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Share Name | Share Symbol | Market | Type |
---|---|---|---|
i3 Verticals Inc | NASDAQ:IIIV | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.045 | 0.20% | 22.755 | 22.63 | 22.76 | 22.78 | 22.59 | 22.78 | 2,687 | 14:46:37 |
Announces Latest Public Sector Acquisition
Raises 2021 Outlook
i3 Verticals, Inc. (Nasdaq: IIIV) (“i3 Verticals” or the “Company”) today reported its financial results for the fiscal second quarter ended March 31, 2021.
Highlights for the fiscal second quarter and six months ended March 31, 2021 vs. 2020
Greg Daily, Chairman and CEO of i3 Verticals, commented, “We are thrilled with our second quarter results as we posted new records in adjusted net revenue, adjusted EBITDA, software revenue, payment volume and integration mix. Software-related revenue is now 36% of our total adjusted net revenue, and our Public Sector vertical is leading the way.
“We anticipate that government technology spending will increase as the effects of the pandemic subside and state and local governments receive federal funds allocated under the American Rescue Plan Act. Our product lineup and integrations are perfectly suited to help our government clients continue to modernize. We will continue to invest in our Public Sector software and are enthusiastic about the opportunities ahead.
“We recently completed an acquisition of a software company that provides products and solutions in the utilities sector. This company focuses on large, Tier 1 customers. Its software and professional services will augment and expand our existing platform in this space. We are excited about our increased ability to deliver excellent products to this market going forward.
“We previously announced in April the closing of our latest two acquisitions in the Healthcare vertical. We have now built a strong foundation to address this market. We are optimistic about our opportunities to further build our product suite and grow our Healthcare vertical.
We exited the second quarter with positive momentum, and we believe we are well positioned to deliver strong financial results during the remainder of the year.”
Revised 2021 Outlook
The Company's practice is to provide annual guidance, excluding future acquisitions and transaction-related costs. The Company is providing the following revised outlook for the fiscal year ending September 30, 2021:
(in thousands, except share and per share amounts)
Outlook Range
Fiscal year ending September 30, 2021
Adjusted net revenue(1) (non-GAAP)
$
204,000
-
$
220,000
Adjusted EBITDA(1) (non-GAAP)
$
52,000
-
$
58,000
Depreciation and internally developed software amortization
$
4,250
-
$
4,500
Cash interest expense, net
$
4,750
-
$
5,250
Pro forma weighted average shares of adjusted diluted Class A common stock outstanding
33,000,000
-
34,000,000
Pro forma adjusted diluted earnings per share(1)(2) (non-GAAP)
$
0.98
-
$
1.08
_______________________
With respect to the “Revised 2021 Outlook” above, reconciliation of adjusted net revenue, adjusted EBITDA and pro forma adjusted diluted earnings per share guidance to the closest corresponding GAAP measure on a forward-looking basis is not available without unreasonable efforts. This inability results from the inherent difficulty in forecasting generally and quantifying certain projected amounts that are necessary for such reconciliations. In particular, sufficient information is not available to calculate certain adjustments required for such reconciliations, including changes in the fair value of contingent consideration, income tax expense of i3 Verticals, Inc. and equity-based compensation expense. The Company expects these adjustments may have a potentially significant impact on future GAAP financial results.
Conference Call
The Company will host a conference call on Tuesday, May 11, 2021, at 8:30 a.m. ET, to discuss financial results and operations. To listen to the call live via telephone, participants should dial (877) 270-2148 approximately 10 minutes prior to the start of the call. A telephonic replay will be available from 11:30 a.m. ET on May 11, 2021, through May 18, 2021, by dialing (877) 344-7529 and entering Confirmation Code 10155829.
To listen to the call live via webcast, participants should visit the “Investors” section of the Company’s website, www.i3verticals.com, and go to the “Events & Presentations” page approximately 10 minutes prior to the start of the call. The online replay will be available on this page of the Company’s website beginning shortly after the conclusion of the call and will remain available for 30 days.
Non-GAAP Measures
This press release contains information prepared in conformity with GAAP as well as non-GAAP information. It is management’s intent to provide non-GAAP financial information to enhance understanding of the Company's consolidated financial information as prepared in accordance with GAAP. This non-GAAP information should be considered by the reader in addition to, but not instead of, the financial statements prepared in accordance with GAAP. Each non-GAAP financial measure and the most directly comparable GAAP financial measure are presented so as not to imply that more emphasis should be placed on the non-GAAP measure. The non-GAAP financial information presented may be determined or calculated differently by other companies.
