COVER
COVER - shares | 6 Months Ended | |
Mar. 31, 2024 | May 09, 2024 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2024 | |
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, $0.0001 Par Value | |
Trading Symbol | IIIV | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Central Index Key | 0001728688 | |
Current Fiscal Year End Date | --09-30 | |
Document Fiscal Year Focus | 2024 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false | |
Class A Common Stock | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 23,419,645 | |
Class B Common Stock | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 10,052,676 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2024 | Sep. 30, 2023 |
Current assets | ||
Cash and cash equivalents | $ 3,139 | $ 3,112 |
Accounts receivable, net | 66,539 | 65,110 |
Settlement assets | 1,586 | 4,873 |
Prepaid expenses and other current assets | 15,802 | 12,449 |
Total current assets | 87,066 | 85,544 |
Property and equipment, net | 11,002 | 12,308 |
Restricted cash | 2,568 | 4,415 |
Capitalized software, net | 61,345 | 62,577 |
Goodwill | 410,772 | 409,563 |
Intangible assets, net | 221,145 | 226,952 |
Deferred tax asset | 51,591 | 52,514 |
Operating lease right-of-use assets | 12,806 | 13,922 |
Other assets | 7,247 | 13,698 |
Total assets | 865,542 | 881,493 |
Current liabilities | ||
Accounts payable | 11,996 | 11,064 |
Current portion of long-term debt | 26,223 | 0 |
Accrued expenses and other current liabilities | 26,854 | 37,740 |
Settlement obligations | 1,586 | 4,873 |
Deferred revenue | 36,931 | 35,275 |
Current portion of operating lease liabilities | 4,421 | 4,509 |
Total current liabilities | 108,011 | 93,461 |
Long-term debt, less current portion and debt issuance costs, net | 343,392 | 385,081 |
Long-term tax receivable agreement obligations | 40,323 | 40,079 |
Operating lease liabilities, less current portion | 9,362 | 10,433 |
Other long-term liabilities | 18,354 | 24,143 |
Total liabilities | 519,442 | 553,197 |
Commitments and contingencies (see Note 12) | ||
Stockholders' equity | ||
Preferred stock, par value $0.0001 per share, 10,000,000 shares authorized; 0 shares issued and outstanding as of March 31, 2024 and September 30, 2023 | 0 | 0 |
Additional paid-in capital | 259,242 | 249,688 |
Accumulated deficit | (9,968) | (12,944) |
Total stockholders' equity | 249,277 | 236,747 |
Non-controlling interest | 96,823 | 91,549 |
Total equity | 346,100 | 328,296 |
Total liabilities and equity | 865,542 | 881,493 |
Class A Common Stock | ||
Stockholders' equity | ||
Common stock | 2 | 2 |
Class B Common Stock | ||
Stockholders' equity | ||
Common stock | $ 1 | $ 1 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Mar. 31, 2024 | Sep. 30, 2023 |
Preferred Stock, par value (in USD per share) | $ 0.0001 | $ 0.0001 |
Preferred Stock authorized (in shares) | 10,000,000 | 10,000,000 |
Preferred Stock issued (in shares) | 0 | 0 |
Preferred Stock outstanding (in shares) | 0 | 0 |
Class A Common Stock | ||
Common Stock, par value (in USD per share) | $ 0.0001 | $ 0.0001 |
Common Stock authorized (in shares) | 150,000,000 | 150,000,000 |
Common Stock issued (in shares) | 23,416,518 | 23,253,272 |
Common Stock, outstanding (in shares) | 23,416,518 | 23,253,272 |
Class B Common Stock | ||
Common Stock, par value (in USD per share) | $ 0.0001 | $ 0.0001 |
Common Stock authorized (in shares) | 40,000,000 | 40,000,000 |
Common Stock issued (in shares) | 10,052,676 | 10,093,394 |
Common Stock, outstanding (in shares) | 10,052,676 | 10,093,394 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2024 | Mar. 31, 2023 | |
Income Statement [Abstract] | ||||
Revenue | $ 94,542 | $ 93,872 | $ 186,532 | $ 179,901 |
Operating expenses | ||||
Other costs of services | 21,180 | 19,930 | 41,604 | 38,999 |
Selling, general and administrative | 54,162 | 57,204 | 107,694 | 108,207 |
Depreciation and amortization | 10,069 | 9,015 | 19,808 | 17,691 |
Change in fair value of contingent consideration | (290) | 2,279 | (527) | 3,722 |
Total operating expenses | 85,121 | 88,428 | 168,579 | 168,619 |
Income from operations | 9,421 | 5,444 | 17,953 | 11,282 |
Other expenses (income) | ||||
Interest expense, net | 7,750 | 6,199 | 14,457 | 11,689 |
Other income | (2,257) | 0 | (2,150) | (203) |
Total other expenses | 5,493 | 6,199 | 12,307 | 11,486 |
Income (loss) before income taxes | 3,928 | (755) | 5,646 | (204) |
Provision for (benefit from) income taxes | 580 | (563) | 762 | (181) |
Net income (loss) | 3,348 | (192) | 4,884 | (23) |
Net income (loss) attributable to non-controlling interest | 1,470 | (228) | 1,908 | 181 |
Net income (loss) attributable to i3 Verticals, Inc. | $ 1,878 | $ 36 | $ 2,976 | $ (204) |
Net income (loss) per share attributable to Class A common stockholders: | ||||
Basic (in USD per share) | $ 0.08 | $ 0 | $ 0.13 | $ (0.01) |
Diluted (in USD per share) | $ 0.08 | $ 0 | $ 0.13 | $ (0.01) |
Weighted average shares of Class A common stock outstanding: | ||||
Basic (in shares) | 23,331,239 | 23,135,898 | 23,299,214 | 23,066,499 |
Diluted (in shares) | 23,718,474 | 34,269,140 | 23,726,720 | 23,066,499 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED) - USD ($) $ in Thousands | Total | Cumulative Effect, Period of Adoption, Adjustment | Class A Common Stock | Class B Common Stock | Common Stock Class A Common Stock | Common Stock Class B Common Stock | Additional Paid-In Capital | Additional Paid-In Capital Cumulative Effect, Period of Adoption, Adjustment | Retained Earnings (Deficit) | Retained Earnings (Deficit) Cumulative Effect, Period of Adoption, Adjustment | Non-Controlling Interest |
Beginning balance (in shares) at Sep. 30, 2022 | 22,986,448 | 10,118,142 | |||||||||
Stockholders' equity, beginning at Sep. 30, 2022 | $ 307,688 | $ (11,933) | $ 2 | $ 1 | $ 241,958 | $ (23,382) | $ (23,582) | $ 11,449 | $ 89,309 | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Equity-based compensation | 6,846 | 6,846 | |||||||||
Net (loss) income | 169 | (240) | 409 | ||||||||
Establishment of liabilities under a tax receivable agreement and related changes to deferred tax assets associated with increases in tax basis | 685 | 685 | |||||||||
Exercise or release of equity-based awards (in shares) | 24,745 | ||||||||||
Exercise or release of equity-based awards | 3 | 3 | |||||||||
Allocation of equity to non-controlling interests | 0 | 1,906 | (1,906) | ||||||||
Ending balance (in shares) at Dec. 31, 2022 | 23,011,193 | 10,118,142 | |||||||||
Stockholders' equity, ending at Dec. 31, 2022 | 303,458 | $ 2 | $ 1 | 228,016 | (12,373) | 87,812 | |||||
Beginning balance (in shares) at Sep. 30, 2022 | 22,986,448 | 10,118,142 | |||||||||
Stockholders' equity, beginning at Sep. 30, 2022 | 307,688 | $ (11,933) | $ 2 | $ 1 | 241,958 | $ (23,382) | (23,582) | $ 11,449 | 89,309 | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Net (loss) income | (23) | $ (23) | |||||||||
Ending balance (in shares) at Mar. 31, 2023 | 23,167,730 | 10,108,218 | |||||||||
Stockholders' equity, ending at Mar. 31, 2023 | 311,811 | $ 2 | $ 1 | 234,442 | (12,337) | 89,703 | |||||
Beginning balance (in shares) at Dec. 31, 2022 | 23,011,193 | 10,118,142 | |||||||||
Stockholders' equity, beginning at Dec. 31, 2022 | 303,458 | $ 2 | $ 1 | 228,016 | (12,373) | 87,812 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Equity-based compensation | 6,802 | 6,802 | |||||||||
Net (loss) income | (192) | $ (192) | 36 | (228) | |||||||
Redemption of common units in i3 Verticals, LLC (in shares) | 9,924 | (9,924) | |||||||||
Redemption of common units in i3 Verticals, LLC | 0 | 86 | (86) | ||||||||
Establishment of liabilities under a tax receivable agreement and related changes to deferred tax assets associated with increases in tax basis | 349 | 349 | |||||||||
Exercise or release of equity-based awards (in shares) | 64,443 | ||||||||||
Exercise or release of equity-based awards | (606) | (606) | |||||||||
Allocation of equity to non-controlling interests | 0 | (2,205) | 2,205 | ||||||||
Issuance of Class A common stock under the 2020 Inducement Plan ( in shares) | 82,170 | ||||||||||
Issuance of Class A common stock under the 2020 Inducement Plan | 2,000 | 2,000 | |||||||||
Ending balance (in shares) at Mar. 31, 2023 | 23,167,730 | 10,108,218 | |||||||||
Stockholders' equity, ending at Mar. 31, 2023 | 311,811 | $ 2 | $ 1 | 234,442 | (12,337) | 89,703 | |||||
Beginning balance (in shares) at Sep. 30, 2023 | 23,253,272 | 10,093,394 | 23,253,272 | 10,093,394 | |||||||
Stockholders' equity, beginning at Sep. 30, 2023 | 328,296 | $ 2 | $ 1 | 249,688 | (12,944) | 91,549 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Equity-based compensation | 6,508 | 6,508 | |||||||||
Net (loss) income | 1,536 | 1,098 | 438 | ||||||||
Exercise or release of equity-based awards (in shares) | 25,898 | ||||||||||
Exercise or release of equity-based awards | (10) | (10) | |||||||||
Sale of exchangeable note hedges | 1,483 | 1,483 | |||||||||
Repurchases of warrants | (657) | (657) | |||||||||
Allocation of equity to non-controlling interests | 0 | (2,450) | 2,450 | ||||||||
Ending balance (in shares) at Dec. 31, 2023 | 23,279,170 | 10,093,394 | |||||||||
Stockholders' equity, ending at Dec. 31, 2023 | 337,156 | $ 2 | $ 1 | 254,562 | (11,846) | 94,437 | |||||
Beginning balance (in shares) at Sep. 30, 2023 | 23,253,272 | 10,093,394 | 23,253,272 | 10,093,394 | |||||||
Stockholders' equity, beginning at Sep. 30, 2023 | 328,296 | $ 2 | $ 1 | 249,688 | (12,944) | 91,549 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Net (loss) income | $ 4,884 | $ 4,884 | |||||||||
Redemption of common units in i3 Verticals, LLC (in shares) | 40,718 | ||||||||||
Exercise or release of equity-based awards (in shares) | 32,517 | ||||||||||
Ending balance (in shares) at Mar. 31, 2024 | 23,416,518 | 10,052,676 | 23,416,518 | 10,052,676 | |||||||
Stockholders' equity, ending at Mar. 31, 2024 | $ 346,100 | $ 2 | $ 1 | 259,242 | (9,968) | 96,823 | |||||
Beginning balance (in shares) at Dec. 31, 2023 | 23,279,170 | 10,093,394 | |||||||||
Stockholders' equity, beginning at Dec. 31, 2023 | 337,156 | $ 2 | $ 1 | 254,562 | (11,846) | 94,437 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Equity-based compensation | 5,777 | 5,777 | |||||||||
Net (loss) income | 3,348 | $ 3,348 | 1,878 | 1,470 | |||||||
Redemption of common units in i3 Verticals, LLC (in shares) | 40,718 | (40,718) | |||||||||
Redemption of common units in i3 Verticals, LLC | 0 | 384 | (384) | ||||||||
Establishment of liabilities under a tax receivable agreement and related changes to deferred tax assets associated with increases in tax basis | 42 | 42 | |||||||||
Exercise or release of equity-based awards (in shares) | 96,630 | ||||||||||
Exercise or release of equity-based awards | (223) | (223) | |||||||||
Allocation of equity to non-controlling interests | 0 | (1,300) | 1,300 | ||||||||
Ending balance (in shares) at Mar. 31, 2024 | 23,416,518 | 10,052,676 | 23,416,518 | 10,052,676 | |||||||
Stockholders' equity, ending at Mar. 31, 2024 | $ 346,100 | $ 2 | $ 1 | $ 259,242 | $ (9,968) | $ 96,823 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) $ in Thousands | 6 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | ||
Cash flows from operating activities: | |||
Net income (loss) | $ 4,884 | $ (23) | |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||
Depreciation and amortization | 19,808 | 17,691 | |
Equity-based compensation | 12,285 | 13,648 | |
Amortization of debt issuance costs | 676 | 729 | |
Gain on repurchase of exchangeable notes | (2,397) | 0 | |
Loss on sale of exchangeable senior note hedges | 245 | 0 | |
Gain on repurchases of warrants | (105) | 0 | |
Provision for (benefit from) income taxes | (1,238) | (208) | |
Non-cash lease expense | 2,349 | 2,289 | |
Changes in non-cash contingent consideration expense from original estimate | (527) | 3,722 | |
Other non-cash adjustments to net income | 668 | 909 | |
Changes in operating assets: | |||
Accounts receivable | 5,517 | 6,497 | |
Prepaid expenses and other current assets | (3,385) | (1,860) | |
Other assets | (802) | (710) | |
Changes in operating liabilities: | |||
Accounts payable | 896 | (1,484) | |
Accrued expenses and other current liabilities | (8,621) | (5,009) | |
Acquisition escrow obligations | (1,848) | (1,564) | |
Deferred revenue | 2,257 | (2,628) | |
Operating lease liabilities | (2,364) | (2,234) | |
Other long-term liabilities | 2 | 0 | |
Contingent consideration paid in excess of original estimates | (3,153) | (3,881) | |
Net cash provided by operating activities | 25,147 | 25,884 | |
Cash flows from investing activities: | |||
Expenditures for property and equipment | (1,537) | (2,322) | |
Proceeds from sale of property and equipment | 618 | 0 | |
Expenditures for capitalized software | (6,106) | (5,381) | |
Purchases of merchant portfolios and residual buyouts | (4,214) | (387) | |
Acquisitions of businesses, net of cash and restricted cash acquired | (1,100) | (101,997) | |
Payments for other investing activities | (34) | (1,227) | |
Proceeds from other investing activities | 4 | 184 | |
Net cash used in investing activities | (12,369) | (111,130) | |
Cash flows from financing activities: | |||
Proceeds from revolving credit facility | 206,419 | 265,811 | |
Payments on revolving credit facility | (132,710) | (179,939) | |
Payments for repurchase of exchangeable notes | (87,840) | 0 | |
Proceeds from sale of exchangeable senior note hedges | 1,238 | 0 | |
Payments for repurchases of warrants | (552) | 0 | |
Payments of debt issuance costs | 0 | (87) | |
Net payments for settlement obligations | [1] | (3,287) | (355) |
Cash paid for contingent consideration | (760) | (1,175) | |
Payments for required distributions to members for tax obligations | (189) | 0 | |
Proceeds from stock option exercises | 0 | 104 | |
Payments for employee's tax withholdings from net settled stock option exercises and RSU releases | (204) | (545) | |
Net cash (used in) provided by financing activities | (17,885) | 83,814 | |
Net decrease in cash, cash equivalents and restricted cash | (5,107) | (1,432) | |
Cash, cash equivalents and restricted cash at beginning of period | 12,400 | 23,765 | |
Cash, cash equivalents and restricted cash at end of period | 7,293 | 22,333 | |
Supplemental disclosure of cash flow information: | |||
Cash paid for interest | 14,107 | 10,266 | |
Cash paid for income taxes | $ 5,376 | $ 1,419 | |
[1]Refer to Note 2 for discussion of the change in the current period presentation. |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2024 | Sep. 30, 2023 | Mar. 31, 2023 | Sep. 30, 2022 |
Statement of Cash Flows [Abstract] | ||||
Cash and cash equivalents | $ 3,139 | $ 3,112 | $ 3,977 | $ 3,490 |
Settlement assets | 1,586 | 4,873 | 7,185 | 7,540 |
Restricted cash | 2,568 | 4,415 | 11,171 | 12,735 |
Total cash, cash equivalents, and restricted cash | $ 7,293 | $ 12,400 | $ 22,333 | $ 23,765 |
ORGANIZATION AND OPERATIONS
ORGANIZATION AND OPERATIONS | 6 Months Ended |
Mar. 31, 2024 | |
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 software and payment solutions to customers in strategic vertical markets. The Company’s headquarters are located 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. In connection with the IPO, the Company completed certain reorganization transactions, which, among other things, resulted in i3 Verticals, Inc. being the sole managing member of i3 Verticals, LLC (the “Reorganization Transactions”). Following the completion of the IPO and Reorganization Transactions, the Company is a holding company and the principal asset that it owns are the common units of i3 Verticals, LLC. 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. As the sole managing member of i3 Verticals, LLC, i3 Verticals, Inc. consolidates the financial results of i3 Verticals, LLC and reports a non-controlling interest representing the Common Units of i3 Verticals, LLC held by owners other than i3 Verticals, Inc. (the “Continuing Equity Owners”). |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Mar. 31, 2024 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and pursuant to the reporting and disclosure rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, such statements include all adjustments (consisting only of normal recurring items) which are considered necessary for fair presentation of the unaudited condensed consolidated financial statements of the Company and its subsidiaries as of March 31, 2024 and for the three and six months ended March 31, 2024 and 2023. The results of operations for the three and six months ended March 31, 2024 and 2023 are not necessarily indicative of the operating results for the full year. As permitted by the rules and regulations of the SEC, certain information and disclosures otherwise included in the notes to the consolidated financial statements have been condensed or omitted from the summary of significant accounting policies. The Company believes the disclosures are adequate to make the information presented not misleading. It is recommended that these interim condensed consolidated financial statements be read in conjunction with the Company's consolidated financial statements and related footnotes for the years ended September 30, 2023 and 2022, included in the Company’s Annual Report on Form 10-K for the year ended September 30, 2023 filed with the SEC on November 22, 2023. Principles of Consolidation These interim condensed consolidated financial statements include the accounts of the Company and its subsidiary companies. All significant intercompany accounts and transactions have been eliminated in consolidation. Restricted Cash Restricted cash represents funds held in escrow related to acquisitions or held-on-deposit with processing banks pursuant to agreements to cover potential merchant losses. It is presented as long-term assets on the accompanying condensed 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. Settlement Assets and Obligations Settlement assets and obligations result when funds are temporarily held or owed by the Company on behalf of merchants, consumers, schools, and other institutions. Timing differences, interchange expenses, merchant reserves and exceptional items cause differences between the amount received from the card networks and the amount funded to counterparties. These balances arising in the settlement process are reflected as settlement assets and obligations on the accompanying consolidated balance sheets. With the exception of merchant reserves, settlement assets or settlement obligations are generally collected and paid within one Reclassifications Certain prior period amounts have been reclassified in order to conform with the current period presentation. These reclassifications have no impact on the Company’s previously reported consolidated net income (loss). Change in presentation During the second quarter of 2024, the Company elected to change its presentation of cash flows associated with "Settlement obligations" from operating activities to financing actives within the Condensed Consolidated Statements of Cash Flows. Comparative amounts have been reclassified to conform to the current period presentation. This change has no impact on the Condensed Consolidated Balance Sheet, Condensed Consolidated Statements of Operations or Condensed Consolidated Statement of Changes in Equity. The following tables present the effects of the change in presentation within the Condensed Consolidated Statements of Cash Flows: For the Six Months Ended March 31, 2024 As Previously Reported Adjustment As Adjusted Cash flows from operating activities: Settlement obligations (3,287) 3,287 — Net cash provided by operating activities 21,860 3,287 25,147 Cash flows from financing activities: Net payments for settlement obligations — (3,287) (3,287) Net cash used in financing activities (14,598) (3,287) (17,885) For the Six Months Ended March 31, 2023 As Previously Reported Adjustment As Adjusted Cash flows from operating activities: Settlement obligations (355) 355 — Net cash provided by operating activities 25,529 355 25,884 Cash flows from financing activities: Net payments for settlement obligations — (355) (355) Net cash provided by (used in) financing activities 84,169 (355) 83,814 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 or specific basis, or net realizable value. Inventories were $3,978 and $4,138 at March 31, 2024 and September 30, 2023, respectively, and are included within prepaid expenses and other current assets on the accompanying condensed 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 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 values of trade names and internally-developed software acquired are identified using the Relief from Royalty 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 condensed 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. Leases The Company adopted ASU 2016-02, Leases, on October 1, 2020, using the optional modified retrospective method under which the prior period financial statements were not restated for the new guidance. The Company elected the accounting policy practical expedients for all classes of underlying assets to (i) combine associated lease and non-lease components in a lease arrangement as a combined lease component and (ii) exclude recording short-term leases as right-of-use assets on the condensed consolidated balance sheets. At contract inception the Company determines whether an arrangement is, or contains a lease, and for each identified lease, evaluates the classification as operating or financing. Leased assets and obligations are recognized at the lease commencement date based on the present value of fixed lease payments to be made over the term of the lease. Renewal and termination options are factored into determination of the lease term only if the option is reasonably certain to be exercised. The Company’s leases do not provide a readily determinable implicit interest rate and the Company uses its incremental borrowing rate to measure the lease liability and corresponding right-of-use asset. The incremental borrowing rate is a fully collateralized rate that considers the Company’s credit rating, market conditions and the term of the lease. The Company accounts for all components in a lease arrangement as a single combined lease component. Operating lease cost is recognized on a straight-line basis over the lease term. Total lease costs include variable lease costs, which are primarily comprised of the consumer price index adjustments and other changes based on rates, such as costs of insurance and property taxes. Variable payments are expensed in the period incurred and not included in the measurement of lease assets and obligations. Revenue Recognition and Deferred Revenue 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's revenue for the six months ended March 31, 2024 and 2023 is derived from the following sources: • Software and related services — Includes sales of software as a service, transaction-based fees, ongoing software maintenance and support, software licenses and other professional services related to our software offerings • Payments — Includes volume-based payment processing fees (“discount fees”), gateway fees and other related fixed transaction or service fees • Other — Includes sales of equipment, non-software related professional services and other revenues 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 customer. 