IIIV - Earnings call 3 2023 | i3 Verticals, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, everyone, and welcome to the i3 Verticals Third Quarter 2023 Earnings Conference Call. Today's call is being recorded, and a replay will be available starting today through August 16. The number for the replay is (877) 344-7529 and the code is 5255024. The replay may also be accessed for 30 days at the company's website. At this time, for opening remarks, I would like to turn the call over to Geoff Smith, SVP of Finance. sir. ahead, go Please

Geoffrey Smith

welcome Verticals. third and call XXXX for iX to morning, quarter the conference Good

on call Stanford, me Clay Paul Joining this our Whitson, and our Christians, our CEO; Chairman CFO; Rick COO. our and are President; Greg Daily,

information non-GAAP reconciliation is provide To a reviewing discussed financial in also the yesterday's enhance measure the by most to directly to earnings measure today's the financial financial its is It you company's of call, intent consolidated non-GAAP extent information. will financial release. any to find understanding comparable GAAP GAAP

by This instead non-GAAP financial each statements. information individual GAAP the addition should not be but considered to, financial in of,

This operating Private regarding among call meaning others, contain Reform performance. the company's including within of Securities financial expected statements, conference the the and forward-looking Act may statements Litigation of XXXX,

during For historical of forward-looking may not purpose, statements this any call statements. that are to statements this be be deemed fact made

that important the in differ forward-looking be are those You actual release from may and or are reports statements others, cautioned results and operations the the Consequently, earnings discussed materially in to furnished among statements. these forth filed factors, in hereby company's forward-looking the SEC. that by may affected set

today's on is this the obligation Finally, shared information the valid date, as company update except call under as law. required applicable of it, and to no undertakes may be

call turn the CEO, the company's Daily. to to over like now I'd and Greg Chairman

Gregory Daily

call. on the morning, the good to for fiscal and Geoff, Thanks, results excited third present everyone We're our year. quarter

year, margins. over the which our which and last EBITDA, XX% up another were XX% for record This quarter improving and reflect our set revenue quarter, we same adjusted

or primarily payments at through software on bringing to year. such the volume-based these the We Vertical XX% as SaaS, of means, of a fees, revenue which We grew Software-as-a-Service which over sources or over prior monetize recurring XX% prior our continue year to through markets. variety excellent focus solutions grew

over can we explore will in on are of Overall, many revenue. There focus our our of related long-term our growth. and on public align of to customers, software M&A we sustainable up sector. lock as Rick incentives Depending such markets continue opportunities. needs XX% made total and but revenue later, in elaborate services

very are patient and are and high, standards Our we disciplined.

want and tools We our that execute fit strategy. us our culture more deals vertical to offer in

the However, that of M&A despite to is be busy would an slower say staying team our understatement. pace

have proud always who on other or seized strategic moment positioned made. equity periods are quick focus strides and the private short-term We've of against We we would buyers accelerate intentionally on wins, internal synergies. to have and optimization counter the ourselves aggressive home

word great iX This The might leading be into at your has out of M&A. many incredibly a served profiles. people proprietary and with through work. business, can well pipeline and life's We've of have financial be trusted accomplished businesses acquisitions retained mostly this us attractive that your talented is which

always amazed is quickly However, close willingness integration where together, new can business and be makes see embrace practices at when is closed, players. collaborate, This Post the that what be necessary. I'm is deal difference. the is the culture our work there team our accomplished sellers to and much

all shared team functions. are team, These include response always and have marketing, services the many accounting professional our services enterprise the to on legal enterprise year and and as our team this wins of clicking cylinders. of centralized that has areas that such many improve. business support Some consolidation upgraded our RFP joined of continuing other These in

more to never detail the and in to has additional been proud better compete are X we about state sector. many that, similar Justice our from level illustrate divisions to of public share. announce wins Tech I'm Transportation Rick positioned processes, To and excited We've

you more our give the call turn third I'll financial performance. quarter first, But details to he on will over and Clay,