Additional information about non-GAAP financial measures, including, but not limited to, adjusted net revenue, pro forma adjusted net income, adjusted EBITDA and pro forma adjusted diluted EPS, and a reconciliation of those measures to the most directly comparable GAAP measures is included on pages 10 through 13 in the financial schedules of this release.
About i3 Verticals
Helping drive the convergence of software and payments, i3 Verticals delivers seamlessly integrated payment and software solutions to small- and medium-sized businesses and other organizations in strategic vertical markets, such as education, non-profit, the public sector, property management, and healthcare and to the business-to-business payments market. With a broad suite of payment and software solutions that address the specific needs of its clients in each strategic vertical market, i3 Verticals processed approximately $15.0 billion in total payment volume for the 12 months ended March 31, 2021.
Forward-Looking Statements
This release contains forward-looking statements that are subject to risks and uncertainties. All statements other than statements of historical fact or relating to present facts or current conditions included in this release are forward-looking statements, including any statements regarding the Company's fiscal 2021 financial outlook and statements of a general economic or industry specific nature. Forward-looking statements give the Company's current expectations and projections relating to its financial condition, results of operations, guidance, plans, objectives, future performance and business. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as “anticipate,” “estimate,” “expect,” “project,” “plan,” “intend,” “believe,” “may,” “will,” “should,” “could have,” “exceed,” “significantly,” “likely” and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events.
The forward-looking statements contained in this release are based on assumptions that we have made in light of the Company's industry experience and its perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances. As you review and consider information presented herein, you should understand that these statements are not guarantees of future performance or results. They depend upon future events and are subject to risks, uncertainties (many of which are beyond the Company's control) and assumptions. Although we believe that these forward-looking statements are based on reasonable assumptions, you should be aware that many factors could affect the Company's actual future performance or results and cause them to differ materially from those anticipated in the forward-looking statements. Certain of these factors and other risks are discussed in the Company's filings with the U.S. Securities and Exchange Commission (the “SEC”) and include, but are not limited to: (i) the anticipated impact to the timing and recovery of the Company’s business operations, payment volume and volume attrition due to the global pandemic of a novel strain of the coronavirus (COVID-19), including the anticipated impact of further school closures on our Education vertical; (ii) the Company’s indebtedness and the ability to maintain compliance with the financial covenants in the Company’s senior secured credit facility in light of the impacts of the COVID-19 pandemic; (iii) the ability to meet the Company’s liquidity needs in light of the impacts of the COVID-19 pandemic; (iv) the ability to raise additional funds on terms acceptable to us, if at all, whether debt, equity or a combination thereof; (v) the triggering of impairment testing of the Company’s fair-valued assets, including goodwill and intangible assets, in the event of a decline in the price of the Company’s Class A common stock; (vi) the ability to generate revenues sufficient to maintain profitability and positive cash flow; (vii) competition in the Company's industry and the ability to compete effectively; (viii) the dependence on non-exclusive distribution partners to market the Company's products and services; (ix) the ability to keep pace with rapid developments and changes in the Company's industry and provide new products and services; (x) liability and reputation damage from unauthorized disclosure, destruction or modification of data or disruption of the Company's services; (xi) technical, operational and regulatory risks related to the Company's information technology systems and third-party providers’ systems; (xii) reliance on third parties for significant services; (xiii) exposure to economic conditions and political risks affecting consumer and commercial spending, including the use of credit cards; (xiv) the ability to increase the Company's existing vertical markets, expand into new vertical markets and execute the Company's growth strategy; (xv) the ability to successfully identify acquisition targets and thereafter to complete and effectively integrate those acquisitions into the Company's services; (xvi) potential degradation of the quality of the Company's products, services and support; (xvii) the ability to retain clients, many of which are small- and medium-sized businesses, which can be difficult and costly to retain; (xviii) the Company's ability to successfully manage its intellectual property; (xiv) the ability to attract, recruit, retain and develop key personnel and qualified employees; (xx) risks related to laws, regulations and industry standards; (xxi) operating and financial restrictions imposed by the Company's senior secured credit facility; and (xxii) the risk factors included in the Company's Annual Report on Form 10-K for the year ended September 30, 2020. Should one or more of these risks or uncertainties materialize, or should any of these assumptions prove incorrect, the Company's actual results may vary in material respects from those projected in these forward-looking statements.
