IIIV

Image source: The Motley Fool. Friday, Aug. 7, 2026 at 8:30 a.m. ET Chief Strategy Officer - Clay Whitson Chairman and CEO - Gregory Daily President - Rick Stanford CFO - Geoffrey Smith Chief Revenue Officer - Paul Christians Operator: Thank you. Good day everyone and welcome to the i3 Verticals third quarter 2026 earnings conference call. Today's call is being recorded and a replay will be available starting today through August 14. The number for the replay is 855-669-9658 and the code is 9466422. 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 Clay Whitson, Chief Strategy Officer. Please go ahead, sir. Clay Whitson: Good morning and welcome to the third fiscal quarter 2026 conference call for i3 Verticals. Joining me on this call are Greg Daily, our Chairman and CEO; Rick Stanford, our President; Geoff Smith, our CFO; Paul Christians, our Chief Revenue Officer. To the extent any non-GAAP financial measures are discussed in today's call, you will also find a reconciliation to the most directly comparable GAAP financial measure by reviewing yesterday's earnings release. It is the company's intent to provide non-GAAP financial information to enhance understanding of its consolidated GAAP financial information. This non-GAAP financial information should be considered by each individual in addition to, but not instead of, the GAAP financial statements. This conference call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements, among others, regarding the company's expected financial and operating performance. For this purpose, any statements made during this call that are not statements of historical facts may be deemed to be forward-looking statements. You are hereby cautioned that these forward-looking statements may be affected by important factors, among others, set forth in the company's earnings release and in reports that are filed or furnished to the SEC. Consequently, actual operations and results may differ materially from those discussed in the forward-looking statements. Finally, the information shared on this call is valid as of today's date, and the company undertakes no obligation to update it except as may be required under applicable law. I will now turn the call over to the company's Chairman and CEO, Greg Daily. Gregory Daily: Thanks, Clay. Good morning to all of you on the call. Our third quarter results fell short of our expectations and we're disappointed in the outcome. The primary challenge continues to be slower than expected growth in certain areas of the business, particularly within revenue streams that tend to be less recurring in nature. Geoff will elaborate further. Despite the disappointing quarter, there are aspects of the business that continue to perform well. Annualized recurring revenue grew at 8% year-over-year, reflecting the ongoing value of our software solutions provided to our customers and the strength of the markets we serve. We have several material go-lives recently that Paul is excited to share with you later in the call. We have laid the groundwork to realize margin expansion in the coming quarters. We remain confident in the long-term opportunity in front of us. Across our public sector end-markets, agencies continue to prioritize modernization, digital engagement, and operational efficiencies. We believe our software platforms, transaction-based solutions, and deep domain expertise position us well to participate in these trends. With that, I'll turn it over to Geoff. He'll walk you through our financial results in more detail. Geoffrey Smith: Thanks, Greg. The following pertains to the third quarter of fiscal year 2026, which is the quarter ended June 30, 2026. Please refer to the slide presentation titled Supplemental Information on our website for reference with this discussion. Revenues for the third quarter of fiscal 2026 increased 2% to $53.1 million from $51.9 million for Q3 2025. Organic revenue was down 2% in the quarter, hampered by a $1.8 million decrease in professional services. Ongoing weakness in professional services continues to be concentrated in our utilities market. We expect the year-over-year drawdown in professional services to persist in the fourth quarter. Overall, non-recurring revenue sources decreased 18% compared to the prior year. Annual recurring revenues increased 8% to $174.1 million for Q3 2026 compared to $160.8 million for Q3 2025. SaaS revenue grew 38% and transaction-based revenue grew 5%. We are experiencing increased interchange rates related to high commercial card usage, a situation we are addressing with our processor in the fourth quarter. In addition, we realized lower growth from our Resolve product in the third quarter than expected but anticipate reacceleration into the next fiscal year due to the slate of go-lives. Maintenance revenue decreased 13%, which is steeper than normal due to the timing of certain material SaaS conversions, but will be closer to 3.5% down go forward. Overall, 82% of our revenues in the quarter came from recurring sources. We do not expect material license revenue the remainder of the fiscal year. Adjusted EBITDA increased 5% to $13.3 million for Q3 2026, $12.7 million for Q3 2025. Adjusted EBITDA as a percentage of revenues was 25%, an increase from 24.5%. We continue to recognize efficiencies and savings due to process improvements and the adoption of AI. We expect the adjusted EBITDA as a percentage of revenue to improve in the fourth quarter and continue to accelerate into the next fiscal year. Corporate expenses as a percentage of revenues were 8.2% for Q3 2026. Adjusted diluted earnings per share from continuing operations for the third quarter of fiscal 2026 increased 8.5% to $0.25 from $0.23 for Q3 2025. Again, please refer to the press release for a full description and reconciliation. You will notice an item in other income this quarter, a $9.9 million unrealized gain on a minority equity investment. Years back, we made a small investment in a business, a former team member launched. We are pleased with their rapid growth and grateful that our investors participate in that success. Regarding the balance sheet, at quarter end, debt stood at $114.3 million and our cash balance was $2.6 million. We still have $285.7 million of borrowing capacity under our revolving credit facility and 5x leverage constraint. The expectation remains that we will use any borrowings for opportunistic acquisitions and stock repurchases. Our share buybacks have reduced our total adjusted weighted average shares outstanding from over 34 million to under 28 million. Following updates our guidance for continuing operations for FY2026, which was last updated during our second quarter fiscal 2026 press release dated May 7, 2026. The outlook does not include acquisitions that have not yet been announced or transaction-related costs. Revenue, $216 million to $221 million. Adjusted EBITDA, $57 million to $60 million. Adjusted diluted earnings per share, $1.08 to $1.12. We appreciate that this is meaningfully lower than our previous guidance, primarily due to lower than anticipated professional services and a deceleration of transaction revenues. Looking past 2026, we expect better growth on a go-forward basis. Last quarter, we elaborated on several reasons for that, which all hold true. However, for 2027, our current expectations is mid-single-digit revenue growth, which is lower than previously guided high single-digit growth. I will now turn the call over to Rick for additional business-related comments. Rick Stanford: Thank you, Geoff. Good morning, everyone. I want to spend a few moments discussing AI and the impact it's having on our business. Obviously, AI continues to be one of the most significant technology trends shaping our industry, and we view it not only as a standalone initiative, but as a strategic capability that is increasingly embedded throughout our operations and our customer facing solutions. Over the past year, we have systematically deployed AI enabled tools across product management, engineering, quality assurance, cloud operations, security, and customer support. These capabilities are helping us increase productivity, improve service delivery, accelerate innovation, and maintain a high standard of quality while operating efficiently. A good example is the integration we delivered this quarter connected to a client's court case management system. What was originally considered an aggressive development timeline was completed in approximately one-third the time that similar projects would have historically required. More importantly, we did not just build a one-time integration. Because of the efficiencies created through AI-assisted development, we built a configurable integration framework that can now be leveraged for future deployments. We expect to bring 2 new clients live this quarter using that infrastructure with a third immediately behind them. AI is also allowing us to improve quality, security, and long-term maintainability. We've expanded our investments in automation engineering and security engineering, enabling testing and security reviews to occur earlier in the development lifecycle. Human oversight with specific domain expertise and established quality controls remain central to our process. But issues are now identified sooner, reducing downstream costs and improving reliability for systems our customers rely on every day. The results are tangible. Internal sprint metrics show that more than 25% improvement in development velocity and we are releasing software more frequently while maintaining a flat engineering headcount. Just as importantly, these internal advances are translating directly into customer value and commercial opportunities. Customers increasingly want solutions that automate routine work, improve accuracy, extract meaningful insights from data, and create more efficient user experiences. We are seeing this firsthand in our markets where AI-powered document processing capabilities are becoming a meaningful growth driver. Today, we hold 8 contracts spanning Louisiana, Tennessee, North Carolina, and South Carolina for AI-enabled document extraction, redaction, and document separation services. These implementations began going live this quarter, and we are increasingly seeing extraction and redaction capabilities specified directly within customer procurement requirements rather than being viewed as optional enhancements. As we evaluate AI opportunities, our focus remains on solving real customer problems and generating tangible returns. We are applying AI in areas where we possess deep industry expertise, proprietary workflow knowledge, and trusted customer relationships. We believe this positions us to deliver differentiated solutions while creating opportunities for both future revenue growth and operating leverage. It's no secret that AI vendors are changing the way they price their platforms from per-seat to usage-based models. While AI-related infrastructure costs are increasing across the industry, as models become more capable and agentic workflows become more sophisticated, we are actively managing those investments. Not all embedded features require the most robust and pricier platforms, but instead some functions are basic and simply require less costly solution. In fact, we are starting to see competitive situations where before it was a take it or leave it on the proposal side for AI platforms. We believe we are still in the early stages of long-term transformation in the software and the momentum we are seeing today reinforces our confidence that AI will be an increasingly important component of our growth strategy. With that, let me turn it over to Paul for revenue updates. Paul Christians: Thank you, Rick. The third quarter remained active across our core markets with customers increasingly evaluating broader, more integrated platform solutions. Our strategic focus has translated this demand into a higher quality sales pipeline, more disciplined pursuits, stronger recurring revenue opportunities and shorter paths from bookings to revenue recognition. We have enhanced our approach to identifying, qualifying and pursuing public sector opportunities. Governments continue to invest in modernization initiatives and i3's focus is on delivering integrated software platforms that serve as operational backbone for mission-critical functions. We are expanding our presence in the JusticeTech market, securing multiple core agency conversions that demonstrate the strength of that platform and our ability to complete -- compete successfully in large established markets. At the same time, we continue to advance our SaaS and cloud strategy, creating ongoing opportunities to migrate customers to more scalable recurring software models. Cross-selling remains a meaningful growth driver across our vertical markets, particularly where software platforms, payments and adjacent workflow solutions can be bundled to increase customer value and deepen long-term relationships. We continue to make meaningful progress across our public sector portfolio and our transportation business serves as a strong example of that momentum this quarter. i3 currently serves 34 jurisdictions across the United States and Canada. During the quarter, we launched the state electronic lien and title solution as part of a broader transportation platform. Unlike traditional ELT providers that operate as single point solutions connecting to an existing state system, i3 provides mission-critical software across the entire title and registration ecosystem, including dealers, county clerks, state motor vehicle agencies and integration points for lender service providers. This comprehensive approach enables a seamless end-to-end digital workflow that improves data accuracy, reduces administrative costs, enhances security, increases operational efficiency and accelerates user adoption. Demand for our motor vehicle insurance verification solutions remained strong. During the quarter, we supported the implementation and launch of insurance verification systems in 2 major Midwestern states. Most recently, Kansas implemented the Kansas Insurance Verification System, real-time platform designed to streamline compliance and strengthen enforcement statewide. The system enables immediate insurance verification for authorized agencies, connects with hundreds of participating insurers and supports the state's effort to reduce uninsured motorists. In Georgia, following statewide approval and execution of agreements with all participating counties, the state's vehicle renewal kiosk program is now fully operational. This achievement further expands i3 Verticals' transportation footprint, establishes additional recurring transaction revenue stream and provides a scalable foundation for future growth across the state. Education delivered another solid quarter, driven by new customer additions and continued expansion with our existing base. Nearly half of the fiscal '26 bookings were generated from net new customers, demonstrating the continued demand for our solutions. On the innovation front, we continue to advance AI initiatives in our education platform. This quarter, we initiated a proof of concept focused on AI-driven inventory optimization, menu planning and food cost management for school nutrition programs. The initiative is designed to help educational institutions better optimize USDA meal program funding while improving efficiency, reducing waste and providing actionable operational insights. Looking ahead, we remain confident in the long-term fundamentals driving public sector technology investment. Government agencies continue to prioritize modernization, automation, enhanced citizen experience and greater operational efficiency. With our integrated software platform supporting critical government functions, we believe i3 Verticals is uniquely positioned to capitalize on these trends. We remain focused on disciplined execution, expanding our market presence and delivering sustainable growth and long-term value to our customers and shareholders. This concludes my comments, Megan. At this time, we will open the call for Q&A, please. Operator: [Operator Instructions] The first question comes from Madison Suhr with Raymond James. Madison Suhr: I wanted to start just on the FY '26 revenue guide here. Obviously, it was lowered by $6.5 million. Maybe just double-click on the composition of that. I know, obviously, it's driven by non-recurring revenue, but is it mainly 1 large customer? Is it multiple? Any color on vertical? And just to be clear, is this a customer-driven kind of push-out or lower, or is there any kind of implementation delays internally? Geoffrey Smith: Thanks for the question, Madison. To unpack it a little bit for you, of the $6.5 million guide down, probably about $4.5-ish million or so that I would attribute to professional services. Within that, about $3 million of that is utilities and I would classify that as pushout, just ongoing delays in our large CIS and a couple of smaller projects, but the vast majority of that being ongoing push out there. About $500,000 justice, $500,000 licensing and permitting in our public administration and a significant project in our transportation market, too, is delayed a little bit. That brings you up to about $4.5 million there. In the transaction revenue, you see that kind of throttle down this quarter. I view that as temporary. A big chunk of that is payments, probably $1 million plus of that is the net take rate on payments, and it's being driven by what we alluded to in the comments around elevated interchange around commercial cards. And basically, that's a data fix that is going in, in the fourth quarter. It's been hurting us for a while. It was particularly acute this quarter, and the fix has just been repeatedly delayed, and there's been some dialogue with our processor that we've just kind of been working through and we just had to bite the bullet here. And then our Resolve product, that is a product we've been upfront about just how excellent the pipeline and the growth is for it. It had a really