IIIV - Earnings call transcript Q1 2025

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

Operator

Good day, everyone, and welcome to the i3 Verticals First Quarter 2025 Earnings Conference Call. Today's call is being recorded and the replay will be available starting today through February 14. [Operator Instructions] At this time, for opening remarks, I would like to turn the call over to Clay Whitson, Chief Strategy Officer. Please go ahead, sir.

Clay Whitson

Good morning, and welcome to the First Quarter 2025 conference call for i3 Verticals.

call Jeff Daily, our Smith, Officer. this Rick and Chief on President Stanford, CFO; me are Chairman Greg CEO; Revenue Joining Paul Christians, the earnings the most discussed comparable GAAP measure will To by find directly non-GAAP reviewing measure call, yesterday's also to today's you is reconciliation a financial any extent release. in financial

individual This to in considered its consolidated of It company's to intent understanding not be but is to, should provide financial addition enhance non-GAAP information. instead the by information each non-GAAP financial information financial GAAP of, the may expected the company's of GAAP conference Reform statements, This Securities financial including Act the regarding financial Private statements. and contain among call forward-looking of others, XXXX operating statements within performance. the Litigation meaning

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

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

materially and the Consequently, actual statements. forward-looking may in discussed from results those operations differ

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

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

Gregory Daily

prior Thanks, We're share to some you of excited QX good fiscal XX%. SaaS Clay, call. adjusted XXXX. and up revenue and up Allow me XX%. highlights. over morning on with XX% to the year's to EBITDA all grew was year our was start Revenue

fruit pleased on see SaaS. the are emphasis our to We of

to one on what's long-term promising Paul growth. drive of But details the to driving I more that most later. expect We to share ARR continue revenue highlight growth want opportunities. will

and and market key are on integrate have retaining new utilities payments we by permitting. ensured we such a uncover software our well strength long-standing opportunities markets vertical capitalize opportunities positioned to continue This in payment proprietary platform has We facilitating been base. as our within to to

I will finished, over on to Geoff and will M&A. call he When will he's will revenue, now for Rick commentary Paul and open call detail on more discuss performance. we'll finally, then provide add turn up the the questions. financial And

Geoffrey Smith

The Greg. to year to of supplemental slide ended information presentation December XXXX Please quarter the first the XXXX. fiscal pertains quarter XX, Thanks, this the for with website on to discussion. following refer titled reference our

aligns for our services our changed we been had Following services presentation as a with merchant peers variable directly better which data costs previously services we gives We of of in provided cost the included allocation customers. support conversion, of and have believe this of software people our more sale other business, and to include other to closely view costs, such presentation installation, training, an SG&A. customer

supporting costs directly our in changed format. related certain Page the shows supplemental hosting of QX and of also software for the We've customers. fiscal information this XXXX through X QX presentation of

you So period. XX-month have a trailing

only a of numbers the operations. As will the all Services business, exclude discuss Merchant after discontinued the co are remain reminder, sale and I

million $XX.X increased A quarter XX% quarter in by million for of fiscal $X growth $XX.X recurring lysing permitting SaaS sources, compared approximately XX% million of from public of reflecting came and XX%. revenue and first the to XXXX. growth the of in recurring for increased XXXX sector. acquisition our revenues revenue X.X% for revenues driven $XXX.X from our QX Annual $XXX.X for to QX to QX the Revenues million of acquisition. recent from XXXX, most XX% organic million XXXX in

software to of but for total year. expected of QX $X.X similar fiscal The our software $X.X from XXXX. of fiscal be -- increased and to revenue expect for licenses of licenses software these has Nonrecurring of in QX remainder X%, to sales sales the other revenue just outpace revenues increased we Payments million was than forms payments for the and SaaS of earlier not of sales XXXX. timing XXXX expectation million for changed to XXXX

expected XXXX, introduced more revenue license up first for moved to we QX. QX, to we some When in land guidance fiscal