Clay's up the on questions. we'll call business in address and Rick for provide M&A. open While Then update will the and detail more comments,

Clay Whitson

morning. the to following website slide Information Good to ended The fiscal XXXX. reference our is quarter for which pertains Supplemental refer the this Please XX, presentation June titled the of on discussion. year XXXX, third our with quarter

had Revenues organic with to record great growth for revenues million increased acquisitions. from and We $XX.X XX% XXXX, $XX.X another the and quarter quarter reflecting million third EBITDA. adjusted for and QX

XXXX. points software yield benefiting from this licenses, growth was for the XXX strong for revenue basis sales million. quarter XXX totaled $X.X reasonably to QX of which basis points a quarter for approximately improved from Organic XX%, Our for revenue quarter

quarter-to-quarter. $XXX.X $XXX.X million XXXX, XX% million continued in for XXXX, come XX%. a for QX part we explain because the line help changes streams rate Although software from ARR totaled to growth a not growth are compared sales organic revenues recurring revenues, quarter this from variability has revenue recurring higher in can in and it of annual of license QX sources. keep Over our of highlighting recurring to

and portion represented remain services and Software for our Adjusted Payments segment. $XX.X increased XXXX, reflecting our QX outpacing from and X%. XX% XX%, momentum QX. to revenues for over Services million $XX.X related in million for continued largest revenues, XXXX EBITDA of Software representing other the XX% QX

XX.X% for segments. increased Merchant reflecting a release revenues description Software diluted and earnings for Services adjusted Adjusted Again, per refer forma full XXXX for increased XXXX, XX.X% to improvement Pro a to QX QX press our $X.XX QX XXXX. margin the from from for reconciliation. share to please QX EBITDA and for as percentage in $X.XX and Services of XXXX

in sales consolidated business. at higher strong fees special to districts education our XXXX half new deserves of school which subvertical, million broad-based increased public sector includes the QX in and lunch XXXX, rebound, It our Segment Public and continued districts. sector subvertical XX% reflecting represents thanks Revenues a $XX.X for & care vertical for verticals. and health Services organic performance. over growth in our education million segment QX from $XX.X to mention. our existing activity Software Revenues to

for QX significantly of as a subsidies XXXX $XX.X past percentage XXXX, since Federal software to margins adjusted outpacing EBITDA $XX.X and state The EBITDA such Adjusted revenues million segment's XXXX, XX% improved QX education. for pandemic. the decreased the for and and traditional revenues. million over from XXXX, QX to lunch high-margin services improved in XX.X% for a acquisitions high reflecting QX year return as from Celtic XX.X% to have

million Revenues $XX.X ISO acquisition X% high XXXX, our from AccuFund effective The QX Both channels. XXXX, QX Services million growth in and segment January for XXXX margins, XX% improved our Services BXB for management. million BXB X increased for million outpacing margin from ISO well. as XXXX increased was our profit and channels for our slightly $XX.X and EBITDA reflecting good cost to Adjusted Merchant better segment revenues. $XX.X revenue to reflecting $X.X their QX for Merchant for QX yields

face remains net sheet under and The of borrowed cash. positioned convertible our $XXX million of balance Our notes for well XXXX. strong $XXX.X are million. revolver, June our had On we value XX,

As repayment, earn-outs. for flow, for of June and The interest credit around convertible Xx X/X of free XX, we remained is our while led rate million roughly the constraint our to rate for X.Xx. X%, ratio by which $XXX the total new notes revolving EBITDA cash currently time, debt interest approximately adjusted into acquisitions current under X.X%. JPMorgan convert is Over be leverage the revolver can is Chase. The expect used

as software internally cash flow EBITDA We define taxes. and expenditures, interest development, adjusted cash cash minus capitalized free capital

we the we We go, acquisition. with Fiscal one are have Outlook. to reporting out. QX our the could ranges, quarter only own reaffirm but the which not we estimates same, midpoints was where things our an will fiscal remain line expectations, when of we shake best think narrowed guidance gave With guidance in the and QX. our closed have

