount of possible loss or range of loss. However, the Company in some instances may be unable to estimate an amount of possible loss or range of loss based on the significant uncertainties involved in, or the preliminary nature of, the matter, and in these instances the Company will disclose the nature of the contingency and describe why the Company is unable to determine an estimate of possible loss or range of loss. In addition, the Company is involved in ordinary course legal proceedings, which include all claims, lawsuits, investigations and proceedings, including unasserted claims, which are probable of being asserted, arising in the ordinary course of business and otherwise not described below. The Company has considered all such ordinary course legal proceedings in formulating its disclosures and assessments. After taking into consideration the evaluation of such legal matters by the Company's legal counsel, the Company's management believes at this time such matters will not have a material impact on the Company's consolidated balance sheet, results of operations or cash flows. Other The Company's subsidiary CP-PS, LLC has certain indemnification obligations in favor of FDS Holdings, Inc. related to the acquisition of certain assets of Merchant Processing Solutions, LLC in February 2014. The Company has incurred expenses related to these indemnification obligations in prior periods and may have additional expenses in the future. However, after taking into consideration the evaluation of such matters by the Company’s legal counsel, the Company’s management believes at this time that the anticipated outcome of any existing or potential indemnification liabilities related to this matter will not have a material impact on the Company’s consolidated financial position, results of operations or cash flows. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Sep. 30, 2020 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | RELATED PARTY TRANSACTIONS Related parties held $6,158 of the Company’s Junior Subordinated Notes as of September 30, 2017. As described Note 9, in connection with the Company's IPO and as part of the Reorganization Transactions, $924 of the Junior Subordinated Notes held by related parties was converted to newly issued shares of the Company's Class A common stock. Also in June 2018, the remaining $5,234 of the Junior Subordinated Notes held by related parties were repaid with proceeds from the Company's IPO. Interest expense to related parties for the Company’s Junior Subordinated Notes amounted to $457 during the year ended September 30, 2018. All lenders party to the Company ’ s Mezzanine Notes are considered related parties, through their ownership interest in the Company and affiliated director relationships. Outstanding Mezzanine Notes payable to related parties amounted to $10,500 as of September 30, 2017. In June 2018, the Mezzanine Notes were repaid in full with proceeds from the Company's IPO. Interest expense to related parties for the Company’s Mezzanine Notes amounted to $952 during the year ended September 30, 2018. In April 2016, the Company entered into a purchase agreement to purchase certain assets of Axia, LLC. On April 29, 2016, the Company entered into a Processing Services Agreement (the “AxiaMed Agreement”) with Axia Technologies, LLC (which has since been incorporated as Axia Technologies, Inc., doing business as AxiaMed (“AxiaMed”)), an entity controlled by the previous owner of Axia, LLC. Under the AxiaMed Agreement, the Company agreed to provide processing services for certain merchants as designated by AxiaMed from time to time. In accordance with ASC 606, revenue from the processing services is recognized net of interchange, residual expense and other fees. The Company earned net revenues related to the AxiaMed Agreement of $95, $81 and $53 during the years ended September 30, 2020, 2019 and 2018 respectively. i3 Verticals, LLC, the Company's CEO and Clay Whitson, the Company's CFO, own 2.0%, 10.5% and 0.4%, respectively, of the outstanding equity of Axia Tech. In connection with our IPO, we entered into a Tax Receivable Agreement with certain non-controlling interest holders that provides for the payment by the Company to the Continuing Equity Owners of 85% of the amount of certain tax benefits, if any, that it actually realizes, or in some circumstances, is deemed to realize in its tax reporting, as a result of (i) future redemptions funded by the Company or exchanges, or deemed exchanges in certain circumstances, of Common Units of i3 Verticals, LLC for Class A common stock of i3 Verticals, Inc. or cash, and (ii) certain additional tax benefits attributable to payments made under the Tax Receivable Agreement. See Note 10 for further information. As of September 30, 2020, the total amount due under the Tax Receivable Agreement was $27,565. |
Segments
Segments | 12 Months Ended |
Sep. 30, 2020 | |
Segment Reporting [Abstract] | |
Segments | SEGMENTS The Company determines its operating segments based on ASC 280, Segment Reporting , how the chief operating decision making group monitors and manages the performance of the business and the level at which financial information is reviewed. The Company’s operating segments are strategic business units that offer different products and services. The Company's core business is delivering seamless integrated payment and software solutions to SMBs and organizations in strategic vertical markets. This is accomplished through the Merchant Services and Proprietary Software and Payments segments. The Merchant Services segment provides comprehensive payment solutions to businesses and organizations. The Merchant Services segment includes third-party integrated payment solutions as well as merchant of record payment services across the Company's strategic vertical markets. The Proprietary Software and Payments segment delivers solutions, including embedded payments, to the Company's clients through company-owned software. Payments are delivered through both the payment facilitator model and the traditional merchant processing model. The Other category includes corporate overhead expenses, when presenting reportable segment information. Effective July 1, 2020, the Company reassigned a component from the Proprietary Software and Payments segment to the Merchant Services segment to better align the Company's segments with its business operations. The prior period comparatives reflected in the tables below have been retroactively adjusted to reflect the Company's current segment presentation. The Company primarily uses processing margin to measure operating performance. The following is a summary of reportable segment operating performance for the years ended September 30, 2020, 2019 and 2018. As of and for the Year ended September 30, 2020 Merchant Services Proprietary Software and Payments Other Total Revenue $ 100,949 $ 50,953 $ (1,768) $ 150,134 Operating expenses Other costs of services 43,940 5,057 (1,767) 47,230 Selling general and administrative 26,376 28,187 23,760 78,323 Depreciation and amortization 11,796 5,723 698 18,217 Change in fair value of contingent consideration (4,691) 3,282 — (1,409) Income (loss) from operations $ 23,528 $ 8,704 $ (24,459) $ 7,773 Processing margin (1) $ 78,627 $ 46,483 $ (1,758) $ 123,352 Total assets $ 206,769 $ 139,107 $ 57,650 $ 403,526 Goodwill $ 115,982 $ 71,023 $ — $ 187,005 __________________________ 1. Processing margin is equal to revenue less other costs of services. $21,618, $587 and $(1,757) of residual expense, a component of other costs of services, are added back to the Merchant Services segment, Proprietary Software and Payments segment, and Other category, respectively. As of and for the Year ended September 30, 2019 Merchant Services Proprietary Software and Payments Other Total Revenue $ 338,968 $ 37,339 $ — $ 376,307 Operating expenses Interchange and network fees 236,170 6,697 — 242,867 Other costs of services 41,487 2,750 — 44,237 Selling general and administrative 27,275 17,059 18,526 62,860 Depreciation and amortization 12,221 3,790 553 16,564 Change in fair value of contingent consideration (477) 3,866 — 3,389 Income (loss) from operations $ 22,292 $ 3,177 $ (19,079) $ 6,390 Processing margin (1) $ 78,369 $ 28,497 $ — $ 106,866 Total assets $ 216,420 $ 99,420 $ 33,462 $ 349,302 Goodwill $ 117,334 $ 50,950 $ — $ 168,284 __________________________ 1. Processing margin is equal to revenue less interchange and network fees, less other costs of services. $17,058, $605 and $0 of residual expense, a component of other costs of services, are added back to the Merchant Services segment, Proprietary Software and Payments segment, and Other category, respectively. As of and for the Year ended September 30, 2018 Merchant Services Proprietary Software and Payments Other Total Revenue $ 303,692 $ 19,819 $ (3) $ 323,508 Operating expenses Interchange and network fees 209,705 4,838 — 214,543 Other costs of services 38,563 1,752 (1) 40,314 Selling general and administrative 23,716 7,177 9,692 40,585 Depreciation and amortization 9,736 1,896 207 11,839 Change in fair value of contingent consideration 2,103 1,763 — 3,866 Income (loss) from operations $ 19,869 $ 2,393 $ (9,901) $ 12,361 Processing margin (1) $ 69,449 $ 13,733 $ (2) $ 83,180 Total assets $ 143,792 $ 26,524 $ 4,826 $ 175,142 Goodwill $ 70,936 $ 13,018 $ — $ 83,954 __________________________ 1. Processing margin is equal to revenue less interchange and network fees, less other costs of services. $14,025, $504 and $0 of residual expense, a component of other costs of services, are added back to the Merchant Services segment, Proprietary Software and Payments segment, and Other category, respectively. |
Non-Controlling Interest
Non-Controlling Interest | 12 Months Ended |
Sep. 30, 2020 | |
Noncontrolling Interest [Abstract] | |
Non-Controlling Interest | NON-CONTROLLING INTEREST i3 Verticals, Inc. is the sole managing member of i3 Verticals, LLC and as a result, consolidates the financial results of i3 Verticals, LLC and reports a non-controlling interest representing the Common Units of i3 Verticals, LLC held by the Continuing Equity Owners. Changes in i3 Verticals, Inc.’s ownership interest in i3 Verticals, LLC while i3 Verticals, Inc. retains its controlling interest in i3 Verticals, LLC will be accounted for as equity transactions. As such, future redemptions or direct exchanges of Common Units of i3 Verticals, LLC by the Continuing Equity Owners will result in a change in ownership and reduce or increase the amount recorded as non-controlling interest and increase or decrease additional paid-in capital when i3 Verticals, LLC has positive or negative net assets, respectively. As of September 30, 2020, and 2019, respectively, i3 Verticals, Inc. owned 18,864,143 and 14,444,115 of i3 Verticals, LLC's Common Units, representing a 61.3% and 52.8% economic ownership interest in i3 Verticals, LLC. The following table summarizes the impact on equity due to changes in the Company's ownership interest in i3 Verticals, LLC: Year ended September 30, 2020 2019 2018 Net (loss) income attributable to non-controlling interest $ (560) $ 3,608 $ 1,937 Transfers to (from) non-controlling interests: Allocation of equity to non-controlling interests arising from the reorganization transactions and IPO — — 70,960 Distributions to non-controlling interest holders (3) (2,060) — Redemption of common units in i3 Verticals, LLC (5,080) (12,077) — Adjustment related to prior periods 2,730 — — Cumulative effect of adoption of new accounting standard 640 — — Allocation of equity to non-controlling interests 24,495 — — Net transfers to (from) non-controlling interests 22,782 (14,137) 70,960 Change from net income attributable to non-controlling interests and transfers to (from) non-controlling interests $ 22,222 $ (10,529) $ 72,897 |
Earnings Per Share
Earnings Per Share | 12 Months Ended |
Sep. 30, 2020 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | EARNINGS PER SHARE Basic earnings per share of Class A common stock is computed by dividing net income available to i3 Verticals, Inc. by the weighted-average number of shares of Class A common stock outstanding during the period. Diluted earnings per share of Class A common stock is computed by dividing net income available to i3 Verticals, Inc. by the weighted-average number of shares of Class A common stock outstanding adjusted to give effect to potentially dilutive securities. Prior to the IPO, the i3 Verticals, LLC membership structure included Class A units, common units and Class P units. The Company analyzed the calculation of earnings per unit for periods prior to the IPO using the two-class method and determined that it resulted in values that would not be meaningful to the users of these consolidated financial statements. Therefore, earnings per share information for the year ended September 30, 2018 represents only the period from June 25, 2018 through September 30, 2018. The following table sets forth reconciliations of the numerators and denominators used to compute basic and diluted earnings per share of Class A common stock: Year ended September 30, 2020 2019 2018 Basic net (loss) income per share: Numerator Net (loss) income (1) $ (979) $ 563 $ 2,673 Less: Net (loss) income attributable to non-controlling interests (560) 3,608 1,937 Net (loss) income attributable to Class A common stockholders $ (419) $ (3,045) $ 736 Denominator Weighted average shares of Class A common stock outstanding (2) 14,833,378 10,490,981 8,812,630 Basic net (loss) income per share (3) $ (0.03) $ (0.29) $ 0.08 Dilutive net (loss) income per share (3) : Numerator Net (loss) income attributable to Class A common stockholders $ (419) $ 736 Reallocation of net (loss) income assuming conversion of common units (5) (422) 1,464 Net (loss) income attributable to Class A common stockholders - diluted $ (841) $ 2,200 Denominator Weighted average shares of Class A common stock outstanding (2)(4) 14,833,378 8,812,630 Weighted average effect of dilutive securities 12,596,423 18,061,248 Weighted average shares of Class A common stock outstanding - diluted 27,429,801 26,873,878 Diluted net (loss) income per share $ (0.03) $ 0.08 ____________________ 1. Basic and diluted earnings per Class A common stock is presented only for the period after the Company’s Reorganization Transactions. As such, net income used in the calculation for the year ended September 30, 2018 represents the net income attributable to Class A common stockholders for the period from June 25, 2018 through September 30, 2018. 2. Excludes 204,969, 282,801 and 299,412 shares of restricted Class A common stock for the years ended September 30, 2020, 2019 and 2018, respectively. 3. For the year ended September 30, 2019, all potentially dilutive securities were anti-dilutive, so diluted net loss per share was equivalent to basic net loss per share. The following securities were excluded from the weighted average effect of dilutive securities in the computation of diluted earnings per share of Class A common stock: a. 15,856,855 shares of weighted average Class B common stock for the year ended September 30, 2019, along with the reallocation of net income assuming conversion of these shares, were excluded because the effect would have been anti-dilutive, b. 626,500 options to purchase shares of Class A common stock for the year ended September 30, 2019, were excluded because the exercise price of these options exceeded the average market price of our Class A common stock during the period (“out-of-the-money”) and the effect of including them would have been anti-dilutive, and c. 1,009,858 shares of Class A common stock for the year ended September 30, 2019, resulting from estimated stock option exercises as calculated by the treasury stock method, and 282,801 shares of restricted Class A common stock for the year ended September 30, 2019 were excluded because the effect of including them would have been anti-dilutive. 4. For the year ended September 30, 2020, the following securities were excluded from the weighted average effect of dilutive securities in the computation of diluted earnings per share of Class A common stock: a. 1,327,500 options to purchase shares of Class A common stock for the year ended September 30, 2020, were excluded because the exercise price of these options exceeded the average market price of our Class A common stock during the period (“out-of-the-money”) and the effect of including them would have been anti-dilutive, and b. 1,179,538 shares of Class A common stock for the year ended September 30, 2020, resulting from estimated stock option exercises as calculated by the treasury stock method, and 204,969 shares of restricted Class A common stock for the year ended September 30, 2020 were excluded because the effect of including them would have been anti-dilutive. 5. The reallocation of net income assuming conversion of common units represents the tax effected net income attributable to non-controlling interest using the effective income tax rates described in Note 10 above and assuming all common units of i3 Verticals, LLC were exchanged for Class A common stock at the beginning of the year. The common units of i3 Verticals, LLC held by the Continuing Equity Owners are potentially dilutive securities, and the computations of pro forma diluted net income per share assume that all common units of i3 Verticals, LLC were exchanged for shares of Class A common stock at the beginning of the year. Since the Company expects to settle the principal amount of its outstanding Exchangeable Notes in cash and any excess in cash or shares of the Company's Class A common stock, the Company uses the treasury stock method for calculating any potential dilutive effect of the conversion spread on diluted net income per share, if applicable. The conversion spread will have a dilutive impact on diluted net income per share of common stock when the average market price of the Company's Class A common stock for a given period exceeds the exchange price of $40.87 per share for the Exchangeable Notes. The Warrants sold in connection with the issuance of the Exchangeable Notes are considered to be dilutive when the average price of the Company's Class A common stock during the period exceeds the Warrants' stock price of $62.88 per share. The effect of the additional shares that may be issued upon exercise of the Warrants will be included in the weighted average shares of Class A common stock outstanding—diluted using the treasury stock method. The Note Hedge Transactions purchased in connection with the issuance of the Exchangeable Notes are considered to be anti-dilutive and therefore do not impact our calculation of diluted net income per share. Refer to Note 9 for further discussion regarding the Exchangeable Notes. |
Significant Non-cash Transactio
Significant Non-cash Transactions | 12 Months Ended |
Sep. 30, 2020 | |
Cash Flow, Noncash Investing and Financing Activities Disclosure [Abstract] | |
Significant Non-cash Transactions | SIGNIFICANT NON-CASH TRANSACTIONS The Company engaged in the following significant non-cash investing and financing activities during the years ended September 30, 2020, 2019, and 2018: Year ended September 30, 2020 2019 2018 Common Units issued as part of acquisitions' purchase consideration (Note 4) $ — $ — $ 104 Restricted Class A common stock issued as part of acquisitions' purchase consideration (Note 4) $ — $ 225 $ 550 Acquisition date fair value of contingent consideration in connection with business combinations $ 4,748 $ 13,032 $ 2,084 Replacement of the 2016 Senior Secured Credit Facility with the 2017 Senior Secured Credit Facility $ — $ — $ 87,525 Replacement of the 2017 Senior Secured Credit Facility with the Senior Secured Credit Facility $ — $ 100,229 $ — Mezzanine Notes net settled with Mezzanine Warrant exercises $ — $ — $ 14 Unsecured notes payable to related and unrelated creditors net settled with Junior Subordinated Notes Warrants $ — $ — $ 2,565 Settlement of warrant liability with equity as a result of Mezzanine Warrant exercise $ — $ — $ 9,253 Preferred return on Redeemable Class A Units $ — $ — $ 552 Preferred return on Class A Units $ — $ — $ 2,522 Debt issuance costs financed with proceeds from the 2017 Senior Secured Credit Facility $ — $ — $ 904 Debt issuance costs and accrued interest financed with proceeds from the 2019 Senior Secured Credit Facility $ — $ 1,271 $ — Conversion of notes payable to related and unrelated creditors to Class A common stock $ — $ — $ 8,054 |
Quarterly Information (Unaudite
Quarterly Information (Unaudited) | 12 Months Ended |
Sep. 30, 2020 | |
Quarterly Financial Information Disclosure [Abstract] | |