weak quarter. It's subject to a number of forces that are kind of in the -- you might call in the realm of things outside of our control, mostly the throughput of cases through the existing customer base. There will be times that, that's a really great kind of wind in our sails item as that throughput is rising in the existing customer base and times when it's kind of dragged down a little bit. We also had some good long-run implementation things, but they were short-run disruption items within that product suite as we went on to a new version of the product this quarter. But long run, that's going to continue to be a really strong growth driver for us. So anyway, that's kind of the anatomy of the guide down. Madison Suhr: Okay, yes, that's very helpful color, Geoff. I appreciate it. And then just a follow-up, I think Greg mentioned, you know, have a solid foundation for margin expansion here. Can you guys maybe just touch on what gives you confidence in improving profitability? Geoff, I know, for example, you've talked about AI efficiencies in the past. And historically, you've talked about normalized margin improvement in the 50 to 100 basis point range. Is that still the right way to think about margins, given your comments around mid-single-digit revenue growth? Thanks, guys. Geoffrey Smith: So, for the fourth quarter, we're looking at very strong margin growth. I'll kind of take it out to 2027 and look at that. We already have reduced our cost structure, and I'm referring specifically to people costs and some other things like some rent and things like that, materially. And frankly, there's a few things that have already been done that we're not getting the benefit from yet in Q3. Some of that is timing and some of that is also, there were some offsets in this current quarter in the form of reserves we had to take on some of our receivables. And so those are one-time items, and we already are looking at kind of a cleaner path to better margins in 2027. A little bit of that is also compressed by the revenue growth situation, and as that improves into 2027, the margin expansion will benefit from that as well. But the long run guide that we've always put on margins being 50 to 100 basis points, I think you're looking north of the 100 basis points in 2027 currently. If revenue is growing in the mid-single digits, as we've kind of described here, we should be more in the 100 to 200 basis point margin expansion range for fiscal 2027. Operator: [Operator Instructions] Clay Whitson: Alex Markgraff at KeyBanc is having audio troubles, but he emailed a question he'd like for us to address. Curious to understand the bridge back to single-digit growth in 2027 and our degree of confidence in that path. Geoffrey Smith: It's a really fair question from Alex. We're definitely sensitive to that and appreciate the market. You need to kind of understand how we get from the growth picture in '26 to '27. So the first thing I would highlight is, Greg and Paul touched on this in their comments, but we have several significant go-lives in our transportation market. Two of those are sort of in what you might call the legacy i3 transportation market. Good recurring revenue go-lives that have just kicked in here in the fourth quarter. Those will be on a ramp-up period, so the impact in Q4 is going to be really modest, but the impact in 2027 will be stronger and then into 2028. And the other two are, in our most recent acquisition, the electronic insurance verification software and frankly, we're not, that's not all touching our organic growth until we get to Q2 of 2027. But the growth in that acquisition is tremendous. They just have a really, really strong market position. The things that we had in the pipeline at the time of the acquisition several months ago are all on track and several material new things are also already in the hopper as well. Really great growth picture there. Once that becomes part of the organic picture, that's going to be a nice, significant uplift on its own. Also, the Board Licensing and Permitting software has had a really rough 2026 with a lot of project delays, but they have a deep backlog of contracted implementation revenue and go-lives slated for 2027 here. So their picture gets a lot brighter in that period. I alluded to the go-lives in our Resolve. Everybody's well aware of West Virginia, which will continue to progress forward. It'll be the back part of 2027 before we start going live on courts with that project. At that point, you get on the ramp of the recurring revenues. But in the meantime, we'll still have a slightly better diet of professional services in the next year. And then finally in the utility space, in both our portal business and the CIS project, that's been a really difficult year in that space in 2026. We've set the bar pretty low to grow over and what we see right now for 2027 looks a lot brighter on both of those fronts. Operator: [Operator Instructions] This concludes our question and answer session. I would like to turn the conference back over to Greg Daily for any closing remarks. Gregory Daily: Again, thank you everyone for dialing in this morning. And we appreciate your support. Operator: Thank you. 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Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Third quarter results fell short of management expectations due to slower growth in non-recurring revenue streams, which decreased 18% year-over-year. Organic revenue declined 2% in the quarter, primarily hampered by a $1.8 million decrease in professional services, with significant weakness concentrated in the utilities market. Annualized recurring revenue (ARR) grew 8% to $174.1 million, driven by 38% growth in SaaS revenue, which management views as the core value driver of the business. Transaction-based revenue growth of 5% was constrained by elevated interchange rates from high commercial card usage and lower-than-expected throughput in the Resolve product. Management has implemented a configurable AI integration framework that reduced development timelines by approximately two-thirds for recent court case management projects. Operational efficiencies from AI-assisted development have resulted in a 25% improvement in development velocity while maintaining a flat engineering headcount. Fiscal 2026 revenue guidance was lowered to $216 million–$221 million, reflecting persistent delays in professional services and a deceleration in transaction revenues. Fiscal 2027 revenue growth expectations were adjusted to mid-single digits, down from previous high single-digit guidance, though management expects better growth than in 2026. Margin expansion of 100 to 200 basis points is anticipated for fiscal 2027, supported by a reduced cost structure in personnel and rent, alongside AI-driven productivity gains. Growth in 2027 is expected to be anchored by significant go-lives in the transportation market and the full integration of electronic insurance verification software into organic metrics by Q2. Maintenance revenue is projected to stabilize at a 3.5% decline going forward, following a steeper 13% drop this quarter caused by the timing of material SaaS conversions. A $9.9 million unrealized gain was recorded in other income related to a minority equity investment in a business launched by a former team member. Management identified a data-related issue causing elevated interchange rates with their processor; a fix is scheduled for the fourth quarter to address net take rate pressure. The company reduced its total adjusted weighted average shares outstanding from over 34 million to under 28 million through active share repurchases. Ongoing delays in a large Utility CIS project and a significant transportation project remain primary headwinds for professional services revenue through the end of the fiscal year. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Approximately $4.5 million of the reduction is attributed to professional services, with $3 million of that stemming from ongoing pushouts in the utilities market. Over $1 million of the shortfall relates to net take rates on payments, specifically due to delayed technical fixes for elevated commercial card interchange rates. The Resolve product underperformed due to lower case throughput and short-term disruption from migrating to a new software version. Management expects margin expansion to exceed the historical 50-100 basis point range, targeting 100-200 basis points in fiscal 2027. Profitability gains will be driven by a cleaner cost structure following one-time receivable reserves taken in Q3 and the realization of previously implemented headcount reductions. Confidence is supported by a deep backlog in licensing and permitting software and a low year-over-year comparison bar in the utility sector. The West Virginia court project is expected to begin contributing recurring revenue in the latter half of 2027 following the professional services phase.

Interested in i3 Verticals, Inc.? Here are five stocks we like better. i3 Verticals lowered its fiscal 2026 outlook after third-quarter revenue fell short of expectations, with weakness concentrated in utility-related professional services and slower transaction revenue growth. New guidance calls for revenue of $216 million-$221 million, adjusted EBITDA of $57 million-$60 million, and adjusted EPS of $1.08-$1.12. Despite revenue pressure, profitability improved: adjusted EBITDA rose 5% to $13.3 million, margin expanded to 25.4%, and adjusted EPS increased 8.5% to $0.25. Management attributed the gains to process improvements, AI adoption, and cost reductions. Management reduced its fiscal 2027 revenue growth expectation to the mid-single digits but anticipates support from transportation deployments, insurance-verification implementations, licensing backlogs, Resolve product go-lives, and AI-enabled public-sector solutions. These 4 Low P/E Tech Stocks Could be Breakout-Ready Bargains i3 Verticals (NASDAQ:IIIV) reported third-quarter fiscal 2026 results that fell short of its expectations, prompting the public-sector software and payments company to lower its full-year outlook. Management cited weaker-than-expected professional services revenue, particularly in utilities, and slower transaction revenue growth. For the quarter ended June 30, revenue increased 2% year over year to $53.1 million. Organic revenue declined 2%, affected by a $1.8 million decrease in professional services revenue. Annual recurring revenue, however, increased 8% to $174.1 million, with SaaS revenue rising 38% and transaction-based revenue increasing 5%. → Meta’s Earnings Drop Shows Wall Street Wants More Than Ad Growth “Our third quarter results fell short of our expectations,” Chairman and CEO Greg Daily said. “The primary challenge continues to be slower than expected growth in certain areas of the business, particularly within revenue streams that tend to be less recurring in nature.” CFO Geoff Smith said the decline in professional services was concentrated in the utilities market and is expected to continue on a year-over-year basis in the fourth quarter. Overall, non-recurring revenue decreased 18% from the prior-year quarter. → 4 Oil and Gas ETF Plays as Prices Stay Sky-High During the analyst question-and-answer session, Smith said that roughly $4.5 million of the company’s $6.5 million reduction in revenue guidance was related to professional services. Of that amount, approximately $3 million was tied to utilities, including delays in a large customer information system project and other smaller projects. Smith also cited roughly $500,000 each of delayed activity in justice and licensing and permitting, along with a delayed transportation project. → Sandisk Just Delivered a Blowout Quarter—Here's Why the Stock Is Falling Transaction revenue growth also slowed during the quarter. Smith said more than $1 million of the reduction was related to net payment take rates, which were affected by elevated interchange costs associated with commercial card usage. The company is working with its processor on a data-related fix expected in the fourth quarter. The company’s Resolve product also delivered less growth than expected, Smith said, due largely to case throughput among existing customers and short-term disruption related to a transition to a new version of the product. He said management expects Resolve to reaccelerate into the next fiscal year as new customer implementations begin. Adjusted EBITDA rose 5% year over year to $13.3 million, while adjusted EBITDA margin expanded to 25.4% from 24.5%. Adjusted diluted earnings per share from continuing operations increased 8.5% to $0.25. Smith attributed margin progress to process improvements and adoption of artificial intelligence tools. The company expects adjusted EBITDA margin to improve in the fourth quarter and continue accelerating in fiscal 2027. The company also reported a $9.9 million unrealized gain in other income related to a minority equity investment in a business launched by a former team member. At quarter-end, i3 Verticals had $114.3 million in debt and $2.6 million in cash. The company had $285.7 million of borrowing capacity under its revolving credit facility, subject to a five-times leverage constraint. Smith said potential borrowing would be used for opportunistic acquisitions and stock repurchases. Share repurchases have reduced adjusted weighted average shares outstanding from more than 34 million to fewer than 28 million. i3 Verticals lowered its fiscal 2026 guidance for continuing operations to: Revenue of $216 million to $221 million Adjusted EBITDA of $57 million to $60 million Adjusted diluted earnings per share of $1.08 to $1.12 Smith said the new outlook was “meaningfully lower” than previous guidance, primarily because of lower-than-expected professional services revenue and slowing transaction revenue. Management also reduced its current fiscal 2027 revenue growth expectation to the mid-single digits, from prior expectations for high-single-digit growth. Still, Smith outlined several contributors expected to support improved growth next year, including transportation software deployments, electronic insurance verification implementations, board licensing and permitting backlog, Resolve go-lives, and an expected improvement in utilities. He said two transportation go-lives had begun in the fourth quarter and would provide a modest benefit initially before contributing more substantially in fiscal 2027 and 2028. Two additional implementations tied to the company’s electronic insurance verification software acquisition are expected to begin contributing to organic growth in the second quarter of fiscal 2027. For fiscal 2027, Smith said the company expects adjusted EBITDA margin expansion of roughly 100 to 200 basis points, above its longer-term range of 50 to 100 basis points. He pointed to lower people-related costs, rent reductions and other actions already taken, as well as the absence of certain third-quarter receivables reserves. President Rick Stanford said i3 Verticals is deploying AI-enabled tools across product management, engineering, quality assurance, cloud operations, security and customer support. Internal sprint metrics show more than a 25% improvement in development velocity while engineering headcount has remained flat, he said. Stanford described a recent court case management integration that was completed in about one-third of the historical development timeline. The company built a configurable framework rather than a one-time integration and expects to bring two additional clients live during the current quarter, with a third following. The company holds eight contracts in Louisiana, Tennessee, North Carolina and South Carolina for AI-enabled document extraction, redaction and document separation services. Those implementations began going live during the third quarter, according to Stanford. Chief Revenue Officer Paul Christians said the company continued to see demand from public-sector customers for broader software platforms, modernization initiatives and bundled software, payments and workflow products. In transportation, i3 launched a state electronic lien and title solution, supported insurance-verification system launches in two major Midwestern states, and said Georgia’s vehicle renewal kiosk program was fully operational following statewide approval and county agreements. In education, Christians said nearly half of fiscal 2026 bookings came from net new customers. The company also began a proof of concept for AI-driven inventory optimization, menu planning and food cost management for school nutrition programs. Daily said the company remains confident in its longer-term opportunity, citing government agencies’ continued focus on modernization, digital engagement and operating efficiency. i3 Verticals, Inc is a provider of integrated software and merchant payment processing solutions tailored for specific vertical markets across the United States. Since its founding in 2001 and headquartered in Columbia, South Carolina, the company has focused on delivering SaaS-based applications and payment services to streamline revenue collection and management workflows for its clients. The company's product portfolio includes electronic payment processing for credit and debit card transactions, automated clearing house (ACH) transfers, online and mobile payment portals, and related risk management and compliance tools. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "i3 Verticals Q3 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

