Company Reaffirms 2025 Outlook
i3 Verticals, Inc. (Nasdaq: IIIV) (“i3 Verticals” or the
“Company”) today reported its financial results for the fiscal
fourth quarter and year ended September 30, 2024.
Highlights from continuing operations1 for the fiscal fourth
quarter and full fiscal year of 2024 vs. 2023
- Fourth quarter revenue from continuing operations was $60.9
million, an increase of 3.9% over the prior year's fourth quarter;
full year revenue from continuing operations was $229.9 million, an
increase of 1.4% over the prior year.
- Fourth quarter net income from continuing operations was $7.0
million, compared to a net loss from continuing operations of $1.2
million in the prior year's fourth quarter. Net loss from
continuing operations for the year ended September 30, 2024, was
$13.3 million, compared to a net loss from continuing operations of
$23.7 million for the year ended September 30, 2023.
- Fourth quarter net income from continuing operations
attributable to i3 Verticals, Inc. was $11.2 million, compared to
net income from continuing operations attributable to i3 Verticals,
Inc. of $1.3 million in the prior year's quarter; full year net
loss from continuing operations attributable to i3 Verticals, Inc.
was $5.3 million, compared to a net loss from continuing operations
attributable to i3 Verticals, Inc. of $15.5 million for the year
ended September 30, 2023.
- Fourth quarter adjusted EBITDA from continuing operations2 was
$16.2 million, an increase of 3.5% over the prior year's fourth
quarter. Adjusted EBITDA from continuing operations2 for the year
ended September 30, 2024, was $58.3 million, a decrease of 1.8%
over the prior year.
- Adjusted EBITDA from continuing operations2 as a percentage of
revenue was 26.7% for the three months ended September 30, 2024,
compared to 26.8% for the three months ended September 30, 2023,
respectively. Adjusted EBITDA from continuing operations2 as a
percentage of revenue was 25.4% for the year ended September 30,
2024, compared to 26.2% for the year ended September 30, 2023.
- Fourth quarter diluted net income per share attributable to
Class A common stock from continuing operations was $0.23, compared
to a diluted net loss per share of $0.02 in the prior year's fourth
quarter; full year diluted net loss per share attributable to Class
A common stock from continuing operations was $0.34, compared to a
diluted net loss per share of $0.67 in the prior year.
- For the fourth quarter and year ended September 30, 2024, pro
forma adjusted diluted earnings per share from continuing
operations2, which gives pro forma effect to the Company's tax
rate, was $0.15 and $0.46, respectively, compared to $0.16 and
$0.65 for the fourth quarter and year ended September 30, 2023,
respectively.
- Diluted net income per share attributable to Class A common
stock from continuing operations and pro forma adjusted diluted
earnings per share from continuing operations both exclude
discontinued operations but include the consolidated cash interest
expense. Cash interest expense for the three months and year ended
September 30, 2024, was $6.7 million and $28.1 million,
respectively. The Company's pro forma weighted average shares of
adjusted diluted Class A common stock outstanding for the three
months and year ended September 30, 2024, was 34,169,684 and
33,879,163, respectively. The fully diluted per share impact,
adjusted for pro forma income tax expense at 25%, of cash interest
expense for the three months and year ended September 30, 2024, was
$0.15 and $0.62, respectively.
- Annualized Recurring Revenue ("ARR")3 from continuing
operations for the fourth quarter of 2024 and 2023 was $188.2
million and $175.1 million, respectively, representing a
period-to-period growth rate of 7.5%.
See footnotes on the following page.
1.
As a result of the sale of the Company’s
merchant services business, which was completed on September 20,
2024, the historical results of i3 Verticals' merchant services
business have been reflected in discontinued operations in the
consolidated statement of operations included in this earnings
release, and continuing operations reflect the Company's remaining
operations after giving effect to such classification. Prior period
results have been recast to reflect this presentation.
2.
Represents a non-GAAP financial measure.
For additional information (including reconciliation information),
see the attached schedules to this release.
