i3 Verticals, Inc. (IIIV) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call presents a mixed outlook. Positive factors include revenue growth, strong recurring revenues, and a solid cash position with no debt, alongside plans for stock repurchases and M&A. However, concerns arise from declining high-margin revenues, non-recurring revenue decrease, and vague management responses. The shift to SaaS and potential risks in Justice and utility investments add uncertainty. Overall, these elements balance out, leading to a neutral stock price prediction over the next two weeks.
Key Financial Performance
Revenue for Q4 2025 $54.9 million, a 7% increase from $51.3 million in Q4 2024. This growth reflects 4.5% organic growth and $1.3 million from acquisitions.
Recurring Revenues for Q4 2025 $41.3 million, a 9% increase from $37.8 million in Q4 2024. This growth was driven by SaaS revenues growing 25%, offsetting an 8% decline in maintenance.
Adjusted EBITDA for Q4 2025 $14.4 million, a slight decline from $14.6 million in Q4 2024. The decline was due to a decrease in high-margin nonrecurring software license sales and an increase in lower-margin professional services.
Adjusted EBITDA as a Percentage of Revenues for Q4 2025 26.2%, down from 28.5% in Q4 2024. This decline was attributed to the same factors affecting Adjusted EBITDA.
Net Dollar Retention for Fiscal 2025 104%, including payments revenue for the first time.
Cash on Hand as of September 30, 2025 $67 million, with no debt. This reflects a strong balance sheet position.
You have reached the limit. Sign up to access full content
Get started
Operating Highlights
Justice and Utility Investments: Significant investments in justice and utility markets, expected to accelerate in 2026. Example: partnership with West Virginia for court management solutions.
SaaS Revenue Growth: SaaS revenues grew 25%, offsetting an 8% decline in maintenance revenues.
Public Sector Focus: Shifted to being a pure-play software solutions provider for the public sector after divesting Merchant Services and Healthcare RCM businesses.
West Virginia Partnership: Expanded partnership with West Virginia Supreme Court to deliver i3 Court 1 case management solution, including ancillary services for efficiency and cost reduction.
Recurring Revenue Growth: Recurring revenues increased 9% in Q4 2025, representing 75% of total revenues.
Adjusted EBITDA: Adjusted EBITDA for Q4 2025 was $14.4 million, slightly down from $14.6 million in Q4 2024, due to a decline in high-margin software license sales.
Divestitures: Divested Merchant Services and Healthcare RCM businesses to focus on public sector software solutions.
M&A Strategy: Maintains a disciplined approach to acquisitions, focusing on public sector verticals for growth and innovation.
You have reached the limit. Sign up to access full content
Get started
Risk or Challenges
Revenue Growth Dependency: The company’s revenue growth is heavily reliant on recurring revenue streams, which, while stable, may limit flexibility in adapting to market changes or unexpected downturns in non-recurring revenue sources.
Non-Recurring Revenue Decline: A decline in non-recurring professional services revenue is expected in fiscal 2026, particularly in the utilities and transportation markets, which could negatively impact overall revenue performance.
Market-Specific Risks: Justice and utility investments represent a significant portion of the company’s focus, and any delays or underperformance in these areas could adversely affect financial outcomes.
Shift to SaaS Model: The ongoing shift from traditional licensing to SaaS models introduces a new budgeting paradigm for government clients, which may lead to slower adoption rates or resistance from clients unfamiliar with this model.
M&A Integration Risks: Potential acquisitions must align with the company’s operational framework, and any misalignment or integration challenges could disrupt operations or dilute financial performance.
Economic and Budgetary Constraints: Government clients, the company’s primary market, may face economic or budgetary constraints that could delay or reduce spending on modernization projects.
Seasonality and Revenue Variability: Seasonality in software license sales and professional services revenue creates variability, making it challenging to forecast and potentially distorting quarterly financial performance.
Dependence on Public Sector: The company’s focus on the public sector makes it vulnerable to changes in government policies, funding priorities, or regulatory requirements.
You have reached the limit. Sign up to access full content
Get started
Guidance & Outlook
ARR Growth Expectations: ARR is expected to grow at similar rates in 2026 as in 2025, with a focus on durable recurring revenue growth.
Revenue Guidance for FY 2026: Revenues are projected to be between $217 million and $232 million.
Adjusted EBITDA Guidance for FY 2026: Adjusted EBITDA is expected to range from $58.5 million to $65 million.
Recurring Revenue Growth: Recurring revenues are expected to grow at a rate of 8% to 10% in fiscal 2026.
Nonrecurring Professional Services Revenue: A decline is expected in nonrecurring professional services revenue in fiscal 2026, particularly in Q1, due to the cadence of revenue recognition in utilities and transportation markets. However, these markets are expected to rebound in fiscal 2027 and beyond.
Long-term Organic Revenue Growth: The company maintains a long-term expectation of high single-digit organic revenue growth.
Market Trends and Opportunities: Governments are prioritizing modernization of legacy systems, enhanced user experience, and improved transparency, creating opportunities for i3 Verticals to provide bundled solutions and address modernization gaps.