QX to as end expect step-up of education we saw from not a large QX. to $X lunch last QX million do year we free QX The last as revenues, step-up For sequential represented in a quite year. from

quarter also license step-up sales our software year. largest year, last historical of $X.X We QX QX in million sequential a million last had $X.X from for

ahead for the that QX. percentage has last adjusted margin year, our running and trended EBITDA flip X well, expect side, continue to On we points of

we for past, updates pipeline. reporting our the guidance in turn As XXXX give fiscal QX fiscal for I'll company the now call and will Rick to of XXXX. in when over

Rick Stanford

updates changed a original a look strategic today, to software comprised back few little plan different together When work to create prepare spoke from executing at it. tomorrow. start Clay. When where company [indiscernible]. on call the and you, on have integrated been, we I of morning, We began design. verticals where this has to with maybe where quickly I'll payments I today ago, think the XX Thank cover business for M&A. sit when then are down to we on and with be and everyone. each want about Greg plan his Good about me quarter, I we that idea years a

have and EBITDA completed acquisitions. XX $XX revenue we in June have tripled million than Since public from $XXX EBITDA. rate million more of date, and in both revenue in going run To XXXX,

in evolution, together. on with focused driving this results effort brand At one our creating one are devoting we point more to team

resources Over domain and augments like from aligned and in resources the of last The companies. vertical roles common combined delivery across areas. the X sub healthcare we public, sub enterprise and To education alignment companies model. development being departments service ensure a vertical sectors we've months, infrastructure verticals many iX need the expertise both and under with sister

product sales, operations, infrastructure enthusiastic and and development, been deployment. synergies strengthening implementation are and has Adoption increased development

In services, being markets infrastructure, on are project addition, cloud internal bolstered by enterprise teams development focused level and security, these customer-facing iX management.

vertical as that alignment Given success, entire organization aligning operate we the we are so one company. cohesive the

services The subcompany and consisted to marketing, and finance, refined a level and As of teams historically our a coordinated model adopted shared level. individual enterprise cohesive we have legal. and result, HR brought enterprise departments

RFP deployed an organization-wide services, to maintaining response meet We being infrastructure expertise. while and have professional are support security. sales vertical added and domain Resources operation team, and

members XXX which implementations. serve with is enterprise entities group wide. services, and as support team who heads functional in vertical across Our of integration to implementation vertical manner. Enterprise the product enterprise dedicated coordinating and software managers effective to seamless, The professional marketing expertise verticals experience The all company enterprise domain delivers and brand will team brand migration, client-focused level marketing product a all coordinates messaging includes have actively a are market organization, group RFP continuity consistent response, with our client comprised throughout ensure Solutions as strategic position and working iX. The team and from vertical wide to both

management and contract team, The revenue unification of and client delivery. the expected to increase is between professional project services decrease time and the services RFP signature

domain enterprise markets, public, including Our from education, and team the precise, is The team RFIs technology. payment to comprised comprehensive most care proposals is health and across response strategic creating RFPs experts unified of our RFP organization. in and

care health utilities, in this entities. and investing systems meet increasing are demand large We to statewide team public from

Our unified approach engineering, thus to research solution model. review are and and has new deals legal affected under winning been far, negotiation and writing, we this

leveraging we We critical are years. the for so cloud to our strategy robust accelerating are migration next solutions, committed technology X technological over

includes and providers. cloud-first technology to of Our a approach both private delivering cloud public blend

We are who with relationships both assisting Microsoft have transformation. and AWS us strategic with this

the ensuring real-time that we remaining deliver solutions our Our adapt technology and security. us empowers to evolving interactions cloud to optimal can to choose provide cloud-agnostic, seamless we needs swiftly The solutions, to state-of-the-art best data customers. customer

abilities protection, management. use information and identity XXX security our improve management, and in Microsoft We threat of the access to areas protection