Quarterly Information (Unaudited) | QUARTERLY INFORMATION (UNAUDITED) The tables below present summarized unaudited quarterly results of operations for the years ended September 30, 2020 and 2019. Management believes that all necessary adjustments have been included in the amounts stated below for a fair presentation of the results of operations for the periods presented when read in conjunction with the consolidated financial statements for the years ended September 30, 2020 and 2019. Results of operations for a particular quarter are not necessarily indicative of results of operations for an annual period and are not predictive of future periods. Quarter ended December 31, March 31, June 30, September 30, Fiscal Year 2019: Revenue $ 84,868 $ 85,394 $ 97,483 $ 108,562 Income (loss) from operations $ 3,530 $ (203) $ 1,194 $ 1,869 Income (loss) before income taxes $ 2,616 $ (1,358) $ (724) $ (148) Net income (loss) attributable to i3 Verticals, Inc. $ 178 $ (1,102) $ (1,191) $ (930) Basic earnings (loss) per share attributable to i3 Verticals, Inc. (1) $ 0.02 $ (0.12) $ (0.12) $ (0.07) Diluted earnings (loss) per share attributable to i3 Verticals, Inc. (2)(4) $ 0.02 $ (0.12) $ (0.12) $ (0.07) Fiscal Year 2020: Revenue $ 41,111 $ 39,178 $ 31,573 $ 38,272 Income from operations $ 4,097 $ 2,041 $ 437 $ 1,198 Income (loss) before income taxes $ 2,083 $ (143) $ (2,815) $ (2,899) Net (loss) income attributable to i3 Verticals, Inc. $ (149) $ 737 $ (356) $ (651) Basic (loss) earnings per share attributable to i3 Verticals, Inc. (1) $ (0.01) $ 0.05 $ (0.02) $ (0.04) Diluted (loss) earnings per share attributable to i3 Verticals, Inc. (3)(4) $ (0.01) $ 0.05 $ (0.02) $ (0.06) ____________________ 1. Basic (loss) earnings per share excludes 295,405, 277,758, 285,433 and 271,881 shares of restricted Class A common stock from the calculation for the quarters ended December 31, 2018, March 31, 2019, June 30, 2019, and September 30, 2019, respectively, and 232,828, 215,564, 193,709 and 94,577 shares of restricted Class A common stock from the calculation for the quarters ended December 31, 2019, March 31, 2020, June 30, 2020, and September 30, 2020, respectively. 2. For the quarters ended December 31, 2018, and March 31, June 30, and September 30, 2019, the following securities were excluded from the weighted average effect of dilutive securities in the computation of diluted earnings per share of Class A common stock: a. 17,213,806, 17,112,164, 16,184,026 and 12,921,637 shares of weighted average Class B common stock for the quarters ended December 31, 2018, and March 31, June 30, and September 30, 2019, respectively, along with the reallocation of net income assuming conversion of these shares, were excluded from the calculation of diluted earnings per share of Class A common stock because the effect would have been anti-dilutive, b. 754,750, 30,500, 443,000 and 446,000 options to purchase shares of Class A common stock for the quarters ended December 31, 2018, and March 31, June 30, and September 30, 2019, respectively, were excluded because the exercise price of these options exceeded the average market price of our Class A common stock during the period (“out-of-the-money”) and the effect of including them would have been anti-dilutive, and c. 1,012,916, 1,188,987 and 1,131,760 shares of Class A common stock for the quarters ended March 31, June 30, and September 30, 2019, respectively, resulting from estimated stock option exercises as calculated by the treasury stock method, and 277,758, 285,433 and 271,881 shares of restricted Class A common stock for the quarters ended March 31, June 30, and September 30, 2019, respectively, were excluded because the effect of including them would have been anti-dilutive. 3. For the quarters ended December 31, 2019, and March 31, June 30, and September 30, 2020, the following securities were excluded from the weighted average effect of dilutive securities in the computation of diluted earnings per share of Class A common stock: a. 12,921,637, 12,769,568 and 12,404,368 shares of weighted average Class B common stock for the quarters ended December 31, 2019, and March 31, and June 30, 2020, respectively, along with the reallocation of net income assuming conversion of these shares, were excluded from the calculation of diluted earnings per share of Class A common stock because the effect would have been anti-dilutive, b. 689,500, 959,000, 1,498,000 and 1,297,500 options to purchase shares of Class A common stock for the quarters ended December 31, 2019, and March 31, June 30, and September 30, 2020, respectively, were excluded because the exercise price of these options exceeded the average market price of our Class A common stock during the period (“out-of-the-money”) and the effect of including them would have been anti-dilutive, and c. 976,594, 1,127,509 and 1,225,697 shares of Class A common stock for the quarters ended December 31, 2019, and June 30, and September 30, 2020, respectively, resulting from estimated stock option exercises as calculated by the treasury stock method, and 232,828, 193,709 and 94,577 shares of restricted Class A common stock for the quarters ended December 31, 2019, and June 30, and September 30, 2020, respectively, were excluded because the effect of including them would have been anti-dilutive. 4. The reallocation of net income assuming conversion of common units represents the tax effected net income attributable to non-controlling interest using the effective income tax rates described in Note 10 above and assuming all common units of i3 Verticals, LLC were exchanged for Class A common stock at the beginning of the year. The common units of i3 Verticals, LLC held by the Continuing Equity Owners are potentially dilutive securities, and the computations of pro forma diluted net income per share assume that all common units of i3 Verticals, LLC were exchanged for shares of Class A common stock at the beginning of the year. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Sep. 30, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | SUBSEQUENT EVENTS Recent Acquisitions Subsequent to September 30, 2020, the Company completed the acquisition of four businesses. The first acquisition is within the Company’s Public Sector vertical and provides software services to public safety and law enforcement customers. The second acquisition is within the Company’s Healthcare vertical and offers medical billing and other software. The third acquisition offers proprietary technology that will augment the Company’s existing platform across several verticals. The final acquisition sells a combination of proprietary and third-party software, which eliminates paper-based systems by creating integrated electronic workflows for courts and government agencies. Total purchase consideration for the four businesses included $59,600 in cash and revolving line of credit proceeds, and an amount of contingent consideration, which is still being valued. Certain provisions in the purchase agreements provide for additional consideration of up to $30,200, in the aggregate, to be paid based upon the achievement of specified financial performance targets, as defined in the purchase agreements, through no later than April 2023. The Company is in process of determining the acquisition date fair values of the liabilities for the contingent consideration based on discounted cash flow analyses. In each subsequent reporting period, the Company will reassess its current estimates of performance relative to the targets and adjust the contingent liabilities to their fair values through earnings. The effect of three of the acquisitions will be included in the consolidated statements of operations beginning October 1, 2020. The effect of the fourth acquisition will be included in the consolidated statements of operations beginning November 1, 2020. The Company is still evaluating the allocations of the preliminary purchase consideration and pro forma results of operations. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the reporting and disclosure rules and regulations of the Securities and Exchange Commission (“SEC”). |
Principles of Consolidation | Principles of Consolidation These consolidated financial statements include the accounts of the Company and its subsidiary companies. All significant intercompany accounts and transactions have been eliminated in consolidation |
Cash and Cash Equivalents | Cash and Cash Equivalents For purposes of reporting cash flows, the Company considers cash on hand, checking accounts, and savings accounts to be cash and cash equivalents. At times, the balance in these accounts may exceed federal insured limits. Cash equivalents are defined as financial instruments readily transferrable into cash with an original maturity less than 90 days. |
Restricted Cash | Restricted Cash Restricted cash represents funds held-on-deposit with processing banks pursuant to agreements to cover potential merchant losses. It is presented as long-term assets on the accompanying consolidated balance sheets since the related agreements extend beyond the next twelve months. Following the adoption of Accounting Standards Update (“ASU”) 2016-18, Statement of Cash Flows: Restricted Cash |
Accounts Receivable and Credit Policies | Accounts Receivable and Credit Policies Accounts receivable consist primarily of uncollateralized credit card processing residual payments due from processing banks requiring payment within thirty days following the end of each month. Accounts receivable also include amounts due from the sales of the Company’s technology solutions to its customers. The carrying amount of accounts receivable is reduced by an allowance for doubtful accounts, if necessary, which reflects management’s best estimate of the amounts that will not be collected. The allowance is estimated based on management’s knowledge of its customers, historical loss experience and existing economic conditions. Accounts receivable and the allowance are written-off when, in management’s opinion, all collection efforts have been exhausted. The Company’s allowance for doubtful accounts was $310 and $232 as of September 30, 2020 and 2019, respectively; however, actual write-offs may exceed estimated amounts. |
Inventories | Inventories Inventories consist of point-of-sale equipment to be sold to customers and are stated at the lower of cost, determined on a weighted average basis, or net realizable value. |
Property and Equipment | Property and Equipment Property and equipment are stated at cost or, if acquired through a business combination or an asset acquisition, fair value at the date of acquisition. Depreciation and amortization are provided over the assets’ estimated useful lives (or, if obtained in connection with a business acquisition, over their estimated remaining useful lives) using the straight-line method, except for leasehold improvements, which are depreciated over the shorter of the estimated useful lives of the assets or the lease term. Expenditures for maintenance and repairs are expensed when incurred. Expenditures for renewals or betterments are capitalized. Management reviews long-lived assets for impairment when events or changes in |
Capitalized Software | Capitalized Software Development costs for software to be sold or leased to customers are capitalized once technological feasibility of the software product has been established. Costs incurred prior to establishing technological feasibility are expensed as incurred. Technological feasibility is established when the Company has completed a detailed program design and has determined that a product can be produced to meet its design specifications, including functions, features and technical performance requirements. Capitalization of costs ceases when the product is generally available to clients. Software development costs are amortized using the greater of the straight-line method or the usage method over its estimated useful life, which is generally estimated to be three years. Software development costs may become impaired in situations where development efforts are abandoned due to the viability of a planned project becoming doubtful or due to technological obsolescence of a planned software product. Management evaluates the remaining useful lives and carrying values of capitalized software at least annually or when events and circumstances warrant such a review, to determine whether significant events or changes in circumstances indicate that impairment in value may have occurred. To the extent estimated net realizable values, which are estimated to equal future undiscounted cash flows, exceed the carrying value, no impairment is necessary. If estimated net realizable values are less than the carrying values, an impairment charge is recorded. Impairment charges during the years ended September 30, 2020, 2019 and 2018 were nominal. Identifiable software technology intangible assets resulting from acquisitions are amortized using the straight-line method over periods not exceeding their remaining estimated useful lives. GAAP requires that intangible assets with estimated useful lives be amortized over their respective estimated useful lives to their residual values, and reviewed for impairment. Acquisition technology intangibles’ net book values are included in capitalized software, net in the accompanying consolidated balance sheets. |
Acquisitions | Acquisitions Business acquisitions have been recorded using the acquisition method of accounting in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 805, Business Combinations (“ASC 805”), and, accordingly, the purchase price has been allocated to the assets acquired and liabilities assumed based on their estimated fair value as of the date of acquisition. Where relevant, the fair value of material contingent consideration included in an acquisition is calculated using a Monte Carlo simulation. The fair value of merchant relationships and non-compete assets acquired is identified using the Income Approach. The fair value of trade names acquired is identified using the Relief from Royalty Method. The fair value of deferred revenue is identified using the Adjusted Fulfillment Cost Method. After the purchase price has been allocated, goodwill is recorded to the extent the total consideration paid for the acquisition, including the acquisition date fair value of contingent consideration, if any, exceeds the sum of the fair values of the separately identifiable acquired assets and assumed liabilities. Acquisition costs for business combinations are expensed when incurred and recorded in selling general and administrative expenses in the accompanying consolidated statements of operations. |
Goodwill | Goodwill In accordance with ASC 350, Intangibles—Goodwill and Other, the Company tests goodwill for impairment for each reporting unit on an annual basis in the fourth quarter, or when events or circumstances indicate the fair value of a reporting unit is below its carrying value. The Company’s goodwill represents the excess of the purchase price over the fair value of the net identifiable assets acquired in business combinations. The goodwill generated from the business combinations is primarily related to the value placed on the employee workforce and expected synergies. Judgment is involved in determining if an indicator or change in circumstances relating to impairment has occurred. Such changes may include, among others, a significant decline in expected future cash flows, a significant adverse change in the business climate, and unforeseen competition. No goodwill impairment charges were recognized during the years ended September 30, 2020, 2019 and 2018. |
Intangible Assets | Intangible Assets Intangible assets include acquired merchant relationships, residual buyouts, referral agreements, trademarks, tradenames, website development costs and non-compete agreements. Merchant relationships represent the fair value of customer relationships purchased by the Company. Residual buyouts represent the right to not have to pay a residual to an independent sales agent related to certain future transactions with the agent’s referred merchants. Referral agreements represent the right to exclusively obtain referrals from a partner for their customers' credit card processing services. The Company amortizes definite lived identifiable intangible assets using a method that reflects the pattern in which the economic benefits of the intangible asset are expected to be consumed or otherwise utilized. The estimated useful lives of the Company’s customer-related intangible assets approximate the expected distribution of cash flows, whether straight-line or accelerated, generated from each asset. The useful lives of contract-based intangible assets are equal to the terms of the agreement. During the first quarter of fiscal year 2019, management determined it was appropriate to change the amortization rate of our merchant contract intangible assets to reflect the expected distribution of future cash flows. This change was applied prospectively beginning on October 1, 2018 and resulted in $1,290 in additional amortization expense recorded in the year ended September 30, 2019. |
Income Taxes | Income Taxes i3 Verticals, Inc. is taxed as a corporation and pays corporate federal, state and local taxes on income allocated to it from i3 Verticals, LLC based on i3 Verticals, Inc.'s economic interest in i3 Verticals, LLC. i3 Verticals, LLC's members, including the Company, are liable for federal, state and local income taxes based on their share of i3 Verticals, LLC's pass-through taxable income. i3 Verticals, LLC is not a taxable entity for federal income tax purposes, but is subject to and reports entity level tax in both Tennessee and Texas. In addition, certain subsidiaries of i3 Verticals, LLC are corporations that are subject to state and federal income taxes. The amount provided for state income taxes is based upon the amounts of current and deferred taxes payable or refundable at the date of the consolidated financial statements as a result of all events recognized in the financial statements as measured by the provisions of enacted tax laws. |
Valuation of Contingent Consideration | Valuation of Contingent Consideration On occasion, the Company may have acquisitions which include contingent consideration. Accounting for business combinations requires the Company to estimate the fair value of any contingent purchase consideration at the acquisition date. For a discussion of the estimate methodology and the significance of various inputs, please see the subheading below titled “Use of Estimates.” Changes in estimates regarding the fair value contingent purchase consideration are reflected as adjustments to the related liability and recognized within operating expenses in the consolidated statements of operations. Short and long-term contingent liabilities are presented within accrued expenses and other current liabilities and other long-term liabilities on the Company's consolidated balance sheets, respectively. |
Classification of Financial Instruments | Classification of Financial Instruments The Company classifies certain financial instruments issued as either equity or as liabilities. Determination of classification is based upon the underlying properties of the instrument. |
Revenue Recognition and Deferred Revenue | Revenue Recognition and Deferred Revenue For the year ended September 30, 2020, revenue is recognized as each performance obligation is satisfied, in accordance with ASC 606, Revenue from Contracts with Customers (“ASC 606”). The Company accrues for rights of refund, processing errors or penalties, or other related allowances based on historical experience. The Company utilized the portfolio approach practical expedient within ASC 606-10-10-4 Revenue from Contracts with Customers—Objectives and the significant financing component practical expedient within ASC 606-10-32-18 Revenue from Contracts with Customers—The Existence of a Significant Financing Component in the Contract in performing the analysis. The Company adopted ASC 606 on October 1, 2019, using the modified retrospective method and applying the standard to all contracts not completed on the date of adoption. Results for the reporting period beginning October 1, 2019 are presented under ASC 606, while prior period amounts continue to be reported in accordance with the Company's historic accounting practices under previous guidance. The majority of the Company's revenue for the years ended September 30, 2020, 2019 and 2018 is derived from volume-based payment processing fees (“discount fees”) and other related fixed transaction or service fees. The remainder is comprised of sales of software licensing subscriptions, ongoing support, and other POS-related solutions the Company provides to its clients directly and through its processing bank relationships. Discount fees represent a percentage of the dollar amount of each credit or debit transaction processed or a specified per transaction amount, depending on the card type. The Company frequently enters into agreements with clients under which the client engages the Company to provide both payment authorization services and transaction settlement services for all of the cardholder transactions of the client, regardless of which issuing bank and card network to which the transaction relates. The Company’s core performance obligations are to stand ready to provide continuous access to the Company’s payment authorization services and transaction settlement services in order to be able to process as many transactions as its clients require on a daily basis over the contract term. These services are stand ready obligations, as the timing and quantity of transactions to be processed is not determinable. Under a stand-ready obligation, the Company’s performance obligation is defined by each time increment rather than by the underlying activities satisfied over time based on days elapsed. Because the service of standing ready is substantially the same each day and has the same pattern of transfer to the client, the Company has determined that its stand-ready performance obligation comprises a series of distinct days of service. Discount fees are recognized each day based on the volume or transaction count at the time the merchants’ transactions are processed. The Company follows the requirements of ASC 606-10-55 Revenue from Contracts with Customers—Principal versus Agent Considerations , which states that the determination of whether a company should recognize revenue based on the gross amount billed to a client or the net amount retained is a matter of judgment that depends on the facts and circumstances of the arrangement. The determination of gross versus net recognition of revenue requires judgment that depends on whether the Company controls the good or service before it is transferred to the merchant or whether the Company is acting as an agent of a third party. The assessment is provided separately for each performance obligation identified. Under its agreements, the Company incurs interchange and network pass-through charges from the third-party card issuers and card networks, respectively, related to the provision of payment authorization services. The Company has determined that it is acting as an agent with respect to these payment authorization services, based on the following factors: (1) the Company has no discretion over which card issuing bank will be used to process a transaction and is unable to direct the activity of the merchant to another card issuing bank, and (2) interchange and card network rates are pre-established by the card issuers or card networks, and the Company has no latitude in determining these fees. Therefore, revenue allocated to the payment authorization performance obligation is presented net of interchange and card network fees paid to the card issuing banks and card networks, respectively, for the year ended September 30, 2020, subsequent to the adoption of ASC 606. With regards to the Company's discount fees, generally, where the Company has control over merchant pricing, merchant portability, credit risk and ultimate responsibility for the merchant relationship, revenues are reported at the time of sale equal to the full amount of the discount charged to the merchant, less interchange and network fees. Revenues generated from merchant portfolios where the Company does not have control over merchant pricing, liability for merchant losses or credit risk or rights of portability are reported net of interchange and network fees as well as third-party processing costs directly attributable to processing and bank sponsorship costs. Revenues are also derived from a variety of fixed transaction or service fees, including authorization fees, convenience fees, statement fees, annual fees, gateway fees, which are charged for accessing our payment and software solutions, and fees for other miscellaneous services, such as handling chargebacks. Revenues derived from service fees are recognized at the time the services are performed and there are no further performance obligations. Revenue from fixed transactions, which principally relates to the sale of equipment, is recognized upon transfer of ownership and delivery to the client, after which there are no further performance obligations. Revenues from sales of the Company’s software are recognized when the related performance obligations are satisfied. Sales of software licenses are categorized into one of two categories of intellectual property in accordance with ASC 606, functional or symbolic. The key distinction is whether the license represents a right to use (functional) or a right to access (symbolic) intellectual property. The Company generates sales of one-time software licenses, which is functional intellectual property. Revenue from functional intellectual property is recognized at a point in time, when delivered to the client. The Company also offers access to its software under software-as-a-service (“SaaS”) arrangements, which represent services arrangements. Revenue from SaaS arrangements is recognized over time, over the term of the agreement. Arrangements may contain multiple performance obligations, such as payment authorization services, transaction settlement services, hardware, software products, maintenance, and professional installation and training services. Revenues are allocated to each performance obligation based on the standalone selling price of each good or service. The selling price for a deliverable is based on standalone