XX% of total for represented payments million and revenues with from outpacing increased Adjusted XXXX XX% EBITDA X%. services for to QX Software-related revenues XXXX. QX $XX.X QX XXXX for XX%, million other $XX

per as an of revenues higher carry was as sales EBITDA on earnings refer Pro Adjusted forma improved lower release in from which for the software XXXX. revenues QX description corporate operations from share to the XXXX. of XX.X% QX XX.X% margins XXXX continuing a reconciliation. Corporate percentage full QX press XXXX, of revenues. please expenses XX.X% percentage as for increase $X.XX expenses for adjusted was QX and from reflecting a and diluted and a XX.X%, percentage Again, high a for

eliminations and sector Following public the our which corporate business, sector, XX% between to revenues Other in Revenues Vertical, public quarter. and we XXXX $XX.X $XX.X QX represented includes care. have ] of the by [ for and XX% XXXX of vertical sale total million million consists of merchant our services segments. segmented RemainCo health QX for increased expenses education from during

QX professional QX recurring The transaction-based EBITDA for such increased digits, $XX.X services. to as The SaaS, increase $XX.X by double XXXX. grew revenue from revenues with million double-digit along which all XXXX million a streams increase XX% segment's was and for driven maintenance in adjusted

to of higher EBITDA sale to for of revenues revenues, which margins. as and by to recurring of in for for benefiting QX services driven lower as QX $XX.X for Revenues of declined million our result from nonrecurring XXXX million from the from $XX.X carries XXXX increased slightly QX QX high-margin software XX.X% increased XXXX QX XXXX, Adjusted for XXXX, XXXX compared XX% professional licenses. QX sales EBITDA segment a XX% software percentage licenses. services a Healthcare XX.X% Adjusted principally software

Adjusted percentage to from XXXX. QX EBITDA as improved for revenues QX a for XXXX XX.X% XX.X% of

$XX.X and of the well sheet positioned sale month. this million, strong matured Merchant at Regarding for sheet, our is September, the end, quarter balance up of of At following during notes, our the which made business future. remainder the debt stood convertible Services balance

Xx We still on have constraint. of with credit leverage a borrowing revolving $XXX million capacity our

on December Our was the tax XX, payments million of of of business. result balance tax-related $XX.X approximately cash have $XX our we or subsequently sale Merchant as but a million Services

million operations million share, have Revenue, FY forma XX, depreciation to The for million, adjusted adjusted set in diluted press $XX does XXXX following $X.XX. $X million, software $XX EBITDA, developed cash and $X to announced $X.XX not $XX million to November been million million, guidance our and internally net amortization, $XXX [indiscernible] for $XX.X $XXX continuing dated interest that to XXXX. pro expense forth reaffirms per transaction-related fiscal non-GAAP, or include XXXX earnings acquisitions release million costs. to non-GAAP, not

of margin and for X EBITDA year. to We continue single-digit approximate to revenue the organic points in in revenue per in XX.X% the quarters XX QX, currently growth QX, in with basis a XXX QX. to expect high following: XX.X% remaining our seasonality XX.X% distribution standpoint, From adjusted improvement QX expect we XX.X%

are M&A. any over now Although a most to variable they of years Rick comments software in sales on and I factor turn to distort quarter. past, in than line seasonality the will still can forecast given call less license item for represent the

Rick Stanford

to call process. then you, I'll the the acquisition Good and report get our Thank fourth revenue Jeff. quarter for to everyone. in morning, recent and to that M&A, Paul over exceeding I'm is turn I'll product most will on straight few happy that updates. to of Paul little in process, we've into expectations, detail thought a insight we a our more given around helpful it not M&A and touch might a give Historically, that minutes. our lot and be

discussions have is M&A We continues buying The building an building. and important and to part be often long our time valuable around resources. of or takes DNA. short

our exist does in Buying valuable the risk. provides addition, speed to it acquire execution expertise, and consistent engineering on mitigate hand, a basis other However, on we external team. any a talent within market,

products, processes, Last, opportunities. for access we customer an existing base immediate cross-sell gained distribution and to established

or the Our the continues and in pipeline deals in to deals in increase noticeable at strong decrease look we of on saw acquisitions with been acquisition of our several vertical. past out come a go no primary number Sector has focus quarter-to-quarter. There quarter, pie. This Public we be

long-term enhanced with new constantly are can to us. goals. for the that to We or important complement markets our is penetrate Obviously, looking technologies new targets opportunity

looking product and are combined potential with enhancements. cost in both for revenue savings deals, expansion market We and

to self-source continue We historically. deals our as we've done

calls sourcing of cold deep introductions. Our facilitate and research, that referrals a is warm combination

