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2月前
i3 Verticals Reports Second Quarter 2026 Financial ResultsMay 7, 2026 4:38 PM
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. 1. As a result of the sale of the Company’s merchant services business (the "Merchant Services Business"), which was completed on September 20, 2024, and the sale of the Company's Healthcare revenue cycle management business ("Healthcare RCM Business"), which was completed on May 5, 2025, the historical results of the Merchant Services Business and the Healthcare RCM Business have been reflected in discontinued operations in the consolidated statement of operations included in this earnings release, and continuing operations reflect the Company's remaining operations after giving effect to such classifications. Prior period results have been recast to reflect this presentation. 2. Represents a non-GAAP financial measure. For additional information regarding non-GAAP financial measures (including reconciliation information), see the attached schedules to this release. 3. Diluted net income (loss) per share attributable to Class A common stockholders from continuing operations and adjusted diluted earnings per share from continuing operations both exclude discontinued operations of the Merchant Services Business and the Healthcare RCM Business but include the consolidated cash interest expense. 4. Corporate income tax expense is based on non-GAAP adjusted income before taxes from continuing operations and is calculated using a tax rate of 25.0% for both the six months ended March 31, 2026 and 2025, based on the estimated long-term effective tax rate, considering blended federal and state tax rates. 5. Annualized Recurring Revenue (ARR) is the annualized revenue derived from recurring sources where the Company has an ongoing contract with its customers. The Company believes revenue from recurring sources is a strategic priority. ARR is comprised of software-as-a-service (“SaaS”) arrangements, transaction-based software-revenue, software maintenance, recurring software-based services, payments revenue and other recurring revenue sources within the quarter. The sum of these revenue categories is multiplied by four to calculate ARR. ARR excludes revenue that is not recurring or is one-time in nature. The Company's management believes this metric provides useful information to investors by providing visibility regarding the ongoing revenue potential of the Company's business model and providing a clearer picture of its sustainable revenue base. Further, the Company's management uses ARR as a metric because it helps to assess the health and trajectory of the Company's business. The Company's management believes that focusing on ARR can orient the Company's sales and operations management towards long-term, reliable revenue growth. This focus on recurring revenue is particularly relevant for businesses operating under a subscription model, where customer retention and contract renewals play a significant role in long-term financial performance. ARR does not have a standardized definition and is therefore unlikely to be comparable to similarly titled measures presented by other companies. It should be reviewed independently of revenue, and it is not a forecast. Additionally, ARR does not take into account seasonality. The active contracts at the end of a reporting period used in calculating ARR may or may not be extended or renewed by the Company's customers. 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: (in thousands, except share and per share amounts) Previous Outlook Range Revised Outlook Range Fiscal year ending September 30, 2026 Revenue $ 223,000 - $ 234,000 $ 221,000 - $ 229,000 Adjusted EBITDA (non-GAAP) $ 61,000 - $ 66,500 $ 61,000 - $ 65,000 Adjusted diluted earnings per share(1)(non-GAAP) $ 1.08 - $ 1.16 $ 1.09 - $ 1.15 ____________________ Assumes an effective tax rate of 25.0% (non-GAAP), based on the estimated long-term effective tax rate, considering blended federal and state tax rates. 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. i3 Verticals, Inc. Consolidated Statements of Operations (Unaudited) ($ in thousands, except share and per share amounts) Three Months Ended March 31, 2026 2025 % Change 2026 2025 % Change Revenue $ 57,518 $ 54,135 6% $ 110,189 $ 106,356 4% Operating expenses Costs of services (excluding depreciation and amortization) 17,138 16,580 3% 34,720 32,156 8% Selling, general and administrative 29,058 26,282 11% 56,047 52,761 6% Depreciation and amortization 7,703 6,998 10% 14,568 13,859 5% Change in fair value of contingent consideration (124 ) (786 ) (84)% (498 ) 466 n/m Total operating expenses 53,775 49,074 10% 104,837 99,242 6% Income from operations 3,743 5,061 (26)% 5,352 7,114 (25)% Other expenses (income) Interest expense 1,141 446 156% 1,522 1,126 35% Other income (70 ) (593 ) (88)% (631 ) (2,419 ) (74)% Total other expenses (income) 1,071 (147 ) n/m 891 (1,293 ) n/m Income before income taxes 2,672 5,208 (49)% 4,461 8,407 (47)% Provision for income taxes 478 2,885 (83)% 1,182 3,294 (64)% Net income from continuing operations 2,194 2,323 3,279 5,113 Net loss from discontinued operations, net of income taxes — (1,554 ) (138 ) (1,236 ) Net income 2,194 769 185% 3,141 3,877 (19)% Net income from continuing operations attributable to non-controlling interest 730 1,304 1,239 2,239 Net loss from discontinued operations attributable to non-controlling interest — (381 ) (46 ) (264 ) Net income attributable to non-controlling interest 730 923 (21)% 1,193 1,975 (40)% Net income from continuing operations attributable to i3 Verticals, Inc. 1,464 1,019 2,040 2,874 