i3 Verticals Earnings Call Transcripts
Fiscal Year 2026
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The company focuses on public sector software, with strong demand from modernization and creative funding. AI adoption accelerates development, cuts costs, and supports innovation and transactional revenue. Despite a recent revenue miss and delays, margin expansion is expected. M&A is opportunistic; share buybacks are favored near term.
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Q3 results missed expectations due to weakness in non-recurring revenue, especially in utilities and professional services, but recurring revenue and SaaS growth remained strong. FY 2026 guidance was lowered, with margin expansion and mid-single-digit growth expected in 2027.
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Q2 2026 saw 6% revenue growth and 12% ARR growth, with SaaS up 37% and adjusted EBITDA up 5%. Margin improvement is expected in the second half, while AI-driven product enhancements and acquisitions are fueling long-term growth, despite ongoing professional services headwinds.
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Now focused on five public sector markets, the company is seeing strong growth in justice and education, with SaaS revenues accelerating due to acquisitions and new customer wins. Recent M&A targets are high-margin, cloud-based SaaS businesses, and the company expects continued margin expansion and healthy demand as public sector clients modernize.
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The company operates in five public sector software niches, with JusticeTech as the largest and fastest-growing. AI is viewed as an opportunity, not a threat, and the business model emphasizes recurring, transactional revenue. M&A remains a key growth lever, with a disciplined approach to capital allocation.
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Q1 2026 saw 1% revenue growth, but recurring and SaaS revenues surged, aided by a major transportation software acquisition. The company remains debt-free, executed significant share buybacks, and expects double-digit recurring revenue growth for FY 2026.
Fiscal Year 2025
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Revenue grew 7% in Q4 and 11% for the year, with recurring revenue and ARR outpacing total growth. FY 2026 guidance projects 8–10% recurring revenue growth, while non-recurring services will decline due to project timing. Strong cash position supports M&A and buybacks.
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Revenue grew 12% year-over-year in Q3 2025, with SaaS up 24% and adjusted EBITDA up 18%. The company is now a pure-play public sector software provider, investing in AI and justice tech, and reaffirmed FY 2025 guidance. Strong sales momentum continues across all sub-verticals.
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Management detailed the shift from payments to public sector software, emphasizing recurring revenue, disciplined M&A, and a cloud-first, AI-enabled product strategy. The company targets high single-digit growth, maintains strong margins, and sees opportunity in a fragmented market dominated by niche players and Tyler Technologies.
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Divestitures have streamlined operations, driving 12% Public Sector revenue growth and 23% SaaS growth. RemainCo posted 11.6% revenue growth and 17% higher adjusted EBITDA, with strong cash reserves and a robust M&A pipeline focused on public sector software.
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Q1 2025 saw 12% revenue growth and 17% Adjusted EBITDA growth, driven by SaaS and payments, with strong recurring revenue and a robust Public Sector performance. Guidance for FY 2025 remains unchanged, with high single-digit organic growth and margin improvement expected.
Fiscal Year 2024
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Q4 2024 saw 4% revenue growth and a 7.5% rise in annualized recurring revenue, driven by a shift to a software-centric model and strong public sector performance. Fiscal 2025 guidance calls for high single-digit organic growth, margin expansion, and resumed M&A activity.
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Q3 2024 saw a 2% revenue decline and 11% drop in adjusted EBITDA, driven by non-recurring headwinds and project delays, but recurring revenue and SaaS/payments growth remained strong. The company completed a strategic acquisition and expects high single-digit organic growth and margin improvement in 2025.