3.
Annualized Recurring Revenue ("ARR") is
the annualized revenue derived from software-as-a-service (“SaaS”)
arrangements, transaction-based software-revenue, software
maintenance, recurring software-based services, payments revenue
and other recurring revenue sources within the quarter. This
excludes contracts that are not recurring or are one-time in
nature. The Company focuses on ARR because it helps i3 Verticals to
assess the health and trajectory of the business. ARR does not have
a standardized definition and is therefore unlikely to be
comparable to similarly titled measures presented by other
companies. It should be reviewed independently of revenue and it is
not a forecast. Additionally, ARR does not take into account
seasonality. The active contracts at the end of a reporting period
used in calculating ARR may or may not be extended or renewed by
our customers.
Greg Daily, Chairman and Chief Executive Officer of i3
Verticals, commented, "We are pleased to report our earnings for
the fourth quarter of fiscal 2024. Our results for the year reflect
a culmination of what has been a significant transition for our
business. We are now a streamlined and scaled vertical market
software provider. We have also de-levered and are ready to
capitalize on multiple growth opportunities in 2025.
“i3 Verticals has an excellent financial profile and we expect
revenue growth and margin expansion to accelerate in the next
fiscal year. We remain focused on growing recurring revenue, which
improved by 7.5% this quarter. Looking ahead we expect to achieve
high-single digits organic revenue growth in fiscal 2025 and
increase our margins by more than 100 bps.
"Finally, I want to welcome Chad Fenner, our new Chief Product
Officer. Chad has more than two decades of experience driving
growth through product development and management. We are excited
to have him on our team to help us bring the best possible products
to market.”
2025 Outlook
The Company's practice is to provide annual guidance, excluding
the impact of future acquisitions, dispositions and
transaction-related costs.
The Company is providing the following outlook for the fiscal
year ending September 30, 2025, which remains unchanged from the
previous guidance included in the Company's earnings release issued
on August 8, 2024:
(in thousands, except share and per share
amounts)
Outlook Range
Fiscal year ending September 30,
2025
Revenue
$
243,000
-
$
263,000
Adjusted EBITDA (non-GAAP)
$
63,000
-
$
71,500
Depreciation and internally developed
software amortization
$
12,000
-
$
14,000
Cash interest expense
$
1,000
-
$
2,000
Pro forma adjusted diluted earnings per
share(1)(non-GAAP)
$
1.05
-
$
1.25
________________ 1.
Assumes an effective pro forma tax rate of
25.0% (non-GAAP).
With respect to the “2025 Outlook” above, reconciliations of
adjusted EBITDA, pro forma adjusted diluted earnings per share and
adjusted diluted earnings per share guidance to the most comparable
GAAP measures on a forward-looking basis are not available without
unreasonable efforts. This inability results from the inherent
difficulty in forecasting generally and quantifying certain
projected amounts that are necessary for such reconciliations. In
particular, sufficient information is not available to calculate
certain adjustments required for such reconciliations, including
changes in the fair value of contingent consideration, income tax
expense of i3 Verticals, Inc. and equity-based compensation
expense. The Company expects these adjustments may have a
potentially significant impact on future GAAP financial
results.
Change in Segments
As noted above, the Company completed the sale of its merchant
services business on September 20, 2024. As a result, the
historical results of the merchant services business have been
reflected in discontinued operations in the Company's consolidated
financial statements, and the Company no longer presents a merchant
services segment. After giving effect to these developments, the
Company has two reportable segments, Public Sector and Healthcare.
See below under “i3 Verticals, Inc. Segment Summary” for financial
information for our reportable segments for the periods
presented.
Conference Call
The Company will host a conference call on Tuesday, November 19,
2024, at 8:30 a.m. ET, to discuss financial results and operations.
To listen to the call live via telephone, participants should dial
(844) 887-9399 approximately 10 minutes prior to the start of the
call. A telephonic replay will be available from 11:30 a.m. ET on
November 19, 2024, through November 26, 2024, by dialing (877)
344-7529 and entering Confirmation Code 4184020.