Net loss from discontinued operations attributable to i3 Verticals, Inc. — (1,173 ) (92 ) (972 ) Net income (loss) attributable to i3 Verticals, Inc. $ 1,464 $ (154 ) n/m $ 1,948 $ 1,902 2% Net income per share attributable to Class A common stockholders from continuing operations: Basic $ 0.07 $ 0.04 $ 0.09 $ 0.12 Diluted $ 0.07 $ 0.04 $ 0.09 $ 0.12 Net loss per share attributable to Class A common stockholders from discontinued operations: Basic — $ (0.05 ) $ 0.00 $ (0.04 ) Diluted — $ (0.05 ) $ 0.00 $ (0.04 ) Weighted average shares of Class A common stock outstanding: Basic, for continuing operations 21,798,840 23,834,233 22,747,267 23,691,648 Diluted, for continuing operations 30,582,587 24,133,738 23,656,640 24,081,232 Basic, for discontinued operations — 23,834,233 22,747,267 23,691,648 Diluted, for discontinued operations — 23,834,233 31,128,948 23,691,648 n/m = not meaningful i3 Verticals, Inc. Consolidated Balance Sheets (Unaudited) ($ in thousands, except share and per share amounts) March 31, September 30, 2026 2025 Assets Current assets Cash and cash equivalents $ 7,142 $ 66,672 Accounts receivable, net 55,284 58,467 Settlement assets 220 411 Prepaid expenses and other current assets 15,564 12,075 Total current assets 78,210 137,625 Property and equipment, net 6,023 7,181 Restricted cash 2,755 250 Capitalized software, net 52,267 48,314 Goodwill 282,284 248,469 Intangible assets, net 156,805 135,797 Deferred tax asset 47,842 49,058 Operating lease right-of-use assets 4,485 4,577 Other assets 5,749 7,140 Total assets $ 636,420 $ 638,411 Liabilities and equity Liabilities Current liabilities Accounts payable $ 3,630 $ 6,248 Accrued expenses and other current liabilities 20,025 24,525 Settlement obligations 220 411 Deferred revenue 32,909 37,678 Current portion of operating lease liabilities 1,786 1,827 Total current liabilities 58,570 70,689 Long-term debt, less current portion 81,000 — Long-term tax receivable agreement obligations 32,379 32,191 Operating lease liabilities, less current portion 2,826 2,964 Other long-term liabilities 23,409 14,844 Total liabilities 198,184 120,688 Commitments and contingencies Stockholders' equity Preferred stock, par value $0.0001 per share, 10,000,000 shares authorized; 0 shares issued and outstanding as of March 31, 2026 and September 30, 2025 — — Class A common stock, par value $0.0001 per share, 150,000,000 shares authorized; 20,541,392 and 23,983,125 shares issued and outstanding as of March 31, 2026 and September 30, 2025, respectively 2 2 Class B common stock, par value $0.0001 per share, 40,000,000 shares authorized; 8,381,681 and 8,381,681 shares issued and outstanding as of March 31, 2026 and September 30, 2025, respectively 1 1 Additional paid-in capital 197,160 271,310 Accumulated earnings 120,218 118,270 Total stockholders' equity 317,381 389,583 Non-controlling interest 120,855 128,140 Total equity 438,236 517,723 Total liabilities and equity $ 636,420 $ 638,411 i3 Verticals, Inc. Consolidated Cash Flow Data (Unaudited) ($ in thousands) Six Months Ended March 31, 2026 2025 Net cash provided by (used in) operating activities $ 24,150 $ (15,627 ) Net cash used in investing activities $ (64,658 ) $ (3,675 ) Net cash used in financing activities $ (16,708 ) $ (60,029 ) 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. i3 Verticals, Inc. Reconciliation of GAAP Net Income (Loss) from Continuing Operations to Non-GAAP Adjusted Net Income from Continuing Operations and Non-GAAP Adjusted EBITDA from Continuing Operations (Unaudited) ($ in thousands) Three Months Ended March 31, Six Months Ended March 31, 2026 2025 2026 2025 Net income from continuing operations attributable to i3 Verticals, Inc. $ 1,464 $ 1,019 $ 2,040 $ 2,874 Net income from continuing operations attributable to non-controlling interest 730 1,304 1,239 2,239 Net income from continuing operations $ 2,194 $ 2,323 $ 3,279 $ 5,113 Non-GAAP adjustments: Provision for income taxes 478 2,885 1,182 3,294 Non-cash change in fair value of contingent consideration(1) (124 ) (786 ) (498 ) 466 Equity-based compensation from continuing operations(2) 4,619 3,545 9,797 7,151 M&A-related activity(3) 126 107 147 159 Acquisition intangible amortization(4) 4,970 4,227 9,366 8,453 Non-cash interest expense(5) 215 250 431 530 Other taxes(6) 463 455 614 707 Loss (gain) on disposal of property and equipment(7) — — 71 (585 ) Non-GAAP adjusted income before taxes from continuing operations(8) $ 12,941 $ 13,006 $ 24,389 $ 25,288 Estimated taxes at 25%(9) (3,235 ) (3,252 ) (6,097 ) (6,323 ) Adjusted net income from continuing operations(8) $ 9,706 $ 9,754 $ 18,292 $ 18,965 Cash interest expense (income), net(10) 915 64 613 (282 ) Estimated taxes at 25%(9) 3,235 3,252 6,097 6,323 Depreciation and internally developed software amortization(11) 2,733 2,771 5,202 5,406 Adjusted EBITDA from continuing operations(8) $ 16,589 $ 15,841 $ 30,204 $ 30,412 ________________ 1. Non-cash change in fair value of contingent consideration reflects the changes in management’s estimates of future cash consideration to be paid in connection with prior acquisitions from the amount estimated as of the later of the most recent balance sheet date forming the beginning of the income statement period or the original estimates made at the closing of the applicable acquisition. 