selling price, if available, the adjusted market assessment approach, estimated cost plus margin approach, or residual approach. The Company establishes estimated selling price, based on the judgment of the Company's management, considering internal factors such as margin objectives, pricing practices and controls, client segment pricing strategies and the product life cycle. In arrangements with multiple performance obligations, the Company determines allocation of the transaction price at inception of the arrangement and uses the standalone selling prices for the majority of the Company's revenue recognition. Revenues from sales of the Company ’ s combined hardware and software element are recognized when each performance obligation has been satisfied which has been determined to be upon the delivery of the product. Revenues derived from service fees are recognized at the time the services are performed and there are no further performance obligations. The Company’s professional services, including training, installation, and repair services are recognized as revenue as these services are performed. The table below presents a disaggregation of the Company's revenue from contracts with clients by product by segment. Refer to Note 16 for discussion of the Company's segments. The Company's products are defined as follows: • Payments — Includes discount fees, gateway fees and other related fixed transaction or service fees. • Other — Includes sales of software, sales of equipment, professional services and other revenues. For the year ended September 30, 2020 Merchant Services Proprietary Software and Payments Other Total Payments revenue $ 82,913 $ 19,359 $ (1,757) $ 100,515 Other revenue 18,036 31,594 (11) 49,619 Total revenue $ 100,949 $ 50,953 $ (1,768) $ 150,134 The table below presents a disaggregation of the Company's revenue from contracts with clients by timing of transfer of goods or services by segment. The Company's revenue included in each category are defined as follows: • Revenue transferred over time — Includes discount fees, gateway fees, sales of SaaS and ongoing support contract revenue. • Revenue transferred at a point in time — Includes fixed service fees, software licenses sold as functional intellectual property, professional services and other equipment. For the year ended September 30, 2020 Merchant Services Proprietary Software and Payments Other Total Revenue earned over time $ 72,800 $ 35,222 $ (1,743) $ 106,279 Revenue earned at a point in time 28,149 15,731 (25) 43,855 Total revenue $ 100,949 $ 50,953 $ (1,768) $ 150,134 Contract Liabilities Deferred revenue represents amounts billed to clients by the Company for services contracts. Payment is typically collected at the start of the contract term. The initial prepaid contract agreement balance is deferred. The balance is then recognized as the services are provided over the contract term. Deferred revenue that is expected to be recognized as revenue within one year is recorded as short-term deferred revenue and the remaining portion is recorded as other long-term liabilities in the consolidated balance sheets. The terms for most of the Company's contracts with a deferred revenue component are one year. Substantially all of the Company's deferred revenue is anticipated to be recognized within the next year. The following table presents the changes in deferred revenue as of and for the year ended September 30, 2020: Balance at September 30, 2019 $ 10,237 Deferral of revenue 22,963 Recognition of unearned revenue (22,146) Balance at September 30, 2020 $ 11,054 Costs to Obtain and Fulfill a Contract The Company capitalizes incremental costs to obtain new contracts and contract renewals and amortizes these costs on a straight-line basis as an expense over the benefit period, which is generally the contract term, unless a commensurate payment is not expected at renewal. As of September 30, 2020, the Company had $3,140, of capitalized contract costs, which relates to commissions paid to obtain new sales, included within “Prepaid expenses and other current assets” and “Other assets" on the consolidated balance sheets. The Company recorded commissions expense related to these costs for the year ended September 30, 2020 of $398. The Company expenses sales commissions as incurred for the Company's sales commission plans that are paid on recurring monthly revenues, portfolios of existing clients, or have a substantive stay requirement prior to payment. Interchange and Network Fees and Other Cost of Services Interchange and network fees consist primarily of fees that are directly related to discount fee revenue. These include interchange fees paid to issuers and assessment fees payable to card associations, which are a percentage of the processing volume the Company generates from Visa and Mastercard, as well as fees charged by card-issuing banks. Other costs of services include costs directly attributable to processing and bank sponsorship costs, which may not be based on a percentage of volume. These costs also include related costs such as residual payments to sales groups, which are based on a percentage of the net revenues generated from merchant referrals. In certain merchant processing bank relationships the Company is liable for chargebacks against a merchant equal to the volume of the transaction. Losses resulting from chargebacks against a merchant are included in other cost of services on the accompanying consolidated statement of operations. The Company evaluates its risk for such transactions and estimates its potential loss from chargebacks based primarily on historical experience and other relevant factors. The reserve for merchant losses is included within accrued expenses and other current liabilities on the accompanying consolidated balance sheets. The cost of equipment sold is also included in other cost of services. Interchange and other costs of services are recognized at the time the merchant's transactions are processed. |
Advertising and Promotion Costs | Advertising and Promotion Costs Advertising and promotion costs are expensed as incurred. |
Equity-based Compensation | Equity-based Compensation The Company accounts for grants of equity awards to employees in accordance with ASC 718, Compensation—Stock Compensation. This standard requires compensation expense to be measured based on the estimated fair value of the share-based awards on the date of grant and recognized as expense on a straight-line basis over the requisite service period, which is generally the vesting period. |
Use of Estimates | Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Such estimates include, but are not limited to, the value of purchase consideration paid and identifiable assets acquired and assumed in acquisitions, goodwill and intangible asset impairment review, warrant valuation, revenue recognition for contracts with multiple performance obligations, loss reserves, assumptions used in the calculation of equity-based compensation and in the calculation of income taxes, and certain tax assets and liabilities as well as the related valuation allowances. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results could differ from those estimates. The impact of the COVID-19 pandemic on certain of the Company's estimates, including goodwill and intangible assets, is uncertain at this time. If general economic conditions continue to deteriorate or remain uncertain for an extended period of time, the trading price of our common stock, which has already declined in recent months, could decline further. If the stock price continues to be depressed or decreases further, it may cause a triggering event for impairment testing of fair-valued assets, including goodwill and intangible assets. During the year ended September 30, 2020, the Company has recorded a $2,668 reduction in the valuation allowance on the deferred tax asset related to the Company’s investment in partnership and a corresponding reduction in the Company's income tax expense for the year ended September 30, 2020. Management has determined an additional portion of the deferred tax asset will be more likely than not realized based off an evaluation of the four sources of taxable income. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements Recently Adopted Accounting Pronouncements In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) The new standard changed the timing of certain revenue and expenses to be recognized under various arrangement types. More judgment and estimates are required when applying the requirements of the new standard than were required under prior GAAP, such as estimating the amount of variable consideration to include in transaction price and estimating expected periods of benefit for certain costs. Through management's review of individual contracts and historical revenue recognition patterns in comparison to the provisions under ASU 2014-09, the Company determined the timing of revenue to be recognized under ASU 2014-09 for each of the Company’s revenue categories, including discount fees, software licensing subscriptions, ongoing support, and other POS-related solutions, is similar to the timing of revenue recognized under the historical guidance under ASC 605. The Company will evaluate, on an ongoing basis, costs to obtain contracts with clients, as well as certain implementation and set-up costs, and, in some cases, may be required to amortize these costs over longer periods than they were historically amortized. Finally, the new standard required additional disclosures regarding revenues and related capitalized contract costs, if any. The Company adopted the new revenue standard using a modified retrospective basis on October 1, 2019. The Company has recorded a $1,345 cumulative increase to equity, including a $705 cumulative increase to accumulated earnings and a $640 cumulative increase to non-controlling interest, as a result of the adoption, due to capitalized costs to obtain contracts with clients being amortized over the expected life of the client rather than the life of the specific contract. The Company determined that the most significant ongoing impact of adopting the new revenue standard was driven by changes in principal versus agent considerations, with the majority of the change overall in total net revenue attributable to reflecting the Company's payment authorization services net of related interchange and network fees prospectively. The Company's interchange and network fees of $242,867 and $214,543 were classified in “Operating Expenses” on the consolidated statement of operations for the years ended September 30, 2019, and 2018, respectively. The Company's interchange and network fees of $244,097 were included as a reduction to revenue on the consolidated statement of operations for the year ended September 30, 2020. Under the modified retrospective basis, the Company has not restated its comparative consolidated financial statements for these effects. The adoption of the new revenue standard did not have a material impact on net income. The following table presents the material impacts of adopting ASC 606 on the Company's consolidated statement of operations for the year ended September 30, 2020: Year ended September 30, 2020 As reported Adjustment Presentation without adoption of ASC 606 Revenue $ 150,134 $ 244,097 $ 394,231 Operating expenses Interchange and network fees $ — $ 244,097 $ 244,097 The following table presents the material impacts of adoption of ASC 606 on the Company's consolidated balance sheet as of September 30, 2020: As of September 30, 2020 As reported Adjustment Presentation without adoption of ASC 606 Assets Current assets Prepaid expenses and other current assets $ 4,869 $ 304 $ 5,173 Deferred tax asset $ 36,755 $ 12 $ 36,767 Other assets $ 5,197 $ (1,932) $ 3,265 Liabilities and equity Stockholders' equity Accumulated deficit $ (2,023) $ (872) $ (2,895) Non-controlling interest $ 84,590 $ (744) $ 83,846 The adoption of ASC 606 did not have a material impact on the Company’s consolidated statement of cash flows for the year ended September 30, 2020. The Company has expanded its consolidated financial statement disclosures as required by this new standard. See above for additional disclosures provided as a result of the adoption of ASC 606. Recently Issued Accounting Pronouncements Not Yet Adopted In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement: Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement (Topic 820) (“ASU 2018-13”). The amendments in ASU 2018-13 provide clarification and modify the disclosure requirements on fair value measurement in Topic 820, Fair Value Measurement. The amendments in ASU 2018-13 are effective for public business entities for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, with early adoption permitted. As the Company is an emerging growth company and has elected to use the extended transition period of such companies, the Company will not be required to adopt ASU 2018-13 until October 1, 2021. The Company is currently evaluating the impact of the adoption of this principle on the Company’s consolidated financial statements. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326) (“ASU 2016-13”). The amendments in ASU 2016-13 require the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. The amendments in ASU 2016-13 are effective for public business entities for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, with early adoption permitted for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. In November 2019, the FASB issued ASU No. 2019-10 (“ASU 2019-10”), which extends the effective date for adoption of ASU 2016-13 for certain entities. As a result of the provisions in ASU 2019-10, and as the Company was a smaller reporting company as of November 15, 2019, the Company will not be required to adopt ASU 2016-13 until October 1, 2023. The Company is currently evaluating the impact of the adoption of this principle on the Company’s consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) The amendments in this ASU No. 2016-02 are effective for public business entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years, with early adoption permitted. In November 2019, the FASB issued ASU No. 2019-10, which extends the effective date for adoption of ASU 2016-02 for certain entities. In June 2020, the FASB issued ASU No. 2020-05, which further extends the effective date for adoption of ASU 2016-02 for certain entities. As a result of the provisions in ASU No. 2020-05, and as the Company is an emerging growth company and has elected to use the extended transition period of such companies, the Company would not be required to adopt this ASU No. 2016-02 until October 1, 2022. The Company has elected to early adopt this ASU No. 2016-02 on October 1, 2020, using the optional modified retrospective transition method, under which the prior period financial statements were not restated for the new guidance. The Company has elected to apply the package of practical expedients whereby the Company does not reassess whether expired or existing leases contain a lease, does not reassess the lease classification for any expired or existing leases, and does not reassess initial direct costs for any existing leases. The Company has further elected to account for lease and nonlease components in a lease arrangement as a combined lease component for all classes of leased assets. The Company has calculated that the adoption of Topic 842 will result in the recognition of the right-of-use assets of $9,093 and the lease liabilities of $9,760 as of October 1, 2020 on the consolidated balance sheet. Lease liabilities will be measured as the present value of remaining lease payments, utilizing the Company’s incremental borrowing rate based on the remaining lease term as of the adoption date. The right-of-use assets will be measured at an amount equal to the lease liabilities adjusted by the amounts of certain assets and liabilities, such as deferred lease obligations and prepaid rent, that were previously recognized on the balance sheet prior to the initial application of Topic 842. The Company does not expect the adoption of Topic 842 to have an impact on the consolidated statements of operations and comprehensive (loss) income, consolidated statements of changes in equity, and consolidated statements of cash flows. In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848) (“ASU 2020-04”). The amendments in ASU 2020-04 provide optional expedients and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments in ASU 2020-04 are effective for all entities as of March 12, 2020 through December 31, 2022. An entity may elect to apply the amendments for contract modifications by Topic or Industry Subtopic as of any date from the beginning an interim period that includes or is subsequent to March 12, 2020, or prospectively from the date that the financial statements are available to be issued. Once elected for a Topic or an Industry Subtopic, the amendments must be applied prospectively for all eligible contract modifications for that Topic or Industry Subtopic. The Company may elect to apply ASU 2020-04 as its contracts referenced in London Interbank Offered Rate (“LIBOR”) are impacted by reference rate reform. The Company is currently evaluating the impact of the adoption of this principle on the Company’s consolidated financial statements. In August 2020, the FASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity's Own Equity (Subtopic 815-40)—Accounting For Convertible Instruments and Contracts in an Entity's Own Equity (“ASU 2020-06”). ASU 2020-06 simplifies accounting for convertible instruments by removing major separation models required under current GAAP. Consequently, more convertible debt instruments will be reported as a single liability instrument with no separate accounting for embedded conversion features. ASU 2020-06 removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, which will permit more equity contracts to qualify for it. ASU 2020-06 also simplifies the diluted net income per share calculation in certain areas. The amendments in ASU 2020-06 are effective for public business entities for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years, with early adoption permitted for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. As the Company is an emerging growth company and has elected to use the extended transition period of such companies, the Company will not be required to adopt ASU 2020-06 until October 1, 2022. The Company is currently evaluating the impact of the adoption of this principle on the Company’s consolidated financial statements. |
Fair Value Measurement | The Company applies the provisions of ASC 820, Fair Value Measurement , which defines fair value, establishes a framework for its measurement and expands disclosures about fair value measurements. Fair value is the price that would be received to sell an asset or the price paid to transfer a liability as of the measurement date. A three-tier, fair-value reporting hierarchy exists for disclosure of fair value measurements based on the observability of the inputs to the valuation of financial assets and liabilities. The three levels are: Level 1 — Quoted prices for identical instruments in active markets. Level 2 — Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. Level 3 — Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable in active exchange markets. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Disaggregation of Revenue | The table below presents a disaggregation of the Company's revenue from contracts with clients by product by segment. Refer to Note 16 for discussion of the Company's segments. The Company's products are defined as follows: • Payments — Includes discount fees, gateway fees and other related fixed transaction or service fees. • Other — Includes sales of software, sales of equipment, professional services and other revenues. For the year ended September 30, 2020 Merchant Services Proprietary Software and Payments Other Total Payments revenue $ 82,913 $ 19,359 $ (1,757) $ 100,515 Other revenue 18,036 31,594 (11) 49,619 Total revenue $ 100,949 $ 50,953 $ (1,768) $ 150,134 The table below presents a disaggregation of the Company's revenue from contracts with clients by timing of transfer of goods or services by segment. The Company's revenue included in each category are defined as follows: • Revenue transferred over time — Includes discount fees, gateway fees, sales of SaaS and ongoing support contract revenue. • Revenue transferred at a point in time — Includes fixed service fees, software licenses sold as functional intellectual property, professional services and other equipment. For the year ended September 30, 2020 Merchant Services Proprietary Software and Payments Other Total Revenue earned over time $ 72,800 $ 35,222 $ (1,743) $ 106,279 Revenue earned at a point in time 28,149 15,731 (25) 43,855 Total revenue $ 100,949 $ 50,953 $ (1,768) $ 150,134 |
Contract with Customer, Asset and Liability | The following table presents the changes in deferred revenue as of and for the year ended September 30, 2020: Balance at September 30, 2019 $ 10,237 Deferral of revenue 22,963 Recognition of unearned revenue (22,146) Balance at September 30, 2020 $ 11,054 |
Schedule of New Accounting Pronouncements and Changes in Accounting Principles | The following table presents the material impacts of adopting ASC 606 on the Company's consolidated statement of operations for the year ended September 30, 2020: Year ended September 30, 2020 As reported Adjustment Presentation without adoption of ASC 606 Revenue $ 150,134 $ 244,097 $ 394,231 Operating expenses Interchange and network fees $ — $ 244,097 $ 244,097 The following table presents the material impacts of adoption of ASC 606 on the Company's consolidated balance sheet as of September 30, 2020: As of September 30, 2020 As reported Adjustment Presentation without adoption of ASC 606 Assets Current assets Prepaid expenses and other current assets $ 4,869 $ 304 $ 5,173 Deferred tax asset $ 36,755 $ 12 $ 36,767 Other assets $ 5,197 $ (1,932) $ 3,265 Liabilities and equity Stockholders' equity Accumulated deficit $ (2,023) $ (872) $ (2,895) Non-controlling interest $ 84,590 $ (744) $ 83,846 |
Acquisitions (Tables)
Acquisitions (Tables) | 12 Months Ended |
Sep. 30, 2020 | |
Business Acquisition [Line Items] | |
Pro Forma Information | This supplemental pro forma information does not purport to be indicative of the results of operations that would have been attained had the acquisitions been made on these dates, or of results of operations that may occur in the future. Year ended September 30, 2020 2019 Revenue (1) $ 156,036 $ 383,546 Net (loss) income $ (1,170) $ 472 __________________________ 1. Effective October 1, 2019, our revenues are presented net of interchange and network fees in accordance with Accounting Standards Codification Topic 606, Revenue from Contracts with Customers . See Note 2 for a description of the recently adopted accounting pronouncement. |
2018 Business Combinations | |
Business Acquisition [Line Items] | |
