Completes Public Sector Acquisition
Authorizes $50 Million Share Repurchase
Program
i3 Verticals, Inc. (Nasdaq: IIIV) (“i3 Verticals” or the
“Company”) today reported its financial results for the fiscal
third quarter ended June 30, 2024.
Highlights for the three and nine months ended June 30, 2024
vs. 2023 from continuing operations1
- Third quarter revenue from continuing operations was $56.0
million, a decrease of 2% over the prior year's third quarter.
Revenue from continuing operations for the nine months ended June
30, 2024, was $169.1 million, an increase of 1% over the prior
year's first nine months.
- Third quarter net loss from continuing operations was $13.8
million, compared to net loss from continuing operations of $10.9
million in the prior year's third quarter. Net loss from continuing
operations for the nine months ended June 30, 2024, was $20.4
million, compared to a net loss from continuing operations of $22.4
million in the prior year's first nine months.
- Third quarter net loss from continuing operations attributable
to i3 Verticals, Inc. was $11.4 million, compared to net loss from
continuing operations attributable to i3 Verticals, Inc. of $8.5
million in the prior year's third quarter. Net loss from continuing
operations attributable to i3 Verticals, Inc. for the nine months
ended June 30, 2024, was $16.4 million, compared to net loss from
continuing operations attributable to i3 Verticals, Inc. of $16.7
million in the prior year's first nine months.
- Third quarter adjusted EBITDA from continuing operations2 was
$12.9 million, a decrease of 11% over the prior year's third
quarter. Adjusted EBITDA from continuing operations2 for the nine
months ended June 30, 2024, was $42.1 million, a decrease of 4%
over the prior year's first nine months.
- Third quarter Adjusted EBITDA from continuing operations2 as a
percentage of revenue was 23%, compared to 25% in the prior year's
third quarter. Adjusted EBITDA2 from continuing operations as a
percentage of revenue for the nine months ended June 30, 2024, was
25%, compared to 26% in the prior year's first nine months.
- Third quarter diluted net loss per share attributable to Class
A common stock from continuing operations was $0.49, compared to
diluted net loss per share attributable to Class A common stock
from continuing operations of $0.37 in the prior year's third
quarter. Diluted net loss per share attributable to Class A common
stock from continuing operations was $0.70 for the nine months
ended June 30, 2024, compared to diluted net loss per share
attributable to Class A common stock from continuing operations of
$0.72 in the prior year's first nine months.
- Third quarter pro forma adjusted diluted earnings per share
from continuing operations2, which gives pro forma effect to the
Company's tax rate, was $0.07 compared to $0.15 for the prior
year's third quarter. Pro forma adjusted diluted earnings per share
from continuing operations2 for the nine months ended June 30,
2024, was $0.31 compared to $0.49 for the prior year's first nine
months.
- Diluted net loss per share attributable to Class A common stock
from continuing operations and pro forma adjusted diluted earnings
per share from continuing operations both exclude discontinued
operations but include the consolidated cash interest expense. Cash
interest expense for the three and nine months ended June 30, 2024,
was $7.7 million and $21.4 million, respectively. The Company's
fully diluted share count for the three and nine months ended June
30, 2024, was 33,707,331 and 33,781,826, respectively. The per
share impact, on a fully diluted basis of the cash interest expense
on these measures for the three and nine months ended June 30,
2024, was $0.23 and $0.63.
- Annualized Recurring Revenue ("ARR") from continuing
operations3 for the three months ended June 30, 2024 and 2023 was
$181.3 million and $174.5 million, respectively, representing a
period-to-period growth rate of 4%.
- As of June 30, 2024, consolidated interest coverage ratio was
3.5x and total leverage ratio was 3.6x. These ratios are defined in
the Company's 2023 Credit Agreement.
- On August 1, 2024, the Company acquired a permitting and
licensing business for $18.0 million in cash consideration, the
issuance of 311,634 shares of the Company's Class A Common Stock,
and an amount of contingent consideration (in an amount not to
exceed $22.0 million), which is still being valued.
1.
As a result of the anticipated sale of i3
Verticals' merchant services business pursuant to the terms of the
securities purchase agreement dated as of June 26, 2024, entered
into by the Company with Payroc, the historical results of i3
Verticals' merchant services business have been reflected in
discontinued operations in the consolidated statement of operations
included in this earnings release, and continuing operations
reflect the Company's remaining operations after giving effect to
such classification. Prior period results have been recast to
reflect this presentation.