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. 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 customers under which the customer engages the Company to provide both payment authorization services and transaction settlement services for all of the cardholder transactions of the customer, 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 customers 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 customer, 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 customer 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 six months ended March 31, 2024 and 2023. 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 transaction fees, which are charged for accessing our payment and software solutions, and fees for other miscellaneous services. Revenues derived from such fees are recognized at the time the transactions occur and when there are no further performance obligations. Revenue from the sale of equipment, is recognized upon transfer of ownership to the customer, after which there are no further performance obligations. 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, customer 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 tables below present a disaggregation of the Company's revenue from contracts with customers by product by segment. Refer to Note 14 for discussion of the Company's segments. The Company's products are defined as follows: • Software and related services — Includes SaaS, transaction-based fees, ongoing software maintenance and support, software licenses and other professional services related to our software offerings • Payments — Includes discount fees, gateway fees and other related fixed transaction or service fees • Other — Includes sales of equipment, non-software related professional services and other revenues For the Three Months Ended March 31, 2024 Software and Services Merchant Services Other Total Software and related services revenue $ 42,130 $ 3,537 $ (10) $ 45,657 Payments revenue 14,855 29,585 (6) 44,434 Other revenue 2,498 1,953 — 4,451 Total revenue $ 59,483 $ 35,075 $ (16) $ 94,542 For the Three Months Ended March 31, 2023 Software and Services Merchant Services Other Total Software and related services revenue $ 44,099 $ 3,217 $ (9) $ 47,307 Payments revenue 14,285 27,634 (10) 41,909 Other revenue 2,413 2,243 — 4,656 Total revenue $ 60,797 $ 33,094 $ (19) $ 93,872 For the Six Months Ended March 31, 2024 Software and Services Merchant Services Other Total Software and related services revenue $ 82,462 $ 6,839 $ (22) $ 89,279 Payments revenue 28,837 59,607 (15) 88,429 Other revenue 4,773 4,051 — 8,824 Total revenue $ 116,072 $ 70,497 $ (37) $ 186,532 For the Six Months Ended March 31, 2023 Software and Services Merchant Services Other Total Software and related services revenue $ 82,244 $ 6,196 $ (19) $ 88,421 Payments revenue 27,038 55,243 (18) 82,263 Other revenue 4,728 4,489 — 9,217 Total revenue $ 114,010 $ 65,928 $ (37) $ 179,901 The tables below present a disaggregation of the Company's revenue from contracts with customers by timing of transfer of goods or services by segment. The Company's revenue included in each category are defined as follows: • Revenue earned over time — Includes discount fees, gateway fees, sales of SaaS, ongoing support or other stand-ready obligations and professional services • Revenue earned at a point in time — Includes point in time service fees that are not stand-ready obligations, software licenses sold as functional intellectual property and other equipment For the Three Months Ended March 31, 2024 Software and Services Merchant Services Other Total Revenue earned over time $ 55,361 $ 30,095 $ (10) $ 85,446 Revenue earned at a point in time 4,122 4,980 (6) 9,096 Total revenue $ 59,483 $ 35,075 $ (16) $ 94,542 For the Three Months Ended March 31, 2023 Software and Services Merchant Services Other Total Revenue earned over time $ 54,568 $ 27,984 $ (9) $ 82,543 Revenue earned at a point in time 6,229 5,110 (10) 11,329 Total revenue $ 60,797 $ 33,094 $ (19) $ 93,872 For the Six Months Ended March 31, 2024 Software and Services Merchant Services Other Total Revenue earned over time $ 109,715 $ 60,176 $ (22) $ 169,869 Revenue earned at a point in time 6,357 10,321 (15) 16,663 Total revenue $ 116,072 $ 70,497 $ (37) $ 186,532 For the Six Months Ended March 31, 2023 Software and Services Merchant Services Other Total Revenue earned over time $ 105,009 $ 55,581 $ (19) $ 160,571 Revenue earned at a point in time 9,001 10,347 (18) 19,330 Total revenue $ 114,010 $ 65,928 $ (37) $ 179,901 Contract Assets The Company bills for certain software and related services sales and fixed fee professional services upon pre-determined milestones in the contracts. Therefore, the Company may have contract assets other than trade accounts receivable for performance obligations that are partially completed, which would typically represent consulting services provided before a milestone is completed in a contract. Additionally, contract assets also include software licenses sold as a right to use license but paid for under a subscription model. Under this structure, the license revenue is recognized upfront while a portion of the revenue is unbilled. Unbilled amounts associated with these services are presented as accounts receivable as the Company has an unconditional right to payment for services performed. As of March 31, 2024 and September 30, 2023, the Company’s contract assets from contracts with customers was $11,478 and $15,131, respectively. Contract Liabilities Deferred revenue represents amounts billed to customers 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 condensed 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 tables present the changes in deferred revenue as of and for the six months ended March 31, 2024 and 2023, respectively: Balance at September 30, 2023 $ 35,444 Deferral of revenue 19,793 Recognition of unearned revenue (15,664) Balance at December 31, 2023 39,573 Deferral of revenue 11,759 Recognition of unearned revenue (13,596) Balance at March 31, 2024 $ 37,736 Balance at September 30, 2022 $ 32,089 Deferral of revenue 19,334 Recognition of unearned revenue (13,925) Balance at December 31, 2022 37,498 Deferral of revenue 10,475 Recognition of unearned revenue (14,286) Balance at March 31, 2023 $ 33,687 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 March 31, 2024 and September 30, 2023, the Company had $5,417 and $4,966, respectively, of capitalized contract costs, which relates to commissions paid to employees and agents as well as other incentives given to customers to obtain new sales, included within “Other assets" on the condensed consolidated balance sheets. The Company recorded expense related to these costs of $241 and $470 for the three and six months ended March 31, 2024, respectively and $193 and $376 for the three and six months ended March 31, 2023. The Company expenses sales commissions as incurred for the Company's sales commission plans that are paid on recurring monthly revenues, portfolios of existing customers, or have a substantive stay requirement prior to payment. Other Cost of Services Other costs of services include third-party processing 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 condensed 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 condensed consolidated balance sheets. The cost of equipment and software sold is also included in other cost of services. Other costs of services are recognized at the time the associated revenue is earned. The Company accounts for all governmental taxes associated with revenue transactions on a net basis. Use of Estimates The preparation of condensed 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 condensed 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, determination of performance obligations for revenue recognition, 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. Recent Accounting Pronouncements Recently Issued Accounting Pronouncements Not Yet Adopted In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740)—Improvements to Income Tax Disclosures (“ASU 2023-09”). ASU 2023-09 will provide improvements to the income tax disclosures primarily related to the income taxes paid and rate reconciliation, and how legislation changes may affect future capital allocation and cash flow forecasts. The amendment will improve the consistency in which companies provide tax information, and will further increase the transparency of related tax risks and operational opportunities. The amendments in ASU 2023-09 are effective for annual periods beginning after December 15, 2024, with early adoption permitted. The Company will not be required to adopt ASU 2023-09 until October 1, 2025. The Company is currently evaluating the impact of the adoption of ASU 2023-09 on the Company’s financial statement disclosures. In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280)—Improvements to Reportable Segment Disclosures (“ASU 2023-07”). ASU 2023-07 improves interim disclosure requirements for segment reporting, including clarifications regarding the measure of profit and loss used to asses segment performance and the allocation of resources. Further, it enhances the disclosures for reporting segment expenses and will require the Company to report significant expenses regularly provided by the chief operating decision maker. The amendment will require companies to disclose a more granular level of information with regards to segment reporting to further enhance the transparency of what specified amounts are included within each segment. The amendments in ASU 2023-07 are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company will not be required to adopt ASU 2023-07 until October 1, 2024. The Company is currently evaluating the impact of the adoption of ASU 2023-07 on the Company’s financial statement disclosures. |
ACQUISITIONS
ACQUISITIONS | 6 Months Ended |
Mar. 31, 2024 | |
Business Combination and Asset Acquisition [Abstract] | |
ACQUISITIONS | ACQUISITIONS During the six months ended March 31, 2024 and 2023, the Company acquired the following intangible assets and businesses: Residual Buyouts From time to time, the Company acquires future commission streams (or "residuals") 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 six months ended March 31, 2024 and 2023, the Company purchased residuals for $4,466 and $387 of consideration, respectively. The purchases were funded with a combination of cash on hand and borrowings on the Company's revolving credit facility. The acquired residual buyout intangible asset has an estimated amortization period of eight years. Referral Agreements From time to time, the Company enters into referral agreements with agent banks (“Referral Partners”). Under these agreements, the Referral Partner refers its customers to the Company for credit card processing services. Total consideration paid for these agreements in the six months ended March 31, 2023 was $420, 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 of five years. Business Combinations during the six months ended March 31, 2024 During the six months ended March 31, 2024 the Company completed the acquisition of a business to expand the Company’s software offerings. Total purchase consideration was $1,270, including $1,100 in cash consideration, funded by proceeds from the Company's revolving credit facility, and $170 of contingent consideration. In connection with this acquisition, the Company allocated approximately $5 to property and equipment, approximately $40 to capitalized software, approximately $220 to customer relationships and the remainder, approximately $1,005, to goodwill, all of which is deductible for tax purposes. Certain of the purchase price allocations assigned for this acquisition is considered preliminary as of March 31, 2024. The acquired customer relationships intangible assets have an estimated amortization periods of ten years. The acquired capitalized software have amortization periods of seven years. Acquisition-related costs for this acquisition amounted to approximately $8 and were expensed as incurred. Business Combinations during the year ended September 30, 2023 Purchase of Celtic Cross Holdings, Inc. and Celtic Systems Pvt. Ltd. During the six months ended March 31, 2023, the Company completed the acquisition of Celtic Cross Holdings, Inc., in Scottsdale, Arizona and Celtic Systems Pvt. Ltd. in Vadodara, India (collectively "Celtic") to expand the Company’s software offerings in the Public Sector vertical. Celtic is within the Software and Services segment. Total purchase consideration consisted of $85,000 in cash consideration, funded by proceeds from the Company's revolving credit facility. The goodwill associated with the Celtic acquisition is deductible for tax purposes. The acquired customer relationships intangible assets has an estimated amortization period of eighteen years. The trade name and non-compete agreements associated with the acquisition have amortization periods of five years and three years, respectively. The weighted-average amortization period for all intangibles acquired is eighteen years. The acquired capitalized software has a weighted-average amortization period of ten years. Acquisition-related costs for this acquisition amounted to approximately $1,782 and were expensed as incurred. Summary of Celtic Cross Holdings, Inc. and Celtic Systems Pvt. Ltd. The fair values assigned to certain assets and liabilities assumed, as of the acquisition date, were as follows: Accounts receivable $ 7,660 Prepaid expenses and other current assets 103 Property and equipment 5,233 Capitalized software 12,600 Customer relationships 33,800 Non-compete agreements 200 Trade name 600 Goodwill 43,899 Total assets acquired 104,095 Accounts payable 9 Accrued expenses and other current liabilities 3,182 Deferred revenue, current 2,741 Other long-term liabilities 13,162 Net assets acquired $ 85,001 Other Business Combinations during the year ended September 30, 2023 The Company completed the acquisition of two other businesses to expand the Company's software offerings. The total purchase consideration was $19,757, including $16,997 in cash consideration, funded by proceeds from the Company's revolving credit facility, $2,000 of the Company's Class A Common Stock, and $760 contingent consideration. In connection with this acquisition, the Company allocated approximately $159 of the consideration to net working capital, approximately $374 to property and equipment, approximately $670 to capitalized software, approximately $8,400 to customer relationships, approximately $100 to trade names, and the remainder, approximately $12,229, to goodwill, of which $2,864 is deductible for tax purposes, and approximately $2,178 to other long-term liabilities. Certain of the purchase price allocations assigned for one of these acquisitions is considered preliminary as of March 31, 2024. The acquired capital software and customer relationships intangible asset have estimated amortization periods of seven ten |
PREPAID EXPENSES AND OTHER CURR
PREPAID EXPENSES AND OTHER CURRENT ASSETS | 6 Months Ended |
Mar. 31, 2024 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
PREPAID EXPENSES AND OTHER CURRENT ASSETS | PREPAID EXPENSES AND OTHER CURRENT ASSETS A summary of the Company's prepaid expenses and other current assets as of March 31, 2024 and September 30, 2023 is as follows: March 31, September 30, 2024 2023 Inventory $ 3,978 $ 4,138 Prepaid licenses 3,613 3,115 Prepaid insurance 929 697 Notes receivable — current portion — 4 Other current assets 7,282 4,495 Prepaid expenses and other current assets $ 15,802 $ 12,449 |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS | 6 Months Ended |
Mar. 31, 2024 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL AND INTANGIBLE ASSETS | GOODWILL AND INTANGIBLE ASSETS Changes in the carrying amount of goodwill are as follows: Software and Services Merchant Services Other Total Balance at September 30, 2023 $ 287,613 $ 121,950 $ — $ 409,563 Goodwill attributable to preliminary purchase price adjustments and acquisitions during the six months ended March 31, 2024 1,209 — — 1,209 Balance at March 31, 2024 $ 288,822 $ 121,950 $ — $ 410,772 Intangible assets consisted of the following as of March 31, 2024: Cost Accumulated Amortization Carrying Value Amortization Life and Method Finite-lived intangible assets: Merchant relationships $ 310,721 $ (106,892) $ 203,829 9 to 25 years – accelerated or straight-line Non-compete agreements 418 (267) 151 3 to 6 years – straight-line Website and brand development costs 103 (71) 32 3 to 4 years – straight-line Trade names 6,131 (3,908) 2,223 3 to 7 years – straight-line Residual buyouts 18,686 (4,134) 14,552 8 years – straight-line Referral and exclusivity agreements 420 (105) 315 5 years – straight-line Total finite-lived intangible assets 336,479 (115,377) 221,102 Indefinite-lived intangible assets: Trademarks 43 — 43 Total identifiable intangible assets $ 336,522 $ (115,377) $ 221,145 Amortization expense for intangible assets amounted to $5,270 and $10,505 for the three and six months ended March 31, 2024, respectively, and $5,157 and $10,216 for the three and six months ended March 31, 2023, respectively. Based on net carrying amounts at March 31, 2024, the Company's estimate of future amortization expense for intangible assets are presented in the table below for fiscal years ending September 30: 2024 (six months remaining) $ 10,435 2025 20,798 2026 20,326 2027 19,706 2028 19,121 Thereafter 130,716 $ 221,102 |
ACCRUED EXPENSES AND OTHER LIAB
ACCRUED EXPENSES AND OTHER LIABILITIES | 6 Months Ended |
Mar. 31, 2024 | |
