i3 Verticals, Inc. 10-Q

Item 1. Financial Statements 3 i3 Verticals, Inc. CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (In thousands, except share amounts) June 30, September 30, 2025 2024 Assets Current assets Cash and cash equivalents $ 55,544 $ 86,525 Accounts receivable, net 49,445 50,779 Settlement assets 18 632 Prepaid expenses and other current assets 12,770 9,973 Current assets held for sale — 5,484 Total current assets 117,777 153,393 Property and equipment, net 7,342 8,288 Restricted cash 250 2,424 Capitalized software, net 49,893 53,983 Goodwill 248,195 242,988 Intangible assets, net 138,708 140,748 Deferred tax asset 49,092 48,445 Operating lease right-of-use assets 5,159 6,331 Other assets 6,858 6,666 Long-term assets held for sale — 67,409 Total assets $ 623,274 $ 730,675 Liabilities and equity Liabilities Current liabilities Accounts payable $ 4,497 $ 4,886 Current portion of long-term debt — 26,223 Accrued expenses and other current liabilities 21,915 88,252 Settlement obligations 18 632 Deferred revenue 29,758 38,361 Current portion of operating lease liabilities 2,023 2,305 Current liabilities held for sale — 4,072 Total current liabilities 58,211 164,731 Long-term tax receivable agreement obligations 35,117 29,347 Operating lease liabilities, less current portion 3,367 4,890 Other long-term liabilities 15,458 14,921 Long-term liabilities held for sale — 1,427 Total liabilities 112,153 215,316 Commitments and contingencies (see Note 14) Stockholders' equity Preferred stock, par value $ 0.0001 per share, 10,000,000 shares authorized; 0 shares issued and outstanding as of June 30, 2025 and September 30, 2024 — — Class A common stock, par value $ 0.0001 per share, 150,000,000 shares authorized; 23,780,915 and 23,882,035 shares issued and outstanding as of June 30, 2025 and September 30, 2024, respectively 2 2 Class B common stock, par value $ 0.0001 per share, 40,000,000 shares authorized; 8,463,204 and 10,032,676 shares issued and outstanding as of June 30, 2025 and September 30, 2024, respectively 1 1 Additional paid-in capital 268,111 279,335 Accumulated earnings 115,181 100,397 Total stockholders' equity 383,295 379,735 Non-controlling interest 127,826 135,624 Total equity 511,121 515,359 Total liabilities and equity $ 623,274 $ 730,675 See Notes to the Interim Condensed Consolidated Financial Statements 4 i3 Verticals, Inc. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (In thousands, except share and per share amounts) Three months ended June 30, Nine months ended June 30, 2025 2024 2025 2024 Revenue $ 51,901 $ 46,183 $ 158,257 $ 139,909 Operating expenses Other costs of services (excluding depreciation and amortization) (1) 16,733 15,287 48,889 44,423 Selling, general and administrative (1) 33,018 26,048 85,779 75,576 Depreciation and amortization 6,989 6,157 20,848 18,794 Change in fair value of contingent consideration ( 26 ) 1 440 171 Total operating expenses 56,714 47,493 155,956 138,964 (Loss) income from operations ( 4,813 ) ( 1,310 ) 2,301 945 Other (income) expenses Interest expense 806 7,906 1,932 22,307 Other income ( 4,601 ) — ( 7,020 ) ( 2,150 ) Total other (income) expenses ( 3,795 ) 7,906 ( 5,088 ) 20,157 (Loss) income before income taxes ( 1,018 ) ( 9,216 ) 7,389 ( 19,212 ) (Benefit from) provision for income taxes ( 22 ) 5,191 3,272 3,153 Net (loss) income from continuing operations ( 996 ) ( 14,407 ) 4,117 ( 22,365 ) Net income from discontinued operations, net of income taxes 19,421 6,109 18,185 18,951 Net income (loss) 18,425 ( 8,298 ) 22,302 ( 3,414 ) Net (loss) income from continuing operations attributable to non-controlling interest ( 586 ) ( 2,608 ) 1,653 ( 4,654 ) Net income from discontinued operations attributable to non-controlling interest 6,129 1,855 5,865 5,809 Net income (loss) attributable to non-controlling interest 5,543 ( 753 ) 7,518 1,155 Net (loss) income from continuing operations attributable to i3 Verticals, Inc. ( 410 ) ( 11,799 ) 2,464 ( 17,711 ) Net income from discontinued operations attributable to i3 Verticals, Inc. 13,292 4,254 12,320 13,142 Net income (loss) attributable to i3 Verticals, Inc. $ 12,882 $ ( 7,545 ) $ 14,784 $ ( 4,569 ) Net (loss) income per share attributable to Class A common stockholders from continuing operations: Basic $ ( 0.02 ) $ ( 0.50 ) $ 0.10 $ ( 0.76 ) Diluted $ ( 0.03 ) $ ( 0.50 ) $ 0.10 $ ( 0.76 ) Net income per share attributable to Class A common stockholders from discontinued operations: Basic $ 0.55 $ 0.18 $ 0.52 $ 0.56 Diluted $ 0.55 $ 0.18 $ 0.49 $ 0.56 Weighted average shares of Class A common stock outstanding: Basic, for