i3 Verticals, Inc. (IIIV): BCG Matrix [Dec-2025 Updated]

You're after a clear-eyed view of i3 Verticals, Inc. (IIIV) following their strategic shift, so I've mapped their Public Sector engine onto the four quadrants of the BCG Matrix as of late 2025. Honestly, the story is one of momentum: high-growth Stars are firing at 23% growth, while the Cash Cows-generating $57.5 million in Adjusted EBITDA-are bankrolling the future, including acquisitions powered by their $66.7 million cash position. This framework distills exactly how they hit that 11.5% revenue increase for FY 2025, showing you the solid foundation and the big bets ahead. Keep reading to see which segments are leading the charge and which ones we need to watch closely.

Background of i3 Verticals, Inc. (IIIV)

You're looking at i3 Verticals, Inc. (IIIV), a technology company that got its start back in 2012, based right out of Nashville, Tennessee. The core idea, from the beginning, was to deliver integrated payment and software solutions tailored for specific, niche vertical markets. Honestly, they built a broad suite of products designed to address the unique needs of small- and medium-sized businesses and organizations in these focused areas.

The company's strategy for growth has long involved tuck-in acquisitions, but as of late 2025, i3 Verticals, Inc. is deep into a significant transformation. They are actively pivoting to become a pure-play public sector software provider. This shift involved divesting non-core businesses, most notably their Healthcare Revenue Cycle Management (RCM) business, which was sold in May 2025. This strategic narrowing means their focus is now almost exclusively on mission-critical enterprise software for government entities across the U.S.

For the fiscal year ended September 30, 2025, i3 Verticals, Inc. reported some solid numbers reflecting this transition. Total revenue from continuing operations for the full fiscal year grew over 11% compared to the prior year. To be defintely clear, the fourth quarter of fiscal 2025 saw revenue from continuing operations hit $54.9 million. On the profitability front, Adjusted EBITDA from continuing operations for the full year 2025 reached $57.5 million, marking a 14.0% increase year-over-year. As of November 2025, the company trades on the Nasdaq Global Select Market with a market capitalization hovering around $0.84 Billion USD.

Their software solutions are designed to help state and local governments manage functions like courts, public safety, utilities, and schools. The emphasis now is heavily on recurring Software-as-a-Service (SaaS) revenue, which saw strong growth, like the 23% growth reported for SaaS revenue in the fourth quarter of 2025 compared to the prior year's quarter. This recurring revenue stream is what underpins their current valuation as they execute this business model change.

i3 Verticals, Inc. (IIIV) - BCG Matrix: Stars

You're looking at the engine room of i3 Verticals, Inc. (IIIV) portfolio right now. The Stars quadrant is where high market share meets high market growth, and for i3 Verticals, that's clearly the cloud-native software business.

The numbers here tell a clear story of investment paying off in high-growth areas. For the fiscal year ending September 30, 2025, the company reported that SaaS revenue grew 23% compared to the prior year. This segment is the definition of a Star-it's leading the market in a rapidly expanding space, which is why the overall annual revenue growth for FY 2025 was reported at 11.47%.

These high-growth, high-margin software streams are what management is focusing on, especially after divesting non-core businesses. The focus on recurring revenue is evident, as the Annualized Recurring Revenue (ARR) growth in Q4 2025 was 9.2%, outpacing the overall revenue growth for that quarter.

Here's a quick look at the performance metrics that position these offerings as Stars:

• SaaS Revenue Growth (FY2025): 23% year-over-year.
• Overall FY2025 Revenue Growth: Over 11%.
• Q4 2025 ARR Growth: 9.2%.
• Q3 2025 Gross Profit Margin: 91.28%.
• FY2025 Adjusted EBITDA Growth: 14.0%.

The company is a recognized leader in mission-critical software platforms, particularly within the public sector verticals of JusticeTech and Utilities. This leadership position in growing, specialized government software markets is what gives these products their high relative market share.

A concrete example of this leadership translating into large-scale wins is the new contract with the Supreme Court of Appeals of West Virginia. This deal involves rolling out the i3 CourtOne™ Case Management Solution (CMS) statewide across Circuit, Family, and Magistrate Courts. This is a massive undertaking that solidifies their position in the JusticeTech space. What this estimate hides is that the company estimates this single contract will represent eight figures in revenue over a six-year period.