Any forward-looking statement made by us in this release speaks only as of the date of this release. Factors or events that could cause the Company's actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. The Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.
i3 Verticals, Inc. Consolidated Statements of Operations
(Unaudited)
($ in thousands, except share and per share amounts)
Three months ended March 31,
Six months ended March 31,
2021
2020
% Change
2021
2020
% Change
Revenue
$
47,863
$
39,178
22
%
$
91,176
$
80,289
14
%
Operating expenses
Other costs of services
11,314
11,955
(5
)%
24,980
24,873
—
%
Selling, general and administrative
30,511
20,786
47
%
55,473
40,073
38
%
Depreciation and amortization
5,851
4,538
29
%
10,943
9,193
19
%
Change in fair value of contingent consideration
322
(142
)
n/m
2,226
12
n/m
Total operating expenses
47,998
37,137
29
%
93,622
74,151
26
%
(Loss) income from operations
(135
)
2,041
n/m
(2,446
)
6,138
n/m
Other expenses
Interest expense, net
2,358
2,184
8
%
4,387
4,198
5
%
Other income
(2,353
)
—
n/m
(2,353
)
—
n/m
Total other expenses
5
2,184
(100
)%
2,034
4,198
(52
)%
(Loss) income before income taxes
(140
)
(143
)
(2
)%
(4,480
)
1,940
(331
)%
Benefit from income taxes
(87
)
(2,062
)
(96
)%
(306
)
(1,913
)
n/m
Net (loss) income
(53
)
1,919
n/m
(4,174
)
3,853
(208
)%
Net (loss) income attributable to non-controlling interest
(493
)
1,182
n/m
(2,042
)
3,265
(163
)%
Net income (loss) attributable to i3 Verticals, Inc.
$
440
$
737
(40
)%
$
(2,132
)
$
588
n/m
Net income (loss) per share available to Class A common stock:
Basic
$
0.02
$
0.05
$
(0.11
)
$
0.04
Diluted
$
0.00
$
0.05
$
(0.12
)
$
0.04
Weighted average shares of Class A common stock outstanding:
Basic
20,940,725
14,456,970
20,024,936
14,344,768
Diluted
33,404,983
16,106,757
31,237,675
15,778,077
n/m = not meaningful
i3 Verticals, Inc. Financial Highlights
(Unaudited)
($ in thousands, except per share amounts)
Three months ended March 31,
Six months ended March 31,
2021
2020
% Change
2021
2020
% Change
Adjusted net revenue (non-GAAP)
$
49,406
$
39,311
26%
$
94,314
$
80,935
17%
Adjusted EBITDA (non-GAAP)
12,435
9,965
25%
23,313
21,824
7%
Pro forma adjusted diluted earnings per share (non-GAAP)
$
0.23
$
0.20
15%
$
0.45
$
0.44
2%
i3 Verticals, Inc. Supplemental Volume Information
(Unaudited)
($ in thousands)
Three months ended March 31,
Six months ended March 31,
2021
2020
2021
2020
Payment volume(1)
$
4,263,205
$
3,577,735
$
8,063,732
$
7,416,853
__________________________
i3 Verticals, Inc. Segment Summary
(Unaudited)
($ in thousands)
For the Three Months Ended March 31, 2021
Merchant Services
Proprietary Software and Payments
Other
Total
Revenue
$
25,992
$
22,549
$
(678
)
$
47,863
Operating expenses
Other costs of services
11,782
210
(678
)
11,314
Selling general and administrative
6,765
15,198
8,548
30,511
Depreciation and amortization
2,712
2,952
187
5,851
Change in fair value of contingent consideration
163
159
—
322
Income (loss) from operations
$
4,570
$
4,030
$
(8,735
)
$
(135
)
Payment volume
$
3,816,170
$
447,035
$
—
$
4,263,205
For the Six Months Ended March 31, 2021
Merchant Services
Proprietary Software and Payments
Other
Total
Revenue
$
50,962
$
41,325
$
(1,111
)
$
91,176
Operating expenses
Other costs of services
22,623
3,467
(1,110
)
24,980
Selling general and administrative
13,209
26,093
16,171
55,473
Depreciation and amortization
5,478
5,101
364
10,943
Change in fair value of contingent consideration
320
1,906
—
2,226
Income (loss) from operations
$
9,332
$
4,758
$
(16,536
)
$
(2,446
)
Payment volume
$
7,398,784
$
664,948
$
—
$
8,063,732
For the Three Months Ended March 31, 2020(1)
Merchant Services
Proprietary Software and Payments
Other
Total
Revenue
$
25,729
$
13,980
$
(531
)
$
39,178
Operating expenses
Other costs of services
11,356
1,129
(530
)
11,955
Selling general and administrative
7,048