This article first appeared on GuruFocus. Revenue: $53.1 million for Q3 2026, up 2% from $51.9 million in Q3 2025. Organic Revenue: Down 2% in the quarter, impacted by a $1.8 million decrease in professional services. Annualized Recurring Revenue: Increased 8% year-over-year to $174.1 million, compared to $160.8 million in Q3 2025. SaaS Revenue: Grew 38% in the quarter. Transaction-Based Revenue: Increased 5% year-over-year. Maintenance Revenue: Decreased 13%, steeper than normal due to timing of SaaS conversions. Non-Recurring Revenue: Decreased 18% compared to the prior year. Adjusted EBITDA: Increased 5% to $13.3 million, up from $12.7 million in Q3 2025. Adjusted EBITDA Margin: 25.4% of revenues, up from 24.5% in the prior year. Adjusted Diluted EPS: Increased 8.5% to $0.25 from $0.23 in Q3 2025. Corporate Expenses: 8.2% of revenues for Q3 2026. Debt: $114.3 million at quarter end, with cash balance of $2.6 million. FY 2026 Guidance: Revenue of $216 million to $221 million; Adjusted EBITDA of $57 million to $60 million; Adjusted diluted EPS of $1.08 to $1.12. Warning! GuruFocus has detected 4 Warning Sign with IIIV. Is IIIV fairly valued? Test your thesis with our free DCF calculator. Release Date: August 07, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Annualized recurring revenue grew 8% year-over-year, driven by strong SaaS (up 38%) and transaction-based revenue (up 5%). Adjusted EBITDA increased 5% to $13.3 million, with margin expansion to 25.4% from 24.5%. AI adoption has improved development velocity by over 25%, enabling faster project delivery and cost efficiencies. Secured eight AI-enabled document processing contracts across multiple states, with implementations beginning to go live. Strong go-live momentum in transportation, including a state electronic lien and title solution and insurance verification systems in two Midwestern states. Education segment delivered solid quarter with nearly half of FY2026 bookings from net new customers. Balance sheet remains flexible with $285.7 million borrowing capacity for opportunistic acquisitions and buybacks. Organic revenue declined 2% in the quarter, with professional services down $1.8 million, primarily in utilities. Non-recurring revenue sources decreased 18% year-over-year, and no material license revenue is expected for the remainder of fiscal 2026. FY2026 guidance was significantly lowered, with revenue now expected at $216-$221 million (down from prior), due to weaker professional services and transaction revenue. 2027 revenue growth expectation reduced to mid-single digits from high single digits, reflecting ongoing challenges. Elevated interchange rates from high commercial card usage negatively impacted transaction revenue, with a fix delayed until Q4. Maintenance revenue decreased 13% due to SaaS conversions, steeper than normal. Resolve product experienced lower-than-expected growth in Q3, with a weak quarter due to case throughput and implementation disruptions. Q: Can you double click on the composition of the FY 2026 revenue guide down of $6.5 million? Is it driven by one large customer or multiple, and is it a push-out or a loss?A: Geoff Smith (CFO): Of the $6.5 million guide down, about $4.5 million is attributed to professional services, with $3 million of that in utilities due to ongoing delays in large CIS projects (classified as push-outs). Other smaller delays include $500,000 in justice and $500,000 in licensing/permitting. The transaction revenue throttle-down is viewed as temporary, with over $1 million driven by elevated interchange rates on commercial cards (a data fix is being implemented in Q4). The Resolve product also had a weak quarter due to case throughput and short-term implementation disruptions, but long-term growth drivers remain intact. Q: What gives you confidence in improving profitability, and is the 50-100 basis point normalized margin improvement still the right way to think about margins given mid-single-digit revenue growth?A: Geoff Smith (CFO): For Q4, we expect very strong margin growth. Looking to 2027, we have already materially reduced our cost structure (people costs, rent) and are not yet seeing the full benefit due to timing and one-time reserves on receivables. As revenue growth improves into 2027, margin expansion will benefit. While the long-run guide is 50-100 basis points, we expect to be north of that, in the 100-200 basis point range for fiscal 2027. Q: Can you bridge the path back to mid-single-digit growth in 2027 and your degree of confidence in that path?A: Geoff Smith (CFO): Several significant go-lives in the transportation market will contribute, including two in the legacy i3 market with modest Q4 impact but stronger 2027 impact, and two in the recent electronic insurance verification acquisition, which will touch organic growth by Q2 2027. The Board licensing and permitting software has a deep backlog of contracted implementation revenue and go-lives slated for 2027. The Resolve product's West Virginia project will start going live on courts in the back part of 2027, ramping recurring revenues. Finally, the utility space, which had a difficult 2026, has a brighter 2027 outlook for both the portal business and CIS project. Q: Can you elaborate on the impact of AI on your business and how it is translating into customer value and commercial opportunities?A: Rick Stanford (President): AI is embedded throughout operations and customer-facing solutions. We have deployed AI-enabled tools across product management, engineering, QA, cloud operations, security, and customer support. A key example is an integration delivered this quarter for a court case management system, completed in one-third the time historically required, and built as a configurable framework for future deployments. We hold eight contracts for AI-enabled document extraction, redaction, and separation services across four states, with implementations going live this quarter. These capabilities are increasingly specified directly in customer procurement requirements. We are actively managing AI infrastructure costs by using less costly solutions for basic functions. Q: Can you provide an update on the transportation business and its recent launches?A: Paul Christians (CRO): i3 serves 34 jurisdictions across the US and Canada. During the quarter, we launched a state electronic lien and title (ELT) solution as part of a broader transportation platform, providing mission-critical software across the entire title and registration ecosystem. We supported the implementation of insurance verification systems in two major Midwestern states, including Kansas's real-time platform. In Georgia, the state's vehicle renewal kiosk program is now fully operational following statewide approval, establishing an additional recurring transaction revenue stream. Q: What were the key drivers of the Q3 financial results, and how did recurring vs. non-recurring revenue perform?A: Geoff Smith (CFO): Revenues increased 2% to $53.1 million, with organic revenue down 2% due to a $1.8 million decrease in professional services, concentrated in the utilities market. Non-recurring revenue sources decreased 18% year-over-year. Annual recurring revenues increased 8% to $174.1 million, with SaaS revenue growing 38% and transaction-based revenue growing 5%. Maintenance revenue decreased 13% due to SaaS conversion timing but will normalize to ~3.5% down. Adjusted EBITDA increased 5% to $13.3 million, with margins expanding to 25.4% from 24.5%. Q: Can you discuss the $9.9 million unrealized gain in other income and the company's balance sheet position?A: Geoff Smith (CFO): The $9.9 million unrealized gain is on a minority equity investment made years ago in a business launched by a former team member, which has experienced rapid growth. Regarding the balance sheet, debt stood at $114.3 million with a cash balance of $2.6 million. We have $285.7 million of borrowing capacity under our revolving credit facility and a 5x leverage constraint. Borrowings will be used for opportunistic acquisitions and stock repurchases. Share buybacks have reduced total adjusted weighted average shares outstanding from over 34 million to under 28 million. Q: What is the updated guidance for FY 2026, and how does it compare to previous expectations?A: Geoff Smith (CFO): For continuing operations, FY 2026 guidance is revenue of $216 million to $221 million, adjusted EBITDA of $57 million to $60 million, and adjusted diluted EPS of $1.08 to $1.12. This is meaningfully lower than previous guidance, primarily due to lower-than-anticipated professional services and a deceleration of transaction revenues. For 2027, current expectations are mid-single-digit revenue growth, lower than the previously guided high single-digit growth. Q: Can you provide an update on the education market and any new AI initiatives?A: Paul Christians (CRO): Education delivered another solid quarter driven by new customer additions and expansion with the existing base. Nearly half of FY 2026 bookings were generated from net new customers. On the innovation front, we initiated a proof of concept focused on AI-driven inventory optimization, menu planning, and food cost management for school nutrition programs, designed to help institutions better optimize USDA meal program funding while improving efficiency and reducing waste. Q: How is the company addressing the increased interchange rates and the lower growth from the Res For the complete transcript of the earnings call, please refer to the full earnings call transcript.

NASHVILLE, Tenn., August 06, 2026--(BUSINESS WIRE)--i3 Verticals, Inc. (Nasdaq: IIIV) ("i3 Verticals" or the "Company") today reported its financial results for the fiscal third quarter ended June 30, 2026. Highlights from continuing operations1 for the three and nine months ended June 30, 2026 vs. 2025 Third quarter revenue from continuing operations1 was $53.1 million, an increase of 2.2% over the prior year's third quarter. Revenue from continuing operations1 for the nine months ended June 30, 2026, was $163.3 million, an increase of 3.2% over the prior year's first nine months. Third quarter net income from continuing operations1 was $5.9 million, compared to net loss from continuing operations1 of $1.0 million for the prior year's third quarter. Net income from continuing operations1 for the nine months ended June 30, 2026, was $9.2 million, compared to net income from continuing operations1 of $4.1 million in the prior year's first nine months. Third quarter net income from continuing operations attributable to i3 Verticals, Inc.1 was $3.6 million, compared to net loss from continuing operations attributable to i3 Verticals, Inc.1 of $0.4 million in the prior year's third quarter. Net income from continuing operations attributable to i3 Verticals, Inc.1 for the nine months ended June 30, 2026, was $5.7 million, compared to net income from continuing operations attributable to i3 Verticals, Inc.1 of $2.5 million in the prior year's first nine months. Third quarter adjusted EBITDA from continuing operations1,2 was $13.3 million, an increase of 4.6% over the prior year's third quarter. Adjusted EBITDA from continuing operations1,2 for the nine months ended June 30, 2026, was $43.5 million, an increase of 0.9% over the prior year's first nine months. Third quarter adjusted EBITDA from continuing operations1,2 as a percentage of revenue was 25.1%, compared to 24.5% in the prior year's third quarter. Adjusted EBITDA from continuing operations1,2 as a percentage of revenue for the nine months ended June 30, 2026, was 26.7%, compared to 27.3% in the prior year's first nine months. Diluted net income per share attributable to Class A common stockholders from continuing operations1,3 was $0.19, compared to diluted net loss per share attributable to Class A common stockholders from continuing operations1,3 of $0.03 in the prior year's third quarter. Diluted net income per share attributable to Class A common stockholders from continuing operations1,3 was $0.25 in the nine months ended June 30, 2026, compared to diluted net income per share attributable to Class A common stockholders from continuing operations1,3 of $0.10 in the prior year's first nine months. Third quarter adjusted diluted earnings per share from continuing operations1,2,3, which gives effect to the Company's 25% estimated long-term effective tax rate4, was $0.25 compared to $0.23 for the prior year's third quarter. Non-GAAP adjusted diluted earnings per share from continuing operations1,2,3 for the nine months ended June 30, 2026, was $0.82 compared to $0.78 for the prior year's first nine months. Annualized Recurring Revenue ("ARR") from continuing operations1,5 for the three months ended June 30, 2026 and 2025 was $174.1 million and $160.8 million, respectively, representing a period-to-period growth rate of 8.3%. See footnotes on the following page. Greg Daily, Chairman and CEO of i3 Verticals, commented, "Our third quarter results came in below our expectations, reflecting ongoing weakness in certain non-recurring revenue streams and implementation delays. While we are disappointed with this outcome, we remain focused on attractive future growth opportunities. "Annualized recurring revenue grew 8% year over year. We are pleased to announce the go-live of four material statewide services in our Transportation market, which we believe will help re-accelerate recurring revenue growth going forward. "We have now repurchased more than 20% of our outstanding shares under share repurchase programs since October 2024, reflecting our long-term confidence in the direction of our business." 2026 Outlook The Company's practice is to provide annual guidance, excluding the impact of future acquisitions and transaction-related costs. The Company is providing the following revised outlook for the fiscal year ending September 30, 2026: With respect to the "2026 Outlook" above, reconciliations of adjusted EBITDA from continuing operations and adjusted diluted earnings per share from continuing operations guidance to the closest corresponding GAAP measure on a forward-looking basis are not available without unreasonable efforts. This inability results from the inherent difficulty in forecasting generally and quantifying certain projected amounts that are necessary for such reconciliations. In particular, sufficient information is not available to calculate certain adjustments required for such reconciliations, including changes in the fair value of contingent consideration, income tax expense of i3 Verticals, Inc. and equity-based compensation expense. The Company expects these adjustments may have a potentially significant impact on future GAAP financial results. Conference Call The Company will host a conference call on Friday, August 7, 2026, at 8:30 a.m. ET, to discuss financial results and operations. To listen to the call live via telephone, participants should dial (844) 887-9399 approximately 10 minutes prior to the start of the call. A telephonic replay will be available from 11:30 a.m. ET on August 7, 2026, through August 14, 2026, by dialing (855) 669-9658 and entering Confirmation Code 9466422. To listen to the call live via webcast, participants should visit the "Investors" section of the Company’s website, www.i3verticals.com, and go to the "Events" page approximately 10 minutes prior to the start of the call. The online replay will be available on this page of the Company’s website beginning shortly after the conclusion of the call and will remain available for 30 days. Non-GAAP Measures This press release contains information prepared in conformity with GAAP as well as non-GAAP information. It is management’s intent to provide non-GAAP financial information to enhance understanding of the Company's consolidated financial information as prepared in accordance with GAAP. This non-GAAP information should be considered by the reader in addition to, but not instead of, the financial statements prepared in accordance with GAAP. Each non-GAAP financial measure and the most directly comparable GAAP financial measure are presented for historical periods so as not to imply that more emphasis should be placed on the non-GAAP measure. The non-GAAP financial information presented may be determined or calculated differently by other companies. Additional information about non-GAAP financial measures, and a reconciliation of those measures to the most directly comparable GAAP measures, is included in the financial schedules of this release. About i3 Verticals The Company provides mission-critical enterprise software solutions to public sector entities. These comprehensive cloud-native solutions address a broad range of government functions, including courts and public safety, public administration, utilities, transportation and schools. The Company’s mission is to enable state and local governments and related agencies to perform their functions and serve their constituents as effectively and efficiently as possible. With thousands of software installations across all 50 states and Canada, i3 Verticals is a leader in the public sector vertical. More information about the Company can be found at www.i3verticals.com. Forward-Looking Statements This release contains forward-looking statements that are subject to risks and uncertainties. All statements other than statements of historical fact or relating to present facts or current conditions included in this release are forward-looking statements, including any statements regarding the Company's fiscal 2026 financial outlook for continuing operations and statements of a general economic or industry specific nature. Forward-looking statements give the Company's current expectations and projections relating to its financial condition, results of operations, guidance, plans, objectives, future performance and business. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as "anticipate," "estimate," "expect," "project," "plan," "intend," "believe," "may," "will," "should," "could have," "exceed," "significantly," "likely" and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events. The forward-looking statements contained in this release are based on assumptions that we have made in light of the Company's industry experience and its perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances. As you review and consider information presented herein, you should understand that these statements are not guarantees of future performance or results. They depend upon future events and are subject to risks, uncertainties (many of which are beyond the Company's control) and assumptions. Factors that could cause actual results to differ from those expressed or implied by our forward-looking statements include, among other things: ongoing and future economic and geopolitical conditions, including the impact of inflation, elevated interest rates, tariff and trade-related developments, ongoing military conflicts in the Middle East and Ukraine, the evolving legal, ethical, regulatory and operational landscape related to artificial intelligence technologies, competition in our industry and our ability to compete effectively, regulatory developments, the successful integration of acquired businesses, our ability to execute on our strategy and achieve our goals following the completion of the sale of our Merchant Services Business and Healthcare RCM Business, and future decisions made by us and our competitors. All of these factors are difficult or impossible to predict accurately and many of them are beyond our control. For a further list and description of these and other important risks and uncertainties that may affect our future operations, see Part I, Item 1A - Risk Factors in our most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission, which we may further update in Part II, Item 1A - Risk Factors in Quarterly Reports on Form 10-Q we will file hereafter, and the risks and uncertainties identified in other filings filed with the Securities and Exchange Commission from time to time. Any forward-looking statement made by us in this release speaks only as of the date of this release and we undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law. Reconciliation of GAAP to Non-GAAP Financial Measures The Company discloses the following non-GAAP financial measures in this earnings release: Adjusted Income Before Taxes from Continuing Operations. Adjusted income before taxes from continuing operations equals net income (loss) from continuing operations attributable to i3 Verticals Inc., adjusted to add back net income (loss) from continuing operations attributable to non-controlling interest and to exclude certain items on a pre-tax basis which the Company believes may not fully reflect our underlying operating performance. The Company believes that this non-GAAP measure provides useful information to investors in understanding and evaluating the Company’s results of continuing operations and ongoing operational performance on a pre-tax basis. Adjusted Net Income from Continuing Operations and Adjusted Diluted Earnings per Share from Continuing Operations. Adjusted net income from continuing operations equals adjusted income before taxes from continuing operations as described above, adjusted to give effect to an effective tax rate of 25%, which reflects our estimated long-term effective tax rate, considering blended federal and state tax rates. Adjusted diluted earnings per share from continuing operations equals adjusted net income from continuing operations divided by our adjusted weighted average shares of adjusted diluted Class A common stock outstanding. The Company believes that these non-GAAP measures provide useful information to investors in understanding and evaluating the Company’s results of continuing operations and ongoing operational performance on a post-tax basis after giving effect to this assumed tax rate. Adjusted Diluted Earnings per Share from Continuing Operations has also been utilized as a metric in connection with performance-based equity awards previously granted by the Company to executives. Adjusted EBITDA from Continuing Operations and Adjusted EBITDA Margin from Continuing Operations. Adjusted EBITDA from continuing operations equals net income (loss) from continuing operations attributable to i3 Verticals Inc., before interest, income taxes, depreciation and amortization, adjusted to add back net income (loss) from continuing operations attributable to non-controlling interest, and to exclude certain items which the Company believes do not fully reflect our underlying operating performance. Adjusted EBITDA margin represents adjusted EBITDA as a percentage of revenue. The Company believes that these non-GAAP measures provide useful information to investors in understanding and evaluating the Company’s results of continuing operations and ongoing operational performance. In addition, Adjusted EBITDA and Adjusted EBITDA margin have been metrics utilized in connection with the Company’s short-term annual cash incentive program for executive management. The Company believes that the disclosure of these non-GAAP financial measures provides investors with useful information in connection with assessing the Company's financial results as described above. In addition, these non-GAAP financial measures are utilized by management to assess the Company's financial results, evaluate the Company's business, manage budgets, allocate resources, and make operational decisions. The Company believes that disclosure of these non-GAAP financial measures provides investors with additional information to help them better understand our financial results just as management utilizes these non-GAAP financial measures as described above. Although these non-GAAP financial measures assist in measuring the Company's financial results and assessing its financial performance, they are not necessarily comparable to similarly titled measures of other companies due to potential inconsistencies in the method of calculation. See below for reconciliations of the non-GAAP financial measures presented in this release. View source version on businesswire.com: https://www.businesswire.com/news/home/20260806718635/en/ Contacts Clay WhitsonChief Strategy Officer(888) [email protected]

Image source: The Motley Fool. Friday, Feb. 6, 2026 at 8:30 a.m. ET Chairman and Chief Executive Officer — Gregory Daily President — Rick Stanford Chief Financial Officer — Geoffrey Smith Chief Administrative Officer — Clay Whitson Need a quote from a Motley Fool analyst? Email [email protected] Clay Whitson: Good morning, and welcome to the first quarter of 2026 Conference Call for i3 Verticals. Joining me on this call are Greg Daily, our Chairman and CEO; Rick Stanford, our President; Geoff Smith, our Chief Financial Officer; and Paul Christians, our Chief Revenue Officer. To the extent any non-GAAP financial measure is discussed in today's call, you will also find a reconciliation to the most directly comparable GAAP financial measure by reviewing yesterday's earnings release. It is the company's intent to provide non-GAAP financial information to enhance understanding of its consolidated GAAP financial information. This non-GAAP financial information should be considered by each individual in addition to, but not instead of, the GAAP financial statements. This conference call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements, among others, regarding the company's expected financial and operating performance. For this purpose, any statements made during this call that are not statements of historical fact may be deemed to be forward-looking statements. You are hereby cautioned that these forward-looking statements may be affected by the important factors, among others, set forth in the company's earnings release and in reports that are filed or furnished to the SEC. Consequently, actual operations and results may differ materially from those discussed in the forward-looking statements. Finally, the information shared on this call is valid as of today's date, and the company undertakes no obligation to update it, except as may be required by applicable law. I will now turn the call over to the company's Chairman and CEO, Greg Daily. Gregory Daily: Thanks, Clay, and good morning to all of you on the call. We're excited with the start of 2026. As we anticipated and guided the market, revenue was only up 1% over prior year's Q1, but recurring revenue was up over 8%, more closely reflecting our expectation of long-term growth. SaaS revenue led with over 24% growth. We're now -- we've now had 4 quarters in a row over 20% SaaS growth, and we see that number staying north of that level through the year. While our recurring revenue sources, professional services and license are both down, we believe our focus on recurring sources will carry the day. We're very excited to announce our latest acquisition. Rick will share more, but this is a deal we're very proud of. Our best deals tend to be the ones we sell -- we source ourselves, and this is the latest example. It is a perfect fit within our transportation market. You will always be surprised at the durable, sticky niche software solutions you will find in the public sector. Well, here's another one. Helping states early detect uninsured motorists is only possible because of thoughtful, well-executed software business solutions like this. Because they already have integrations with the insurance carriers, they have an incredible defensive market positioning and their growth is compelling. The team that built this business is staying on, and we couldn't be more excited about what we can accomplish together. We remain exceptionally well capitalized and thoughtful about how to deploy our capital and expect to have great opportunities in 2026. As always, the focus is discipline. I will now turn the call over to Geoff, and he will provide more details on financial performance. When he's finished, Rick will address our latest deal in more detail. And finally, Paul will discuss revenue, and then we'll open up the call for questions. Geoffrey Smith: Thanks, Greg. The following pertains to the first quarter of fiscal year 2026, which is the quarter ended December 31, 2025. Please refer to the slide presentation titled Supplemental Information on our website for reference with this discussion. Revenues for the first quarter of fiscal 2026 increased 1% to $52.7 million or $52.2 million for Q1 2025, in line with expectations. The growth reflected 8% growth in recurring revenues, partially offset by a $3 million decline in nonrecurring professional services and software license revenues. Annual recurring revenues increased 8% to $169.6 million for Q1 2026 compared to $156.4 million for Q1 2025. 80% of our revenues for the quarter came from recurring sources, driven by SaaS revenue growth of 24%, transaction-based revenue growth of 12% and payments revenue growth of 8%. Maintenance revenues declined 8%, reflecting the emphasis on SaaS and new sales. Adjusted EBITDA declined $1 million to $13.6 million for Q1 2026 from $14.6 million for Q1 2025, in line with expectations. Adjusted EBITDA as a percentage of revenues was 25.8% for Q1 2026 versus 27.9% for Q1 2025. The dollar and percentage declines were driven by previously mentioned investments in our justice and utility markets, higher hosting costs and $2.6 million lower professional services revenues. While professional services are not high, the associated costs can follow revenue fluctuations with a lag. We expect the adjusted EBITDA margin to improve for the remainder of the year, and our long-term expectation remains 50 to 100 basis points per year. Adjusted diluted earnings per share from continuing operations was $0.26 for Q1 2026. Again, please refer to the press release for a full description and reconciliation. Our balance sheet is strong and well positioned for the future. As of December 31, we had $37 million of cash and no debt. As Greg mentioned, effective January 1, we purchased a provider of software for driver and motor vehicle insurance verification for $60 million in cash. Here's some color to help you incorporate this acquisition into your models. We paid approximately 15x EBITDA. The company is durably growing at a rate above 20% and has an EBITDA margin above 50%. We still have a $400 million revolving credit facility with a 5x leverage constraint. We intend to use any borrowings for acquisitions and opportunistic stock repurchases. The following sets forth guidance for continuing operations for FY 2026. The outlook does not include acquisitions that have not yet closed or transaction-related costs. revenues, $2.3 $223 million to $234 million; adjusted EBITDA, $61 million to $66.5 million; adjusted diluted earnings per share, $1.08 to $1.16. We expect recurring revenues to grow at double-digit rate for FY 2026, including the acquisition. However, we expect a decline in nonrecurring professional service revenue driven by the cadence of revenue recognition on certain projects in our utilities and transportation markets. Despite the lower outlook in those markets for fiscal 2026, they are well positioned to rebound in fiscal 2027 and beyond. Our long-term expectation for organic revenue growth remains high single digit. From a seasonality standpoint, software license sales and professional services represent the most variable line items to forecast and can distort seasonality in any given quarter. We currently expect our revenue distribution for FY 2026 to approximate the following: Q1, 23%; Q2, 25%; Q3, 25%; Q4, 27%. So I'll now turn the call over to Rick for comments on M&A. Rick Stanford: Thank you, Geoff. Good morning, everyone. As mentioned in last night's earnings release, on January 1, we closed our latest acquisition. This business operates in the transportation market and does business at the state level. The company's insurance verification product is feature-rich, including real-time verification, continuous insurance lapse updates, direct connection with insurance companies and seamless integration with state motor vehicle systems. The product can accommodate integration with every possible motor vehicle system in use by the states today, including i3s. This transaction will significantly expand our geographic reach in the transportation market, better positioning i3 to be the vendor of choice in ongoing modernization initiatives. Currently, we have the adjacent market for motor carrier software solutions such as IRP and IFA tax software and truck routing software. i3 is a major player in the motor carrier and motor vehicle software market with a combined 30 states and 4 Canadian provinces. We are thrilled to welcome this talented team to i3 and look forward to their many successes in the future. Relative to our acquisition pipeline itself is continually filled with some promising opportunities similar to this deal. Again, we remain diligent with regard to the value and strategic impact of potential acquisitions to our growth prospects. I'll now turn the call over to Paul for final comments. Gregory Daily: Paul, you may be on mute. Rick Stanford: It seems as if Paul is having technical difficulty. Operator: It seems like Paul's line has dropped here. Rick Stanford: Okay. That's fine. I'll take it from here. Thank you. Our focus on refining market offerings, especially in Justice Tech and transportation markets is providing -- is proving to be timely and effective as we continue to see an increased demand for technology that enable decision-making. This shift towards market-based solutions is evident through expanded solution scope within RFPs, increased emphasis on unified data structures to support analytics and growing expectations for continuous innovation and system evolution. In JusticeTech, we have seen an uptick in opportunities at both the state and local levels as we rolled out our new CourtOne offering, especially around case management systems and the CourtOne Jury Solution. These offerings are aligning well with current market demand, allowing us to engage meaningfully in opportunities as agencies modernize their systems. We are excited that the market leader of electronic insurance verification recently joined the i3 family. Their solutions augment the strength of our transportation market offering. Now some portion of the i3 Verticals transportation platform is live in 30 states and 4 Canadian provinces. Our partnership with West Virginia continues to be strong. We are in the process of fulfilling the recently won contract with the West Virginia Supreme Court of Appeals with i3 CourtOne. Additionally, the Arizona Department of Real Estate selected i3 to provide licensing and regulatory software across the state. We are seeing particularly strong activity across JusticeTech, transportation and regulatory and licensing markets. In addition, i3 Education is realizing the investment in i3 Marketplace. i3 Marketplace is a portal providing unified access complete with SSO, single sign-on and MFA, multifactor authentication to all i3 education models. It supports students, parents and administrators across schools and districts. i3 continues to gain traction with AI-enabled solutions. We also delivered an AI support upgrades to our current Georgia JusticeTech footprint, and we'll continue to push those changes into our other markets across the U.S. throughout 2026. Our focus on leveraging AI, along with our deep domain expertise is proving to be positive for both i3 and our customer base. This concludes my comments, Dave. At this time, we'll open the call for Q&A, please. Operator: [Operator Instructions] Our first question comes from Madison Suhr with Raymond James. Madison Suhr: I wanted to start on the FY '26 updated outlook and putting together some of the comments on the deal. It does seem like organic growth may have ticked down very modestly, maybe $1 million or $2 million. So I guess just for starters, is that generally correct? And if so, just any color on what's driving maybe the slightly modest headwinds relative to last quarter? Clay Whitson: Madison, you are correct, and it comes on the professional services line. I think we entered the year thinking professional services would go from $40 million to $33 million, $40 million in '25 to $33 million in '26. Our current view is that it will go to $31 million on professional services. Madison Suhr: Okay. Got it. That's helpful. And then obviously, the recurring side continues to be strong, 8% in the quarter. You guys talked about 8% to 10% for the year last quarter. I apologize if I missed it, but is that still the right way to think about the recurring side for this year? Geoffrey Smith: Yes. That's correct. Clay Whitson: With