TechDogs-"i3 Verticals Reports Third Quarter 2022 Financial Results"

Software Development

i3 Verticals Reports Third Quarter 2022 Financial Results

By Business Wire

Business Wire
Overall Rating

Third Quarter Revenue Grows 27.6%; Annualized Recurring Revenue2 Grows 30.2%

TechDogs-"i3 Verticals Reports Third Quarter 2022 Financial Results"
NASHVILLE, Tenn.--(BUSINESS WIRE)--$IIIV--i3 Verticals, Inc. (Nasdaq: IIIV) (“i3 Verticals” or the “Company”) today reported its financial results for the fiscal third quarter ended June 30, 2022.

Highlights for the fiscal third quarter ended June 30, 2022 vs. 2021

  • Third quarter revenue was $80.6 million, an increase of 27.6% over the prior year's third quarter. Revenue for the nine months ended June 30, 2022, was $232.6 million, an increase of 48.2% over the prior year's first nine months.
  • Third quarter net loss was $4.7 million, compared to net loss of $4.2 million in the prior year's third quarter. Net loss for the nine months ended June 30, 2022, was $18.8 million, compared to a net loss of $5.9 million in the prior year's first nine months.
  • Third quarter net loss attributable to i3 Verticals, Inc. was $3.7 million. Net loss attributable to i3 Verticals, Inc. for the nine months ended June 30, 2022, was $13.6 million.
  • Adjusted EBITDA1 was $20.1 million, an increase of 29.1% over the prior year's third quarter. Adjusted EBITDA1 for the nine months ended June 30, 2022, was $57.8 million, an increase of 50.7% over the prior year's first nine months.
  • Adjusted EBITDA1 as a percentage of revenue was 24.9%, compared to 24.6% in the prior year's third quarter. Adjusted EBITDA1 as a percentage of revenue for the nine months ended June 30, 2022, was 24.9%, compared to 24.4% in the prior year's first nine months.
  • Diluted net loss per share available to Class A common stock was $0.17, compared to diluted net loss per share available to Class A common stock of $0.15 in the prior year's third quarter. Diluted net loss per share available to Class A common stock was $0.62, compared to diluted net loss per share available to Class A common stock of $0.19 in the prior year's first nine months.
  • Pro forma adjusted diluted earnings per share1, which gives pro forma effect to the Company's tax rate, was $0.37 compared to $0.29 for the prior year's third quarter. Pro forma adjusted diluted earnings per share1 for the nine months ended June 30, 2022, was $1.09 compared to $0.73 for the prior year's first nine months.
  • Annualized Recurring Revenue ("ARR")2 for the three months ended June 30, 2022 and 2021 was $266.7 million and $204.9 million, respectively, representing a period-to-period growth rate of 30.2%.
  • Software and related services revenue3 as a percentage of total revenue was 48% and 42% for the three months ended June 30, 2022 and 2021, respectively.
  • As of June 30, 2022, consolidated interest coverage ratio was 14.73x, total leverage ratio was 4.00x and consolidated senior leverage ratio was 2.51x. These ratios are defined in the Company's Senior Secured Credit Facility.

1.

Represents a non-GAAP financial measure. For additional information (including reconciliation information), see the attached schedules to this release.

2.

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. The active contracts at the end of a reporting period used in calculating ARR may or may not be extended or renewed by the Company's customers.

3.

Software and related services revenue includes the sale of licenses, subscriptions, installation and implementation services, and ongoing support specific to software.

Greg Daily, Chairman and CEO of i3 Verticals, commented, “We are pleased to report another great quarter and anticipate an excellent finish to the fiscal year. Revenue and adjusted EBITDA both set records, greater than 80% of our revenue came from recurring sources and annualized recurring revenue for the third quarter of 2022 increased 30% from the third quarter of 2021.

“The acquisition we completed this quarter in the Healthcare vertical, effective April 30, has been an excellent fit and has already shown significant success in cross-selling to customers in our revenue cycle management services. This demonstrates promise to supplement our existing software-enabled services with an additional stream of recurring SaaS revenue. Our M&A strategy is well-positioned for the current market and we expect there to be more great opportunities to add to our thriving businesses.”

Revised 2022 Outlook

The Company's practice is to provide annual guidance, excluding future acquisitions and transaction-related costs.

The Company is providing the following revised outlook for the fiscal year ending September 30, 2022:

(in thousands, except share and per share amounts)

Previous Outlook Range

Revised Outlook Range

Fiscal year ending September 30, 2022

Revenue

$

300,000

-

$

312,000

$

307,000

-

$

317,000

Adjusted EBITDA (non-GAAP)

$

75,000

-

$

81,000

$

76,500

-

$

80,500

Pro forma adjusted diluted earnings per share(1)(non-GAAP)

$

1.40

-

$

1.47

$

1.41

-

$

1.47

_______________________

1.

