i3 Verticals, Inc. (Nasdaq: IIIV) (“i3 Verticals” or the
“Company”) today reported its financial results for the fiscal
second quarter ended March 31, 2020.
Highlights for the fiscal second quarter and six months ended
March 31, 2020 vs. 2019
- Second quarter revenue was $39.2 million, a decrease of 54%
over the prior year's second quarter. Revenue for the six months
ended March 31, 2020, was $80.3 million, a decrease of 53% over the
prior year's first six months. Results for 2020 reflect the
adoption of Accounting Standards Codification Topic 606, Revenue
from Contracts with Customers.1
- Second quarter adjusted net revenue2, which excludes
acquisition revenue adjustments and interchange and network fees,
was $39.3 million, an increase of 25% over the prior year's second
quarter. Adjusted net revenue2 for the six months ended March 31,
2020, was $80.9 million, an increase of 33% over the prior year's
first six months.
- Second quarter net income was $1.9 million, compared to a net
loss of $1.2 million in the prior year's second quarter. Net income
for the six months ended March 31, 2020, was $3.9 million, an
increase of 241.3% over the prior year's first six months.
- Second quarter adjusted EBITDA2 was $10.0 million, an increase
of 14% over the prior year's second quarter. Adjusted EBITDA2 for
the six months ended March 31, 2020, was $21.8 million, an increase
of 26% over the prior year's first six months.
- Second quarter adjusted EBITDA2 as a percentage of adjusted net
revenue2 was 25.3%, compared to 27.8% in the prior year's second
quarter. For the six months ended March 31, 2020, adjusted EBITDA2
as a percentage of adjusted net revenue2 was 27.0%, compared to
28.4% for the prior year's first six months.
- Second quarter diluted net income per share available to Class
A common stock was $0.05, compared to diluted net loss per share
available to Class A common stock of $0.12 in the prior year's
second quarter. For the six months ended March 31, 2020, diluted
net income per share available to Class A common stock was $0.04,
compared to diluted net loss per share available to Class A common
stock of $0.10 for the prior year's first six months.
- For the three and six months ended March 31, 2020, pro forma
adjusted diluted earnings per share1, which gives pro forma effect
to the Company's going forward effective tax rate, was $0.20 and
$0.44, respectively, compared to $0.20 and $0.40 for the three and
six months ended March 31, 2019, respectively.
- Integrated payments3 were 55% of payment volume for both the
three and six months ended March 31, 2020.
- At March 31, 2020, the ratio of consolidated
interest coverage ratio was 6.11x, total leverage ratio was 3.41x
and consolidated senior leverage ratio was 0.38x. These ratios are
defined in the Company's Senior Secured Credit Facility.
1.
Effective October 1, 2019, our revenues
are presented net of interchange and network fees in accordance
with Accounting Standards Codification Topic 606, Revenue from
Contracts with Customers. This change in presentation affected our
reported revenues and operating expenses for the three and six
months ended March 31, 2020, by the same amount and had no effect
on our income from operations.
2.
Represents a non-GAAP financial measure.
For additional information (including reconciliation information),
see the attached schedules to this release.
3.
Integrated payments represents payment
transactions that are generated in situations where payment
technology is embedded within the Company's own proprietary
software, a client’s software or critical business process.
Greg Daily, Chairman and CEO of i3 Verticals, commented, “We
delivered strong fiscal second quarter results. Our momentum from
the fiscal first quarter continued through January and February,
but we began to see the economic impact of the COVID‑19 pandemic in
the second half of March with a decline in payment volume. I could
not be prouder of our employees’ response to the crisis as they
rallied to serve our customers. Our support teams utilized our
advanced platforms to quickly shift to remote support and provided
uninterrupted service to our customers.
“Due to the uncertainty of the economic environment, we have
paused acquisition activity until there is greater clarity on the
impact of the COVID-19 pandemic. We have several deals currently on
hold. Despite the market downturn, our acquisition pipeline has
continued to build. We believe our strong balance sheet, recent
exchangeable notes offering and capacity under our senior credit
facility position us well for acquisition activity, even in the
current economic environment.”
Impact of COVID-19
Daily continued, “Our first priority is the health and safety of
our employees and their families, so we implemented work-from-home
policies for our employees in mid-March and limited all employee
travel. Throughout this period, I have been inspired by the
creativity, dedication and commitment of our team, which has
allowed us to quickly adapt to the work-from-home structure and
continue to service our customers in a prompt and efficient
manner.
