I3 Verticals ((IIIV)) has held its Q1 earnings call. Read on for the main highlights of the call.
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The latest earnings call of I3 Verticals conveyed an overall positive sentiment, marked by substantial growth in both revenue and EBITDA. This growth was primarily driven by strong performance in the SaaS segment and successful mergers and acquisitions (M&A) activities. Despite a notable decline in revenue from the healthcare segment, the company’s strategic focus on the public sector and its robust balance sheet paint an optimistic outlook.
Revenue and EBITDA Growth
The company showcased an impressive 12% increase in revenue over the prior year’s Q1, reaching a total of $61.7 million. This was complemented by a 17% rise in adjusted EBITDA, which amounted to $16.4 million. These figures underscore the company’s robust financial performance and effective operational strategies.
SaaS Revenue Increase
One of the standout performers was the SaaS segment, which saw a 16% growth in revenue. This contributed significantly to the company’s annual recurring revenue growth of 7.6%, highlighting the increasing importance and success of SaaS offerings in the company’s portfolio.
Public Sector Revenue Growth
The public sector vertical also experienced notable growth, with revenues increasing by 12% to $48.8 million. This growth was primarily driven by recurring revenue streams such as SaaS and transaction-based revenues, reinforcing the company’s strategic focus on this sector.
Successful M&A Strategy
I3 Verticals’ recent acquisition in the permitting and licensing space exceeded expectations, contributing approximately $1 million in revenue. This success underscores the company’s effective M&A strategy and its ability to integrate and capitalize on new acquisitions.
Strong Balance Sheet
The company’s financial stability is further reinforced by its strong balance sheet, boasting $85.6 million in cash as of December 31, 2024, and a borrowing capacity of $450 million. This financial strength positions the company well for future investments and growth opportunities.
Healthcare Segment Revenue Decline
Despite the overall positive performance, the healthcare segment faced challenges with a 14% decline in revenue to $13.2 million. However, there was a silver lining as adjusted EBITDA in this segment increased by 34%, indicating improved operational efficiency.
Timing of Software License Sales
Sales of software licenses, which are non-recurring in nature, increased to $2.7 million from $0.4 million. However, the timing of these sales was earlier than expected, which impacted fiscal expectations for the year.
Forward-Looking Guidance
Looking ahead, I3 Verticals reaffirmed its guidance for FY 2025. The company projects revenues between $243 million and $263 million, with adjusted EBITDA ranging from $63 million to $71.5 million. Furthermore, pro forma adjusted diluted earnings per share are anticipated to be between $1.05 and $1.25. The company expects SaaS and payments to spearhead revenue growth throughout the year.
In conclusion, I3 Verticals’ latest earnings call painted a primarily positive picture, with significant revenue and EBITDA growth driven by strategic initiatives and a focus on SaaS and public sector verticals. Despite some challenges in the healthcare segment, the company’s strong balance sheet and forward-looking guidance suggest a promising future.