2.
Represents a non-GAAP financial measure.
For additional information (including reconciliation information),
see the attached schedules to this release.
3.
Annualized Recurring Revenue (ARR) is the
annualized revenue derived from software-as-a-service (“SaaS”)
arrangements, transaction-based software-revenue, software
maintenance, recurring software-based services, payments revenue
and other recurring revenue sources within the quarter. This
excludes contracts that are not recurring or are one-time in
nature. The Company focuses on ARR because it helps i3 Verticals to
assess the health and trajectory of the business. ARR does not have
a standardized definition and is therefore unlikely to be
comparable to similarly titled measures presented by other
companies. It should be reviewed independently of revenue, and it
is not a forecast. Additionally, ARR does not take into account
seasonality. The active contracts at the end of a reporting period
used in calculating ARR may or may not be extended or renewed by i3
Verticals' customers.
Greg Daily, Chairman and CEO of i3 Verticals, commented, "At the
end of June, we announced the definitive agreement for the sale of
our Merchant Services Business. Following the closing, we will be a
pure vertical market software business focused entirely on the
Public Sector, Education and Healthcare markets. I am confident the
remaining business has a very bright future. ARR grew 4% this
quarter. We have a deep pipeline and still expect to grow revenue
in the high-single digits in our fiscal 2025. While margins will
initially take a step back after the Merchant Services transaction,
we expect them to steadily improve as revenue scales.
"One of the outcomes of the sale of the Merchant Services
Business is that we plan to pay off all of our revolving credit
facility. We are excited about this circumstance as it will set the
table for additional vertical market software M&A. We continue
to find businesses who want to be a part of what we are
building.
"One such business was acquired by i3 this month. It is a
permitting and licensing company that has one of the absolute best
products in the market. This business is a great fit with our
existing public sector products and is led by a talented team. We
expect it to be a driver of revenue growth going forward.”
Definitive Agreement Regarding the Sale of i3 Verticals'
Merchant Services Business
As previously announced, on June 26, 2024, i3 Verticals, Inc.,
i3 Verticals, LLC, and i3 Holdings Sub, Inc., a wholly-owned
subsidiary of i3 Verticals, LLC, entered into a Securities Purchase
Agreement (the “Purchase Agreement”) with Payroc Buyer, LLC
(“Payroc”) and Payroc WorldAccess LLC. Pursuant to the terms of the
Purchase Agreement, Payroc would purchase the equity interests of
certain direct and indirect wholly-owned subsidiaries (the
“Acquired Entities”) of i3 Verticals, LLC and i3 Holdings Sub, Inc.
comprising the Merchant Services segment as well as certain assets
within the Company's Software and Services segment related to the
Non-profit and Property Management vertical markets, including its
associated proprietary technology (collectively, the "Merchant
Services Business"). The purchase price payable by Payroc to the
Company for the equity interests of the Acquired Entities would be
$440 million (the “Purchase Price”), payable in cash upon the
closing of the transactions under the Purchase Agreement (the
"Transactions"), subject to adjustments for closing net working
capital and other purchase price adjustments provided in the
Purchase Agreement.
The closing of the Transactions is subject to certain closing
conditions set forth in the Purchase Agreement. We continue to
expect the consummation of the Transactions to occur during the
three months ending September 30, 2024.
Share Repurchase Program
The Company's Board of Directors has approved a new share
repurchase program for the Company’s Class A common stock, under
which the Company may repurchase up to $50 million of outstanding
shares of Class A common stock. This share repurchase program will
terminate on the earlier of August 8, 2025, or when the maximum
dollar amount under the program has been expended. Pursuant to this
authorization, repurchases may be made from time to time in the
open market, through privately negotiated transactions, or
otherwise. In addition, any repurchases under the authorization
will be subject to prevailing market conditions, liquidity and cash
flow considerations, applicable securities laws requirements
(including under Rule 10b-18 and Rule 10b5-1 of the Securities
Exchange Act of 1934, as applicable), and other factors.
Taking into account restrictions under the Company’s credit
agreement, the Company does not anticipate making any repurchases
under this authorization until the closing of the transactions
under the Purchase Agreement. This share repurchase program does
not require the Company to acquire any amount of shares of Class A
common stock, and may be extended, modified, suspended or
discontinued at any time.
