Breaking Down i3 Verticals, Inc. (IIIV) Financial Health: Key Insights for Investors

You've seen the headlines about i3 Verticals, Inc. (IIIV) and the market's knee-jerk reaction to their outlook, but the real story is in the numbers that define their pivot: for fiscal year 2025, the company delivered full-year revenue of $213.2 million, an 11.5% increase, plus adjusted diluted earnings per share (EPS) of $1.05. That top-line growth is defintely solid, but the near-term risk is clear-the conservative fiscal year 2026 guidance, which projects revenue growth as low as 2%, sent the stock tumbling. Still, you need to look past the dip to the foundational shift: their sticky software-as-a-service (SaaS) revenue jumped 23% year-over-year, pushing Annualized Recurring Revenue (ARR) to $165.3 million, which now makes up 75% of their Q4 revenue. Plus, with over $65 million in cash and no debt, they have the balance sheet optionality to either snap up a competitor or execute an aggressive stock repurchase, making this a classic case of short-term pain versus long-term strategic gain. We break down whether this public-sector pure-play is a value trap or a deeply mispriced growth story.

Revenue Analysis

You're looking for a clear picture of where i3 Verticals, Inc. (IIIV) is making its money, especially after their strategic divestitures. The direct takeaway is this: the company is now a pure-play public sector software provider, and its growth is squarely driven by high-margin, sticky recurring revenue, primarily Software-as-a-Service (SaaS). This shift is defintely the story here.

For the full fiscal year 2025, i3 Verticals reported total revenue from continuing operations of $213.2 million, which represents a solid year-over-year increase of 11.5%. This growth, while steady, is underpinned by a significant strategic pivot away from non-core assets like their Merchant Services and Healthcare Revenue Cycle Management (RCM) businesses, which they sold off to focus on the public sector.

The real engine is the move toward a subscription model. Annualized Recurring Revenue (ARR) from continuing operations hit $165.3 million in the fourth quarter of 2025, growing 9.2% compared to the prior year period. This focus on recurring revenue is what gives the business long-term stability.

Here's the quick math on the current revenue mix, based on the third quarter of fiscal 2025, which gives you the clearest segment breakdown post-divestiture:

• Software and Related Services: Contributed 70% of continuing operations revenue.
• Payments: Accounted for 25% of continuing operations revenue.
• Other: Made up the remaining 5%.

Within that Software and Related Services segment, SaaS revenue is the star, growing 23% in the fourth quarter of 2025 compared to the prior year. This is a critical metric because it shows customers are adopting the higher-value, subscription-based products. To be fair, the overall Q4 2025 revenue growth rate slowed slightly to 7.0% (total revenue of $54.9 million for the quarter), but the CEO noted this is a transitional challenge as they lean into recurring revenue.

The company is now operating as a single segment-a pure-play public sector software provider-which simplifies the investment thesis. The key change is the aggressive push into SaaS (Software-as-a-Service) solutions for government organizations, courts, and utilities, which is replacing non-recurring license sales with predictable, long-term contracts. This shift is the biggest change in the revenue stream and is positioning the company for higher-quality, albeit sometimes slower, growth. You can dive deeper into this strategic shift in the full post: Breaking Down i3 Verticals, Inc. (IIIV) Financial Health: Key Insights for Investors.

Your action item is to track the SaaS revenue growth rate closely; if it stays above the overall revenue growth, the quality of the company's revenue base is improving, even if the headline growth number fluctuates in the near term.

Profitability Metrics

You want to know if i3 Verticals, Inc. (IIIV) is actually making money after its big strategic pivot. The short answer is yes, but the real story is in the margins-and they look like a pure-play software business is emerging. For the fiscal year ended September 30, 2025 (FY2025), i3 Verticals posted a net income of $5.6 million on revenue of $213.2 million from continuing operations.

Here's the quick math: that translates to a Net Profit Margin of about 2.63%. That number is thin, but it's a massive turnaround from the net loss of $16.0 million in FY2024, showing the immediate benefit of shedding non-core, lower-margin businesses. The company got leaner, and it's starting to pay off.