Azure global seamlessly with Microsoft tools from a utilizing virtual are We while integrating the centralized manage across platform other resources to enterprise. desktops

on a single log of Azure customers a on sign-on software solution services working currently cloud applications using purely and technology our our to credentials. to based set single are into allow We

in allowing Our scale our to manage applications Payment to AWS a handle and us containerized secure, integration sites demand. geographic in with applications during deployments. Fargate customer technologies available, deploy us for AWS AWS highly when auto events automatic to downtime needed ability such manner, redundant serverless, for Cloudflare utilized and such resulting tools failover as zero allows seamless the between giving as software third-party regions,

is internal circumstances, in to We and market product are there acceptance. knowledge also solutions specific to bases responsive using all instances service environments customer and the of the iX select artificial intelligence where

India proprietary enterprise payment vertical, enhance to access in speed skilled to iX delivery our allowing technologies. utilization. We market us talent developing are cost for leveraging iX to and India and improved gives

on such as is to code certainty development tools focus market. low accelerate execution to of speed Our and rapid

continuous life quality agile focused user We improvement enhance demand, giving customer-centric us have collaboration, to implemented development enterprise-wide meet experience software transparency. an a market for and approach better flexibility and on cycle,

to The public to continues response market sector of wide range our see solutions. positive

With solutions. and of the marketing support public Align and iX RFP solutions successfully enterprise teams, deployed sold enterprise-level

our with digital AOC and dispute our a our solution online to a Our utility portfolio Justice Tech our with deploy Tier payments. expanded contract utility state a with X-year customer engagement level closed X vision judiciary resolution division portal product, and its

In formerly being Tax the that integrated group, the in the addition, Midwest. the International Fuel Agreement; significant DMD state Registration utilized Unified of IRP, and state-level our; suite Plan part solution under software Registration Transportation won known International includes modules. division, specifically Celtic The Carrier brand IFTA, UCR, a of the by iX

are iX education record Education. strong quarter and to year Third in a for sector sales contribute

have new synergies. of result partnerships, strategic a more Healthcare software position the iX strengthening new vertical-specific enterprise by the of integrated iX iX automation. It on to is iX resources. a Education and to improved are a As has focusing deals, sales artificial EHR between Common delivered a portals to Healthcare delivery current RCM software sales Solutions that represent state-level fewer reach and Healthcare further delivery and expanded leveraging partnership business for process. team iX alignment and districts engaged Alabama. billing professional iX for of robotic do market closing margins in base profit statements record with noted payment suite focused service strategy spectrum product to solution utilization respected the iX highly to of and XXX force should a vertical. Healthcare entire suite. in the the process software system adding customer science has to model than is of an and our and quarter. machine all also with unified formalized also we leveraging platforms the respective their more across services. Adoption enterprise our verticals the its yielded services monetize medical the state deliver optimize Healthcare health adopted new learning and business This produced allowed facilitate rate Louisiana They be patient to us of processes with has to process intelligence, technology, look engineering

In addition, Digital and from looked Solutions TrueCertify, product TrueSign, deployment I'll the iX suite at this desire include our iX Group. sold speak all iX suite. Market and any spans support, multiples integration companies elected to provided but and Enterprise sheets. that by has be agreeing sales largely vertical can and on are enterprise the to Products the iX EOS entire several verticals stems by the software portal, implementation, force. PayTech We not bring IVR,I down past offer now execute to M&A. term quarter This and price. community

disciplined determine gracefully the company We a can are pre-diligence remaining back the on for We the what if deal. Also, grow out. good must not, table. if the and and we monetize make sense company. can will a we we will if further through away financials early pay be from check fit, If

out of sector full coming both public be to continues pipeline pie. care companies Our and and in going in health the of

future. In normal and our will in down focus are operations to the continue paying on expect meantime, growing streamlining ability the pace and our we deals of about do that will concerned company, debt. to the not continue We acquisitions we

to Q&A, at continue we'll the this self-source concludes my targets. call open time, Megan, please. we our usual, This As for acquisition comments,