7,138
6,600
20,786
Depreciation and amortization
2,995
1,364
179
4,538
Change in fair value of contingent consideration
(649
)
507
—
(142
)
Income (loss) from operations
$
4,979
$
3,842
$
(6,780
)
$
2,041
Payment volume
$
3,393,710
$
184,025
$
—
$
3,577,735
________
For the Six Months Ended March 31, 2020(1)
Merchant Services
Proprietary Software and Payments
Other
Total
Revenue
$
53,968
$
27,262
$
(941
)
$
80,289
Operating expenses
Other costs of services
23,530
2,283
(940
)
24,873
Selling general and administrative
13,911
14,533
11,629
40,073
Depreciation and amortization
6,067
2,778
348
9,193
Change in fair value of contingent consideration
(2,946
)
2,958
—
12
Income (loss) from operations
$
13,406
$
4,710
$
(11,978
)
$
6,138
Payment volume
$
7,028,766
$
388,087
$
—
$
7,416,853
________
i3 Verticals, Inc. Consolidated Balance Sheets
($ in thousands, except share and per share amounts)
March 31,
September 30,
2021
2020
(unaudited)
Assets
Current assets
Cash and cash equivalents
$
2,352
$
15,568
Accounts receivable, net
24,599
17,538
Settlement assets
6,056
—
Prepaid expenses and other current assets
9,983
4,869
Total current assets
42,990
37,975
Property and equipment, net
5,929
5,339
Restricted cash
10,090
5,033
Capitalized software, net
39,163
16,989
Goodwill
263,365
187,005
Intangible assets, net
165,145
109,233
Deferred tax asset
51,277
36,755
Operating lease right-of-use assets
14,821
—
Other assets
10,039
5,197
Total assets
$
602,819
$
403,526
Liabilities and equity
Liabilities
Current liabilities
Accounts payable
$
4,871
$
3,845
Accrued expenses and other current liabilities
42,357
24,064
Settlement obligations
6,056
—
Deferred revenue
22,426
10,986
Current portion of operating lease liabilities
3,056
—
Total current liabilities
78,766
38,895
Long-term debt, less current portion and debt issuance costs, net
178,442
90,758
Long-term tax receivable agreement obligations
39,626
27,565
Operating lease liabilities, less current portion
12,382
—
Other long-term liabilities
12,138
6,140
Total liabilities
321,354
163,358
Commitments and contingencies (see Note 10)
Stockholders' equity
Preferred stock, par value $0.0001 per share, 10000,000 shares authorized; 0 shares issued and outstanding as of March 31, 2021 and September 30, 2020
—
—
Class A common stock, par value $0.0001 per share, 150,000,000 shares authorized; 1,919,300 and 18,864,143 shares issued and outstanding as of March 31, 2021 and September 30, 2020, respectively
2
2
Class B common stock, par value $0.0001 per share, 40,000,000 shares authorized 10,229,142 and 11,900,621 shares issued and outstanding as of March 31, 2021 and September 30, 2020, respectively
1
1
Additional paid-in capital
203,803
157,598
Accumulated (deficit) earnings
(4,155
)
(2,023
)
Total stockholders' equity
199,651
155,578
Non-controlling interest
81,814
84,590
Total equity
281,465
240,168
Total liabilities and equity
$
602,819
$
403,526
i3 Verticals, Inc. Consolidated Cash Flow Data
(Unaudited)
($ in thousands)
Six months ended March 31,
2021
2020
Net cash provided by operating activities
$
23,875
$
8,847
Net cash used in investing activities
$
(115,934
)
$
(3,881
)
Net cash provided by (used in) financing activities
$
83,900
$
(4,994
)
Reconciliation of GAAP to Non-GAAP Financial Measures
The Company believes that non-GAAP financial measures are important to enable investors to understand and evaluate its ongoing operating results. Accordingly, i3 Verticals includes non-GAAP financial measures when reporting its financial results to stockholders and potential investors in order to provide them with an additional tool to evaluate the Company’s ongoing business operations. i3 Verticals believes that the non-GAAP financial measures are representative of comparative financial performance that reflects the economic substance of i3 Verticals’ current and ongoing business operations.