These Star products require significant investment to maintain their growth trajectory, which is why the cash flow is often balanced-high cash in, high cash out for promotion and placement. The company is accelerating investments in new solutions for courts and utilities to keep this momentum going.

Consider the key financial outputs supporting the Star classification:

The strategy here is clear: keep investing heavily in these market-leading, high-growth software platforms, because if the market growth slows, these will transition into the Cash Cows, providing reliable, high-margin returns.

i3 Verticals, Inc. (IIIV) - BCG Matrix: Cash Cows

The Cash Cow quadrant for i3 Verticals, Inc. is anchored by its established, integrated Payment Facilitator (PayFac) services embedded within its core public sector software offerings. This segment represents the mature, high-market-share business units that reliably fund the rest of the portfolio.

The stability of this position is quantified by the core base of Annualized Recurring Revenue (ARR) from continuing operations, which reached $165.3 million as of the fourth quarter of fiscal 2025. This figure outpaced the overall revenue growth in the quarter, signaling the strength of the recurring model.

The high-margin nature of these operations is evident in the full-year results for the continuing operations segment. This segment generated $57.5 million in Adjusted EBITDA for the fiscal year ended September 30, 2025, representing an increase of 14.0% over the prior year.

You can see the key financial metrics that define this cash-generating engine:

The stable, high-margin revenue stream is derived from transaction-based fees within the government and utility customer base, which is a key component of the recurring revenue base. For the fourth quarter of fiscal 2025, recurring revenues increased 9% year-over-year to $41.3 million, making up 75% of the total Q4 revenue.

These Cash Cows exhibit the following characteristics, which justify the investment strategy to maintain or 'milk' the gains:

• The core business is the established public sector software base.
• ARR reached $165.3 million in Q4 2025.
• FY 2025 Adjusted EBITDA for the segment was $57.5 million.
• SaaS revenue within the segment grew 25% in Q4 2025.
• The company ended the period with $67 million in cash and no debt.
• Net dollar retention for fiscal 2025 was 104%.

The focus here is on efficiency and maintaining market leadership, not aggressive growth spending. Investments are directed toward supporting infrastructure to improve efficiency and further solidify the existing high market share, which is why the segment's margin improved for the full year to 27.0% from 26.4% in FY 2024.

i3 Verticals, Inc. (IIIV) - BCG Matrix: Dogs

The Dogs quadrant in the Boston Consulting Group Matrix represents business units or product lines characterized by a low market share in a low-growth market. For i3 Verticals, Inc., this category is primarily defined by the strategic exit from certain non-core segments and the inherent nature of remaining non-recurring revenue streams.

Divested businesses, namely the Merchant Services division (sold in 2024) and the Healthcare Revenue Cycle Management (RCM) division (sold in early 2025), are the clearest examples of prior Dogs or Question Marks that management chose to eliminate to streamline operations. The Healthcare RCM business was sold for an all-cash transaction of $96 million. This move, following the 2024 sale of Merchant Services, signals a definitive pivot away from segments where i3 Verticals lacked the necessary scale to compete effectively.

The remaining elements fitting the Dog profile are those that management has explicitly flagged for potential contraction or those that are not part of the core, high-growth Software-as-a-Service (SaaS) strategy. You should view these as areas where capital is best redeployed to Stars or strong Question Marks.

The remaining Non-Recurring Professional Services revenue is expected to decline in the near term. For instance, management projected that nonrecurring professional services would be lighter, particularly in the first quarter of fiscal 2026, due to the timing of revenue recognition on specific projects. This contrasts sharply with the overall fiscal year 2025 continuing operations revenue of $213.2 million, where the focus is clearly on the 23% growth in SaaS revenue. In the fourth quarter of fiscal 2025, nonrecurring sales of software licenses actually declined by $1.9 million, even as professional services revenue increased by $1.8 million in that same quarter.