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 March 31, 2024 and September 30, 2023 is as follows is as follows: March 31, September 30, 2024 2023 Accrued wages, bonuses, commissions and vacation $ 6,290 $ 8,713 Accrued interest 1,004 1,313 Accrued contingent consideration — current portion 3,868 6,825 Escrow liabilities 2,118 3,965 Customer deposits 1,061 1,258 Employee health self-insurance liability 1,058 1,014 Accrued interchange 2,066 2,191 Other current liabilities 9,389 12,461 Accrued expenses and other current liabilities $ 26,854 $ 37,740 A summary of the Company's long-term liabilities as of March 31, 2024 and September 30, 2023 is as follows: March 31, September 30, 2024 2023 Accrued contingent consideration — long-term portion $ 101 $ 1,414 Deferred tax liability — long-term 17,125 19,646 Other long-term liabilities 1,128 3,083 Total other long-term liabilities $ 18,354 $ 24,143 |
LONG-TERM DEBT, NET
LONG-TERM DEBT, NET | 6 Months Ended |
Mar. 31, 2024 | |
Debt Disclosure [Abstract] | |
LONG-TERM DEBT, NET | 3.0 to 1.0 0.30 % 3.00 % 3.00 % 2.00 % > 2.5 to 1.0 but < 3.00 to 1.0 0.25 % 2.50 % 2.50 % 1.50 % > 2.0 to 1.0 but < 2.50 to 1.0 0.20 % 2.25 % 2.25 % 1.25 % < 2.0 to 1.0 0.15 % 2.00 % 2.00 % 1.00 % In addition to paying interest on outstanding principal under the Revolver, the Borrower will be required to pay a commitment fee equal to the product of between 0.15% and 0.30% (the applicable percentage depending on the Borrower’s consolidated total net leverage ratio as reflected in the schedule above, 0.30% at March 31, 2024) times the actual daily amount by which $450 million exceeds the total amount outstanding under the Revolver and available to be drawn under all outstanding letters of credit. The Borrower will be permitted to voluntarily reduce the unutilized portion of the commitment amount and repay outstanding loans under the 2023 Senior Secured Credit Facility, whether such amounts are issued under the Revolver or under the additional term loan facilities or additional revolving credit facilities, at any time without premium or penalty. In addition, if the total amount borrowed under the Revolver exceeds $450 million at any time, the 2023 Senior Secured Credit Facility requires the Borrower to prepay such excess outstanding amounts. All obligations under the 2023 Senior Secured Credit Facility are unconditionally guaranteed by the Company, and each of the Company’s existing and future direct and indirect material, wholly owned domestic subsidiaries, subject to certain exceptions. The obligations are secured by first-priority security interests in substantially all tangible and intangible assets of the Borrower, the Company and each subsidiary guarantor, in each case whether owned on the date of the initial borrowings or thereafter acquired. The 2023 Senior Secured Credit Facility places certain restrictions on the ability of the Borrower, the Company and their subsidiaries to, among other things, incur debt and liens; merge, consolidate or liquidate; dispose of assets; enter into hedging arrangements; make certain restricted payments; undertake transactions with affiliates; enter into sale-leaseback transactions; make certain investments; prepay or modify the terms of certain indebtedness; and modify the terms of certain organizational agreements. The 2023 Senior Secured Credit Facility contains customary events of default, including payment defaults, breaches of representations and warranties, covenant defaults, cross-defaults to other material indebtedness, certain events of bankruptcy and insolvency, material judgments, certain events with respect to employee benefit plans, invalidity of loan documents and certain changes in control. Debt issuance costs The Company did not incur any debt issuance costs during the three and six months ended March 31, 2024, and incurred $265 in debt issuance costs during the six months ended March 31, 2023. During the three and six months ended March 31, 2024. the Company wrote off $926 of debt issuance costs in connection with the Exchangeable Note Repurchases. The Company's debt issuance costs are being amortized over the related term of the debt using the straight-line method, which is not materially different than the effective interest rate method, and are presented net against long-term debt in the condensed consolidated balance sheets. The amortization of deferred debt issuance costs is included in interest expense and amounted to approximately $262 and $676 during the three and six months ended March 31, 2024, respectively, and $368 and $729 during the three and six months ended March 31, 2023, respectively." id="sjs-B4">LONG-TERM DEBT, NET A summary of long-term debt, net as of March 31, 2024 and September 30, 2023 is as follows: March 31, September 30, Maturity 2024 2023 Revolving lines of credit to banks under the 2023 Senior Secured Credit Facility May 8, 2028 $ 346,214 $ 272,505 1% Exchangeable Senior Notes due 2025 February 15, 2025 26,223 117,000 Debt issuance costs, net (2,822) (4,424) Total long-term debt, net of issuance costs 369,615 385,081 Less current portion of long-term debt (26,223) — Long-term debt, net of current portion $ 343,392 $ 385,081 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 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, among i3 Verticals, LLC, the Company and U.S. Bank National Association, as trustee. For a discussion of the terms of the Exchangeable Notes, refer to the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2023. Non-cash interest expense, including amortization of debt issuance costs, related to the Exchangeable Notes for the three and six months ended March 31, 2024 was $104 and $359, respectively and $233 and $460 for the three and six months ended March 31, 2023. Total unamortized debt issuance costs related to the Exchangeable Notes were $216 and $1,501 as of March 31, 2024 and September 30, 2023, respectively. During fiscal year 2020, we repurchased $21,000 in aggregate principal amount of Exchangeable Notes in open market purchases. In addition, on December 21, 2023, i3 Verticals, LLC entered into agreements to repurchase an additional portion of its Exchangeable Notes pursuant to privately negotiated transactions with a limited number of holders of the Exchangeable Notes (the "Exchangeable Note Repurchases"). The repurchase payments were determined by the Company’s average stock price over the 15 trading-day measurement period ending January 16, 2024. The closing of the Exchangeable Note Purchases occurred on January 18, 2024, and the Company paid $87,391 to repurchase $90,777 in aggregate principal amount of its Exchangeable Notes and to repay approximately $386 in accrued interest on the repurchased portion of the Exchangeable Notes. The Company wrote off $926 of debt issuance costs in connection with the repurchase transactions. These repurchases resulted in a decrease in the Company's total leverage ratio, and following the completion of the repurchases of these Exchangeable Notes, approximately $26,223 in aggregate principal amount of the Exchangeable Notes remained outstanding, with terms unchanged. The Company recorded a gain on retirement of debt of $2,397 due to the estimated acquisition price exceeding the net carrying amount of the repurchased portion of the Exchangeable Notes, adjusted for unamortized debt issuance costs and costs and third-party fees related to the transaction. As of March 31, 2024, the aggregate principal amount outstanding of the Exchangeable Notes was $26,223. The estimated fair value of the Exchangeable Notes was $25,043 as of March 31, 2024. 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 10. 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. In December 2023, i3 Verticals, LLC received $250 from the Counterparties to terminate the portion of the Note Hedge Transactions corresponding to the Exchangeable Notes that were repurchased in fiscal year 2020. Also in December 2023, i3 Verticals, LLC entered into agreements with the Counterparties to terminate the portion of the Note Hedge Transactions corresponding to the Exchangeable Note Repurchases. On January 18, 2024, in connection with the Exchangeable Note Repurchases, the Company and i3 Verticals, LLC terminated the corresponding portions of the Note Hedge Transactions ("Note Hedge Unwinds"), and i3 Verticals, LLC received $987 for the sale of the Note Hedge Unwinds and recorded a loss on the sale of the Note Hedge Unwinds of $245. 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. In December 2023, the Company paid $119 to the Counterparties to terminate the portion of the Warrants corresponding to the Exchangeable Notes that were repurchased in fiscal year 2020. Also in December 2023, i3 Verticals, LLC entered into agreements with the Counterparties to terminate the portion of the Warrants corresponding to the Exchangeable Note Repurchases. On January 18, 2024, in connection with the Exchangeable Note Repurchases, the Company and i3 Verticals, LLC terminated the corresponding portions of the and Warrants ("Warrant Unwinds"), and the Company paid $433 for the repurchase of the Warrant Unwinds and recorded a gain on the repurchase of the Warrant Unwinds of $105. 2023 Senior Secured Revolving Credit Facility On May 8, 2023, i3 Verticals, LLC (the “Borrower”), entered into that certain Credit Agreement (the “2023 Senior Secured Credit Facility”) with the guarantors and lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent (“JPMorgan”). The 2023 Senior Secured Credit Facility replaced the prior senior secured credit facility of the Company which was entered into on May 9, 2019 (the "Prior Senior Secured Credit Facility"). The 2023 Senior Secured Credit Facility provides for aggregate commitments of $450 million in the form of a senior secured revolving credit facility (the “Revolver”). The 2023 Senior Secured Credit Facility provides that the Borrower has the right to seek additional commitments to provide additional term loan facilities or additional revolving credit commitments in an aggregate principal amount up to, as of any date of determination, the sum of (i) the greater of $100 million and 100% of the Borrower’s consolidated EBITDA (as defined in the 2023 Senior Secured Credit Facility) for the most recently completed four quarter period, plus (ii) the amount of certain prepayments of certain indebtedness, so long as, among other things, after giving pro forma effect to the incurrence of such additional borrowings and any related transactions, the Borrower’s consolidated interest coverage ratio (as defined in the 2023 Senior Secured Credit Facility) would not be less than 3.0 to 1.0 and the Borrower’s consolidated total net leverage ratio (as defined in the 2023 Senior Secured Credit Facility) would not exceed 5.0 to 1.0. As of March 31, 2024, the Borrower's consolidated interest coverage ratio was 4.1x and total leverage ratio was 3.5x. The provision of any such additional amounts under the additional term loan facilities or additional revolving credit commitments are subject to certain additional conditions and the receipt of certain additional commitments by existing or additional lenders. The lenders under the 2023 Senior Secured Credit Facility are not under any obligation to provide any such additional term loan facilities or revolving credit commitments. The proceeds of the Revolver, together with proceeds from any additional amounts under the additional term loan facilities or additional revolving credit commitments, may only be used by the Borrower to (i) finance working capital, capital expenditures and other lawful corporate purposes, (ii) finance permitted acquisitions (as defined in the 2023 Senior Secured Credit Facility) and (iii) to refinance certain existing indebtedness. Borrowings under the Revolver will be made, at the Borrower’s option, at the Adjusted Term SOFR rate or the base rate, plus, in each case, an applicable margin. The Adjusted Term SOFR rate will be the rate of interest per annum equal to the Term SOFR rate (based upon an interest period of one, three or six months), plus 0.10%, plus an applicable margin of 2.00% to 3.00% (3.00% at March 31, 2024). The Adjusted Term SOFR rate shall not be less than 0% in any event. The base rate is a fluctuating rate of interest per annum equal to the highest of (a) the greater of the federal funds rate or the overnight bank funding rate, plus ½ of 1%, (b) Wall Street Journal prime rate and (c) the Adjusted Term SOFR rate for an interest period of one month, plus 1%, plus an applicable margin of 1.00% to 2.00% (2.00% at March 31, 2024). The base rate shall not be less than 1% in any event. The applicable margin is based upon the Borrower’s consolidated total net leverage ratio (as defined in the 2023 Senior Secured Credit Facility), as reflected in the schedule below: Consolidated Total Net Leverage Ratio Commitment Fee Letter of Credit Fee Term Benchmark Loans Base Rate Loans > 3.0 to 1.0 0.30 % 3.00 % 3.00 % 2.00 % > 2.5 to 1.0 but < 3.00 to 1.0 0.25 % 2.50 % 2.50 % 1.50 % > 2.0 to 1.0 but < 2.50 to 1.0 0.20 % 2.25 % 2.25 % 1.25 % < 2.0 to 1.0 0.15 % 2.00 % 2.00 % 1.00 % In addition to paying interest on outstanding principal under the Revolver, the Borrower will be required to pay a commitment fee equal to the product of between 0.15% and 0.30% (the applicable percentage depending on the Borrower’s consolidated total net leverage ratio as reflected in the schedule above, 0.30% at March 31, 2024) times the actual daily amount by which $450 million exceeds the total amount outstanding under the Revolver and available to be drawn under all outstanding letters of credit. The Borrower will be permitted to voluntarily reduce the unutilized portion of the commitment amount and repay outstanding loans under the 2023 Senior Secured Credit Facility, whether such amounts are issued under the Revolver or under the additional term loan facilities or additional revolving credit facilities, at any time without premium or penalty. In addition, if the total amount borrowed under the Revolver exceeds $450 million at any time, the 2023 Senior Secured Credit Facility requires the Borrower to prepay such excess outstanding amounts. All obligations under the 2023 Senior Secured Credit Facility are unconditionally guaranteed by the Company, and each of the Company’s existing and future direct and indirect material, wholly owned domestic subsidiaries, subject to certain exceptions. The obligations are secured by first-priority security interests in substantially all tangible and intangible assets of the Borrower, the Company and each subsidiary guarantor, in each case whether owned on the date of the initial borrowings or thereafter acquired. The 2023 Senior Secured Credit Facility places certain restrictions on the ability of the Borrower, the Company and their subsidiaries to, among other things, incur debt and liens; merge, consolidate or liquidate; dispose of assets; enter into hedging arrangements; make certain restricted payments; undertake transactions with affiliates; enter into sale-leaseback transactions; make certain investments; prepay or modify the terms of certain indebtedness; and modify the terms of certain organizational agreements. The 2023 Senior Secured Credit Facility contains customary events of default, including payment defaults, breaches of representations and warranties, covenant defaults, cross-defaults to other material indebtedness, certain events of bankruptcy and insolvency, material judgments, certain events with respect to employee benefit plans, invalidity of loan documents and certain changes in control. Debt issuance costs The Company did not incur any debt issuance costs during the three and six months ended March 31, 2024, and incurred $265 in debt issuance costs during the six months ended March 31, 2023. During the three and six months ended March 31, 2024. the Company wrote off $926 of debt issuance costs in connection with the Exchangeable Note Repurchases. The Company's debt issuance costs are being amortized over the related term of the debt using the straight-line method, which is not materially different than the effective interest rate method, and are presented net against long-term debt in the condensed consolidated balance sheets. The amortization of deferred debt issuance costs is included in interest expense and amounted to approximately $262 and $676 during the three and six months ended March 31, 2024, respectively, and $368 and $729 during the three and six months ended March 31, 2023, respectively. |
INCOME TAXES
INCOME TAXES | 6 Months Ended |
Mar. 31, 2024 | |
Income Tax Disclosure [Abstract] | |
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 Company’s tax provision for interim periods is determined using an estimate of its annual effective tax rate, adjusted for discrete items, if any, that are taken into account in the relevant period. When the estimate of the annual effective tax rate is unreliable, the Company records its income tax expense or benefit based up on a period to date effective tax rate. Each quarter, the Company updates its estimate of the annual effective tax rate, and if the Company’s estimated tax rate changes, it makes a cumulative adjustment in that period. The Company’s provision for income taxes was a provision of $580 and $762 for the three and six months ended March 31, 2024, respectively and a benefit of $563 and $181 during the three and six months ended March 31, 2023, respectively. 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 six months ended March 31, 2024, the Company acquired an aggregate of 40,718 Common Units in i3 Verticals, LLC in connection with the redemption of Common Units from the Continuing Equity Owners. 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 the exchange, during the six months ended March 31, 2024, the Company recognized an increase to its net deferred tax assets in the amount of $286, and corresponding Tax Receivable Agreement liabilities of $243, representing 85% of the tax benefits due to Continuing Equity Owners. The deferred tax asset and corresponding Tax Receivable Agreement liability balances were $38,009 and $40,323, respectively, as of March 31, 2024. Payments to the Continuing Equity Owners related to exchanges through March 31, 2024 will range from $0 to $3,256 per year and are expected to be paid over the next 24 years. The amounts recorded as of March 31, 2024, 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. |
LEASES
LEASES | 6 Months Ended |
Mar. 31, 2024 | |
Leases [Abstract] | |
LEASES | LEASES The Company’s leases consist primarily of real estate leases throughout the markets in which the Company operates. At contract inception, the Company determines whether an arrangement is or contains a lease, and for each identified lease, evaluates the classification as operating or financing. The Company had no finance leases as of March 31, 2024. Leased assets and obligations are recognized at the lease commencement date based on the present value of fixed lease payments to be made over the term of the lease. Renewal and termination options are factored into determination of the lease term only if the option is reasonably certain to be exercised. The weighted-average remaining lease term at March 31, 2024 and 2023 was two years and four years, respectively. The Company had no significant short-term leases during the three and six months ended March 31, 2024 and 2023. The Company’s leases do not provide a readily determinable implicit interest rate and the Company uses its incremental borrowing rate to measure the lease liability and corresponding right-of-use asset. The incremental borrowing rates were determined based on a portfolio approach considering the Company’s current secured borrowing rate adjusted for market conditions and the length of the lease term. The weighted-average discount rate used in the measurement of our lease liabilities was 7.4% and 7.3% as of March 31, 2024 and 2023, respectively. Operating lease cost is recognized on a straight-line basis over the lease term. Operating lease costs were $1,318 and $2,651 for the three and six months ended March 31, 2024, respectively, and $1,405 and $2,909 for the three and six months ended March 31, 2023, respectively, which are included in selling, general and administrative expenses in the condensed consolidated statements of operations. Total operating lease costs include variable lease costs of approximately $39 and $49, for the three and six months ended March 31, 2024, respectively, and $9 and $20 for the three and six months ended March 31, 2023, respectively, which are primarily comprised of costs of maintenance and utilities and changes in rates, and are determined based on the actual costs incurred during the period. Variable payments are expensed in the period incurred and not included in the measurement of lease assets and liabilities. Short-term rent expense was $41 and $86 for the three and six months ended March 31, 2024, respectively, and $75 and $110 for the three and six months ended March 31, 2023, respectively, and are included in selling, general and administrative expenses in the condensed consolidated statements of operations. As of March 31, 2024, maturities of lease liabilities are as follows: Fiscal Years ending September 30: 2024 (six months remaining) $ 2,598 2025 4,984 2026 3,874 2027 1,668 2028 755 Thereafter 1,261 Total future minimum lease payments (undiscounted) (1) 15,140 Less: present value discount (1,357) Present value of lease liability $ 13,783 __________________________ 1. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 6 Months Ended |
