i3 Verticals (IIIV) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue from continuing operations was $56.0M, down 2% year-over-year, mainly due to lower software license and professional services revenue, partially offset by higher recurring revenues in the Public Sector vertical.

• Adjusted EBITDA for Q3 2024 was $12.9M, down 11% year-over-year; nine-month adjusted EBITDA was $42.1M, down 4%.

• Net loss from continuing operations was $13.8M for Q3 2024, compared to $10.9M in Q3 2023; nine-month net loss improved to $20.4M from $22.4M.

• Entered into a $440M agreement to sell the Merchant Services Business, expected to close in Q4 2024, with historical results now reflected as discontinued operations.

• Acquired a permitting and licensing software company for $18M plus stock and contingent consideration to expand Public Sector offerings.

Financial highlights

• Q3 2024 revenue from continuing operations: $56.0M (down 2% year-over-year); nine months: $169.1M (up 1%).

• Q3 adjusted EBITDA margin was 23%, down from 25% in Q3 2023; nine-month margin was 25%, down from 26%.

• Annualized Recurring Revenue (ARR) grew 4% year-over-year to $181.3M, with over 80% of revenues from recurring sources.

• Pro forma adjusted diluted EPS for Q3 was $0.07, down from $0.15; nine-month pro forma adjusted EPS was $0.31, down from $0.49.

• Q3 FY24 income from operations was $(0.7)M, compared to $(4.6)M in Q3 FY23.

Outlook and guidance

• FY24 continuing operations revenue expected between $228M–$234M; adjusted EBITDA $56M–$60M.

• FY25 continuing operations revenue expected between $243M–$263M; adjusted EBITDA $63M–$71.5M; pro forma adjusted diluted EPS of $1.05–$1.25.

• Expects high single-digit organic revenue growth and annual EBITDA margin improvement of 50–100 bps starting FY25.

• Proceeds from Merchant Services sale expected to pay down debt and fund share repurchases.

• No specific forward guidance on revenue or earnings beyond FY25 was provided.