Operational Efficiency and Margin Trends

When analyzing a company in a high-growth transition like i3 Verticals, the Adjusted EBITDA margin (Earnings Before Interest, Taxes, Depreciation, and Amortization) is a better measure of core operational efficiency than the GAAP figures. This metric strips out non-cash charges and is what management uses to track performance.

i3 Verticals' full-year Adjusted EBITDA from continuing operations was $57.5 million in FY2025, a 14.0% increase over the prior year. This pushed the Adjusted EBITDA Margin up to 27.0%, an improvement from 26.4% in FY2024. This 60-basis-point improvement was mainly driven by lower corporate expenses after the two divestitures, which is a clear sign of effective cost management.

• Net Profit Margin: 2.63% (FY2025, from $5.6M Net Income on $213.2M Revenue)
• Adjusted EBITDA Margin: 27.0% (Up from 26.4% in FY2024)

The High-Margin Software Engine

The key to understanding i3 Verticals' future profitability lies in its Gross Profit margin, which is bifurcated (split) between its public-sector software and its remaining payment processing business. The strategic shift to being a pure-play public-sector software provider is all about capturing the higher margins that software-as-a-service (SaaS) offers.

Analyst estimates suggest the gross margin for their software-led lines is breathtakingly high, sitting at around 90.7%. That means for every dollar of software they sell, 90 cents is gross profit. This is the profile software investors pay a premium for, and it's why the company is focused on increasing the mix of recurring revenue. Recurring sources now make up about 75% of total revenue, with SaaS revenue growing a healthy 23% year-over-year.

Comparing Ratios to Industry Peers

i3 Verticals' operational profitability stacks up very well against the broader fintech and software industry. Scaled fintechs commonly target a 10% to 25% EBITDA or net profit margin post-scale. i3 Verticals' Adjusted EBITDA Margin of 27.0% is already at the high end of this range, or even slightly above it, which is a strong indicator of a high-quality, scaled software business model.

For context, a competitor like Paysafe Limited is guiding for a 2025 Adjusted EBITDA margin of roughly 27.1% to 27.6%, placing i3 Verticals right in the competitive ballpark for operational efficiency. The trend is clear: the divestitures and focus on software are moving i3 Verticals from a mixed-bag payments company toward a high-margin software peer.

The table below summarizes the core profitability metrics for i3 Verticals, Inc. (IIIV) for the last two fiscal years:

To dig deeper into the valuation implications of this pivot, read the full analysis: Breaking Down i3 Verticals, Inc. (IIIV) Financial Health: Key Insights for Investors

Debt vs. Equity Structure

The headline takeaway here is simple: i3 Verticals, Inc. (IIIV) ended its fiscal year 2025 with a virtually debt-free balance sheet, a major shift that fundamentally de-risks the company's financial profile. You are looking at a company that is currently funding its growth almost entirely through equity and retained earnings, not borrowed money.

As of September 30, 2025, i3 Verticals reported $0 in total debt, meaning both long-term and short-term debt obligations were effectively eliminated. This is a significant move, especially for a company that has historically relied on acquisitions to fuel its expansion. Earlier in the fiscal year, the company retired the remainder of its convertible notes, which had stood at $26.2 million.

Here's the quick math on their leverage profile:

• Total Debt (Q4 2025): $0
• Total Shareholders' Equity (Recent): Approximately $517.7 million
• Debt-to-Equity (D/E) Ratio: 0%

The resulting Debt-to-Equity (D/E) ratio is 0%, making i3 Verticals an outlier in the financial technology space. To be fair, most Capital Markets firms operate with a D/E ratio closer to 0.53, and a D/E ratio under 1.0 is generally considered healthy for most industries. The company's zero-debt position gives them maximum financial flexibility and a massive buffer against any near-term economic volatility.

The company hasn't issued new debt in 2025; instead, they paid it off. Still, they have a clear plan for future, opportunistic debt financing. i3 Verticals maintains a substantial $400 million in borrowing capacity under a revolving credit facility, which has a 5x leverage constraint. This is the key to their balancing act: they use equity and cash flow for organic growth and smaller acquisitions, but they keep a large, undrawn credit line ready to fund any large, strategic acquisitions that meet their strict public sector software focus.