Outlook for Continuing Operations for Fiscal Year 2024 and
Fiscal Year 2025
The Company's practice is to provide annual guidance, excluding
the impact of acquisitions, dispositions and transaction-related
costs. In connection with the anticipated sale of the Merchant
Services Business pursuant to the terms of the Purchase Agreement
and the classification of the Merchant Services Business as
discontinued operations as noted above, the Company has provided an
outlook for continuing operations for the fiscal year ending
September 30, 2024, and for the fiscal year ending September 30,
2025. Further, in light of these developments, the Company is
withdrawing the consolidated-level guidance previously provided in
the Company's earnings release issued on May 10, 2024.
The Company is providing the following outlook for continuing
operations:
(in thousands, except share and per share
amounts)
FY24 Continuing Operations
Outlook Range
FY25 Continuing Operations
Outlook Range
Revenue
$
228,000
-
$
234,000
$
243,000
-
$
263,000
Adjusted EBITDA (non-GAAP)
$
56,000
-
$
60,000
$
63,000
-
$
71,500
Depreciation and internally developed
software amortization
$
12,000
-
$
14,000
Cash interest expense, net
$
1,000
-
$
2,000
Pro forma adjusted diluted earnings per
share(1)(non-GAAP)
$
1.05
-
$
1.25
________________
1.
Assumes an effective pro forma tax rate of
25.0% (non-GAAP).
With respect to the “Outlook for Continuing Operations for
Fiscal Year 2024 and Fiscal Year 2025” above, reconciliations of
adjusted EBITDA from continuing operations and pro forma adjusted
diluted earnings per share from continuing operations 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 Friday, August 9,
2024, 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
August 9, 2024, through August 16, 2024, by dialing (877) 344-7529
and entering Confirmation Code 2697756.
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” 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 for historical periods 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, pro forma adjusted net income from
continuing operations, adjusted EBITDA from continuing operations
and pro forma adjusted diluted EPS from continuing operations, 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 software and services
to customers in strategic vertical markets. Building on its
sophisticated and diverse platform of software and services
solutions, the Company creates and acquires software products to
serve the specific needs of public and private organizations in its
strategic verticals, including its Public Sector (including
Education) and Healthcare verticals.
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
2024 and fiscal 2025 financial outlook for continuing operations
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: the impact the anticipated sale of our
Merchant Services Business pursuant to the terms of the Purchase
Agreement, including the risks that the parties to the Purchase
Agreement may be unable to complete the Transactions in a timely
manner or at all, because, among other reasons, conditions to the
closing of the Transactions set forth in the Purchase Agreement may
not be satisfied or waived, uncertainty as to the timing of
completion of the Transactions, the occurrence of any event, change
or other circumstances that could give rise to the termination of
the Purchase Agreement, risks related to disruption of management’s
attention from ongoing business operations, post-closing risks
related to the transition services agreement, the processing
services agreement, the restrictive covenant agreement, and other
ancillary agreements to be entered into at closing, and the ability
of the Company to execute on its strategy and achieve its goals and
other expectations after any completion of the Transactions;
ongoing economic and geopolitical conditions, including the impact
of inflation and elevated interest rates, competition in our
industry and our ability to compete effectively, and regulatory
developments; 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 have updated and may
further 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.
i3 Verticals, Inc.
Consolidated Statements of Operations
(Unaudited)
($ in thousands, except share and
per share amounts)
Three Months Ended June
30,
Nine Months Ended June
30,
2024
2023
% Change
2024
2023
% Change
Revenue
$
56,037
$
57,260
(2)%
$
169,059
$
168,138
1%
Operating expenses
Other costs of services
4,722
3,944
20%
13,540
11,272
20%
Selling, general and administrative
45,033
45,045
—%
131,548
132,510
(1)%
Depreciation and amortization
6,969
6,665
5%
21,216
19,289
10%
Change in fair value of contingent
consideration
(18
)
6,183
n/m
(545
)
9,891
n/m
Total operating expenses
56,706
61,837
(8)%
165,759
172,962
(4)%
(Loss) income from operations
(669
)
(4,577
)
(85)%
3,300
(4,824
)
n/m
Other expenses (income)
Interest expense, net
7,906
6,725
18%
22,307
18,414
21%
Other income
—
(92
)
(100)%
(2,150
)
(295
)
629%
Total other expenses
7,906
6,633
19%
20,157
18,119
11%
Loss before income taxes from continuing
operations
(8,575
)
(11,210
)
(24)%
(16,857
)
(22,943
)
(27)%
Provision for (benefit from) income
taxes
5,271
(292
)
n/m
3,507
(500
)
n/m
Net loss from continuing operations
(13,846
)
(10,918
)
(20,364
)
(22,443
)
Net income from discontinued operations,
net of income taxes
5,548
4,840
16,950
16,342
Net loss
(8,298
)
(6,078
)
37%
(3,414
)
(6,101
)
(44)%
Net loss from continuing operations
attributable to non-controlling interest
(2,416
)
(2,392
)
(3,944
)
(5,702
)
Net income from discontinued operations
attributable to non-controlling interest
1,663
1,469
5,099
4,960
Net (loss) income attributable to
non-controlling interest
(753
)
(923
)
(18)%
1,155
(742
)
n/m
Net loss from continuing operations
attributable to i3 Verticals, Inc.