the exception of our acquisition, that will tick it up. It's mainly recurring revenue. Geoffrey Smith: Yes. 8% to 10% organic. Madison Suhr: Okay. Awesome. And then if I can sneak one more in just on capital allocation. Obviously, you guys did a deal. M&A is a key part of the strategy, a differentiator for you guys. But just given what we're seeing in the market and the dislocation for your stock in particular, I would love to just hear your thoughts on buybacks versus M&A here. And it does look like you guys might have bought back some stock in the quarter. Just any color on kind of the quarter itself from a buyback perspective as well. Geoffrey Smith: There will be more information about that in our 10-Q that comes out here. But to get out in front of that, yes, we did buy back a significant number of shares this last quarter. The outlook and approach has always been for us to be opportunistic with buybacks. We're in a really good place on our balance sheet. We think that our stock is inexpensive and a great investment for the current shareholders of the business at the levels we've been at. So that will continue to be the approach going forward. But you'll see a little bit of reporting about that in terms of quantity in the 10-Q. Operator: And the next question comes from Peter Heckmann with D.A. Davidson. Peter Heckmann: Congratulations on the new acquisition. Just a few additional details in terms of how you think about the opportunity there. I guess how do you think about this company's market share either by number of states or covered population? I think you said it was at the state level and at the county level. And then next, like is the revenue stream transaction-based? Or is it more of a subscription software model? Rick Stanford: So we -- thanks, Pete, for the question. We're very excited about the deal. We think the growth prospects going forward are going to be staggering to say the least. They're very good with their customers. They have their very first customer. They never lost one. We like their presence in the market. They're well known. It's not transactional today. We think that we can take this product into our motor carrier to some degree. And we know that current customers, a handful have been asking for, let's say, one neck to choke with payments and software. So we think we can get some payments play in there, too, but that's to be seen. But we're very excited about the deal. Peter Heckmann: Okay. Okay. So just as a follow-up, it sounds like there's significant opportunity to grow the number of existing relationships. Clay Whitson: Yes. Operator: The next question comes from Charles Nabhan with Stephens. Charles Nabhan: Good to see another quarter of strong SaaS revenue growth. I was wondering if you could expand on some of the drivers of that 20% plus growth as well as speak to the sustainability of that pace. Geoffrey Smith: So first off, the acquisition will add a whole new layer of SaaS growth. So we'll be well north of that number, north of 30% for the rest of this fiscal year on that. But the organic SaaS growth should stay in that general vicinity north of 20% as well. Drivers are -- it's the fruits of the emphasis that we put on SaaS in all our markets. It's coming from a lot of different markets, utilities, the public administration market, especially our board and licensing software, the justice market, it's -- all of the different markets contribute kind of in their own way there. So the -- again, rest of the year, expect organic to be north of 20%. The new acquisition, which is currently monetized primarily off SaaS. And as Rick said, there will be opportunities to add other kind of streams for that will be a great thing, but we'll be in a great spot on SaaS growth for a while. Charles Nabhan: Got it. As my follow-up, I wanted to get your thoughts on AI, approaching it from a couple of different angles. I'd love to hear how you're thinking about it in your internal processes as well as how you think about it from a the disruption potential for -- within GovTech from AI, whether it's fact or fiction and just generally how you're thinking about it given some of the recent stock movements. Rick Stanford: Yes. So Charles, this is Rick. I'll take a stab at this, and I'll let Greg and Clay chime in after. Look, we have pockets where adoption is very high with our customer base with extraction and reaction in the CAMA world. We have others where it's -- the adoption is not so great. We're continuing to push it both on the customer side and on the development side internally. That's the first thing we think about in our engineering group is how do we use AI to develop new features to our products. But at the end of the day, state, local and municipal agencies will need to create frameworks of processes, functions, structures, laws before creating engineering and security protocols. Initially, policies are going to be rigorous and hypercontrol for the fear of AI itself. So that will be a headwind to us near term, providing minimally viable products and services for constituent use. Without an overall agreed-upon plan in GovTech or guidance at the state or federal level, there's going to be inter jurisdictional inconsistencies that will cause confusion amongst state constituents. And that's something that's going to kind of put a clog in the engine. In short, we believe that it's going to be a good bit of time away from this concept of proliferation of AI within GovTech being a real working asset because of the headwinds I mentioned. Companies like i3 can accelerate the AI process. But the customer at the end of the day, is going to drive adoption at a slower pace than we can move forward. Would you add anything to that? Clay Whitson: I think that's right. We're excited about AI. It enables us to deliver better products more quickly to our customers. We have deep domain expertise, and we are the enterprise platform in most cases or the system of record for our customers. So we're deeply embedded in their everyday workflows. Gregory Daily: Just the relationship that we have. Their -- go ahead, I'm sorry. Charles Nabhan: No, no, I was just going to thank you for your thoughts. But always interested in hearing more. If I cut you off, I apologize. Operator: And the next question comes from Alex Markgraff with KeyBanc Capital Markets. Alexander Markgraff: Just a couple from me. Maybe first on the transaction. I think I heard 15 times just based on some historical comments, I think, a bit outside the sweet spot as you all have described it. Obviously, like some compelling financial profile details that you all shared. Just curious if this is a unique transaction for the multiple and maybe how many more of these sort of unique opportunities that might pull you upwards of that sweet spot there are that exist today? Clay Whitson: Well, from a price standpoint, most of the companies we bought historically have been growing organically in the 10% range. This one is north of 20%, and we see new customers coming on sustaining that growth. There are some synergies available and their margins are in the 50% range. So that's implied a higher multiple in the price. What was the second part of your question, Alex? Alexander Markgraff: Just as to whether or not there are more of these types of deals out there or in the pipeline that might sort of pull you up outside of that sweet spot for good reason, but notably pull you outside of that upper end that you've historically paid for deals. Rick Stanford: Yes, I'm glad you said for good reason. I mean we've made it known all along that while our sweet spot is 7 to 10x, if we find something that's growing, that's a perfect fit with incredible margins like this, lucky to have it. Alexander Markgraff: Okay. Super helpful. And then just on the product investments, I guess, it sounds like things are going [Technical Difficulty] plan there, and you're seeing some benefits in the sales pipeline around that. Still just as you described it last quarter, that sort of acceleration investment for '26, still the right way to think about it? And then just any changes to how you're thinking about that spend for the rest of the year would be helpful. Clay Whitson: I mean it's a continuation of what we introduced in our third quarter report last year, the investment in advance of revenues. We're glad we're doing it. It's according to plan. Really nothing has changed there. Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Greg Daily for any closing remarks. Gregory Daily: Well, thanks, everybody, for listening and dialing in and showing interest. I wanted to kind of give a shout out to our large utility customer in Seattle. Good luck Sunday. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect. Before you buy stock in I3 Verticals, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and I3 Verticals wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $463,900!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,294,401!* Now, it’s worth noting Stock Advisor’s total average return is 978% — a market-crushing outperformance compared to 211% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors. 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Image source: The Motley Fool. Friday, May 8, 2026 at 8:30 a.m. ET Chairman and Chief Executive Officer — Gregory Daily President — Rick Stanford Chief Financial Officer — Geoffrey Smith Chief Revenue Officer — Paul Christians Vice President, Investor Relations — Clay Whitson Clay Whitson: Good morning, and welcome to the Second Fiscal Quarter 2026 Conference Call for i3 Verticals. Joining me on this call are Greg Daily, our Chairman and CEO; Rick Stanford, our President; Jeff Smith, our CFO; and Paul Christians, our Chief Revenue Officer. To the extent any non-GAAP financial measure is discussed in today's call, you will also find a reconciliation to the most directly comparable GAAP financial measure by reviewing yesterday's earnings release. It is the company's intent to provide non-GAAP financial information to enhance understanding of its consolidated GAAP financial information. This non-GAAP financial information should be considered by each individual in addition to, but not instead of, the GAAP financial statements. This conference call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements, among others, regarding the company's expected financial and operating performance. For this purpose, any statements made during this call that are not statements of historical fact may be deemed to be forward-looking statements. You are hereby cautioned that these forward-looking statements may be affected by important factors, among others, set forth in the company's earnings release and in reports that are filed or furnished to the SEC. Consequently, actual operations and results may differ materially from those discussed in the forward-looking statements. Finally, the information shared on this call is valid as of today's date, and the company undertakes no obligation to update it, except as may be required under applicable law. I'll now turn the call over to the company's Chairman and CEO, Greg Daily. Gregory Daily: Thanks, Clay, and good morning to everyone on the call. We are pleased with our performance in the second quarter as we continue to execute against our strategy and further improve the quality of our business. Revenue from continuing operations grew 6% year-over-year and annualized recurring revenue increased 12%, which we continue to believe is the best indicator of our long-term growth opportunity. Across each of our public sector markets, we are investing thoughtfully in products and capabilities where we see opportunities. For example, we continue to find compelling opportunities to invest in Justice Tech market to help courts modernize and capitalize on their own revenue opportunities. However, we are seeing opportunities for cost control and margin expansion amongst many of our highly durable products. Importantly, the process improvements and the efficiency initiatives we've been driving through the organization are beginning to show up in our operating model. While we continue to invest for growth, we believe these efforts position us well for margin improvement as we move through the remainder of fiscal year '26. We remain well positioned from a balance sheet perspective, which gives us the flexibility to pursue all manner of capital allocation opportunities. Overall, we're encouraged by the momentum we're seeing across the business and remain confident in our ability to create long-term value for our shareholders. With that, I'll turn it over to Jeff to walk through the financial results in more detail. Geoffrey Smith: Thanks, Greg. The following pertains to the second quarter of fiscal year 2026, which is the quarter ended March 31, 2026. Please refer to the slide presentation titled Supplemental Information on our website for reference with this discussion. You will see we have retooled our presentation of revenue. We believe this clarifies our recurring revenue and simplifies the categories investors track while maintaining visibility in the important trends in the business. Revenues for the second quarter of fiscal 2026 increased 6% to $57.5 million from $54.1 million for Q2 2025, principally reflecting revenues from two acquisitions, which have not yet annualized. Organic revenue was flat in the quarter, hampered by a $2.2 million decrease in professional services. The ongoing weakness in professional services continues to be concentrated in our utilities market, and we expect this to continue through the remainder of the fiscal year. Overall, nonrecurring revenue sources decreased 11% compared to the prior year. Annual recurring revenues increased 12% to $183.5 million for Q2 2026 compared to $164.5 million for Q2 2025. SaaS revenues grew 37% and transaction-based revenue grew 7%. We expect elevated levels of SaaS growth for the remainder of the fiscal year and accelerating transaction-based revenue growth. Overall, 80% of our revenues in the quarter came from recurring sources. Most of our expected software license sales for fiscal 2026 have been, and we expect lower levels for the remainder of the year. Adjusted EBITDA increased 5% to $16.6 million for Q2 2026 from $15.8 million for Q2 2025. Adjusted EBITDA as a percentage of revenues was 28.8%, a decrease from 29.3% -- similar to last quarter, the percentage decline was driven by the previously mentioned investments in our Justice Tech market, higher hosting costs and lower professional services revenues. While professional services margins are relatively lower, the associated costs can revenue fluctuations. We expect the adjusted EBITDA as a percentage of revenue to improve for the remainder of the year, and our long-term expectation remains 50 to 100 basis points improvements per year. Corporate expenses as a percentage of revenues were 9.3% for Q2 2026. Adjusted diluted earnings per share from continuing operations for the second quarter of fiscal 2026 increased 10% to $0.32 from $0.29 for Q2 2025. Again, please refer to the press release for a full description and reconciliation. Balance sheet, at quarter end, debt stood at $81 million, and our cash balance was $7.1 million. We still have $319 million of borrowing capacity under our revolving credit facility with a 5x leverage constraint. The expectation remains that we will use any borrowings for opportunistic acquisitions and stock repurchases. The following updates our guidance for continuing operations for FY 2026, which was previously set forth in our first quarter fiscal 2026 press release dated February 5. The outlook does not include acquisitions that have not been announced or transaction-related costs. Revenue, $221 million to $229 million; adjusted EBITDA, $61 million to $65 million; adjusted diluted earnings per share, $1.09 to $1.15. We expect recurring revenues to continue to grow at a double-digit rate through the remainder of FY 2026. However, our view of nonrecurring professional services has deteriorated further, leading us to guiding down the midpoint of our revenue range. Greg and I have alluded to margin strength in the back half of the fiscal year. You can see that in our guide as we expect to hold closer to our previous guide on EBITDA despite the lower revenue expectations. Looking past 2026, we expect better growth in 2027 and beyond. To highlight several discrete items that will compound with our normal growth algorithm, ongoing boarding of courts in West Virginia and other states on our CMS platforms and other transaction-based revenues will continue to feed excellent ARR growth in our Justice Tech market. In our transportation market, near the end of fiscal 2026, we will turn on two long-delayed transaction-based revenue opportunities, the impact of which will be felt in 2027. In addition, the insurance verification acquisition we made on January 1 continues to accelerate, and we will add multiple new state contracts in this fiscal year and the next. While professional services is not our preferred revenue source, we always pursue ARR when given the chance. We expect the professional services line to be far more stable than it has been in 2026. Our long-term expectation of organic revenue growth remains high single digit. From a seasonality standpoint, we currently expect our revenue distribution for the remaining 2 quarters to approximate the following: Q,3, 48%; Q4, 52%. I will now turn the call over to Rick for additional business-related comments. Rick Stanford: Thank you, Jeff. Good morning, everyone. This past quarter, we continued our focus on AI-powered capabilities that create measurable value for our government clients we serve by strengthening the core platforms they rely on every day. Our core platforms serve as systems of record containing critical IP sensitive data and are designed with deep domain knowledge and experience. An example of our AI-powered capabilities is our newly released Ad Hoc query and reporting tool, which allows users to extract meaningful insights from their existing data using natural language without