“We expect that the continuation of the COVID-19 pandemic will
adversely impact our fiscal third quarter performance. The various
strategies enacted by federal, state and local governments to
combat the spread of COVID-19 have obviously slowed the pace of
commerce. This has caused a decrease in our payment volume and
adversely impacted our revenues. In particular, our Education
vertical experienced a significant decline in payment volumes as
K-12 schools closed for the remainder of the current school year.
Our restaurant and hotel customers also experienced a significant
decline in payment volume. Our Public Sector, B2B and other
vertical customers experienced less of an impact in payment volume.
We benefited from our strategy of diversifying our business across
multiple verticals to reduce sector-specific downturns and
safeguard against effects on our payment volume from any one market
sector. This strategy should also serve us well in a recovery.
“We also expect the long-term impact of COVID-19 to lead to
further digitization of payments, particularly within the Public
Sector and Education verticals, which have been slower to adopt
electronic payments. We believe that the Public Sector and
Education markets will have increased budget pressures and their
constituents will demand greater access to online services and
payments. We believe that our SaaS solutions are designed to
address many of these issues and that the ability of our nimble
salesforce in each vertical to sell technology-enabled payments
will help us drive growth as the economy begins to rebound. On the
other side of this crisis, we believe that we are well-positioned
to capture market share,” concluded Daily.
2020 Outlook
The COVID-19 pandemic has created significant uncertainty in the
economy and the extent to which COVID-19 will impact the Company's
future results is difficult to reasonably estimate at this time.
Therefore, the Company is not providing a financial outlook for the
fiscal year ending September 30, 2020.
Conference Call
The Company will host a conference call on Friday, May 8, 2020,
at 8:30 a.m. ET, to discuss financial results and operations. To
listen to the call live via telephone, participants should dial
(646) 828-8193 approximately 10 minutes prior to the start of the
call. A telephonic replay will be available from 11:30 a.m. ET on
May 8, 2020, through May 15, 2020, by dialing (719) 457-0820 and
entering Confirmation Code 8964705.
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 $14.7 billion in total payment volume for
the 12 months ended March 31, 2020.
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 guidance 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 generally 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 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 and
include, but are not limited to: (i) the anticipated impact to the
Company’s business operations, payment volume and volume attrition
due to the recent global pandemic of a novel strain of the
coronavirus (COVID-19); (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 coronavirus (COVID-19); (iii) the ability to meet the Company’s
liquidity needs in light of the impacts of the coronavirus
(COVID-19); (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, complete those acquisitions and
effectively integrate those acquisitions into the Company's
services; (xvi) 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; (xix) 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; (xxii)
risks related to the accounting method for the Company’s 1.0%
Exchangeable Senior Notes due February 15, 2025 (the “Exchangeable
Notes”); (xxiii) the ability to raise the funds necessary to settle
exchanges of the Exchangeable Notes or to repurchase the
Exchangeable Notes upon a fundamental change; (xxiv) risks related
to the conditional exchange feature of the Exchangeable Notes; and
(xxv) the risk factors included in the Company's Annual Report on
Form 10-K for the year ended September 30, 2019 and in our
subsequent filings. 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,
2020
2019
% Change
2020
2019
% Change
Revenue
$
39,178
$
85,394
(54)%
$
80,289
$
170,262
(53)%
Operating expenses
Interchange and network fees(1)
54,685
n/m
110,514
n/m
Other costs of services
11,955
10,193
17%
24,873
19,983
24%
Selling general and administrative
20,786
14,319
45%
40,073
26,835
49%
Depreciation and amortization
4,538
3,898
16%
9,193
7,450
23%
Change in fair value of contingent
consideration
(142)
2,502
n/m
12
2,153
(99)%
Total operating expenses
37,137
85,597
(57)%
74,151
166,935
(56)%
Income (loss) from operations
2,041
(203)
n/m
6,138
3,327
84%
Interest expense, net
2,184
1,155
89%
4,198
2,069
103%
(Loss) income before income taxes
(143)
(1,358)
(89)%
1,940
1,258
54%
(Benefit from) provision for income
taxes
(2,062)
(136)
1,416%
(1,913)
129
n/m
Net income (loss)
1,919
(1,222)
n/m
3,853
1,129
241%
Net income (loss) attributable to
non-controlling interest
1,182
(120)
n/m
3,265
2,053
59%
Net income (loss) attributable to i3
Verticals, Inc.