Schedule of Preliminary Purchase Consideration of the Acquired Assets and Assumed Liabilities | The fair values assigned to certain assets and liabilities assumed, as of the acquisition dates, during the year ended September 30, 2018 were as follows: SDCR, Inc. Other Total Cash and cash equivalents $ 1,338 $ — $ 1,338 Accounts receivable 1,008 — 1,008 Settlement assets — 350 350 Related party receivable 773 — 773 Inventories 1,318 — 1,318 Prepaid expenses and other current assets 1,176 8 1,184 Property and equipment 69 58 127 Capitalized software — 200 200 Acquired merchant relationships 5,500 5,100 10,600 Exclusivity Agreements — 100 100 Non-compete agreements 40 1,440 1,480 Trade name 1,340 200 1,540 Goodwill 16,523 8,914 25,437 Other assets — 4 4 Total assets acquired 29,085 16,374 45,459 Accounts payable 1,342 — 1,342 Accrued expenses and other current liabilities 3,123 431 3,554 Settlement obligations — 350 350 Deferred revenue, current 2,029 190 2,219 Other long-term liabilities 1,757 — 1,757 Net assets acquired $ 20,834 $ 15,403 $ 36,237 |
2019 Business Combinations | |
Business Acquisition [Line Items] | |
Schedule of Preliminary Purchase Consideration of the Acquired Assets and Assumed Liabilities | The fair values assigned to certain assets and liabilities assumed, as of the acquisition dates, were as follows: Pace Other Total Cash and cash equivalents $ 108 $ 4,453 $ 4,561 Accounts receivable 545 4,907 5,452 Settlement assets — 18 18 Inventories 45 61 106 Prepaid expenses and other current assets 59 483 542 Property and equipment 527 1,929 2,456 Capitalized software 3,400 9,440 12,840 Acquired merchant relationships 13,400 34,480 47,880 Non-compete agreements 60 150 210 Trade name 500 1,540 2,040 Goodwill 35,589 47,483 83,072 Other assets 2,622 2 2,624 Total assets acquired 56,855 104,946 161,801 Accounts payable 722 369 1,091 Accrued expenses and other current liabilities 56 2,284 2,340 Settlement obligations — 18 18 Deferred revenue, current 24 2,698 2,722 Other long-term liabilities — 690 690 Net assets acquired $ 56,053 $ 98,887 $ 154,940 |
2020 Business Combinations | |
Business Acquisition [Line Items] | |
Schedule of Preliminary Purchase Consideration of the Acquired Assets and Assumed Liabilities | The fair values assigned to certain assets and liabilities assumed, as of the acquisition dates, during the year ended September 30, 2020 were as follows: Cash and cash equivalents $ 313 Accounts receivable 709 Prepaid expenses and other current assets 54 Property and equipment 122 Capitalized software 1,970 Acquired merchant relationships 11,900 Non-compete agreements 90 Trade name 300 Goodwill 19,948 Other assets 17 Total assets acquired 35,423 Accounts payable 168 Accrued expenses and other current liabilities 623 Deferred revenue, current 200 Other long-term liabilities 1,799 Net assets acquired $ 32,633 |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 12 Months Ended |
Sep. 30, 2020 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | A summary of the Company's property and equipment as of September 30, 2020 and 2019 is as follows: Estimated Useful Life 2020 2019 Computer equipment and software (1) 2 to 7 years $ 2,382 $ 1,990 Furniture and fixtures 2 to 7 years 1,867 1,639 Terminals 2 to 3 years 584 429 Office equipment 2 to 5 years 942 940 Automobiles 3 years 366 307 Leasehold improvements 2 to 7 years 2,194 1,665 Accumulated depreciation (2,996) (1,944) Property and equipment, net $ 5,339 $ 5,026 ____________________ |
Capitalized Software, Net (Tabl
Capitalized Software, Net (Tables) | 12 Months Ended |
Sep. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Capitalized Computer Software | A summary of the Company's capitalized software as of September 30, 2020 and 2019 is as follows: Estimated Useful Life 2020 2019 Software development costs 1 to 7 years $ 21,485 $ 20,347 Development in progress 2,638 833 Accumulated amortization (7,134) (5,726) Capitalized software, net $ 16,989 $ 15,454 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 12 Months Ended |
Sep. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Changes in Carrying Amount of Goodwill | Changes in the carrying amount of goodwill are as follows: Merchant Services Proprietary Software and Payments Other Total Balance at September 30, 2018 (net of accumulated impairment losses of $11,458, $0 and $0, respectively) $ 70,936 $ 13,018 $ — $ 83,954 Goodwill attributable to preliminary purchase price adjustments and acquisition activity during the year ended September 30, 2019 46,398 37,932 — 84,330 Balance at September 30, 2019 117,334 50,950 — 168,284 Goodwill reassigned in segment realignment (1) (419) 419 — — Goodwill attributable to preliminary purchase price adjustments and acquisition activity during the year ended September 30, 2020 (933) 19,654 — 18,721 Balance at September 30, 2020 $ 115,982 $ 71,023 $ — $ 187,005 ____________________ |
Schedule of Finite-Lived Intangible Assets | Intangible assets consisted of the following as of September 30, 2020: Cost Accumulated Amortization Carrying Value Amortization Life and Method Finite-lived intangible assets: Merchant relationships $ 154,571 $ (53,388) $ 101,183 12 to 20 years – accelerated or straight-line Non-compete agreements 1,700 (851) 849 3 to 5 years – straight-line Website and brand development costs 215 (65) 150 3 to 4 years – straight-line Trade names 3,880 (1,538) 2,342 3 to 7 years – straight-line Residual buyouts 5,373 (1,172) 4,201 2 to 8 years – straight-line Referral and exclusivity agreements 900 (434) 466 5 to 10 years – straight-line Total finite-lived intangible assets 166,639 (57,448) 109,191 Indefinite-lived intangible assets: Trademarks 42 — 42 Total identifiable intangible assets $ 166,681 $ (57,448) $ 109,233 Intangible assets consisted of the following as of September 30, 2019: Cost Accumulated Amortization Carrying Value Amortization Life and Method Finite-lived intangible assets: Merchant relationships $ 142,671 $ (43,579) $ 99,092 12 to 20 years – accelerated or straight-line Non-compete agreements 1,770 (619) 1,151 2 to 5 years – straight-line Website development costs 77 (22) 55 3 years – straight-line Trade names 4,292 (1,307) 2,985 3 to 7 years – straight-line Residual buyouts 5,346 (1,882) 3,464 2 to 8 years – straight-line Referral and exclusivity agreements 900 (264) 636 5 to 10 years – straight-line Total finite-lived intangible assets 155,056 (47,673) 107,383 Indefinite-lived intangible assets: Trademarks 36 — 36 Total identifiable intangible assets 155,092 (47,673) 107,419 |
Schedule of Indefinite-Lived Intangible Assets | Intangible assets consisted of the following as of September 30, 2020: Cost Accumulated Amortization Carrying Value Amortization Life and Method Finite-lived intangible assets: Merchant relationships $ 154,571 $ (53,388) $ 101,183 12 to 20 years – accelerated or straight-line Non-compete agreements 1,700 (851) 849 3 to 5 years – straight-line Website and brand development costs 215 (65) 150 3 to 4 years – straight-line Trade names 3,880 (1,538) 2,342 3 to 7 years – straight-line Residual buyouts 5,373 (1,172) 4,201 2 to 8 years – straight-line Referral and exclusivity agreements 900 (434) 466 5 to 10 years – straight-line Total finite-lived intangible assets 166,639 (57,448) 109,191 Indefinite-lived intangible assets: Trademarks 42 — 42 Total identifiable intangible assets $ 166,681 $ (57,448) $ 109,233 Intangible assets consisted of the following as of September 30, 2019: Cost Accumulated Amortization Carrying Value Amortization Life and Method Finite-lived intangible assets: Merchant relationships $ 142,671 $ (43,579) $ 99,092 12 to 20 years – accelerated or straight-line Non-compete agreements 1,770 (619) 1,151 2 to 5 years – straight-line Website development costs 77 (22) 55 3 years – straight-line Trade names 4,292 (1,307) 2,985 3 to 7 years – straight-line Residual buyouts 5,346 (1,882) 3,464 2 to 8 years – straight-line Referral and exclusivity agreements 900 (264) 636 5 to 10 years – straight-line Total finite-lived intangible assets 155,056 (47,673) 107,383 Indefinite-lived intangible assets: Trademarks 36 — 36 Total identifiable intangible assets 155,092 (47,673) 107,419 |
Schedule of Future Amortization Expense of Finite-lived Intangible Assets | Based on gross carrying amounts at September 30, 2020, the Company's estimate of future amortization expense for intangible assets are presented in this table as follows for each fiscal year ending September 30: 2021 $ 11,645 2022 10,500 2023 9,428 2024 8,702 2025 8,495 Thereafter 60,421 $ 109,191 |
Accrued Expenses and Other Li_2
Accrued Expenses and Other Liabilities (Tables) | 12 Months Ended |
Sep. 30, 2020 | |
Payables and Accruals [Abstract] | |
Summary of Accrued Expenses and Other Current Liabilities | A summary of the Company's accrued expenses and other current liabilities as of September 30, 2020 and 2019 is as follows: 2020 2019 Accrued wages, bonuses, commissions and vacation $ 3,867 $ 4,256 Accrued interest 141 254 Accrued contingent consideration — current portion 10,062 10,223 Escrow liabilities 4,363 1,414 Tax receivable agreement liability — current portion — 24 Customer deposits 1,828 1,968 Other current liabilities 3,803 3,421 Accrued expenses and other current liabilities $ 24,064 $ 21,560 |
Summary of Long-term Liabilities | A summary of the Company's long-term liabilities as of September 30, 2020 and 2019 is as follows: 2020 2019 Accrued contingent consideration — long-term portion $ 2,972 $ 8,003 Deferred tax liability — long-term 2,212 516 Other long-term liabilities 956 605 Total other long-term liabilities $ 6,140 $ 9,124 |
Long-Term Debt, Net (Tables)
Long-Term Debt, Net (Tables) | 12 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
Summary of Long-term Debt | A summary of long-term debt, net as of September 30, 2020 and September 30, 2019 is as follows: Maturity 2020 2019 Revolving lines of credit to banks under the Senior Secured Credit Facility May 9, 2024 $ — $ 141,144 1.0% Exchangeable Senior Notes due 2025 February 15, 2025 95,325 — Debt issuance costs, net (4,567) (1,846) Total long-term debt, net of issuance costs $ 90,758 $ 139,298 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Sep. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Schedule of Components of Income Tax Expense | Year ended September 30, 2020 2019 2018 Current: Federal tax (benefit) expense $ (34) $ 220 $ 668 State tax expense 446 189 351 Deferred: Federal tax benefit (3,018) (487) (685) State tax (benefit) expense (189) (99) 3 Income tax (benefit) expense $ (2,795) $ (177) $ 337 |
Schedule of Effective Income Tax Rate Reconciliation | A reconciliation of income tax expense from operations computed at the U.S. federal statutory income tax rate to the Company’s effective income tax rate is as follows: Year ended September 30, 2020 2019 2018 Expected U.S. federal income taxes at statutory rate $ (792) 21.0 % $ 81 21.0 % $ (1,139) 24.6 % Partnership income not taxed at federal level 85 (2.3) % (1,007) (260.9) % 294 (6.4) % Valuation allowance (2,694) 71.4 % 251 65.0 % 965 (20.9) % State and local income taxes, net of federal benefit 244 (6.5) % 104 26.9 % 295 (6.4) % Nondeductible expenses and other permanent items 496 (13.1) % 582 150.8 % 66 (1.4) % Revaluation of debt and other debt transaction differences 222 (5.9) % (189) (49.0) % 332 (7.2) % Federal tax rate change — — % — — % (471) 10.2 % Change in liability for uncertain tax positions 108 (2.9) % — — % — — % Federal tax credits (431) 11.4 % — — % — — % Other (33) 0.9 % 1 0.3 % (5) 0.1 % Income tax (benefit) expense $ (2,795) 74.1 % $ (177) (45.9) % $ 337 (7.3) % |
Schedule of Deferred Tax Assets and Liabilities | Net deferred taxes spanning multiple jurisdictions as of September 30, 2020 and 2019 were as follows: September 30, 2020 2019 Deferred tax assets: Investment in partnership $ 47,897 $ 40,880 Stock-based compensation 1187 811 Deferred revenue 525 564 Accrued expenses 181 110 Net operating loss carryforwards 10,969 6,360 Section 163j carryforward 2,498 2,006 Federal tax credits 901 — Other 73 42 Gross deferred tax assets 64,231 50,773 Valuation allowance (20,230) (16,609) Deferred tax liabilities: Intangible assets $ (9,167) $ (6,257) Other (291) (285) Net deferred tax asset $ 34,543 $ 27,622 |
Summary of Components of Uncertain Tax Positions | The components of the Company’s liability for uncertain tax benefits are as follows: Gross unrecognized tax benefits as of September 30, 2019 $ — Increase in current year tax positions 108 Increase in prior year tax positions 76 Gross unrecognized tax benefits as of September 30, 2020 $ 184 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Sep. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Changes in Level 3 Financial Instruments Measured on a Recurring Basis | The following tables present the changes in the Company's Level 3 financial instruments that are measured at fair value on a recurring basis. Accrued Contingent Consideration Balance at September 30, 2018 $ 5,999 Contingent consideration accrued at time of business combination 13,032 Change in fair value of contingent consideration included in Operating expenses 3,389 Contingent consideration paid (4,194) Balance at September 30, 2019 $ 18,226 Contingent consideration accrued at time of business combination 4,748 Change in fair value of contingent consideration included in Operating expenses (1,409) Contingent consideration paid (8,531) Balance at September 30, 2020 $ 13,034 |
Equity-Based Compensation (Tabl
Equity-Based Compensation (Tables) | 12 Months Ended |
Sep. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Summary of Equity-Based Compensation Expense | A summary of equity-based compensation expense recognized during the years ended September 30, 2020, 2019 and 2018 is as follows: Year ended September 30, 2020 2019 2018 TRA non-participation compensatory shares $ — $ — $ 741 Stock options 10,452 6,124 826 Equity-based compensation expense $ 10,452 $ 6,124 $ 1,567 |
Fair Value of Stock Option Awards | The fair value of stock option awards during the years ended September 30, 2020, and 2019, and from June 20, 2018 through September 30, 2018 was determined on the grant date using the Black-Scholes valuation model based on the following weighted-average assumptions: September 30, 2020 September 30, 2019 Expected volatility (1) 28.5 % 26.7 % Expected dividend yield (2) — % — % Expected term (3) 6 years 6 years Risk-free interest rate (4) 1.2 % 2.5 % _________________ 1. Expected volatility is based on the historical volatility of a selected peer group over a period equivalent to the expected term. 2. The Company has assumed a dividend yield of zero as management has no plans to declare dividends in the foreseeable future. 3. Expected term represents the estimated period of time until an award is exercised and was determined using the simplified method as details of employee exercise behavior are limited due to limited historical data. 4. The risk-free rate is an interpolation of yields on U.S. Treasury securities with maturities equivalent to the expected term. |
Summary of Stock Option Activity | A summary of stock option activity for the year ended September 30, 2020 is as follows: Stock Options Weighted Average Exercise Price Outstanding at beginning of period 4,240,695 $ 18.33 Granted 1,438,900 30.37 Exercised (331,141) 15.85 Forfeited (137,888) 21.56 Outstanding at end of period 5,210,566 $ 21.73 |
Stockholders' _ Members' Equi_2
Stockholders' / Members' Equity and Redeemable Class A Units (Tables) | 12 Months Ended |
Sep. 30, 2020 | |
Equity [Abstract] | |
Schedule of Warrants | Warrants Expiration Exercise Price Junior Subordinated Notes Warrants 1,433,920 February 14, 2024 $ 2.095 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Sep. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Approximate Future Minimum Rental Payments for Operating Leases | A summary of approximate future minimum payments under these leases as of September 30, 2020 is as follows: Years ending September 30: 2021 $ 2,726 2022 2,397 2023 2,096 2024 1,469 2025 968 Thereafter 1,221 Total $ 10,877 |
Minimum Fee Commitments | As of September 30, 2020, such minimum fee commitments were as follows: Years ending September 30: 2021 $ 3,334 2022 2,818 2023 2,645 2024 450 2025 — Thereafter — Total $ 9,247 |
Segments (Tables)
Segments (Tables) | 12 Months Ended |
Sep. 30, 2020 | |
Segment Reporting [Abstract] | |
Summary of Reportable Segment Performance | The Company primarily uses processing margin to measure operating performance. The following is a summary of reportable segment operating performance for the years ended September 30, 2020, 2019 and 2018. As of and for the Year ended September 30, 2020 Merchant Services Proprietary Software and Payments Other Total Revenue $ 100,949 $ 50,953 $ (1,768) $ 150,134 Operating expenses Other costs of services 43,940 5,057 (1,767) 47,230 Selling general and administrative 26,376 28,187 23,760 78,323 Depreciation and amortization 11,796 5,723 698 18,217 Change in fair value of contingent consideration (4,691) 3,282 — (1,409) Income (loss) from operations $ 23,528 $ 8,704 $ (24,459) $ 7,773 Processing margin (1) $ 78,627 $ 46,483 $ (1,758) $ 123,352 Total assets $ 206,769 $ 139,107 $ 57,650 $ 403,526 Goodwill $ 115,982 $ 71,023 $ — $ 187,005 __________________________ 1. Processing margin is equal to revenue less other costs of services. $21,618, $587 and $(1,757) of residual expense, a component of other costs of services, are added back to the Merchant Services segment, Proprietary Software and Payments segment, and Other category, respectively. As of and for the Year ended September 30, 2019 Merchant Services Proprietary Software and Payments Other Total Revenue $ 338,968 $ 37,339 $ — $ 376,307 Operating expenses Interchange and network fees 236,170 6,697 — 242,867 Other costs of services 41,487 2,750 — 44,237 Selling general and administrative 27,275 17,059 18,526 62,860 Depreciation and amortization 12,221 3,790 553 16,564 Change in fair value of contingent consideration (477) 3,866 — 3,389 Income (loss) from operations $ 22,292 $ 3,177 $ (19,079) $ 6,390 Processing margin (1) $ 78,369 $ 28,497 $ — $ 106,866 Total assets $ 216,420 $ 99,420 $ 33,462 $ 349,302 Goodwill $ 117,334 $ 50,950 $ — $ 168,284 __________________________ 1. Processing margin is equal to revenue less interchange and network fees, less other costs of services. $17,058, $605 and $0 of residual expense, a component of other costs of services, are added back to the Merchant Services segment, Proprietary Software and Payments segment, and Other category, respectively. As of and for the Year ended September 30, 2018 Merchant Services Proprietary Software and Payments Other Total Revenue $ 303,692 $ 19,819 $ (3) $ 323,508 Operating expenses Interchange and network fees 209,705 4,838 — 214,543 Other costs of services 38,563 1,752 (1) 40,314 Selling general and administrative 23,716 7,177 9,692 40,585 Depreciation and amortization 9,736 1,896 207 11,839 Change in fair value of contingent consideration 2,103 1,763 — 3,866 Income (loss) from operations $ 19,869 $ 2,393 $ (9,901) $ 12,361 Processing margin (1) $ 69,449 $ 13,733 $ (2) $ 83,180 Total assets $ 143,792 $ 26,524 $ 4,826 $ 175,142 Goodwill $ 70,936 $ 13,018 $ — $ 83,954 __________________________ 1. Processing margin is equal to revenue less interchange and network fees, less other costs of services. $14,025, $504 and $0 of residual expense, a component of other costs of services, are added back to the Merchant Services segment, Proprietary Software and Payments segment, and Other category, respectively. |
Noncontrolling Interest (Tables
Noncontrolling Interest (Tables) | 12 Months Ended |
Sep. 30, 2020 | |
Noncontrolling Interest [Abstract] | |
Summary of Ownership Interest | The following table summarizes the impact on equity due to changes in the Company's ownership interest in i3 Verticals, LLC: Year ended September 30, 2020 2019 2018 Net (loss) income attributable to non-controlling interest $ (560) $ 3,608 $ 1,937 Transfers to (from) non-controlling interests: Allocation of equity to non-controlling interests arising from the reorganization transactions and IPO — — 70,960 Distributions to non-controlling interest holders (3) (2,060) — Redemption of common units in i3 Verticals, LLC (5,080) (12,077) — Adjustment related to prior periods 2,730 — — Cumulative effect of adoption of new accounting standard 640 — — Allocation of equity to non-controlling interests 24,495 — — Net transfers to (from) non-controlling interests 22,782 (14,137) 70,960 Change from net income attributable to non-controlling interests and transfers to (from) non-controlling interests $ 22,222 $ (10,529) $ 72,897 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 12 Months Ended |
Sep. 30, 2020 | |
Earnings Per Share [Abstract] | |
Schedule of Reconciliations of the Numerators and Denominators Used to Compute Basic and Diluted Earnings Per Share | The following table sets forth reconciliations of the numerators and denominators used to compute basic and diluted earnings per share of Class A common stock: Year ended September 30, 2020 2019 2018 Basic net (loss) income per share: Numerator Net (loss) income (1) $ (979) $ 563 $ 2,673 Less: Net (loss) income attributable to non-controlling interests (560) 3,608 1,937 Net (loss) income attributable to Class A common stockholders $ (419) $ (3,045) $ 736 Denominator Weighted average shares of Class A common stock outstanding (2) 14,833,378 10,490,981 8,812,630 Basic net (loss) income per share (3) $ (0.03) $ (0.29) $ 0.08 Dilutive net (loss) income per share (3) : Numerator Net (loss) income attributable to Class A common stockholders $ (419) $ 736 Reallocation of net (loss) income assuming conversion of common units (5) (422) 1,464 Net (loss) income attributable to Class A common stockholders - diluted $ (841) $ 2,200 Denominator Weighted average shares of Class A common stock outstanding (2)(4) 14,833,378 8,812,630 Weighted average effect of dilutive securities 12,596,423 18,061,248 Weighted average shares of Class A common stock outstanding - diluted 27,429,801 26,873,878 Diluted net (loss) income per share $ (0.03) $ 0.08 ____________________ 1. Basic and diluted earnings per Class A common stock is presented only for the period after the Company’s Reorganization Transactions. As such, net income used in the calculation for the year ended September 30, 2018 represents the net income attributable to Class A common stockholders for the period from June 25, 2018 through September 30, 2018. 2. Excludes 204,969, 282,801 and 299,412 shares of restricted Class A common stock for the years ended September 30, 2020, 2019 and 2018, respectively. 3. For the year ended September 30, 2019, all potentially dilutive securities were anti-dilutive, so diluted net loss per share was equivalent to basic net loss per share. The following securities were excluded from the weighted average effect of dilutive securities in the computation of diluted earnings per share of Class A common stock: a. 15,856,855 shares of weighted average Class B common stock for the year ended September 30, 2019, along with the reallocation of net income assuming conversion of these shares, were excluded because the effect would have been anti-dilutive, b. 626,500 options to purchase shares of Class A common stock for the year ended September 30, 2019, were excluded because the exercise price of these options exceeded the average market price of our Class A common stock during the period (“out-of-the-money”) and the effect of including them would have been anti-dilutive, and c. 1,009,858 shares of Class A common stock for the year ended September 30, 2019, resulting from estimated stock option exercises as calculated by the treasury stock method, and 282,801 shares of restricted Class A common stock for the year ended September 30, 2019 were excluded because the effect of including them would have been anti-dilutive. 4. For the year ended September 30, 2020, the following securities were excluded from the weighted average effect of dilutive securities in the computation of diluted earnings per share of Class A common stock: a. 1,327,500 options to purchase shares of Class A common stock for the year ended September 30, 2020, were excluded because the exercise price of these options exceeded the average market price of our Class A common stock during the period (“out-of-the-money”) and the effect of including them would have been anti-dilutive, and b. 1,179,538 shares of Class A common stock for the year ended September 30, 2020, resulting from estimated stock option exercises as calculated by the treasury stock method, and 204,969 shares of restricted Class A common stock for the year ended September 30, 2020 were excluded because the effect of including them would have been anti-dilutive. 5. The reallocation of net income assuming conversion of common units represents the tax effected net income attributable to non-controlling interest using the effective income tax rates described in Note 10 above and assuming all common units of i3 Verticals, LLC were exchanged for Class A common stock at the beginning of the year. The common units of i3 Verticals, LLC held by the Continuing Equity Owners are potentially dilutive securities, and the computations of pro forma diluted net income per share assume that all common units of i3 Verticals, LLC were exchanged for shares of Class A common stock at the beginning of the year. |