Operator

question Instructions] comes Matt with from [Operator VanVliet The BTIG. first

Matthew VanVliet

rest And guess, look even how than you'll most the really on customers how you, verticals the you are are feeling had some feel of as recent maybe strength? the few us about of I more just kind recent where you've towards specific -- next deals? pipeline look see a you help success helping reference as some the across the Any good of large think here? those ahead, quarters first, is like number robust where you of you pipeline it

Gregory Daily

We're pipeline. activity. picked Healthcare with fickle, though still public sector that. still of up probably performing. would sector very still it's the the has well leading how was quarter, our Public It's Healthcare the pipeline way. in in last XX-XX and I Public say, more was So XX% balance dominates probably sector

still in sticking the along, next in year. it concerned, are do us have something think I came foresee I We that our large our not spot. as pipeline that but if it's sweet doing one deals far we're As would to we

to So $X $X of million spot. EBITDA still sweet is our million

months slowed it pipeline. good seems that last in X Xx probably it's like X the the options, I really XX, multiples like still an to in about earn-out plan, with amazing. stock the And it ago down we price, but pretty our Our that along now are XX has the activity has feel fair days in feel normal XX a -- in been

Matthew VanVliet

helpful. seeing you you've as still opportunities vertical How overall expand deal strategy sizes Very number a more buying and are be and Or front? up a your more overlaying a land a shared services seeing this you landing? go-to-market trend? then newer more little maybe after just importantly, the the customers informed the teams look the rolled maybe everyone Okay. are teams of than you number services is at of And shared module are now little out Are more what and teams. on of bit products one helping a

Rick Stanford

Matt. Yes.

entire So we of in teams sell the on are then teams the enterprise-level and second to and fourth that product well we've as one working and model entire got product The our time. fact aware third our the over go as chip vertical, salespeople suite. across and our typically with so

proprietary X expands So knowledge we because products and X a all software far have we've that verticals. in-house time I as this think the vertical we're the offer expanded able an to across created more at juncture at as

those that the push of continue on We and products. to customers availability train our

Operator

Heckmann comes D.A. question next Peter from Davidson. Our with

Peter Heckmann

you're go to after, annual the that do you think about deals when be winning an to largest million you're going years? from of you let's mean million, deals When the for or year? value. deals kind whether -- TCV willing say, you'd talking could about contract $XX that the a X standpoint be potential see $X million over these be, I $X Are RFP

Paul Christians

This is Paul Christians.

-- more to RFP little of a more in public -- sector movement team larger and our multiproducts execution that's in natural seeing are and bit degree. those. our We that in A for opportunities the natural because a healthcare to of history on enterprise a require

As and it's this little useful joining the steam and that's well. the get bit systems for given Transportation several as point and the recognition been beginning last that Celtic of whole to for BIS we've years, court us at more seeing been sector over that in our a

see we don't to what So those see tend often county be that as level or municipal them see deals -- generally, as we we deals.

So consistent they without tend where happy we're regularity, to but any very positioned surface with them. we're

Gregory Daily

but we our are the fair deal winning X I $X are of never X-year think responding optimistic month. would we're talking to more pipeline. say is million to things $XX one a deals I We now and really million about feel of per And is the about contracts. where those, those out. early, and we saw larger duration. -- deals over couple years. things It's and a amount the and to of mean, more we're X key good I those that X

Peter Heckmann

Great. mean we've certainly, Great. I seen it.

I think states, Canadian deals provinces. know, you X or don't have I statewide XX in, X

to it, and the So those deals some great visibility type but of there recurring doing clearly provide is revenue. potential

many you up, have do services? of -- think deals each how up, some to Or that significant bit do I is? professional purchased you on know of had you you terms get existing companies or that for any move that little -- more of discretionary these about software either As development kind might implementation the ramping does But not? work a of those typically, solutions. custom the mean, In that I

Rick Stanford

we've more support significant, to more that. I an than had organization gets but do also have historically in it we aligned believe resources

done with India So to delivery the high and of gives comfort the enterprise to iX do movement that able the enhance and even level ramp ability us historically. a to be over continue and certainty degree in what of to we've domestically to

Gregory Daily

XX maybe and Their old got to be years existing XX. technologies

using dark And versus so COVID What are ages, of what today. they're the dramatic. quite bringing them helped installing But it's we are out definitely we us.

