i3 Verticals (IIIV) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue from continuing operations was $56.0M, down 2% year-over-year, with nine-month revenue at $169.1M, up 1%.

• 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.

• Announced agreement to sell Merchant Services Business for $440M, expected to close in Q4 2024, transitioning to a pure-play vertical software and services company.

• Acquired a permitting and licensing software company for $18M in cash and stock to expand public sector offerings.

Financial highlights

• Q3 2024 recurring revenue was $45.3M, with ARR up 4% year-over-year to $181.3M; over 80% of Q3 revenue from recurring sources.

• Q3 adjusted EBITDA margin was 23%, down from 25% in Q3 2023.

• Q3 diluted net loss per share from continuing operations was $0.49; pro forma adjusted diluted EPS was $0.07.

• Cash and cash equivalents at June 30, 2024, were $9.7M; available borrowing capacity was $98.6M.

• Operating cash flow for nine months ended June 30, 2024, was $33.3M, up from $26.4M prior year.

Outlook and guidance

• FY 2024 revenue guidance: $228M–$234M; adjusted EBITDA: $56M–$60M.

• FY 2025 revenue guidance: $243M–$263M; adjusted EBITDA: $63M–$71.5M; pro forma adjusted diluted EPS: $1.05–$1.25.

• Expects high single-digit organic revenue growth and 50–100 bps annual EBITDA margin improvement starting FY 2025.

• Headwinds in 2024 totaling $12M in revenue are not expected to repeat in 2025.

• Q4 is seasonally strongest due to back-to-school; expect historical seasonality patterns.