As vertical remain defined on I've we We've any disciplined said before, in parameters acquisition. our depending a objectives subvertical. and of strategic the

offer. prior assess several We making to an things

of profitability to growth, the compatibility foremost, review market and and and deal customer product potential base offerings fit. strategic and position, is synergies. First determine We

post-close cultural deal. friction review aspects aligned us forecasted does with our pre We goal to eliminate communication want post historical early and and clubs. Next, key set. management is performance the and of the for a clear We then financial

at complexities operational personnel, we deal suite. technology we within required. product is any our with on also need then post consider of There focus to existing may and close. integration look review to key also expertise. ensure of extensive security We compatibility We continuity an want We

Lastly, established align overall we consider post-close with objectives. that our value We recognition. metrics strategic

ultimately, have of now call We continue sheet comments. with closure. to will over Paul detailed the hopes turn I'll to creating final conversations for a term and and targets

Paul Christians

sales this productivity. synergies combined intravertical to on Rick. of The to growth drive portfolio, bundling The and evolution focus SaaS continues you, are evident. our in needed in place intra gains are product Thank facilitate and our with meaningful systems

Our product integrate are pricing multiple model, has to differentiator ability proven contracts and a to and to practices funding arena, the SaaS solutions verticals to significant be transitioned client across contractual legacy in a commitments. being subject

format teams in to market Verticals model current presented are upgrading also commitments. meet product our development contracts practices the New The product and subject funding contractual SaaS iX demands. to are and

products, technology our replaces products and Tech orderly accounting sunset fund in end, and a subvertical To jury Each subvertical. module and management fashion. and legacy a licensing for it ERP sell Justice introduced we our upgraded modules value in additional customer. we have that government new in and As updated each brings public system reasoned our to safety

new model integrated services solutions expanding markets and The where our strength breaking a share already support pricing given Tech a transitioned Justice to iX reputation are in a markets in great have strong subvertical of with of and We is attendant payments. we the is verticals presence. example and SaaS a market. into geographic

the integrated technology, well as received filing the with platform payments. MyFile. is has XX strategies online statewide exemplified filing received ERP base is state. for Mission, utility court success. and deploying XX probate solutions. this [indiscernible] its also and by iFile True excited innovative the have largest the our the -- current in in that payments Clayton integrated acquisition [indiscernible] is optimizing integrated is is and total this The licensing including new iX our by through with e-filing Verticals In went powered TruFile County, Louisiana, which permission it to the about. Georgia mentioned where we're state previously utility impact building iX of courts solutions Rick powered quarter prepares accounting, fifth in live and payments licensing core key adopted for an been a XX is operations sales Leveraging municipal very recently billing. municipal a our our of city that closed customer we also intra-vertical it fund with mandate.

focused firm This integrated highly the and in resources board have creation effective of payment is support, be sales and pipeline. permitting space. the should a evidenced level is they by It of enjoying licensing state significant a the RFP, been noted vertical expanding benefits on highly that in

well as success notable iX engagement seeing are our e-portal. with customer We

market portal Power The in in for the its utility the the is spot end-user iX for large with use #X [indiscernible] recognized with portal application #X spans recent the in the spot Seattle all was west Northeast engagement areas. customer rankings. The technology, by utilities which for utilities case large enterprise an secured J.D. We iX and

that X customers I internal for also payment X recently successfully competitive RFPs, systems. won possible through portal we have historic contracts awarded providers technology downstream. or proprietary displacing We been Tier new are portal opportunities

remainder leveraging public enterprise of use our the to teams utility sector. a the the markets had domain-specific marketing with across technology we've focus in in for the heavier subsegment cases are configure and product success Our

case noted open call be also concludes should use ICE Q&A, time, please. At the it all This we portal proprietary Drew. are requires. technology seamlessly integrated this It will with comments, proprietary for that the and the my our software payment as

Operator

James. Instructions] [Operator Raymond first with Davis John question The from comes

John Davis

to care health accelerated to XX%. Nice the see in improvement

think quarter. down last was I it X%

should How of So the anything that to about the call lumpiness? Any for year? out? we think rest

Clay Whitson

segment. year. of onetime license growth were Most in software expect health this care still low the sales for the health J.D. care single-digit we

John Davis

Perfect. Okay.

kind in the XQ laid to of the from fair? me Based the year it leads next was looks that maybe Is off Geoff $X.X that to revenue million like cadence pull license of XQ. that about change the So forward question. for out,

Clay Whitson

Yes, yes, that's pretty close.