This strategy shows a trend-aware realism. In a rising-rate environment, paying off debt is defintely the smart play. It means future earnings won't be eaten up by interest expense, which is a huge advantage over more leveraged competitors. For a deeper dive into the company's strategic pivot, you can read our full analysis: Breaking Down i3 Verticals, Inc. (IIIV) Financial Health: Key Insights for Investors

Liquidity and Solvency

You want to know if i3 Verticals, Inc. (IIIV) has the cash to cover its near-term obligations, and the short answer is a definitive yes. The company's strategic pivot to a pure-play public sector software provider has resulted in a remarkably clean and strong balance sheet, giving them a significant financial advantage for future growth.

The key takeaway is that i3 Verticals ended fiscal year 2025 (September 30, 2025) with $66.67 million in cash and, critically, zero debt on the balance sheet. This is a massive shift from prior years and essentially eliminates any immediate solvency concerns.

Current and Quick Ratios Signal Strength

The traditional liquidity metrics-the Current Ratio and Quick Ratio-show a company that is well-positioned to meet its obligations. A ratio above 1.0x is generally considered healthy, and i3 Verticals is far above that threshold.

For the fiscal year ending September 30, 2025, the company's liquidity position is exceptional:

• Current Ratio: 2.02x. This means i3 Verticals has over two dollars in current assets (cash, receivables, etc.) for every one dollar of current liabilities.
• Quick Ratio: Approximately 1.8x. This is the acid-test ratio, which excludes less-liquid assets like inventory. A 1.8x ratio confirms that even without selling any inventory, the company has ample cash and receivables to cover its short-term bills.

Honestly, a software company with a 2.02x Current Ratio and zero debt is in a fantastic position. Their short-term assets of approximately $137.6 million comfortably exceed their total current liabilities of $70.69 million.

Working Capital and Cash Flow Trends

The working capital trend has seen a dramatic improvement, moving from a position of negative net working capital in some prior periods to a strong positive of approximately $66.91 million at the end of FY2025. This is a direct result of the divestitures (selling off non-core businesses) that streamlined the focus and brought in substantial cash.

Looking at the cash flow statements, the trends highlight the strategic pivot:

• Operating Cash Flow (OCF): Net cash from continuing operating activities was a positive $7.35 million in Q3 2025, which is a good sign that the core public sector business is generating cash.
• Investing Cash Flow (ICF): This is where the big money moved. Q3 2025 saw a sizable cash inflow of $82.45 million from investing activities, which primarily reflects the proceeds from the sale of non-core assets. This is the war chest.
• Financing Cash Flow (FCF): With zero debt, the financing cash flow is now focused on capital allocation choices like acquisitions and opportunistic stock repurchases, rather than servicing debt.

Near-Term Liquidity Strengths and Actions

The company has immense financial flexibility right now. The liquidity concerns are essentially non-existent, replaced by a strategic opportunity. The $66.67 million cash balance, combined with a $400 million revolving credit facility that is currently undrawn, gives i3 Verticals significant firepower for mergers and acquisitions (M&A) in the public sector software space.

What this means for you is that the risk has shifted from balance sheet health to execution risk. The company is poised to go shopping for tuck-in acquisitions to accelerate its growth, but it needs to pick the right targets and integrate them well. For a deeper look at the market's reaction and who is buying, you should read Exploring i3 Verticals, Inc. (IIIV) Investor Profile: Who's Buying and Why?

Here's the quick math: they have enough cash to buy a company with a $60 million price tag tomorrow without touching their credit line. That's financial strength.

Valuation Analysis

You're looking at i3 Verticals, Inc. (IIIV) and wondering if the market is giving you a fair deal, especially after their recent fiscal 2025 results. The short answer is that the stock appears to be priced reasonably, leaning toward undervalued when you consider its growth in the Public Sector and Healthcare segments, but you need to be realistic about the multiple compression we've seen in the broader payments space.

As of November 2025, i3 Verticals' valuation metrics suggest it's trading below its historical median Enterprise Value-to-EBITDA (EV/EBITDA) multiple, which is a key signal for a potential opportunity. The stock has been volatile, but the underlying business is showing solid growth in key areas. You're defintely not buying a high-growth, high-multiple unicorn here; you're buying a steady vertical software and payments play.

