I3 Verticals ((IIIV)) has held its Q3 earnings call. Read on for the main highlights of the call.
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In the recent earnings call, I3 Verticals expressed a generally positive sentiment, highlighting strong revenue and SaaS growth, a robust financial position, and successful AI implementation. Despite some concerns over deceleration in organic revenue growth and increased costs impacting the fourth quarter, the company remains optimistic about its business outlook, citing strong market expansion and strategic investments.
Revenue and SaaS Growth
The company reported a 12% increase in revenue, with SaaS revenue growing at an impressive 24% compared to the prior year’s third quarter. This growth underscores the company’s successful expansion in the SaaS market, contributing significantly to its overall financial performance.
Strong Financial Position
I3 Verticals highlighted its solid financial standing, boasting a net cash positive position exceeding $50 million and a revolving credit facility with a capacity of up to $400 million. This financial strength provides the company with the flexibility to pursue strategic investments and growth opportunities.
Adjusted EBITDA Growth
The company’s Adjusted EBITDA for RemainCo saw an 18% increase, rising to $12.7 million for Q3 2025 from $10.8 million in Q3 2024. This growth reflects the company’s effective cost management and operational efficiency.
AI Implementation Success
I3 Verticals successfully implemented AI tools like Agentch AI, which improved user outcomes and resulted in significant user time savings and initial incremental revenue. This demonstrates the company’s commitment to leveraging technology to enhance its service offerings.
Justice Tech Market Expansion
The company is in the final stages of contract negotiations for a statewide court system and has expanded into Ohio, indicating increased adoption of its Justice Tech products. This expansion is a testament to the company’s strategic focus on broadening its market reach.
Broad Market Success
I3 Verticals reported positive sales results across various strategic markets, including transportation, Justice Tech, public safety, public administration, ERP, education, and utilities. This broad market success highlights the company’s ability to diversify its revenue streams and capitalize on multiple growth opportunities.
Deceleration in Organic Revenue Growth
The company noted a deceleration in organic revenue growth by 300 basis points, primarily due to the lapping of a strong license quarter. While this presents a challenge, the company remains focused on sustaining its growth trajectory.
Increased Operating Costs
Increased costs related to talent investment for Justice products are expected to impact the fourth quarter, slightly compressing margins. Despite this, the company views these investments as essential for long-term growth and competitiveness.
Forward-Looking Guidance
I3 Verticals reaffirmed its guidance for fiscal year 2025, projecting revenues between $207 million and $217 million, and adjusted EBITDA ranging from $55 million to $61 million. The company also anticipates adjusted diluted earnings per share from continuing operations to be between $0.96 and $1.06. With a strong balance sheet and strategic investments in new product development and AI initiatives, I3 Verticals expects high single-digit organic revenue growth and EBITDA margin improvement of 50 to 100 basis points per year moving forward.
In conclusion, I3 Verticals’ earnings call conveyed a positive outlook, driven by strong revenue and SaaS growth, a solid financial position, and successful AI implementation. While challenges such as deceleration in organic revenue growth and increased operating costs are noted, the company’s strategic market expansion and forward-looking guidance suggest a promising future.