i3 Verticals, Inc.

For Q3 fiscal 2026, revenue increased 2% to $53.1 million from $51.9 million in Q3 2025. Organic revenue was down 2%, and non-recurring revenue sources fell 18% year over year. Annual recurring revenue increased 8% to $174.1 million from $160.8 million. Adjusted EBITDA rose 5% to $13.3 million from $12.7 million, with margin improving to 25% from 24.5%. Adjusted diluted EPS from continuing operations increased 8.5% to $0.25 from $0.23. At quarter end, debt was $114.3 million and cash was $2.6 million, with $285.7 million of borrowing capacity remaining. FY2026 guidance was lowered to revenue of $216 million-$221 million, adjusted EBITDA of $57 million-$60 million, and adjusted diluted EPS of $1.08-$1.12. Management said the full-year outlook excludes unannounced acquisitions and transaction-related costs. For FY2027, the current expectation is mid-single-digit revenue growth.

Greg Daily said the quarter fell short of expectations and called the result disappointing, but he emphasized that recurring revenue growth and recent go-lives show the business is still progressing. He pointed to 8% ARR growth and said the company has laid groundwork for margin expansion in coming quarters. His tone was cautious on the quarter but confident about the long-term opportunity in public sector software, payments, and modernization trends.

Geoff Smith said revenue was $53.1 million, adjusted EBITDA was $13.3 million, and adjusted diluted EPS was $0.25, while ARR reached $174.1 million. He broke down the FY2026 guide cut as mostly reflecting about $4.5 million tied to professional services, including about $3 million in utilities pushouts, plus weaker transaction revenue and a soft Resolve quarter. He also said debt was $114.3 million, cash was $2.6 million, and the company has $285.7 million of revolver capacity; buybacks have reduced adjusted weighted average shares from over 34 million to under 28 million. Looking ahead, he expects Q4 and FY2027 margin improvement, saying 2027 could see 100 to 200 basis points of margin expansion if revenue grows in the mid-single digits.

Analysts focused on the reduced FY2026 revenue guide and asked how much was due to one customer versus broad weakness, and whether delays were customer-driven or internal. Management said the decline was spread across professional services, transaction revenue, and Resolve, with utilities pushouts, elevated interchange on commercial cards, and some product-version transition disruption; they described some of those issues as temporary and said a processor data fix is coming in Q4. On margins, management said prior cost reductions, one-time receivable reserves, and improving revenue growth should support stronger profitability, and they now see 2027 margin expansion above the historical 50 to 100 basis point range. In response to questions about the path back to growth, management highlighted transportation go-lives, the acquired electronic insurance verification business, a deeper licensing and permitting backlog, and a later-2027 ramp in Resolve and utilities.