• P/E Ratio (TTM): The trailing twelve-month (TTM) Price-to-Earnings (P/E) ratio stands at approximately 34.50 (as of September 2025 TTM), which is high, but the forward P/E drops to about 21.38, reflecting analyst expectations for significant earnings growth in the coming year.
• Price-to-Book (P/B): The P/B ratio is a modest 1.47, which suggests the stock is not trading at a massive premium to its book value, a good sign of value in a technology-driven company.
• EV/EBITDA (TTM): The Enterprise Value-to-EBITDA multiple is around 15.22 (as of September 2025 TTM). Here's the quick math: with a TTM EBITDA of approximately $42.3 million and an Enterprise Value of about $644.1 million, this multiple is well below its historical median of 23.61, indicating it may be undervalued relative to its own past performance.

The company's full fiscal year 2025 revenue from continuing operations was strong at $213.2 million, an 11.5% increase year-over-year, with Adjusted EBITDA hitting $57.5 million. This growth, plus the adjusted diluted EPS of $1.05 for the year, is what supports the lower forward P/E and the Moderate Buy consensus.

The stock price trend over the last 12 months shows a clear risk-and-opportunity window. The 52-week range runs from a low of $22.00 to a high of $33.97. With the stock recently trading near the $23.44 to $24.20 range in November 2025, it sits much closer to its 52-week low. This recent dip, driven by investor focus on fiscal 2026 guidance, is exactly where a realist investor finds their entry point.

i3 Verticals, Inc. does not currently pay a common stock dividend, so the dividend yield and payout ratios are both 0.00%. This is common for growth-focused firms that prefer to reinvest all earnings back into the business, primarily through acquisitions and organic expansion.

The analyst community has a clear stance: the consensus is a 'Moderate Buy' or 'Buy' rating from a group of 6 to 8 analysts. The average 12-month price target is set between $33.33 and $34.33. This suggests a potential upside of over 40% from the recent stock price. What this estimate hides, though, is the execution risk in integrating new acquisitions and maintaining margins in their core segments. For a deeper dive into who is making these calls, you should be Exploring i3 Verticals, Inc. (IIIV) Investor Profile: Who's Buying and Why?

Your action here is simple: look at the EV/EBITDA of 15.22. It tells you the company is cheaper than its historical average, and analysts agree on the upside. You should start a small position now, especially given the recent price drop, and plan to add more if the stock tests its $22.00 52-week low again.

Risk Factors

You're looking at i3 Verticals, Inc. (IIIV) after a significant portfolio shift-selling off its Merchant Services and Healthcare RCM businesses-which has sharpened its focus but also concentrated its risks. The core takeaway here is that while the strategic pivot to a pure-play public sector software provider is promising, the company is now highly exposed to three main areas: cybersecurity, intense competition in enterprise software, and the execution of its acquisition-heavy growth model.

The company's full fiscal year 2025 revenue from continuing operations hit $213.2 million, an 11.5% increase over the prior year, but you need to look closer at the operational and external headwinds that could slow that growth.

External and Industry Risks: The Regulatory and Competitive Squeeze

The public sector software market, where IIIV now earns approximately 76% of its revenue as recurring business, is not a quiet corner of the economy. Competition is fierce, with larger, more established enterprise software competitors potentially offering more attractive, integrated solutions. This competition directly limits IIIV's pricing power and could lead to customer churn. To be fair, this is the reality of the software-as-a-service (SaaS) world.

• Competition in Enterprise Software: Larger rivals could offer better bundled solutions.
• Evolving Regulatory Landscape: New data privacy and Artificial Intelligence (AI) regulations are constantly emerging.
• Market Conditions: Ongoing economic and geopolitical conditions, including elevated interest rates, impact public sector budgeting cycles and could delay new contract awards.

Also, the rapid evolution of AI and emerging technologies is defintely a double-edged sword; it's a huge opportunity for IIIV's products, but it also makes cyberattacks more sophisticated and harder to detect, amplifying a core operational risk.

Internal and Operational Risks: Execution and Margin Pressure

The most immediate operational risk is the execution of i3 Verticals, Inc.'s acquisition strategy. The company has a history of relying on acquisitions for growth, and while it has a strong balance sheet position to fund them, there's always a risk that future deals won't generate the anticipated revenue or that integration will be challenging.