To listen to the call live via webcast, participants should
visit the “Investors” section of the Company’s website,
www.i3verticals.com, and go to the “Events” page approximately 10
minutes prior to the start of the call. The online replay will be
available on this page of the Company’s website beginning shortly
after the conclusion of the call and will remain available for 30
days.
Non-GAAP Measures
This press release contains information prepared in conformity
with GAAP as well as non-GAAP information. It is management’s
intent to provide non-GAAP financial information to enhance
understanding of the Company's consolidated financial information
as prepared in accordance with GAAP. This non-GAAP information
should be considered by the reader in addition to, but not instead
of, the financial statements prepared in accordance with GAAP. Each
non-GAAP financial measure and the most directly comparable GAAP
financial measure are presented for historical periods so as not to
imply that more emphasis should be placed on the non-GAAP measure.
The non-GAAP financial information presented may be determined or
calculated differently by other companies.
Additional information about non-GAAP financial measures,
including, but not limited to, pro forma adjusted net income from
continuing operations, adjusted EBITDA from continuing operations
and pro forma adjusted diluted EPS from continuing operations, and
a reconciliation of those measures to the most directly comparable
GAAP measures is included in the financial schedules of this
release.
About i3 Verticals
The Company delivers seamless integrated software to customers
in strategic vertical markets. Building on its sophisticated and
diverse platform of software and services solutions, the Company
creates and acquires software products to serve the specific needs
of public and private organizations in its strategic verticals,
including its Public Sector and Healthcare verticals.
Forward-Looking Statements
This release contains forward-looking statements that are
subject to risks and uncertainties. All statements other than
statements of historical fact or relating to present facts or
current conditions included in this release are forward-looking
statements, including any statements regarding the Company's fiscal
2025 financial outlook and statements of a general economic or
industry specific nature. Forward-looking statements give the
Company's current expectations and projections relating to its
financial condition, results of operations, guidance, plans,
objectives, future performance and business. You can identify
forward-looking statements by the fact that they do not relate
strictly to historical or current facts. These statements may
include words such as “anticipate,” “estimate,” “expect,”
“project,” “plan,” “intend,” “believe,” “may,” “will,” “should,”
“could have,” “exceed,” “significantly,” “likely” and other words
and terms of similar meaning in connection with any discussion of
the timing or nature of future operating or financial performance
or other events.
The forward-looking statements contained in this release are
based on assumptions that we have made in light of the Company's
industry experience and its perceptions of historical trends,
current conditions, expected future developments and other factors
we believe are appropriate under the circumstances. As you review
and consider information presented herein, you should understand
that these statements are not guarantees of future performance or
results. They depend upon future events and are subject to risks,
uncertainties (many of which are beyond the Company's control) and
assumptions. Factors that could cause actual results to differ from
those expressed or implied by our forward-looking statements
include, among other things: ongoing and future economic and
geopolitical conditions, including the impact of inflation and
elevated interest rates, competition in our industry and our
ability to compete effectively, regulatory developments, the
successful integration of acquired businesses, our ability to
execute on our strategy and achieve our goals following the
completion of the sale of our merchant services business, and
future decisions made by us and our competitors. All of these
factors are difficult or impossible to predict accurately and many
of them are beyond our control. For a further list and description
of these and other important risks and uncertainties that may
affect our future operations, see Part I, Item 1A - Risk Factors in
our most recent Annual Report on Form 10-K filed with the
Securities and Exchange Commission, which we have updated in Part
II, Item 1A - Risk Factors in Quarterly Reports on Form 10-Q we
have filed thereafter, and the risks and uncertainties identified
in other filings filed with the Securities and Exchange Commission
from time to time.
Any forward-looking statement made by us in this release speaks
only as of the date of this release and we undertake no obligation
to publicly update any forward-looking statement, whether as a
result of new information, future developments or otherwise, except
as may be required by law.
i3 Verticals, Inc.