Assumes an effective pro forma tax rate of 25.0% (non-GAAP).

With respect to the “Revised 2022 Outlook” above, reconciliation of net revenue, adjusted EBITDA and pro forma adjusted diluted earnings per share guidance to the closest corresponding GAAP measure on a forward-looking basis is 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.

Conference Call

The Company will host a conference call on Tuesday, August 9, 2022, at 8:30 a.m. EDT, 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. EDT on August 9, 2022, through August 16, 2022, by dialing (877) 344-7529 and entering Confirmation Code 3637280.

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 & Presentations” 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 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, adjusted EBITDA and pro forma adjusted diluted EPS, and a reconciliation of those measures to the most directly comparable GAAP measures is included in the financial schedules of this release.

Here's another interesting article on Introduction To Software Development

About i3 Verticals

The Company delivers seamless integrated software and services to customers in strategic vertical markets. Building on its broad suite of software and services solutions, the Company creates and acquires software products to serve the specific needs of its customers. The Company's primary strategic verticals are Public Sector (including Education) and Healthcare.

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 2022 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: future economic, competitive, and regulatory conditions, the COVID-19 pandemic, the successful integration of acquired businesses, 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 may update in Part II, Item 1A - Risk Factors in Quarterly Reports on Form 10-Q we have filed or will file hereafter.

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

(Unaudited)

($ in thousands, except share and per share amounts)

Three months ended June 30,

Nine months ended June 30,

2022

2021(1)

% Change

2022

2021(1)

% Change

Revenue

$

80,553

$

63,129

28

%

$

232,612

$

156,947

48

%

Operating expenses

Other costs of services

19,749

16,064

23

%

52,890

41,044

29

%

Selling, general and administrative

47,775

37,296

28

%

142,878

92,769

54

%

Depreciation and amortization

7,506

6,995

7

%

21,823

17,938

22

%

Change in fair value of contingent consideration

8,254

3,609

129

%

24,684

5,835

323

%

Total operating expenses

83,284

63,964

30

%

242,275

157,586

54

%

Loss from operations

(2,731

)

(835

)

227

%

(9,663

)

(639

)

1,412

%

Interest expense, net

3,767

2,704

39

%

10,298

7,092

45

%

Other income

n/m

(2,353

)

(100

)%

Total other expenses

3,767

2,704

39

%

10,298

4,739

117

%

Loss before income taxes

(6,498

)

(3,539

)

84

%

(19,961

)

(5,378

)

271

%

(Benefit from) provision for income taxes

(1,810

)

662

n/m

(1,154

)

516

n/m

Net loss

(4,688

)

(4,201

)

12

%

(18,807

)

(5,894

)

219

%

Net loss attributable to non-controlling interest

(960

)

(921

)

4

%

(5,178

)

(1,918

)

170

%

Net loss attributable to i3 Verticals, Inc.

$

(3,728

)

$

(3,280

)

14

%

$

(13,629

)

$

(3,976

)

243

%

Net loss per share attributable to Class A common stockholders:

Basic

$

(0.17

)

$

(0.15

)

$

(0.62

)

$

(0.19

)

Diluted

$

(0.17

)

$

(0.15

)

$

(0.62

)

$

(0.19

)

Weighted average shares of Class A common stock outstanding:

Basic

22,229,787

21,926,225

22,116,172

20,658,700

Diluted

22,229,787

21,926,225

22,116,172

20,658,700

__________________________

1.

Effective October 1, 2020, the Company's financial statements are presented in accordance with ASU 2021-08, Accounting Standards Codification Topic 805, Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. See Note 21 to the consolidated financial statements within our Form 10-K filed with the SEC on November 22, 2021, for a description of the recently adopted accounting pronouncement and the impacts of adoption on the condensed consolidated statements of operations.

i3 Verticals, Inc. Financial Highlights

(Unaudited)

($ in thousands, except per share amounts)

Three months ended June 30,

Nine months ended June 30,

2022

2021

% Change

2022

2021

% Change

Adjusted EBITDA(1)

$

20,051

$

15,534

29

%

$

57,805

$

38,350

51

%

Pro forma adjusted diluted earnings per share(1)

$

0.37

$

0.29

28

%

$

1.09

$

0.73

49

%

__________________________

1.