Although non-GAAP financial measures are often used to measure the Company's operating results and assess its financial performance, they are not necessarily comparable to similarly titled measures of other companies due to potential inconsistencies in the method of calculation. i3 Verticals believes that its provision of non-GAAP financial measures provides investors with important key financial performance indicators that are utilized by management to assess the Company's operating results, evaluate the business and make operational decisions on a prospective, going-forward basis. Hence, management provides disclosure of non-GAAP financial measures to give stockholders and potential investors an opportunity to see i3 Verticals as viewed by management, to assess i3 Verticals with some of the same tools that management utilizes internally and to be able to compare such information with prior periods. i3 Verticals believes that inclusion of non-GAAP financial measures provides investors with additional information to help them better understand its financial statements just as management utilizes these non-GAAP financial measures to better understand the business, manage budgets and allocate resources.
i3 Verticals, Inc. Reconciliation of GAAP Net Income to Non-GAAP Pro Forma Adjusted Net Income and Non-GAAP Adjusted EBITDA
(Unaudited)
($ in thousands)
Three months ended March 31,
Six months ended March 31,
2021
2020
2021
2020
Net income (loss) attributable to i3 Verticals, Inc.
$
440
$
737
$
(2,132
)
$
588
Net (loss) income attributable to non-controlling interest
(493
)
1,182
(2,042
)
3,265
Non-GAAP adjustments:
Benefit from income taxes
(87
)
(2,062
)
(306
)
(1,913
)
Financing-related expenses(1)
63
221
116
221
Non-cash change in fair value of contingent consideration(2)
322
(142
)
2,226
12
Equity-based compensation(3)
4,142
2,510
7,583
4,634
Acquisition revenue adjustments(4)
1,543
133
3,138
646
Acquisition-related expenses(5)
520
583
1,530
845
Acquisition intangible amortization(6)
4,827
3,600
8,944
7,321
Non-cash interest expense(7)
1,352
879
2,684
979
Other taxes(8)
129
81
223
135
Gain on investment(9)
(2,353
)
—
(2,353
)
—
Non-GAAP pro forma adjusted income before taxes
10,405
7,722
19,611
16,733
Pro forma taxes at effective tax rate(10)
(2,601
)
(1,930
)
(4,903
)
(4,183
)
Pro forma adjusted net income(11)
$
7,804
$
5,792
$
14,708
$
12,550
Cash interest expense, net(12)
1,006
1,305
1,703
3,219
Pro forma taxes at effective tax rate(10)
2,601
1,930
4,903
4,183
Depreciation, non-acquired intangible asset amortization and internally developed software amortization(13)
1,024
938
1,999
1,872
Adjusted EBITDA
$
12,435
$
9,965
$
23,313
$
21,824
________
i3 Verticals, Inc. GAAP Diluted EPS and Non-GAAP Pro Forma Adjusted Diluted EPS
(Unaudited)
($ in thousands, except share and per share amounts)
Three months ended March 31,
Six months ended March 31,
2021
2020
2021
2020
Diluted net income (loss) available to Class A common stock per share
$
0.00
$
0.05
$
(0.12
)
$
0.04
Pro forma adjusted diluted earnings per share (non-GAAP)(1)
$
0.23
$
0.20
$
0.45
$
0.44
Pro forma adjusted net income(2)
$
7,804
$
5,792
$
14,708
$
12,550
Pro forma weighted average shares of adjusted diluted Class A common stock outstanding(3)
33,404,983
28,876,325
32,698,865
28,624,095
__________
i3 Verticals, Inc. Reconciliation of GAAP Revenue to Non-GAAP Adjusted Net Revenue
(Unaudited)
($ in thousands)
Three months ended March 31,
Six months ended March 31,
2021
2020
2021
2020
Revenue
$
47,863
$
39,178
$
91,176
$
80,289
Acquisition revenue adjustments(1)
1,543
133
3,138
646
Adjusted Net Revenue
$
49,406
$
39,311
$
94,314
$
80,935
__________
View source version on businesswire.com: https://www.businesswire.com/news/home/20210510005923/en/
Clay Whitson Chief Financial Officer (888) 251-0987 investorrelations@i3verticals.com
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