I3 Verticals (IIIV) AI Stock Analysis

• Market Cap: $946.68M
• Dividend Yield: N/A
• Average Volume (3M): 380.72K
• Price to Earnings (P/E): 6.1
• Beta (1Y): 0.74
• Revenue Growth: -35.88%
• EPS Growth: 4611.09%
• Country: US
• Employees: 1,480
• Sector: Technology
• Sector Strength: 90
• Industry: Software - Infrastructure
• EPS (TTM): 0.32
• Shares Outstanding: 24,384,745
• 10 Day Avg. Volume: 330,163
• 30 Day Avg. Volume: 380,717
• PEG Ratio: -3.22
• Price to Book (P/B): 1.76
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 2.17K
• Enterprise Value/Market Cap: 0.76
• Enterprise Value/Revenue: 0.62
• Enterprise Value/Gross Profit: 3.81
• Enterprise Value/Ebitda: 3.43
• 1Y Price Target: $31.00
• Price Target Upside: 8.05% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 4

• Rating: 73 Outperform
• Price Target: $32.00 ▲(11.54%Upside)

The overall stock score reflects strong technical momentum and attractive valuation. While solid profitability margins provide a foundation, concerns about declining revenue and cash flow need addressing. Recent strategic moves and guidance highlight potential for future growth.

Positive Factors

Company Transformation

I3 Verticals transformed itself into a company focused on providing integrated software solutions to the Public Sector, resulting in a debt-free balance sheet and potential for new deals.

Recurring Revenue

With 75% of revenues being recurring and strong free cash flow generation, i3 Verticals offers attractive financial characteristics for potential buyers.

Revenue Growth

The company's recent divestitures have led to higher revenue growth rates and better adjusted EBITDA margins, making the business more attractive.

Negative Factors

Investor Confidence

Investors might be less comfortable with what go-forward growth looks like ex-Merchant and ex-Healthcare, especially as the durability of Public Sector growth is still somewhat uncertain.

Macroeconomic Challenges

The revised pro forma FY2025 guidance was softened slightly due to macro headwinds and Manitoba contract timing.

Stock Performance

Despite consistent execution from i3 Verticals, the share price is unchanged over the last five years, indicating a lack of clear catalyst for a re-rating.

I3 Verticals Business Overview & Revenue Model

Company Description

i3 Verticals, Inc. provides integrated payment and software solutions to small- and medium-sized businesses and organizations in education, non-profit, public sector, and healthcare markets in the United States. It operates in two segments, Merchant Services, and Proprietary Software and Payments. The company offers payment processing services that enables clients to accept electronic payments, facilitating the exchange of funds and transaction data between clients, financial institutions, and payment networks. The company also licenses software; and provides ongoing support, and other point of sale-related solutions. It offers its solutions to clients through direct sales force; distribution partners, including independent software vendors, value-added resellers, and independent sales organizations; and referral partners, such as financial institutions, trade associations, chambers of commerce, and card issuers. The company was founded in 2012 and is headquartered in Nashville, Tennessee.

How the Company Makes Money

i3 Verticals makes money primarily through transaction fees generated from its payment processing services, which enable businesses to accept electronic payments from their customers. Additionally, the company earns revenue from the sale and licensing of its proprietary software solutions, which are designed to meet the specific needs of the sectors it serves. Key revenue streams include transaction-based revenue from payment processing, subscription fees from software-as-a-service (SaaS) offerings, and professional services fees for implementation and support. Strategic partnerships with financial institutions and technology providers also play a significant role in expanding its market reach and enhancing its product offerings.

I3 Verticals Financial Statement Overview

Summary

I3 Verticals exhibits strong profitability margins with a gross profit margin of 78.1% and net profit margin of 46.5% TTM. However, declining revenue and operating cash flow, along with asset shrinkage, raise concerns about future growth and liquidity.

Income Statement

The company shows a strong gross profit margin of 78.1% TTM, indicating efficient cost management relative to revenue. Net profit margin improved to 46.5% TTM, reflecting significant net income gains. However, revenue has declined from $370.2 million in 2023 to $241.7 million TTM, indicating a negative growth trajectory. EBIT and EBITDA margins of 3.9% and 17.9% respectively suggest moderate profitability.