2. Equity-based compensation expense related to stock options and restricted stock units issued under the Company's 2018 Equity Incentive Plan and 2020 Acquisition Equity Incentive Plan. 3. M&A-related activity is the net impact of professional service and related costs directly related to any merger, acquisition and disposition activity of the Company ("M&A-related expenses"), which are recorded in selling, general and administrative in the condensed consolidated statements of operations, and revenue earned through post-sale non-recurring activities with divestitures ("M&A-related income"), which are recorded in other income in the condensed consolidated statements of operations. i3 Verticals believes these activities are not reflective of the underlying operational performance of the Company. M&A-related income was $60 and $225 for the three and six months ended March 31, 2026, respectively, and $461 and $956 for the three and six months ended March 31, 2025, respectively. M&A-related expenses were $186 and $372 for the three and six months ended March 31, 2026, respectively and $570 and $1,116 for the three and six months ended March 31, 2025, respectively. 4. Acquisition intangible amortization reflects amortization of intangible assets and software acquired through acquisitions of business or other purchases of intangible assets. 5. Non-cash interest expense reflects amortization of debt issuance costs and any write-offs of debt issuance costs. 6. Other taxes consist of franchise taxes, commercial activity taxes, reserves for ongoing tax audit matters, the employer portion of payroll taxes related to stock option exercises and other non-income-based taxes. Taxes related to salaries are not included. 7. Loss (gain) on disposal of property and equipment is related to the sale of buildings and automobiles purchased through acquisitions. 8. Represents a non-GAAP financial measure. 9. Corporate income tax expense is based on non-GAAP adjusted income before taxes from continuing operations and is calculated using a tax rate of 25.0% for both the six months ended March 31, 2026 and 2025, based on the estimated long-term effective tax rate, considering blended federal and state tax rates. 10. Cash interest expense (income), net, represents all interest expense net of interest income recorded on the Company's statement of operations other than non-cash interest expense, which represents amortization of debt issuance costs and any write-offs of debt issuance costs. 11. Depreciation and internally developed software amortization reflects depreciation on the Company's property, plant and equipment, net, and amortization expense on its internally developed capitalized software. i3 Verticals, Inc. GAAP Diluted EPS from Continuing Operations and Non-GAAP Adjusted Diluted EPS from Continuing Operations (Unaudited) ($ in thousands, except share and per share amounts) Three Months Ended March 31, Six Months Ended March 31, 2026 2025 2026 2025 Diluted net income per share attributable to Class A common stockholders from continuing operations(1) $ 0.07 $ 0.04 $ 0.09 $ 0.12 Adjusted diluted earnings per share from continuing operations(2)(3) $ 0.32 $ 0.29 $ 0.57 $ 0.56 Adjusted net income from continuing operations(2)(4) $ 9,706 $ 9,754 $ 18,292 $ 18,965 Adjusted weighted average shares of adjusted diluted Class A common stock outstanding(2)(5) 30,582,587 33,542,165 32,038,321 33,801,930 ________________ 1. Diluted net income per share attributable to Class A common stockholders from continuing operations and adjusted diluted earnings per share from continuing operations both exclude the discontinued operations of the Merchant Services Business and the Healthcare RCM Business but include the consolidated cash interest expense. 2. Represents a non-GAAP financial measure. 3. Adjusted diluted earnings per share from continuing operations, a non-GAAP financial measure, is calculated using adjusted net income from continuing operations and the adjusted weighted average shares of adjusted diluted Class A common stock outstanding. Further, adjusted diluted earnings per share from continuing operations assumes that all Common Units in i3 Verticals, LLC and the associated non-voting Class B common stock were exchanged for Class A common stock at the beginning of the period on a one-for-one basis. 4. Adjusted net income from continuing operations, a non-GAAP financial measure, assumes that all net income from continuing operations during the period is available to the holders of the Company's Class A common stock. 5. Adjusted weighted average shares of adjusted diluted Class A common stock outstanding include 8,381,681 and 9,408,427 weighted average outstanding shares of Class B common stock (which can be converted into Class A common stock upon the exchange of the Class B common stock and the associated Common Units in i3 Verticals, LLC) and 402,066 and 299,505 shares resulting from estimated stock option exercises and restricted stock units vesting as calculated by the treasury stock method for the three months ended March 31, 2026 and 2025, respectively. Adjusted weighted average shares of adjusted diluted Class A common stock outstanding include 8,381,681 and 9,720,698 weighted average outstanding shares of Class B common stock (which can be converted into Class A common stock upon the exchange of the Class B common stock and the associated Common Units in i3 Verticals, LLC) and 909,373 and 389,584 shares resulting from estimated stock option exercises and restricted stock units vesting as calculated by the treasury stock method for the six months ended March 31, 2026 and 2025, respectively. View source version on businesswire.com: https://www.businesswire.com/news/home/20260507075496/en/ Clay Whitson
Chief Strategy Officer
(888) 251-0987
investorrelations@i3verticals.com Original: i3 Verticals Reports Second Quarter 2026 Financial Results
PennyStock Alert
7年前
i3 Verticals Reports Fourth Quarter and Full Year 2018 Financial Results
Source: GlobeNewswire Inc.
