i3 Verticals Reports Second Quarter 2024 Financial Results
NASHVILLE, Tenn. , May 10 /Businesswire/ - i3 Verticals, Inc. (Nasdaq: IIIV) (“i3 Verticals” or the “Company”) today reported its financial results for the fiscal second quarter ended March 31, 2024.
Highlights for the second quarter and six months ended March 31, 2024 vs. 2023
1. |
Represents a non-GAAP financial measure. For additional information (including reconciliation information), see the attached schedules to this release. |
2. |
Annualized Recurring Revenue (ARR) is the annualized revenue derived from 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. This excludes contracts that are not recurring or are one-time in nature. The Company focuses on ARR because it helps i3 Verticals to assess the health and trajectory of the business. 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 i3 Verticals' customers. |
3. |
Software and related services revenue includes the sale of subscriptions, recurring services, ongoing support, licenses, and installation and implementation services specific to software. |
Greg Daily, Chairman and CEO of i3 Verticals, commented, "In the second quarter of fiscal year 2024 we continued to make progress on our recurring revenue sources. SaaS and software transaction-based revenue were both up 10%, while payments was up 6%. Despite certain non-recurring sources of revenue such as license and professional services being temporarily lower, we still expanded our adjusted EBITDA margins by 100 bps year-over-year, a testament to our team’s efforts to drive bottom line results. Looking ahead, we are excited about our pipeline of opportunities as well as our market position in our core vertical markets.”
Update on Exploration of Sale of our Merchant Services Business
The Company previously announced that its Board of Directors initiated a process solely to explore the potential sale of certain assets related to its Merchant Services Business. While that process is ongoing, there is no assurance that the process to explore the sale of the Merchant Services Business will result in any transaction, or if the transaction is completed, the timing or terms of any such transaction. Any decision by the Board to engage in any transaction involving the Merchant Services Business will be aligned with the Board’s objectives of maximizing long-term shareholder value and strengthening the Company’s ongoing operations, and in all cases will be subject to then prevailing market conditions.
Revised 2024 Outlook
The Company's practice is to provide annual guidance, excluding the impact of acquisitions, dispositions and transaction-related costs. In particular, this annual guidance does not take into account any impact of the potential sale of i3 Verticals' Merchant Services Business as described above in the Company's results of operations for the fiscal year ending September 30, 2024, in the event that such sale is completed.
The Company is providing the following revised outlook for the fiscal year ending September 30, 2024:
(in thousands, except share and per share amounts) |
Previous Outlook Range |
|
Revised Outlook Range |
||||||||
|
Fiscal year ending September 30, 2024 |
||||||||||
Revenue |
$ |
385,000 |
- |
$ |
400,000 |
|
$ |
380,000 |
- |
$ |
394,000 |
Adjusted EBITDA (non-GAAP) |
$ |
109,000 |
- |
$ |
115,000 |
|
$ |
107,000 |
- |
$ |
113,000 |
Depreciation and internally developed software amortization |
$ |
11,000 |
- |
$ |
13,000 |
|
$ |
11,000 |
- |
$ |
13,000 |
Cash interest expense, net |
$ |
26,000 |
- |
$ |
29,000 |
|
$ |
27,000 |
- |
$ |
29,000 |
Pro forma adjusted diluted earnings per share(1)(non-GAAP) |
$ |
1.52 |
- |
$ |
1.64 |
|
$ |
1.49 |
- |
$ |
1.57 |
_______________________ |
|
1. |
Assumes an effective pro forma tax rate of 25.0% (non-GAAP). |
With respect to the “Revised 2024 Outlook” above, reconciliations of adjusted EBITDA and pro forma 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 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 10, 2024, at 9:00 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 12:00 p.m. ET on May 10, 2024, through May 17, 2024, by dialing (877) 344-7529 and entering Confirmation Code 6854757.
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, including, but not limited to, 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 in the financial schedules of this release.
About i3 Verticals
The Company delivers seamless integrated software and services to customers in strategic vertical markets. Building on its sophisticated and diverse platform of software and services solutions, the Company creates and acquires software products to serve the specific needs of public and private organizations in its strategic verticals, including its Public Sector (including Education) and Healthcare verticals.
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 2024 financial outlook 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: the impact of our Board of Directors exploring a potential sale of our Merchant Services Business, including the risks that a definitive agreement will not be reached with respect to a potential transaction or that a potential transaction will not be consummated, potential adverse effects on the market price of our Class A common stock or on our operating results because of the failure to complete such a potential transaction, potential adverse effects of the announcement or the consummation of such potential transaction on the market price of our Class A common stock, significant transaction costs associated with such a potential transaction, and the effect of the announcement or pendency of such potential transaction on our business relationships, operating results, and business generally, among other factors; ongoing economic and geopolitical conditions, including the impact of inflation and elevated interest rates, competition in our industry and our ability to compete effectively, and regulatory developments; the successful integration of acquired businesses; 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 update in Part II, Item 1A - Risk Factors in Quarterly Reports on Form 10-Q we have filed or will file hereafter.
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.
|
|
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i3 Verticals, Inc. Consolidated Statements of Operations |
|||||||||||||||||||
(Unaudited) |
|||||||||||||||||||
($ in thousands, except share and per share amounts) |
|||||||||||||||||||
|
Three Months Ended March 31, |
|
Six Months Ended March 31, |
||||||||||||||||
|
2024 |
|
2023 |
|
% Change |
|
2024 |
|
2023 |
|
% Change |
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Revenue |
$ |
94,542 |
|
|
$ |
93,872 |
|
|
1% |
|
$ |
186,532 |
|
|
$ |
179,901 |
|
|
4% |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
||||||||
Other costs of services |
|
21,180 |
|
|
|
19,930 |
|
|
6% |
|
|
41,604 |
|
|
|
38,999 |
|
|
7% |
Selling, general and administrative |
|
54,162 |
|
|
|
57,204 |
|
|
(5)% |
|
|
107,694 |
|
|
|
108,207 |
|
|
—% |
Depreciation and amortization |
|
10,069 |
|
|
|
9,015 |
|
|
12% |
|
|
19,808 |
|
|
|
17,691 |
|
|
12% |
Change in fair value of contingent consideration |
|
(290 |
) |
|
|
2,279 |
|
|
n/m |
|
|
(527 |
) |
|
|
3,722 |
|
|
n/m |
Total operating expenses |
|
85,121 |
|
|
|
88,428 |
|
|
(4)% |
|
|
168,579 |
|
|
|
168,619 |
|
|
—% |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Income from operations |
|
9,421 |
|
|
|
5,444 |
|
|
73% |
|
|
17,953 |
|
|
|
11,282 |
|
|
59% |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Other expenses (income) |
|
|
|
|
|
|
|
|
|
|
|
||||||||
Interest expense, net |
|
7,750 |
|
|
|
6,199 |
|
|
25% |
|
|
14,457 |
|
|
|
11,689 |
|
|
24% |
Other income |
|
(2,257 |
) |
|
|
— |
|
|
n/m |
|
|
(2,150 |
) |
|
|
(203 |
) |
|
959% |
Total other expenses |
|
5,493 |
|
|
|
6,199 |
|
|
(11)% |
|
|
12,307 |
|
|
|
11,486 |
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