West Virginia Supreme Court Partnership: The company has expanded its partnership with the West Virginia Supreme Court to deliver a case management solution, which includes ancillary value-added services to improve efficiency and offset project costs.
M&A Strategy: The company plans to use its cash and borrowing capacity for acquisitions and opportunistic stock repurchases, focusing on targets that align with its public sector vertical and strategic goals.
You have reached the limit. Sign up to access full content
Get started
Shareholder Return Plan
Stock Repurchases: We intend to use the cash and any borrowings for acquisitions and opportunistic stock repurchases.
You have reached the limit. Sign up to access full content
Get started
Key Q&A
Q:What is the '26 organic growth outlook and the expected performance of professional services?
A:The '26 organic growth outlook is about 5%. The company is focusing on recurring revenue, such as SaaS, over professional services. Professional services are expected to decline in 2026 due to timing and cadence of performance obligations, with some revenue shifting to the back end of 2026 or into 2027. However, this is not seen as a long-term trend.
Q:What was the dollar retention for the year, and how much of it was due to price increases?
A:The dollar retention for the year was 104. Historically, price increases contributed about 1% to retention, but this is expected to increase incrementally by 1% per year. For 2026, price increases are expected to contribute in the range of 1.5% to 3%.
Q:What were the Justice Tech investments in the quarter, and what is expected for 2026?
A:Justice Tech investments primarily involved hiring personnel to accelerate development and implementation of the core package. The costs were in line with expectations for Q4 and are expected to remain elevated into 2026.
Q:How is the company planning to allocate its $85 million cash balance between buybacks and M&A?
A:The company has refreshed its buyback approval to $50 million and plans to be opportunistic with buybacks. For M&A, the company expects to pursue meaningful deals in 2026, focusing on tuck-in acquisitions in the $2 million to $5 million EBITDA range, with potential to go slightly above that.
Q:What type of M&A deals does the company plan to pursue in 2026?
A:The company plans to pursue tuck-in acquisitions in the $2 million to $5 million EBITDA range, paying around 10x EBITDA. These deals are not transformative but are larger than the small, immaterial ones done in the past.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on the expected year-over-year decline in professional services revenue, using vague language about timing and cadence. Additionally, while they mentioned being opportunistic with buybacks and pursuing meaningful M&A deals, they did not provide concrete timelines or specific targets for these activities.
You have reached the limit. Sign up to access full content
Get started
Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
ARR rate
ARR step
Chairman CEO
Justice
Merchant Services
RCM
Revenues
SaaS
Verticals
West Virginia
administration
borrowing
cadence
court
decline
detail
discussion
dollar retention
health care
license sale
line item
payment dollar
point improvement
project
replay
revenue
sale software
seasonality
sector
service
software license
term expectation
utility transportation
IIIV Transcript
i3 Verticals, Inc. (IIIV) Q2 2026 Earnings Call Transcript
Positive5-8
The earnings call highlights strong financial performance with a 20% revenue increase and improved EBITDA and net income, indicating operational efficiency. Despite the lack of strategic discussions, the financials suggest a positive outlook. The absence of concerning Q&A responses further supports a positive sentiment.
i3 Verticals, Inc. (IIIV) Presents at Morgan Stanley Technology, Media & Telecom Conference 2026 Transcript
Neutral3-3
i3 Verticals, Inc. (IIIV) Q1 2026 Earnings Call Transcript
Unknown2-6
The earnings call presents a mixed picture: strong SaaS revenue growth and a strategic acquisition are positive, but declining nonrecurring revenue and increased costs are concerns. The Q&A reveals uncertainties in organic growth and AI adoption. Despite some positive factors, like opportunistic buybacks and recurring revenue growth, the market may react cautiously due to high acquisition costs and lower EBITDA margins. These mixed signals suggest a neutral stock price movement in the short term.
i3 Verticals, Inc. (IIIV) Q4 2025 Earnings Call Transcript
Unknown11-18
The earnings call presents a mixed outlook. Positive factors include revenue growth, strong recurring revenues, and a solid cash position with no debt, alongside plans for stock repurchases and M&A. However, concerns arise from declining high-margin revenues, non-recurring revenue decrease, and vague management responses. The shift to SaaS and potential risks in Justice and utility investments add uncertainty. Overall, these elements balance out, leading to a neutral stock price prediction over the next two weeks.
IIIV Slides
IIIV Report
Frequently Asked Questions
Where does this earnings call transcript come from?
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
How soon is the transcript available after the earnings call ends?
Full verbatim transcripts are typically published within 4–12 hours after the call ends. Same-day availability is guaranteed for all S&P 500 and most mid-cap companies.
Is the transcript edited or altered in any way?
No material content is ever changed or summarized in the “Full Transcript” section. We only correct obvious spoken typos (e.g., “um”, “ah”, repeated 10 times”, or clear misspoken ticker symbols) and add speaker names/titles for readability. Every substantive sentence remains 100% as spoken.
Why do some answers appear as “Unclear” or “Inaudible”?
When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.
Who creates the AI Summary and Key Q&A highlights shown above the transcript?
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