i3 Verticals, Inc. (Nasdaq: IIIV) (“i3 Verticals” or the “Company”) today reported its financial results for the fiscal fourth quarter and year ended September 30, 2018.
Highlights for the fiscal fourth quarter and full year of 2018 vs. 2017
Fourth quarter revenue was $84.1 million, an increase of 17% over the prior year's fourth quarter; Full year revenue was $323.5 million, an increase of 23% over the prior year.
Fourth quarter net revenue1, which excludes interchange and related network fees, was $28.1 million, an increase of 38% over the prior year's fourth quarter; Full year net revenue1 was $109.0 million, an increase of 48% over the prior year.
Fourth quarter net income was $2.9 million; Full year net loss was $5.0 million.
Fourth quarter adjusted EBITDA1 was $7.8 million, an increase of 36% over the prior year's fourth quarter; Full year adjusted EBITDA1 was $30.3 million, an increase of 58% over the prior year.
Fourth quarter adjusted EBITDA1 as a percentage of net revenue1 was 28%, compared to 28% in the prior year's fourth quarter; Full year adjusted EBITDA1 as a percentage of net revenue1 was 28%, an increase from 26% in the prior year.
Fourth quarter diluted net income per share available to Class A common stock was $0.09; Full year diluted net loss per share available to Class A common stock2 was $0.08.
Fourth quarter and full year pro forma adjusted diluted earnings per share1, which gives pro forma effect to the Company's going forward effective tax rate following its Up-C reorganization in connection with its initial public offering (“IPO”), was $0.19 and $0.57, respectively.
Integrated payments3 were 45% and 43% of payment volume for the three months and full year ended September 30, 2018, respectively.
Debt was reduced by $74.1 million during the year ended September 30, 2018, primarily with net proceeds from the Company’s IPO and the conversion of a portion of its junior subordinated notes in connection with the IPO. At September 30, 2018, the ratio of consolidated debt-to-EBITDA, as defined in the Company's Senior Secured Credit Facility, was 1.27x.
Since the third quarter earnings release issued on August 9, 2018, the Company has completed three acquisitions, all within the Proprietary Software and Payments reporting segment. Two of the acquisitions were within the public sector vertical, and the third acquisition provided technology that enhances the Burton Platform. One of the public sector acquisitions was completed during the fourth quarter. The other two acquisitions were completed subsequent to September 30, 2018. The aggregate purchase price, excluding contingent consideration, for these three acquisitions was $27.1 million.
Represents a non-GAAP financial measure. For additional information (including reconciliation information), see the attached schedules to this release.
Diluted loss per Class A common stock is presented only for the period after the Company’s Reorganization Transactions (as defined in the Company's prospectus, dated June 20, 2018, filed with the Securities and Exchange Commission).
Integrated payments represents payment transactions that are generated in situations where payment technology is embedded within the Company's own proprietary software, a client’s software or critical business process.
Greg Daily, Chairman and CEO of i3 Verticals, commented, “We are pleased with our fourth quarter performance. Our strategy to grow in strategic vertical markets continues to be validated as we saw healthy organic sales growth, particularly within our Proprietary Software and Payments segment, in the quarter. In addition, we continue to strengthen our strategy through complementary acquisitions, as we now provide a comprehensive suite of software products in our public sector vertical, including solutions for property assessments, tax collection, court payments and sheriff office payments. Our acquisitions have also accelerated the development of our Burton Platform, and we now offer point-to-point encryption and have expanded the number of EMV-enabled devices that process on the Burton Platform. These enhancements reduce the scope of PCI compliance costs for our ISV customers and our clients. We continue to have a strong balance sheet with adequate debt capacity, and our acquisition pipeline is active and healthy. We believe the expansion of our integrated payments, coupled with our proprietary technology, positions us to deliver continued growth in the coming years.”
Revised 2019 Outlook
The Company's practice is to provide annual guidance, excluding future acquisitions and transaction-related costs. The outlook also excludes the effect of software deferred revenue write-downs resulting from acquisitions that have already closed.1 The Company is providing the following revised outlook for the fiscal year ending September 30, 2019:
(in thousands, except per share amounts) Outlook Range
Fiscal year ended September 30, 2019
Adjusted net revenue (non-GAAP) $ 122,000 - $ 128,000
Adjusted EBITDA (non-GAAP) $ 35,000 - $ 36,000
Adjusted diluted earnings per share(2) (non-GAAP) $ 0.84 - $ 0.87
_______________________
GAAP require companies to adjust, as necessary, beginning balances of acquired deferred revenue to fair value as part of acquisition accounting as defined by GAAP. For the 2019 outlook, the Company has removed the effect of these adjustments to acquisition date fair value from acquisitions that have closed as of the earnings release date.