Mar. 31, 2024 | |
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, settlement assets and obligations, accounts receivable, other assets, accounts payable, and accrued expenses, approximated their fair values as of March 31, 2024 and 2023, because of the relatively short maturity dates on these instruments. The carrying amount of debt approximates fair value as of March 31, 2024 and 2023, 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, 2023 $ 8,239 Contingent consideration accrued at time of business combination 170 Change in fair value of contingent consideration included in Operating expenses (527) Contingent consideration paid (3,913) Balance at March 31, 2024 $ 3,969 Accrued Contingent Consideration Balance at September 30, 2022 $ 22,833 Contingent consideration accrued at time of business combination 760 Change in fair value of contingent consideration included in Operating expenses 3,722 Contingent consideration paid (5,056) Balance at March 31, 2023 $ 22,259 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 $3,868 and $6,825 of contingent consideration was recorded in accrued expenses and other current liabilities as of March 31, 2024 and September 30, 2023, respectively. Approximately $101 and $1,414 of contingent consideration was recorded in other long-term liabilities as of March 31, 2024 and September 30, 2023, respectively. Disclosure of Fair Values |
EQUITY-BASED COMPENSATION
EQUITY-BASED COMPENSATION | 6 Months Ended |
Mar. 31, 2024 | |
Share-Based Payment Arrangement [Abstract] | |
EQUITY-BASED COMPENSATION | EQUITY-BASED COMPENSATION A summary of equity-based compensation expense recognized during the three and six months ended March 31, 2024 and 2023 is as follows: Three Months Ended March 31, Six Months Ended March 31, 2024 2023 2024 2023 Stock options $ 4,554 $ 5,992 $ 9,523 $ 12,280 Restricted stock units 1,223 810 2,762 1,368 Equity-based compensation expense $ 5,777 $ 6,802 $ 12,285 $ 13,648 Amounts are included in general and administrative expense on the condensed consolidated statements of operations. Current and deferred income tax benefits of $927 and $2,005 were recognized during the three and six months ended March 31, 2024, respectively, and $1,215 and $2,404 during the three and six months ended March 31, 2023, respectively. 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 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 4.0%. As of March 31, 2024, equity awards with respect to 1,259,827 shares of the Company's Class A common stock were available for grant under the 2018 Plan. In September 2020, the Company adopted the 2020 Acquisition Equity Incentive Plan (the “2020 Inducement Plan”) under which the Company may grant up to 1,500,000 stock options and other equity-based awards to individuals that were not previously employees of the Company or its subsidiaries in connection with acquisitions, as a material inducement to the individual's entry into employment with the Company or its subsidiaries within the meaning of Rule 5635(c)(4) of the Nasdaq Listing Rules. In May 2021, the Company amended the 2020 Inducement Plan to increase the number of shares of the Company's Class A common stock available for issuance from 1,500,000 to 3,000,000 shares. As of March 31, 2024, equity awards with respect to 1,230,668 shares of the Company's Class A common stock were available for grant under the 2020 Inducement Plan. Share-based compensation expense includes the estimated effects of forfeitures, which will be adjusted over the requisite service period to the extent actual forfeitures differ or are expected to differ from such estimates. Stock Options The Company has issued stock option awards under the 2018 Plan and the 2020 Inducement Plan. The fair value of the stock option awards during the six months ended March 31, 2024 and during the year ended September 30, 2023 was determined on the grant date using the Black-Scholes valuation model based on the following weighted-average assumptions: March 31, 2024 September 30, 2023 Expected volatility (1) 52.1 % 54.9 % Expected dividend yield (2) — % — % Expected term (3) 6 years 6 years Risk-free interest rate (4) 4.1 % 3.9 % _________________ 1. Expected volatility is based on the Company's own share price. 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 six months ended March 31, 2024 is as follows: Stock Options Weighted Average Exercise Price Outstanding at September 30, 2023 8,576,670 $ 25.16 Granted 944,556 19.23 Exercised (32,517) 18.14 Forfeited (230,180) 27.57 Outstanding at March 31, 2024 9,258,529 $ 24.52 Exercisable at March 31, 2024 6,602,597 $ 25.08 The weighted-average grant date fair value of stock options granted during the six months ended March 31, 2024 was $10.54. As of March 31, 2024, total unrecognized compensation expense related to unvested stock options, including an estimate for pre-vesting forfeitures, was $22,046, which is expected to be recognized over a weighted-average period of 2.68 years. The Company's policy is to account for forfeitures of stock-based compensation awards as they occur. The total fair value of stock options that vested during the three and six months ended March 31, 2024 was $10,853 and 17,248, respectively. Restricted Stock Units The Company has issued Class A common stock in the form of restricted stock units ("RSUs") under the 2018 Plan. A summary of activity related to restricted stock units for the six months ended March 31, 2024 is as follows: Restricted Stock Units Weighted Average Grant Date Fair Value Outstanding at September 30, 2023 874,024 $ 24.95 Granted 258,684 19.26 Vested (172,159) 25.65 Forfeited (32,084) 24.86 Outstanding at March 31, 2024 928,465 $ 23.24 As of March 31, 2024, total unrecognized compensation expense related to unvested RSUs, including an estimate for pre-vesting forfeitures, was $14,329, which is expected to be recognized over a weighted average period of 3.01 years. The total fair value of RSUs that vested during the three and six months ended March 31, 2024 was $3,718 and $4,416, respectively. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Mar. 31, 2024 | |
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 $1,359 and $2,737 during the three and six months ended March 31, 2024, respectively, and $1,480 and $3,019 during the and three and six months ended March 31, 2023, respectively. Refer to Note 9 for further discussion and a table of the future minimum payments under these leases. Minimum Processing Commitments The Company has non-exclusive agreements with several processors to provide the Company 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 the processor would have received if the Company had submitted the required minimum number of transactions. As of March 31, 2024, such minimum fee commitments were as follows: Fiscal Years ending September 30: 2024 (six months remaining) $ 2,177 2025 728 2026 240 2027 60 2028 — Thereafter — Total $ 3,205 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, any such material 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. 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. 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. S&S Litigation On June 2, 2021, the State of Louisiana, Division of Administration (the “State”) and a putative class of Louisiana sheriffs and law enforcement districts (collectively "Plaintiffs") filed a Petition (as amended on October 4, 2021, the “Petition”), in the 19 th Judicial District Court for the Parish of East Baton Rouge against i3-Software & Services, LLC (“S&S”), a subsidiary of the Company located in Shreveport, Louisiana, the Company, i3 Verticals, LLC, the current leader of the S&S business, the former leader of the S&S business, and 1120 South Pointe Properties, LLC (“South Pointe”), the former owner of the assets of the S&S business (collectively "Defendants") . See State of Louisiana, by and through its Division of Administration, East Baton Rouge Parish Law Enforcement District, by and through the duly elected East Baton Rouge Parish Sheriff, Sid J. Gautreaux, III, et. al., individually and as class representatives vs. i3-Software & Services, LLC; 1120 South Pointe Properties, LLC, formerly known as Software and Services of Louisiana, L.L.C.; i3 Verticals, Inc.; i3 Verticals, LLC; Gregory R. Teeters; and Scott Carrington . The Petition was amended on October 4, 2021 to amend and expand the putative class and subsequently removed to the United States District Court for the Middle District of Louisiana. The Petition seeks monetary damages for the cost of network remediation of $15,000 purportedly spent by the State and $7,000 purportedly spent by the Plaintiffs, return of purchase prices, potential additional expenses related to remediation and any obligation to notify parties of an alleged data breach as and if required by applicable law, and reasonable attorneys’ fees. The claimed damages relate to a third-party remote access software product used in connection with services provided by S&S to certain Louisiana law enforcement districts and alleged inadequacies in the Company’s cybersecurity practices. Plaintiffs moved to remand the action to state court on November 5, 2021, and the motion was referred to a magistrate to make a report and recommendation to the district court judge. On July 5, 2022, the magistrate recommended that the matter be remanded to state court. On July 19, 2022, the Company and all other defendants filed objections to the recommendation. On August 3, 2022, the Plaintiffs filed a response to those objections. On August 16, 2022, the district court granted the Plaintiffs’ motion to remand, and all Defendants appealed. Oral argument on this motion in front of the United States Fifth Circuit Court of Appeals took place on April 4, 2023, and on September 1, 2023, the Fifth Circuit panel affirmed the District Court order to remand the case back to state court. On September 29, 2023, all Defendants-Appellants filed a Petition for Rehearing En Banc, which the Plaintiffs-Appellees opposed on October 12, 2023. As a result of Defendants’ petition, the Fifth Circuit held its mandate, effectively staying the effective date of its decision, but the Fifth Circuit ultimately denied the petition for rehearing on February 22, 2024, sending the case back to the 19th Judicial District Court for the Parish of East Baton Rouge, where the case remains pending. The assets of the S&S business were acquired from South Pointe by the Company in 2018 for $17,000, including upfront cash consideration and contingent consideration, and provides software and payments services within the Company’s Public Sector vertical to local government agencies almost exclusively in Louisiana. The Company is unable to predict the outcome of this litigation. While we do not believe that this matter will have a material adverse effect on our business or financial condition, we cannot give assurance that this matter will not have a material effect on our results of operations or cash flows for the period in which it is resolved. 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 | 6 Months Ended |
Mar. 31, 2024 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | RELATED PARTY TRANSACTIONS In connection with the Company’s IPO, the Company and i3 Verticals, LLC entered into a Tax Receivable Agreement with the Continuing Equity Owners 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 8 for further information. As of March 31, 2024, the total amount due under the Tax Receivable Agreement was $40,323. |
SEGMENTS
SEGMENTS | 6 Months Ended |
Mar. 31, 2024 | |
Segment Reporting [Abstract] | |
SEGMENTS | SEGMENTS The Company determines its operating segments based on ASC 280, Segment Reporting , in alignment with how the chief operating decision-making group monitors and manages the performance of the business as well as 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 seamlessly integrated software and payment solutions customers in strategic vertical markets. This is accomplished through the Merchant Services and Software and Services segments. The Software and Services segment delivers vertical market software solutions to customers across all of the Company's strategic vertical markets. These solutions often include embedded payments or other recurring services. 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 traditional merchant processing services across the Company's strategic vertical markets. The Other category includes corporate overhead expenses when presenting reportable segment information. The Company primarily uses processing margin to measure operating performance. Processing margin is equal to revenue less other cost of services plus residuals expense, which are a component of other cost of services. The following is a summary of reportable segment operating performance for the three and six months ended March 31, 2024 and 2023. As of and for the Three Months Ended March 31, 2024 Software and Services Merchant Services Other Total Revenue $ 59,483 $ 35,075 $ (16) $ 94,542 Other costs of services (4,908) (16,289) 17 (21,180) Residuals 735 10,587 (6) 11,316 Processing margin $ 55,310 $ 29,373 $ (5) $ 84,678 Residuals (11,316) Selling, general and administrative (54,162) Depreciation and amortization (10,069) Change in fair value of contingent consideration 290 Income from operations $ 9,421 Total assets $ 593,219 $ 212,082 $ 60,241 $ 865,542 Goodwill $ 288,822 $ 121,950 $ — $ 410,772 As of and for the Six Months Ended March 31, 2024 Software and Services Merchant Services Other Total Revenue $ 116,072 $ 70,497 $ (37) $ 186,532 Other costs of services (9,217) (32,423) 36 (41,604) Residuals 1,353 20,987 (15) 22,325 Processing margin $ 108,208 $ 59,061 $ (16) $ 167,253 Residuals (22,325) Selling, general and administrative (107,694) Depreciation and amortization (19,808) Change in fair value of contingent consideration 527 Income from operations $ 17,953 Total assets $ 593,219 $ 212,082 $ 60,241 $ 865,542 Goodwill $ 288,822 $ 121,950 $ — $ 410,772 As of and for the Three Months Ended March 31, 2023 Software and Services Merchant Services Other Total Revenue $ 60,797 $ 33,094 $ (19) $ 93,872 Other costs of services (4,229) (15,719) 18 (19,930) Residuals 799 10,039 (9) 10,829 Processing Margin $ 57,367 $ 27,414 $ (10) $ 84,771 Residuals (10,829) Selling, general and administrative (57,204) Depreciation and amortization (9,015) Change in fair value of contingent consideration (2,279) Income from operations $ 5,444 Total assets $ 620,126 $ 205,898 $ 57,002 $ 883,026 Goodwill $ 287,092 $ 121,950 $ — $ 409,042 As of and for the Six Months Ended March 31, 2023 Software and Services Merchant Services Other Total Revenue $ 114,010 $ 65,928 $ (37) $ 179,901 Other costs of services (7,752) (31,286) 39 (38,999) Residuals 1,322 19,848 (20) 21,150 Processing margin $ 107,580 $ 54,490 $ (18) $ 162,052 Residuals (21,150) Selling, general and administrative (108,207) Depreciation and amortization (17,691) Change in fair value of contingent consideration (3,722) Income from operations $ 11,282 Total assets $ 620,126 $ 205,898 $ 57,002 $ 883,026 Goodwill $ 287,092 $ 121,950 $ — $ 409,042 The Company has not disclosed expenditures on long-lived assets as such expenditures are not reviewed by or provided to the chief operating decision maker. |
NON-CONTROLLING INTEREST
NON-CONTROLLING INTEREST | 6 Months Ended |
Mar. 31, 2024 | |
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 March 31, 2024 and 2023, respectively, i3 Verticals, Inc. owned 23,416,518 and 23,167,730 of i3 Verticals, LLC's Common Units, representing a 70.0% and 69.6% 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: Six Months Ended March 31, 2024 2023 Net income attributable to non-controlling interest $ 1,908 $ 181 Transfers (from) to non-controlling interests: Redemption of common units in i3 Verticals, LLC (384) (86) Allocation of equity to non-controlling interests 3,750 299 Net transfers to non-controlling interests 3,366 213 Change from net income attributable to non-controlling interests and net transfers to non-controlling interests $ 5,274 $ 394 |
EARNINGS PER SHARE
EARNINGS PER SHARE | 6 Months Ended |
Mar. 31, 2024 | |
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. 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 for the three and six months ended March 31, 2024 and 2023: Three Months Ended March 31, Six Months Ended March 31, 2024 2023 2024 2023 Basic net income (loss) per share: Numerator Net income (loss) $ 3,348 $ (192) $ 4,884 $ (23) Less: Net income (loss) attributable to non-controlling interest 1,470 (228) 1,908 181 Net income (loss) attributable to Class A common stockholders $ 1,878 $ 36 $ 2,976 $ (204) Denominator Weighted average shares of Class A common stock outstanding 23,331,239 23,135,898 23,299,214 23,066,499 Basic net income (loss) per share (1) $ 0.08 $ 0.00 $ 0.13 $ (0.01) Diluted net income per share: Numerator Net income attributable to Class A common stockholders $ 1,878 $ 36 $ 2,976 Reallocation of net loss assuming conversion of common units (2)(3) — (171) — Net income (loss) attributable to Class A common stockholders - diluted 1,878 (135) 2,976 Denominator Weighted average shares of Class A common stock outstanding 23,331,239 23,135,898 23,299,214 Weighted average effect of dilutive securities (2) 387,235 11,133,242 427,506 Weighted average shares of Class A common stock outstanding - diluted 23,718,474 34,269,140 23,726,720 Diluted net income (loss) per share $ 0.08 $ 0.00 $ 0.13 __________________________ 1. For the six months ended March 31, 2023, 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 net loss per share of Class A common stock: a. 10,114,598 weighted average shares of Class B common stock for the six months ended March 31, 2023, along with the reallocation of net income assuming conversion of these shares, were excluded because the effect would have been anti-dilutive. b. 5,165,478 stock options for the six months ended March 31, 2023, were excluded because the exercise price of these stock 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. 633,453 shares for the six months ended March 31, 2023, resulting from estimated stock option exercises and restricted stock units vesting as calculated by the treasury stock method were excluded because of the effect of including them would have been anti-dilutive. 2. For the three and six months ended March 31, 2024 and the three months ended March 31, 2023, the following securities were excluded from the weighted average effect of dilutive securities in the computation of diluted net income per share of Class A common stock: a. 10,091,604 and 10,092,504 weighted average shares of Class B common stock for the three and six months ended March 31, 2024, respectively, along with the reallocation of net income assuming conversion of these shares, were excluded because the effect would have been anti-dilutive, and b. 7,852,595 and 8,246,542 stock options for the three and six months ended March 31, 2024, respectively, and 4,018,042 stock options for the three months ended March 31, 2023, were excluded because the exercise price of these stock 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. 3. 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 8 above and assuming all common units of i3 Verticals, LLC were exchanged for Class A common stock at the beginning of the period. 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 period. In September 2022 the Company made the irrevocable election to settle the principal portion of its Exchangeable Notes only in cash, 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 7 for further discussion regarding the Exchangeable Notes. |
SIGNIFICANT NON-CASH TRANSACTIO
