Education
About Us
Working with TipRanks
Follow Us
I3 Verticals (IIIV)
NASDAQ:IIIV
Top Page
I3 Verticals
(NASDAQ:IIIV)
74Outperform
Positive Factors
Financial Performance
F1Q25 performance exceeded expectations, with both revenue and EBITDA beating estimates, reaffirming a positive outlook for FY25.
M&A Strategy
The sale of their Merchant Services business positions the company well to drive M&A execution given a significantly stronger balance sheet.
Negative Factors
Healthcare Sector Challenges
There is previously called out weakness in Healthcare, where consolidation and competition have led to an uptick in attrition.
I3 Verticals (IIIV) vs. S&P 500 (SPY)
Market Cap
$792.61M
Dividend YieldN/A
Average Volume (3M)217.39K
Price to Earnings (P/E)4.9
Beta (1Y)0.95
Revenue Growth-27.40%
EPS Growth21780.54%
CountryUS
Employees1,480
SectorTechnology
Sector Strength54
IndustrySoftware
Share Statistics
EPS (TTM)4.73
Shares Outstanding23,428,284
10 Day Avg. Volume171,686
30 Day Avg. Volume217,389
Financial Highlights & Ratios
PEG Ratio0.00023
Price to Book (P/B)N/A
Price to Sales (P/S)3.93
Price to Cash Flow (P/CF)17.10
P/FCF Ratio17.10
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$29.50Price Target Upside27.16% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering5
I3 Verticals Business Overview & Revenue Model
Company Descriptioni3 Verticals, Inc. is a holding company, which engages in the provision of integrated payment and software solutions to small-and medium-sized businesses and organizations in strategic vertical markets. It operates through the following segments: Merchant Services, Proprietary Software and Payments, and Others. The Merchant Services segment offers comprehensive payment solutions to businesses and organizations. The Proprietary Software and Payments segment delivers embedded payment solutions to clients through company-owned software. The Other segment covers corporate overhead expenses. The company was founded on January 17, 2018 and is headquartered in Nashville, TN.
How the Company Makes Moneyi3 Verticals makes money through a diversified revenue model centered on transaction-based fees, subscription services, and software sales. The company earns revenue by processing electronic payments for merchants and charging a fee for each transaction. Additionally, i3 Verticals offers subscription-based services for its proprietary software solutions, which provide recurring revenue streams. The company also generates income through partnerships with financial institutions and other entities, enhancing its service offerings and expanding its customer base. These partnerships, along with strategic acquisitions, play a significant role in i3 Verticals' growth and revenue generation.
I3 Verticals Financial Statement Overview
Summary
I3 Verticals demonstrates strong profitability and efficient cost management, as evidenced by high net and gross profit margins. The balance sheet reflects low leverage and strong equity utilization, though revenue growth is a concern. Cash flow remains stable, but the company faces challenges in free cash flow growth. Overall, the financial health is sound with room for improvement in revenue generation.Income Statement
I3 Verticals shows strong profitability with a high net profit margin of 41.8% in TTM (Trailing-Twelve-Months), driven by significant net income growth. The gross profit margin is robust at 85.0%, reflecting efficient cost management. Revenue growth, however, is negative over the past year, indicating a decline in sales, which is a concern for future growth potential. The EBIT and EBITDA margins are solid at 5.4% and 17.9% respectively, indicating good operational efficiency.77
Positive
Balance Sheet
The balance sheet displays a stable equity position with an equity ratio of 51.6%, suggesting moderate reliance on equity financing. The debt-to-equity ratio is relatively low at 0.17, indicating low leverage risk. However, the return on equity is exceptionally high at 30.5% in TTM, indicating effective utilization of equity to generate profits. The overall stability is commendable, though the high ROE may be influenced by non-operational gains.65
Positive
Cash Flow
Cash flow analysis reveals healthy operating cash flow with an operating cash flow to net income ratio of 0.41, indicating good cash generation relative to net income. The free cash flow growth rate is negative, pointing to potential challenges in maintaining free cash flow levels. The free cash flow to net income ratio of 0.30 suggests reasonable cash flow from operations, though there is room for improvement.72
Positive
| Breakdown | |||||
| TTM | Sep 2024 | Sep 2023 | Sep 2022 | Sep 2021 | Sep 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 273.13M | 229.92M | 370.24M | 317.86M | 224.12M | 150.13M | Gross Profit |
| 232.13M | 211.35M | 289.69M | 244.50M | 166.42M | 102.90M | EBIT |
| 14.71M | 6.85M | 22.71M | 20.29M | 9.72M | 3.74M | EBITDA |
| 50.25M | 33.23M | 57.73M | 30.91M | 30.20M | 23.37M | Net Income Common Stockholders |
| 114.30M | 113.34M | -811.00K | -23.22M | -7.84M | -979.00K |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 85.55M | 86.54M | 3.11M | 3.49M | 3.64M | 15.57M | Total Assets |
| 726.23M | 730.67M | 881.49M | 770.31M | 651.80M | 403.53M | Total Debt |
| 64.32M | 65.39M | 400.02M | 305.58M | 215.77M | 90.76M | Net Debt |
| -21.23M | -21.15M | 396.91M | 302.09M | 212.13M | 75.19M | Total Liabilities |
| 215.09M | 215.32M | 553.20M | 462.62M | 362.21M | 163.36M | Stockholders Equity |
| 374.99M | 379.74M | 236.75M | 218.38M | 204.76M | 155.58M |
| Cash Flow | Free Cash Flow | ||||
| 31.48M | 48.41M | 18.13M | 33.40M | 38.57M | 17.77M | Operating Cash Flow |
| 46.85M | 48.41M | 34.50M | 45.85M | 46.77M | 23.72M | Investing Cash Flow |
| 401.90M | 396.15M | -121.52M | -113.05M | -156.31M | -35.43M | Financing Cash Flow |
| -370.63M | -367.36M | 75.65M | 73.03M | 102.10M | 29.11M |
I3 Verticals Technical Analysis
Negative
23.20
Price Trends
25.41
Negative
24.57
Negative
23.17
Positive
Market Momentum
-0.68
Positive
31.47
Neutral
5.49
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For IIIV, the sentiment is Negative. The current price of 23.2 is below the 20-day moving average (MA) of 26.14, below the 50-day MA of 25.41, and above the 200-day MA of 23.17, indicating a neutral trend. The MACD of -0.68 indicates Positive momentum. The RSI at 31.47 is Neutral, neither overbought nor oversold. The STOCH value of 5.49 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for IIIV.
