i3 Verticals (IIIV) Morgan Stanley Technology, Media & Telecom Conference 2026 summary

Company overview and market focus

• Now operates as a pure-play public sector software provider in five markets: justice, transportation, utilities, public administration, and education, with over 80% recurring revenues, mainly from SaaS, maintenance, and transactional revenues.

• Justice is the largest and fastest-growing market, with significant recent wins such as the state of West Virginia, expected to become the largest project over the next five years.

• Education has delivered steady double-digit EBITDA growth since 2014, while utilities are currently weaker but expected to rebound in 2027 and beyond.

• The company is moving upmarket, increasingly participating in larger RFPs, which can be slower but offer larger rewards.

Competitive landscape and M&A strategy

• Main public competitor is Tyler Technologies, with overlap in justice and utilities but serving different tiers and product focuses in other markets.

• M&A strategy is focused on founder-led, cloud-based SaaS businesses within the five core markets, with a preference for recurring revenues and strong margins.

• Three acquisitions in the past two years, all cloud-based SaaS, with integration speed depending on tech stack compatibility.

• Recent acquisition of a leading driver and motor vehicle insurance verification software company expands presence to about 20 states, with strong cross-sell opportunities in payments and printing.

• Acquired assets are expected to grow over 20% annually for several years, with margins around 50%.

Revenue mix, growth drivers, and financial performance

• 80% of revenues are recurring, split between software (including SaaS and maintenance) and transactional revenues (including payments), with SaaS currently growing faster.

• SaaS ARR grew 24% in fiscal Q1 2026, driven by new logos, acquisitions, and inflationary price increases; net revenue retention is 104%.

• Professional services and perpetual license sales make up the remaining 20%, with fluctuations tied to customer preferences, especially in utilities.

• Adjusted EBITDA margin was 25.8% in Q1 2026, down year-over-year due to investments in justice and utilities, higher hosting costs, and a decline in professional services revenue.

• Long-term margin expansion target of 50-100 basis points per year remains intact, supported by high-margin acquisitions and headcount adjustments.