Consolidated Statements of Operations
($ in thousands, except share and
per share amounts)
(Unaudited)
Three months ended September
30,
Year ended September
30,
2024
2023
% Change
2024
2023
% Change
Revenue
$
60,864
$
58,584
4
%
$
229,923
$
226,722
1
%
Operating expenses
Other costs of services
5,033
4,083
23
%
18,573
15,355
21
%
Selling, general and administrative
44,842
45,221
(1
)%
176,390
177,731
(1
)%
Depreciation and amortization
7,580
7,149
6
%
28,796
26,438
9
%
Change in fair value of contingent
consideration
(145
)
876
n/m
(690
)
10,767
n/m
Total operating expenses
57,310
57,329
—
%
223,069
230,291
(3
)%
Income (loss) from operations
3,554
1,255
n/m
6,854
(3,569
)
n/m
Other expenses
Interest expense, net
6,956
6,714
4
%
29,263
25,128
16
%
Other income
(1,245
)
(929
)
n/m
(3,395
)
(1,224
)
n/m
Total other expenses
5,711
5,785
(1
)%
25,868
23,904
8
%
Loss before income taxes
(2,157
)
(4,530
)
(52
)%
(19,014
)
(27,473
)
(31
)%
Benefit from income taxes
(9,175
)
(3,288
)
n/m
(5,668
)
(3,788
)
n/m
Net income (loss) from continuing
operations
7,018
(1,242
)
(13,346
)
(23,685
)
Income from discontinued operations, net
of income taxes
171,526
4,691
188,476
21,033
Net income (loss)
178,544
3,449
n/m
175,130
(2,652
)
n/m
Net loss from continuing operations
attributable to non-controlling interest
(4,134
)
(2,506
)
(8,078
)
(8,208
)
Net income from discontinued operations
attributable to non-controlling interest
64,768
1,407
69,867
6,367
Net income (loss) attributable to
non-controlling interest
60,634
(1,099
)
n/m
61,789
(1,841
)
n/m
Net income (loss) from continuing
operations attributable to i3 Verticals, Inc.
11,152
1,264
(5,268
)
(15,477
)
Net income from discontinued operations
attributable to i3 Verticals, Inc.
106,758
3,284
118,609
14,666
Net income (loss) attributable to i3
Verticals
$
117,910
$
4,548
n/m
$
113,341
$
(811
)
n/m
Net income (loss) per share attributable
to Class A common stockholders from continuing operations:
Basic
$
0.47
$
0.05
$
(0.22
)
$
(0.67
)
Diluted
$
0.23
$
(0.02
)
$
(0.34
)
$
(0.67
)
Net income per share attributable to Class
A common stockholders from discontinued operations:
Basic
$
4.51
$
0.14
$
5.06
$
0.63
Diluted
$
4.42
$
0.13
$
4.98
$
0.57
Weighted average shares of Class A common
stock outstanding:
Basic, for continuing operations
23,657,149
23,236,620
23,419,421
23,137,586
Diluted, for continuing operations
34,169,684
34,011,302
33,486,820
23,137,586
Basic, for discontinued operations
23,657,149
23,236,620
23,419,421
23,137,586
Diluted, for discontinued operations
24,137,008
34,011,302
23,811,764
33,970,731
n/m = not meaningful
i3 Verticals, Inc. Segment
Summary from Continuing Operations
(Unaudited)
($ in thousands)
For the Three Months Ended
September 30, 2024
Public Sector
