Raises 2022 Outlook

i3 Verticals, Inc. (Nasdaq: IIIV) (“i3 Verticals” or the “Company”) today reported its financial results for the fiscal second quarter ended March 31, 2022.

Highlights for the fiscal second quarter ended March 31, 2022 vs. 2021

• Second quarter revenue was $78.1 million, an increase of 58.8% over the prior year's second quarter. Revenue for the six months ended March 31, 2022, was $152.1 million, an increase of 62.1% over the prior year's first six months.
• Second quarter net loss was $10.4 million, compared to net income of $1.3 million in the prior year's second quarter. Net loss for the six months ended March 31, 2022, was $14.1 million, compared to a net loss of $1.7 million in the prior year's first six months.
• Second quarter net loss attributable to i3 Verticals was $7.4 million. Net loss attributable to the Company for the six months ended March 31, 2022, was $9.9 million.
• Adjusted EBITDA¹ was $19.5 million, an increase of 59.4% over the prior year's second quarter. Adjusted EBITDA¹ for the six months ended March 31, 2022, was $37.8 million, an increase of 65.5% over the prior year's first six months.
• Adjusted EBITDA¹ as a percentage of revenue was 25.0%, compared to 24.9% in the prior year's second quarter. Adjusted EBITDA¹ as a percentage of revenue for the six months ended March 31, 2022, was 24.8%, compared to 24.3% in the prior year's first six months.
• Diluted net loss per share available to Class A common stock was $0.33, compared to diluted net income per share available to Class A common stock of $0.04 in the prior year's second quarter. Diluted net loss per share available to Class A common stock was $0.45, compared to diluted net loss per share available to Class A common stock of $0.05 in the prior year's first six months.
• Pro forma adjusted diluted earnings per share¹, which gives pro forma effect to the Company's tax rate, was $0.37 compared to $0.23 for the prior year's second quarter. Pro forma adjusted diluted earnings per share¹ for the six months ended March 31, 2022, was $0.72 compared to $0.44 for the prior year's first six months.
• Annualized Recurring Revenue ("ARR")² for the three months ended March 31, 2022 and 2021 was $254.5 million and $173.3 million, respectively, representing a period-to-period growth rate of 46.8%.
• Software and related services revenue³ as a percentage of total revenue was 50% and 36% for the three months ended March 31, 2022 and 2021, respectively.
• As of March 31, 2022, consolidated interest coverage ratio was 8.66x, total leverage ratio was 3.89x and consolidated senior leverage ratio was 2.37x. These ratios are defined in the Company's Senior Secured Credit Facility.
• Represents a non-GAAP financial measure. For additional information (including reconciliation information), see the attached schedules to this release.

Greg Daily, Chairman and CEO of i3 Verticals, commented, "We are pleased to report another great quarter with record revenue and adjusted EBITDA. Greater than 80% of our revenue is recurring, and annualized recurring revenue for the second quarter of 2022 increased 47% from the second quarter of 2021. In addition, our revenue mix continues to evolve, and software and related services now make up 50% of our revenue. At the same time, integrated payments are advancing as the engine that helps us unlock additional value on our software platforms.

“We continue to execute on our M&A strategy, and I’m pleased to announce the tuck-in acquisition of a new software business in our Healthcare vertical, which will be included in our results beginning May 1. Their electronic healthcare records platform and patient engagement solutions are a perfect addition to our revenue cycle product offerings and add an excellent stream of recurring SaaS revenue. Our momentum in both the Public Sector and Healthcare vertical markets has us positioned to continue to deliver growth for the foreseeable future.”

Revised 2022 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, 2022:

With respect to the “Revised 2022 Outlook” above, reconciliation of 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 10, 2022, at 8:30 a.m. ET, to discuss financial results and operations. To listen to the call live via telephone, participants should dial (844) 887-9399 approximately 10 minutes prior to the start of the call. A telephonic replay will be available from 11:30 a.m. ET on May 10, 2022, through May 17, 2022, by dialing (877) 344-7529 and entering Confirmation Code 3376015.

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 in the financial schedules of this release.

About i3 Verticals

The Company delivers seamless integrated payment and software solutions to customers and end users in strategic vertical markets. Building on its sophisticated and diverse platform of payment solutions, the Company creates and acquires software products to serve the specific needs of public and private organizations in its strategic verticals that include Public Sector, Healthcare and Education, among others.

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 2022 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. Factors that could cause actual results to differ from those expressed or implied by our forward-looking statements include, among other things: future economic, competitive, and regulatory conditions, the COVID-19 pandemic, the successful integration of acquired businesses, and future decisions made by us and our competitors. All of these factors are difficult or impossible to predict accurately and many of them are beyond our control. For a further list and description of these and other important risks and uncertainties that may affect our future operations, see Part I, Item 1A - Risk Factors in our most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission, which we may update in Part II, Item 1A - Risk Factors in Quarterly Reports on Form 10-Q we have filed or will file hereafter.

Any forward-looking statement made by us in this release speaks only as of the date of this release and we undertake 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.

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 shareholders 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 shareholders 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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20220509006129/en/