Significant Non-cash Transact_2
Significant Non-cash Transactions (Tables) | 12 Months Ended |
Sep. 30, 2020 | |
Cash Flow, Noncash Investing and Financing Activities Disclosure [Abstract] | |
Schedule of Significant Noncash Transactions | The Company engaged in the following significant non-cash investing and financing activities during the years ended September 30, 2020, 2019, and 2018: Year ended September 30, 2020 2019 2018 Common Units issued as part of acquisitions' purchase consideration (Note 4) $ — $ — $ 104 Restricted Class A common stock issued as part of acquisitions' purchase consideration (Note 4) $ — $ 225 $ 550 Acquisition date fair value of contingent consideration in connection with business combinations $ 4,748 $ 13,032 $ 2,084 Replacement of the 2016 Senior Secured Credit Facility with the 2017 Senior Secured Credit Facility $ — $ — $ 87,525 Replacement of the 2017 Senior Secured Credit Facility with the Senior Secured Credit Facility $ — $ 100,229 $ — Mezzanine Notes net settled with Mezzanine Warrant exercises $ — $ — $ 14 Unsecured notes payable to related and unrelated creditors net settled with Junior Subordinated Notes Warrants $ — $ — $ 2,565 Settlement of warrant liability with equity as a result of Mezzanine Warrant exercise $ — $ — $ 9,253 Preferred return on Redeemable Class A Units $ — $ — $ 552 Preferred return on Class A Units $ — $ — $ 2,522 Debt issuance costs financed with proceeds from the 2017 Senior Secured Credit Facility $ — $ — $ 904 Debt issuance costs and accrued interest financed with proceeds from the 2019 Senior Secured Credit Facility $ — $ 1,271 $ — Conversion of notes payable to related and unrelated creditors to Class A common stock $ — $ — $ 8,054 |
Quarterly Information (Unaudi_2
Quarterly Information (Unaudited) (Tables) | 12 Months Ended |
Sep. 30, 2020 | |
Quarterly Financial Information Disclosure [Abstract] | |
Quarterly Financial Information | The tables below present summarized unaudited quarterly results of operations for the years ended September 30, 2020 and 2019. Management believes that all necessary adjustments have been included in the amounts stated below for a fair presentation of the results of operations for the periods presented when read in conjunction with the consolidated financial statements for the years ended September 30, 2020 and 2019. Results of operations for a particular quarter are not necessarily indicative of results of operations for an annual period and are not predictive of future periods. Quarter ended December 31, March 31, June 30, September 30, Fiscal Year 2019: Revenue $ 84,868 $ 85,394 $ 97,483 $ 108,562 Income (loss) from operations $ 3,530 $ (203) $ 1,194 $ 1,869 Income (loss) before income taxes $ 2,616 $ (1,358) $ (724) $ (148) Net income (loss) attributable to i3 Verticals, Inc. $ 178 $ (1,102) $ (1,191) $ (930) Basic earnings (loss) per share attributable to i3 Verticals, Inc. (1) $ 0.02 $ (0.12) $ (0.12) $ (0.07) Diluted earnings (loss) per share attributable to i3 Verticals, Inc. (2)(4) $ 0.02 $ (0.12) $ (0.12) $ (0.07) Fiscal Year 2020: Revenue $ 41,111 $ 39,178 $ 31,573 $ 38,272 Income from operations $ 4,097 $ 2,041 $ 437 $ 1,198 Income (loss) before income taxes $ 2,083 $ (143) $ (2,815) $ (2,899) Net (loss) income attributable to i3 Verticals, Inc. $ (149) $ 737 $ (356) $ (651) Basic (loss) earnings per share attributable to i3 Verticals, Inc. (1) $ (0.01) $ 0.05 $ (0.02) $ (0.04) Diluted (loss) earnings per share attributable to i3 Verticals, Inc. (3)(4) $ (0.01) $ 0.05 $ (0.02) $ (0.06) ____________________ 1. Basic (loss) earnings per share excludes 295,405, 277,758, 285,433 and 271,881 shares of restricted Class A common stock from the calculation for the quarters ended December 31, 2018, March 31, 2019, June 30, 2019, and September 30, 2019, respectively, and 232,828, 215,564, 193,709 and 94,577 shares of restricted Class A common stock from the calculation for the quarters ended December 31, 2019, March 31, 2020, June 30, 2020, and September 30, 2020, respectively. 2. For the quarters ended December 31, 2018, and March 31, June 30, and September 30, 2019, the following securities were excluded from the weighted average effect of dilutive securities in the computation of diluted earnings per share of Class A common stock: a. 17,213,806, 17,112,164, 16,184,026 and 12,921,637 shares of weighted average Class B common stock for the quarters ended December 31, 2018, and March 31, June 30, and September 30, 2019, respectively, along with the reallocation of net income assuming conversion of these shares, were excluded from the calculation of diluted earnings per share of Class A common stock because the effect would have been anti-dilutive, b. 754,750, 30,500, 443,000 and 446,000 options to purchase shares of Class A common stock for the quarters ended December 31, 2018, and March 31, June 30, and September 30, 2019, respectively, were excluded because the exercise price of these options exceeded the average market price of our Class A common stock during the period (“out-of-the-money”) and the effect of including them would have been anti-dilutive, and c. 1,012,916, 1,188,987 and 1,131,760 shares of Class A common stock for the quarters ended March 31, June 30, and September 30, 2019, respectively, resulting from estimated stock option exercises as calculated by the treasury stock method, and 277,758, 285,433 and 271,881 shares of restricted Class A common stock for the quarters ended March 31, June 30, and September 30, 2019, respectively, were excluded because the effect of including them would have been anti-dilutive. 3. For the quarters ended December 31, 2019, and March 31, June 30, and September 30, 2020, the following securities were excluded from the weighted average effect of dilutive securities in the computation of diluted earnings per share of Class A common stock: a. 12,921,637, 12,769,568 and 12,404,368 shares of weighted average Class B common stock for the quarters ended December 31, 2019, and March 31, and June 30, 2020, respectively, along with the reallocation of net income assuming conversion of these shares, were excluded from the calculation of diluted earnings per share of Class A common stock because the effect would have been anti-dilutive, b. 689,500, 959,000, 1,498,000 and 1,297,500 options to purchase shares of Class A common stock for the quarters ended December 31, 2019, and March 31, June 30, and September 30, 2020, respectively, were excluded because the exercise price of these options exceeded the average market price of our Class A common stock during the period (“out-of-the-money”) and the effect of including them would have been anti-dilutive, and c. 976,594, 1,127,509 and 1,225,697 shares of Class A common stock for the quarters ended December 31, 2019, and June 30, and September 30, 2020, respectively, resulting from estimated stock option exercises as calculated by the treasury stock method, and 232,828, 193,709 and 94,577 shares of restricted Class A common stock for the quarters ended December 31, 2019, and June 30, and September 30, 2020, respectively, were excluded because the effect of including them would have been anti-dilutive. 4. The reallocation of net income assuming conversion of common units represents the tax effected net income attributable to non-controlling interest using the effective income tax rates described in Note 10 above and assuming all common units of i3 Verticals, LLC were exchanged for Class A common stock at the beginning of the year. The common units of i3 Verticals, LLC held by the Continuing Equity Owners are potentially dilutive securities, and the computations of pro forma diluted net income per share assume that all common units of i3 Verticals, LLC were exchanged for shares of Class A common stock at the beginning of the year. |
Organization and Operations (De
Organization and Operations (Details) - USD ($) $ / shares in Units, $ in Thousands | Sep. 15, 2020 | Jun. 10, 2019 | Jun. 25, 2018 | Sep. 30, 2020 | Sep. 30, 2019 |
i3Verticals, LLC | |||||
Subsidiary, Sale of Stock [Line Items] | |||||
Non-controlling interest, ownership interest (percent) | 61.30% | 52.80% | |||
Continuing Equity Owner | |||||
Subsidiary, Sale of Stock [Line Items] | |||||
Shareholders ownership interest (percent) | 39.20% | ||||
Class A Common Stock | Continuing Equity Owner | |||||
Subsidiary, Sale of Stock [Line Items] | |||||
Shareholders ownership interest (percent) | 0.50% | ||||
Class B Common Stock | Continuing Equity Owner | |||||
Subsidiary, Sale of Stock [Line Items] | |||||
Shareholders ownership interest (percent) | 38.70% | ||||
IPO | |||||
Subsidiary, Sale of Stock [Line Items] | |||||
Shares issued (shares) | 7,647,500 | ||||
Public offering price (in USD per share) | $ 13 | ||||
Net proceeds from IPO | $ 92,500 | ||||
Secondary Public Offering | i3Verticals, LLC | |||||
Subsidiary, Sale of Stock [Line Items] | |||||
Net proceeds from IPO | $ 20,870 | ||||
Common units, purchased (in units) | 1,000,000 | ||||
Secondary Public Offering | Continuing Equity Owner | |||||
Subsidiary, Sale of Stock [Line Items] | |||||
Common units, purchased (in units) | 4,165,527 | ||||
Secondary Public Offering | Class A Common Stock | |||||
Subsidiary, Sale of Stock [Line Items] | |||||
Shares issued (shares) | 5,165,527 | ||||
Public offering price (in USD per share) | $ 22.75 | ||||
Net proceeds from IPO | $ 111,640 | ||||
Underwriters exercised option to purchase additional shares (shares) | 673,764 | ||||
Primary Public Offering | i3Verticals, LLC | |||||
Subsidiary, Sale of Stock [Line Items] | |||||
Net proceeds from IPO | $ 72,018 | ||||
Common units, purchased (in units) | 3,250,000 | ||||
Primary Public Offering | Continuing Equity Owner | |||||
Subsidiary, Sale of Stock [Line Items] | |||||
Common units, purchased (in units) | 487,500 | ||||
Primary Public Offering | Class A Common Stock | |||||
Subsidiary, Sale of Stock [Line Items] | |||||
Shares issued (shares) | 3,737,500 | ||||
Public offering price (in USD per share) | $ 23.50 | ||||
Net proceeds from IPO | $ 83,400 | ||||
Underwriters exercised option to purchase additional shares (shares) | 487,500 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) | Oct. 01, 2020USD ($) | Sep. 30, 2020USD ($)reportable_unit | Sep. 30, 2019USD ($) | Sep. 30, 2018USD ($) | Oct. 01, 2019USD ($) | ||
Concentration Risk [Line Items] | |||||||
Allowance for doubtful accounts | $ 310,000 | $ 232,000 | |||||
Inventories | 1,309,000 | 1,294,000 | |||||
Impairment charges | $ 0 | 0 | $ 0 | ||||
Estimated useful life | 3 years | ||||||
Notes receivable, fair value disclosure | $ 1,195,000 | 195,000 | |||||
Revenue from acquisitions | 1,275,000 | ||||||
Net income | 327,000 | ||||||
Goodwill impairment | $ 0 | 0 | 0 | ||||
Number of reporting units | reportable_unit | 5 | ||||||
Amortization expense of intangible assets | $ 12,414,000 | 12,394,000 | 9,341,000 | ||||
Impairment of intangible assets, excluding goodwill | 0 | 0 | 0 | ||||
Capitalized contract cost, gross | 3,140,000 | ||||||
Advertising expense | 1,813,000 | 1,443,000 | 926,000 | ||||
Equity-based compensation expense | 10,452,000 | 6,124,000 | 1,567,000 | ||||
Benefit from income taxes | $ 2,795,000 | 177,000 | (337,000) | ||||
Accounting Standards Update [Extensible List] | us-gaap:AccountingStandardsUpdate201409Member | ||||||
Cumulative increase to equity | $ 240,168,000 | 142,441,000 | 112,198,000 | ||||
Accumulated earnings | (2,023,000) | (2,309,000) | |||||
Non-controlling interest | 84,590,000 | 62,368,000 | |||||
Interchange and network fees | 0 | 242,867,000 | [1] | 214,543,000 | [1] | ||
Subsequent Event | |||||||
Concentration Risk [Line Items] | |||||||
Accounting Standards Update [Extensible List] | us-gaap:AccountingStandardsUpdate201602Member | ||||||
Presentation without adoption of ASC 606 | |||||||
Concentration Risk [Line Items] | |||||||
Accumulated earnings | (2,895,000) | ||||||
Non-controlling interest | 83,846,000 | ||||||
Interchange and network fees | 244,097,000 | ||||||
Operating Expense | |||||||
Concentration Risk [Line Items] | |||||||
Interchange and network fees | 242,867,000 | $ 214,543,000 | |||||
Cumulative Effect, Period of Adoption, Adjustment | |||||||
Concentration Risk [Line Items] | |||||||
Cumulative increase to equity | 1,345,000 | ||||||
Accumulated earnings | $ 705,000 | ||||||
Non-controlling interest | $ 640,000 | ||||||
Cumulative Effect, Period of Adoption, Adjustment | Subsequent Event | Forecast | |||||||
Concentration Risk [Line Items] | |||||||
Right-of-Use asset | $ 9,093,000 | ||||||
Lease liability | $ 9,760,000 | ||||||
Class B Common Stock | |||||||
Concentration Risk [Line Items] | |||||||
Reduction in the benefit from income taxes | 235,000 | ||||||
Increase to net loss | 3,728,000 | ||||||
Reduction in company's net loss | 3,493,000 | ||||||
Intangible Assets, Amortization Period | |||||||
Concentration Risk [Line Items] | |||||||
Amortization expense of intangible assets | 398,000 | $ 1,290,000 | |||||
Change in Accounting Method Accounted for as Change in Estimate | |||||||
Concentration Risk [Line Items] | |||||||
Change in valuation allowance for deferred tax assets | 2,668,000 | ||||||
Benefit from income taxes | $ (2,668,000) | ||||||
[1] | Effective October 1, 2019, the Company's revenues are presented net of interchange and network fees in accordance with Accounting Standards Codification Topic 606, Revenue from Contracts with Customers . See Note 2 to our consolidated financial statements for a description of the recently adopted accounting pronouncement. |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Disaggregated Revenue (Details) $ in Thousands | 12 Months Ended |
Sep. 30, 2020USD ($) | |
Concentration Risk [Line Items] | |
Revenue | $ 150,134 |
Revenue earned over time | |
Concentration Risk [Line Items] | |
Revenue | 106,279 |
Revenue earned at a point in time | |
Concentration Risk [Line Items] | |
Revenue | 43,855 |
Merchant Services | |
Concentration Risk [Line Items] | |
Revenue | 100,949 |
Merchant Services | Revenue earned over time | |
Concentration Risk [Line Items] | |
Revenue | 72,800 |
Merchant Services | Revenue earned at a point in time | |
Concentration Risk [Line Items] | |
Revenue | 28,149 |
Proprietary Software and Payments | |
Concentration Risk [Line Items] | |
Revenue | 50,953 |
Proprietary Software and Payments | Revenue earned over time | |
Concentration Risk [Line Items] | |
Revenue | 35,222 |
Proprietary Software and Payments | Revenue earned at a point in time | |
Concentration Risk [Line Items] | |
Revenue | 15,731 |
Other | |
Concentration Risk [Line Items] | |
Revenue | (1,768) |
Other | Revenue earned over time | |
Concentration Risk [Line Items] | |
Revenue | (1,743) |
Other | Revenue earned at a point in time | |
Concentration Risk [Line Items] | |
Revenue | (25) |
Payments revenue | |
Concentration Risk [Line Items] | |
Revenue | 100,515 |
Payments revenue | Merchant Services | |
Concentration Risk [Line Items] | |
Revenue | 82,913 |
Payments revenue | Proprietary Software and Payments | |
Concentration Risk [Line Items] | |
Revenue | 19,359 |
Payments revenue | Other | |
Concentration Risk [Line Items] | |
Revenue | (1,757) |
Other revenue | |
Concentration Risk [Line Items] | |
Revenue | 49,619 |
Other revenue | Merchant Services | |
Concentration Risk [Line Items] | |
Revenue | 18,036 |
Other revenue | Proprietary Software and Payments | |
Concentration Risk [Line Items] | |
Revenue | 31,594 |
Other revenue | Other | |
Concentration Risk [Line Items] | |
Revenue | $ (11) |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Changes in Deferred Revenue (Details) $ in Thousands | 12 Months Ended |
Sep. 30, 2020USD ($) | |
Contract with customer, Liability [Roll Forward] | |
Deferred revenue, beginning | $ 10,237 |
Deferral of revenue | 22,963 |
Recognition of unearned revenue | (22,146) |
Deferred revenue, ending | $ 11,054 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Impact of Adoption of ASC 606 (Details) - USD ($) $ in Thousands | 12 Months Ended | ||||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2018 | [1] | ||
Concentration Risk [Line Items] | |||||
Revenue | $ 150,134 | ||||
Operating expenses | |||||
Interchange and network fees | 0 | $ 242,867 | [1] | $ 214,543 | |
Current assets | |||||
Prepaid expenses and other current assets | 4,869 | ||||
Deferred tax asset | 36,755 | 28,138 | |||
Other assets | 5,197 | 2,329 | |||
Liabilities and equity | |||||
Accumulated deficit | (2,023) | (2,309) | |||
Non-controlling interest | 84,590 | $ 62,368 | |||
Presentation without adoption of ASC 606 | |||||
Concentration Risk [Line Items] | |||||
Revenue | 394,231 | ||||
Operating expenses | |||||
Interchange and network fees | 244,097 | ||||
Current assets | |||||
Prepaid expenses and other current assets | 5,173 | ||||
Deferred tax asset | 36,767 | ||||
Other assets | 3,265 | ||||
Liabilities and equity | |||||
Accumulated deficit | (2,895) | ||||
Non-controlling interest | 83,846 | ||||
Accounting Standards Update 2014-09 | Adjustment | |||||
Concentration Risk [Line Items] | |||||
Revenue | 244,097 | ||||
Operating expenses | |||||
Interchange and network fees | 244,097 | ||||
Current assets | |||||
Prepaid expenses and other current assets | 304 | ||||
Deferred tax asset | 12 | ||||
Other assets | (1,932) | ||||
Liabilities and equity | |||||
Accumulated deficit | (872) | ||||
Non-controlling interest | $ (744) | ||||
[1] | Effective October 1, 2019, the Company's revenues are presented net of interchange and network fees in accordance with Accounting Standards Codification Topic 606, Revenue from Contracts with Customers . See Note 2 to our consolidated financial statements for a description of the recently adopted accounting pronouncement. |
Credit Risk and Other Concent_2
Credit Risk and Other Concentrations (Details) | 12 Months Ended | ||
Sep. 30, 2020payment_processorcustomer | Sep. 30, 2019customerpayment_processor | Sep. 30, 2018payment_processorcustomer | |
Concentration Risk [Line Items] | |||
Number of third party payment processors | 6 | ||
Gross Revenue | Customer Concentration Risk | |||
Concentration Risk [Line Items] | |||
Number of customers | customer | 0 | 0 | 0 |
Concentration risk (percent) | 10.00% | 10.00% | 10.00% |
Gross Revenue | Supplier Concentration Risk | |||
Concentration Risk [Line Items] | |||
Number of third party payment processors | 3 | 3 | 3 |
Concentration risk (percent) | 10.00% | 10.00% | 10.00% |
Acquisitions - Additional Infor
Acquisitions - Additional Information (Details) - USD ($) | 12 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2018 | |
Finite-Lived Intangible Assets [Line Items] | |||
Estimated amortization period | 10 years | ||
Residual buyouts | |||
Finite-Lived Intangible Assets [Line Items] | |||
Intangible assets acquired | $ 1,788,000 | $ 3,585,000 | $ 1,567,000 |
Estimated amortization period | 8 years | 7 years | 2 years |
Referral agreement | |||
Finite-Lived Intangible Assets [Line Items] | |||
Intangible assets acquired | $ 0 | $ 0 | $ 815,000 |
Estimated amortization period | 5 years |
Acquisitions - Schedule of Prel
Acquisitions - Schedule of Preliminary Purchase Consideration of the Acquired Assets and Assumed Liabilities (Details) $ in Thousands | May 31, 2019USD ($) | Oct. 31, 2017USD ($) | Sep. 30, 2020USD ($)payment_processor | Sep. 30, 2019USD ($) | Sep. 30, 2018USD ($) |
Business Acquisition [Line Items] | |||||
Common units issued to seller | $ 0 | $ 0 | $ 104 | ||
Estimated amortization period | 10 years | ||||
Acquisition-related costs | 1,179 | ||||
Goodwill | 187,005 | 168,284 | $ 83,954 | ||
2018 Business Combinations | |||||
Business Acquisition [Line Items] | |||||
Cash and cash equivalents | 1,338 | ||||
Accounts receivable | 1,008 | ||||
Settlement assets | 350 | ||||
Related party receivable | 773 | ||||
Inventories | 1,318 | ||||
Prepaid expenses and other current assets | 1,184 | ||||
Property and equipment | 127 | ||||
Goodwill | 25,437 | ||||
Other assets | 4 | ||||
Total assets acquired | 45,459 | ||||
Accounts payable | 1,342 | ||||
Accrued expenses and other current liabilities | 3,554 | ||||
Settlement obligations | 350 | ||||
Deferred revenue, current | 2,219 | ||||
Other long-term liabilities | 1,757 | ||||
Net assets acquired | 36,237 | ||||
San Diego Cash Register Company, Inc. | |||||
Business Acquisition [Line Items] | |||||
Total purchase consideration | $ 20,834 | ||||
Proceeds from issuance of long-term debt used to fund the acquisition | 20,000 | ||||
Contingent cash consideration | $ 730 | ||||
Estimated amortization period | 11 years | ||||
Acquisition-related costs | $ 293 | ||||
Potential additional consideration | 2,400 | ||||
Cash and cash equivalents | 1,338 | ||||
Accounts receivable | 1,008 | ||||
Settlement assets | 0 | ||||
Related party receivable | 773 | ||||
Inventories | 1,318 | ||||
Prepaid expenses and other current assets | 1,176 | ||||
Property and equipment | 69 | ||||
Goodwill | 16,523 | ||||
Other assets | 0 | ||||
Total assets acquired | 29,085 | ||||
Accounts payable | 1,342 | ||||
Accrued expenses and other current liabilities | 3,123 | ||||
Settlement obligations | 0 | ||||
Deferred revenue, current | 2,029 | ||||
Other long-term liabilities | 1,757 | ||||
Net assets acquired | 20,834 | ||||
Other 2018 Business Combinations | |||||
Business Acquisition [Line Items] | |||||
Total purchase consideration | 15,604 | ||||
Common units issued to seller | 550 | ||||
Proceeds from issuance of long-term debt used to fund the acquisition | 13,700 | ||||
Contingent cash consideration | $ 1,354 | ||||
Estimated amortization period | 12 years | ||||
Acquisition-related costs | $ 233 | ||||
Potential additional consideration | 11,800 | ||||
Cash and cash equivalents | 0 | ||||
Accounts receivable | 0 | ||||
Settlement assets | 350 | ||||
Related party receivable | 0 | ||||
Inventories | 0 | ||||
Prepaid expenses and other current assets | 8 | ||||
Property and equipment | 58 | ||||
Goodwill | 8,914 | ||||
Other assets | 4 | ||||
Total assets acquired | 16,374 | ||||
Accounts payable | 0 | ||||
Accrued expenses and other current liabilities | 431 | ||||
Settlement obligations | 350 | ||||
Deferred revenue, current | 190 | ||||
Other long-term liabilities | 0 | ||||
Net assets acquired | 15,403 | ||||
2019 Business Combinations | |||||