Represents a non-GAAP financial measure. For additional information (including reconciliation information), see the attached schedules to this release.

i3 Verticals, Inc. Supplemental Volume Information

(Unaudited)

($ in thousands)

Three months ended June 30,

Nine months ended June 30,

2022

2021

2022

2021

Payment volume(1)

$

5,914,742

$

5,136,285

$

16,562,677

$

13,200,017

__________________________

1.

Payment volume is the net dollar value of both 1) Visa, Mastercard and other payment network transactions processed by the Company's customers and settled to customers by us and 2) ACH transactions processed by the Company's customers and settled to customers by the Company.

i3 Verticals, Inc. Segment Summary

(Unaudited)

($ in thousands)

For the Three Months Ended June 30, 2022

Merchant

Services

Proprietary

Software and Payments

Other

Total

Revenue

$

32,714

$

47,839

$

$

80,553

Income (loss) from operations

$

6,451

$

2,248

$

(11,430

)

$

(2,731

)

Payment volume

$

5,396,964

$

517,778

$

$

5,914,742

For the Nine Months Ended June 30, 2022

Merchant Services

Proprietary

Software and Payments

Other

Total

Revenue

$

91,071

$

141,575

$

(34

)

$

232,612

Income (loss) from operations

$

17,849

$

7,080

$

(34,592

)

$

(9,663

)

Payment volume

$

15,018,474

$

1,544,203

$

$

16,562,677

For the Three Months Ended June 30, 2021(1)

Merchant Services

Proprietary

Software and Payments

Other

Total

Revenue

$

29,963

$

33,729

$

(563

)

$

63,129

Income (loss) from operations

$

5,569

$

3,054

$

(9,458

)

$

(835

)

Payment volume

$

4,761,350

$

374,935

$

$

5,136,285

__________________________

1.

Effective October 1, 2020, the Company's financial statements are presented in accordance with ASU 2021-08, Accounting Standards Codification Topic 805, Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. See Note 21 to the consolidated financial statements within our Form 10-K filed with the SEC on November 22, 2021, for a description of the recently adopted accounting pronouncement and the impacts of adoption on the condensed consolidated statements of operations.

For the Nine Months Ended June 30, 2021(1)

Merchant

Services

Proprietary

Software and Payments

Other

Total

Revenue

$

81,130

$

77,491

$

(1,674

)

$

156,947

Income (loss) from operations

$

15,106

$

10,249

$

(25,994

)

$

(639

)

Payment volume

$

12,160,134

$

1,039,883

$

$

13,200,017

__________________________

1.

Effective October 1, 2020, the Company's financial statements are presented in accordance with ASU 2021-08, Accounting Standards Codification Topic 805, Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. See Note 21 to the consolidated financial statements within our Form 10-K filed with the SEC on November 22, 2021, for a description of the recently adopted accounting pronouncement and the impacts of adoption on the condensed consolidated statements of operations.

i3 Verticals, Inc. Consolidated Balance Sheets

($ in thousands, except share and per share amounts)

June 30,

September 30,

2022

2021

(unaudited)

Assets

Current assets

Cash and cash equivalents

$

9,046

$

3,641

Accounts receivable, net

43,653

38,500

Settlement assets

6,365

4,768

Prepaid expenses and other current assets

14,084

11,214

Total current assets

73,148

58,123

Property and equipment, net

5,418

5,902

Restricted cash

14,705

9,522

Capitalized software, net

51,764

41,371

Goodwill

353,882

292,243

Intangible assets, net

200,454

171,706

Deferred tax asset

51,698

49,992

Operating lease right-of-use assets

18,790

14,479

Other assets

10,565

8,462

Total assets

$

780,424

$

651,800

Liabilities and equity

Liabilities

Current liabilities

Accounts payable

$

8,083

$

7,865

Accrued expenses and other current liabilities

63,883

50,815

Settlement obligations

6,365

4,768

Deferred revenue

22,641

29,862

Current portion of operating lease liabilities

4,624

3,201

Total current liabilities

105,596

96,511

Long-term debt, less current portion and debt issuance costs, net

307,927

200,605

Long-term tax receivable agreement obligations

39,866

39,122

Operating lease liabilities, less current portion

15,021

11,960

Other long-term liabilities

21,522

14,011

Total liabilities

489,932

362,209

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 June 30, 2022 and September 30, 2021

Class A common stock, par value $0.0001 per share, 150,000,000 shares authorized; 22,252,640 and 22,026,098 shares issued and outstanding as of June 30, 2022 and September 30, 2021, respectively

2

2

Class B common stock, par value $0.0001 per share, 40,000,000 shares authorized; 10,118,142 and 10,229,142 shares issued and outstanding as of June 30, 2022 and September 30, 2021, respectively

1

1

Additional paid-in capital

226,269

211,237

Accumulated deficit

(20,109

)