The third area involves smaller, legacy software or payments contracts in less strategic or saturated micro-verticals, and any residual, low-growth payment processing business not tightly integrated with the core platform. While the overall payments revenue is part of the recurring base, the non-integrated or legacy portion is inherently lower-growth. The company's ongoing business post-divestitures is approximately 75% software and related services revenue and 25% payments, down from a prior structure. The remaining workflow software business from the divested healthcare segment is estimated to generate only about $8 million in revenue for fiscal 2025, aligning it with a low-growth profile compared to the overall company's $57.5 million in Adjusted EBITDA from continuing operations for the year.

Here's a quick look at the major components that have been strategically removed or are expected to contract, fitting the Dog narrative:

The strategy here is clear: avoid expensive turn-around plans. i3 Verticals, Inc. chose divestiture over investment in these low-market-share, low-growth areas. The focus is now on the core, which saw Annualized Recurring Revenue (ARR) grow 9.2% in Q4 2025 to $165.3 million.

You should monitor the following characteristics that define these Dog-like elements:

• Expected decline in nonrecurring professional services revenue.
• Focus on streamlining away from payments-heavy models.
• Management commentary emphasizing a pivot to Public Sector SaaS.
• The small revenue contribution of the remaining, non-core healthcare software.

Finance: draft 13-week cash view by Friday.

i3 Verticals, Inc. (IIIV) - BCG Matrix: Question Marks

These Question Marks represent business units or product lines within i3 Verticals, Inc. (IIIV) that operate in high-growth areas but currently hold a relatively low market share, thus consuming capital while building their presence. The strategy here is clearly one of aggressive investment to capture market share before they risk becoming Dogs.

The company's recent strategic pivot, following the divestiture of the Healthcare Revenue Cycle Management Business for $96.3 million in cash in May 2025 and the Merchant Services Business for approximately $439.5 million in September 2024, has sharpened the focus onto a single public sector-focused segment. This refocusing leaves the remaining, newer initiatives as prime candidates for the Question Mark quadrant.

The primary areas demanding significant capital deployment to achieve scale, fitting the Question Mark profile, involve expansion into adjacent public sector markets and accelerating development in specific verticals.

• New geographic or adjacent public sector markets beyond the core base of thousands of software installations.
• Accelerated investments in new solutions for utilities and transportation markets.
• New product development initiatives lacking large-scale customer validation.
• Potential tuck-in acquisitions funded by strong liquidity.

The need for investment is supported by the company's current financial capacity. As of September 30, 2025, i3 Verticals, Inc. maintained a strong liquidity position with $67 million in cash and cash equivalents and $400 million available under its credit facility, with no borrowings outstanding on that facility. This capital is earmarked for growth initiatives, including acquisitions.

The push into new solutions for utilities and transportation markets exemplifies this investment thesis. While the company anticipates a decline in nonrecurring professional services revenue in these markets during fiscal year 2026, the long-term expectation for organic revenue growth remains high-single-digit, suggesting the underlying markets are perceived as high-growth. A concrete example of this investment is the acquisition of a utility billing software company on April 1, 2025, for $9.0 million in cash, with an additional contingent consideration up to $5.0 million. This acquisition is a direct move to build market share in a targeted growth vertical.

New product development initiatives are also consuming cash now for future returns. Management noted in the Q3 2025 earnings call that they are scaling up people costs for revenue opportunities on the horizon, with cost impacts expected to be felt in the fourth quarter of fiscal 2025. These are the unvalidated bets that must quickly gain traction.

The financial commitment to these Question Marks is supported by the company's overall financial health and strategic intent, as detailed below:

The core challenge for these Question Marks is converting investment into market adoption. The company must rapidly increase their market share in these chosen high-growth areas, such as utilities, or risk these investments becoming Dogs. The Justice Tech vertical, however, is noted as 'really doing well,' suggesting it may be transitioning out of the Question Mark phase.

The path forward for these units is clearly defined by the need for capital deployment, which is facilitated by the current balance sheet strength. The company plans to continue its focus on acquisitions as a core growth strategy, leveraging this liquidity.

• Focus on strengthening the public sector vertical.
• Maintain a disciplined approach to an active M&A pipeline.
• Thoughtfully deploy capital to enhance customer solutions.