John Davis

expansion revenue see I Great. basis then, about throughout year-over-year the first maybe quarter cadence XXX particular the out Okay. in Anything the margins of that around I year. weaker, stronger basis or Geoff, And should the XXX up year, balance in be of improvement. as the call margin far as calls on appreciate quarter. any year help points points the good to the full to think

Geoffrey Smith

The year of guidance Yes. margin. kind full on the holds

been within looking you're our cadence that, of As low point margin. at historically for like has kind

that revenue hit for you'd and I in see any that that think I that of schools this hardest out barring of would year, similar is being year, that onetime quarter. us reason last Primary and anticipate kind session, tweaking

John Davis

for how me. Any progressing? is one project the on customer update large that utility and And last

Geoffrey Smith

kind That's with stairstep that to payments utility from under hood this of million revenue million customer. would on up live would continue terms We've there. progressing on Our guided the customer? in approximately well. to that going the on year. of of gone $X that kind what's track $X-ish We that And

piece excited really payments that's about. we're So growth big of a the

kind it's significantly revenues they'll The size of proof of be will what implementation great the a scale. but accelerate XXXX. from the of can software rest steady, or and what XXXX do kind And of and concept in the of of we

more gets this go exciting track, So out. year. a on further helpful but it's you as It's lot it

Operator

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

Peter Heckmann

RFPs in larger position follow on there? participating to with Can bit think the of good like of you wanted longer-term work start you terms a opportunity like? competitive in when to landscape does see be little some And about talk in last. terms you What what the Just in utilities. a you'll the for look

Unknown Executive

upon some quite by or generally positive XX We need place there. see been but years. XX higher. It's that is services. we to And continue software see continuing cases as and component, the driven that's particularly products a we're evolve in with really the upgrade involved actively landscape to that very in software The and It's to of legacy in in mentioned, today. get demand like accelerating. touch that portal We number I for

down can gaining through service we to a to of bear aid manifests new other components very that and technology, within It's responsive billing technologies see that we high improving utility customer and that how is interest. degree bring itself the also in

engaged So at that constrained I up think you'll today in see not a steady ramp it really in point. arena, and this we're actively and

Gregory Daily

the #X great I exciting I but a obviously, that of thing utilities they agree. it's still got is people in inbound weren't the we've calls getting pipeline, most building. mean have from #X. are are now is handful but I think momentum probably spaces, If our but either that we definitely or

Paul Christians

continued. and and Yes. very consistent It's improving been

Peter Heckmann

utilities how I'm in just there. trying prospects Tier couple How would think the like talking you Are universe many U.S.? characterize the about potential a X to X hundred about we Tier of there? Or

Paul Christians

would Yes. when X. be becomes it to much you robust It that X wouldn't I high. low quite tiers, say and get X, more

X you offerings and I that X below down look the have offerings and we in XXX in think through range. area, in Tier X And X, that's just tiers if gas that also serve areas. the we water, that have serve and to X

at exposure X the all thousand. up. couple the of if heavily to like it, in many in and So relatively that weighted it's But you of in total space, markets, looked measures Tier

Peter Heckmann

that J.D. Or specific you the lastly, that by some is Was Okay. municipal And for the then portal iX customer? Powers. just mentioned product? recognition for

Paul Christians

the the of portal both those examples product. for was It -- for

Operator

question Charles next comes Nabhan Stephens. with The from

Charles Nabhan

M&A around your you But on between within versus any smaller all if maybe color the your environment opportunities, do curious if Appreciate smaller and you're and seeing there. strategy the deals. could differences willingness deals to your larger touch more larger And pipeline?

in the generally just you're any what If or preference you seeing have market?