SIGNIFICANT NON-CASH TRANSACTIONS | 6 Months Ended |
Mar. 31, 2024 | |
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 six months ended March 31, 2024 and 2023: Six months ended March 31, 2024 2023 Acquisition date fair value of contingent consideration in connection with business combinations $ 170 $ 760 Debt issuance costs financed with proceeds from the 2023 Senior Secured Credit Facility $ — $ 178 Consideration accrued for residual buyouts $ 252 $ — Right-of-use assets obtained in exchange for operating lease obligations $ 1,279 $ 1,098 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 6 Months Ended |
Mar. 31, 2024 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | SUBSEQUENT EVENTS [PENDING] |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2024 | Mar. 31, 2023 | |
Pay vs Performance Disclosure | ||||
Net income attributable to Class A common stockholders | $ 1,878 | $ 36 | $ 2,976 | $ (204) |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Mar. 31, 2024 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Mar. 31, 2024 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and pursuant to the reporting and disclosure rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, such statements include all adjustments (consisting only of normal recurring items) which are considered necessary for fair presentation of the unaudited condensed consolidated financial statements of the Company and its subsidiaries as of March 31, 2024 and for the three and six months ended March 31, 2024 and 2023. The results of operations for the three and six months ended March 31, 2024 and 2023 are not necessarily indicative of the operating results for the full year. As permitted by the rules and regulations of the SEC, certain information and disclosures otherwise included in the notes to the consolidated financial statements have been condensed or omitted from the summary of significant accounting policies. The Company believes the disclosures are adequate to make the information presented not misleading. It is recommended that these interim condensed consolidated financial statements be read in conjunction with the Company's consolidated financial statements and related footnotes for the years ended September 30, 2023 and 2022, included in the Company’s Annual Report on Form 10-K for the year ended September 30, 2023 filed with the SEC on November 22, 2023. |
Principles of Consolidation | Principles of Consolidation |
Restricted Cash | Restricted Cash Restricted cash represents funds held in escrow related to acquisitions or held-on-deposit with processing banks pursuant to agreements to cover potential merchant losses. It is presented as long-term assets on the accompanying condensed 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 |
Settlement Assets and Obligations | Settlement Assets and Obligations one |
Reclassifications | Reclassifications Certain prior period amounts have been reclassified in order to conform with the current period presentation. These reclassifications have no impact on the Company’s previously reported consolidated net income (loss). |
Inventories | Inventories |
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 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 values of trade names and internally-developed software acquired are identified using the Relief from Royalty 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 condensed consolidated statements of operations. |
Leases | Leases The Company adopted ASU 2016-02, Leases, on October 1, 2020, using the optional modified retrospective method under which the prior period financial statements were not restated for the new guidance. The Company elected the accounting policy practical expedients for all classes of underlying assets to (i) combine associated lease and non-lease components in a lease arrangement as a combined lease component and (ii) exclude recording short-term leases as right-of-use assets on the condensed consolidated balance sheets. At contract inception the Company determines whether an arrangement is, or contains a lease, and for each identified lease, evaluates the classification as operating or financing. Leased assets and obligations are recognized at the lease commencement date based on the present value of fixed lease payments to be made over the term of the lease. Renewal and termination options are factored into determination of the lease term only if the option is reasonably certain to be exercised. The Company’s leases do not provide a readily determinable implicit interest rate and the Company uses its incremental borrowing rate to measure the lease liability and corresponding right-of-use asset. The incremental borrowing rate is a fully collateralized rate that considers the Company’s credit rating, market conditions and the term of the lease. The Company accounts for all components in a lease arrangement as a single combined lease component. Operating lease cost is recognized on a straight-line basis over the lease term. Total lease costs include variable lease costs, which are primarily comprised of the consumer price index adjustments and other changes based on rates, such as costs of insurance and property taxes. Variable payments are expensed in the period incurred and not included in the measurement of lease assets and obligations. |
Revenue Recognition and Deferred Revenue | Revenue Recognition and Deferred Revenue 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's revenue for the six months ended March 31, 2024 and 2023 is derived from the following sources: • Software and related services — Includes sales of software as a service, transaction-based fees, ongoing software maintenance and support, software licenses and other professional services related to our software offerings • Payments — Includes volume-based payment processing fees (“discount fees”), gateway fees and other related fixed transaction or service fees • Other — Includes sales of equipment, non-software related professional services and other revenues 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 customer. 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. 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 customers under which the customer engages the Company to provide both payment authorization services and transaction settlement services for all of the cardholder transactions of the customer, 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 customers 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 customer, 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 customer 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 six months ended March 31, 2024 and 2023. 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 transaction fees, which are charged for accessing our payment and software solutions, and fees for other miscellaneous services. Revenues derived from such fees are recognized at the time the transactions occur and when there are no further performance obligations. Revenue from the sale of equipment, is recognized upon transfer of ownership to the customer, after which there are no further performance obligations. 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, customer 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 tables below present a disaggregation of the Company's revenue from contracts with customers by product by segment. Refer to Note 14 for discussion of the Company's segments. The Company's products are defined as follows: • Software and related services — Includes SaaS, transaction-based fees, ongoing software maintenance and support, software licenses and other professional services related to our software offerings • Payments — Includes discount fees, gateway fees and other related fixed transaction or service fees • Other — Includes sales of equipment, non-software related professional services and other revenues For the Three Months Ended March 31, 2024 Software and Services Merchant Services Other Total Software and related services revenue $ 42,130 $ 3,537 $ (10) $ 45,657 Payments revenue 14,855 29,585 (6) 44,434 Other revenue 2,498 1,953 — 4,451 Total revenue $ 59,483 $ 35,075 $ (16) $ 94,542 For the Three Months Ended March 31, 2023 Software and Services Merchant Services Other Total Software and related services revenue $ 44,099 $ 3,217 $ (9) $ 47,307 Payments revenue 14,285 27,634 (10) 41,909 Other revenue 2,413 2,243 — 4,656 Total revenue $ 60,797 $ 33,094 $ (19) $ 93,872 For the Six Months Ended March 31, 2024 Software and Services Merchant Services Other Total Software and related services revenue $ 82,462 $ 6,839 $ (22) $ 89,279 Payments revenue 28,837 59,607 (15) 88,429 Other revenue 4,773 4,051 — 8,824 Total revenue $ 116,072 $ 70,497 $ (37) $ 186,532 For the Six Months Ended March 31, 2023 Software and Services Merchant Services Other Total Software and related services revenue $ 82,244 $ 6,196 $ (19) $ 88,421 Payments revenue 27,038 55,243 (18) 82,263 Other revenue 4,728 4,489 — 9,217 Total revenue $ 114,010 $ 65,928 $ (37) $ 179,901 The tables below present a disaggregation of the Company's revenue from contracts with customers by timing of transfer of goods or services by segment. The Company's revenue included in each category are defined as follows: • Revenue earned over time — Includes discount fees, gateway fees, sales of SaaS, ongoing support or other stand-ready obligations and professional services • Revenue earned at a point in time — Includes point in time service fees that are not stand-ready obligations, software licenses sold as functional intellectual property and other equipment For the Three Months Ended March 31, 2024 Software and Services Merchant Services Other Total Revenue earned over time $ 55,361 $ 30,095 $ (10) $ 85,446 Revenue earned at a point in time 4,122 4,980 (6) 9,096 Total revenue $ 59,483 $ 35,075 $ (16) $ 94,542 For the Three Months Ended March 31, 2023 Software and Services Merchant Services Other Total Revenue earned over time $ 54,568 $ 27,984 $ (9) $ 82,543 Revenue earned at a point in time 6,229 5,110 (10) 11,329 Total revenue $ 60,797 $ 33,094 $ (19) $ 93,872 For the Six Months Ended March 31, 2024 Software and Services Merchant Services Other Total Revenue earned over time $ 109,715 $ 60,176 $ (22) $ 169,869 Revenue earned at a point in time 6,357 10,321 (15) 16,663 Total revenue $ 116,072 $ 70,497 $ (37) $ 186,532 For the Six Months Ended March 31, 2023 Software and Services Merchant Services Other Total Revenue earned over time $ 105,009 $ 55,581 $ (19) $ 160,571 Revenue earned at a point in time 9,001 10,347 (18) 19,330 Total revenue $ 114,010 $ 65,928 $ (37) $ 179,901 Contract Assets The Company bills for certain software and related services sales and fixed fee professional services upon pre-determined milestones in the contracts. Therefore, the Company may have contract assets other than trade accounts receivable for performance obligations that are partially completed, which would typically represent consulting services provided before a milestone is completed in a contract. Additionally, contract assets also include software licenses sold as a right to use license but paid for under a subscription model. Under this structure, the license revenue is recognized upfront while a portion of the revenue is unbilled. Unbilled amounts associated with these services are presented as accounts receivable as the Company has an unconditional right to payment for services performed. As of March 31, 2024 and September 30, 2023, the Company’s contract assets from contracts with customers was $11,478 and $15,131, respectively. Contract Liabilities Deferred revenue represents amounts billed to customers 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 condensed 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 tables present the changes in deferred revenue as of and for the six months ended March 31, 2024 and 2023, respectively: Balance at September 30, 2023 $ 35,444 Deferral of revenue 19,793 Recognition of unearned revenue (15,664) Balance at December 31, 2023 39,573 Deferral of revenue 11,759 Recognition of unearned revenue (13,596) Balance at March 31, 2024 $ 37,736 Balance at September 30, 2022 $ 32,089 Deferral of revenue 19,334 Recognition of unearned revenue (13,925) Balance at December 31, 2022 37,498 Deferral of revenue 10,475 Recognition of unearned revenue (14,286) Balance at March 31, 2023 $ 33,687 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 March 31, 2024 and September 30, 2023, the Company had $5,417 and $4,966, respectively, of capitalized contract costs, which relates to commissions paid to employees and agents as well as other incentives given to customers to obtain new sales, included within “Other assets" on the condensed consolidated balance sheets. The Company recorded expense related to these costs of $241 and $470 for the three and six months ended March 31, 2024, respectively and $193 and $376 for the three and six months ended March 31, 2023. The Company expenses sales commissions as incurred for the Company's sales commission plans that are paid on recurring monthly revenues, portfolios of existing customers, or have a substantive stay requirement prior to payment. Other Cost of Services Other costs of services include third-party processing 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 condensed 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 condensed consolidated balance sheets. The cost of equipment and software sold is also included in other cost of services. Other costs of services are recognized at the time the associated revenue is earned. |
Use of Estimates | Use of Estimates |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Recently Issued Accounting Pronouncements Not Yet Adopted In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740)—Improvements to Income Tax Disclosures (“ASU 2023-09”). ASU 2023-09 will provide improvements to the income tax disclosures primarily related to the income taxes paid and rate reconciliation, and how legislation changes may affect future capital allocation and cash flow forecasts. The amendment will improve the consistency in which companies provide tax information, and will further increase the transparency of related tax risks and operational opportunities. The amendments in ASU 2023-09 are effective for annual periods beginning after December 15, 2024, with early adoption permitted. The Company will not be required to adopt ASU 2023-09 until October 1, 2025. The Company is currently evaluating the impact of the adoption of ASU 2023-09 on the Company’s financial statement disclosures. In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280)—Improvements to Reportable Segment Disclosures (“ASU 2023-07”). ASU 2023-07 improves interim disclosure requirements for segment reporting, including clarifications regarding the measure of profit and loss used to asses segment performance and the allocation of resources. Further, it enhances the disclosures for reporting segment expenses and will require the Company to report significant expenses regularly provided by the chief operating decision maker. The amendment will require companies to disclose a more granular level of information with regards to segment reporting to further enhance the transparency of what specified amounts are included within each segment. The amendments in ASU 2023-07 are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company will not be required to adopt ASU 2023-07 until October 1, 2024. The Company is currently evaluating the impact of the adoption of ASU 2023-07 on the Company’s financial statement disclosures. |
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) | 6 Months Ended |
Mar. 31, 2024 | |
Accounting Policies [Abstract] | |
Schedule of New Accounting Pronouncements and Changes in Accounting Principles | The following tables present the effects of the change in presentation within the Condensed Consolidated Statements of Cash Flows: For the Six Months Ended March 31, 2024 As Previously Reported Adjustment As Adjusted Cash flows from operating activities: Settlement obligations (3,287) 3,287 — Net cash provided by operating activities 21,860 3,287 25,147 Cash flows from financing activities: Net payments for settlement obligations — (3,287) (3,287) Net cash used in financing activities (14,598) (3,287) (17,885) For the Six Months Ended March 31, 2023 As Previously Reported Adjustment As Adjusted Cash flows from operating activities: Settlement obligations (355) 355 — Net cash provided by operating activities 25,529 355 25,884 Cash flows from financing activities: Net payments for settlement obligations — (355) (355) Net cash provided by (used in) financing activities 84,169 (355) 83,814 |
Schedule of Disaggregation of Revenue | The tables below present a disaggregation of the Company's revenue from contracts with customers by product by segment. Refer to Note 14 for discussion of the Company's segments. The Company's products are defined as follows: • Software and related services — Includes SaaS, transaction-based fees, ongoing software maintenance and support, software licenses and other professional services related to our software offerings • Payments — Includes discount fees, gateway fees and other related fixed transaction or service fees • Other — Includes sales of equipment, non-software related professional services and other revenues For the Three Months Ended March 31, 2024 Software and Services Merchant Services Other Total Software and related services revenue $ 42,130 $ 3,537 $ (10) $ 45,657 Payments revenue 14,855 29,585 (6) 44,434 Other revenue 2,498 1,953 — 4,451 Total revenue $ 59,483 $ 35,075 $ (16) $ 94,542 For the Three Months Ended March 31, 2023 Software and Services Merchant Services Other Total Software and related services revenue $ 44,099 $ 3,217 $ (9) $ 47,307 Payments revenue 14,285 27,634 (10) 41,909 Other revenue 2,413 2,243 — 4,656 Total revenue $ 60,797 $ 33,094 $ (19) $ 93,872 For the Six Months Ended March 31, 2024 Software and Services Merchant Services Other Total Software and related services revenue $ 82,462 $ 6,839 $ (22) $ 89,279 Payments revenue 28,837 59,607 (15) 88,429 Other revenue 4,773 4,051 — 8,824 Total revenue $ 116,072 $ 70,497 $ (37) $ 186,532 For the Six Months Ended March 31, 2023 Software and Services Merchant Services Other Total Software and related services revenue $ 82,244 $ 6,196 $ (19) $ 88,421 Payments revenue 27,038 55,243 (18) 82,263 Other revenue 4,728 4,489 — 9,217 Total revenue $ 114,010 $ 65,928 $ (37) $ 179,901 The tables below present a disaggregation of the Company's revenue from contracts with customers by timing of transfer of goods or services by segment. The Company's revenue included in each category are defined as follows: • Revenue earned over time — Includes discount fees, gateway fees, sales of SaaS, ongoing support or other stand-ready obligations and professional services • Revenue earned at a point in time — Includes point in time service fees that are not stand-ready obligations, software licenses sold as functional intellectual property and other equipment For the Three Months Ended March 31, 2024 Software and Services Merchant Services Other Total Revenue earned over time $ 55,361 $ 30,095 $ (10) $ 85,446 Revenue earned at a point in time 4,122 4,980 (6) 9,096 Total revenue $ 59,483 $ 35,075 $ (16) $ 94,542 For the Three Months Ended March 31, 2023 Software and Services Merchant Services Other Total Revenue earned over time $ 54,568 $ 27,984 $ (9) $ 82,543 Revenue earned at a point in time 6,229 5,110 (10) 11,329 Total revenue $ 60,797 $ 33,094 $ (19) $ 93,872 For the Six Months Ended March 31, 2024 Software and Services Merchant Services Other Total Revenue earned over time $ 109,715 $ 60,176 $ (22) $ 169,869 Revenue earned at a point in time 6,357 10,321 (15) 16,663 Total revenue $ 116,072 $ 70,497 $ (37) $ 186,532 For the Six Months Ended March 31, 2023 Software and Services Merchant Services Other Total Revenue earned over time $ 105,009 $ 55,581 $ (19) $ 160,571 Revenue earned at a point in time 9,001 10,347 (18) 19,330 Total revenue $ 114,010 $ 65,928 $ (37) $ 179,901 |
Schedule of Contract with Customer, Asset and Liability | The following tables present the changes in deferred revenue as of and for the six months ended March 31, 2024 and 2023, respectively: Balance at September 30, 2023 $ 35,444 Deferral of revenue 19,793 Recognition of unearned revenue (15,664) Balance at December 31, 2023 39,573 Deferral of revenue 11,759 Recognition of unearned revenue (13,596) Balance at March 31, 2024 $ 37,736 Balance at September 30, 2022 $ 32,089 Deferral of revenue 19,334 Recognition of unearned revenue (13,925) Balance at December 31, 2022 37,498 Deferral of revenue 10,475 Recognition of unearned revenue (14,286) Balance at March 31, 2023 $ 33,687 |