requiring lengthy custom report development or IT involvement. At last month's IUCX conference, which is the leading utility customer experience conference for electric, gas, water and wastewater utilities, the response to this new set of tools was immediate with clients requesting access on the spot and citing the ability to compress what had been a multi-day reporting cycle down to minutes. In addition, our AI-assisted document analysis and management platform brings the same philosophy to unstructured content, enabling clients to ingest, separate, extract, redact and search documents throughout their entire life cycle, providing our customer workforce with the tools to improve the value of their existing data and documents with an auditable AI-assisted workflow. In both cases, human review remains at the center of the process, ensuring accuracy, traceability and compliance in the regulated environments our government clients operate in. What makes these capabilities particularly valuable is that they are designed as a platform architecture, not isolated point solutions. That distinction matters in an AI-driven market. Both tools are architected to layer on top of any product within the i3 enterprise, which means the value compounds as adoption grows. For example, a client using our transportation or justice tech solutions today can extend these AI capabilities across their existing workflows without disruption to their data models or existing integrations. This positions i3 to expand the value of existing relationships within our installed base while simultaneously making our platform more compelling to net new clients who are prioritizing durability, depth and long-term efficiency in their technology decisions. Beyond our client-facing products, we are seeing meaningful gains in how we build software today versus a year ago. We began with AI assistance across the enterprise, which in layman's terms simply suggests snippets of code to enhance overall code development, debugging testing among other uses and now have moved to AI agent tools that plan, write, test and modify code with minimal human intervention and increased our product development capabilities, allowing us to pursue opportunities that would have previously required difficult trade-offs and prioritization, such as new feature development and product releases. Both AI assistant and AI agent design tooling is elevating the user experience of existing applications and automated testing through Playwright is improving our reliability and quality of our releases. Playwright allows us to create a library of automated testing scripts that would run on the cadence of our choosing without human intervention or action. Taken together, these investments are expanding what our teams can accomplish within a given sprint, letting us do more across our product portfolio without compromising on quality or execution discipline. We believe the work we're doing today in AI-powered product development will compound in value over time. but it is deeply embedded in mission-critical systems and workflows our clients depend on, strengthening our capabilities and our long-term customer relationships. I'll now turn the call over to Paul for revenue updates. Paul Christians: Thank you, Rick. Demand across our core markets remained healthy in Q2 as government agencies continue to prioritize modernization, improved constituent experience and platforms that reduce long-term operational complexity. Across procurement and active opportunities, we continue to see three consistent buying patterns, broader solution scope beyond a single core system, preference for platforms that support integrated analytics, payments, transactional services and AI platform architecture that layer on top of existing features and benefits, seeking vendors that can scale and also seeking vendors that can scale from local agencies to statewide deployments. These trends continue to favor i3's market-centric model and our ability to provide integrated platform solutions. From a commercial execution standpoint, we continue to see sustained interest across Justice Tech, transportation, education and licensing and permitting, increased multi-module evaluations rather than single solution procurements, all with integrated analytics, payments, transactional services and AI-enabled workflows. Justice Tech remained one of our most active markets this quarter, supported by continued court modernization demand and strong alignment of our court case management system, jury solutions and transactional services. We saw increased customer engagement, reflecting agencies urgency to reduce workload, modernize workflows and improve customer outcomes at both the state and local levels. creating increased interest in offerings that include payments, analytics, transactional services and citizen access. As i3 continues to expand and deploy our case management system footprint, we are seeing growing market awareness of the transactional services embedded in that ecosystem. Historically, case management system deployments served as the primary entry point with transactional service adoption following as customers became operational and more educated on their value. Over time, this created strong demand, but with long sales and implementation cycles typical of public sector system replacements. We are entering the next phase of this strategy. With the ability to offer transactional services independently of a full case management system deployment, we have introduced another commercial motion that accelerates time to revenue recognition. This approach allows agencies to engage with transactional services first, which drives revenue for the agency, generating pull-through demand for broader software adoption. As transactional services adoption grows, it strengthens our customer relationships and enables faster and more natural expansion into additional products and platform capabilities without requiring a full system replacement upfront. In transportation, market momentum continues to be supported by AI-enabled verification and enforcement workflows, proven deployments that validate scale and reliability and cross-sell opportunities, expanding our platform reach. Transportation continues to execute strongly within our platform-first strategy, delivering durable recurring revenue while deepening our role as a long-term modernization partner for motor vehicle, driver services and motor carrier agencies. We further strengthened strategically important customer relationships by securing multiyear support and maintenance agreements and delivering multiple large renewals with disciplined pricing, reinforcing platform stickiness and long-term pricing durability. Operationally, we remain focused on core platform execution and supporting future modernization efforts. As recent acquisitions have expanded -- or excuse me, our recent acquisition has expanded our footprint as the market-leading insurance verification provider while enabling tighter integration with payments and shared data services in the broader i3 platform. Across licensing and permitting in our public administration area, agencies continue to expand platform scope, building on core implementations. Commercial trends include broader adoption of licensing and permitting and compliance modules and an increased focus on citizen engagement and digital services delivery. These dynamics reinforce higher deal values and longer-term customer relationships and introduce AI as an accelerator. In the second quarter, we expanded adoption of AI indexing across new client agencies, demonstrating clear willingness among public sector customers to invest in practical embedded AI that delivers immediate operational value. These wins are also accelerating our broader sales actions, and we are compressing engagement time lines and driving significant pipeline expansion. In utilities, we continue to expand our platform capabilities with our i3 Unifi 360 customer information system and our Unifi 5.0 portal systems into a platform cloud offering. These capabilities, including real-time analytics, help agencies streamline operations, improve customer experience and reduce friction across billing, payments and service interactions. As adoption grows, we are seeing increased opportunities to extend these solutions through embedded payments and data services, reinforcing our platform approach and expanding long-term value within the utility market. Education continues to be a strong perennial performer for i3. This quarter, we opened up another state with the addition of Utah. We are also pleased to report that close to half of our new sales for fiscal '26 so far are net new customers. In addition, we have operationalized AI and development, operations and product with near-term plans to augment our customer-facing AI-powered reporting tools. While deal timing remains product-driven, overall bookings activity reflects healthy deal flow across core markets, increased average solution scope for each opportunity, continued customer preference for SaaS delivery models augmented by integrated transactional services. Looking ahead, our commercial priorities remain centered on sustained pipeline and RFP growth with both new from new and new from existing clients, expanding solution scope within existing accounts and leveraging platform architecture AI capabilities as part of our sales and service delivery. This concludes my comments, Cindy. At this point, we will open the call for Q&A, please. Operator: [Operator Instructions] Our first question comes from Madison Suhr of Raymond James. Madison Suhr: I wanted to start just on the nonrecurring side. I know there's some headwinds this year, but you did call out high single digits is still the right way to think about the business. Just what gives you confidence that, that's the right longer-term growth rate? And if you can also maybe just touch on what the key verticals are that you think can drive an acceleration back into that range over the medium term? Geoffrey Smith: Thanks for the question, Madison. So we touched on this a little bit in the script. If you think about 2027, you started to kind of like give a little bit of breadcrumbs on that. Specifically, the justice market is going to be -- continue to be a really strong ARR grower through that period. That business, they have the West Virginia win, will really start to keep scaling and has really good prospects as they land and expand those courts. Our Resolve product, which is we're assisting with revenue generation for these courts is absolutely the kind of the right product for the right time with a very deep pipeline right now and a lot of implementation in front of us. We're really excited about that. Transportation market also has a couple of really solid things going for it. A couple of long-term ARR things that have been years in the works and have been long delayed are finally going live. That will be nice additive items. And then the most recent acquisition, we touched on this, but just to hit it a little bit more. They currently have five states in implementation and several more that are kind of near line of sight, just an incredible market position that they have there is kind of the right -- with the right to win status, you might say, as these states implement this kind of no-brainer solution to preemptively monitor for insurance on their registered vehicles. They're in a great market position. It's going to be a great growth driver for the company. That's a couple of things that layer on top of our already existing growth algorithm. And then outside of the net dollar retention growth algorithm, which we expect to kind of remain in that sort of 103% to 105%, hopefully push it a little higher kind of level. We were 104% this last year, not expecting any significant changes there. The story this year and why the growth isn't kind of still up in that high single digits is the nonrecurring stuff. Our professional services specifically has gone from about $39 million to the current guide expects somewhere more in the high 20s on an organic basis. We'll have a little bit of inorganic in there. And that's what has been revised down from the initial guide. This coming year, as you look out to 2027, you don't have to expect that, that growth -- that revenue line rebounds back up to $40 million nearly to see us getting back to a much better growth number that's in the high single digits, in line with our longer guidance. Even if that kind of maintains at the already kind of depleted level as it's at, you're already kind of there. And we have some things in the hopper that the give or take on that number is decently wide as always because it's nonrecurring. But we have some opportunities in front of us that are still really attractive. Utilities, in particular, has been kind of where some of the pain has been felt this particular year. That's a project that's still very much moving forward, and we still remain very excited about it and convicted about the market opportunity. We've had to be a lot more patient than we would prefer, but that is what it is, and we're still going to get this thing done ultimately. Madison Suhr: Okay. No, that's all very helpful color. I appreciate it. And then just a follow-up on the 2026 outlook. You did touch on this a little bit as well in your prepared remarks, but you took revenue down by about $3.5 million and EBITDA only down $750,000. So call it about a 20% decremental margin. So just as we think about expenses here, to the extent some of these nonrecurring headwinds persist, do you feel like you can continue to manage expenses to partially offset a big portion of those headwinds? And do you think some of these efforts you're doing now sets you up well to be in that 50 to 100 basis points of normalized margin expansion in FY '27, assuming the revenue also is more in the normalized range? Geoffrey Smith: Yes, absolutely. On margin specifically, as always, there's a mix of things going on within that. But we've highlighted this on the last couple of calls, as our professional services drops down, those costs lag a little bit on the revenue drawdown, especially in our utilities market, we had a lot of third-party contractors and things like that, that we're engaged in projects that we were able to kind of manage and mitigate. And then the same trends that we've been talking about for a little while are still present. We have been doing less acquisitions. And as a result, we have been continually tightening up and improving and efficiency and processes all over the business in multiple different pockets. We have been benefiting greatly from AI. And I think there's still more room to kind of benefit enhance there. And that goes for a lot of different processes and pockets within the company. I mean, obviously, DevOps, but there's probably not a single person within the business who isn't benefiting from this stuff in some form or fashion. So you're able to do more with less when you have attrition, you're able to consider do we really need to backfill roll, things like that. Cumulatively, that's all adding up to a pretty attractive margin expansion situation. We expect margins to be stronger in the back half of this fiscal year. We still are making sure we invest in opportunities when we see those to run right through them, the Justice market being an example of that. So it's not all kind of reduction in costs. There are some pockets where we're really accelerating and pouring fuel on the fire. But the net picture is still one of -- it's a pretty attractive margin expansion scenario for us. Operator: The next question comes from Peter Heckmann of D.A. Davidson. Peter Heckmann: As regards to the recent acquisition in auto insurance verification, when you win a state there, do you automatically get 100% share of the state's business? Or is that something where potentially maybe like a hunting license or you're one of several suppliers and so you have to compete for share? Geoffrey Smith: So the short answer is we would get 100% of their insurance verification. There's no scenario that we're aware of, and I think it's extremely unlikely that the state would ever try to bifurcate that. There needs to be kind of a single system of record of these -- what it is, is basically civil penalties proactively being sent out when there's an uninsured motorist. There needs to be a single system of record for that, and that's our software. there's not really a scenario where you would bifurcate that. Now that being said, this is sold into the Department of Transportation. There's a lot of other software that the Department of Transportation needs, a lot of which we provide. So the added footprint we have here on the insurance verification improves our market position to provide other features, motor vehicle, driver's license, some of the fuel tax solutions, truck routing, all the different things that the Department of Transportation needs to provide services to its constituents. So that's where the competitive landscape is. Peter Heckmann: Got it. Okay. And if I remember correctly, that acquisition already had something like 18 to 20 states. So just -- I didn't write down whether you said you had three or five implementation. But can you talk a little bit about the number of states that, that company has live, how many are in implementation? And then does the revenue model -- is it geared towards the underlying population of the state? Geoffrey Smith: So we'll just speak in broad numbers, we'll be in the -- we're in the low 20s at this point. We'll be in the high 20s, I think, when you look back in 2 years. Revenue model is like a lot of our software, I'll say, flexible. We -- this is generally SaaS. There's some implementation revenues on the front end and SaaS, and that would be sized based off of the size of the state generally, maybe not quite like it's probably the type of thing where like a larger state is definitely going to pay more, but a smaller state isn't going to get like proportionately lower cost necessarily. And then we also have