$
737
$
(1,102)
n/m
$
588
$
(924)
n/m
Net income (loss) per share available to
Class A common stock:
Basic
$
0.05
$
(0.12)
$
0.04
$
(0.10)
Diluted
$
0.05
$
(0.12)
$
0.04
$
(0.10)
Weighted average shares of Class A common
stock outstanding:
Basic
14,456,970
8,887,050
14,344,768
8,849,431
Diluted
16,106,757
8,887,050
15,778,077
8,849,431
n/m = not meaningful
__________________________
1.
Effective October 1, 2019, our revenues
are presented net of interchange and network fees in accordance
with Accounting Standards Codification Topic 606, Revenue from
Contracts with Customers.
i3 Verticals, Inc. Financial
Highlights
(Unaudited)
($ in thousands, except per share
amounts)
Three months ended March
31,
Six months ended March
31,
2020
2019
% Change
2020
2019
% Change
Adjusted net revenue (non-GAAP)
$
39,311
$
31,448
25%
$
80,935
$
61,018
33%
Adjusted EBITDA (non-GAAP)
9,965
8,747
14%
21,824
17,325
26%
Pro forma adjusted diluted earnings per
share (non-GAAP)
$
0.20
$
0.20
—%
$
0.44
$
0.40
10%
i3 Verticals, Inc.
Supplemental Volume Information
(Unaudited)
($ in thousands)
Three months ended March
31,
Six months ended March
31,
2020
2019
2020
2019
Payment volume(1)
$
3,577,735
$
2,942,808
$
7,416,853
$
5,886,657
__________________________
1.
Payment volume is the net dollar value of
both 1) Visa, Mastercard and other payment network transactions
processed by the Company's clients and settled to clients by us and
2) ACH transactions processed by the Company's clients and settled
to clients by the Company.
i3 Verticals, Inc. Segment
Summary
(Unaudited)
($ in thousands)
For the Three Months Ended
March 31, 2020
Merchant
Services
Proprietary
Software and
Payments
Other
Total
Revenue
$
25,018
$
14,691
$
(531)
$
39,178
Operating expenses
Other costs of services
11,297
1,188
(530)
11,955
Selling general and administrative
6,469
7,717
6,600
20,786
Depreciation and amortization
2,861
1,498
179
4,538
Change in fair value of contingent
consideration
(400)
258
—
(142)
Income (loss) from operations
$
4,791
$
4,030
$
(6,780)
$
2,041
Payment volume
$
3,393,710
$
184,025
$
—
$
3,577,735
For the Six Months Ended March
31, 2020
Merchant
Services
Proprietary
Software and
Payments
Other
Total
Revenue
$
52,483
$
28,747
$
(941)
$
80,289
Operating expenses
Other costs of services
23,410
2,403
(940)
24,873
Selling general and administrative
12,791
15,653
11,629
40,073
Depreciation and amortization
5,808
3,037
348
9,193
Change in fair value of contingent
consideration
(1,606)
1,618
—
12
Income (loss) from operations
$
12,080
$
6,036
$
(11,978)
$
6,138
Payment volume
$
7,028,766
$
388,087
$
—
$
7,416,853
For the Three Months Ended
March 31, 2019
Merchant
Services
Proprietary
Software and
Payments
Other
Total
Revenue
$
76,875
$
8,519
$
—
$
85,394
Operating expenses
Interchange and network fees
53,121
1,564
—
54,685
Other costs of services
9,725
468
—
10,193
Selling general and administrative
6,226
3,675
4,418
14,319
Depreciation and amortization
2,917
842
139
3,898
Change in fair value of contingent
consideration
(390)
2,892
—
2,502
Income (loss) from operations
$
5,276
$
(922)
$
(4,557)
$
(203)
Payment volume
$
2,794,120
$
148,688
$
—
$
2,942,808
For the Six Months Ended March
31, 2019
Merchant
Services
Proprietary
Software and
Payments
Other
Total
Revenue
$
154,577
$
15,685
$
—
$
170,262
Operating expenses
Interchange and network fees
107,485
3,029
—
110,514
Other costs of services
19,121
862
—
19,983
Selling general and administrative
12,317
6,662
7,856
26,835
Depreciation and amortization
5,699
1,503
248
7,450
Change in fair value of contingent
consideration
(709)
2,862
—
2,153
Income (loss) from operations
$
10,664
$
767
$
(8,104)
$
3,327
Payment volume
$
5,598,259
$
288,398
$
—
$
5,886,657
i3 Verticals, Inc.