Assumes an effective pro forma tax rate of 25.0% (non-GAAP).
With respect to the “Revised 2019 Outlook” above, reconciliation of adjusted net revenue, adjusted EBITDA and adjusted diluted earnings per share guidance to the closest corresponding GAAP measure on a forward-looking basis is 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 expenses 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 Thursday, November 29, 2018, at 8:00 a.m. ET, to discuss financial results and operations. To listen to the call live via telephone, participants should dial (323) 794-2423 approximately 10 minutes prior to the start of the call. A telephonic replay will be available from 11:00 a.m. ET on November 29, 2018, through December 6, 2018, by dialing (719) 457-0820 and entering Confirmation Code 3349103.
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 & Presentations” 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 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, including, but not limited to, net revenue, pro forma adjusted net income, adjusted EBITDA and pro forma adjusted diluted EPS, and a reconciliation of those measures to the most directly comparable GAAP measures is included on pages 10-12 in the financial schedules of this release.
About i3 Verticals
Helping drive the convergence of software and payments, i3 Verticals delivers integrated payment and software solutions to small- and medium-sized businesses and other organizations in strategic vertical markets, such as education, non-profit, the public sector, property management, and healthcare and to the business-to-business payments market. With a broad suite of payment and software solutions that address the specific needs of its clients in each strategic vertical market, i3 Verticals processed approximately $11.6 billion in total payment volume for the 12 months ended September 30, 2018.
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 guidance 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. Although we believe that these forward-looking statements are based on reasonable assumptions, you should be aware that many factors could affect the Company's actual future performance or results and cause them to differ materially from those anticipated in the forward-looking statements. Certain of these factors and other risks are discussed in the Company's filings with the U.S. Securities and Exchange Commission (the “SEC”) and include, but are not limited to: (i) the ability to generate revenues sufficient to attain and maintain profitability and positive cash flow; (ii) competition in the Company's industry and the ability to compete effectively; (iii) the dependence on non-exclusive distribution partners to market the Company's products and services; (iv) the ability to keep pace with rapid developments and changes in the Company's industry and provide new products and services; (v) liability and reputation damage from unauthorized disclosure, destruction or modification of data or disruption of the Company's services; (vi) technical, operational and regulatory risks related to the Company's information technology systems and third-party providers’ systems; (vii) reliance on third parties for significant services; (viii) exposure to economic conditions and political risks affecting consumer and commercial spending, including the use of credit cards; (ix) the ability to increase the Company's existing vertical markets, expand into new vertical markets and execute the Company's growth strategy; (x) the ability to successfully complete acquisitions and effectively integrate those acquisitions into the Company's services; (xi) degradation of the quality of the Company's products, services and support; (xii) the ability to retain clients, many of which are SMBs, which can be difficult and costly to retain; (xiii) the Company's ability to successfully manage its intellectual property; (xiv) the ability to attract, recruit, retain and develop key personnel and qualified employees; (xv) risks related to laws, regulations and industry standards; (xvi) the Company's indebtedness and potential increases in its indebtedness; and (xvii) operating and financial restrictions imposed by the Company's senior secured credit facility. Should one or more of these risks or uncertainties materialize, or should any of these assumptions prove incorrect, the Company's actual results may vary in material respects from those projected in these forward-looking statements. More information on potential factors that could affect the Company’s financial results and performance is included in the “Risk Factors” section of the Company’s recently filed registration statement on Form S-1, as amended, and other filings with the SEC.
Any forward-looking statement made by us in this release speaks only as of the date of this release. Factors or events that could cause the Company's actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. The Company undertakes 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.
Contacts:
Clay Whitson Scott Meriwether
Chief Financial Officer Senior Vice President - Finance
(615) 988-9890
(615) 942-6175
cwhitson@i3verticals.com smeriwether@i3verticals.com
i3 Verticals, Inc. Consolidated Statements of Operations
($ in thousands, except share and per share amounts)
Three months ended September 30, Year ended September 30,
2018 2017 % Change 2018 2017 % Change
(unaudited) (unaudited) (unaudited)
Revenue $ 84,053 $ 71,779 17 % $ 323,508 $ 262,571 23 %
Operating expenses
Interchange and network fees 55,966 51,433 9 % 214,543 189,112 13 %
Other costs of services 10,195 8,002 27 % 40,314 28,798 40 %
Selling general and administrative 10,848 8,029 35 % 40,585 27,194 49 %
Depreciation and amortization 2,963 2,632 13 % 11,839 10,085 17 %
Change in fair value of contingent consideration 586 (395 ) (248 )% 3,866 (218 ) n/m
Total operating expenses 80,558 69,701 16 % 311,147 254,971 22 %
Income from operations 3,495 2,078 68 % 12,361 7,600 63 %
Other expenses
Interest expense, net 849 1,975 (57 )% 8,498 6,936 23 %
Change in fair value of warrant liability — (357 ) n/m 8,487 (415 ) n/m
Total other expenses 849 1,618 (48 )% 16,985 6,521 160 %
Income (loss) before income taxes 2,646 460 475 % (4,624 ) 1,079 (529 )%
(Benefit from) provision for income taxes (216 ) 76 (384 )% 337 177 90 %
Net income (loss) 2,862 384 645 % (4,961 ) 902 (650 )%
Net income attributable to non-controlling interest 2,028 — n/m 1,937 — n/m
Net income (loss) attributable to i3 Verticals, Inc. $ 834 $ 384 117 % $ (6,898 ) $ 902 (865 )%
Net income per share available to Class A common stock(1):
Basic $ 0.09 $ 0.08
Diluted $ 0.09 $ 0.08
Weighted average shares of Class A common stock outstanding(1):
Basic 8,812,630 8,812,630
Diluted 26,891,688 26,873,878
__________________________
Basic and diluted net income per Class A common stock are presented only for the period after the Company’s Reorganization Transactions.