ACQUISITIONS (Tables)
ACQUISITIONS (Tables) | 6 Months Ended |
Mar. 31, 2024 | |
Business Combination and Asset Acquisition [Abstract] | |
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 date, were as follows: Accounts receivable $ 7,660 Prepaid expenses and other current assets 103 Property and equipment 5,233 Capitalized software 12,600 Customer relationships 33,800 Non-compete agreements 200 Trade name 600 Goodwill 43,899 Total assets acquired 104,095 Accounts payable 9 Accrued expenses and other current liabilities 3,182 Deferred revenue, current 2,741 Other long-term liabilities 13,162 Net assets acquired $ 85,001 |
PREPAID EXPENSES AND OTHER CU_2
PREPAID EXPENSES AND OTHER CURRENT ASSETS (Tables) | 6 Months Ended |
Mar. 31, 2024 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Schedule of Prepaid Expenses and Other Current Assets | A summary of the Company's prepaid expenses and other current assets as of March 31, 2024 and September 30, 2023 is as follows: March 31, September 30, 2024 2023 Inventory $ 3,978 $ 4,138 Prepaid licenses 3,613 3,115 Prepaid insurance 929 697 Notes receivable — current portion — 4 Other current assets 7,282 4,495 Prepaid expenses and other current assets $ 15,802 $ 12,449 |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS (Tables) | 6 Months Ended |
Mar. 31, 2024 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Changes in Carrying Amount of Goodwill | Changes in the carrying amount of goodwill are as follows: Software and Services Merchant Services Other Total Balance at September 30, 2023 $ 287,613 $ 121,950 $ — $ 409,563 Goodwill attributable to preliminary purchase price adjustments and acquisitions during the six months ended March 31, 2024 1,209 — — 1,209 Balance at March 31, 2024 $ 288,822 $ 121,950 $ — $ 410,772 |
Schedule of Finite-Lived Intangible Assets | Intangible assets consisted of the following as of March 31, 2024: Cost Accumulated Amortization Carrying Value Amortization Life and Method Finite-lived intangible assets: Merchant relationships $ 310,721 $ (106,892) $ 203,829 9 to 25 years – accelerated or straight-line Non-compete agreements 418 (267) 151 3 to 6 years – straight-line Website and brand development costs 103 (71) 32 3 to 4 years – straight-line Trade names 6,131 (3,908) 2,223 3 to 7 years – straight-line Residual buyouts 18,686 (4,134) 14,552 8 years – straight-line Referral and exclusivity agreements 420 (105) 315 5 years – straight-line Total finite-lived intangible assets 336,479 (115,377) 221,102 Indefinite-lived intangible assets: Trademarks 43 — 43 Total identifiable intangible assets $ 336,522 $ (115,377) $ 221,145 |
Schedule of Indefinite-Lived Intangible Assets | Intangible assets consisted of the following as of March 31, 2024: Cost Accumulated Amortization Carrying Value Amortization Life and Method Finite-lived intangible assets: Merchant relationships $ 310,721 $ (106,892) $ 203,829 9 to 25 years – accelerated or straight-line Non-compete agreements 418 (267) 151 3 to 6 years – straight-line Website and brand development costs 103 (71) 32 3 to 4 years – straight-line Trade names 6,131 (3,908) 2,223 3 to 7 years – straight-line Residual buyouts 18,686 (4,134) 14,552 8 years – straight-line Referral and exclusivity agreements 420 (105) 315 5 years – straight-line Total finite-lived intangible assets 336,479 (115,377) 221,102 Indefinite-lived intangible assets: Trademarks 43 — 43 Total identifiable intangible assets $ 336,522 $ (115,377) $ 221,145 |
Schedule of Future Amortization Expense for Intangible Assets | Based on net carrying amounts at March 31, 2024, the Company's estimate of future amortization expense for intangible assets are presented in the table below for fiscal years ending September 30: 2024 (six months remaining) $ 10,435 2025 20,798 2026 20,326 2027 19,706 2028 19,121 Thereafter 130,716 $ 221,102 |
ACCRUED EXPENSES AND OTHER LI_2
ACCRUED EXPENSES AND OTHER LIABILITIES (Tables) | 6 Months Ended |
Mar. 31, 2024 | |
Payables and Accruals [Abstract] | |
Schedule of Accrued Expenses and Other Current Liabilities | A summary of the Company's accrued expenses and other current liabilities as of March 31, 2024 and September 30, 2023 is as follows is as follows: March 31, September 30, 2024 2023 Accrued wages, bonuses, commissions and vacation $ 6,290 $ 8,713 Accrued interest 1,004 1,313 Accrued contingent consideration — current portion 3,868 6,825 Escrow liabilities 2,118 3,965 Customer deposits 1,061 1,258 Employee health self-insurance liability 1,058 1,014 Accrued interchange 2,066 2,191 Other current liabilities 9,389 12,461 Accrued expenses and other current liabilities $ 26,854 $ 37,740 |
Schedule of Long-term Liabilities | A summary of the Company's long-term liabilities as of March 31, 2024 and September 30, 2023 is as follows: March 31, September 30, 2024 2023 Accrued contingent consideration — long-term portion $ 101 $ 1,414 Deferred tax liability — long-term 17,125 19,646 Other long-term liabilities 1,128 3,083 Total other long-term liabilities $ 18,354 $ 24,143 |
LONG-TERM DEBT, NET (Tables)
LONG-TERM DEBT, NET (Tables) | 6 Months Ended |
Mar. 31, 2024 | |
Debt Disclosure [Abstract] | |
Schedule of Long-term Debt | A summary of long-term debt, net as of March 31, 2024 and September 30, 2023 is as follows: March 31, September 30, Maturity 2024 2023 Revolving lines of credit to banks under the 2023 Senior Secured Credit Facility May 8, 2028 $ 346,214 $ 272,505 1% Exchangeable Senior Notes due 2025 February 15, 2025 26,223 117,000 Debt issuance costs, net (2,822) (4,424) Total long-term debt, net of issuance costs 369,615 385,081 Less current portion of long-term debt (26,223) — Long-term debt, net of current portion $ 343,392 $ 385,081 |
Schedule of Consolidated Total Net Leverage Ratio | The applicable margin is based upon the Borrower’s consolidated total net leverage ratio (as defined in the 2023 Senior Secured Credit Facility), as reflected in the schedule below: Consolidated Total Net Leverage Ratio Commitment Fee Letter of Credit Fee Term Benchmark Loans Base Rate Loans > 3.0 to 1.0 0.30 % 3.00 % 3.00 % 2.00 % > 2.5 to 1.0 but < 3.00 to 1.0 0.25 % 2.50 % 2.50 % 1.50 % > 2.0 to 1.0 but < 2.50 to 1.0 0.20 % 2.25 % 2.25 % 1.25 % < 2.0 to 1.0 0.15 % 2.00 % 2.00 % 1.00 % |
LEASES (Tables)
LEASES (Tables) | 6 Months Ended |
Mar. 31, 2024 | |
Leases [Abstract] | |
Schedule of Maturities of Lease Liabilities | As of March 31, 2024, maturities of lease liabilities are as follows: Fiscal Years ending September 30: 2024 (six months remaining) $ 2,598 2025 4,984 2026 3,874 2027 1,668 2028 755 Thereafter 1,261 Total future minimum lease payments (undiscounted) (1) 15,140 Less: present value discount (1,357) Present value of lease liability $ 13,783 __________________________ 1. |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 6 Months Ended |
Mar. 31, 2024 | |
Fair Value Disclosures [Abstract] | |
Schedule of 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, 2023 $ 8,239 Contingent consideration accrued at time of business combination 170 Change in fair value of contingent consideration included in Operating expenses (527) Contingent consideration paid (3,913) Balance at March 31, 2024 $ 3,969 Accrued Contingent Consideration Balance at September 30, 2022 $ 22,833 Contingent consideration accrued at time of business combination 760 Change in fair value of contingent consideration included in Operating expenses 3,722 Contingent consideration paid (5,056) Balance at March 31, 2023 $ 22,259 |
EQUITY-BASED COMPENSATION (Tabl
EQUITY-BASED COMPENSATION (Tables) | 6 Months Ended |
Mar. 31, 2024 | |
Share-Based Payment Arrangement [Abstract] | |
Schedule of Equity-Based Compensation Expense | A summary of equity-based compensation expense recognized during the three and six months ended March 31, 2024 and 2023 is as follows: Three Months Ended March 31, Six Months Ended March 31, 2024 2023 2024 2023 Stock options $ 4,554 $ 5,992 $ 9,523 $ 12,280 Restricted stock units 1,223 810 2,762 1,368 Equity-based compensation expense $ 5,777 $ 6,802 $ 12,285 $ 13,648 |
Schedule of Fair Value of Stock Option Awards | The fair value of the stock option awards during the six months ended March 31, 2024 and during the year ended September 30, 2023 was determined on the grant date using the Black-Scholes valuation model based on the following weighted-average assumptions: March 31, 2024 September 30, 2023 Expected volatility (1) 52.1 % 54.9 % Expected dividend yield (2) — % — % Expected term (3) 6 years 6 years Risk-free interest rate (4) 4.1 % 3.9 % _________________ 1. Expected volatility is based on the Company's own share price. 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. |
Schedule of Stock Option Activity | A summary of stock option activity for the six months ended March 31, 2024 is as follows: Stock Options Weighted Average Exercise Price Outstanding at September 30, 2023 8,576,670 $ 25.16 Granted 944,556 19.23 Exercised (32,517) 18.14 Forfeited (230,180) 27.57 Outstanding at March 31, 2024 9,258,529 $ 24.52 Exercisable at March 31, 2024 6,602,597 $ 25.08 |
Schedule of Activity Related to Restricted Stock Unit | A summary of activity related to restricted stock units for the six months ended March 31, 2024 is as follows: Restricted Stock Units Weighted Average Grant Date Fair Value Outstanding at September 30, 2023 874,024 $ 24.95 Granted 258,684 19.26 Vested (172,159) 25.65 Forfeited (32,084) 24.86 Outstanding at March 31, 2024 928,465 $ 23.24 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 6 Months Ended |
Mar. 31, 2024 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Minimum Fee Commitments | As of March 31, 2024, such minimum fee commitments were as follows: Fiscal Years ending September 30: 2024 (six months remaining) $ 2,177 2025 728 2026 240 2027 60 2028 — Thereafter — Total $ 3,205 |
SEGMENTS (Tables)
SEGMENTS (Tables) | 6 Months Ended |
Mar. 31, 2024 | |
Segment Reporting [Abstract] | |
Schedule of Reportable Segment Performance | The following is a summary of reportable segment operating performance for the three and six months ended March 31, 2024 and 2023. As of and for the Three Months Ended March 31, 2024 Software and Services Merchant Services Other Total Revenue $ 59,483 $ 35,075 $ (16) $ 94,542 Other costs of services (4,908) (16,289) 17 (21,180) Residuals 735 10,587 (6) 11,316 Processing margin $ 55,310 $ 29,373 $ (5) $ 84,678 Residuals (11,316) Selling, general and administrative (54,162) Depreciation and amortization (10,069) Change in fair value of contingent consideration 290 Income from operations $ 9,421 Total assets $ 593,219 $ 212,082 $ 60,241 $ 865,542 Goodwill $ 288,822 $ 121,950 $ — $ 410,772 As of and for the Six Months Ended March 31, 2024 Software and Services Merchant Services Other Total Revenue $ 116,072 $ 70,497 $ (37) $ 186,532 Other costs of services (9,217) (32,423) 36 (41,604) Residuals 1,353 20,987 (15) 22,325 Processing margin $ 108,208 $ 59,061 $ (16) $ 167,253 Residuals (22,325) Selling, general and administrative (107,694) Depreciation and amortization (19,808) Change in fair value of contingent consideration 527 Income from operations $ 17,953 Total assets $ 593,219 $ 212,082 $ 60,241 $ 865,542 Goodwill $ 288,822 $ 121,950 $ — $ 410,772 As of and for the Three Months Ended March 31, 2023 Software and Services Merchant Services Other Total Revenue $ 60,797 $ 33,094 $ (19) $ 93,872 Other costs of services (4,229) (15,719) 18 (19,930) Residuals 799 10,039 (9) 10,829 Processing Margin $ 57,367 $ 27,414 $ (10) $ 84,771 Residuals (10,829) Selling, general and administrative (57,204) Depreciation and amortization (9,015) Change in fair value of contingent consideration (2,279) Income from operations $ 5,444 Total assets $ 620,126 $ 205,898 $ 57,002 $ 883,026 Goodwill $ 287,092 $ 121,950 $ — $ 409,042 As of and for the Six Months Ended March 31, 2023 Software and Services Merchant Services Other Total Revenue $ 114,010 $ 65,928 $ (37) $ 179,901 Other costs of services (7,752) (31,286) 39 (38,999) Residuals 1,322 19,848 (20) 21,150 Processing margin $ 107,580 $ 54,490 $ (18) $ 162,052 Residuals (21,150) Selling, general and administrative (108,207) Depreciation and amortization (17,691) Change in fair value of contingent consideration (3,722) Income from operations $ 11,282 Total assets $ 620,126 $ 205,898 $ 57,002 $ 883,026 Goodwill $ 287,092 $ 121,950 $ — $ 409,042 |
NON-CONTROLLING INTEREST (Table
NON-CONTROLLING INTEREST (Tables) | 6 Months Ended |
Mar. 31, 2024 | |
Noncontrolling Interest [Abstract] | |
Schedule of Ownership Interest | The following table summarizes the impact on equity due to changes in the Company's ownership interest in i3 Verticals, LLC: Six Months Ended March 31, 2024 2023 Net income attributable to non-controlling interest $ 1,908 $ 181 Transfers (from) to non-controlling interests: Redemption of common units in i3 Verticals, LLC (384) (86) Allocation of equity to non-controlling interests 3,750 299 Net transfers to non-controlling interests 3,366 213 Change from net income attributable to non-controlling interests and net transfers to non-controlling interests $ 5,274 $ 394 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 6 Months Ended |
Mar. 31, 2024 | |
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 for the three and six months ended March 31, 2024 and 2023: Three Months Ended March 31, Six Months Ended March 31, 2024 2023 2024 2023 Basic net income (loss) per share: Numerator Net income (loss) $ 3,348 $ (192) $ 4,884 $ (23) Less: Net income (loss) attributable to non-controlling interest 1,470 (228) 1,908 181 Net income (loss) attributable to Class A common stockholders $ 1,878 $ 36 $ 2,976 $ (204) Denominator Weighted average shares of Class A common stock outstanding 23,331,239 23,135,898 23,299,214 23,066,499 Basic net income (loss) per share (1) $ 0.08 $ 0.00 $ 0.13 $ (0.01) Diluted net income per share: Numerator Net income attributable to Class A common stockholders $ 1,878 $ 36 $ 2,976 Reallocation of net loss assuming conversion of common units (2)(3) — (171) — Net income (loss) attributable to Class A common stockholders - diluted 1,878 (135) 2,976 Denominator Weighted average shares of Class A common stock outstanding 23,331,239 23,135,898 23,299,214 Weighted average effect of dilutive securities (2) 387,235 11,133,242 427,506 Weighted average shares of Class A common stock outstanding - diluted 23,718,474 34,269,140 23,726,720 Diluted net income (loss) per share $ 0.08 $ 0.00 $ 0.13 __________________________ 1. For the six months ended March 31, 2023, 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 net loss per share of Class A common stock: a. 10,114,598 weighted average shares of Class B common stock for the six months ended March 31, 2023, along with the reallocation of net income assuming conversion of these shares, were excluded because the effect would have been anti-dilutive. b. 5,165,478 stock options for the six months ended March 31, 2023, were excluded because the exercise price of these stock 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. 633,453 shares for the six months ended March 31, 2023, resulting from estimated stock option exercises and restricted stock units vesting as calculated by the treasury stock method were excluded because of the effect of including them would have been anti-dilutive. 2. For the three and six months ended March 31, 2024 and the three months ended March 31, 2023, the following securities were excluded from the weighted average effect of dilutive securities in the computation of diluted net income per share of Class A common stock: a. 10,091,604 and 10,092,504 weighted average shares of Class B common stock for the three and six months ended March 31, 2024, respectively, along with the reallocation of net income assuming conversion of these shares, were excluded because the effect would have been anti-dilutive, and b. 7,852,595 and 8,246,542 stock options for the three and six months ended March 31, 2024, respectively, and 4,018,042 stock options for the three months ended March 31, 2023, were excluded because the exercise price of these stock 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. 3. 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 8 above and assuming all common units of i3 Verticals, LLC were exchanged for Class A common stock at the beginning of the period. 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 period. |
SIGNIFICANT NON-CASH TRANSACT_2
SIGNIFICANT NON-CASH TRANSACTIONS (Tables) | 6 Months Ended |
Mar. 31, 2024 | |
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 six months ended March 31, 2024 and 2023: Six months ended March 31, 2024 2023 Acquisition date fair value of contingent consideration in connection with business combinations $ 170 $ 760 Debt issuance costs financed with proceeds from the 2023 Senior Secured Credit Facility $ — $ 178 Consideration accrued for residual buyouts $ 252 $ — Right-of-use assets obtained in exchange for operating lease obligations $ 1,279 $ 1,098 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2024 | Mar. 31, 2023 | Sep. 30, 2023 | Sep. 30, 2022 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Settlement assets | $ 1,586 | $ 7,185 | $ 1,586 | $ 7,185 | $ 4,873 | $ 7,540 |
Settlement obligations | 1,586 | 1,586 | 4,873 | |||
Inventories | 3,978 | 3,978 | 4,138 | |||
Contract assets from contracts with customer | 11,478 | 11,478 | 15,131 | |||
Capitalized contract costs | 5,417 | 5,417 | $ 4,966 | |||
Commissions related to capitalized contract costs | $ 241 | $ 193 | $ 470 | $ 376 | ||
Minimum | ||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Maturity period of settlement assets and obligations (in years) | 1 day | |||||
Maximum | ||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Maturity period of settlement assets and obligations (in years) | 4 days |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - New Accounting Pronouncements and Changes in Accounting Principles (Details) - USD ($) $ in Thousands | 6 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | ||
Cash flows from operating activities: | |||
Settlement obligations | $ 0 | $ 0 | |
Net cash provided by operating activities | 25,147 | 25,884 | |
Cash flows from financing activities: | |||
Net payments for settlement obligations | [1] | (3,287) | (355) |
Net cash (used in) provided by financing activities | (17,885) | 83,814 | |
As Previously Reported | |||
Cash flows from operating activities: | |||
Settlement obligations | (3,287) | (355) | |
Net cash provided by operating activities | 21,860 | 25,529 | |
Cash flows from financing activities: | |||
Net payments for settlement obligations | 0 | 0 | |
Net cash (used in) provided by financing activities | (14,598) | 84,169 | |
Adjustment | |||
Cash flows from operating activities: | |||
Settlement obligations | 3,287 | 355 | |
Net cash provided by operating activities | 3,287 | 355 | |
Cash flows from financing activities: | |||
Net payments for settlement obligations | (3,287) | (355) | |
Net cash (used in) provided by financing activities | $ (3,287) | $ (355) | |
[1]Refer to Note 2 for discussion of the change in the current period presentation. |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Disaggregated Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2024 | Mar. 31, 2023 | |
Concentration Risk [Line Items] | ||||
Total revenue | $ 94,542 | $ 93,872 | $ 186,532 | $ 179,901 |
Revenue earned over time | ||||
Concentration Risk [Line Items] | ||||
Total revenue | 85,446 | 82,543 | 169,869 | 160,571 |
Revenue earned at a point in time | ||||
Concentration Risk [Line Items] | ||||
Total revenue | 9,096 | 11,329 | 16,663 | 19,330 |
Software and Services | ||||
Concentration Risk [Line Items] | ||||
Total revenue | 59,483 | 60,797 | 116,072 | 114,010 |
Software and Services | Revenue earned over time | ||||
Concentration Risk [Line Items] | ||||
Total revenue | 55,361 | 54,568 | 109,715 | 105,009 |
Software and Services | Revenue earned at a point in time | ||||
Concentration Risk [Line Items] | ||||
Total revenue | 4,122 | 6,229 | 6,357 | 9,001 |
Merchant Services | ||||
Concentration Risk [Line Items] | ||||
Total revenue | 35,075 | 33,094 | 70,497 | 65,928 |
Merchant Services | Revenue earned over time | ||||
Concentration Risk [Line Items] | ||||
Total revenue | 30,095 | 27,984 | 60,176 | 55,581 |
Merchant Services | Revenue earned at a point in time | ||||
Concentration Risk [Line Items] | ||||
