I3 Verticals ((IIIV)) has held its Q4 earnings call. Read on for the main highlights of the call.
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In the recent earnings call, i3 Verticals, Inc. presented a balanced outlook, highlighting significant achievements in mergers and acquisitions (M&A) and strategic partnerships, especially within the public sector. Despite facing challenges in certain market segments, the company is strategically shifting towards recurring revenue, indicating a forward-thinking approach to its business model.
Strong M&A Pipeline
The company expressed optimism about its acquisition pipeline, which is filled with promising opportunities. i3 Verticals maintains a disciplined approach to pricing and focuses on strengthening its public sector vertical, which shows significant potential for growth and innovation.
West Virginia Supreme Court Partnership
A notable highlight from the earnings call was the expanded partnership with the West Virginia Supreme Court. i3 Verticals will deliver the i3 Court One case management solution to the state’s circuit, family, and magistrate courts, including value-added services designed to maximize efficiency and improve case disposition rates.
Shift Towards Recurring Revenue
The company is placing a strong emphasis on recurring revenue opportunities, opting for SaaS and recurring sources over professional services implementation during contract negotiations. This strategic shift is aimed at creating a more stable and predictable revenue stream.
Platform Solutions Demand
There is a heightened demand for technology-forward platform solutions across the public sector, as evidenced by an increase in RFPs and unified data structures for analytics. This trend underscores i3 Verticals’ recognition as a trusted platform provider.
Lower Outlook for Utilities and Transportation Markets
The outlook for the utilities and transportation markets in fiscal 2026 is lower, though these sectors are expected to rebound in fiscal 2027 and beyond. This temporary dip is part of the company’s broader strategic planning.
Professional Services Revenue Decline
A decline in professional services revenue is anticipated for 2026, attributed to the timing and cadence of some projects, leading to a lighter revenue period.
Conservative Price Increases
Historically conservative with price increases, i3 Verticals is now aiming for consistent 3% to 5% increases, reflecting a strategic adjustment to enhance revenue growth.
Forward-Looking Guidance
For fiscal year 2025, i3 Verticals provided detailed guidance, anticipating a revenue distribution for fiscal 2026 with varying percentages across quarters. Despite a lower outlook for certain markets, the company expects a rebound in fiscal 2027 and beyond. The focus remains on expanding the public sector vertical and shifting towards recurring revenue models, with a consistent price increase range. The firm is also actively managing its acquisition pipeline, expecting meaningful M&A activities in 2026.
In summary, i3 Verticals, Inc. conveyed a balanced sentiment during its earnings call, highlighting strategic achievements and a forward-looking approach. The company’s focus on M&A, strategic partnerships, and a shift towards recurring revenue models positions it well for future growth, despite some challenges in specific market segments.