i3 Verticals, Inc. Financial Highlights
(Unaudited)
($ in thousands, except per share amounts)
Three months ended September 30, Year ended September 30,
2018 2017 % Change
2018 2017 % Change
Net revenue (non-GAAP) $ 28,087 $ 20,346 38 % $ 108,965 $ 73,459 48 %
Adjusted EBITDA (non-GAAP)
7,849 5,751 36 % 30,348 19,264 58 %
Pro forma adjusted diluted earnings per share (non-GAAP)
$ 0.19 $ 0.57
i3 Verticals, Inc. Supplemental Volume Information
(Unaudited)
($ in thousands)
Three months ended September 30, Year ended September 30,
2018 2017 2018 2017
Payment volume(1) $ 2,971,220 $ 2,772,308 $ 11,554,806 $ 10,269,435
__________________________
Payment volume is the net dollar value of both 1) Visa, Mastercard and other payment network transactions processed by the Company's clients and settled to clients by us and 2) ACH transactions processed by the Company's clients and settled to clients by the Company.
i3 Verticals, Inc. Segment Summary
(Unaudited)
($ in thousands)
As of and for the Three Months Ended September 30, 2018
Merchant Services Proprietary Software and Payments Other Total
Revenue $ 78,258 $ 5,795 $ — $ 84,053
Operating expenses
Interchange and network fees 54,683 1,283 — 55,966
Other costs of services 9,450 746 (1 ) 10,195
Selling general and administrative 6,164 2,057 2,627 10,848
Depreciation and amortization 2,395 482 86 2,963
Change in fair value of contingent consideration 237 349 — 586
Income (loss) from operations $ 5,329 $ 878 $ (2,712 ) $ 3,495
Payment volume
$ 2,850,503 $ 120,717 $ — $ 2,971,220
As of and for the Year ended September 30, 2018
Merchant Services Proprietary Software and Payments Other Total
Revenue $ 302,929 $ 20,582 $ (3 ) $ 323,508
Operating expenses
Interchange and network fees 209,695 4,848 — 214,543
Other costs of services 38,399 1,916 (1 ) 40,314
Selling general and administrative 23,291 7,602 9,692 40,585
Depreciation and amortization 9,535 2,097 207 11,839
Change in fair value of contingent consideration 1,772 2,094 — 3,866
Income (loss) from operations $ 20,237 $ 2,025 $ (9,901 ) $ 12,361
Payment volume
$ 11,072,266 $ 482,540 $ — $ 11,554,806
i3 Verticals, Inc. Segment Summary (continued)
(Unaudited)
($ in thousands)
As of and for the Three Months Ended September 30, 2017
Merchant Services Proprietary Software and Payments Other Total
Revenue $ 67,560 $ 4,239 $ (20 ) $ 71,779
Operating expenses
Interchange and network fees 50,360 1,073 — 51,433
Other costs of services 7,459 563 (20 ) 8,002
Selling general and administrative 4,383 1,926 1,720 8,029
Depreciation and amortization 2,097 504 31 2,632
Change in fair value of contingent consideration (400 ) 5 — (395 )
Income (loss) from operations $ 3,661 $ 168 $ (1,751 ) $ 2,078
Payment volume $ 2,668,734 $ 103,574 $ — $ 2,772,308
As of and for the Year ended September 30, 2017
Merchant Services Proprietary Software and Payments Other Total
Revenue $ 248,005 $ 14,582 $ (16 ) $ 262,571
Operating expenses
Interchange and network fees 185,141 3,971 — 189,112
Other costs of services 27,350 1,559 (111 ) 28,798
Selling general and administrative 13,858 7,194 6,142 27,194
Depreciation and amortization 8,029 1,938 118 10,085
Change in fair value of contingent consideration 192 (410 ) — (218 )
Income (loss) from operations $ 13,435 $ 330 $ (6,165 ) $ 7,600
Payment volume $ 9,883,947 $ 385,488 $ — $ 10,269,435
i3 Verticals, Inc. Consolidated Balance Sheets
($ in thousands, except share and per share amounts)
September 30, September 30,
2018 2017
(unaudited)
Assets
Current assets
Cash and cash equivalents $ 572 $ 955
Accounts receivable, net 12,500 8,412
Settlement assets 863 5,196
Prepaid expenses and other current assets 2,630 1,141
Total current assets 16,565 15,704
Property and equipment, net 2,958 1,420
Restricted cash 665 1,013
Capitalized software, net 3,372 3,778
Goodwill 83,954 58,517
Intangible assets, net 66,023 59,259
Other assets 1,605 300
Total assets $ 175,142 $ 139,991
Liabilities, Redeemable Class A Units and equity
Liabilities
Current liabilities
Accounts payable 4,114 1,600
Current portion of long-term debt 5,000 4,000
Accrued expenses and other current liabilities 11,538 6,706
Settlement obligations 863 5,196
Deferred revenue 4,927 2,719
Total current liabilities 26,442 20,221
Long-term debt, less current portion and debt issuance costs, net 31,776 106,836
Other long-term liabilities 4,726 2,065
Total liabilities 62,944 129,122
Commitments and contingencies
Redeemable Class A units; 0 and 4,900,000 Units authorized, issued and outstanding as of September 30, 2018 and September 30, 2017, respectively — 7,723
