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i3 Verticals, Inc. (IIIV)·Q4 2025 Earnings Summary

Executive Summary

  • Q4 FY2025 revenue grew 7% year-over-year to $54.9M and 6% sequentially, with 75% recurring revenue; adjusted diluted EPS from continuing operations was $0.27 while GAAP diluted EPS was $0.04 .
  • Revenue and adjusted EPS exceeded Wall Street consensus: revenue $54.9M vs $53.7M*, and adjusted EPS $0.27 vs $0.242*; management cited SaaS strength (+25% YoY) and mix shifts toward recurring as key drivers .
  • Adjusted EBITDA was $14.4M (26.2% margin), down ~230 bps YoY on lower high-margin license sales and higher professional services; ARR grew 9% to $165.3M, outpacing revenue .
  • FY2026 outlook introduced: revenue $217–$232M, adjusted EBITDA $58.5–$65.0M, adjusted EPS $1.06–$1.16; recurring revenue growth expected at 8–10% while non-recurring professional services decline near-term, particularly in Q1 .
  • Strategic catalysts: statewide West Virginia CourtOne™ case management win (estimated eight-figure revenue over six years) and continued investments in JusticeTech and Utilities expected to support durable recurring revenue growth .

What Went Well and What Went Wrong

  • What Went Well
    • Recurring revenue strength: 75% of Q4 revenue was recurring; SaaS grew 25% YoY; payments +11% YoY; ARR +9% YoY to $165.3M .
    • Strategic win: expanded West Virginia Supreme Court partnership to deliver CourtOne statewide; management: “We look forward to a long partnership…with our court management solution” .
    • Balance sheet optionality: cash ~$67M and no debt, with $400M revolver availability, enabling M&A and opportunistic buybacks .
  • What Went Wrong
    • Margin compression: adjusted EBITDA margin 26.2% vs 28.5% prior year on mix (lower software licenses, higher professional services) .
    • Maintenance revenue declined ~8% YoY amid shift to SaaS; non-recurring license sales fell $1.9M YoY, pressuring gross profit mix .
    • Professional services cadence lighter in FY2026, with Q1 particularly soft; Manitoba project delays and U.S.–Canada trade friction impacted 2H FY2025 guidance earlier in the year .

Financial Results

MetricQ4 2024Q3 2025Q4 2025
Revenue ($USD Millions)$51.323 $51.901 $54.901
GAAP Diluted EPS – Continuing Ops ($)$0.19 $(0.03) $0.04
Adjusted Diluted EPS – Continuing Ops ($)$0.12 $0.23 $0.27
Adjusted EBITDA ($USD Millions)$14.613 $12.724 $14.399
Adjusted EBITDA Margin (%)28.5% 24.5% 26.2%
Income from Operations ($USD Millions)$3.410 $(4.813) $1.476

Estimate Comparison (S&P Global)

MetricConsensusActualSurprise
Revenue ($USD Millions) – Q4 2025$53.684*$54.901 +$1.217
Primary EPS ($) – Q4 2025$0.242*$0.27 (Adjusted Diluted EPS) +$0.028

Values marked with * retrieved from S&P Global.

Segment/Revenue Composition

Category ($USD Thousands)Q4 2024Q3 2025Q4 2025
SaaS$8,331 $9,299 $10,375
Transaction-based$3,910 $4,052 $4,294
Maintenance$8,610 $8,648 $7,956
Recurring software services$3,416 $3,811 $3,764
Professional services$9,729 $9,458 $11,537
Software licenses$2,491 $977 $590
Payments revenue$12,150 $13,100 $13,464
Other revenue (Total)$2,686 $2,556 $2,921
Total Revenue$51,323 $51,901 $54,901

KPIs

KPIQ4 2024Q3 2025Q4 2025
ARR ($USD Thousands)$151,366 $160,804 $165,260
Recurring Revenue ($USD Thousands)$37,842 $40,201 $41,315
Net Dollar Retention (%)——104% (FY2025)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY2025$207M–$217M Reaffirmed in Aug (unchanged) Maintained
Adjusted EBITDAFY2025$55M–$61M Reaffirmed Maintained
Adjusted Diluted EPSFY2025$0.96–$1.06 Reaffirmed Maintained
RevenueFY2026—$217M–$232M New
Adjusted EBITDAFY2026—$58.5M–$65.0M New
Depreciation & internally developed software amortizationFY2026—$10.5M–$12.5M New
Adjusted Diluted EPSFY2026—$1.06–$1.16 New
Recurring revenue growthFY2026—8%–10% New
Non-recurring professional servicesFY2026—Down vs FY2025; Q1 particularly soft Lowered
Revenue seasonality distributionFY2026—Q1 23%, Q2 25.5%, Q3 24.5%, Q4 27% New
Share repurchase authorizationThrough 9/30/2026—Up to $50M (approved Aug 7, 2025) New

