The following is a summary of the I3 Verticals, Inc. (IIIV) Q3 2024 Earnings Call Transcript:
Financial Performance:
Q3 revenue dropped 2% to $56 million due to declines in non-recurring sources.
Adjusted EBITDA decreased 11% to $12.9 million due to a fall in software license sales.
Business Progress:
Post-divestiture, i3 Verticals focuses on vertical software and services.
Announced acquisition of a public sector permitting and licensing company.
Opportunity:
Strategic software market focus post Merchant Services divestiture offers growth opportunities.
Acquisition enhances public sector offerings and presents cross-sell opportunities.
Risk:
Delays in projects like the Manitoba implementation could impact financial outcomes.
Transition focus might distract from operational effectiveness, affecting near-term growth.
Financial Performance:
i3 Verticals reported a decrease in revenue for Q3 2024, totaling $56 million, a 2% decline from $57.3 million in Q3 2023, mainly due to declines in non-recurring sources like professional services and software licenses.
SaaS and transaction-based software revenues grew 8%, and payments revenues grew 9%.
Adjusted EBITDA for Q3 2024 was $12.9 million, down 11% from $14.5 million in Q3 2023, primarily due to a $2 million decline in one-time software license sales.
Pro forma adjusted diluted earnings per share from continuing operations was $0.07 for Q3 2024.
Business Progress:
i3 Verticals has shifted its focus towards vertical software and services post-divestiture of the Merchant Services business.
Announced acquisition of a permitting and licensing company fits well with its public sector vertical.
As a proactive step, the company is adding an enterprise leader to drive ongoing investment in next-generation, web-native configurable applications.
Enhancement in public sector offerings, particularly in permitting and licensing solutions through the recent acquisition.
Ongoing development in utility solutions and modernization efforts across various sectors, indicating sustained product evolution and growth commitment.
Opportunities:
The company's strategic transition to focus on the software market, with divestiture of the Merchant Services business, opens up significant growth avenues in its existing verticals, leveraging its SaaS and payment platforms.
The acquisition provides not only a better product offering in the permitting and licensing sphere but also cross-sell opportunities through i3 Vertical's broader Public Sector customer base, suggesting horizontal expansion and penetration in untapped markets.
Continued technological investments and realignment of internal structures aim to enhance operational efficiency and market responsiveness, presenting competitive advantages and revenue growth potential.
Risks:
Delays and headwinds in projects such as the Manitoba implementation due to external factors, like public workers strikes, leading to lagged revenue recognition and affecting the financial outcomes.
Throughout the transitional year, the focus on internal realignment and divestiture might distract from operational effectiveness, affecting near-term growth metrics and presenting integration risks associated with new acquisitions.
Vulnerabilities related to the transition to SaaS potentially resulting in short-term revenue declines.
More details: i3 Verticals IR
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