Healthcare
Other
Total
Revenue
$
49,603
$
11,399
$
(138
)
$
60,864
Other costs of services
4,370
799
(136
)
5,033
Recurring cash SG&A expenses(1)
25,034
8,441
6,123
39,598
Adjusted EBITDA(2)
$
20,199
$
2,159
$
(6,125
)
$
16,233
Adjusted EBITDA Margin(2)
41
%
19
%
n/m
27
%
Income (loss) from operations
$
14,268
$
1,172
$
(11,886
)
$
3,554
For the Year Ended September
30, 2024
Public Sector
Healthcare
Other
Total
Revenue
$
184,841
$
45,566
$
(484
)
$
229,923
Other costs of services
16,125
2,932
(484
)
18,573
Recurring cash SG&A expenses(1)
95,500
33,622
23,920
153,042
Adjusted EBITDA(2)
$
73,216
$
9,012
$
(23,920
)
$
58,308
Adjusted EBITDA Margin(2)
40
%
20
%
n/m
25
%
Income (loss) from operations
$
49,712
$
5,821
$
(48,679
)
$
6,854
For the Three Months Ended
September 30, 2023
Public Sector
Healthcare
Other
Total
Revenue
$
46,895
$
11,714
$
(25
)
$
58,584
Other costs of services
3,388
718
(23
)
4,083
Recurring cash SG&A expenses(1)
24,490
8,726
5,603
38,819
Adjusted EBITDA(2)
$
19,017
$
2,270
$
(5,605
)
$
15,682
Adjusted EBITDA Margin(2)
41
%
19
%
n/m
27
%
Income (loss) from operations
$
12,182
$
1,491
$
(12,418
)
$
1,255
For the Year Ended September
30, 2023
Public Sector
Healthcare
Other
Total
Revenue
$
182,214
$
44,583
$
(75
)
$
226,722
Other costs of services
13,326
2,103
(74
)
15,355
Recurring cash SG&A expenses(1)
95,397
33,242
23,329
151,968
Adjusted EBITDA(2)
$
73,491
$
9,238
$
(23,330
)
$
59,399
Adjusted EBITDA Margin(2)
40
%
21
%
n/m
26
%
Income (loss) from operations
$
41,987
$
4,770
$
(50,326
)
$
(3,569
)
________________ 1.
Recurring cash SG&A expenses
represents the following items; payroll, fringe, third-party labor,
capitalized development, commissions, rent, travel &
entertainment, office, connectivity, SaaS & hosting, tech
services, professional services, advertising, and other operating
expenses.
2.
Adjusted EBITDA and Adjusted EBITDA margin
as presented at a segment level are measures reported to our
management for purposes of making decisions about allocating
resources to our business segments and assessing the performance of
our business segments, and these measures will be presented in our
financial statement footnotes in accordance with ASC 280, beginning
with the Company’s annual report on Form 10-K to be filed for the
fiscal year ending September 30, 2024. Adjusted EBITDA margin
represents adjusted EBITDA as a percentage of revenue. Adjusted
EBITDA and Adjusted EBITDA margin, as presented on a consolidated
basis, are non-GAAP financial measures. For additional information
regarding these non-GAAP financial measures, including
reconciliations of consolidated Adjusted EBITDA to the most
comparable GAAP measure, see below under "Reconciliation of GAAP to
Non-GAAP Financial Measures."
i3 Verticals, Inc.