Rick Stanford

pass let been than spot spot look little both $X look not and hasn't sweet little million large. larger. to -- has a tend in deals that EBITDA. We So Historically, at small really deals between and $X We're and $X we a million define EBITDA. dynamic. deals larger $X at our below million, in changed we've seeing That or sweet look, me on million our do

uptick There's and competitive deals in at we we're ago. environment, were been a same looking no of a number quarter year than the every

Charles Nabhan

Got it.

and from in Okay. conversations uncertainty And with administration, about just moving I as pieces you of change trends outlook city -- follow-up. a know interested changes administration but a few years, few the your had you've think the in spending and for as lot years? the on the over changes thoughts potential on or change from next next the I'm the in in state the level any quick

Paul Christians

and seen topic But early all days, pullback Yes. figure out. This any that trying in to of a is now. It's right hot haven't arena. that we're we kind

that of user the software in revenue we One do the the public has sector that is of transaction based. particularly cost things with well monetized

so to government entity nothing. cases, to that is some And in the the cost deploy

So would increase federal ARPA with constraints. done of there don't We business -- many we if to haven't do grants types. a see we continuing ton or of that are historically

see threat because not our really So that has been we in focus. it arena don't a

we and where going what's on. of terms are In

some be they optionality creative agencies giving can transitioning or cash costs it. that we some this use At and base a trying to the point, in We how of do it, cover systems requirements what are constituent be deploy don't noise to terms flow government and for fees. of there terms we in those see think around will of them to for

Charles Nabhan

guys. color, Got it. Appreciate all the

Operator

with Markgraff Alex Capital KeyBanc from comes question next The Markets.

Alexander Markgraff

Greg First, maybe or for Paul.

opportunities that just you expand made sort payments integrate the at the or of on of think reference more product. pipeline? it's the if you what at that's and the around call, just I to as base look some further Greg, on existing in you outset to, comments Just the customer Can

Paul Christians

is We a of need complete typically case typically demands it, a that facilitate -- payments some there's some some where that it this to has It's Paul. to fee -- We type to present transaction of of we of because type of mechanism they that government the the high use where is with certainty software where virtually that very and at are do that continuity. That's a all particular, that look into happy provides case. find agencies, integrated take it execution a in cycle. level our or

doing the reconciliation our programs And in processes with versus have software, it superior to find. are they conjunction then if exterior that they're

are integration So where opportunities customers we an including And go they and presentations. we a covered in we active we have effort not deeper back not do approach software applicable, we those existing are product in portfolio -- to if to it's see that. and assess our we where do have pursue like payments would portfolio to do are our -- if

Alexander Markgraff

Okay.

So in is just mostly opportunity Is to clarify, I vertical. the where that that to That's government correctly? hear did back. there go --

Paul Christians

That's correct.

Alexander Markgraff

Okay. time I verticals growth line the the average? up time which on in for company to to dilutive and us they're at there. process. look expect Rick, event the time up just of at or X maybe some that remind you the then profitability those of M&A And on comments the sort appreciate of and above for signing at bring just that looking you of to the average at you the Could or one maybe of then the thresholds sort

Rick Stanford

expect at corporate look down to XX% -- not rate. like We typically a growth our we revenue we Well, average. pull margins

generally as assigned blend more time lower So low then high a we Paul XXs, prefer of with the them adding to certainly can combination on and paid than lower morning. by payments, margins EBITDA, some this be XXs. XXx spent in earn-outs multiples that with We've not we

were, if years. dilutive not correct the would that first within generally they're we want So to they X

Operator

from comes James question Stanley. with next Morgan The Faucette

Shefali Tamaskar

is Tamaskar on This Shefali for James.

high So guide. just on single-digit a the growth one quick organic

into ones, drivers a that year. How and could detailed the much how wondering makeup those more this new little new if versus just picture have you a organic of growth of for So new do existing projects visibility much and pipeline? in the you bit this single-digit of high is provide projects

Clay Whitson

X% Sure. are We but to when we'll dollar published quarter, not include we that number. it number think in last increases, Inflation it point a future, it but a higher. It annually, does not X% expect include the might able to contribute retention In that We or payments will that X. contributed or we has and other price historically was net XXX%. be payments words, in do XXX%.

for remainder the leave new would that then logos. And

elephant of way and So years. general a couple the of swing in that can seen other, big but that's last we've kind or one that the algorithm, customers

Shefali Tamaskar

it. acquisitions That's about should M&A, And Got this X on we X generally to helpful. then to continue year. expect

Gregory Daily

right. about Yes, that's

lumpy, if I year. think It opportunistic it be digest we this on do year, optimistic about but would quarter, well. last perfect very them we're a we it could is but

Operator

[Operator Instructions]

Gregory Daily

appreciate very X team job X or next the the and doing. a the about they're excited as we're Really you. company And Thank years.

Operator

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

disconnect. You may now

i3 Verticals (IIIV) 7 Feb 252025 Q1 Earnings call transcript