Stockholders' / Members' equity
Members' equity — 36,164
Preferred stock, par value $0.0001 per share, 10,000,000 shares authorized; 0 shares issued and outstanding as of September 30, 2018 — —
Class A common stock, par value $0.0001 per share, 150,000,000 shares authorized; 9,112,042 shares issued and outstanding as of September 30, 2018 1 —
Class B common stock, par value $0.0001 per share, 40,000,000 shares authorized; 17,213,806 shares issued and outstanding as of September 30, 2018 2 —
Additional paid-in-capital 38,562 —
Accumulated earnings (deficit) 736 (33,018 )
Total Stockholders' / Members' equity 39,301 3,146
Non-controlling interest 72,897 —
Total equity 112,198 3,146
Total liabilities, Redeemable Class A Units and members' / stockholders' equity (deficit) $ 175,142 $ 139,991
i3 Verticals, Inc. Consolidated Cash Flow Data
($ in thousands)
Year ended September 30,
2018 2017
(unaudited)
Net cash provided by operating activities $ 18,080 $ 8,330
Net cash used in investing activities $ (38,055 ) $ (47,903 )
Net cash provided by financing activities $ 19,244 $ 37,352
Reconciliation of GAAP to Non-GAAP Financial Measures
The Company believes that non-GAAP financial measures are important to enable investors to understand and evaluate its ongoing operating results. Accordingly, i3 Verticals includes non-GAAP financial measures when reporting its financial results to shareholders and potential investors in order to provide them with an additional tool to evaluate the Company’s ongoing business operations. i3 Verticals believes that the non-GAAP financial measures are representative of comparative financial performance that reflects the economic substance of i3 Verticals’ current and ongoing business operations.
Although non-GAAP financial measures are often used to measure the Company's operating results and assess its financial performance, they are not necessarily comparable to similarly titled measures of other companies due to potential inconsistencies in the method of calculation. i3 Verticals believes that its provision of non-GAAP financial measures provides investors with important key financial performance indicators that are utilized by management to assess the Company's operating results, evaluate the business and make operational decisions on a prospective, going-forward basis. Hence, management provides disclosure of non-GAAP financial measures to give shareholders and potential investors an opportunity to see i3 Verticals as viewed by management, to assess i3 Verticals with some of the same tools that management utilizes internally and to be able to compare such information with prior periods. i3 Verticals believes that inclusion of non-GAAP financial measures provides investors with additional information to help them better understand its financial statements just as management utilizes these non-GAAP financial measures to better understand the business, manage budgets and allocate resources.
i3 Verticals, Inc. Reconciliation of GAAP Net Income to Non-GAAP Pro Forma Adjusted Net Income and Non-GAAP Adjusted EBITDA
(Unaudited)
($ in thousands)
Three months ended September 30, Year ended September 30,
2018 2017 2018 2017
Net income (loss) attributable to i3 Verticals, Inc. $ 834 $ 384 $ (6,898 ) $ 902
Net income attributable to non-controlling interest
2,028 — 1,937 —
Non-GAAP Adjustments:
(Benefit from) provision for income taxes (216 ) 76 337 177
Offering-related expenses(1) — — 124 —
Non-cash change in fair value of contingent consideration(2) 586 (395 ) 3,866 (218 )
Non-cash change in fair value of warrant liability(3) — (357 ) 8,487 (415 )
Equity-based compensation(4) 750 — 1,567 —
Acquisition-related expenses(5) 53 430 531 766
Acquisition intangible amortization(6) 2,378 2,003 9,384 7,669
Non-cash interest expense(7) 233 124 1,072 453
Other taxes(8) 2 11 60 36
Legal settlement(9) — 995 — 995
Non-GAAP pro forma adjusted income before taxes 6,648 3,271 20,467 10,365
Pro forma taxes at effective tax rate(10) (1,662 ) (818 ) (5,117 ) (2,591 )
Pro forma adjusted net income(11) $ 4,986 $ 2,453 $ 15,350 $ 7,774
Cash interest expense, net(12) 616 1,851 7,426 6,483
Pro forma taxes at effective tax rate(13) 1,662 818 5,117 2,591
Depreciation and internally developed software amortization(14) 585 629 2,455 2,416
Adjusted EBITDA $ 7,849 $ 5,751 $ 30,348 $ 19,264
______________
Includes costs associated with forming i3 Verticals, Inc. and other expenses directly related to the Reorganization Transactions (as defined in the Company's prospectus, dated June 20, 2018, filed with the Securities and Exchange Commission).