Consolidated Balance Sheets
($ in thousands, except share and
per share amounts)
(Unaudited)
September 30,
September 30,
2024
2023
Assets
Current assets
Cash and cash equivalents
$
86,541
$
3,105
Accounts receivable, net
55,988
50,785
Settlement assets
632
4,873
Prepaid expenses and other current
assets
10,232
9,512
Current assets held for sale
—
17,269
Total current assets
153,393
85,544
Property and equipment, net
8,677
10,059
Restricted cash
2,424
4,215
Capitalized software, net
58,592
58,057
Goodwill
280,678
267,983
Intangible assets, net
162,816
163,149
Deferred tax asset
48,445
52,514
Operating lease right-of-use assets
8,954
11,815
Other assets(1)
6,696
11,727
Long-term assets held for sale
—
219,354
Total assets
$
730,675
$
884,417
Liabilities and equity
Liabilities
Current liabilities
Accounts payable
$
5,370
$
6,369
Current portion of long-term debt
26,223
—
Accrued expenses and other current
liabilities
89,972
33,580
Settlement obligations
632
4,873
Deferred revenue
39,029
32,785
Current portion of operating lease
liabilities
3,505
3,657
Current liabilities held for sale
—
12,197
Total current liabilities
164,731
93,461
Long-term debt, less current portion and
debt issuance costs, net(1)
—
388,005
Long-term tax receivable agreement
obligations
29,347
40,079
Operating lease liabilities, less current
portion
6,317
8,968
Other long-term liabilities
14,921
23,078
Long-term liabilities held for sale
—
2,530
Total liabilities
215,316
556,121
Commitments and contingencies
Stockholders' equity
Preferred stock, par value $0.0001 per
share, 10,000,000 shares authorized; 0 shares issued and
outstanding as of September 30, 2024 and 2023
—
—
Class A common stock, par value $0.0001
per share, 150,000,000 shares authorized; 23,882,035 and 23,253,272
shares issued and outstanding as of September 30, 2024 and 2023,
respectively
2
2
Class B common stock, par value $0.0001
per share, 40,000,000 shares authorized; 10,032,676 and 10,093,394
shares issued and outstanding as of September 30, 2024 and 2023,
respectively
1
1
Additional paid-in-capital
279,335
249,688
Accumulated earnings (deficit)
100,397
(12,944
)
Total stockholders' equity
379,735
236,747
Non-controlling interest
135,624
91,549
Total equity
515,359
328,296
Total liabilities and equity
$
730,675
$
884,417
See footnotes on the following page.
________________ 1.
During the fourth quarter of 2024, the
Company elected to change its presentation of debt issuance costs
associated with the revolver pursuant to the 2023 Senior Secured
Credit Facility to an asset rather than a reduction in the related
liability as the previously drawn amounts on the 2023 Senior
Secured Credit Facility were repaid upon the closing of the sale of
the Merchant Services Business. As of September 30, 2023, $2,924
was reclassified from a reduction in "Long-term debt, less current
portion and debt issuance costs, net" to "Other assets" to conform
to the current period presentation.
i3 Verticals, Inc.
Consolidated Cash Flow Data
($ in thousands)
(Unaudited)
Year ended September
30,
2024
2023
Net cash provided by operating
activities
$
48,409
$
37,170
Net cash provided by (used in) investing
activities
$
396,150
$
(121,520
)
Net cash (used in) provided by financing
activities
$
(367,362
)
$
72,985
Reconciliation of GAAP to Non-GAAP Financial Measures
The Company discloses adjusted EBITDA from continuing
operations, pro forma adjusted net income from continuing
operations and pro forma adjusted diluted EPS from continuing
operations because the Company believes that these non-GAAP
financial measures provide useful information to investors in
understanding and evaluating the Company's ongoing operating
results. Accordingly, the Company discloses these non-GAAP
financial measures when reporting its financial results to
stockholders and potential investors in order to provide them with
an additional tool to evaluate the Company’s ongoing business
operations. The Company believes that these non-GAAP financial
measures are representative of comparative financial performance
that reflects the economic substance of the Company’s current and
ongoing business operations.
Although these non-GAAP financial measures assist in measuring
the Company's financial results and assessing its financial
performance, they are not necessarily comparable to similarly
titled measures of other companies due to potential inconsistencies
in the method of calculation. The Company believes that the
disclosure of these non-GAAP financial measures provides investors
with important key financial performance indicators that are
utilized by management to assess the Company's financial results,
evaluate the Company's business and make operational decisions on a
prospective, going-forward basis. Hence, management provides
disclosure of these non-GAAP financial measures to give
stockholders and potential investors an opportunity to see the
Company as viewed by management, to assess the Company with some of
the same tools that management utilizes internally and to be able
to compare such information with prior periods. The Company
believes that disclosure of these non-GAAP financial measures
provides investors with additional information to help them better
understand its financial statements just as management utilizes
these non-GAAP financial measures to better understand the
business, manage budgets and allocate resources.
i3 Verticals, Inc.