the opportunity to do transactional revenue here. This is another classic situation for i3 where this company could monetize payments and wasn't monetizing payments. It absolutely will go forward. We've already got two states lined up for that. They have a state that is a very small state that they monetize on a per transaction basis. And that model has worked out really well for them. That state punches way above its weight relative to population. That model will -- that won't be the only state on that model long run. And then we can also charge for the presentment of these. There's a lot of different levers we can pull. So we can be flexible and work with the state for what works with them in their budget situation. Peter Heckmann: Great. Great. So that one looks like it should be -- as that falls into the organic calculation, that one also looks like it should be additive to organic growth. Gregory Daily: Yes, absolutely. Operator: [Operator Instructions] Our next question comes from Alex Markgraff of KeyBanc Capital Markets. Alexander Markgraff: A couple of questions. Maybe one for Paul and Jeff, just around some of the AI comments. I'm curious, it sounds like you all are doing quite a bit. Would just be curious to kind of understand where you expect this to show up most materially in the model in the near to midterm, thinking about things like growth in existing relationships, new customer relationships, pricing retention, maybe implementation time lines. Just help us think about how that sort of materializes from a model standpoint based on what you're hearing on the ground? Paul Christians: This is Paul. I'll get started on it. We see it really early in the sales process, and we see the ability because we've got a lot of domain expertise organized by market to really hit the trigger points for where they're creating issues for our customers. And so it typically will start with the pain point reduction, and that may manifest itself in increased maintenance fees as we annualize on those conversations. It may manifest itself in specific pricing related to an AI deployment on that. It just depends on the customer and the particular process for how that's working. It also allows us -- since it's -- the architecture is sitting on top of the AI component and it's architected on top of our existing positions. It also allows us to affect those more quickly than we would if we were just doing that on a pure stand-alone basis and having to do deep integrations because it's already our stuff, and we're enhancing that program. I do think we're in early innings of that conversation. And it does appear to me that as we have customers who look at it and say, "Hey, we're excited and they want AI exposure. In many cases, they don't know what that means or how to go about it. And so we're trying to focus on tangible value add that can improve their operational efficiency or enhance their constituent experience much more naturally, which then tends to open up yet another opportunity and yet another opportunity. So as we run down the road, I think we'll have more opportunities, but it also puts a little bit of pressure on us to continue to evolve in that fashion on a consistent basis, and we're structured to accommodate that. So we're excited about it. Geoffrey Smith: Just to the financial model, Alex, we Obviously, we're experiencing benefits in the margin area already, but also absolutely in revenue. Rick in his script highlighted a couple of discrete items where you're talking direct revenue that's a result of functionality that's been added to the software that would not have been possible kind of in the pre-AI area, features and things like that, that are directly taking advantage of the capabilities now. And the opportunities there are very large, I think, over the next several years. There -- there's a lot of -- the pie of what can be delivered and the range of things that can be delivered to our customers, the functionality of the software has just expanded greatly. But then it's -- honestly, it touches a lot of other revenue, too, just when you think about like how the software is built now. in terms of like what revenue is enabled by AI is going to be in the not so far future. It's like kind of everything. Alexander Markgraff: Got it. That's helpful. And then maybe just one follow-up on the sales front. I think I heard 50% or about half of sales this year from new customers. If I heard that correctly, maybe just a reminder how that sort of compares to the last couple of years? Geoffrey Smith: Yes. That was for education, particularly. And it's probably close to 2x what their average would have been 5 years ago. Clay Whitson: Education...[Audio Gap] Operator: Helle, Is anyone there? Geoffrey Smith: Yes, We are here. Operator: Okay. Does that conclude the question from Alex? Alexander Markgraff: Yes, yes. Sorry about ... Operator: [Operator Instructions] This concludes our question-and-answer session. I would like to turn the conference back over to Greg Daily for any closing remarks. Gregory Daily: Thank you for your continued interest in the company. Stay tuned. We're excited about our pipeline, our team that we've put together. And thanks again, call us if you need anything. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect. Before you buy stock in I3 Verticals, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and I3 Verticals wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $463,900!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,294,401!* Now, it’s worth noting Stock Advisor’s total average return is 978% — a market-crushing outperformance compared to 211% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of June 1, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. i3 Verticals (IIIV) Q2 2026 Earnings Transcript was originally published by The Motley Fool

Last week's profit announcement from i3 Verticals, Inc. (NASDAQ:IIIV) was underwhelming for investors, despite headline numbers being robust. We think that the market might be paying attention to some underlying factors that they find to be concerning. AI is about to change healthcare. These 20 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10bn in marketcap - there is still time to get in early. Importantly, our data indicates that i3 Verticals' profit received a boost of US$1.1m in unusual items, over the last year. While it's always nice to have higher profit, a large contribution from unusual items sometimes dampens our enthusiasm. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. Which is hardly surprising, given the name. i3 Verticals had a rather significant contribution from unusual items relative to its profit to March 2026. All else being equal, this would likely have the effect of making the statutory profit a poor guide to underlying earnings power. That might leave you wondering what analysts are forecasting in terms of future profitability. Luckily, you can click here to see an interactive graph depicting future profitability, based on their estimates. As we discussed above, we think the significant positive unusual item makes i3 Verticals' earnings a poor guide to its underlying profitability. As a result, we think it may well be the case that i3 Verticals' underlying earnings power is lower than its statutory profit. But at least holders can take some solace from the 49% EPS growth in the last year. Of course, we've only just scratched the surface when it comes to analysing its earnings; one could also consider margins, forecast growth, and return on investment, among other factors. With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. While conducting our analysis, we found that i3 Verticals has 1 warning sign and it would be unwise to ignore it. Today we've zoomed in on a single data point to better understand the nature of i3 Verticals' profit. But there are plenty of other ways to inform your opinion of a company. For example, many people consider a high return on equity as an indication of favorable business economics, while others like to 'follow the money' and search out stocks that insiders are buying. So you may wish to see this free collection of companies boasting high return on equity, or this list of stocks with high insider ownership. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Interested in i3 Verticals, Inc.? Here are five stocks we like better. Recurring revenue strength but organic softness: Annualized recurring revenue rose 12% to $183.5M (SaaS +37%, transaction revenue +7%) and recurring sources made up ~80% of revenue, yet organic revenue was flat due to a $2.2M decline in professional services—prompting a modest cut to the revenue midpoint within the guidance range of $221M–$229M. Margins pressured now, improvement expected: Adjusted EBITDA grew 5% to $16.6M while margin slipped to 28.8% from 29.3% because of investments in JusticeTech, higher hosting costs and lower services revenue, but management expects stronger margins in H2 and long-term annual improvement of 50–100 basis points. Balance sheet and product momentum: With $81M of debt, $7.1M cash and $319M revolver capacity, the company has capital flexibility for acquisitions/repurchases while rolling out AI-powered reporting and document tools and seeing demand across JusticeTech, transportation and education markets. These 4 Low P/E Tech Stocks Could be Breakout-Ready Bargains i3 Verticals (NASDAQ:IIIV) reported second-quarter fiscal 2026 results marked by higher recurring revenue and continued investment in product capabilities, while ongoing weakness in professional services weighed on organic growth and prompted a modest reduction to full-year revenue guidance. Chairman and CEO Greg Daily said the company was “pleased with our performance in the second quarter as we continue to execute against our strategy and further improve the quality of our business.” Daily noted that revenue from continuing operations grew 6% year over year and annualized recurring revenue increased 12%, which he called “the best indicator of our long-term growth opportunity.” → Insider Sales: Top AST SpaceMobile Insider Cuts Postion Over 30% Chief Financial Officer Geoff Smith said revenue for the quarter ended March 31, 2026 increased 6% to $57.5 million, up from $54.1 million in the prior-year quarter, “principally reflecting revenues from two acquisitions which have not yet annualized.” Smith said organic revenue was flat, citing a $2.2 million decrease in professional services revenue. Smith said the “ongoing weakness in professional services continues to be concentrated in our utilities market,” and the company expects that trend to persist through the remainder of fiscal 2026. He added that non-recurring revenue sources declined 11% year over year, while annual recurring revenue rose to $183.5 million from $164.5 million. → Light Speed Returns: Corning Cashes In on NVIDIA Growth Breaking down recurring performance, Smith said SaaS revenue grew 37% and transaction-based revenue rose 7%. He said the company expects “elevated levels of SaaS growth the remainder of the fiscal year and accelerating transaction-based revenue growth.” Smith also noted that 80% of quarterly revenue came from recurring sources, and that the company expects lower software license sales for the remainder of fiscal 2026 after most expected license sales have already been completed. Adjusted EBITDA increased 5% to $16.6 million from $15.8 million, while adjusted EBITDA margin dipped to 28.8% from 29.3%. Smith attributed the margin decline to “investments in our JusticeTech market, higher hosting costs, and lower professional services revenues.” → Years in the Making, AMD’s Upside Movement Has Just Begun Despite the margin pressure in the quarter, Smith said the company expects adjusted EBITDA margin to improve in the remainder of the year and reiterated a long-term expectation of 50 to 100 basis points of margin improvement per year. In the Q&A session, Smith told analysts the company’s cost actions include managing expenses tied to professional services declines and “continually tidying up and improving and efficiency and processes all over the business,” noting the firm has benefited from AI across “a lot of different processes and pockets within the company.” He said the company expects “margins to be stronger the back half of this fiscal year,” while continuing to invest in growth areas such as JusticeTech. Adjusted diluted earnings per share from continuing operations rose 10% to $0.32 from $0.29, according to Smith. Smith reaffirmed full-year fiscal 2026 guidance ranges but lowered the midpoint of the revenue outlook, citing a weaker view of non-recurring professional services. Revenue: $221 million to $229 million Adjusted EBITDA: $61 million to $65 million Adjusted diluted EPS: $1.09 to $1.15 Smith said the company expects recurring revenue to grow at a double-digit rate for the rest of fiscal 2026, but “our view of non-recurring professional services has deteriorated further, leading us to guiding down the midpoint of our revenue range.” He added that the company expects to remain closer to its prior EBITDA outlook despite lower revenue expectations, pointing to anticipated “margin strength in the back half of the fiscal year.” On seasonality, Smith said the company expects revenue distribution in the final two quarters to be approximately 48% in the third quarter and 52% in the fourth quarter. Smith said quarter-end debt was $81 million and cash was $7.1 million. He also said i3 Verticals had $319 million of borrowing capacity under its revolving credit facility, subject to a 5x leverage constraint. Smith said the company expects to use borrowings for “opportunistic acquisitions and stock repurchases.” Daily also pointed to balance sheet strength, saying it gives the company flexibility to pursue “all manner of capital allocation opportunities.” President Rick Stanford highlighted new AI-powered capabilities aimed at government clients. He described a newly released ad hoc query and reporting tool that allows users to access insights from existing data using natural language “without requiring lengthy custom report development or IT involvement.” Stanford said feedback at the IUCX utility customer experience conference was immediate, with clients requesting access and citing the ability to compress a multi-day reporting cycle “down to minutes.” Stanford also discussed an AI-assisted document analysis and management platform to ingest, extract, redact, and search documents with an “auditable AI-assisted workflow,” emphasizing that “human review remains at the center of the process” to support accuracy and compliance in regulated environments. On internal development, Stanford said i3 Verticals has expanded AI use from assistance tools to AI agent tools that can “plan, write, test, and modify code with minimal human intervention.” He also cited automated testing through Playwright, which he said improves release reliability and quality. Chief Revenue Officer Paul Christians said demand remained healthy in the quarter as government agencies prioritize modernization and platforms that reduce operational complexity. He outlined consistent buying patterns including broader solution scope beyond a single system, preference for integrated analytics and payments, and interest in AI platform architecture that can layer on top of existing solutions. Christians said JusticeTech was among the company’s most active markets, supported by court modernization demand and interest in offerings that combine payments, analytics, transactional services, and citizen access. He also described a strategy shift to offer transactional services independently of a full case management system deployment, which he said can accelerate time to revenue recognition and drive pull-through demand for broader software adoption. In transportation, Christians pointed to momentum supported by AI-enabled verification and enforcement workflows and cross-sell opportunities. He also said the company has strengthened customer relationships through multi-year support and maintenance agreements and “multiple large renewals with disciplined pricing.” Christians noted education remained strong and said the company “opened up another state with the addition of Utah.” He added that “close to half of our new sales for FY 2026 so far are net new customers” in education, later clarifying in Q&A that this was “probably close to 2x what their average would have been five years ago.” On the earnings call, Smith pointed to several factors he expects to support growth beyond fiscal 2026, including ongoing onboarding of courts in West Virginia and other states on case management platforms, two “long-delayed” transaction-based revenue opportunities in transportation expected to go live near the end of fiscal 2026, and acceleration in the company’s recent insurance verification acquisition. In response to analyst questions about that acquisition, Smith said the vendor typically receives 100% of a state’s insurance verification business, as a single system of record is required. He added that the business is “generally SaaS” with implementation revenue upfront, and that i3 Verticals expects to monetize payments, noting “we’ve already got two states lined up for that.” Daily closed the call by saying the company is “excited about our pipeline” and encouraged investors to “stay tuned.” i3 Verticals, Inc is a provider of integrated software and merchant payment processing solutions tailored for specific vertical markets across the United States. Since its founding in 2001 and headquartered in Columbia, South Carolina, the company has focused on delivering SaaS-based applications and payment services to streamline revenue collection and management workflows for its clients. The company's product portfolio includes electronic payment processing for credit and debit card transactions, automated clearing house (ACH) transfers, online and mobile payment portals, and related risk management and compliance tools. The article "i3 Verticals Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for May 2026.