Non-cash change in fair value of contingent consideration reflects the changes in management’s estimates of future cash consideration to be paid in connection with prior acquisitions from the amount estimated as of the later of the most recent balance sheet date forming the beginning of the income statement period or the original estimates made at the closing of the applicable acquisition.
Non-cash change in warrant liability reflects the fair value change in certain warrants for the Company's common units associated with the Company's mezzanine notes in the aggregate principal amount of $10.5 million. These warrants are accounted for as liabilities on the Company's consolidated balance sheets and were repaid with proceeds from its IPO.
Equity-based compensation expense consisted of $750 and $826 related to stock options issued under the Company's 2018 Equity Incentive Plan during the three months and year ended September 30, 2018, respectively. Additionally, during the year ended September 30, 2018, the Company incurred $741 related to tax receivables agreement (TRA) non-participation compensatory shares. TRA non-participation compensatory shares were issued to former equity owners as part of the Reorganization Transactions in conjunction with the IPO.
Acquisition-related expenses are the professional service and related costs directly related to the Company's acquisitions and are not part of its core performance.
Acquisition intangible amortization reflects amortization of intangible assets and software acquired through business combinations, acquired customer portfolios, acquired referral agreements and related asset acquisitions.
Non-cash interest expense reflects amortization of deferred financing costs.
Other taxes consist of franchise taxes, commercial activity taxes and other non-income based taxes. Taxes related to salaries or employment are not included.
Legal settlement is a charge from certain legal proceedings.
Pro forma corporate income tax expense is based on Non-GAAP adjusted income before taxes and is calculated using tax rates of 25.0% for 2018 and 2017, based on blended federal and state tax rates, considering the Tax Reform Act for 2018.
Pro forma adjusted net income assumes that the effect of the Reorganization Transactions and the Company's IPO occurred prior to the year ended September 30, 2018, and that all net income during that period is available to the Class A common shareholders. Further, pro forma adjusted diluted earnings per share assumes that all Common Units in i3 Verticals, LLC and the associated non-voting Class B common stock were exchanged for Class A common stock at the beginning of the period on a one for one basis.
Cash interest expense, net represents all interest expense recorded on statement of operations other than non-cash interest expense, which represents amortization of deferred financing costs.
Pro forma corporate income tax expense is based on Non-GAAP adjusted income before taxes and is calculated using tax rates of 25.0% for 2018 and 2017, based on blended federal and state tax rates, considering the Tax Reform Act for 2018.
Depreciation and internally developed software amortization reflects depreciation on the Company's property, plant and equipment, net, and amortization expense on its internally developed capitalized software.
i3 Verticals, Inc. GAAP Diluted EPS and Non-GAAP Pro Forma Adjusted Diluted EPS
(Unaudited)
($ in ones)
Three months ended September 30, 2018 Year ended September 30, 2018
Diluted net income (loss) available to Class A common stock per share $ 0.09 $ 0.08
Pro forma adjusted diluted earnings per share (non-GAAP)(1)
$ 0.19 $ 0.57
Pro forma weighted average shares of adjusted diluted Class A common stock outstanding(2) 26,891,688 26,873,878
_______________
Pro forma adjusted diluted earnings per share is calculated using pro forma adjusted net income and the pro forma weighted average shares of adjusted diluted Class A common stock outstanding. It presumes that the effect of the Reorganization Transactions and the Company's IPO occurred prior to the year ended September 30, 2018, and that all net income during that period is available to the Class A common shareholders. Further, pro forma adjusted diluted earnings per share assumes that all Common Units in i3 Verticals, LLC and the associated non-voting Class B common stock were exchanged for Class A common stock at the beginning of the period on a one for one basis.
Pro forma weighted average shares of adjusted diluted Class A common stock outstanding include 17,213,806 outstanding shares of Class A common stock issuable upon the exchange of Common Units in i3 Verticals, LLC and 865,252 and 847,442 shares of unvested Class A common stock and options for the three months and year ended September 30, 2018, respectively.
i3 Verticals, Inc. Reconciliation of GAAP Revenue to Non-GAAP Net Revenue
(Unaudited)
($ in thousands)
Three months ended September 30, Year ended September 30,
2018 2017 2018 2017
Revenue $ 84,053 $ 71,779 $ 323,508 $ 262,571
Interchange and network fees 55,966 51,433 214,543 189,112
Net Revenue $ 28,087 $ 20,346 $ 108,965 $ 73,459
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