$
(11,430
)
$
(8,526
)
$
(16,420
)
$
(16,741
)
Net income from discontinued operations
attributable to i3 Verticals, Inc.
$
3,885
$
3,371
$
11,851
$
11,382
Net loss attributable to i3 Verticals,
Inc.
$
(7,545
)
$
(5,155
)
46%
$
(4,569
)
$
(5,359
)
(15)%
Net loss per share attributable to Class A
common stockholders from continuing operations:
Basic
$
(0.49
)
$
(0.37
)
$
(0.70
)
$
(0.72
)
Diluted
$
(0.49
)
$
(0.37
)
$
(0.70
)
$
(0.72
)
Net income per share attributable to Class
A common stockholders from discontinuing operations:
Basic
$
0.17
$
0.15
$
0.51
$
0.49
Diluted
$
0.15
$
0.13
$
0.46
$
0.44
Net loss per share attributable to Class A
common stockholders:
Basic and diluted
$
(0.32
)
$
(0.22
)
$
(0.20
)
$
(0.23
)
Weighted average shares of Class A common
stock outstanding:
Basic
23,420,811
23,179,638
23,339,598
23,104,212
Diluted, for continuing operations
23,420,811
23,179,638
23,339,598
23,104,212
Diluted, for discontinued operations
33,707,331
33,845,584
33,781,826
33,956,879
i3 Verticals, Inc.
Consolidated Balance Sheets
(Unaudited)
($ in thousands, except share and
per share amounts)
June 30,
September 30,
2024
2023
Assets
Current assets
Cash and cash equivalents
$
9,745
$
3,105
Accounts receivable, net
48,655
50,785
Settlement assets
1,355
4,873
Prepaid expenses and other current
assets
11,279
9,512
Current assets held for sale
237,002
17,269
Total current assets
308,036
85,544
Property and equipment, net
8,928
10,059
Restricted cash
2,396
4,215
Capitalized software, net
56,634
58,057
Goodwill
269,192
267,983
Intangible assets, net
154,039
163,149
Deferred tax asset
50,307
52,514
Operating lease right-of-use assets
9,564
11,815
Other assets
2,626
8,803
Long-term assets held for sale
—
219,354
Total assets
$
861,722
$
881,493
Liabilities and equity
Liabilities
Current liabilities
Accounts payable
$
5,955
$
6,369
Current portion of long-term debt
26,223
—
Accrued expenses and other current
liabilities
22,827
33,580
Settlement obligations
1,355
4,873
Deferred revenue
29,497
32,785
Current portion of operating lease
liabilities
3,477
3,657
Current liabilities held for sale
13,953
12,197
Total current liabilities
103,287
93,461
Long-term debt, less current portion and
debt issuance costs, net
347,892
385,081
Long-term tax receivable agreement
obligations
40,441
40,079
Operating lease liabilities, less current
portion
6,949
8,968
Other long-term liabilities
17,238
23,078
Long-term liabilities held for sale
—
2,530
Total liabilities
515,807
553,197
Commitments and contingencies
Stockholders' equity
Preferred stock, par value $0.0001 per
share, 10,000,000 shares authorized; 0 shares issued and
outstanding as of June 30, 2024 and September 30, 2023
—
—
Class A common stock, par value $0.0001
per share, 150,000,000 shares authorized; 23,442,698 and 23,253,272
shares issued and outstanding as of June 30, 2024 and September 30,
2023, respectively
2
2
Class B common stock, par value $0.0001
per share, 40,000,000 shares authorized; 10,032,676 and 10,093,394
shares issued and outstanding as of June 30, 2024 and September 30,
2023, respectively
1
1
Additional paid-in capital
267,176
249,688
Accumulated deficit
(17,513
)
(12,944
)
Total stockholders' equity
249,666
236,747
Non-controlling interest
96,249
91,549
Total equity
345,915
328,296
Total liabilities and equity
$
861,722
$
881,493
i3 Verticals, Inc.