(6,480

)

Total stockholders' equity

206,163

204,760

Non-controlling interest

84,329

84,831

Total equity

290,492

289,591

Total liabilities and equity

$

780,424

$

651,800

i3 Verticals, Inc. Consolidated Cash Flow Data

(Unaudited)

($ in thousands)

Nine months ended June 30,

2022

2021

Net cash provided by operating activities

$

35,840

$

34,035

Net cash used in investing activities

$

(109,350

)

$

(149,937

)

Net cash provided by financing activities

$

85,695

$

115,519

Reconciliation of GAAP to Non-GAAP Financial Measures

The Company believes that non-GAAP financial measures are important to enable investors to understand and evaluate its ongoing operating results. Accordingly, i3 Verticals includes non-GAAP financial measures when reporting its financial results to shareholders and potential investors in order to provide them with an additional tool to evaluate the Company’s ongoing business operations. i3 Verticals believes that the non-GAAP financial measures are representative of comparative financial performance that reflects the economic substance of i3 Verticals’ current and ongoing business operations.

Although non-GAAP financial measures are often used to measure the Company's operating results and assess its financial performance, they are not necessarily comparable to similarly titled measures of other companies due to potential inconsistencies in the method of calculation. i3 Verticals believes that its provision of non-GAAP financial measures provides investors with important key financial performance indicators that are utilized by management to assess the Company's operating results, evaluate the business and make operational decisions on a prospective, going-forward basis. Hence, management provides disclosure of non-GAAP financial measures to give shareholders and potential investors an opportunity to see i3 Verticals as viewed by management, to assess i3 Verticals with some of the same tools that management utilizes internally and to be able to compare such information with prior periods. i3 Verticals believes that inclusion of 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 to Non-GAAP Pro Forma Adjusted Net Income and Non-GAAP Adjusted EBITDA

(Unaudited)

($ in thousands)

Three months Ended

June 30,

Nine months ended
June 30, 2021

2022

2021(1)

2022

2021(1)

Net loss attributable to i3 Verticals, Inc.

$

(3,728

)

$

(3,280

)

$

(13,629

)

$

(3,976

)

Net loss attributable to non-controlling interest

(960

)

(921

)

(5,178

)

(1,918

)

Non-GAAP adjustments:

(Benefit from) provision for income taxes

(1,810

)

662

(1,154

)

516

Financing-related expenses(2)

7

36

13

152

Non-cash change in fair value of contingent consideration(3)

8,254

3,609

24,684

5,835

Equity-based compensation(4)

6,799

5,111

19,680

12,694

Acquisition-related expenses(5)

136

535

1,017

2,065

Acquisition intangible amortization(6)

6,095

5,673

17,974

14,617

Non-cash interest expense(7)

1,459

1,372

4,312

4,056

Other taxes(8)

80

82

251

305

Gain on investment(9)

(2,353

)

Non-GAAP pro forma adjusted income before taxes

16,332

12,879

47,970

31,993

Pro forma taxes at effective tax rate(10)

(4,083

)

(3,220

)

(11,993

)

(7,998

)

Pro forma adjusted net income(11)

$

12,249

$

9,659

$

35,977

$

23,995

Cash interest expense, net(12)

2,308

1,333

5,986

3,036

Pro forma taxes at effective tax rate(10)

4,083

3,220

11,993

7,998

Depreciation, non-acquired intangible asset amortization and internally

developed software amortization(13)

1,411

1,322

3,849

3,321

Adjusted EBITDA

$

20,051

$

15,534

$

57,805

$

38,350


Contacts

Clay Whitson
Chief Financial Officer
(888) 251-0987
investorrelations@i3verticals.com


Read full story here

Liked what you read? Head to the TechDogs homepage to find the latest tech content infused with drama and entertainment. We've got ArticlesWhite PapersCase StudiesReportsVideos and Events that help you Know Your World of Technology.

First published on Thu, Jan 1, 1970

Disclaimer - Reference to any specific product, software or entity does not constitute an endorsement or recommendation by TechDogs nor should any data or content published be relied upon. The views expressed by TechDogs’ members and guests are their own and their appearance on our site does not imply an endorsement of them or any entity they represent. Views and opinions expressed by TechDogs’ Authors are those of the Authors and do not necessarily reflect the view of TechDogs or any of its officials. All information / content found on TechDogs’ site may not necessarily be reviewed by individuals with the expertise to validate its completeness, accuracy and reliability.

Tags:

i3 Verticals Inc. Financial Results Integrated Software And Services Public Sector Healthcare

References:

Join The Discussion

  • Dark
  • Light