Reconciliation of GAAP Net Income from Continuing Operations to
Non-GAAP Pro Forma Adjusted Net Income from Continuing Operations
and Non-GAAP Adjusted EBITDA from Continuing Operations
(Unaudited)
($ in thousands)
Three Months Ended
September 30,
Year Ended
September 30,
2024
2023
2024
2023
Net income (loss) from
continuing operations attributable to i3 Verticals, Inc.
$
11,152
$
1,264
$
(5,268
)
$
(15,477
)
Net loss from continuing operations
attributable to non-controlling interests
(4,134
)
(2,506
)
(8,078
)
(8,208
)
Net income (loss) from continuing
operations
7,018
(1,242
)
(13,346
)
(23,685
)
Non-GAAP Adjustments:
Benefit from income taxes
(9,175
)
(3,288
)
(5,668
)
(3,788
)
Non-cash change in fair value of
contingent consideration(1)
(145
)
876
(690
)
10,767
Equity-based compensation from continuing
operations(2)
3,367
5,939
18,178
23,723
M&A-related expenses(3)
272
28
3,161
1,140
Acquisition intangible amortization(4)
4,853
5,077
19,327
19,733
Non-cash interest expense(5)
278
405
1,175
1,717
Other taxes(6)
1,605
435
2,009
900
Other income related to adjustments of
liabilities under tax receivable agreement(7)
(1,245
)
(929
)
(1,245
)
(929
)
Net gain on exchangeable note repurchases
and related transactions(8)
—
—
(2,257
)
—
Gain on investment(9)
—
—
—
(295
)
Loss on disposal of property and
equipment(10)
—
—
107
—
Non-GAAP pro forma adjusted income
before taxes from continuing operations(11)
6,828
7,301
20,751
29,283
Pro forma taxes at effective tax
rate(12)
(1,707
)
(1,824
)
(5,188
)
(7,320
)
Pro forma adjusted net income from
continuing operations(13)
$
5,121
$
5,477
$
15,563
$
21,963
Cash interest expense, net(14)
6,678
6,309
28,088
23,411
Pro forma taxes at effective tax
rate(12)
1,707
1,824
5,188
7,320
Depreciation and internally developed
software amortization(15)
2,727
2,072
9,469
6,705
Adjusted EBITDA from continuing
operations(11)
$
16,233
$
15,682
$
58,308
$
59,399
See footnotes on the following page.
________________________
1.
Non-cash change in fair value of
contingent consideration reflects the changes in management’s
estimates of future cash consideration to be paid in connection
with prior acquisitions from the amount estimated as of the later
of the most recent balance sheet date forming the beginning of the
income statement period or the original estimates made at the
closing of the applicable acquisition.
2.
Equity-based compensation expense related
to stock options and restricted stock units issued under the
Company's 2018 Equity Incentive Plan and 2020 Acquisition Equity
Incentive Plan.
3.
M&A-related expenses are the
professional service and related costs directly related to any
merger, acquisition and disposition activity of the Company.
M&A-related expenses also include financing costs related to
the administration of the Company's exchangeable notes. The Company
believes these expenses are not reflective of the underlying
operational performance of the Company.
4.
Acquisition intangible amortization
reflects amortization of intangible assets and software acquired
through business combinations, acquired customer portfolios,
acquired referral agreements and related asset acquisitions.
5.
Non-cash interest expense reflects
amortization of debt discount and debt issuance costs and any
write-offs of debt issuance costs.
6.
Other taxes consist of franchise taxes,
commercial activity taxes, reserves for ongoing tax audit matters,
the employer portion of payroll taxes related to stock option
exercises and other non-income based taxes. Taxes related to
salaries are not included.
7.
Under our Tax Receivable Agreement we have
a liability equal to 85% of certain deferred tax assets resulting
from an increase in the tax basis of our investment in i3
Verticals, LLC. Other expenses related to adjustments of
liabilities under our Tax Receivable Agreement relate to the
remeasurement of the underlying deferred tax asset for changes in
estimated income tax rates.
