8-K: i3 Verticals Reports Strong FY25 Revenue Growth, Q4 Net Income Dips

i3 Verticals, Inc. announced its fiscal fourth quarter and full fiscal year 2025 financial results, highlighting significant annual revenue growth and a strategic focus on public sector software solutions.

Summary

• Fourth quarter 2025 revenue from continuing operations was $54.9 million, an increase of 7.0% over the prior year's fourth quarter.
• Full year 2025 revenue from continuing operations was $213.2 million, an increase of 11.5% over the prior year.
• Fourth quarter 2025 net income from continuing operations was $1.5 million, compared to $6.3 million in the prior year's fourth quarter.
• Full year 2025 net income from continuing operations was $5.6 million, compared to a net loss of $16.0 million for the year ended September 30, 2024.
• Fourth quarter 2025 adjusted EBITDA from continuing operations was $14.4 million, a decrease of 1.5% over the prior year's fourth quarter.
• Full year 2025 adjusted EBITDA from continuing operations was $57.5 million, an increase of 14.0% over the prior year.
• Full year 2025 adjusted diluted earnings per share from continuing operations was $1.05, compared to $0.30 for the year ended September 30, 2024.
• Annualized Recurring Revenue (ARR) from continuing operations for the fourth quarter of 2025 was $165.3 million, representing a period-to-period growth rate of 9.2%.
• SaaS revenue grew 23% compared to the prior year.
• The company has over $65 million in cash on hand.

Sentiment

Score: 7

Explanation: The company demonstrated strong full-year financial improvements, particularly in net income and adjusted EPS, and robust SaaS revenue growth, indicating a successful strategic pivot to its public sector software focus. While Q4 showed some sequential declines in net income and adjusted EBITDA, the overall trajectory and positive 2026 outlook suggest a healthy and growing business.

Positives

• Full year 2025 revenue from continuing operations increased by 11.5% to $213.2 million.
• Full year 2025 net income from continuing operations significantly improved to $5.6 million, compared to a net loss of $16.0 million in fiscal year 2024.
• Full year 2025 adjusted EBITDA from continuing operations increased by 14.0% to $57.5 million.
• Full year 2025 adjusted diluted earnings per share from continuing operations rose substantially to $1.05, up from $0.30 in fiscal year 2024.
• Annualized Recurring Revenue (ARR) for Q4 2025 grew 9.2% to $165.3 million.
• SaaS revenue demonstrated robust growth of 23% compared to the prior year.
• Secured a new contract with the Supreme Court of Appeals of West Virginia to implement new case management software statewide.
• The company maintains a strong cash position with over $65 million on hand.

Negatives

• Fourth quarter 2025 net income from continuing operations decreased significantly to $1.5 million, compared to $6.3 million in the prior year's fourth quarter.
• Fourth quarter 2025 adjusted EBITDA from continuing operations decreased by 1.5% to $14.4 million.
• Fourth quarter 2025 diluted net income per share attributable to Class A common stock from continuing operations decreased to $0.04, compared to $0.19 in the prior year's fourth quarter.
• Adjusted EBITDA from continuing operations as a percentage of revenue was 26.2% for Q4 2025, down from 28.5% for Q4 2024.

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.
• Factors that are difficult or impossible to predict accurately and many of which are beyond the company's control, which could cause actual results to differ from forward-looking statements.

Future Outlook

i3 Verticals provides an outlook for the fiscal year ending September 30, 2026, projecting revenue between $217.0 million and $232.0 million, adjusted EBITDA between $58.5 million and $65.0 million, and adjusted diluted earnings per share between $1.06 and $1.16. This guidance excludes the impact of future acquisitions and transaction-related costs.

Management Comments

• "We are pleased to report our earnings for the fourth quarter of fiscal 2025. For the quarter, we achieved 7% revenue growth and over 11% for the fiscal year overall. SaaS revenue grew 23% compared to the prior year."
• "We continue to accelerate investments in new solutions for courts and utilities."
• "We recently announced a new contract with the Supreme Court of Appeals of West Virginia to implement our new case management software statewide. Although our work continues, we are excited to share this early validation of the opportunity we see in the market."
• "With over $65 million in cash on hand, we will always be thoughtful about ways to enhance our offerings for state and local governments. The future of our business is bright and we cant wait to grow in 2026 and beyond."

Industry Context

i3 Verticals is strategically focused on providing mission-critical enterprise software solutions to public sector entities, including courts, public safety, public administration, utilities, transportation, and schools. The company's emphasis on SaaS revenue growth (23% year-over-year) and recurring revenue (ARR up 9.2%) aligns with broader industry trends favoring subscription-based models and stable revenue streams in specialized software markets. The divestiture of its Merchant Services and Healthcare RCM businesses indicates a clear pivot to its core public sector software vertical, aiming for more focused growth and leveraging its extensive presence across all 50 states and Canada.

Management Changes

Stakeholder Impact

• Shareholders: Positive impact from improved full-year profitability, strong recurring revenue growth, and positive future outlook. Potential concern from Q4 net income and adjusted EBITDA decline.
• Employees: Continued investment in new solutions and growth plans suggest stability and potential for expansion.
• Customers (Public Sector Entities): Benefit from accelerated investments in new solutions and expanded offerings, such as the new case management software for the West Virginia Supreme Court.

Next Steps

• Continue accelerating investments in new solutions for courts and utilities.
• Focus on growth in 2026 and beyond.
• Host a conference call on November 18, 2025, to discuss financial results and operations.

Key Dates

Recommendation

While the full-year results show significant improvement and the company has a clear strategic focus on a growing public sector software market with strong recurring revenue, the sequential decline in Q4 net income and adjusted EBITDA, coupled with a director resignation, introduces some caution. The 2026 outlook is positive but within a reasonable range. A "Hold" recommendation allows investors to observe the execution of the strategy and the performance in the upcoming quarters, especially regarding the Q4 dip, before making a stronger commitment. The company's strong cash position and SaaS growth are positive, but the recent Q4 performance warrants a watchful approach.

Keywords

i3 Verticals, IIIV, financial results, earnings, Q4 2025, fiscal year 2025, revenue, net income, EBITDA, adjusted EPS, SaaS, public sector software, government solutions, recurring revenue, SEC filing, 8-K