Business Acquisition [Line Items] | |||||
Adjustment to current assets | 153 | ||||
Adjustment to other assets | 933 | ||||
Adjustment to liabilities | (258) | ||||
Adjustment to goodwill | (1,227) | ||||
Cash and cash equivalents | 4,561 | ||||
Accounts receivable | 5,452 | ||||
Settlement assets | 18 | ||||
Inventories | 106 | ||||
Prepaid expenses and other current assets | 542 | ||||
Property and equipment | 2,456 | ||||
Goodwill | 83,072 | ||||
Other assets | 2,624 | ||||
Total assets acquired | 161,801 | ||||
Accounts payable | 1,091 | ||||
Accrued expenses and other current liabilities | 2,340 | ||||
Settlement obligations | 18 | ||||
Deferred revenue, current | 2,722 | ||||
Other long-term liabilities | 690 | ||||
Net assets acquired | 154,940 | ||||
Pace Payment Systems, Inc. | |||||
Business Acquisition [Line Items] | |||||
Common units issued to seller | $ 56,053 | ||||
Proceeds from issuance of long-term debt used to fund the acquisition | 52,492 | ||||
Contingent cash consideration | $ 3,336 | ||||
Estimated amortization period | 15 years | ||||
Acquisition-related costs | $ 507 | 444 | |||
Potential additional consideration | 20,000 | ||||
Cash and cash equivalents | 108 | ||||
Accounts receivable | 545 | ||||
Settlement assets | 0 | ||||
Inventories | 45 | ||||
Prepaid expenses and other current assets | 59 | ||||
Property and equipment | 527 | ||||
Goodwill | 35,589 | ||||
Other assets | 2,622 | ||||
Total assets acquired | 56,855 | ||||
Accounts payable | 722 | ||||
Accrued expenses and other current liabilities | 56 | ||||
Settlement obligations | 0 | ||||
Deferred revenue, current | 24 | ||||
Other long-term liabilities | 0 | ||||
Net assets acquired | 56,053 | ||||
Other 2019 Business Combinations | |||||
Business Acquisition [Line Items] | |||||
Total purchase consideration | 98,887 | ||||
Proceeds from issuance of long-term debt used to fund the acquisition | 89,191 | ||||
Contingent cash consideration | $ 9,696 | ||||
Estimated amortization period | 16 years | ||||
Acquisition-related costs | $ 1,299 | ||||
Potential additional consideration | 34,900 | ||||
Cash and cash equivalents | 4,453 | ||||
Accounts receivable | 4,907 | ||||
Settlement assets | 18 | ||||
Inventories | 61 | ||||
Prepaid expenses and other current assets | 483 | ||||
Property and equipment | 1,929 | ||||
Goodwill | 47,483 | ||||
Other assets | 2 | ||||
Total assets acquired | 104,946 | ||||
Accounts payable | 369 | ||||
Accrued expenses and other current liabilities | 2,284 | ||||
Settlement obligations | 18 | ||||
Deferred revenue, current | 2,698 | ||||
Other long-term liabilities | 690 | ||||
Net assets acquired | 98,887 | ||||
2020 Business Combinations | |||||
Business Acquisition [Line Items] | |||||
Total purchase consideration | 32,633 | ||||
Proceeds from issuance of long-term debt used to fund the acquisition | 27,885 | ||||
Contingent cash consideration | $ 4,748 | ||||
Estimated amortization period | 16 years | ||||
Acquisition-related costs | $ 547 | ||||
Potential additional consideration | $ 18,600 | ||||
Number of businesses acquired | payment_processor | 3 | ||||
Cash and cash equivalents | $ 313 | ||||
Accounts receivable | 709 | ||||
Prepaid expenses and other current assets | 54 | ||||
Property and equipment | 122 | ||||
Goodwill | 19,948 | ||||
Other assets | 17 | ||||
Total assets acquired | 35,423 | ||||
Accounts payable | 168 | ||||
Accrued expenses and other current liabilities | 623 | ||||
Deferred revenue, current | 200 | ||||
Other long-term liabilities | 1,799 | ||||
Net assets acquired | $ 32,633 | ||||
Class A Common Stock | Pace Payment Systems, Inc. | |||||
Business Acquisition [Line Items] | |||||
Common units issued to seller | $ 225 | ||||
i3Verticals, LLC | San Diego Cash Register Company, Inc. | |||||
Business Acquisition [Line Items] | |||||
Common units issued to seller | $ 104 | ||||
Capitalized software | 2018 Business Combinations | |||||
Business Acquisition [Line Items] | |||||
Intangible assets | 200 | ||||
Capitalized software | San Diego Cash Register Company, Inc. | |||||
Business Acquisition [Line Items] | |||||
Intangible assets | 0 | ||||
Capitalized software | Other 2018 Business Combinations | |||||
Business Acquisition [Line Items] | |||||
Intangible assets | 200 | ||||
Capitalized software | 2019 Business Combinations | |||||
Business Acquisition [Line Items] | |||||
Intangible assets | 12,840 | ||||
Capitalized software | Pace Payment Systems, Inc. | |||||
Business Acquisition [Line Items] | |||||
Estimated amortization period | 7 years | ||||
Intangible assets | $ 3,400 | ||||
Capitalized software | Other 2019 Business Combinations | |||||
Business Acquisition [Line Items] | |||||
Estimated amortization period | 6 years | ||||
Intangible assets | $ 9,440 | ||||
Capitalized software | 2020 Business Combinations | |||||
Business Acquisition [Line Items] | |||||
Estimated amortization period | 7 years | ||||
Intangible assets | $ 1,970 | ||||
Acquired merchant relationships | 2018 Business Combinations | |||||
Business Acquisition [Line Items] | |||||
Intangible assets | 10,600 | ||||
Acquired merchant relationships | San Diego Cash Register Company, Inc. | |||||
Business Acquisition [Line Items] | |||||
Estimated amortization period | 12 years | ||||
Intangible assets | 5,500 | ||||
Acquired merchant relationships | Other 2018 Business Combinations | |||||
Business Acquisition [Line Items] | |||||
Intangible assets | 5,100 | ||||
Acquired merchant relationships | 2019 Business Combinations | |||||
Business Acquisition [Line Items] | |||||
Intangible assets | 47,880 | ||||
Acquired merchant relationships | Pace Payment Systems, Inc. | |||||
Business Acquisition [Line Items] | |||||
Estimated amortization period | 15 years | ||||
Intangible assets | 13,400 | ||||
Acquired merchant relationships | Other 2019 Business Combinations | |||||
Business Acquisition [Line Items] | |||||
Intangible assets | 34,480 | ||||
Acquired merchant relationships | 2020 Business Combinations | |||||
Business Acquisition [Line Items] | |||||
Intangible assets | $ 11,900 | ||||
Exclusivity Agreements | 2018 Business Combinations | |||||
Business Acquisition [Line Items] | |||||
Intangible assets | 100 | ||||
Exclusivity Agreements | San Diego Cash Register Company, Inc. | |||||
Business Acquisition [Line Items] | |||||
Intangible assets | 0 | ||||
Exclusivity Agreements | Other 2018 Business Combinations | |||||
Business Acquisition [Line Items] | |||||
Intangible assets | 100 | ||||
Non-compete agreements | 2018 Business Combinations | |||||
Business Acquisition [Line Items] | |||||
Intangible assets | 1,480 | ||||
Non-compete agreements | San Diego Cash Register Company, Inc. | |||||
Business Acquisition [Line Items] | |||||
Estimated amortization period | 2 years | ||||
Intangible assets | $ 40 | ||||
Non-compete agreements | Other 2018 Business Combinations | |||||
Business Acquisition [Line Items] | |||||
Estimated amortization period | 5 years | ||||
Intangible assets | $ 1,440 | ||||
Non-compete agreements | 2019 Business Combinations | |||||
Business Acquisition [Line Items] | |||||
Intangible assets | 210 | ||||
Non-compete agreements | Pace Payment Systems, Inc. | |||||
Business Acquisition [Line Items] | |||||
Estimated amortization period | 3 years | ||||
Intangible assets | $ 60 | ||||
Non-compete agreements | Other 2019 Business Combinations | |||||
Business Acquisition [Line Items] | |||||
Estimated amortization period | 3 years | ||||
Intangible assets | $ 150 | ||||
Non-compete agreements | 2020 Business Combinations | |||||
Business Acquisition [Line Items] | |||||
Estimated amortization period | 3 years | ||||
Intangible assets | $ 90 | ||||
Trade name | 2018 Business Combinations | |||||
Business Acquisition [Line Items] | |||||
Intangible assets | 1,540 | ||||
Trade name | San Diego Cash Register Company, Inc. | |||||
Business Acquisition [Line Items] | |||||
Estimated amortization period | 5 years | ||||
Intangible assets | $ 1,340 | ||||
Trade name | Other 2018 Business Combinations | |||||
Business Acquisition [Line Items] | |||||
Estimated amortization period | 5 years | ||||
Intangible assets | $ 200 | ||||
Trade name | 2019 Business Combinations | |||||
Business Acquisition [Line Items] | |||||
Intangible assets | 2,040 | ||||
Trade name | Pace Payment Systems, Inc. | |||||
Business Acquisition [Line Items] | |||||
Estimated amortization period | 5 years | ||||
Intangible assets | $ 500 | ||||
Trade name | Other 2019 Business Combinations | |||||
Business Acquisition [Line Items] | |||||
Estimated amortization period | 5 years | ||||
Intangible assets | $ 1,540 | ||||
Trade name | 2020 Business Combinations | |||||
Business Acquisition [Line Items] | |||||
Estimated amortization period | 3 years | ||||
Intangible assets | $ 300 | ||||
Minimum | Acquired merchant relationships | Other 2018 Business Combinations | |||||
Business Acquisition [Line Items] | |||||
Estimated amortization period | 12 years | ||||
Minimum | Acquired merchant relationships | Other 2019 Business Combinations | |||||
Business Acquisition [Line Items] | |||||
Estimated amortization period | 13 years | ||||
Minimum | Acquired merchant relationships | 2020 Business Combinations | |||||
Business Acquisition [Line Items] | |||||
Estimated amortization period | 15 years | ||||
Maximum | Acquired merchant relationships | Other 2018 Business Combinations | |||||
Business Acquisition [Line Items] | |||||
Estimated amortization period | 15 years | ||||
Maximum | Acquired merchant relationships | Other 2019 Business Combinations | |||||
Business Acquisition [Line Items] | |||||
Estimated amortization period | 20 years | ||||
Maximum | Acquired merchant relationships | 2020 Business Combinations | |||||
Business Acquisition [Line Items] | |||||
Estimated amortization period | 18 years |
Acquisitions - Pro Forma Inform
Acquisitions - Pro Forma Information (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Business Combinations [Abstract] | ||
Revenue(1) | $ 156,036 | $ 383,546 |
Net (loss) income | $ (1,170) | $ 472 |
Property and Equipment, Net (De
Property and Equipment, Net (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2018 | |
Property, Plant and Equipment [Line Items] | |||
Accumulated depreciation | $ (2,996) | $ (1,944) | |
Property and equipment, net | 5,339 | 5,026 | |
Depreciation expense | 1,825 | 1,195 | $ 802 |
Computer equipment and software | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment | 2,382 | 1,990 | |
Furniture and fixtures | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment | 1,867 | 1,639 | |
Terminals | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment | 584 | 429 | |
Office equipment | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment | 942 | 940 | |
Automobiles | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment | $ 366 | 307 | |
Estimated Useful Life | 3 years | ||
Leasehold improvements | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment | $ 2,194 | 1,665 | |
Computer Software | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment | $ 694 | $ 674 | |
Minimum | Computer equipment and software | |||
Property, Plant and Equipment [Line Items] | |||
Estimated Useful Life | 2 years | ||
Minimum | Furniture and fixtures | |||
Property, Plant and Equipment [Line Items] | |||
Estimated Useful Life | 2 years | ||
Minimum | Terminals | |||
Property, Plant and Equipment [Line Items] | |||
Estimated Useful Life | 2 years | ||
Minimum | Office equipment | |||
Property, Plant and Equipment [Line Items] | |||
Estimated Useful Life | 2 years | ||
Minimum | Leasehold improvements | |||
Property, Plant and Equipment [Line Items] | |||
Estimated Useful Life | 2 years | ||
Maximum | Computer equipment and software | |||
Property, Plant and Equipment [Line Items] | |||
Estimated Useful Life | 7 years | ||
Maximum | Furniture and fixtures | |||
Property, Plant and Equipment [Line Items] | |||
Estimated Useful Life | 7 years | ||
Maximum | Terminals | |||
Property, Plant and Equipment [Line Items] | |||
Estimated Useful Life | 3 years | ||
Maximum | Office equipment | |||
Property, Plant and Equipment [Line Items] | |||
Estimated Useful Life | 5 years | ||
Maximum | Leasehold improvements | |||
Property, Plant and Equipment [Line Items] | |||
Estimated Useful Life | 7 years |
Capitalized Software, Net (Deta
Capitalized Software, Net (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2018 | |
Finite-Lived Intangible Assets [Line Items] | |||
Amortization life | 3 years | ||
Accumulated amortization | $ (7,134) | $ (5,726) | |
Capitalized software, net | 16,989 | 15,454 | |
Software capitalized during the period | 5,756 | 15,067 | |
Amortization expense | 3,978 | 2,977 | $ 1,696 |
Software development costs | |||
Finite-Lived Intangible Assets [Line Items] | |||
Capitalized software | 21,485 | 20,347 | |
Development in progress | |||
Finite-Lived Intangible Assets [Line Items] | |||
Capitalized software | $ 2,638 | $ 833 | |
Minimum | Software development costs | |||
Finite-Lived Intangible Assets [Line Items] | |||
Amortization life | 1 year | ||
Maximum | Software development costs | |||
Finite-Lived Intangible Assets [Line Items] | |||
Amortization life | 7 years |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets - Changes in Goodwill (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2018 | |
Goodwill [Roll Forward] | |||
Goodwill, beginning | $ 168,284 | $ 83,954 | |
Goodwill attributable to preliminary purchase price adjustments and acquisition activity | 18,721 | 84,330 | |
Goodwill reassigned in segment realignment | 0 | ||
Goodwill, ending | 187,005 | 168,284 | |
Merchant Services | |||
Goodwill [Roll Forward] | |||
Goodwill, beginning | 117,334 | 70,936 | |
Goodwill attributable to preliminary purchase price adjustments and acquisition activity | (933) | 46,398 | |
Goodwill reassigned in segment realignment | (419) | ||
Goodwill, ending | 115,982 | 117,334 | |
Accumulated impairment losses | $ 11,458 | ||
Proprietary Software and Payments | |||
Goodwill [Roll Forward] | |||
Goodwill, beginning | 50,950 | 13,018 | |
Goodwill attributable to preliminary purchase price adjustments and acquisition activity | 19,654 | 37,932 | |
Goodwill reassigned in segment realignment | 419 | ||
Goodwill, ending | 71,023 | 50,950 | |
Accumulated impairment losses | 0 | ||
Other | |||
Goodwill [Roll Forward] | |||
Goodwill, beginning | 0 | 0 | |
Goodwill attributable to preliminary purchase price adjustments and acquisition activity | 0 | 0 | |
Goodwill reassigned in segment realignment | 0 | ||
Goodwill, ending | $ 0 | $ 0 | |
Accumulated impairment losses | $ 0 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets - Intangible Assets (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2018 | |
Finite-Lived Intangible Assets [Line Items] | |||
Finite-lived intangible assets, cost | $ 166,639 | $ 155,056 | |
Finite-lived intangible assets, accumulated amortization | (57,448) | (47,673) | |
Finite-lived intangible assets, carrying value | 109,191 | 107,383 | |
Total identifiable intangible assets, cost | 166,681 | 155,092 | |
Total identifiable intangible assets, carrying value | $ 109,233 | 107,419 | |
Amortization life | 3 years | ||
Amortization expense of intangible assets | $ 12,414 | 12,394 | $ 9,341 |
Trademarks | |||
Finite-Lived Intangible Assets [Line Items] | |||
Indefinite-lived Intangible Assets | 42 | 36 | |
Merchant relationships | |||
Finite-Lived Intangible Assets [Line Items] | |||
Finite-lived intangible assets, cost | 154,571 | 142,671 | |
Finite-lived intangible assets, accumulated amortization | (53,388) | (43,579) | |
Finite-lived intangible assets, carrying value | $ 101,183 | $ 99,092 | |
Merchant relationships | Minimum | |||
Finite-Lived Intangible Assets [Line Items] | |||
Amortization life | 12 years | 12 years | |
Merchant relationships | Maximum | |||
Finite-Lived Intangible Assets [Line Items] | |||
Amortization life | 20 years | 20 years | |
Non-compete agreements | |||
Finite-Lived Intangible Assets [Line Items] | |||
Finite-lived intangible assets, cost | $ 1,700 | $ 1,770 | |
Finite-lived intangible assets, accumulated amortization | (851) | (619) | |
Finite-lived intangible assets, carrying value | $ 849 | $ 1,151 | |
Non-compete agreements | Minimum | |||
Finite-Lived Intangible Assets [Line Items] | |||
Amortization life | 3 years | 2 years | |
Non-compete agreements | Maximum | |||
Finite-Lived Intangible Assets [Line Items] | |||
Amortization life | 5 years | 5 years | |
Website and brand development costs | |||
Finite-Lived Intangible Assets [Line Items] | |||
Finite-lived intangible assets, cost | $ 215 | $ 77 | |
Finite-lived intangible assets, accumulated amortization | (65) | (22) | |
Finite-lived intangible assets, carrying value | $ 150 | $ 55 | |
Amortization life | 3 years | ||
Website and brand development costs | Minimum | |||
Finite-Lived Intangible Assets [Line Items] | |||
Amortization life | 3 years | ||
Website and brand development costs | Maximum | |||
Finite-Lived Intangible Assets [Line Items] | |||
Amortization life | 4 years | ||
Trade names | |||
Finite-Lived Intangible Assets [Line Items] | |||
Finite-lived intangible assets, cost | $ 3,880 | $ 4,292 | |
Finite-lived intangible assets, accumulated amortization | (1,538) | (1,307) | |
Finite-lived intangible assets, carrying value | $ 2,342 | $ 2,985 | |
Trade names | Minimum | |||
Finite-Lived Intangible Assets [Line Items] | |||
Amortization life | 3 years | 3 years | |
Trade names | Maximum | |||
Finite-Lived Intangible Assets [Line Items] | |||
Amortization life | 7 years | 7 years | |
Residual buyouts | |||
Finite-Lived Intangible Assets [Line Items] | |||
Finite-lived intangible assets, cost | $ 5,373 | $ 5,346 | |
Finite-lived intangible assets, accumulated amortization | (1,172) | (1,882) | |
Finite-lived intangible assets, carrying value | $ 4,201 | $ 3,464 | |
Residual buyouts | Minimum | |||
Finite-Lived Intangible Assets [Line Items] | |||
Amortization life | 2 years | 2 years | |
Residual buyouts | Maximum | |||
Finite-Lived Intangible Assets [Line Items] | |||
Amortization life | 8 years | 8 years | |
Referral and exclusivity agreements | |||
Finite-Lived Intangible Assets [Line Items] | |||
Finite-lived intangible assets, cost | $ 900 | $ 900 | |
Finite-lived intangible assets, accumulated amortization | (434) | (264) | |
Finite-lived intangible assets, carrying value | $ 466 | $ 636 | |
Referral and exclusivity agreements | Minimum | |||
Finite-Lived Intangible Assets [Line Items] | |||
Amortization life | 5 years | 5 years | |
Referral and exclusivity agreements | Maximum | |||
Finite-Lived Intangible Assets [Line Items] | |||
Amortization life | 10 years | 10 years |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets - Future Amortization Expense (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Sep. 30, 2019 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2021 | $ 11,645 | |
2022 | 10,500 | |
2023 | 9,428 | |
2024 | 8,702 | |
2025 | 8,495 | |
Thereafter | 60,421 | |
Finite-lived intangible assets, carrying value | $ 109,191 | $ 107,383 |
Accrued Expenses and Other Li_3
Accrued Expenses and Other Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Sep. 30, 2019 |
Accrued expenses and other current liabilities: | ||
Accrued wages, bonuses, commissions and vacation | $ 3,867 | $ 4,256 |
Accrued interest | 141 | 254 |
Accrued contingent consideration — current portion | 10,062 | 10,223 |
Escrow liabilities | 4,363 | 1,414 |
Tax receivable agreement liability — current portion | 0 | 24 |
Customer deposits | 1,828 | 1,968 |
Other current liabilities | 3,803 | 3,421 |
Accrued expenses and other current liabilities | 24,064 | 21,560 |
Long-term Liabilities | ||
Accrued contingent consideration — long-term portion | 2,972 | 8,003 |
Deferred tax liability — long-term | 2,212 | 516 |
Other long-term liabilities | 956 | 605 |
Total other long-term liabilities | $ 6,140 | $ 9,124 |
Long-Term Debt, Net - Summary o
Long-Term Debt, Net - Summary of Long-term Debt (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Feb. 18, 2020 | Sep. 30, 2019 |
Debt Instrument [Line Items] | |||
Debt issuance costs, net | $ (4,567) | $ (1,846) | |
Total long-term debt, net of issuance costs | 90,758 | 139,298 | |
Line of Credit | Revolving lines of credit to banks under the Senior Secured Credit Facility | |||
Debt Instrument [Line Items] | |||
Long-term debt | 0 | 141,144 | |
Exchangeable Notes | 1.0% Exchangeable Senior Notes due 2025 | |||
Debt Instrument [Line Items] | |||
Long-term debt | 95,325 | $ 0 | |
Stated interest rate (percent) | 1.00% | ||
Debt issuance costs, net | $ (3,193) |
Long-Term Debt, Net - Additiona
Long-Term Debt, Net - Additional Information (Details) | Feb. 18, 2020USD ($)day$ / shares | Feb. 13, 2020USD ($)shares | May 09, 2019USD ($) | Oct. 31, 2017USD ($) | Jun. 30, 2018USD ($) | Jul. 31, 2017USD ($)shares | Sep. 30, 2020USD ($)$ / shares | Sep. 30, 2020USD ($)$ / shares | Sep. 30, 2019USD ($) | Sep. 30, 2018USD ($) | Jun. 25, 2018USD ($) | Oct. 30, 2017USD ($) | Sep. 30, 2017USD ($)$ / shares | Dec. 31, 2014USD ($)shares | Dec. 31, 2013USD ($)creditorshares |
Debt Instrument [Line Items] | |||||||||||||||
Proceeds from borrowings on exchangeable notes | $ 138,000,000 | $ 0 | $ 0 | ||||||||||||
Equity component of exchangeable notes, net of issuance costs and deferred taxes | 27,578,000 | ||||||||||||||
Debt issuance costs incurred | $ 152,000 | ||||||||||||||
Debt issuance costs | $ 4,212,000 | 4,212,000 | 1,245,000 | ||||||||||||
Amortization of deferred debt issuance costs | 758,000 | 721,000 | 1,072,000 | ||||||||||||
Debt issuance costs, net | 4,567,000 | 4,567,000 | 1,846,000 | ||||||||||||
Exchangeable notes, fair value | 102,064,000 | 102,064,000 | |||||||||||||
Repayments of convertible debt | 17,414,000 | 0 | 0 | ||||||||||||
Debt issuance cost write offs | 141,000 | 152,000 | 0 | ||||||||||||
Payments for note hedge transactions | $ 28,676,000 | 28,676,000 | 0 | 0 | |||||||||||
Proceeds from issuance of warrants | 14,669,000 | 0 | 0 | ||||||||||||
Conversion of notes payable to related and unrelated creditors to Class A common stock | 0 | $ 0 | $ 8,054,000 | ||||||||||||
1.0% Exchangeable Senior Notes due 2025 | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Repayments of convertible debt | 17,414,000 | ||||||||||||||
1.0% Exchangeable Senior Notes due 2025 | Exchangeable Notes | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Original principal amount | $ 138,000,000 | ||||||||||||||
Stated interest rate (percent) | 1.00% | ||||||||||||||
Proceeds from borrowings on exchangeable notes | $ 132,762,000 | ||||||||||||||
Debt issuance costs incurred | 5,238,000 | ||||||||||||||
Debt issuance costs | $ 4,150,000 | ||||||||||||||
Amortization of deferred debt issuance costs | 365,000 | ||||||||||||||
Debt issuance costs, net | 3,193,000 | 3,193,000 | |||||||||||||
Debt aggregate repurchase amount | 21,000,000 | 21,000,000 | |||||||||||||
Debt interest, repurchase amount | 24,000 | $ 24,000 | |||||||||||||
Loss on retirement of debt | 2,297,000 | ||||||||||||||
Debt issuance cost write offs | $ 592,000 | ||||||||||||||
1.0% Exchangeable Senior Notes due 2025 | Exchangeable Notes | In Event of Fundamental Change | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Repurchase price as percent of face value of notes (percent) | 100.00% | ||||||||||||||
1.0% Exchangeable Senior Notes due 2025 | Exchangeable Notes | February 20, 2023 to 47th Scheduled Trading Day Immediately Preceding the Maturity Date | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Repurchase price as percent of face value of notes (percent) | 100.00% | ||||||||||||||