Consolidated Cash Flow Data
(Unaudited)
($ in thousands)
Nine Months Ended June
30,
2024
2023
Net cash provided by operating
activities
$
33,266
$
26,370
Net cash used in investing activities
$
(16,755
)
$
(115,415
)
Net cash (used in) provided by financing
activities
$
(15,215
)
$
85,482
Reconciliation of GAAP to Non-GAAP Financial Measures
The Company believes that the non-GAAP financial measures
presented by the Company provide useful information to investors in
understanding and evaluating the Company's ongoing operating
results. Accordingly, the Company includes such 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. The
Company believes that these non-GAAP financial measures are
representative of comparative financial performance that reflects
the economic substance of the Company's current and ongoing
business operations.
Although these non-GAAP financial measures assist in measuring
the Company's operating results and assessing its financial
performance, they are not necessarily comparable to similarly
titled measures of other companies due to potential inconsistencies
in the method of calculation. The Company believes that the
disclosure of these 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 these non-GAAP financial measures to give
shareholders and potential investors an opportunity to see the
Company as viewed by management, to assess the Company with some of
the same tools that management utilizes internally and to be able
to compare such information with prior periods. The Company
believes that disclosure of these 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 Loss from Continuing Operations to
Non-GAAP Pro Forma Adjusted Net Income from Continuing Operations
and
Non-GAAP Adjusted EBITDA from
Continuing Operations
(Unaudited)
($ in thousands)
Three Months Ended June
30,
Nine Months Ended June
30,
2024
2023
2024
2023
Net loss from continuing operations
attributable to i3 Verticals, Inc.
$
(11,430
)
$
(8,526
)
$
(16,420
)
$
(16,741
)
Net loss from continuing operations
attributable to non-controlling interest
(2,416
)
(2,392
)
(3,944
)
(5,702
)
Non-GAAP adjustments:
Provision for (benefit from) income
taxes
5,271
(292
)
3,507
(500
)
Non-cash change in fair value of
contingent consideration(1)
(18
)
6,183
(545
)
9,891
Equity-based compensation from continuing
operations(2)
4,432
6,124
14,811
17,784
M&A-related expenses(3)
1,931
26
2,889
1,112
Acquisition intangible amortization(4)
4,788
4,932
14,474
14,656
Non-cash interest expense(5)
221
582
897
1,312
Other taxes(6)
230
75
404
465
Net gain on exchangeable note repurchases
and related transactions(7)
—
—
(2,257
)
—
Gain on investment(8)
—
(92
)
—
(295
)
Loss on disposal of property and
equipment(9)
—
—
107
—
Non-GAAP pro forma adjusted income
before taxes from continuing operations
$
3,009
$
6,620
$
13,923
$
21,982
Pro forma taxes at effective tax
rate(10)
(752
)
(1,655
)
(3,481
)
(5,496
)
Pro forma adjusted net income from
continuing operations(11)
$
2,257
$
4,965
$
10,442
$
16,486
Cash interest expense, net(12)
7,685
6,143
21,410
17,102
Pro forma taxes at effective tax
rate(10)
752
1,655
3,481
5,496
Depreciation and internally developed
software amortization(13)
2,181
1,733
6,742
4,633
Adjusted EBITDA from continuing
operations(14)
$
12,875
$
14,496
$
42,075
$
43,717
1.
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.
2.
Equity-based compensation expense related
to stock options and restricted stock units issued under the
Company's 2018 Equity Incentive Plan and 2020 Acquisition Equity
Incentive Plan.
3.
M&A-related expenses are the
professional service and related costs directly related to any
merger, acquisition and disposition activity of the Company. i3
Verticals believes these expenses are not reflective of the
underlying operational performance of the Company. M&A-related
expenses included $1,826 and $2,626 of transaction costs related to
the anticipated sale of the Merchant Services Business for the
three and nine months ended June 30, 2024, respectively.
M&A-related expenses also includes financing costs related to
the administration of the Company's exchangeable notes.
4.
Acquisition intangible amortization
reflects amortization of intangible assets and software acquired
through business combinations, acquired customer portfolios,
acquired referral agreements and related asset acquisitions.
5.