Balance Sheet

The debt-to-equity ratio is 0.11 TTM, showing low leverage and financial stability. Return on equity (ROE) stands at 29.1% TTM, indicating effective use of equity to generate profits. The equity ratio of 59.6% TTM suggests a strong equity base. However, the reduction in total assets from $881.5 million in 2023 to $646.4 million TTM indicates potential asset shrinkage.

Cash Flow

Operating cash flow has decreased from $34.5 million in 2023 to $7.6 million TTM, signaling declining operational efficiency. Free cash flow has also dropped significantly from $18.1 million in 2023 to $318,000 TTM, reflecting limited cash available after capital expenditures. The operating cash flow to net income ratio is 0.07 TTM, suggesting limited cash coverage of net income.

Breakdown	Sep 2024	Sep 2023	Sep 2022	Sep 2021	Sep 2020
Income Statement
Total Revenue	229.92M	370.24M	317.86M	224.12M	150.13M
Gross Profit	211.35M	289.69M	244.50M	166.42M	102.90M
EBITDA	47.69M	57.73M	30.91M	30.20M	23.37M
Net Income	113.34M	-811.00K	-23.22M	-7.84M	-979.00K
Balance Sheet
Total Assets	730.67M	881.49M	770.31M	651.80M	403.53M
Cash, Cash Equivalents and Short-Term Investments	86.54M	3.11M	3.49M	3.64M	15.57M
Total Debt	36.05M	400.02M	305.58M	215.77M	90.76M
Total Liabilities	215.32M	553.20M	462.62M	362.21M	163.36M
Stockholders Equity	379.74M	236.75M	218.38M	204.76M	155.58M
Cash Flow
Free Cash Flow	48.41M	18.13M	33.40M	38.57M	17.77M
Operating Cash Flow	48.41M	34.50M	45.85M	46.77M	23.72M
Investing Cash Flow	396.15M	-121.52M	-113.05M	-156.31M	-35.43M
Financing Cash Flow	-367.36M	75.65M	73.03M	102.10M	29.11M

I3 Verticals Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 28.69
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For IIIV, the sentiment is Positive. The current price of 28.69 is above the 20-day moving average (MA) of 28.37, above the 50-day MA of 26.36, and above the 200-day MA of 25.00, indicating a bullish trend. The MACD of 0.76 indicates Positive momentum. The RSI at 56.99 is Neutral, neither overbought nor oversold. The STOCH value of 58.69 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for IIIV.

I3 Verticals Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
VRNT	74 Outperform	$1.33B	28.49	5.32%	―	-2.09%	76.96%
IIIV	73 Outperform	$946.68M	6.12	0.63%	―	-35.88%	4611.09%
ATEN	73 Outperform	$1.35B	28.13	24.36%	1.29%	4.90%	9.91%
RDWR	68 Neutral	$1.22B	107.85	3.78%	―	9.54%	―
BASE	68 Neutral	$1.33B	―	-55.90%	―	12.76%	16.97%
DAVA	64 Neutral	$857.73M	37.24	2.85%	―	7.58%	-57.13%
Sector *	50 Neutral	C$3.03B	2.50	-63.12%	2.26%	4.49%	-6.07%

I3 Verticals Corporate Events

I3 Verticals Reports Q2 Revenue Growth and Acquisition

i3 Verticals reported an 8.8% increase in second-quarter revenue for 2025, reaching $63.1 million, and a net income of $1.1 million, reversing a loss from the previous year. The company completed the acquisition of a utility billing software company and divested its Healthcare Revenue Cycle Management business, aiming to focus on expanding its enterprise software offerings in the public sector.

i3 Verticals Sells Healthcare Division to Infinx

On May 5, 2025, i3 Verticals, LLC, a subsidiary of i3 Verticals, Inc., completed the sale of its healthcare revenue cycle management business to Infinx, Inc. for $96 million in cash. This divestiture allows i3 Verticals to focus on its core operations in the Public Sector, particularly in the K-12 education market, while Infinx enhances its AI-driven solutions with the acquired expertise and technology.