Peter Heckmann

right. Right,

in terms growth XX% business, the organic Okay. of quarter, And thinking just squeeze that's the I could if about more just one great. in, in

terms single a is mean preliminary thinking In appropriate? have high would do of be -- for you digits we 'XX? thought I fiscal

Clay Whitson

'XX. went We the are provided and of away, digits. year, thinking free education high in we tailwind as lunch a fourth single that saw This quarter fiscal

with still consistent single but -- So is we've IPO. since guided thinking high which digit, the we're what

Operator

from with Our John Davis comes next Raymond question James.

John Davis

to comment of dig Rick and seems I market up. have a your comments bit perspective? a on reset, private M&A. are like Obviously, from you public markets it in the appreciate But a hang little but valuations. Greg, want bit all What around Greg, a on seeing there's still little I

today? it's So you're is about pay your X% willing to hurdle you're you that And to and do the the deals biggest doing of that impacted how kind what the I by paying debt? then on valuation fact think assume

curious paying higher. becomes and how versus of hurdle broadly But the like think the So is M&A? about guys kind what you up doing down just big hang debt

Gregory Daily

Great JD. the question. deals Valuations, self-source we

so trust a they with them talk says, probably SSI. gave million one sheet with moved believe perfect deal a growing deal on is them with paid us, then We've We X We've your and are sweet term worth as done stock dramatically, fits. we We a fantastic. based very multiple. And for We done send rarely EBITDA. of growth. an up or million $XX if And that Milestone. that $X options they a earn-out that them XXx give do here's So X, it's companies earnout. we these

we to -- don't at. because look the used we deals across half often. our on think very of I seems more have I But do mean lot from. a being we it to we But conservative come choose we're don't valuations like those desk deals

boils case X don't do lot it management we've we we of got XX%. down the less and We've need systems. them We're pickier, to than Now -- of got person. more a

They guys, -- meet for office meant, that's We're these and the in wait I family a legal big. they timing. after last week. till need a owned software marketing, all walked mean, looking -- XX-year-old that I They back I businesses. do in meeting need about just I shared upgrade. need services, you Houston it's

John Davis

Clay, -- then, years. over And Rick's moving the to next I about just kind the helpful. That's heard comments of Okay. cloud X

have to would the why that brand. going XXX that? Also to reason of that team cloud. cloud to are margin margins streamlining historically guys to guys points investments guided eventually? XX kind move making Just you You in pressure of under Any one market kind Could lot basis organic help a of the of expansion. curious, moving to the

curious the Just how there? about we think on should impacts margin the and

Clay Whitson

Yes. will basis think XX to again XXXX. points we I do in achieve XXX

help cloud ripples you the significantly software Moving temporarily customers. have out your headwind our can going and update instead but long on-prem to things just In to a is will margins, of favor. these of all updating the because for instances once run, it we in all other it margins

The security, You our year of big noted last a that's corporate as hired in rightly true. your percentage note we CTO ago, we is last revenues, a night expenses driver project our year of that up he management, beef recommended about capabilities. our that that gone our development and a new and up had

And so we've so. done

So And benefits of the I an think a been for us. of that's we're seeing investment step-up, that. sort

John Davis

XX% consistent. And good Okay. That's growth the see organic helpful. then to relatively

and if last and education networks, of quarters. lot not you line think with care. I several But look a I in very that health normalize know the if government your cyclical at the you businesses,

the You -- trends year? for weakness the seen August? July quarter-to-date to guide Any But full the or of pockets kind of pointed midpoint of sort any thoughts and you updates so have pockets, any of in sorry, far in on any slowdown? any