Non-cash interest expense reflects
amortization of debt issuance costs and any write-offs of debt
issuance costs.
6.
Other taxes consist of franchise taxes,
commercial activity taxes, reserves for ongoing tax audit matters,
the employer portion of payroll taxes related to stock option
exercises and other non-income-based taxes. Taxes related to
salaries are not included.
7.
Net gain on exchangeable note repurchases
and related transactions reflects the gain on repurchases of
exchangeable notes and warrant unwinds, net of the loss on sale of
bond hedge unwinds, which occurred during the three months ended
June 30, 2024.
8.
Gain on investment reflects contingent
consideration received for an investment that was sold in a prior
year.
9.
Loss on disposal of property and equipment
is related to the sale of a building purchased through an
acquisition.
10.
Pro forma corporate income tax expense is
based on non-GAAP adjusted income before taxes from continuing
operations and is calculated using a tax rate of 25.0% for both
2024 and 2023, based on blended federal and state tax rates.
11.
Pro forma adjusted net income from
continuing operations represents a non-GAAP financial measure and
assumes that all net income during the period is available to the
holders of the Company's Class A common stock.
12.
Cash interest expense, net represents all
interest expense net of interest income recorded on the Company's
statement of operations other than non-cash interest expense, which
represents amortization of debt issuance costs and any write-offs
of debt issuance costs.
13.
Depreciation 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.
14.
Represents a non-GAAP financial
measure.
i3 Verticals, Inc. GAAP
Diluted EPS from Continuing Operations and
Non-GAAP Pro Forma Adjusted
Diluted EPS from Continuing Operations
(Unaudited)
($ in thousands, except share and
per share amounts)
Three Months Ended June
30,
Nine Months Ended June
30,
2024
2023
2024
2023
Diluted net loss attributable to Class A
common stock per share from continuing operations
$
(0.49
)
$
(0.37
)
$
(0.70
)
$
(0.72
)
Pro forma adjusted diluted earnings per
share from continuing operations(1)(2)(3)
$
0.07
$
0.15
$
0.31
$
0.49
Pro forma adjusted net income from
continuing operations(2)
$
2,257
$
4,965
$
10,442
$
16,486
Pro forma weighted average shares of
adjusted diluted Class A common stock outstanding(4)
33,707,331
33,845,584
33,781,826
33,956,879
________________
1.
Pro forma adjusted diluted earnings per
share from continuing operations, a non-GAAP financial measure, is
calculated using pro forma adjusted net income from continuing
operations and the pro forma weighted average shares of adjusted
diluted Class A common stock outstanding.
2.
Pro forma adjusted net income from
continuing operations, a non-GAAP financial measure, assumes that
all net income from continuing operations during the period is
available to the holders of the Company's Class A common stock.
Further, pro forma adjusted diluted earnings per share from
continuing operations 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.
Diluted net loss per share attributable to
Class A common stock from continuing operations and pro forma
adjusted diluted earnings per share from continuing operations both
exclude discontinued operations but include the consolidated cash
interest expense. Cash interest expense for the three months ended
June 30, 2024 and 2023 was $7.7 million and $6.1 million,
respectively, and $21.4 million and $17.1 million for the nine
months ended June 30, 2024 and 2023, respectively. The per share
impact, on a fully diluted basis of the cash interest expense on
these measures for the three months ended June 30, 2024 and 2023
was $0.23 and $0.18, respectively, and $0.63 and $0.50 for the nine
months ended June 30, 2024 and 2023, respectively.
4.
Pro forma weighted average shares of
adjusted diluted Class A common stock outstanding include
10,052,017 and 10,108,218 outstanding shares of Class A common
stock issuable upon the exchange of Common Units in i3 Verticals,
LLC and 234,503 and 557,728 shares resulting from estimated stock
option exercises and restricted stock units vesting as calculated
by the treasury stock method for the three months ended June 30,
2024 and 2023, respectively. Pro forma weighted average shares of
adjusted diluted Class A common stock outstanding include
10,079,057 and 10,112,471 outstanding shares of Class A common
stock issuable upon the exchange of Common Units in i3 Verticals,
LLC and 363,171 and 740,196 shares resulting from estimated stock
option exercises and restricted stock units vesting as calculated
by the treasury stock method for the nine months ended June 30,
2024 and 2023, respectively.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240808184213/en/
Clay Whitson Chief Financial Officer (888) 251-0987
investorrelations@i3verticals.com
i3 Verticals (NASDAQ:IIIV)
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