NASHVILLE, Tenn., May 07, 2026--(BUSINESS WIRE)--i3 Verticals, Inc. (Nasdaq: IIIV) ("i3 Verticals" or the "Company") today reported its financial results for the fiscal second quarter ended March 31, 2026. Highlights from continuing operations1 for the three and six months ended March 31, 2026 vs. 2025 Second quarter revenue from continuing operations1 was $57.5 million, an increase of 6.2% over the prior year's second quarter. Revenue from continuing operations1 for the six months ended March 31, 2026, was $110.2 million, an increase of 3.6% over the prior year's first six months. Second quarter net income from continuing operations1 was $2.2 million, compared to net income from continuing operations1 of $2.3 million for the prior year's second quarter. Net income from continuing operations1 for the six months ended March 31, 2026, was $3.3 million, compared to net income from continuing operations1 of $5.1 million in the prior year's first six months. Second quarter net income from continuing operations attributable to i3 Verticals, Inc.1 was $1.5 million, compared to net income from continuing operations attributable to i3 Verticals, Inc.1 of $1.0 million in the prior year's second quarter. Net income from continuing operations attributable to i3 Verticals, Inc.1 for the six months ended March 31, 2026, was $2.0 million, compared to net income from continuing operations attributable to i3 Verticals, Inc.1 of $2.9 million in the prior year's first six months. Second quarter adjusted EBITDA from continuing operations1,2 was $16.6 million, an increase of 4.7% over the prior year's second quarter. Adjusted EBITDA from continuing operations1,2 for the six months ended March 31, 2026, was $30.2 million as compared to $30.4 million in the prior year's first six months. Second quarter adjusted EBITDA from continuing operations1,2 as a percentage of revenue was 28.8%, compared to 29.3% in the prior year's second quarter. Adjusted EBITDA from continuing operations1,2 as a percentage of revenue for the six months ended March 31, 2026, was 27.4%, compared to 28.6% in the prior year's first six months. Diluted net income per share attributable to Class A common stockholders from continuing operations1,3 was $0.07, compared to diluted net income per share attributable to Class A common stockholders from continuing operations1,3 of $0.04 in the prior year's second quarter. Diluted net income per share attributable to Class A common stockholders from continuing operations1,3 was $0.09 in the six months ended March 31, 2026, compared to diluted net income per share attributable to Class A common stockholders from continuing operations1,3 of $0.12 in the prior year's first six months. Second quarter adjusted diluted earnings per share from continuing operations1,2,3, which gives effect to the Company's 25% estimated long-term effective tax rate4, was $0.32 compared to $0.29 for the prior year's second quarter. Non-GAAP adjusted diluted earnings per share from continuing operations1,2,3 for the six months ended March 31, 2026, was $0.57 compared to $0.56 for the prior year's first six months. Annualized Recurring Revenue ("ARR") from continuing operations1,5 for the three months ended March 31, 2026 and 2025 was $183.5 million and $164.5 million, respectively, representing a period-to-period growth rate of 11.6%. Greg Daily, Chairman and CEO of i3 Verticals, commented, "We are pleased with our second quarter results, which reflect continued progress in the execution of our strategy. Revenue from continuing operations grew 6% year over year, driven by strong performance across our recurring revenue streams, and annualized recurring revenue increased nearly 12% compared to the prior year. "Across the public sector, we continue to invest thoughtfully in products with attractive long‑term growth opportunities. At the same time, ongoing process improvements and efficiency initiatives position us well for margin expansion as we move through the remainder of the fiscal year. "With a strong balance sheet and a growing base of high‑quality recurring revenue, we are excited about the opportunities ahead and confident in our ability to create long‑term value." See footnotes on the following page. 2026 Outlook The Company's practice is to provide annual guidance, excluding the impact of future acquisitions and transaction-related costs. The Company is providing the following revised outlook for the fiscal year ending September 30, 2026: With respect to the "2026 Outlook" above, reconciliations of adjusted EBITDA from continuing operations and adjusted diluted earnings per share from continuing operations guidance to the closest corresponding GAAP measure on a forward-looking basis are not available without unreasonable efforts. This inability results from the inherent difficulty in forecasting generally and quantifying certain projected amounts that are necessary for such reconciliations. In particular, sufficient information is not available to calculate certain adjustments required for such reconciliations, including changes in the fair value of contingent consideration, income tax expense of i3 Verticals, Inc. and equity-based compensation expense. The Company expects these adjustments may have a potentially significant impact on future GAAP financial results. Conference Call The Company will host a conference call on Friday, May 8, 2026, at 8:30 a.m. ET, to discuss financial results and operations. To listen to the call live via telephone, participants should dial (844) 887-9399 approximately 10 minutes prior to the start of the call. A telephonic replay will be available from 11:30 a.m. ET on May 8, 2026, through May 14, 2026, by dialing (855) 669-9658 and entering Confirmation Code 6088860. To listen to the call live via webcast, participants should visit the "Investors" section of the Company’s website, www.i3verticals.com, and go to the "Events" page approximately 10 minutes prior to the start of the call. The online replay will be available on this page of the Company’s website beginning shortly after the conclusion of the call and will remain available for 30 days. Non-GAAP Measures This press release contains information prepared in conformity with GAAP as well as non-GAAP information. It is management’s intent to provide non-GAAP financial information to enhance understanding of the Company's consolidated financial information as prepared in accordance with GAAP. This non-GAAP information should be considered by the reader in addition to, but not instead of, the financial statements prepared in accordance with GAAP. Each non-GAAP financial measure and the most directly comparable GAAP financial measure are presented for historical periods so as not to imply that more emphasis should be placed on the non-GAAP measure. The non-GAAP financial information presented may be determined or calculated differently by other companies. Additional information about non-GAAP financial measures, and a reconciliation of those measures to the most directly comparable GAAP measures, is included in the financial schedules of this release. About i3 Verticals The Company provides mission-critical enterprise software solutions to public sector entities. These comprehensive cloud-native solutions address a broad range of government functions, including courts and public safety, public administration, utilities, transportation and schools. The Company’s mission is to enable state and local governments and related agencies to perform their functions and serve their constituents as effectively and efficiently as possible. With thousands of software installations across all 50 states and Canada, i3 Verticals is a leader in the public sector vertical. More information about the Company can be found at www.i3verticals.com. Forward-Looking Statements This release contains forward-looking statements that are subject to risks and uncertainties. All statements other than statements of historical fact or relating to present facts or current conditions included in this release are forward-looking statements, including any statements regarding the Company's fiscal 2026 financial outlook for continuing operations and statements of a general economic or industry specific nature. Forward-looking statements give the Company's current expectations and projections relating to its financial condition, results of operations, guidance, plans, objectives, future performance and business. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as "anticipate," "estimate," "expect," "project," "plan," "intend," "believe," "may," "will," "should," "could have," "exceed," "significantly," "likely" and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events. The forward-looking statements contained in this release are based on assumptions that we have made in light of the Company's industry experience and its perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances. As you review and consider information presented herein, you should understand that these statements are not guarantees of future performance or results. They depend upon future events and are subject to risks, uncertainties (many of which are beyond the Company's control) and assumptions. Factors that could cause actual results to differ from those expressed or implied by our forward-looking statements include, among other things: ongoing and future economic and geopolitical conditions, including the impact of inflation, elevated interest rates, tariff and trade-related developments, ongoing military conflicts in the Middle East and Ukraine, the evolving legal, ethical, regulatory and operational landscape related to artificial intelligence technologies, competition in our industry and our ability to compete effectively, regulatory developments, the successful integration of acquired businesses, our ability to execute on our strategy and achieve our goals following the completion of the sale of our Merchant Services Business and Healthcare RCM Business, and future decisions made by us and our competitors. All of these factors are difficult or impossible to predict accurately and many of them are beyond our control. For a further list and description of these and other important risks and uncertainties that may affect our future operations, see Part I, Item 1A - Risk Factors in our most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission, which we may further update in Part II, Item 1A - Risk Factors in Quarterly Reports on Form 10-Q we will file hereafter, and the risks and uncertainties identified in other filings filed with the Securities and Exchange Commission from time to time. Any forward-looking statement made by us in this release speaks only as of the date of this release and we undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law. Reconciliation of GAAP to Non-GAAP Financial Measures The Company discloses the following non-GAAP financial measures in this earnings release: Adjusted Income Before Taxes from Continuing Operations. Adjusted income before taxes from continuing operations equals net income (loss) from continuing operations attributable to i3 Verticals Inc., adjusted to add back net income (loss) from continuing operations attributable to non-controlling interest and to exclude certain items on a pre-tax basis which the Company believes may not fully reflect our underlying operating performance. The Company believes that this non-GAAP measure provides useful information to investors in understanding and evaluating the Company’s results of continuing operations and ongoing operational performance on a pre-tax basis. Adjusted Net Income from Continuing Operations and Adjusted Diluted Earnings per Share from Continuing Operations. Adjusted net income from continuing operations equals adjusted income before taxes from continuing operations as described above, adjusted to give effect to an effective tax rate of 25%, which reflects our estimated long-term effective tax rate, considering blended federal and state tax rates. Adjusted diluted earnings per share from continuing operations equals adjusted net income from continuing operations divided by our adjusted weighted average shares of adjusted diluted Class A common stock outstanding. The Company believes that these non-GAAP measures provide useful information to investors in understanding and evaluating the Company’s results of continuing operations and ongoing operational performance on a post-tax basis after giving effect to this assumed tax rate. Adjusted Diluted Earnings per Share from Continuing Operations has also been utilized as a metric in connection with performance-based equity awards previously granted by the Company to executives. Adjusted EBITDA from Continuing Operations and Adjusted EBITDA Margin from Continuing Operations. Adjusted EBITDA from continuing operations equals net income (loss) from continuing operations attributable to i3 Verticals Inc., before interest, income taxes, depreciation and amortization, adjusted to add back net income (loss) from continuing operations attributable to non-controlling interest, and to exclude certain items which the Company believes do not fully reflect our underlying operating performance. Adjusted EBITDA margin represents adjusted EBITDA as a percentage of revenue. The Company believes that these non-GAAP measures provide useful information to investors in understanding and evaluating the Company’s results of continuing operations and ongoing operational performance. In addition, Adjusted EBITDA and Adjusted EBITDA margin have been metrics utilized in connection with the Company’s short-term annual cash incentive program for executive management. The Company believes that the disclosure of these non-GAAP financial measures provides investors with useful information in connection with assessing the Company's financial results as described above. In addition, these non-GAAP financial measures are utilized by management to assess the Company's financial results, evaluate the Company's business, manage budgets, allocate resources, and make operational decisions. The Company believes that disclosure of these non-GAAP financial measures provides investors with additional information to help them better understand our financial results just as management utilizes these non-GAAP financial measures as described above. Although these non-GAAP financial measures assist in measuring the Company's financial results and assessing its financial performance, they are not necessarily comparable to similarly titled measures of other companies due to potential inconsistencies in the method of calculation. See below for reconciliations of the non-GAAP financial measures presented in this release. View source version on businesswire.com: https://www.businesswire.com/news/home/20260507075496/en/ Contacts Clay Whitson Chief Strategy Officer (888) 251-0987 [email protected]