Clay Whitson

always is is our quarter going May little They and the of which in QX, a middle June in which the June. close quarter, our we closed to education. Well, March they're schools the QX, from have then

weak education during that So period. is

into QX, away year on with like lunch. gangbusters they last because free education came Going did

had QX so And for quarter We still don't -- X saw previous you is quarter I keep always so then but year. year should as quarter reasons of that expect in And item. step-up think generally our they year. license education and that. I from last our big the ever we those in sales line our in from $X QX we'll QX to September, And year's million strong as have software every it be QX step-up it's on biggest eye last won't big the a we to were think last comparison closer the

John Davis

helpful. pockets That's sort you of kind seeing of of small Okay. is But kind as no, just whether restaurant or along you're it's had everything not super your any expected? weakness, business humming of

Clay Whitson

good. Yes. weakness. any of activity. picked think I is No, up can't Healthcare has of Everything really pockets

Operator

from Our next question comes Berenberg. Mark with Palmer

Mark Palmer

Yes.

a Just wanted your that thinking to of current the ask is care what your could rollout introduce about to the opportunity what opportunity health look timing like vertical, to payments regard to with that and what would evolve?

Clay Whitson

service customers. personnel that And important being to in across sales It's actively software delivery have be investing our we delivered our to to that that and today doing respective and the we're additional that in today. and harvesting in initial the that involved We're spectrum. give the accelerate actively seamless

Gregory Daily

at that Healthcare somewhat a our X% to priority need penetrated great we question. I role a probably It inning seems XX% the in pace mean X% like where so single be. digit, of It's best a it's on business second we big is project of to payments or is third And

Mark Palmer

with ARPU payments the associated think attachment of And the how to should improvement Healthcare? we about to

Rick Stanford

didn't understand. We didn't We .

Clay Whitson

what? of improvement The

Mark Palmer

the incremental to healthcare? result payments ARPU, customer attaching revenue that To from would per

Clay Whitson

we're for where the the is this majority of our don't I like field bill. some as think as a example, of education, large verticals insurance pays Well, -- it's

And so it's a lot of co-pays on end. the front

what in education, for might example. it's you It's And see significant. so -- not well,

Gregory Daily

It XX%. as could be high as

Operator

Stanley. James comes with Morgan Faucette Our from next question

James Faucette

ask margins that indicate your mentioned certainly, to and capabilities you're wanted to that. kind expenses you of bit solutions. there more hiring been focused I that really commentary with qualitative that associated and seems on increased your of and on growth. the a And have quickly a the follow-up some integrations CTO Is advancing

if headwind. we about margins, I'm there? what's But a that what like of to potential guess does little a growth for indicated cetera. all, think related tied the -- and wondering how be to at contracts, into I much pricing coming, should And put CPI right of long-term conditions being your et to from now is you changes bit the how perhaps able that, any through

Clay Whitson

our guidance I a margins, to on basis XX Well, points still long-term year. do is think XXX

in we from duplicate the done a streamlining acquisitions. to of internally just we've market, have only some result savings functions our the resulting in delivers of cost but lot of product had because areas not better a Some does some

We are trying to keep pace with inflation.

for yield we quarter, Services, in passing increases you point even this not we're our a Merchant Visa If big, which at increased we're Mastercard costs our basis example, with staying through. revenue that look from but is

we're doing with inflation. well, some has secret, wage just increases modest We're that. pace doing trying It's So no inflation. everybody software keep to as in

able to we're pace. keep So

Our prices. style to raise never has been

we and our And so do, haven't them when we customers in years understand. cases, some XX raised in

So front. term, IT, bit and cloud. will have such ahead net the it's a keeping getting But but things we long little the In term, have the be pass a headwind, to us near do other increases. the through streamlining margin win on cost the to of ability resolve we it a as

Operator

Charles [Operator with Our next Nabhan Instructions] comes question Stephens. from

Charles Nabhan

from renewals the notable another of line, to ahead But top it a cadence to throughout the that is, if year. revenue go-lives things on growth COVID-related of think you're the in quarter from Celtic or perspective. and Is terms guess in boot yourself think October out could X As swing I like call next or we distancing or going we license higher large clean anything the there my about lower? recovery. pretty question are to of on be seems some X comp year, went