2020 Senior Secured Credit Facility | Line of Credit | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Revolving line of credit borrowing capacity | 275,000,000 | ||||||||||||||
Optional addition to borrowing capacity | 50,000,000 | ||||||||||||||
Unused commitment fee (percent) | 0.30% | ||||||||||||||
Debt covenant, minimum consolidated interest coverage ratio | 3 | 3 | |||||||||||||
Debt covenant, maximum total leverage ratio | 5 | 5 | |||||||||||||
Debt covenant, maximum consolidated senior secured leverage ratio | 3.25 | 3.25 | |||||||||||||
Debt covenant, increase to maximum consolidated senior secured leverage ratio during leverage increase period | 0.25 | 0.25 | |||||||||||||
Remaining borrowing capacity | $ 275,000,000 | $ 275,000,000 | |||||||||||||
Debt covenant, equity repurchase limit from employees, directors, officers or consultants | $ 3,000,000 | ||||||||||||||
Debt covenant, dividend or distribution limit as percent of net cash proceeds from additional common equity issuance (percent) | 5.00% | ||||||||||||||
2020 Senior Secured Credit Facility | Line of Credit | Minimum | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Unused commitment fee (percent) | 0.15% | ||||||||||||||
2020 Senior Secured Credit Facility | Line of Credit | Maximum | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Unused commitment fee (percent) | 0.30% | ||||||||||||||
2020 Senior Secured Credit Facility | Line of Credit | One, Two, Three or Six-Month LIBOR | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Basis spread on variable rate (percent) | 3.25% | ||||||||||||||
2020 Senior Secured Credit Facility | Line of Credit | One, Two, Three or Six-Month LIBOR | Minimum | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Basis spread on variable rate (percent) | 2.25% | ||||||||||||||
2020 Senior Secured Credit Facility | Line of Credit | One, Two, Three or Six-Month LIBOR | Maximum | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Basis spread on variable rate (percent) | 3.25% | ||||||||||||||
2020 Senior Secured Credit Facility | Line of Credit | Federal Funds Rate | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Basis spread on variable rate (percent) | 0.50% | ||||||||||||||
2020 Senior Secured Credit Facility | Line of Credit | LIBOR Plus 1% | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Basis spread on variable rate (percent) | 1.00% | 1.25% | |||||||||||||
2020 Senior Secured Credit Facility | Line of Credit | LIBOR Plus 1% | Minimum | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Basis spread on variable rate (percent) | 0.25% | ||||||||||||||
2020 Senior Secured Credit Facility | Line of Credit | LIBOR Plus 1% | Maximum | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Basis spread on variable rate (percent) | 1.25% | ||||||||||||||
2020 Senior Secured Credit Facility | Line of Credit | Letter of Credit | Maximum | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Unused commitment fee (percent) | 3.25% | ||||||||||||||
Term loans to bank under the Senior Secured Credit Facility | Secured Debt | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Original principal amount | $ 40,000,000 | ||||||||||||||
Senior Secured Credit Facility | Line of Credit | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Revolving line of credit borrowing capacity | $ 110,000,000 | ||||||||||||||
Quarterly principal payment | $ 1,250,000 | ||||||||||||||
Senior Secured Credit Facility | Line of Credit | Minimum | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Unused commitment fee (percent) | 0.15% | ||||||||||||||
Senior Secured Credit Facility | Line of Credit | Maximum | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Unused commitment fee (percent) | 0.30% | ||||||||||||||
Senior Secured Credit Facility | Line of Credit | Prime Rate | Minimum | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Basis spread on variable rate (percent) | 0.50% | ||||||||||||||
Senior Secured Credit Facility | Line of Credit | Prime Rate | Maximum | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Basis spread on variable rate (percent) | 2.00% | ||||||||||||||
Senior Secured Credit Facility | Line of Credit | 30-day LIBOR | Minimum | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Basis spread on variable rate (percent) | 2.75% | ||||||||||||||
Senior Secured Credit Facility | Line of Credit | 30-day LIBOR | Maximum | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Basis spread on variable rate (percent) | 4.00% | ||||||||||||||
Notes payable to Mezzanine Lenders | Notes Payable | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Original principal amount | $ 10,500,000 | ||||||||||||||
Stated interest rate (percent) | 12.00% | ||||||||||||||
Debt issuance cost write offs | $ 78,000 | ||||||||||||||
Warrants outstanding (shares) | shares | 1,423,688 | ||||||||||||||
Warrants sold in connection with the issuance of the Exchangeable notes (in USD per share) | $ / shares | $ 0.01 | ||||||||||||||
Number of creditors | creditor | 3 | ||||||||||||||
Intrinsic value of warrants | $ 9,241,000 | $ 767,000 | |||||||||||||
Junior Subordinated Notes | Unsecured Debt | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Original principal amount | $ 17,608,000 | ||||||||||||||
Stated interest rate (percent) | 10.00% | ||||||||||||||
Debt issuance cost write offs | 43,000 | ||||||||||||||
Warrants outstanding (shares) | shares | 1,433,920 | ||||||||||||||
Extinguishment of debt, amount | 8,054,000 | ||||||||||||||
Additional Paid-In Capital | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Equity component of exchangeable notes, net of issuance costs and deferred taxes | $ 28,662,000 | $ 27,578,000 | |||||||||||||
Additional Paid-In Capital | 1.0% Exchangeable Senior Notes due 2025 | Exchangeable Notes | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Debt issuance costs | $ 1,088,000 | ||||||||||||||
Common Stock | Junior Subordinated Notes | Unsecured Debt | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Loss on retirement of debt | $ 0 | ||||||||||||||
Conversion of notes payable to related and unrelated creditors to Class A common stock | $ 500,000 | ||||||||||||||
Debt conversion, converted instrument, shares issued | shares | 148,000 | ||||||||||||||
Class A Common Stock | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Exchangeable notes, exchange price per share (in USD per share) | $ / shares | $ 40.87 | $ 40.87 | $ 40.87 | ||||||||||||
Warrants outstanding (shares) | shares | 3,376,391 | ||||||||||||||
Warrants sold in connection with the issuance of the Exchangeable notes (in USD per share) | $ / shares | $ 62.88 | $ 62.88 | |||||||||||||
Proceeds from issuance of warrants | $ 14,669,000 | ||||||||||||||
Class A Common Stock | 1.0% Exchangeable Senior Notes due 2025 | Exchangeable Notes | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Exchangeable notes, exchange rate, shares per $1000 | 0.0244666 | ||||||||||||||
Class A Common Stock | 1.0% Exchangeable Senior Notes due 2025 | Exchangeable Notes | February 20, 2023 to 47th Scheduled Trading Day Immediately Preceding the Maturity Date | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Threshold exchange price as percent of closing price per share to allow redemption, (percent) | 130.00% | ||||||||||||||
Threshold trading days closing price for stock must exceed exchange price | day | 20 | ||||||||||||||
Class A Common Stock | Common Stock | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Conversion of notes payable to related and unrelated creditors to Class A common stock | $ 8,054,000 |
Income Taxes - Income Tax Expen
Income Taxes - Income Tax Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2018 | |
Current: | |||
Federal tax (benefit) expense | $ (34) | $ 220 | $ 668 |
State tax expense | 446 | 189 | 351 |
Deferred: | |||
Federal tax benefit | (3,018) | (487) | (685) |
State tax (benefit) expense | (189) | (99) | 3 |
Income tax (benefit) expense | $ (2,795) | $ (177) | $ 337 |
Income Taxes - Income Tax Exp_2
Income Taxes - Income Tax Expense Reconciliation (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2018 | |
Effective Income Tax Rate Reconciliation, Percent [Abstract] | |||
Expected U.S. federal income taxes at statutory rate (percent) | 21.00% | 21.00% | 24.60% |
Partnership income not taxed at federal level (percent) | (2.30%) | (260.90%) | (6.40%) |
Valuation allowance (percent) | 71.40% | 65.00% | (20.90%) |
State and local income taxes, net of federal benefit (percent) | (6.50%) | 26.90% | (6.40%) |
Nondeductible expenses and other permanent items (percent) | (13.10%) | 150.80% | (1.40%) |
Revaluation of debt and other debt transaction differences (percent) | (0.059) | (0.490) | (0.072) |
Federal tax rate change (percent) | 0.00% | 0.00% | 10.20% |
Change in liability for uncertain tax positions (percent) | (2.90%) | 0.00% | 0.00% |
Federal tax credit (percent) | 11.40% | 0.00% | 0.00% |
Other (percent) | 0.90% | 0.30% | 0.10% |
Income tax expense (percent) | 74.10% | (45.90%) | (7.30%) |
Effective Income Tax Rate Reconciliation, Amount [Abstract] | |||
Expected U.S. federal income taxes at statutory rate | $ (792) | $ 81 | $ (1,139) |
Partnership income not taxed at federal level | 85 | (1,007) | 294 |
Valuation allowance | (2,694) | 251 | 965 |
State and local income taxes, net of federal benefit | 244 | 104 | 295 |
Nondeductible expenses and other permanent items | 496 | 582 | 66 |
Revaluation of debt and other debt transaction differences | 222 | (189) | 332 |
Federal tax rate change | 0 | 0 | (471) |
Change in liability for uncertain tax positions | 108 | 0 | 0 |
Federal tax credits | (431) | 0 | 0 |
Other | (33) | 1 | (5) |
Income tax (benefit) expense | $ (2,795) | $ (177) | $ 337 |
Income Taxes - Deferred Tax Ass
Income Taxes - Deferred Tax Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Sep. 30, 2019 |
Deferred tax assets: | ||
Investment in partnership | $ 47,897 | $ 40,880 |
Stock-based compensation | 1,187 | 811 |
Deferred revenue | 525 | 564 |
Accrued expenses | 181 | 110 |
Net operating loss carryforwards | 10,969 | 6,360 |
Section 163j carryforward | 2,498 | 2,006 |
Federal tax credits | 901 | 0 |
Other | 73 | 42 |
Gross deferred tax assets | 64,231 | 50,773 |
Valuation allowance | (20,230) | (16,609) |
Deferred tax liabilities: | ||
Intangible assets | (9,167) | (6,257) |
Other | (291) | (285) |
Net deferred tax asset | $ 34,543 | $ 27,622 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2018 | Jun. 25, 2018 | |
Class of Stock [Line Items] | |||||
Benefit from deferred income taxes | $ (3,207,000) | $ (586,000) | $ (682,000) | ||
Valuation allowance | 20,230,000 | 16,609,000 | |||
Investment in partnership | 47,897,000 | 40,880,000 | |||
Accrued interest related to uncertain tax positions | 7,000 | 0 | |||
Accrued penalties related to uncertain tax positions | 0 | 0 | |||
Unrecognized tax benefits | 184,000 | 0 | |||
Percent of tax benefits payable to continuing equity owners | 85.00% | ||||
Tax benefits retained (percent) | 15.00% | ||||
Purchase of common units in i3 Verticals, LLC from selling unitholder | $ (4,635,000) | (5,080,000) | (12,077,000) | 0 | |
Deferred tax asset recognized | $ 64,231,000 | 50,773,000 | |||
Increase in net deferred tax assets | 25,776,000 | ||||
Increase tax receivable agreement liability | 22,413,000 | ||||
Period of payment to continuing equity owners | 25 years | ||||
i3 Vericals, LLC | |||||
Class of Stock [Line Items] | |||||
Valuation allowance | $ 16,271,000 | ||||
Change in valuation allowance for deferred tax assets | 2,143,000 | ||||
Investment in partnership | 47,897,000 | ||||
Minimum | |||||
Class of Stock [Line Items] | |||||
Expected payments for repurchase of redeemable noncontrolling interest | 0 | ||||
Maximum | |||||
Class of Stock [Line Items] | |||||
Expected payments for repurchase of redeemable noncontrolling interest | 2,460,000 | ||||
Continuing Equity Owner | Class B Common Stock | |||||
Class of Stock [Line Items] | |||||
Deferred tax asset recognized | 960,000 | 31,626,000 | 26,736,000 | 960,000 | |
Tax benefits due to continuing equity owners | 816,000 | 27,565,000 | $ 23,229,000 | $ 816,000 | |
Increase in deferred tax assets | 6,307,000 | ||||
Increase tax receivable agreement liability | $ 5,361,000 | ||||
Non-Controlling Interest | |||||
Class of Stock [Line Items] | |||||
Purchase of common units in i3 Verticals, LLC from selling unitholder | $ (4,635,000) | ||||
Common Stock | Class B Common Stock | |||||
Class of Stock [Line Items] | |||||
Redemption of common units in i3 Verticals, LLC (shares) | (1,021,016) | (4,292,169) | |||
Common Stock | Class A Common Stock | |||||
Class of Stock [Line Items] | |||||
Redemption of common units in i3 Verticals, LLC (shares) | 1,021,016 | 4,292,169 | |||
Federal | |||||
Class of Stock [Line Items] | |||||
Net operating loss carryforwards | $ 26,984,000 | ||||
Tax credit carryforward | 901,000 | ||||
Benefit from deferred income taxes | 6,568,000 | ||||
Valuation allowance | 388,000 | ||||
Change in valuation allowance for deferred tax assets | 383,000 | ||||
State | |||||
Class of Stock [Line Items] | |||||
Net operating loss carryforwards | 81,827,000 | ||||
Benefit from deferred income taxes | 5,302,000 | ||||
Valuation allowance | 3,571,000 | ||||
Change in valuation allowance for deferred tax assets | $ 1,094,000 |
Income Taxes - Uncertain Tax Po
Income Taxes - Uncertain Tax Positions (Details) $ in Thousands | 12 Months Ended |
Sep. 30, 2020USD ($) | |
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | |
Gross unrecognized tax benefits as of September 30, 2019 | $ 0 |
Increase in current year tax positions | 108 |
Increase in prior year tax positions | 76 |
Gross unrecognized tax benefits as of September 30, 2020 | $ 184 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Exchangeable notes, fair value | $ 102,064 | |
Accrued Contingent Consideration | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Balance, beginning | 18,226 | $ 5,999 |
Contingent consideration accrued at time of business combination | 4,748 | 13,032 |
Change in fair value of contingent consideration included in Operating expenses | (1,409) | 3,389 |
Contingent consideration paid | (8,531) | (4,194) |
Balance, ending | 13,034 | 18,226 |
Accrued Expenses and Other Current Liabilities | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Contingent consideration | 10,062 | 10,223 |
Other Long-term Liabilities | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Contingent consideration | $ 2,972 | $ 8,003 |
Equity-Based Compensation (Deta
Equity-Based Compensation (Details) - USD ($) | Jun. 25, 2018 | Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2018 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Equity-based compensation expense | $ 10,452,000 | $ 6,124,000 | $ 1,567,000 | |
Income tax benefits related to equity-based compensation | 604,000 | 160,000 | 0 | |
TRA non-participation compensatory shares | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Equity-based compensation expense | $ 741,000 | 0 | 0 | 741,000 |
Stock options | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Equity-based compensation expense | $ 10,452,000 | $ 6,124,000 | $ 826,000 |
Equity-Based Compensation - Add
Equity-Based Compensation - Additional Information (Details) - USD ($) $ in Thousands | Jun. 25, 2018 | Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2018 | May 31, 2018 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Equity-based compensation expense | $ 10,452 | $ 6,124 | $ 1,567 | ||
2018 Equity Incentive Award Plan | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Shares available for grant under the plan (shares) | 205,151 | 3,500,000 | |||
Additional Class A common shares added at the beginning of calendar year as percentage of common stock outstanding at end of previous year (percent) | 4.00% | ||||
TRA non-participation compensatory shares | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Equity-based compensation expense | $ 741 | $ 0 | $ 0 | $ 741 |
Equity-Based Compensation - Fai
Equity-Based Compensation - Fair Value of Stock Option Awards (Details) - Stock options | 12 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected volatility (percent) | 28.50% | 26.70% |
Expected dividend yield (percent) | 0.00% | 0.00% |
Expected term | 6 years | 6 years |
Risk-free interest rate (percent) | 1.20% | 2.50% |
Equity-Based Compensation - Sto
Equity-Based Compensation - Stock Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Stock Options | ||
Outstanding at beginning of period (shares) | 4,240,695 | |
Granted (shares) | 1,438,900 | |
Exercised (shares) | (331,141) | |
Forfeited (shares) | (137,888) | |
Outstanding at end of period (shares) | 5,210,566 | 4,240,695 |
Weighted Average Exercise Price | ||
Outstanding at beginning of period, weighted average exercise price (in USD per share) | $ 21.73 | $ 18.33 |
Granted, weighted average exercise price (in USD per share) | 30.37 | |
Exercised, weighted average exercise price (in USD per share) | 15.85 | |
Forfeited, weighted average exercise price (in USD per share) | 21.56 | |
Outstanding at end of period, weighted average exercise price (in USD per share) | 21.73 | $ 18.33 |
Granted, weighted average grant date fair value (in USD per share) | $ 9.07 | |
Options exercisable at end of period (shares) | 1,686,957 | |
Unrecognized compensation expense related to unvested options at end of period | $ 18,620 | |
Period for recognition of unrecognized compensation cost | 1 year 10 months 24 days | |
Fair value of stock options that vested | $ 8,100 |
Stockholders' _ Members' Equi_3
Stockholders' / Members' Equity and Redeemable Class A Units (Details) | Jun. 25, 2018USD ($)$ / sharesshares | Sep. 30, 2017USD ($)$ / sharesshares | Sep. 30, 2020vote$ / sharesshares | Feb. 13, 2020shares | Sep. 30, 2019$ / sharesshares |
Class of Stock [Line Items] | |||||
Preferred Stock authorized (shares) | 10,000,000 | 10,000,000 | 10,000,000 | ||
Preferred Stock, par value (in USD per share) | $ / shares | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||
Common Stock, number of votes per share | vote | 1 | ||||
Mezzanine Warrants | |||||
Class of Stock [Line Items] | |||||
Warrants outstanding (shares) | 1,423,688 | ||||
Unsecured Debt | Junior Subordinated Notes | |||||
Class of Stock [Line Items] | |||||
Warrants outstanding (shares) | 1,433,920 | ||||
Intrinsic value of warrants | $ | $ 0 | ||||
Warrant exercise price (in USD per share) | $ / shares | $ 2.095 | ||||
IPO | |||||
Class of Stock [Line Items] | |||||
Shares issued (shares) | 7,647,500 | ||||
Class A Common Stock | |||||
Class of Stock [Line Items] | |||||
Common Stock authorized (shares) | 150,000,000 | 150,000,000 | 150,000,000 | ||
Common Stock, par value (in USD per share) | $ / shares | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||
Conversion ratio | 1 | ||||
Conversion ratio, number of shares used to value cash payment (in shares) | 1 | ||||
Units issued (shares) | 13,892,129 | ||||
Units outstanding (shares) | 13,892,129 | ||||
Cumulative preferred return | $ | $ 7,627,000 | $ 5,105,000 | |||
Distributions to unit holders | $ | $ 625,000 | ||||
Common Stock issued (shares) | 18,864,143 | 14,444,115 | |||
Common Stock, outstanding (shares) | 18,864,143 | 14,444,115 | |||
Warrants outstanding (shares) | 3,376,391 | ||||
Warrant exercise price (in USD per share) | $ / shares | $ 62.88 | ||||
Class B Common Stock | |||||
Class of Stock [Line Items] | |||||
Common Stock authorized (shares) | 40,000,000 | 40,000,000 | 40,000,000 | ||
Common Stock, par value (in USD per share) | $ / shares | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||
Conversion ratio | 1 | ||||
Common Stock issued (shares) | 11,900,621 | 12,921,637 | |||
Common Stock, outstanding (shares) | 11,900,621 | 12,921,637 | |||
Redeemable Class A Units | |||||
Class of Stock [Line Items] | |||||
Units issued (shares) | 4,900,000 | ||||
Units outstanding (shares) | 4,900,000 | ||||
Annual preferred return rate (percent) | 10.00% | ||||
Cumulative preferred return | $ | $ 3,376,000 | $ 2,823,000 | |||
Distributions to unit holders | $ | $ 131,000 | ||||
Common Stock | |||||
Class of Stock [Line Items] | |||||
Common Stock issued (shares) | 1,548,722 | ||||
Common Stock, outstanding (shares) | 1,548,722 | ||||
Restricted Class P Units | |||||
Class of Stock [Line Items] | |||||
Common Stock issued (shares) | 7,647,350 | ||||
Common Stock, outstanding (shares) | 7,647,350 |
Commitments and Contingencies -
Commitments and Contingencies - Operating Leases (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |||
Operating leases for office space and equipment | $ 2,820 | $ 2,302 | $ 1,555 |
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | |||
2021 | 2,726 | ||
2022 | 2,397 | ||
2023 | 2,096 | ||
2024 | 1,469 | ||
2025 | 968 | ||
Thereafter | 1,221 | ||
Total | $ 10,877 |
Commitments and Contingencies_2
Commitments and Contingencies - Minimum Fee Commitments (Details) $ in Thousands | Sep. 30, 2020USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2021 | $ 3,334 |
2022 | 2,818 |
2023 | 2,645 |
2024 | 450 |
2025 | 0 |
Thereafter | 0 |
Total | $ 9,247 |
Commitments and Contingencies_3
Commitments and Contingencies - Loan Commitment (Details) - Third Party Sales Organization - USD ($) $ in Thousands | Oct. 20, 2020 | Sep. 30, 2020 |
Loan Commitment | ||
Other Commitments [Line Items] | ||
Loan commitment for fiscal year 2021 | $ 3,500 | |
Loan Commitment | Subsequent Event | ||
Other Commitments [Line Items] | ||
Commitments to third party sales organization | $ 3,500 | |
Buyout Commitment | Subsequent Event | ||
Other Commitments [Line Items] | ||
Commitments to third party sales organization | 29 | |
Additional Buyout Consideration | Subsequent Event | ||
Other Commitments [Line Items] | ||
Commitments to third party sales organization | $ 9 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | ||||
Jun. 30, 2018 | Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2018 | Jun. 25, 2018 | Sep. 30, 2017 | |
Related Party Transaction [Line Items] | ||||||
Sale of Class A common stock in initial public offering, net | $ 0 | $ 0 | $ 8,054 | |||
Percent of tax benefits payable to continuing equity owners | 85.00% | |||||
Class B Common Stock | Continuing Equity Owner | ||||||
Related Party Transaction [Line Items] | ||||||
Tax benefits due to continuing equity owners | $ 27,565 | 23,229 | 816 | |||
Common Stock | Class A Common Stock | ||||||
Related Party Transaction [Line Items] | ||||||
Sale of Class A common stock in initial public offering, net | $ 8,054 | |||||
Affiliated Entity | Chief Executive Officer | ||||||
Related Party Transaction [Line Items] | ||||||
Ownership interest in Axia Tech (percent) | 10.50% | |||||
Affiliated Entity | Chief Financial Officer | ||||||
Related Party Transaction [Line Items] | ||||||
Ownership interest in Axia Tech (percent) | 0.40% | |||||
Affiliated Entity | Axia Med | ||||||
Related Party Transaction [Line Items] | ||||||
Net revenue from related party | $ 95 | $ 81 | 53 | |||
Affiliated Entity | i3Verticals, LLC | ||||||
Related Party Transaction [Line Items] | ||||||
Ownership interest in Axia Tech (percent) | 2.00% | |||||
Affiliated Entity | Conversion of Related Party Debt | Common Stock | Class A Common Stock | ||||||
Related Party Transaction [Line Items] | ||||||
Sale of Class A common stock in initial public offering, net | 924 | |||||
Junior Subordinated Notes | Unsecured Debt | Affiliated Entity | ||||||
Related Party Transaction [Line Items] | ||||||
Notes payable, related parties | $ 6,158 | |||||
Related party interest expense | 457 | |||||
