i3 Verticals Reports Q2 2025 Financial Results: Revenue Up 8.8%, Adjusted EBITDA Grows 12.7%

i3 Verticals, Inc. (NASDAQ: IIIV) recently reported its financial results for the fiscal second quarter ended March 31, 2025. The company has shown strong improvements in various financial metrics, reflecting its strategic shift and focus on the public sector. Here are the key highlights: Revenue and Profitability Revenue: Second-quarter revenue increased by 8.8% to $63.1 million, compared to $57.968 million in the same quarter last year. For the six months ended March 31, 2025, revenue was $124.8 million, up by 10.4% from $113.022 million in the prior year's first six months. Net Income: The company reported a net income of $1.1 million in the second quarter, reversing a net loss of $2.3 million from the same quarter in the previous year. For the first six months of 2025, the net income was $4.4 million, turning around a net loss of $6.5 million in the prior year. Adjusted EBITDA: Second-quarter adjusted EBITDA rose by 12.7% to $17.1 million, compared to $15.214 million in the prior year. For the six months, adjusted EBITDA increased by 14.8% to $33.5 million, up from $29.202 million in the prior year. Diluted Earnings Per Share (EPS): The company reported a diluted net income per share of $0.00 in the second quarter, up from a net loss per share of $0.07 in the prior year. For the six months, diluted net income per share was $0.09, compared to a net loss per share of $0.20 in the prior year. Strategic Activities Discontinued Operations: On September 20, 2024, i3 Verticals completed the sale of its Merchant Services Business and recently sold its Healthcare Revenue Cycle Management (RCM) business to Infinx for $96 million on May 5, 2025. The RCM business contributed $9.1 million and $18.9 million in revenue for the three and six months ended March 31, 2025, respectively. Acquisitions: On April 1, 2025, i3 Verticals acquired a utility billing software company for $9 million, plus potential contingent consideration of up to $5 million. This acquisition complements the company's existing utilities practices and aligns with its focus on the public sector. Annualized Recurring Revenue (ARR) ARR Growth: As of March 31, 2025, ARR stood at $199.1 million, marking a 6.5% increase from $186.8 million in the prior year. The company emphasizes the importance of ARR as a key indicator of its sustainable revenue base and long-term growth potential. Future Outlook Revised Guidance: Following the recent divestiture, i3 Verticals revised its fiscal year 2025 outlook. The company now expects revenue between $207 million and $217 million, down from the previous range of $243 million to $263 million. Adjusted EBITDA is forecasted between $55 million and $61 million, compared to the previous range of $63 million to $71.5 million. Adjusted diluted earnings per share are now estimated between $0.96 and $1.06, revised from the prior range of $1.05 to $1.25. CEO Comments Greg Daily, Chairman and CEO of i3 Verticals, stated that the decision to divest the Healthcare RCM business aligns with the company's strategy to focus on the public sector, which is at an early stage of a technological transformation cycle. He noted that this move enhances the company's opportunities for M&A and positions it to bring best-in-class enterprise software to public sector clients. Industry Insights and Evaluation Industry insiders view the strategic divestitures as a positive move for i3 Verticals, allowing the company to streamline its operations and focus on high-growth areas. The sale of the RCM business to Infinx, a larger player with better scaling capabilities, is seen as a win-win for both parties and is likely to unlock additional value for shareholders. Analysts predict that the acquisition of the utility billing software company will strengthen i3 Verticals' position in the utilities sector and contribute to its ARR growth. Company Profile i3 Verticals is known for delivering seamless enterprise software to customers in strategic vertical markets, particularly in the public sector. The company continues to build and acquire software products tailored to the specific needs of public and private organizations. Its sophisticated platform and diverse portfolio of solutions are designed to enhance efficiency and modernize government services. This summary highlights the significant financial improvements and strategic realignments at i3 Verticals, emphasizing the company's focus and potential in the public sector market. The divestitures and acquisitions indicate a concerted effort to optimize its business model for sustainable growth and profitability.