Total revenue | 4,980 | 5,110 | 10,321 | 10,347 |
Other | ||||
Concentration Risk [Line Items] | ||||
Total revenue | (16) | (19) | (37) | (37) |
Other | Revenue earned over time | ||||
Concentration Risk [Line Items] | ||||
Total revenue | (10) | (9) | (22) | (19) |
Other | Revenue earned at a point in time | ||||
Concentration Risk [Line Items] | ||||
Total revenue | (6) | (10) | (15) | (18) |
Software and related services revenue | ||||
Concentration Risk [Line Items] | ||||
Total revenue | 45,657 | 47,307 | 89,279 | 88,421 |
Software and related services revenue | Software and Services | ||||
Concentration Risk [Line Items] | ||||
Total revenue | 42,130 | 44,099 | 82,462 | 82,244 |
Software and related services revenue | Merchant Services | ||||
Concentration Risk [Line Items] | ||||
Total revenue | 3,537 | 3,217 | 6,839 | 6,196 |
Software and related services revenue | Other | ||||
Concentration Risk [Line Items] | ||||
Total revenue | (10) | (9) | (22) | (19) |
Payments revenue | ||||
Concentration Risk [Line Items] | ||||
Total revenue | 44,434 | 41,909 | 88,429 | 82,263 |
Payments revenue | Software and Services | ||||
Concentration Risk [Line Items] | ||||
Total revenue | 14,855 | 14,285 | 28,837 | 27,038 |
Payments revenue | Merchant Services | ||||
Concentration Risk [Line Items] | ||||
Total revenue | 29,585 | 27,634 | 59,607 | 55,243 |
Payments revenue | Other | ||||
Concentration Risk [Line Items] | ||||
Total revenue | (6) | (10) | (15) | (18) |
Other revenue | ||||
Concentration Risk [Line Items] | ||||
Total revenue | 4,451 | 4,656 | 8,824 | 9,217 |
Other revenue | Software and Services | ||||
Concentration Risk [Line Items] | ||||
Total revenue | 2,498 | 2,413 | 4,773 | 4,728 |
Other revenue | Merchant Services | ||||
Concentration Risk [Line Items] | ||||
Total revenue | 1,953 | 2,243 | 4,051 | 4,489 |
Other revenue | Other | ||||
Concentration Risk [Line Items] | ||||
Total revenue | $ 0 | $ 0 | $ 0 | $ 0 |
SUMMARY OF SIGNIFICANT ACCOUN_7
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Contract with Customer, Asset and Liability (Details) - USD ($) $ in Thousands | 3 Months Ended | |||
Mar. 31, 2024 | Dec. 31, 2023 | Mar. 31, 2023 | Dec. 31, 2022 | |
Contract with customer, Liability [Roll Forward] | ||||
Deferred revenue, beginning | $ 39,573 | $ 35,444 | $ 37,498 | $ 32,089 |
Deferral of revenue | 11,759 | 19,793 | 10,475 | 19,334 |
Recognition of unearned revenue | (13,596) | (15,664) | (14,286) | (13,925) |
Deferred revenue, ending | $ 37,736 | $ 39,573 | $ 33,687 | $ 37,498 |
ACQUISITIONS - Additional Infor
ACQUISITIONS - Additional Information (Details) $ in Thousands | 6 Months Ended | 12 Months Ended | |
Mar. 31, 2024 USD ($) | Mar. 31, 2023 USD ($) | Sep. 30, 2023 USD ($) business | |
Finite-Lived Intangible Assets [Line Items] | |||
Goodwill | $ 410,772 | $ 409,042 | $ 409,563 |
Residual buyouts | |||
Finite-Lived Intangible Assets [Line Items] | |||
Intangible assets acquired | $ 4,466 | $ 387 | |
Estimated amortization period | 8 years | ||
Referral agreements | |||
Finite-Lived Intangible Assets [Line Items] | |||
Intangible assets acquired | $ 420 | ||
Estimated amortization period | 5 years | ||
Software Business Acquisition | |||
Finite-Lived Intangible Assets [Line Items] | |||
Total purchase consideration | $ 1,270 | ||
Payment to acquire business | 1,100 | ||
Contingent consideration | 170 | ||
Property and equipment | 5 | ||
Goodwill | 1,005 | ||
Acquisition-related costs | $ 8 | ||
Software Business Acquisition | Customer relationships | |||
Finite-Lived Intangible Assets [Line Items] | |||
Estimated amortization period | 10 years | ||
Intangible assets | $ 220 | ||
Software Business Acquisition | Capitalized software | |||
Finite-Lived Intangible Assets [Line Items] | |||
Estimated amortization period | 7 years | ||
Intangible assets | $ 40 | ||
Celtic | |||
Finite-Lived Intangible Assets [Line Items] | |||
Estimated amortization period | 18 years | ||
Payment to acquire business | $ 85,000 | ||
Property and equipment | 5,233 | ||
Goodwill | 43,899 | ||
Acquisition-related costs | 1,782 | ||
Other long-term liabilities | $ 13,162 | ||
Celtic | Customer relationships | |||
Finite-Lived Intangible Assets [Line Items] | |||
Estimated amortization period | 18 years | ||
Intangible assets | $ 33,800 | ||
Celtic | Capitalized software | |||
Finite-Lived Intangible Assets [Line Items] | |||
Estimated amortization period | 10 years | ||
Intangible assets | $ 12,600 | ||
Celtic | Trade names | |||
Finite-Lived Intangible Assets [Line Items] | |||
Estimated amortization period | 5 years | ||
Intangible assets | $ 600 | ||
Celtic | Non-compete agreements | |||
Finite-Lived Intangible Assets [Line Items] | |||
Estimated amortization period | 3 years | ||
Intangible assets | $ 200 | ||
Other Business Combinations | |||
Finite-Lived Intangible Assets [Line Items] | |||
Total purchase consideration | 19,757 | ||
Payment to acquire business | 16,997 | ||
Contingent consideration | 760 | ||
Property and equipment | 374 | ||
Goodwill | $ 12,229 | ||
Number of businesses acquired | business | 2 | ||
Net working capital | $ 159 | ||
Business acquisition, goodwill, expected tax deductible amount | 2,864 | ||
Other long-term liabilities | 2,178 | ||
Other Business Combinations | Class A Common Stock | |||
Finite-Lived Intangible Assets [Line Items] | |||
Common units issued to seller | 2,000 | ||
Other Business Combinations | Customer relationships | |||
Finite-Lived Intangible Assets [Line Items] | |||
Intangible assets | $ 8,400 | ||
Other Business Combinations | Customer relationships | Minimum | |||
Finite-Lived Intangible Assets [Line Items] | |||
Estimated amortization period | 10 years | ||
Other Business Combinations | Customer relationships | Maximum | |||
Finite-Lived Intangible Assets [Line Items] | |||
Estimated amortization period | 15 years | ||
Other Business Combinations | Capitalized software | |||
Finite-Lived Intangible Assets [Line Items] | |||
Intangible assets | $ 670 | ||
Other Business Combinations | Capitalized software | Minimum | |||
Finite-Lived Intangible Assets [Line Items] | |||
Estimated amortization period | 7 years | ||
Other Business Combinations | Capitalized software | Maximum | |||
Finite-Lived Intangible Assets [Line Items] | |||
Estimated amortization period | 8 years | ||
Other Business Combinations | Trade names | |||
Finite-Lived Intangible Assets [Line Items] | |||
Intangible assets | $ 100 |
ACQUISITIONS - Preliminary Purc
ACQUISITIONS - Preliminary Purchase Consideration of the Acquired Assets and Assumed Liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Sep. 30, 2023 | Mar. 31, 2023 |
Business Acquisition [Line Items] | |||
Goodwill | $ 410,772 | $ 409,563 | $ 409,042 |
Celtic | |||
Business Acquisition [Line Items] | |||
Accounts receivable | 7,660 | ||
Prepaid expenses and other current assets | 103 | ||
Property and equipment | 5,233 | ||
Goodwill | 43,899 | ||
Total assets acquired | 104,095 | ||
Accounts payable | 9 | ||
Accrued expenses and other current liabilities | 3,182 | ||
Deferred revenue, current | 2,741 | ||
Other long-term liabilities | 13,162 | ||
Net assets acquired | 85,001 | ||
Celtic | Capitalized software | |||
Business Acquisition [Line Items] | |||
Intangible assets | 12,600 | ||
Celtic | Customer relationships | |||
Business Acquisition [Line Items] | |||
Intangible assets | 33,800 | ||
Celtic | Non-compete agreements | |||
Business Acquisition [Line Items] | |||
Intangible assets | 200 | ||
Celtic | Trade names | |||
Business Acquisition [Line Items] | |||
Intangible assets | $ 600 |
PREPAID EXPENSES AND OTHER CU_3
PREPAID EXPENSES AND OTHER CURRENT ASSETS (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Sep. 30, 2023 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Inventory | $ 3,978 | $ 4,138 |
Prepaid licenses | 3,613 | 3,115 |
Prepaid insurance | 929 | 697 |
Notes receivable — current portion | 0 | 4 |
Other current assets | 7,282 | 4,495 |
Prepaid expenses and other current assets | $ 15,802 | $ 12,449 |
GOODWILL AND INTANGIBLE ASSET_2
GOODWILL AND INTANGIBLE ASSETS - Changes in Goodwill (Details) $ in Thousands | 6 Months Ended |
Mar. 31, 2024 USD ($) | |
Goodwill [Roll Forward] | |
Goodwill, beginning | $ 409,563 |
Goodwill attributable to preliminary purchase price adjustments and acquisitions during the six months ended March 31, 2024 | 1,209 |
Goodwill, ending | 410,772 |
Software and Services | |
Goodwill [Roll Forward] | |
Goodwill, beginning | 287,613 |
Goodwill attributable to preliminary purchase price adjustments and acquisitions during the six months ended March 31, 2024 | 1,209 |
Goodwill, ending | 288,822 |
Merchant Services | |
Goodwill [Roll Forward] | |
Goodwill, beginning | 121,950 |
Goodwill attributable to preliminary purchase price adjustments and acquisitions during the six months ended March 31, 2024 | 0 |
Goodwill, ending | 121,950 |
Other | |
Goodwill [Roll Forward] | |
Goodwill, beginning | 0 |
Goodwill attributable to preliminary purchase price adjustments and acquisitions during the six months ended March 31, 2024 | 0 |
Goodwill, ending | $ 0 |
GOODWILL AND INTANGIBLE ASSET_3
GOODWILL AND INTANGIBLE ASSETS - Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2024 | Mar. 31, 2023 | Sep. 30, 2023 | |
Finite-Lived Intangible Assets [Line Items] | |||||
Finite-lived intangible assets, cost | $ 336,479 | $ 336,479 | |||
Finite-lived intangible assets, accumulated amortization | (115,377) | (115,377) | |||
Finite-lived intangible assets, carrying value | 221,102 | 221,102 | |||
Total identifiable intangible assets, cost | 336,522 | 336,522 | |||
Total identifiable intangible assets, carrying value | 221,145 | 221,145 | $ 226,952 | ||
Amortization expense of intangible assets | 5,270 | $ 5,157 | 10,505 | $ 10,216 | |
Trademarks | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Indefinite-lived intangible assets | 43 | 43 | |||
Merchant relationships | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Finite-lived intangible assets, cost | 310,721 | 310,721 | |||
Finite-lived intangible assets, accumulated amortization | (106,892) | (106,892) | |||
Finite-lived intangible assets, carrying value | $ 203,829 | $ 203,829 | |||
Merchant relationships | Minimum | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Amortization life | 9 years | 9 years | |||
Merchant relationships | Maximum | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Amortization life | 25 years | 25 years | |||
Non-compete agreements | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Finite-lived intangible assets, cost | $ 418 | $ 418 | |||
Finite-lived intangible assets, accumulated amortization | (267) | (267) | |||
Finite-lived intangible assets, carrying value | $ 151 | $ 151 | |||
Non-compete agreements | Minimum | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Amortization life | 3 years | 3 years | |||
Non-compete agreements | Maximum | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Amortization life | 6 years | 6 years | |||
Website and brand development costs | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Finite-lived intangible assets, cost | $ 103 | $ 103 | |||
Finite-lived intangible assets, accumulated amortization | (71) | (71) | |||
Finite-lived intangible assets, carrying value | $ 32 | $ 32 | |||
Website and brand development costs | Minimum | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Amortization life | 3 years | 3 years | |||
Website and brand development costs | Maximum | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Amortization life | 4 years | 4 years | |||
Trade names | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Finite-lived intangible assets, cost | $ 6,131 | $ 6,131 | |||
Finite-lived intangible assets, accumulated amortization | (3,908) | (3,908) | |||
Finite-lived intangible assets, carrying value | $ 2,223 | $ 2,223 | |||
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 | $ 18,686 | $ 18,686 | |||
Finite-lived intangible assets, accumulated amortization | (4,134) | (4,134) | |||
Finite-lived intangible assets, carrying value | $ 14,552 | $ 14,552 | |||
Amortization life | 8 years | 8 years | |||
Referral and exclusivity agreements | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Finite-lived intangible assets, cost | $ 420 | $ 420 | |||
Finite-lived intangible assets, accumulated amortization | (105) | (105) | |||
Finite-lived intangible assets, carrying value | $ 315 | $ 315 | |||
Amortization life | 5 years | 5 years |
GOODWILL AND INTANGIBLE ASSET_4
GOODWILL AND INTANGIBLE ASSETS - Future Amortization Expense (Details) $ in Thousands | Mar. 31, 2024 USD ($) |
Goodwill and Intangible Assets Disclosure [Abstract] | |
2024 (six months remaining) | $ 10,435 |
2025 | 20,798 |
2026 | 20,326 |
2027 | 19,706 |
2028 | 19,121 |
Thereafter | 130,716 |
Finite-lived intangible assets, carrying value | $ 221,102 |
ACCRUED EXPENSES AND OTHER LI_3
ACCRUED EXPENSES AND OTHER LIABILITIES (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Sep. 30, 2023 |
Accrued expenses and other current liabilities: | ||
Accrued wages, bonuses, commissions and vacation | $ 6,290 | $ 8,713 |
Accrued interest | 1,004 | 1,313 |
Accrued contingent consideration — current portion | 3,868 | 6,825 |
Escrow liabilities | 2,118 | 3,965 |
Customer deposits | 1,061 | 1,258 |
Employee health self-insurance liability | 1,058 | 1,014 |
Accrued interchange | 2,066 | 2,191 |
Other current liabilities | 9,389 | 12,461 |
Accrued expenses and other current liabilities | 26,854 | 37,740 |
Long-term Liabilities | ||
Accrued contingent consideration — long-term portion | 101 | 1,414 |
Deferred tax liability — long-term | 17,125 | 19,646 |
Other long-term liabilities | 1,128 | 3,083 |
Total other long-term liabilities | $ 18,354 | $ 24,143 |
LONG-TERM DEBT, NET - Schedule
LONG-TERM DEBT, NET - Schedule of Long-term Debt (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Sep. 30, 2023 | Feb. 18, 2020 |
Debt Instrument [Line Items] | |||
Debt issuance costs, net | $ (2,822) | $ (4,424) | |
Total long-term debt, net of issuance costs | 369,615 | 385,081 | |
Less current portion of long-term debt | (26,223) | 0 | |
Long-term debt, net of current portion | 343,392 | 385,081 | |
Line of Credit | Revolving lines of credit to banks under the 2023 Senior Secured Credit Facility | |||
Debt Instrument [Line Items] | |||
Long-term debt | 346,214 | 272,505 | |
Exchangeable Notes | 1% Exchangeable Senior Notes due 2025 | |||
Debt Instrument [Line Items] | |||
Long-term debt | 26,223 | 117,000 | |
Debt issuance costs, net | $ (216) | $ (1,501) | |
Stated interest rate (percent) | 1% | 1% |
LONG-TERM DEBT, NET - Additiona
LONG-TERM DEBT, NET - Additional Information (Details) | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||||||||
Jan. 18, 2024 USD ($) | May 08, 2023 USD ($) | Feb. 18, 2020 USD ($) | Feb. 13, 2020 USD ($) $ / shares shares | Dec. 31, 2023 USD ($) | Mar. 31, 2024 USD ($) | Mar. 31, 2023 USD ($) | Mar. 31, 2024 USD ($) | Mar. 31, 2023 USD ($) | Sep. 30, 2023 USD ($) | Sep. 30, 2020 USD ($) | |
Debt Instrument [Line Items] | |||||||||||
Proceeds from sale of exchangeable senior note hedges | $ 1,238,000 | $ 0 | |||||||||
Amortization of debt issuance costs | $ 262,000 | $ 368,000 | 676,000 | 729,000 | |||||||
Unamortized debt issuance costs | 2,822,000 | 2,822,000 | $ 4,424,000 | ||||||||
Repayments of convertible debt | 87,840,000 | 0 | |||||||||
Exchangeable notes, fair value | 25,043,000 | 25,043,000 | |||||||||
Payments for note hedge transactions | $ 433,000 | $ 28,676,000 | |||||||||
Sale of note hedge warrants | 987,000 | $ 250,000 | |||||||||
Loss on sale of exchangeable senior note hedges | 245,000 | 245,000 | 0 | ||||||||
Payments for repurchases of warrants | 552,000 | 0 | |||||||||
Gain on repurchases of warrants | 105,000 | 105,000 | 0 | ||||||||
Debt issuance costs incurred | 0 | 0 | 265,000 | ||||||||
Class A Common Stock | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Warrants outstanding ( in shares) | shares | 3,376,391 | ||||||||||
Warrants sold in connection with the issuance of the exchangeable notes (in USD per share) | $ / shares | $ 62.88 | ||||||||||
Proceeds from issuance of warrants | $ 14,669,000 | ||||||||||
1% Exchangeable Senior Notes due 2025 | Exchangeable Notes | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Original principal amount | $ 138,000,000 | $ 26,223,000 | $ 26,223,000 | ||||||||
Stated interest rate (percent) | 1% | 1% | 1% | ||||||||
Proceeds from sale of exchangeable senior note hedges | $ 132,762,000 | ||||||||||
Amortization of debt issuance costs | $ 104,000 | $ 233,000 | $ 359,000 | $ 460,000 | |||||||
Unamortized debt issuance costs | 216,000 | 216,000 | 1,501,000 | ||||||||
Debt aggregate repurchase amount | 90,777,000 | $ 21,000,000 | |||||||||
Repayments of convertible debt | 87,391,000 | ||||||||||
Debt interest, repurchase amount | 386,000 | ||||||||||
Debt issuance costs written off | 926,000 | ||||||||||
Gain on retirement of debt | $ 2,397,000 | ||||||||||
Long-term debt | 26,223,000 | 26,223,000 | 117,000,000 | ||||||||
Payments for repurchases of warrants | $ 119,000 | ||||||||||
Revolving lines of credit to banks under the 2023 Senior Secured Credit Facility | Line of Credit | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Long-term debt | $ 346,214,000 | $ 346,214,000 | $ 272,505,000 | ||||||||
Commitment Fee | 0.30% | ||||||||||
Revolving lines of credit to banks under the 2023 Senior Secured Credit Facility | Line of Credit | One, Two, Three or Six-month SOFR | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Basis spread on variable rate (percent) | 3% | ||||||||||
Revolving lines of credit to banks under the 2023 Senior Secured Credit Facility | Line of Credit | SOFR plus 1% | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Basis spread on variable rate (percent) | 2% | ||||||||||
Revolving lines of credit to banks under the 2023 Senior Secured Credit Facility | Line of Credit | Minimum | One, Two, Three or Six-month SOFR | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Basis spread on variable rate (percent) | 2% | ||||||||||
Revolving lines of credit to banks under the 2023 Senior Secured Credit Facility | Line of Credit | Minimum | SOFR plus 1% | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Basis spread on variable rate (percent) | 1% | ||||||||||
Revolving lines of credit to banks under the 2023 Senior Secured Credit Facility | Line of Credit | Maximum | One, Two, Three or Six-month SOFR | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Basis spread on variable rate (percent) | 3% | ||||||||||
Revolving lines of credit to banks under the 2023 Senior Secured Credit Facility | Line of Credit | Maximum | SOFR plus 1% | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Basis spread on variable rate (percent) | 2% | ||||||||||
Revolving lines of credit to banks under the 2023 Senior Secured Credit Facility | Line of Credit | Revolving Credit Facility | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Revolving line of credit borrowing capacity | $ 450,000,000 | ||||||||||
Optional addition to borrowing capacity | $ 100,000,000 | ||||||||||
Consolidation basis | 1 | ||||||||||
Debt covenant, minimum consolidated interest coverage ratio | 3 | 4.1 | 4.1 | ||||||||
Debt covenant, maximum total leverage ratio | 5 | 3.5 | 3.5 | ||||||||
Commitment fee multiplier | $ 450,000,000 | ||||||||||
Revolving lines of credit to banks under the 2023 Senior Secured Credit Facility | Line of Credit | Revolving Credit Facility | One, Two, Three or Six-month SOFR | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Basis spread on variable rate (percent) | 0.10% | ||||||||||
Revolving lines of credit to banks under the 2023 Senior Secured Credit Facility | Line of Credit | Revolving Credit Facility | Federal Funds Rate | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Basis spread on variable rate (percent) | 0.50% | ||||||||||
Revolving lines of credit to banks under the 2023 Senior Secured Credit Facility | Line of Credit | Revolving Credit Facility | Secured Overnight Financing Rate (SOFR) | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Basis spread on variable rate (percent) | 1% | ||||||||||
Revolving lines of credit to banks under the 2023 Senior Secured Credit Facility | Line of Credit | Revolving Credit Facility | Adjusted Term SOFR | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Basis spread on variable rate (percent) | 0% | ||||||||||
Revolving lines of credit to banks under the 2023 Senior Secured Credit Facility | Line of Credit | Revolving Credit Facility | Base Rate | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Basis spread on variable rate (percent) | 1% | ||||||||||