Consolidated Balance Sheets
($ in thousands, except share and
per share amounts)
March 31,
September 30,
2020
2019
(unaudited)
Assets
Current assets
Cash and cash equivalents
$
1,591
$
1,119
Accounts receivable, net
13,515
15,335
Prepaid expenses and other current
assets
4,662
4,117
Total current assets
19,768
20,571
Property and equipment, net
5,035
5,026
Restricted cash
1,581
2,081
Capitalized software, net
14,472
15,454
Goodwill
167,054
168,284
Intangible assets, net
102,837
107,419
Deferred tax asset
35,334
28,138
Other assets
5,101
2,329
Total assets
$
351,182
$
349,302
Liabilities and equity
Liabilities
Current liabilities
Accounts payable
$
3,520
$
3,438
Accrued expenses and other current
liabilities
17,884
21,560
Deferred revenue
9,613
10,237
Total current liabilities
31,017
35,235
Long-term debt, less current portion and
debt issuance costs, net
123,226
139,298
Long-term tax receivable agreement
obligations
25,773
23,204
Other long-term liabilities
4,385
9,124
Total liabilities
184,401
206,861
Commitments and contingencies (see Note
9)
Stockholders' equity
Preferred stock, par value $0.0001 per
share, 10,000,000 shares authorized; 0 shares issued and
outstanding as of March 31, 2020 and September 30, 2019
—
—
Class A common stock, par value $0.0001
per share, 150,000,000 shares authorized; 15,038,918 and 14,444,115
shares issued and outstanding as of March 31, 2020 and September
30, 2019, respectively
1
1
Class B common stock, par value $0.0001
per share, 40,000,000 shares authorized; 12,411,621 and 12,921,637
shares issued and outstanding as of March 31, 2020 and September
30, 2019, respectively
1
1
Additional paid-in-capital
104,122
82,380
Accumulated (deficit) earnings
(1,016)
(2,309)
Total stockholders' equity
103,108
80,073
Non-controlling interest
63,673
62,368
Total equity
166,781
142,441
Total liabilities and stockholders'
equity
$
351,182
$
349,302
i3 Verticals, Inc.
Consolidated Cash Flow Data
(Unaudited)
($ in thousands)
Six months ended March
31,
2020
2019
Net cash provided by operating
activities
$
8,847
$
11,424
Net cash used in investing activities
$
(3,881)
$
(44,945)
Net cash (used in) provided by financing
activities
$
(4,994)
$
34,343
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,
2020
2019
2020
2019
Net income (loss) attributable to i3
Verticals, Inc.
$
737
$
(1,102)
$
588
$
(924)
Net income (loss) attributable to
non-controlling interest
1,182
(120)
3,265
2,053
Non-GAAP adjustments:
Provision for (benefit from) income
taxes
(2,062)
(136)
(1,913)
129
Offering-related expenses(1)
221
—
221
—
Non-cash change in fair value of
contingent consideration(2)
(142)
2,502
12
2,153
Equity-based compensation(3)
2,510
1,363
4,634
2,314
Acquisition revenue adjustments(4)
133
739
646
1,270
Acquisition-related expenses(5)
583
261
845
621
Acquisition intangible amortization(6)
3,600
3,205
7,321
6,110
Non-cash interest expense(7)
879
232
979
465
Other taxes(8)
81
187
135
190
Non-GAAP pro forma adjusted income
before taxes
7,722
7,131
16,733
14,381
Pro forma taxes at effective tax
rate(9)
(1,930)
(1,783)
(4,183)
(3,595)
Pro forma adjusted net
income(10)
$
5,792
$
5,348
$
12,550
$
10,786
Cash interest expense, net(11)
1,305
923
3,219
1,604
Pro forma taxes at effective tax
rate(9)
1,930
1,783
4,183
3,595
Depreciation, non-acquired intangible
asset amortization and internally developed software
amortization(12)
938
693
1,872
1,340
Adjusted EBITDA
$
9,965
$
8,747
$
21,824
$
17,325
________
1.
Offering-related expenses includes
expenses directly related to certain transactions as part of an
offering.
2.
Non-cash change in fair value of
contingent consideration reflects the changes in management’s
estimates of future cash consideration to be paid in connection
with prior acquisitions from the amount estimated as of the later
of the most recent balance sheet date forming the beginning of the
income statement period or the original estimates made at the
closing of the applicable acquisition.
3.