Clay Whitson

you our we the acquired out, care October acquired as pretty that, it and acquisition X Celtic is X. small point comp. year No. We clean Really, company X. on a was before October on January ACS, a health AccuFund

acquisitions. school we So September think quarter always is in which make always normal QX the good that us -- I our do, more more And is good good just it's a absence would until back which acquisitions, just leave is But of the quarter is I to a will we seasonality. there. think

for is difference is of in just our for that those closures. sector. patterns because a bit in weak school all normal sector. But our would payments seasonal little a December next are strong public payments weakens quarters between in of education QX make public year. QX

Gregory Daily

a health very we I would say If could this is explainable. it was a spike, put exactly what on services... [ finger we and there mean professional be ]

Clay Whitson

onetime the the also difference. The explain explains But next a quarter line vary growth of Yes. organic little software usually sales modeling, every year. as think and would just quarter, I quarters throughout you're it the distribution bit every does

Charles Nabhan

follow-up, your a commentary the in little as EBITDA is it's Got it. And guide in million M&A end of been that a I noticed at the your past. lower target than just $X lower

million said I smaller any past, million. AccuFund smaller -- an focused on million filled deals? to area $X indicate deals, to product the you $X that with million might So we're acquisition know And in side? think your an the I there larger you be a in or as does reduction the do $X to $X Or like mix a but such is smaller on specific that think willingness

Gregory Daily

of with could why smaller our small we said there some if a like They deal were deals been perfect I expectations. software beyond about ones, the the in a example is We the fantastic one. deal, whole is be that. find and -- offering, crazy really another aren't It's AccuFund to small but Yes. really they've that we and would management do they our the maybe have perfect. have AccuFund and we

Operator

turn like back I conference session. closing Greg would any our question-and-answer Daily This for over concludes the to remarks. to

Gregory Daily

Smith next I Davis know kind don't you Why asked of thoughts walk our down going to debt on briefly. debt. about paying paying over that Geoff Thanks, about everybody. and John M&A something just through XX to talk I'm the down ask months.

Geoffrey Smith

Sure.

really very deal was So And I as a we stepped Celtic, good we've then, to bringing disciplined down that big value you'll do do look think our something us. at in you our since see like was staying months been we credit leverage thought X our up that refinancing into the last facility, win. really when leverage a a for

We number year. had this of earnouts a last also

rate little the we're debt, with the interest, paying down So which bit a higher at which velocity, lower. coupled

down. that of position those and balance come you some the kind see has with on sheet, can through earnouts those turn in our we we're of As

the little the down and market we've over And we next that do of that -- better -- at the right. think just will amounts have be million that, year, previously which we cash We in I flow. pay visibility much alluded than year we debt a M&A of to can earlier, do a the bit rate as next through fiscal $XXX Greg free do our to the north higher. off this can to spoken current of XXx M&A assuming significant And hope multiples. environment, we

in our is So with where -- with just organic the we're cash ability grow we really grow are with grow at M&A, flow. to happy of and terms our but scale

that the find hang ability Greg a about deal very the larger can fit we as word to just be and it's much smaller. deals the If do deal, to kind us, something great do of effort would going but to think a and right get to it's speaking larger as for on grow. we're and opportunities. to disciplined be going that, this. asset was -- to or I'll this smaller a work sometimes I to it's be that's our that plan willing are a strategic do on takes we

we value. make we're M&A. we're out sure think we really but at to the the so deals right remain And really right there position a good disciplined staying in in that opportunities are The exciting, get

Gregory Daily

it. A Great. special team. us. out to shout They just Great. again, remarkable, I thanks, and everybody, Well, joining are love for our

Thanks, everybody. have good So day. anyway, a

Operator

for has concluded. presentation. attending conference you Thank now today's The

now may disconnect. You

i3 Verticals (IIIV) 9 Aug 232023 Q3 Earnings call transcript