i3 Verticals (IIIV) Q2 2026 earnings summary

Executive summary

• Revenue from continuing operations grew 6.2% year-over-year to $57.5 million for Q2 FY2026, driven by recurring revenue growth and supported by strategic investments and AI-powered enhancements.

• Net income attributable to common stockholders was $1.5 million for the quarter, up from $1.0 million in the prior year period.

• The company completed the divestiture of its Healthcare RCM and Merchant Services businesses, with proceeds of $96.3 million and $439.5 million, respectively; results are now reflected as discontinued operations.

• A significant acquisition in the transportation market was completed for $60 million in cash plus contingent consideration, expanding the public sector software portfolio.

• Strategic investments in JusticeTech, efficiency initiatives, and AI-powered product enhancements are positioning the company for future growth.

Financial highlights

• Q2 2026 revenues increased 6.2% to $57.5 million, with recurring revenues up 12% to $45.9 million and ARR reaching $183.5 million; non-recurring revenue declined 11% year-over-year.

• SaaS revenues grew 37% to $12.7 million, transaction-based revenue up 7% to $22.4 million; 80% of Q2 revenues were recurring.

• Adjusted EBITDA increased 5% to $16.6 million, with margin at 28.8% (down from 29.3%); adjusted diluted EPS up 10% to $0.32.

• Net income from continuing operations was $2.2 million, down 5.6% year-over-year; adjusted net income was $9.7 million.

• Debt at quarter end was $81 million, cash $7.1 million, and $319 million in borrowing capacity remains.

Outlook and guidance

• FY 2026 guidance: revenue $221–229 million, adjusted EBITDA $61–65 million, adjusted diluted EPS $1.09–1.15; guidance revised downward from previous estimates.

• Recurring revenues expected to grow at double-digit rates, while non-recurring professional services outlook has deteriorated, lowering revenue midpoint.

• Margin strength anticipated in the second half of FY 2026, with better growth expected in 2027 and beyond.

• Liquidity remains strong with $7.1 million in cash and $319 million available under the credit facility.

• Revenue distribution for Q3/Q4 expected at 48%/52%.