I3 Verticals Risk Analysis
I3 Verticals disclosed 55 risk factors in its most recent earnings report. I3 Verticals reported the most risks in the “Legal & Regulatory” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
I3 Verticals Peers Comparison
Overall Rating
UnderperformOutperform
Sector (58)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $11.83B | 23.16 | 34.88% | 0.73% | 11.19% | 51.03% | |
74 Outperform | $792.61M | 4.90 | 1.23% | ― | -27.40% | 21780.54% | |
74 Outperform | $67.88B | 16.74 | 20.00% | ― | 7.10% | 4.45% | |
74 Outperform | $34.63B | 11.88 | 14.50% | ― | 10.06% | 38060.98% | |
73 Outperform | $23.00B | 15.08 | 6.94% | 1.08% | 4.68% | 63.39% | |
58 Neutral | $21.67B | 10.04 | -18.58% | 2.39% | 5.01% | -23.17% | |
51 Neutral | $36.08B | 48.04 | 4.65% | 2.11% | -17.38% | ― |
* Technology Sector Average
Performance Comparison
IIIV
I3 Verticals
23.20
1.20
5.45%
FIS
Fidelity National Info
69.75
1.92
2.83%
GPN
Global Payments
92.18
-36.78
-28.52%
PAYC
Paycom
202.82
14.60
7.76%
PYPL
PayPal Holdings
66.91
4.06
6.46%
XYZ
Block
54.04
-26.13
-32.59%
I3 Verticals Earnings Call Summary
Earnings Call Date: Feb 6, 2025 | % Change Since: -9.66% | Next Earnings Date: May 12, 2025
Earnings Call Sentiment Positive
The earnings call reflected a positive sentiment overall, with substantial revenue and EBITDA growth, driven by the SaaS segment and successful M&A activities. Despite a notable decline in the healthcare segment's revenue, the company's strategic focus on the public sector and a strong balance sheet indicate a robust outlook.Highlights
Revenue and EBITDA Growth
Revenue increased 12% over the prior year's Q1, reaching $61.7 million, and adjusted EBITDA grew by 17% to $16.4 million.
SaaS Revenue Increase
SaaS revenue grew by 16%, contributing to the company's annual recurring revenue growth of 7.6%.
Public Sector Revenue Growth
Revenues in the public sector vertical increased by 12% to $48.8 million, driven by recurring revenue streams such as SaaS and transaction-based revenues.
Successful M&A Strategy
The most recent acquisition in the permitting and licensing space exceeded expectations and contributed approximately $1 million in revenue.
Strong Balance Sheet
The company had $85.6 million in cash as of December 31, 2024, with $450 million of borrowing capacity.
Lowlights
Healthcare Segment Revenue Decline
Healthcare segment revenues decreased 14% to $13.2 million, despite an increase in adjusted EBITDA by 34%.
Timing of Software License Sales
Non-recurring sales of software licenses increased to $2.7 million from $0.4 million, but the timing of these sales was earlier than expected, impacting fiscal expectations.
Company Guidance
In the first quarter of fiscal year 2025, i3 Verticals reported a 12% increase in revenue, reaching $61.7 million, up from $55.1 million in Q1 2024, with organic growth accounting for 10% of this increase and an additional $1 million from a recent acquisition. Adjusted EBITDA rose 17% to $16.4 million, representing 26.5% of revenues, up from 25.4% in the previous year. The company saw significant growth in SaaS revenue at 16%, contributing to a 7.6% increase in annual recurring revenues to $193.3 million. Payments revenue grew by 7%, with expectations for SaaS and payments to lead revenue growth throughout the year. The public sector, which comprises 79% of total revenues, experienced a 12% revenue increase, while the healthcare segment saw a 14% rise in revenues, driven by recurring software services and software license sales. The company reaffirmed its guidance for FY 2025, projecting revenues between $243 million and $263 million, with adjusted EBITDA ranging from $63 million to $71.5 million, and pro forma adjusted diluted earnings per share between $1.05 and $1.25.I3 Verticals Corporate Events
Business Operations and StrategyFinancial Disclosures
i3 Verticals Reports Strong Fiscal Q1 2024 Results
Positive
Feb 6, 2025
i3 Verticals reported its financial results for the fiscal first quarter ending December 31, 2024, showing a 12.1% increase in revenue from continuing operations compared to the previous year. The company also turned a net income of $3.3 million, a significant improvement from a net loss of $4.2 million in the prior year’s first quarter. With a strong balance sheet and upward trends in revenue and margins, i3 Verticals expects continued growth in its SaaS segment and payment capabilities, despite divesting its merchant services business. The company reaffirmed its fiscal year 2025 outlook, highlighting its ability to integrate payment services within its existing software offerings as a key competitive advantage.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.