Revolving lines of credit to banks under the 2023 Senior Secured Credit Facility | Line of Credit | Revolving Credit Facility | Minimum | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Commitment Fee | 0.15% | ||||||||||
Revolving lines of credit to banks under the 2023 Senior Secured Credit Facility | Line of Credit | Revolving Credit Facility | Maximum | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Commitment Fee | 0.30% |
LONG-TERM DEBT, NET - Consolida
LONG-TERM DEBT, NET - Consolidated Total Net Leverage Ratio (Details) - Revolving lines of credit to banks under the 2023 Senior Secured Credit Facility | 6 Months Ended | |
May 08, 2023 | Mar. 31, 2024 | |
Line of Credit | ||
Debt Instrument [Line Items] | ||
Commitment Fee | 0.30% | |
Revolving Credit Facility | Line of Credit | Minimum | ||
Debt Instrument [Line Items] | ||
Commitment Fee | 0.15% | |
Revolving Credit Facility | Line of Credit | Maximum | ||
Debt Instrument [Line Items] | ||
Commitment Fee | 0.30% | |
Revolving Credit Facility | Line of Credit | Base Rate | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate (percent) | 1% | |
Greater than 3.00 to 1.0 | Revolving Credit Facility | Line of Credit | ||
Debt Instrument [Line Items] | ||
Net leverage ratio | 3 | |
Commitment Fee | 0.30% | |
Greater than 3.00 to 1.0 | Revolving Credit Facility | Line of Credit | Base Rate | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate (percent) | 2% | |
Greater than 3.00 to 1.0 | Revolving Credit Facility | Letter of Credit | ||
Debt Instrument [Line Items] | ||
Letter of Credit Fee | 3% | |
Greater than 3.00 to 1.0 | Revolving Credit Facility | Secured Debt | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate (percent) | 3% | |
Greater than 2.50 to 1.0 but less than 3.00 to 1.00 | Revolving Credit Facility | Line of Credit | ||
Debt Instrument [Line Items] | ||
Commitment Fee | 0.25% | |
Greater than 2.50 to 1.0 but less than 3.00 to 1.00 | Revolving Credit Facility | Line of Credit | Minimum | ||
Debt Instrument [Line Items] | ||
Net leverage ratio | 2.5 | |
Greater than 2.50 to 1.0 but less than 3.00 to 1.00 | Revolving Credit Facility | Line of Credit | Maximum | ||
Debt Instrument [Line Items] | ||
Net leverage ratio | 3 | |
Greater than 2.50 to 1.0 but less than 3.00 to 1.00 | Revolving Credit Facility | Line of Credit | Base Rate | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate (percent) | 1.50% | |
Greater than 2.50 to 1.0 but less than 3.00 to 1.00 | Revolving Credit Facility | Letter of Credit | ||
Debt Instrument [Line Items] | ||
Letter of Credit Fee | 2.50% | |
Greater than 2.50 to 1.0 but less than 3.00 to 1.00 | Revolving Credit Facility | Secured Debt | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate (percent) | 2.50% | |
Greater than 2.00 to 1.00 but less than 2.50 to 1.0 | Revolving Credit Facility | Line of Credit | ||
Debt Instrument [Line Items] | ||
Commitment Fee | 0.20% | |
Greater than 2.00 to 1.00 but less than 2.50 to 1.0 | Revolving Credit Facility | Line of Credit | Minimum | ||
Debt Instrument [Line Items] | ||
Net leverage ratio | 2 | |
Greater than 2.00 to 1.00 but less than 2.50 to 1.0 | Revolving Credit Facility | Line of Credit | Maximum | ||
Debt Instrument [Line Items] | ||
Net leverage ratio | 2.50 | |
Greater than 2.00 to 1.00 but less than 2.50 to 1.0 | Revolving Credit Facility | Line of Credit | Base Rate | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate (percent) | 1.25% | |
Greater than 2.00 to 1.00 but less than 2.50 to 1.0 | Revolving Credit Facility | Letter of Credit | ||
Debt Instrument [Line Items] | ||
Letter of Credit Fee | 2.25% | |
Greater than 2.00 to 1.00 but less than 2.50 to 1.0 | Revolving Credit Facility | Secured Debt | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate (percent) | 2.25% | |
Greater than 2.00 to 1.00 | Revolving Credit Facility | Line of Credit | ||
Debt Instrument [Line Items] | ||
Net leverage ratio | 2 | |
Commitment Fee | 0.15% | |
Greater than 2.00 to 1.00 | Revolving Credit Facility | Line of Credit | Base Rate | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate (percent) | 1% | |
Greater than 2.00 to 1.00 | Revolving Credit Facility | Letter of Credit | ||
Debt Instrument [Line Items] | ||
Letter of Credit Fee | 2% | |
Greater than 2.00 to 1.00 | Revolving Credit Facility | Secured Debt | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate (percent) | 2% |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2024 | Mar. 31, 2023 | Jun. 25, 2018 | |
Class of Stock [Line Items] | |||||
Provision for (benefit from) income taxes | $ 580 | $ (563) | $ 762 | $ (181) | |
Percent of tax benefits payable to continuing equity owners | 85% | 85% | 85% | ||
Tax benefits retained (percent) | 15% | ||||
Period of payment to continuing equity owners | 24 years | ||||
Minimum | |||||
Class of Stock [Line Items] | |||||
Expected payments for repurchase of redeemable noncontrolling interest | $ 0 | $ 0 | |||
Maximum | |||||
Class of Stock [Line Items] | |||||
Expected payments for repurchase of redeemable noncontrolling interest | 3,256 | 3,256 | |||
Class B Common Stock | Continuing Equity Owner | |||||
Class of Stock [Line Items] | |||||
Increase in net deferred tax assets | 286 | ||||
Tax benefit | 243 | ||||
Deferred tax asset recognized | 38,009 | 38,009 | |||
Tax benefits due to continuing equity owners | $ 40,323 | $ 40,323 | |||
Common Stock | Class A Common Stock | |||||
Class of Stock [Line Items] | |||||
Redemption of common units in i3 Verticals, LLC (in shares) | 40,718 | 9,924 | 40,718 | ||
Common Stock | Class B Common Stock | |||||
Class of Stock [Line Items] | |||||
Redemption of common units in i3 Verticals, LLC (in shares) | (40,718) | (9,924) |
LEASES - Additional Information
LEASES - Additional Information (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2024 USD ($) lease | Mar. 31, 2023 USD ($) | Mar. 31, 2024 USD ($) lease | Mar. 31, 2023 USD ($) | |
Leases [Abstract] | ||||
Number of finance leases | lease | 0 | 0 | ||
Weighted-average remaining lease term | 2 years | 4 years | 2 years | 4 years |
Weighted-average discount rate of operating leases | 7.40% | 7.30% | 7.40% | 7.30% |
Operating lease costs | $ 1,318 | $ 1,405 | $ 2,651 | $ 2,909 |
Variable lease costs | 39 | 9 | 49 | 20 |
Short-term rent expense | $ 41 | $ 75 | $ 86 | $ 110 |
LEASES - Maturities of Lease Li
LEASES - Maturities of Lease Liabilities (Details) $ in Thousands | Mar. 31, 2024 USD ($) |
Leases [Abstract] | |
2024 (six months remaining) | $ 2,598 |
2025 | 4,984 |
2026 | 3,874 |
2027 | 1,668 |
2028 | 755 |
Thereafter | 1,261 |
Total future minimum lease payments (undiscounted) | 15,140 |
Less: present value discount | (1,357) |
Present value of lease liability | 13,783 |
Short-term leases | $ 39 |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details) - USD ($) $ in Thousands | 6 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Sep. 30, 2023 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||
Exchangeable notes, fair value | $ 25,043 | ||
Accrued Contingent Consideration | |||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||
Balance, beginning | 8,239 | $ 22,833 | |
Contingent consideration accrued at time of business combination | 170 | 760 | |
Change in fair value of contingent consideration included in Operating expenses | (527) | 3,722 | |
Contingent consideration paid | (3,913) | (5,056) | |
Balance, ending | 3,969 | $ 22,259 | |
Accrued Expenses and Other Current Liabilities | |||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||
Contingent consideration | 3,868 | $ 6,825 | |
Other Long-term Liabilities | |||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||
Contingent consideration | $ 101 | $ 1,414 |
EQUITY-BASED COMPENSATION - Sha
EQUITY-BASED COMPENSATION - Share-based Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2024 | Mar. 31, 2023 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Equity-based compensation expense | $ 5,777 | $ 6,802 | $ 12,285 | $ 13,648 |
Stock options | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Equity-based compensation expense | 4,554 | 5,992 | 9,523 | 12,280 |
Restricted stock units | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Equity-based compensation expense | $ 1,223 | $ 810 | $ 2,762 | $ 1,368 |
EQUITY-BASED COMPENSATION - Add
EQUITY-BASED COMPENSATION - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | |||||
Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2024 | Mar. 31, 2023 | May 31, 2021 | Sep. 30, 2020 | May 31, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Income tax benefits related to equity-based compensation | $ 927 | $ 1,215 | $ 2,005 | $ 2,404 | |||
Granted, weighted average grant date fair value (in USD per share) | $ 10.54 | ||||||
Unrecognized compensation expense related to unvested options at end of period | 22,046 | $ 22,046 | |||||
Period for recognition of unrecognized compensation cost | 2 years 8 months 4 days | ||||||
Fair value of stock options that vested | 10,853 | $ 17,248 | |||||
Restricted stock units | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Period for recognition of unrecognized compensation cost | 3 years 3 days | ||||||
Cost not yet recognized, amount | 14,329 | $ 14,329 | |||||
Vested in period, fair value | $ 3,718 | $ 4,416 | |||||
2018 Equity Incentive Award Plan | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Shares available for grant under the plan (in shares) | 1,259,827 | 1,259,827 | 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% | ||||||
2020 Equity Incentive Award Plan | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Shares available for grant under the plan (in shares) | 1,230,668 | 1,230,668 | 3,000,000 | 1,500,000 |
EQUITY-BASED COMPENSATION - Fai
EQUITY-BASED COMPENSATION - Fair Value of Stock Option Awards (Details) - Stock options | 6 Months Ended | 12 Months Ended |
Mar. 31, 2024 | Sep. 30, 2023 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected volatility (percent) | 52.10% | 54.90% |
Expected dividend yield (percent) | 0% | 0% |
Expected term (years) | 6 years | 6 years |
Risk-free interest rate (percent) | 4.10% | 3.90% |
EQUITY-BASED COMPENSATION - Sto
EQUITY-BASED COMPENSATION - Stock Option Activity (Details) - $ / shares | 6 Months Ended |
Mar. 31, 2024 | |
Stock Options | |
Outstanding at beginning of period (in shares) | 8,576,670 |
Granted (in shares) | 944,556 |
Exercised (in shares) | (32,517) |
Forfeited (in shares) | (230,180) |
Outstanding at end of period (in shares) | 9,258,529 |
Options exercisable at end of period (in shares) | 6,602,597 |
Weighted Average Exercise Price | |
Outstanding at beginning of period (in USD per share) | $ 25.16 |
Granted (in USD per share) | 19.23 |
Exercised (in USD per share) | 18.14 |
Forfeited (in USD per share) | 27.57 |
Outstanding at end of period (in USD per share) | 24.52 |
Exercisable, weighted average exercise price (in USD per share) | $ 25.08 |
EQUITY-BASED COMPENSATION - RSU
EQUITY-BASED COMPENSATION - RSU Activity (Details) - Restricted stock units | 6 Months Ended |
Mar. 31, 2024 $ / shares shares | |
Restricted Stock Units | |
Outstanding at beginning of period (in shares) | shares | 874,024 |
Granted (in shares) | shares | 258,684 |
Vested (in shares) | shares | (172,159) |
Forfeited (in shares) | shares | (32,084) |
Outstanding at end of period (in shares) | shares | 928,465 |
Weighted Average Grant Date Fair Value | |
Outstanding at beginning of period (in USD per share) | $ / shares | $ 24.95 |
Granted (in USD per share) | $ / shares | 19.26 |
Vested (in USD per share) | $ / shares | 25.65 |
Forfeited (in USD per share) | $ / shares | 24.86 |
Outstanding at end of period (in USD per share) | $ / shares | $ 23.24 |
COMMITMENTS AND CONTINGENCIES-
COMMITMENTS AND CONTINGENCIES- Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2024 | Mar. 31, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | ||||
Rent expense | $ 1,359 | $ 1,480 | $ 2,737 | $ 3,019 |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Minimum Fee Commitments (Details) $ in Thousands | Mar. 31, 2024 USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2024 (six months remaining) | $ 2,177 |
2025 | 728 |
2026 | 240 |
2027 | 60 |
2028 | 0 |
Thereafter | 0 |
Total | $ 3,205 |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES - S&S Litigation (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Oct. 04, 2021 | Sep. 30, 2018 | |
Software & Services, LLC ("S&S") | ||
Loss Contingencies [Line Items] | ||
Total purchase consideration | $ 17,000 | |
S & S Vs. State | ||
Loss Contingencies [Line Items] | ||
Loss contingency, damages sought, value | $ 15,000 | |
S & S Vs. Sheriffs | ||
Loss Contingencies [Line Items] | ||
Loss contingency, damages sought, value | $ 7,000 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Jun. 25, 2018 |
Related Party Transaction [Line Items] | ||
Percent of tax benefits payable to continuing equity owners | 85% | 85% |
Class B Common Stock | Continuing Equity Owner | ||
Related Party Transaction [Line Items] | ||
Tax benefits due to continuing equity owners | $ 40,323 |
SEGMENTS (Details)
SEGMENTS (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2024 | Mar. 31, 2023 | Sep. 30, 2023 | |
Segment Reporting Information [Line Items] | |||||
Revenue | $ 94,542 | $ 93,872 | $ 186,532 | $ 179,901 | |
Other costs of services | (21,180) | (19,930) | (41,604) | (38,999) | |
Residuals | 11,316 | 10,829 | 22,325 | 21,150 | |
Processing margin | 84,678 | 84,771 | 167,253 | 162,052 | |
Residuals | (11,316) | (10,829) | (22,325) | (21,150) | |
Selling, general and administrative | (54,162) | (57,204) | (107,694) | (108,207) | |
Depreciation and amortization | (10,069) | (9,015) | (19,808) | (17,691) | |
Change in fair value of contingent consideration | 290 | (2,279) | 527 | (3,722) | |
Income from operations | 9,421 | 5,444 | 17,953 | 11,282 | |
Total assets | 865,542 | 883,026 | 865,542 | 883,026 | $ 881,493 |
Goodwill | 410,772 | 409,042 | 410,772 | 409,042 | 409,563 |
Software and Services | |||||
Segment Reporting Information [Line Items] | |||||
Revenue | 59,483 | 60,797 | 116,072 | 114,010 | |
Other costs of services | (4,908) | (4,229) | (9,217) | (7,752) | |
Residuals | 735 | 799 | 1,353 | 1,322 | |
Processing margin | 55,310 | 57,367 | 108,208 | 107,580 | |
Residuals | (735) | (799) | (1,353) | (1,322) | |
Total assets | 593,219 | 620,126 | 593,219 | 620,126 | |
Goodwill | 288,822 | 287,092 | 288,822 | 287,092 | 287,613 |
Merchant Services | |||||
Segment Reporting Information [Line Items] | |||||
Revenue | 35,075 | 33,094 | 70,497 | 65,928 | |
Other costs of services | (16,289) | (15,719) | (32,423) | (31,286) | |
Residuals | 10,587 | 10,039 | 20,987 | 19,848 | |
Processing margin | 29,373 | 27,414 | 59,061 | 54,490 | |
Residuals | (10,587) | (10,039) | (20,987) | (19,848) | |
Total assets | 212,082 | 205,898 | 212,082 | 205,898 | |
Goodwill | 121,950 | 121,950 | 121,950 | 121,950 | 121,950 |
Other | |||||
Segment Reporting Information [Line Items] | |||||
Revenue | (16) | (19) | (37) | (37) | |
Other costs of services | 17 | 18 | 36 | 39 | |
Residuals | (6) | (9) | (15) | (20) | |
Processing margin | (5) | (10) | (16) | (18) | |
Residuals | 6 | 9 | 15 | 20 | |
Total assets | 60,241 | 57,002 | 60,241 | 57,002 | |
Goodwill | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 |
NON-CONTROLLING INTEREST - Addi
NON-CONTROLLING INTEREST - Additional Information (Details) - i3Verticals, LLC - shares | Mar. 31, 2024 | Mar. 31, 2023 |
Noncontrolling Interest [Line Items] | ||
Non-controlling interest, common units (in shares) | 23,416,518 | 23,167,730 |
Non-controlling interest, ownership interest (percent) | 70% | 69.60% |
NON-CONTROLLING INTEREST - Owne
NON-CONTROLLING INTEREST - Ownership Interest (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2024 | Mar. 31, 2023 | |
Noncontrolling Interest [Abstract] | ||||
Net income attributable to non-controlling interest | $ 1,470 | $ (228) | $ 1,908 | $ 181 |
Redemption of common units in i3 Verticals, LLC | (384) | (86) | ||
Allocation of equity to non-controlling interests | 3,750 | 299 | ||
Net transfers to non-controlling interests | 3,366 | 213 | ||
Change from net income attributable to non-controlling interests and net transfers to non-controlling interests | $ 5,274 | $ 394 |
EARNINGS PER SHARE - Basic and
EARNINGS PER SHARE - Basic and Diluted (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Mar. 31, 2024 | Dec. 31, 2023 | Mar. 31, 2023 | Dec. 31, 2022 | Mar. 31, 2024 | Mar. 31, 2023 | |
Numerator | ||||||
Net income (loss) | $ 3,348 | $ 1,536 | $ (192) | $ 169 | $ 4,884 | $ (23) |
Less: Net income (loss) attributable to non-controlling interest | 1,470 | (228) | 1,908 | 181 | ||
Net income (loss) attributable to i3 Verticals, Inc. | $ 1,878 | $ 36 | $ 2,976 | $ (204) | ||
Denominator | ||||||
Weighted average shares of Class A common stock outstanding - basic (in shares) | 23,331,239 | 23,135,898 | 23,299,214 | 23,066,499 | ||
Basic net income (loss) per share (in USD per share) | $ 0.08 | $ 0 | $ 0.13 | $ (0.01) | ||
Class A Common Stock | ||||||
Numerator | ||||||
Net income (loss) | $ 3,348 | $ (192) | $ 4,884 | $ (23) | ||
Less: Net income (loss) attributable to non-controlling interest | 1,470 | (228) | 1,908 | 181 | ||
Net income (loss) attributable to i3 Verticals, Inc. | $ 1,878 | $ 36 | $ 2,976 | $ (204) | ||
Denominator | ||||||
Weighted average shares of Class A common stock outstanding - basic (in shares) | 23,331,239 | 23,135,898 | 23,299,214 | 23,066,499 |
EARNINGS PER SHARE - Diluted (D
EARNINGS PER SHARE - Diluted (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2024 | Mar. 31, 2023 | |
Numerator | ||||
Net income attributable to Class A common stockholders | $ 1,878 | $ 36 | $ 2,976 | $ (204) |
Denominator | ||||
Weighted average shares of Class A common stock outstanding - basic (in shares) | 23,331,239 | 23,135,898 | 23,299,214 | 23,066,499 |
Weighted average shares of Class A common stock outstanding - diluted (in shares) | 23,718,474 | 34,269,140 | 23,726,720 | 23,066,499 |
Diluted net income (loss) per share (in USD per share) | $ 0.08 | $ 0 | $ 0.13 | $ (0.01) |
Class A Common Stock | ||||
Numerator | ||||
Net income attributable to Class A common stockholders | $ 1,878 | $ 36 | $ 2,976 | $ (204) |
Reallocation of net loss assuming conversion of common units | 0 | (171) | 0 | |
Net income (loss) attributable to Class A common stockholders - diluted | $ 1,878 | $ (135) | $ 2,976 | |
Denominator | ||||
Weighted average shares of Class A common stock outstanding - basic (in shares) | 23,331,239 | 23,135,898 | 23,299,214 | 23,066,499 |
Weighted average effect of dilutive securities (in shares) | 387,235 | 11,133,242 | 427,506 | |
Weighted average shares of Class A common stock outstanding - diluted (in shares) | 23,718,474 | 34,269,140 | 23,726,720 | |
Diluted net income (loss) per share (in USD per share) | $ 0.08 | $ 0 | $ 0.13 |
EARNINGS PER SHARE - Antidiluti
EARNINGS PER SHARE - Antidilutive Securities (Details) - $ / shares | 3 Months Ended | 6 Months Ended | |||
Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2024 | Mar. 31, 2023 | Feb. 13, 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 | |||
Warrants sold in connection with the issuance of the exchangeable notes (in USD per share) | $ 62.88 | ||||
Class B Common Stock | |||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 10,091,604 | 10,092,504 | |||
Class B Common Stock | |||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 10,114,598 | ||||
Out-of-the-money Options | |||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 7,852,595 | 4,018,042 | 8,246,542 | 5,165,478 | |
Employee Stock Options and Restricted Stock Units (RSUs) | |||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 633,453 |
SIGNIFICANT NON-CASH TRANSACT_3
SIGNIFICANT NON-CASH TRANSACTIONS (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Cash Flow, Noncash Investing and Financing Activities Disclosure [Abstract] | ||
Acquisition date fair value of contingent consideration in connection with business combinations | $ 170 | $ 760 |
Debt issuance costs financed with proceeds from the 2023 Senior Secured Credit Facility | 0 | 178 |
Consideration accrued for residual buyouts | 252 | 0 |
Right-of-use assets obtained in exchange for operating lease obligations | $ 1,279 | $ 1,098 |
Uncategorized Items - iiiv-2024
Label | Element | Value |
Accounting Standards Update [Extensible Enumeration] | us-gaap_AccountingStandardsUpdateExtensibleList | Accounting Standards Update 2020-06 [Member] |