Equity-based compensation expense
consisted of $2,510 and $1,363 related to stock options issued
under the Company's 2018 Equity Incentive Plan during the three
months ended March 31, 2020 and 2019, respectively, and $4,634 and
$2,314 related to stock options issued under the Company's 2018
Equity Incentive Plan during the six months ended March 31, 2020
and 2019, respectively.
4.
Under GAAP, companies must adjust, as
necessary, beginning balances of acquired deferred revenue to fair
value as part of acquisition accounting as defined by GAAP.
Acquisition revenue adjustments remove the effect of these
adjustments to acquisition date fair value from acquisitions that
have closed as of the date of this earnings release.
5.
Acquisition-related expenses are the
professional service and related costs directly related to the
Company's acquisitions and are not part of its core
performance.
6.
Acquisition intangible amortization
reflects amortization of intangible assets and software acquired
through business combinations, acquired customer portfolios,
acquired referral agreements and related asset acquisitions.
7.
Non-cash interest expense reflects
amortization of debt discount and debt issuance costs and any
write-offs of debt issuance costs.
8.
Other taxes consist of franchise taxes,
commercial activity taxes and other non-income based taxes. Taxes
related to salaries or employment are not included.
9.
Pro forma corporate income tax expense is
based on Non-GAAP adjusted income before taxes and is calculated
using a tax rate of 25.0% for both 2020 and 2019, based on blended
federal and state tax rates.
10.
Pro forma adjusted net income assumes that
all net income during that period was available to the holders of
the Company's Class A common stock.
11.
Cash interest expense, net represents all
interest expense recorded on the Company's statement of operations
other than non-cash interest expense, which represents amortization
of debt discount and debt issuance costs and any write-offs of debt
issuance costs.
12.
Depreciation, non-acquired intangible
asset amortization and internally developed software amortization
reflects depreciation on the Company's property, plant and
equipment, net, and amortization expense on its internally
developed capitalized software.
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,
2020
2019
2020
2019
Diluted net loss available to Class A
common stock per share
$
0.05
(0.12)
$
0.04
(0.10)
Pro forma adjusted diluted earnings per
share (non-GAAP)(1)
$
0.20
$
0.20
$
0.44
$
0.40
Pro forma adjusted net income(2)
$
5,792
$
5,348
$
12,550
$
10,786
Pro forma weighted average shares of
adjusted diluted Class A common stock outstanding(3)
28,876,325
27,289,888
28,624,095
27,124,176
__________
1.
Pro forma adjusted diluted earnings per
share is calculated using pro forma adjusted net income and the pro
forma weighted average shares of adjusted diluted Class A common
stock outstanding.
2.
Pro forma adjusted net income assumes that
all net income during the period is available to the holders of the
Company's Class A common stock. Further, pro forma adjusted diluted
earnings per share assumes that all Common Units in i3 Verticals,
LLC and the associated non-voting Class B common stock were
exchanged for Class A common stock at the beginning of the period
on a one-for-one basis.
3.
Pro forma weighted average shares of
adjusted diluted Class A common stock outstanding include
12,769,568 and 17,112,164 outstanding shares of Class A common
stock issuable upon the exchange of Common Units in i3 Verticals,
LLC and 1,649,787 and 1,290,674 shares of unvested Class A common
stock and options for the three months ended March 31, 2020 and
2019, respectively. Pro forma weighted average shares of adjusted
diluted Class A common stock outstanding include 12,846,018 and
17,112,164 outstanding shares of Class A common stock issuable upon
the exchange of Common Units in i3 Verticals, LLC and 1,433,309 and
1,162,581 shares of unvested Class A common stock and options for
the six months ended March 31, 2020 and 2019, respectively.
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,
2020
2019
2020
2019
Revenue
$
39,178
$
85,394
$
80,289
$
170,262
Acquisition revenue adjustments(1)
133
739
646
1,270
Interchange and network fees(2)
(54,685)
(110,514)
Adjusted Net Revenue
$
39,311
$
31,448
$
80,935
$
61,018
__________
1.
Under GAAP, companies must adjust, as
necessary, beginning balances of acquired deferred revenue to fair
value as part of acquisition accounting as defined by GAAP.
Acquisition revenue adjustments remove the effect of these
adjustments to acquisition date fair value from acquisitions that
have closed as of the date of this earnings release.
2.
Effective October 1, 2019, our revenues
are presented net of interchange and network fees in accordance
with Accounting Standards Codification Topic 606, Revenue from
Contracts with Customers.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200507006132/en/
Clay Whitson Chief Financial Officer (615) 988-9890
cwhitson@i3verticals.com
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