Earnings Call Themes & Trends

TopicQ2 2025 (Mar QTR)Q3 2025 (Jun QTR)Q4 2025 (Sep QTR)Trend
AI/technology initiativesReleased AI agent in transportation; land records automated indexing; generative AI bots for utilities Detailed stack (AgenTek RAG, chatbots, dev tools), dev efficiency +30–50% Focus shifted to recurring revenue/market investments; AI momentum implied via platform approach Building capabilities; integration across markets
Professional services cadenceGuidance adjusted for Manitoba delays; outlined 2H split (Q3 48%, Q4 52%) License pull-forward into Q3; Q4 softer license activity expected FY2026: professional services down, Q1 particularly soft Near-term decline; long-term rebound
Pricing/macroU.S–Canada friction impacted Manitoba —Price increases to 3–5% target over time; 2025 contribution ~1–2%, 2026 ~1.5–3% Gradual pricing tailwind
JusticeTech & Utilities investmentUtility billing acquisition closed; Justice pipeline Incremental JusticeTech investment (~$0.7M in Q4 implied from prior quarter) Accelerating investments in courts/utilities; West Virginia statewide win Strategic focus; revenue durability
M&A pipelineUtility billing acquisition; pipeline strong Ongoing opportunities; disciplined pricing “Meaningful” tuck-ins; sweet spot $2–5M EBITDA at ~10x Active, non-transformational
Education expansionNew contracts in ID, TX, OK, NC, DE Additional states; strong adoption —Expanding footprint

Management Commentary

  • CEO Greg Daily: “We are pleased to report our earnings for the fourth quarter of fiscal 2025… SaaS revenue grew 23% compared to the prior year… With over $65 million in cash on hand, we will always be thoughtful about ways to enhance our offerings for state and local governments” .
  • CFO Geoff Smith: “Recurring revenues increased 9%… SaaS revenues grew a healthy 25%, more than offsetting an 8% decline in maintenance… Adjusted EBITDA… 26.2% for Q4 2025… We expect recurring revenues to grow… 8%–10% in FY2026… professional services… decline, particularly in Q1” .
  • CRO Paul Christians: “We are experiencing a heightened awareness and demand for technology-forward platform solutions across the public sector… expanded partnership with the West Virginia Supreme Court… deliver i3 Court One case management solution” .

Q&A Highlights

  • Recurring vs professional services: Management is “leaning into recurring revenue” in negotiations; professional services expected to be down in FY2026 due to project timing, with eventual rebound (utilities pipeline and West Virginia) .
  • Pricing tailwind: Historically conservative; moving toward 3–5% annual price increases; 2025 price contribution ~1–2%, 2026 expected ~1.5–3% .
  • JusticeTech investment: Investments mainly in development and implementation capacity; elevated costs continue into FY2026 .
  • Capital allocation: Buyback authorization refreshed to $50M; M&A focus on tuck-ins ($2–$5M EBITDA at ~10x), not transformative deals .

Estimates Context

  • Revenue and adjusted EPS both beat consensus for Q4 FY2025: revenue $54.9M vs $53.7M*, adjusted EPS $0.27 vs $0.242* .
  • Q1 FY2026 consensus: revenue ~$53.0M*, Primary EPS ~$0.247*; management’s seasonality distribution (Q1 ~23%) aligns with softer quarter .
    Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Mix shift to recurring/SaaS is improving revenue durability; ARR growth (+9%) outpaced total revenue and should be the anchor for medium-term estimates revisions .
  • Near-term margin pressure from lower license sales and higher professional services should moderate as platform wins (e.g., West Virginia CourtOne) ramp recurring revenue .
  • FY2026 guide is constructive despite professional services cadence: recurring growth 8–10%, adjusted EPS $1.06–$1.16; expect estimate lifts on revenue/ARR, with cautious modeling of Q1 seasonality .
  • Capital optionality: ~$67M cash, no debt, $400M revolver; pipeline of tuck-in M&A and refreshed $50M buyback provide multiple levers in 2026 .
  • Pricing tailwinds (targeting 3–5% increases) and cross-market solution bundling can support organic growth and margin resilience even with softer non-recurring services .
  • Watch catalysts: execution on statewide court deployments, utilities implementations cadence, and conversion of acquisitions to SaaS/payments integration for margin expansion .
  • For trading: positive beat vs consensus and confident FY2026 outlook are supportive; near-term volatility may follow professional services cadence and Q1 seasonality—position around ARR momentum and contract wins .

Citations: Q4 FY2025 8-K and press release ; Q4 FY2025 call transcripts ; Q3 FY2025 materials ; Q2 FY2025 materials ; Other press releases .

Values marked with * retrieved from S&P Global.