8.
Net gain on exchangeable note repurchases
and related transactions reflects the gain on repurchases of
exchangeable notes and warrant unwinds, net of the loss on sale of
bond hedge unwinds, which occurred during the year ended September
30, 2024.
9.
Gain on investment, which the Company
recognizes in other income, reflects contingent consideration
received during the year ended September 30, 2023 for an investment
that was sold in a prior year.
10.
Loss on disposal of property and equipment
is related to the sale of a building purchased through an
acquisition.
11.
Represents a non-GAAP financial
measure.
12.
Pro forma corporate income tax expense is
based on Non-GAAP adjusted income before taxes from continuing
operations and is calculated using tax rates of 25.0% for 2024 and
2023, based on blended federal and state tax rates.
13.
Pro forma adjusted net income from
continuing operations represents a non-GAAP financial measure, and
assumes that all net income during the period is available to the
holders of the Company’s Class A common stock.
14.
Cash interest expense, net, represents all
interest expense net of interest income recorded on the Company's
statement of operations other than non-cash interest expense, which
represents amortization of debt discount and debt issuance costs
and any write-offs of debt issuance costs.
15.
Depreciation and internally developed
software amortization reflects depreciation on the Company's
property, plant and equipment, net, and amortization expense on its
internally developed capitalized software.
i3 Verticals, Inc. GAAP
Diluted EPS from Continuing Operations and Non-GAAP Pro Forma
Adjusted Diluted EPS from Continuing Operations
(Unaudited)
($ in thousands, except share and
per share amounts)
Three months ended September
30,
Year ended September
30,
2024
2023
2024
2023
Diluted net income (loss) attributable to
Class A common stock per share from continuing operations
$
0.23
$
(0.02
)
$
(0.34
)
$
(0.67
)
Pro forma adjusted diluted earnings per
share from continuing operations(1)(2)
$
0.15
$
0.16
$
0.46
$
0.65
Pro forma adjusted net income from
continuing operations(2)
$
5,121
$
5,477
$
15,563
$
21,963
Pro forma weighted average shares of
adjusted diluted Class A common stock outstanding(3)
34,169,684
34,011,302
33,879,163
33,970,731
________________
1.
Pro forma adjusted diluted earnings per
share from continuing operations, a non-GAAP financial measure, is
calculated using pro forma adjusted net income from continuing
operations and the pro forma weighted average shares of adjusted
diluted Class A common stock outstanding.
2.
Pro forma adjusted net income from
continuing operations, a non-GAAP financial measure, assumes that
all net income from continuing operations during the period is
available to the holders of the Company's Class A common stock.
Further, pro forma adjusted diluted earnings per share from
continuing operations assumes that all Common Units in i3
Verticals, LLC and the associated non-voting Class B common stock
were exchanged for Class A common stock at the beginning of the
period on a one-for-one basis.
3.
Pro forma weighted average shares of
adjusted diluted Class A common stock outstanding include
10,032,676 and 10,067,399 weighted average outstanding shares of
Class A common stock issuable upon the exchange of Common Units in
i3 Verticals, LLC and 479,859 and 392,343 shares resulting from
estimated stock option exercises and restricted stock units vesting
as calculated by the treasury stock method for the three months and
year ended September 30, 2024, respectively. Pro forma weighted
average shares of adjusted diluted Class A common stock outstanding
include 10,099,678 and 10,109,247 outstanding shares of Class A
common stock issuable upon the exchange of Common Units in i3
Verticals, LLC and 675,004 and 723,898 shares resulting from
estimated stock option exercises and restricted stock units vesting
as calculated by the treasury stock method for the three months and
year ended September 30, 2023, respectively.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241118399784/en/
Clay Whitson Chief Strategy Officer (888) 251-0987
investorrelations@i3verticals.com
i3 Verticals (NASDAQ:IIIV)
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