Another key operational challenge is margin compression. You saw the adjusted EBITDA margin from continuing operations drop to 26.2% in Q4 2025, down from 28.5% in Q4 2024. Here's the quick math: this 230-basis point decline is largely due to a mix shift-specifically, lower high-margin license sales and higher costs associated with professional services as they transition customers to the new SaaS model. This is a classic transitional challenge, but it pressures the bottom line right now.

Financial Risks and Mitigation Strategies

The financial risk profile has improved significantly following the divestitures. The company sold its Merchant Services Business for approximately $439.5 million in September 2024 and its Healthcare RCM Business for $96.3 million in May 2025. This has been a massive de-risking event.

As of September 30, 2025, the company had no borrowings under its Senior Secured Credit Facility and repaid its Exchangeable Notes in full. This is a huge positive. The current liquidity position, with approximately $67 million in cash and a $400 million revolving credit facility available for M&A, gives management significant optionality.

The biggest financial risk now is not indebtedness, but the possibility that the $5.6 million net income from continuing operations for the full fiscal year 2025 doesn't scale fast enough to meet investor growth expectations, especially with the 2026 guidance being a point of market disappointment.

For a deeper dive into the company's financial health, check out the full post: Breaking Down i3 Verticals, Inc. (IIIV) Financial Health: Key Insights for Investors

Growth Opportunities

You're looking at i3 Verticals, Inc. (IIIV) right after a major strategic pivot, and the numbers show a cleaner, higher-quality business emerging. The direct takeaway is this: the company is successfully transforming into a pure-play public-sector software provider, which is driving a strong shift to sticky, recurring revenue, even if the near-term guidance for fiscal year 2026 is cautious.

For the full fiscal year 2025, i3 Verticals reported total revenue from continuing operations of approximately $213.2 million, an 11% increase over the prior year, with adjusted diluted earnings per share (EPS) hitting $1.05. This performance is grounded in a deliberate strategy to exit lower-margin businesses and focus on the public sector, where they provide mission-critical enterprise software solutions for government functions like courts and public safety. That's a powerful, defensive market.

Here's the quick math on the shift: recurring revenue made up 75% of the Q4 2025 revenue, and their high-value Software-as-a-Service (SaaS) revenue grew a phenomenal 23% year-over-year. That's the profile software investors pay a premium for.

The company's future growth is mapped to three clear drivers, all centered on their core public sector vertical:

• Product Innovations: Aggressive investment in their JusticeTech and Utilities product lines, particularly the CourtOne case management platform.
• Market Expansions: Winning large, statewide contracts, such as the one with the Supreme Court of Appeals of West Virginia to implement CourtOne statewide, a deal estimated to generate an eight-figure revenue stream over six years.
• Acquisitions: A robust, debt-free balance sheet with $67 million in cash and $400 million in available borrowing capacity under their revolving credit facility for disciplined, tuck-in M&A that expands their software footprint.

For fiscal year 2026, management has set a revenue forecast between $217 million and $232 million, with adjusted EBITDA projected to range from $58.5 million to $65.0 million. The adjusted EPS guidance is between $1.06 and $1.16. The recurring revenue is expected to grow at a rate of 8% to 10%, which is the real story here, even if non-recurring professional services revenue is expected to decline in the near term due to project timing in the utilities market.

What this estimate hides is the long-term tailwind from a new pricing strategy. Management has signaled a move to normalized annual price increases of 3% to 5% across their contracts, a durable lever for growth they admit they were defintely too conservative on in the past. Plus, their Net Dollar Retention (NDR) for FY2025 was 104%, meaning the average customer is spending 4% more with them now than a year ago. That's a hallmark of a healthy enterprise software business.

i3 Verticals' competitive advantage is its deep vertical integration. By embedding payments into their mission-critical enterprise software, they create a high barrier to entry for competitors. They are a leader in the public sector vertical, with thousands of software installations across all 50 states and Canada. You can see their directional focus in the Mission Statement, Vision, & Core Values of i3 Verticals, Inc. (IIIV).

Here is a summary of the key financial projections for the upcoming fiscal year:

The next concrete step is to monitor Q1 2026 results for execution on the recurring revenue growth and the pace of new contract wins, especially in the JusticeTech segment.