8-K: i3 Verticals Reports Q1 FY26 Results, Boosts Outlook

i3 Verticals, Inc. announced its first quarter fiscal year 2026 financial results, which were in line with expectations, alongside a new share repurchase program and an upward revision to its full-year 2026 guidance.

Summary

• Revenue from continuing operations for Q1 FY26 was $52.7 million, a 0.9% increase year-over-year.
• Net income from continuing operations decreased to $1.1 million from $2.8 million in the prior year's first quarter.
• Adjusted EBITDA from continuing operations was $13.6 million, down from $14.6 million in the prior year.
• Annualized Recurring Revenue (ARR) grew 8.4% to $169.6 million as of December 31, 2025.
• Completed the acquisition of a driver and motor vehicle insurance verification software company for $60.0 million in cash, with potential contingent consideration up to $20.0 million, effective January 1, 2026.
• The Board of Directors approved a new $60 million share repurchase program, replacing the fully expended prior program, set to terminate by February 4, 2027.
• Revised fiscal year 2026 outlook, increasing the lower and upper bounds for revenue and Adjusted EBITDA, and the lower bound for Adjusted diluted EPS.

Sentiment

Score: 7

Explanation: StockSavvy.ai views this as a moderately positive report. While GAAP net income and EBITDA declined, the strong recurring revenue growth, strategic acquisition, and upward revision of full-year guidance indicate underlying business strength and management confidence.

Positives

• Annualized Recurring Revenue (ARR) from continuing operations increased by 8.4% year-over-year to $169.6 million.
• SaaS growth in the first quarter rose to 24%.
• Successfully completed a strategic acquisition of a motor vehicle insurance verification software company for $60.0 million, which is expected to be a "perfect fit" and has a "unique competitive advantage."
• The company's Board approved a new $60 million share repurchase program, indicating confidence in future cash flow and a commitment to shareholder returns.
• Revised fiscal year 2026 outlook shows increased guidance ranges for revenue (to $223.0 million $234.0 million), Adjusted EBITDA (to $61.0 million $66.5 million), and Adjusted diluted EPS (to $1.08 $1.16).
• Interest expense decreased by 44% to $381 thousand compared to $680 thousand in the prior year's first quarter.

Negatives

• Net income from continuing operations decreased significantly by 60.7% to $1.1 million from $2.8 million in the prior year's first quarter.
• Net income attributable to i3 Verticals, Inc. from continuing operations fell by 68.4% to $0.6 million from $1.9 million.
• Adjusted EBITDA from continuing operations decreased by 6.8% to $13.6 million from $14.6 million in the prior year.
• Adjusted EBITDA as a percentage of revenue declined to 25.8% from 27.9% in the prior year's first quarter.
• Diluted net income per share attributable to Class A common stock from continuing operations decreased by 75% to $0.02 from $0.08.
• Adjusted diluted earnings per share from continuing operations slightly decreased to $0.26 from $0.27.
• Cash and cash equivalents decreased from $66.672 million at September 30, 2025, to $37.523 million at December 31, 2025.
• Net cash used in financing activities increased significantly to $40.451 million from $10.467 million in the prior year.

Risks

• Ongoing and future economic and geopolitical conditions, including the impact of inflation, elevated interest rates, and tariff and trade-related developments.
• Competition in the industry and the company's ability to compete effectively.
• Regulatory developments.
• The successful integration of acquired businesses.
• The company's ability to execute on its strategy and achieve its goals following the completion of the sale of its Merchant Services Business and Healthcare RCM Business.
• Future decisions made by the company and its competitors.

Future Outlook

i3 Verticals has revised its fiscal year 2026 outlook, increasing the lower and upper bounds for revenue to a range of $223.0 million to $234.0 million, and Adjusted EBITDA to a range of $61.0 million to $66.5 million. The lower bound for Adjusted diluted earnings per share has also been raised to $1.08, with the upper bound remaining at $1.16. This guidance excludes the impact of future acquisitions and transaction-related costs.

Management Comments

• "We are pleased to report our first quarter of fiscal 2026 results, which were in line with our expectations and market guidance." Greg Daily, Chairman and CEO.
• "While total revenue grew modestly at 1% year over year, recurring revenue increased by more than 8%, reflecting our long-term growth strategy. SaaS growth in the first quarter rose to 24%." Greg Daily.
• "I am very excited to announce our latest acquisition, effective January 1, 2026, which is a perfect fit within our transportation market. We self-sourced this transaction, and our deep relationships within the market made it possible." Greg Daily.
• "We believe the product has a unique competitive advantage, and the company has never lost a customer. The team brings an incredible track record, and it has been a pleasure welcoming them to i3. We are excited to do great things together!" Greg Daily.
• "While we're pleased with our start to the fiscal year, we look forward to sharing more as the year progresses." Greg Daily.

Industry Context

StockSavvy.ai notes that i3 Verticals' focus on mission-critical enterprise software solutions for public sector entities positions it in a resilient market segment, often less susceptible to economic cyclicality than broader commercial markets. The emphasis on recurring revenue and SaaS growth aligns with prevailing industry trends towards subscription-based models, which typically offer greater revenue predictability and higher valuations. The strategic acquisition in the motor vehicle insurance verification space further solidifies its vertical market expertise, a common strategy among successful niche software providers.

Corporate Governance

Stakeholder Impact

• Shareholders: Potential positive impact from the new $60 million share repurchase program, which could increase earnings per share and stock value. The upward revision of guidance also suggests improved future financial performance.
• Employees: The acquisition of a new software company will integrate new employees into i3 Verticals, potentially expanding the workforce and expertise.
• Customers: The acquisition of a motor vehicle insurance verification software company aims to enhance product offerings and competitive advantage, potentially benefiting customers in the transportation market.
• Creditors: The share repurchase program is subject to compliance with contractual restrictions under the company's credit facility, indicating that creditor interests are considered.

Next Steps

• Host a conference call on February 6, 2026, at 8:30 a.m. EDT to discuss financial results and operations.
• Continue to execute the new $60 million share repurchase program until February 4, 2027, or until the maximum amount is expended.
• Integrate the newly acquired driver and motor vehicle insurance verification software company.
• Provide further updates on fiscal year progress.

Key Dates

Recommendation

While i3 Verticals demonstrated strong recurring revenue growth and strategic M&A, the significant decline in GAAP net income and Adjusted EBITDA in the quarter warrants caution. The upward revision of full-year guidance and the new share repurchase program are positive signals, but the immediate quarter's profitability dip suggests a 'hold' until further clarity on sustained earnings improvement and successful integration of the new acquisition.

Keywords

i3 Verticals, IIIV, Financial Results, Q1 2026, Earnings, SEC Filing, 8-K, Software Solutions, Public Sector, SaaS, Recurring Revenue, Acquisition, Share Repurchase, Guidance, Fintech, Government Technology