Junior Subordinated Notes | Unsecured Debt | Affiliated Entity | Repayment of Debt | ||||||
Related Party Transaction [Line Items] | ||||||
Debt repaid with proceeds from the company's IPO | $ 5,234 | |||||
Notes Payable | Affiliated Entity | ||||||
Related Party Transaction [Line Items] | ||||||
Notes payable, related parties | $ 10,500 | |||||
Related party interest expense | $ 952 |
Segments (Details)
Segments (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||||
Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2018 | |||
Segment Reporting Information [Line Items] | |||||||||||||
Revenue | $ 38,272 | $ 31,573 | $ 39,178 | $ 41,111 | $ 108,562 | $ 97,483 | $ 85,394 | $ 84,868 | $ 150,134 | $ 376,307 | $ 323,508 | ||
Operating expenses | |||||||||||||
Interchange and network fees | 0 | 242,867 | [1] | 214,543 | [1] | ||||||||
Other costs of services | 47,230 | 44,237 | 40,314 | ||||||||||
Selling general and administrative | 78,323 | 62,860 | 40,585 | ||||||||||
Depreciation and amortization | 18,217 | 16,564 | 11,839 | ||||||||||
Change in fair value of contingent consideration | (1,409) | 3,389 | 3,866 | ||||||||||
Income from operations | 1,198 | $ 437 | $ 2,041 | $ 4,097 | 1,869 | $ 1,194 | $ (203) | $ 3,530 | 7,773 | 6,390 | 12,361 | ||
Processing margin | 123,352 | 106,866 | 83,180 | ||||||||||
Total assets | 403,526 | 349,302 | 403,526 | 349,302 | 175,142 | ||||||||
Goodwill | 187,005 | 168,284 | 187,005 | 168,284 | 83,954 | ||||||||
Merchant Services | |||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||
Revenue | 100,949 | 338,968 | 303,692 | ||||||||||
Operating expenses | |||||||||||||
Interchange and network fees | 236,170 | 209,705 | |||||||||||
Other costs of services | 43,940 | 41,487 | 38,563 | ||||||||||
Selling general and administrative | 26,376 | 27,275 | 23,716 | ||||||||||
Depreciation and amortization | 11,796 | 12,221 | 9,736 | ||||||||||
Change in fair value of contingent consideration | (4,691) | (477) | 2,103 | ||||||||||
Income from operations | 23,528 | 22,292 | 19,869 | ||||||||||
Processing margin | 78,627 | 78,369 | 69,449 | ||||||||||
Total assets | 206,769 | 216,420 | 206,769 | 216,420 | 143,792 | ||||||||
Goodwill | 115,982 | 117,334 | 115,982 | 117,334 | 70,936 | ||||||||
Residual expense | 21,618 | 17,058 | 14,025 | ||||||||||
Proprietary Software and Payments | |||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||
Revenue | 50,953 | 37,339 | 19,819 | ||||||||||
Operating expenses | |||||||||||||
Interchange and network fees | 6,697 | 4,838 | |||||||||||
Other costs of services | 5,057 | 2,750 | 1,752 | ||||||||||
Selling general and administrative | 28,187 | 17,059 | 7,177 | ||||||||||
Depreciation and amortization | 5,723 | 3,790 | 1,896 | ||||||||||
Change in fair value of contingent consideration | 3,282 | 3,866 | 1,763 | ||||||||||
Income from operations | 8,704 | 3,177 | 2,393 | ||||||||||
Processing margin | 46,483 | 28,497 | 13,733 | ||||||||||
Total assets | 139,107 | 99,420 | 139,107 | 99,420 | 26,524 | ||||||||
Goodwill | 71,023 | 50,950 | 71,023 | 50,950 | 13,018 | ||||||||
Residual expense | 587 | 605 | 504 | ||||||||||
Other | |||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||
Revenue | (1,768) | 0 | (3) | ||||||||||
Operating expenses | |||||||||||||
Interchange and network fees | 0 | 0 | |||||||||||
Other costs of services | (1,767) | 0 | (1) | ||||||||||
Selling general and administrative | 23,760 | 18,526 | 9,692 | ||||||||||
Depreciation and amortization | 698 | 553 | 207 | ||||||||||
Change in fair value of contingent consideration | 0 | 0 | 0 | ||||||||||
Income from operations | (24,459) | (19,079) | (9,901) | ||||||||||
Processing margin | (1,758) | 0 | (2) | ||||||||||
Total assets | 57,650 | 33,462 | 57,650 | 33,462 | 4,826 | ||||||||
Goodwill | $ 0 | $ 0 | 0 | 0 | 0 | ||||||||
Residual expense | $ (1,757) | $ 0 | $ 0 | ||||||||||
[1] | Effective October 1, 2019, the Company's revenues are presented net of interchange and network fees in accordance with Accounting Standards Codification Topic 606, Revenue from Contracts with Customers . See Note 2 to our consolidated financial statements for a description of the recently adopted accounting pronouncement. |
Non-Controlling Interest - Narr
Non-Controlling Interest - Narrative (Details) - i3Verticals, LLC - shares | Sep. 30, 2020 | Sep. 30, 2019 |
Noncontrolling Interest [Line Items] | ||
Non-controlling interest, common units (shares) | 18,864,143 | 14,444,115 |
Non-controlling interest, ownership interest (percent) | 61.30% | 52.80% |
Non-Controlling Interest - Impa
Non-Controlling Interest - Impact on Equity (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2018 | |
Noncontrolling Interest [Abstract] | ||||
Net (loss) income attributable to non-controlling interest | $ (560) | $ 3,608 | $ 1,937 | |
Allocation of equity to non-controlling interests arising from the reorganization transactions and IPO | 0 | 0 | 70,960 | |
Distributions to non-controlling interest holders | (3) | (2,060) | 0 | |
Redemption of common units in i3 Verticals, LLC | $ (4,635) | (5,080) | (12,077) | 0 |
Adjustment related to prior periods | 2,730 | 0 | 0 | |
Cumulative effect of adoption of new accounting standard | 640 | 0 | 0 | |
Allocation of equity to non-controlling interests | 24,495 | 0 | 0 | |
Net transfers to (from) non-controlling interests | 22,782 | (14,137) | 70,960 | |
Change from net income attributable to non-controlling interests and transfers to (from) non-controlling interests | $ 22,222 | $ (10,529) | $ 72,897 |
Earnings Per Share - Basic (Det
Earnings Per Share - Basic (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||||||||||
Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 25, 2018 | Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2018 | ||||
Numerator | ||||||||||||||||
Net (loss) income | $ 2,673 | $ (979) | $ 563 | $ (4,961) | ||||||||||||
Less: Net (loss) income attributable to non-controlling interests | (560) | 3,608 | 1,937 | |||||||||||||
Net loss attributable to i3 Verticals, Inc. | $ (651) | $ (356) | $ 737 | $ (149) | $ (930) | $ (1,191) | $ (1,102) | $ 178 | $ (7,634) | $ (419) | $ (3,045) | $ (6,898) | ||||
Denominator | ||||||||||||||||
Basic net (loss) income per share (in USD per Share) | $ (0.04) | $ (0.02) | $ 0.05 | $ (0.01) | $ (0.07) | $ (0.12) | $ (0.12) | $ 0.02 | $ (0.03) | [1] | $ (0.29) | [1] | $ 0.08 | [1] | ||
Class A Common Stock | ||||||||||||||||
Numerator | ||||||||||||||||
Net (loss) income | $ (979) | $ 563 | $ 2,673 | |||||||||||||
Less: Net (loss) income attributable to non-controlling interests | (560) | 3,608 | 1,937 | |||||||||||||
Net loss attributable to i3 Verticals, Inc. | $ (419) | $ (3,045) | $ 736 | |||||||||||||
Denominator | ||||||||||||||||
Weighted average shares of Class A common stock outstanding (shares) | 14,833,378 | 10,490,981 | 8,812,630 | |||||||||||||
[1] | Basic and diluted net income per share of Class A common stock are presented only for the period after the Company’s Reorganization Transactions. See Note 1 for a description of the Reorganization Transactions. See Note 18 for the calculation of income per common share. |
Earnings Per Share - Diluted (D
Earnings Per Share - Diluted (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||||||||||
Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Jun. 25, 2018 | Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2018 | |||||
Numerator | ||||||||||||||||
Net (loss) income attributable to Class A common stockholders | $ (651) | $ (356) | $ 737 | $ (149) | $ (930) | $ (1,191) | $ (1,102) | $ 178 | $ (7,634) | $ (419) | $ (3,045) | $ (6,898) | ||||
Denominator | ||||||||||||||||
Weighted average shares of Class A common stock outstanding - diluted (shares) | [1] | 27,429,801 | 10,490,981 | 26,873,878 | ||||||||||||
Diluted net (loss) income per share (in USD per share) | $ (0.06) | $ (0.02) | $ 0.05 | $ (0.01) | $ (0.07) | $ (0.12) | $ (0.12) | $ 0.02 | $ (0.03) | [2] | $ (0.29) | [2] | $ 0.08 | [2] | ||
Class A Common Stock | ||||||||||||||||
Numerator | ||||||||||||||||
Net (loss) income attributable to Class A common stockholders | $ (419) | $ (3,045) | $ 736 | |||||||||||||
Reallocation of net (loss) income assuming conversion of common units | (422) | 1,464 | ||||||||||||||
Net (loss) income attributable to Class A common stockholders - diluted | $ (841) | $ 2,200 | ||||||||||||||
Denominator | ||||||||||||||||
Weighted average shares of Class A common stock outstanding (shares) | 14,833,378 | 10,490,981 | 8,812,630 | |||||||||||||
Weighted average effect of dilutive securities (shares) | 12,596,423 | 18,061,248 | ||||||||||||||
Weighted average shares of Class A common stock outstanding - diluted (shares) | 27,429,801 | 26,873,878 | ||||||||||||||
Diluted net (loss) income per share (in USD per share) | $ 0.08 | |||||||||||||||
[1] | Effective October 1, 2019, the Company's revenues are presented net of interchange and network fees in accordance with Accounting Standards Codification Topic 606, Revenue from Contracts with Customers . See Note 2 to our consolidated financial statements for a description of the recently adopted accounting pronouncement. | |||||||||||||||
[2] | Basic and diluted net income per share of Class A common stock are presented only for the period after the Company’s Reorganization Transactions. See Note 1 for a description of the Reorganization Transactions. See Note 18 for the calculation of income per common share. |
Earnings Per Share - Antidiluti
Earnings Per Share - Antidilutive Securities (Details) - $ / shares | 3 Months Ended | 12 Months Ended | ||||||||||
Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2018 | Feb. 18, 2020 | |
Class A Common Stock | ||||||||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||||||||
Exchangeable notes, exchange price per share (in USD per share) | $ 40.87 | $ 40.87 | $ 40.87 | |||||||||
Warrant exercise price (in USD per share) | $ 62.88 | $ 62.88 | ||||||||||
Restricted Class A Common Stock | ||||||||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||||||||
Antidilutive securities excluded from computation of earnings per share (shares) | 94,577 | 193,709 | 215,564 | 232,828 | 271,881 | 285,433 | 277,758 | 295,405 | 204,969 | 282,801 | 299,412 | |
Class B Common Stock | ||||||||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||||||||
Antidilutive securities excluded from computation of earnings per share (shares) | 12,404,368 | 12,769,568 | 12,921,637 | 12,921,637 | 16,184,026 | 17,112,164 | 17,213,806 | 15,856,855 | ||||
Out-of-the-money Options | Class A Common Stock | ||||||||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||||||||
Antidilutive securities excluded from computation of earnings per share (shares) | 1,297,500 | 1,498,000 | 959,000 | 689,500 | 446,000 | 443,000 | 30,500 | 754,750 | 1,327,500 | 626,500 | ||
Stock options | Class A Common Stock | ||||||||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||||||||
Antidilutive securities excluded from computation of earnings per share (shares) | 1,225,697 | 1,127,509 | 976,594 | 1,131,760 | 1,188,987 | 1,012,916 | 1,179,538 | 1,009,858 |
Significant Non-cash Transact_3
Significant Non-cash Transactions (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended | ||
Jun. 25, 2018 | Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2018 | |
Other Significant Noncash Transactions [Line Items] | ||||
Equity issued as part of acquisitions' purchase consideration | $ 0 | $ 0 | $ 104 | |
Acquisition date fair value of contingent consideration in connection with business combinations | 4,748 | 13,032 | 2,084 | |
Replacement of prior senior secured credit facility with senior secured credit facility | 0 | 100,229 | 87,525 | |
Mezzanine Notes net settled with Mezzanine Warrant exercises | 0 | 0 | 14 | |
Unsecured notes payable to related and unrelated creditors net settled with Junior Subordinated Notes Warrants | 0 | 0 | 2,565 | |
Settlement of warrant liability with equity as a result of Mezzanine Warrant exercise | 0 | 0 | 9,253 | |
Preferred return on redeemable class A units and class A units | $ 0 | |||
Debt issuance costs financed with proceeds from senior secured credit facility | 0 | 1,271 | 904 | |
Conversion of notes payable to related and unrelated creditors to Class A common stock | 0 | 0 | 8,054 | |
Redeemable Class A Common Stock | ||||
Other Significant Noncash Transactions [Line Items] | ||||
Preferred return on redeemable class A units and class A units | 0 | 0 | 552 | |
Class A Common Stock | ||||
Other Significant Noncash Transactions [Line Items] | ||||
Preferred return on redeemable class A units and class A units | 0 | 0 | 2,522 | |
Restricted Class A Common Stock | ||||
Other Significant Noncash Transactions [Line Items] | ||||
Equity issued as part of acquisitions' purchase consideration | $ 0 | $ 225 | $ 550 |
Quarterly Information (Unaudi_3
Quarterly Information (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||||||||||
Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Jun. 25, 2018 | Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2018 | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||||||||||||
Revenue | $ 38,272 | $ 31,573 | $ 39,178 | $ 41,111 | $ 108,562 | $ 97,483 | $ 85,394 | $ 84,868 | $ 150,134 | $ 376,307 | $ 323,508 | ||||
Income (loss) from operations | 1,198 | 437 | 2,041 | 4,097 | 1,869 | 1,194 | (203) | 3,530 | 7,773 | 6,390 | 12,361 | ||||
Income (loss) before income taxes | (2,899) | (2,815) | (143) | 2,083 | (148) | (724) | (1,358) | 2,616 | |||||||
Net income (loss) attributable to i3 Verticals, Inc. | $ (651) | $ (356) | $ 737 | $ (149) | $ (930) | $ (1,191) | $ (1,102) | $ 178 | $ (7,634) | $ (419) | $ (3,045) | $ (6,898) | |||
Basic earnings (loss) per share attributable to i3 Verticals, Inc. (in USD per share) | $ (0.04) | $ (0.02) | $ 0.05 | $ (0.01) | $ (0.07) | $ (0.12) | $ (0.12) | $ 0.02 | $ (0.03) | [1] | $ (0.29) | [1] | $ 0.08 | [1] | |
Diluted earnings (loss) per share attributable to i3 Verticals, Inc. (in USD per share) | $ (0.06) | $ (0.02) | $ 0.05 | $ (0.01) | $ (0.07) | $ (0.12) | $ (0.12) | $ 0.02 | $ (0.03) | [1] | $ (0.29) | [1] | $ 0.08 | [1] | |
Class A Common Stock | |||||||||||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||||||||||||
Net income (loss) attributable to i3 Verticals, Inc. | $ (419) | $ (3,045) | $ 736 | ||||||||||||
Diluted earnings (loss) per share attributable to i3 Verticals, Inc. (in USD per share) | $ 0.08 | ||||||||||||||
Restricted Class A Common Stock | |||||||||||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||||||||||||
Antidilutive securities excluded from computation of earnings per share (shares) | 94,577 | 193,709 | 215,564 | 232,828 | 271,881 | 285,433 | 277,758 | 295,405 | 204,969 | 282,801 | 299,412 | ||||
Class B Common Stock | |||||||||||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||||||||||||
Antidilutive securities excluded from computation of earnings per share (shares) | 12,404,368 | 12,769,568 | 12,921,637 | 12,921,637 | 16,184,026 | 17,112,164 | 17,213,806 | 15,856,855 | |||||||
Out-of-the-money Options | Class A Common Stock | |||||||||||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||||||||||||
Antidilutive securities excluded from computation of earnings per share (shares) | 1,297,500 | 1,498,000 | 959,000 | 689,500 | 446,000 | 443,000 | 30,500 | 754,750 | 1,327,500 | 626,500 | |||||
Stock options | Class A Common Stock | |||||||||||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||||||||||||
Antidilutive securities excluded from computation of earnings per share (shares) | 1,225,697 | 1,127,509 | 976,594 | 1,131,760 | 1,188,987 | 1,012,916 | 1,179,538 | 1,009,858 | |||||||
[1] | Basic and diluted net income per share of Class A common stock are presented only for the period after the Company’s Reorganization Transactions. See Note 1 for a description of the Reorganization Transactions. See Note 18 for the calculation of income per common share. |
Subsequent Events (Details)
Subsequent Events (Details) - Subsequent Event $ in Thousands | 2 Months Ended |
Nov. 20, 2020USD ($)business | |
Subsequent Event [Line Items] | |
Number of businesses acquired | business | 4 |
Cash and proceeds from issuance of long-term debt used to fund the acquisition | $ 59,600 |
Potential additional consideration | $ 30,200 |
Uncategorized Items - iiiv-2020
Label | Element | Value |
Increase (Decrease) in Stockholders Equity due to Reorganization Transactions | iiiv_IncreaseDecreaseInStockholdersEquityDueToReorganizationTransactions | $ 9,017,000 |
Noncontrolling Interest, Increase from Sale of Parent Equity Interest | us-gaap_NoncontrollingInterestIncreaseFromSaleOfParentEquityInterest | 0 |
Stock Issued During Period, Value, New Issues | us-gaap_StockIssuedDuringPeriodValueNewIssues | 550,000 |
Stock Issued During Period, Value, New Issues | us-gaap_StockIssuedDuringPeriodValueNewIssues | 104,000 |
APIC, Share-based Payment Arrangement, Increase for Cost Recognition | us-gaap_AdjustmentsToAdditionalPaidInCapitalSharebasedCompensationRequisiteServicePeriodRecognitionValue | 788,000 |
Equity Issued During Period Value Warrants Exercised | iiiv_EquityIssuedDuringPeriodValueWarrantsExercised | 12,073,000 |
Shares Issued, Value, Share-based Payment Arrangement, Forfeited | us-gaap_StockIssuedDuringPeriodValueShareBasedCompensationForfeited | 0 |
Limited Liability Company (LLC) Members' Equity, Unit-based Payment Arrangement | us-gaap_LimitedLiabilityCompanyLLCMembersEquityUnitBasedCompensation | 38,000 |
Adjustments to Additional Paid in Capital, Stock Issued, Issuance Costs | us-gaap_AdjustmentsToAdditionalPaidInCapitalStockIssuedIssuanceCosts | 4,015,000 |
Adjustments To Additional Paid In Capital, Tax Related Adjustments | iiiv_AdjustmentsToAdditionalPaidInCapitalTaxRelatedAdjustments | 144,000 |
Common Stock [Member] | ||
Increase (Decrease) in Stockholders Equity due to Reorganization Transactions | iiiv_IncreaseDecreaseInStockholdersEquityDueToReorganizationTransactions | (13,562,000) |
Stock Issued During Period, Value, New Issues | us-gaap_StockIssuedDuringPeriodValueNewIssues | 104,000 |
Equity Issued During Period Value Warrants Exercised | iiiv_EquityIssuedDuringPeriodValueWarrantsExercised | 12,218,000 |
Noncontrolling Interest [Member] | ||
Increase (Decrease) in Stockholders Equity due to Reorganization Transactions | iiiv_IncreaseDecreaseInStockholdersEquityDueToReorganizationTransactions | 15,493,000 |
Noncontrolling Interest, Increase from Sale of Parent Equity Interest | us-gaap_NoncontrollingInterestIncreaseFromSaleOfParentEquityInterest | 60,102,000 |
Net Income (Loss) Attributable to Noncontrolling Interest | us-gaap_NetIncomeLossAttributableToNoncontrollingInterest | (1,937,000) |
Additional Paid-in Capital [Member] | ||
Increase (Decrease) in Stockholders Equity due to Reorganization Transactions | iiiv_IncreaseDecreaseInStockholdersEquityDueToReorganizationTransactions | 804,000 |
Noncontrolling Interest, Increase from Sale of Parent Equity Interest | us-gaap_NoncontrollingInterestIncreaseFromSaleOfParentEquityInterest | (60,102,000) |
Stock Issued During Period, Value, Conversion of Convertible Securities | us-gaap_StockIssuedDuringPeriodValueConversionOfConvertibleSecurities | 550,000 |
APIC, Share-based Payment Arrangement, Increase for Cost Recognition | us-gaap_AdjustmentsToAdditionalPaidInCapitalSharebasedCompensationRequisiteServicePeriodRecognitionValue | 788,000 |
Equity Issued During Period Value Warrants Exercised | iiiv_EquityIssuedDuringPeriodValueWarrantsExercised | (145,000) |
Limited Liability Company (LLC) Members' Equity, Unit-based Payment Arrangement | us-gaap_LimitedLiabilityCompanyLLCMembersEquityUnitBasedCompensation | 38,000 |
Adjustments to Additional Paid in Capital, Stock Issued, Issuance Costs | us-gaap_AdjustmentsToAdditionalPaidInCapitalStockIssuedIssuanceCosts | 4,015,000 |
Adjustments To Additional Paid In Capital, Tax Related Adjustments | iiiv_AdjustmentsToAdditionalPaidInCapitalTaxRelatedAdjustments | 144,000 |
Retained Earnings [Member] | ||
Increase (Decrease) in Stockholders Equity due to Reorganization Transactions | iiiv_IncreaseDecreaseInStockholdersEquityDueToReorganizationTransactions | 43,726,000 |
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest | us-gaap_ProfitLoss | (7,634,000) |
Net Income (Loss) Attributable to Parent | us-gaap_NetIncomeLoss | 736,000 |
Redeemable Class A Common [Member] | ||
Distribution Made to Limited Liability Company (LLC) Member, Cash Distributions Declared | us-gaap_DistributionMadeToLimitedLiabilityCompanyLLCMemberCashDistributionsDeclared | 552,000 |
Redeemable Class A Common [Member] | Retained Earnings [Member] | ||
Distribution Made to Limited Liability Company (LLC) Member, Cash Distributions Declared | us-gaap_DistributionMadeToLimitedLiabilityCompanyLLCMemberCashDistributionsDeclared | 552,000 |
Common Class A [Member] | Common Stock [Member] | ||
Increase (Decrease) in Stockholders Equity due to Reorganization Transactions | iiiv_IncreaseDecreaseInStockholdersEquityDueToReorganizationTransactions | (37,446,000) |
Distribution Made to Limited Liability Company (LLC) Member, Cash Distributions Declared | us-gaap_DistributionMadeToLimitedLiabilityCompanyLLCMemberCashDistributionsDeclared | $ (2,522,000) |
Stock Issued During Period, Shares, New Issues | us-gaap_StockIssuedDuringPeriodSharesNewIssues | 27,840 |
Stock Issued During Period Shares Reorganization Transactions | iiiv_StockIssuedDuringPeriodSharesReorganizationTransactions | 824,861 |
Shares Issued, Shares, Share-based Payment Arrangement, Forfeited | us-gaap_StockIssuedDuringPeriodSharesShareBasedCompensationForfeited | 7,701 |
Common Class A [Member] | Retained Earnings [Member] | ||
Distribution Made to Limited Liability Company (LLC) Member, Cash Distributions Declared | us-gaap_DistributionMadeToLimitedLiabilityCompanyLLCMemberCashDistributionsDeclared | $ 2,522,000 |
Class A, Issued in Conversion [Member] | ||
Stock Issued During Period, Value, Conversion of Convertible Securities | us-gaap_StockIssuedDuringPeriodValueConversionOfConvertibleSecurities | $ 8,054,000 |
Class A, Issued in Conversion [Member] | Common Stock [Member] | ||
Stock Issued During Period, Shares, Conversion of Convertible Securities | us-gaap_StockIssuedDuringPeriodSharesConversionOfConvertibleSecurities | 619,542 |
Class A, Issued in Conversion [Member] | Additional Paid-in Capital [Member] | ||
Stock Issued During Period, Value, Conversion of Convertible Securities | us-gaap_StockIssuedDuringPeriodValueConversionOfConvertibleSecurities | $ 8,054,000 |
Class A Common, Initial Offering [Member] | ||
Stock Issued During Period, Value, New Issues | us-gaap_StockIssuedDuringPeriodValueNewIssues | $ 92,447,000 |
Class A Common, Initial Offering [Member] | Common Stock [Member] | ||
Stock Issued During Period, Shares, New Issues | us-gaap_StockIssuedDuringPeriodSharesNewIssues | 7,647,500 |
Stock Issued During Period, Value, New Issues | us-gaap_StockIssuedDuringPeriodValueNewIssues | $ 1,000 |
Class A Common, Initial Offering [Member] | Additional Paid-in Capital [Member] | ||
Stock Issued During Period, Value, New Issues | us-gaap_StockIssuedDuringPeriodValueNewIssues | 92,446,000 |
Common Class B [Member] | Common Stock [Member] | ||
Increase (Decrease) in Stockholders Equity due to Reorganization Transactions | iiiv_IncreaseDecreaseInStockholdersEquityDueToReorganizationTransactions | $ 2,000 |
Stock Repurchased and Retired During Period, Shares | us-gaap_StockRepurchasedAndRetiredDuringPeriodShares | 383,417 |
Stock Issued During Period Shares Reorganization Transactions | iiiv_StockIssuedDuringPeriodSharesReorganizationTransactions | 17,597,223 |