continuing operations 24,345,826 23,420,811 23,909,714 23,339,598 Diluted, for continuing operations 32,983,325 23,420,811 24,823,635 23,339,598 Basic, for discontinued operations 24,345,826 23,420,811 23,909,714 23,339,598 Diluted, for discontinued operations 24,345,826 23,420,811 34,183,267 23,339,598 _________________________________________ 1. Refer to Note 3 for discussion of the change in the current and prior period presentation. See Notes to the Interim Condensed Consolidated Financial Statements 5 i3 Verticals, Inc. CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED) (In thousands, except share amounts) Class A Common Stock Class B Common Stock Additional Paid-In Capital Retained Earnings Non-Controlling Interest Total Equity Shares Amount Shares Amount Balance at September 30, 2024 23,882,035 $ 2 10,032,676 $ 1 $ 279,335 $ 100,397 $ 135,624 $ 515,359 Equity-based compensation — — — — 3,814 — — 3,814 Net income — — — — — 2,056 1,052 3,108 Redemption of common units in i3 Verticals, LLC 17,577 — ( 17,577 ) — 237 — ( 237 ) — Establishment of liabilities under a tax receivable agreement and related changes to deferred tax assets associated with increases in tax basis — — — — 14 — — 14 Exercise of equity-based awards 34,423 — — — 29 — — 29 Repurchases of Class A common stock ( 496,785 ) — — — ( 11,190 ) — — ( 11,190 ) Allocation of equity to non-controlling interests — — — — 293 — ( 293 ) — Balance at December 31, 2024 23,437,250 2 10,015,099 1 272,532 102,453 136,146 511,134 Equity-based compensation — — — — 3,932 — — 3,932 Net (loss) income — — — — — ( 154 ) 923 769 Adjustments to accrued distributions to non-controlling interest holders — — — — — — 283 283 Redemption of common units in i3 Verticals, LLC 813,782 — ( 813,782 ) — 11,493 — ( 11,493 ) — Recapitalization from contribution to i3 Verticals, LLC — — ( 369,256 ) — ( 5,689 ) — 5,689 — Establishment of liabilities under a tax receivable agreement and related changes to deferred tax assets associated with increases in tax basis — — — — 143 — — 143 Exercise or release of equity-based awards 149,328 — — — ( 2,179 ) — — ( 2,179 ) Repurchases of Class A common stock ( 13,370 ) — — — ( 423 ) — — ( 423 ) Allocation of equity to non-controlling interests — — — — 3,063 — ( 3,063 ) — Balance at March 31, 2025 24,386,990 2 8,832,061 1 282,872 102,299 128,485 513,659 Equity-based compensation — — — — 7,396 — — 7,396 Net income — — — — — 12,882 5,543 18,425 Distributions to non-controlling interest holders — — — — — — ( 630 ) ( 630 ) Redemption of common units in i3 Verticals, LLC 368,857 — ( 368,857 ) — 5,340 — ( 5,340 ) — Establishment of liabilities under a tax receivable agreement and related changes to deferred tax assets associated with increases in tax basis — — — — 281 — — 281 Exercise of equity-based awards 88,794 — — — ( 1,644 ) — — ( 1,644 ) Repurchases of Class A common stock ( 1,063,726 ) — — — ( 26,366 ) — — ( 26,366 ) Allocation of equity to non-controlling interests — — — — 232 — ( 232 ) — Balance at June 30, 2025 23,780,915 $ 2 8,463,204 $ 1 $ 268,111 $ 115,181 $ 127,826 $ 511,121 See Notes to the Interim Condensed Consolidated Financial Statements 6 i3 Verticals, Inc. CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED) (CONTINUED) (In thousands, except share amounts) Class A Common Stock Class B Common Stock Additional Paid-In Capital Retained Earnings (Deficit) Non-Controlling Interest Total Equity Shares Amount Shares Amount Balance at September 30, 2023 23,253,272 $ 2 10,093,394 $ 1 $ 249,688 $ ( 12,944 ) $ 91,549 $ 328,296 Equity-based compensation — — — — 6,508 — — 6,508 Net income — — — — — 1,098 438 1,536 Exercise of equity-based awards 25,898 — — — ( 10 ) — — ( 10 ) Sale of exchangeable note hedges — — — — 1,483 — — 1,483 Repurchases of warrants — — — — ( 657 ) — — ( 657 ) Allocation of equity to non-controlling interests — — — — ( 2,450 ) — 2,450 — Balance at December 31, 2023 23,279,170 2 10,093,394 1 254,562 ( 11,846 ) 94,437 337,156 Equity-based compensation — — — — 5,777 — — 5,777 Net income — — — — — 1,878 1,470 3,348 Redemption of common units in i3 Verticals, LLC 40,718 — ( 40,718 ) — 384 — ( 384 ) — Establishment of liabilities under a tax receivable agreement and related changes to deferred tax assets associated with increases in tax basis — — — — 42 — — 42 Exercise of equity-based awards 96,630 — — — ( 223 ) — — ( 223 ) Allocation of equity to non-controlling interests — — — — ( 1,300 ) — 1,300 — Balance at March 31, 2024 23,416,518 2 10,052,676 1 259,242 ( 9,968 ) 96,823 346,100 Equity-based compensation — — — — 5,102 — — 5,102 Net loss — — — — — ( 7,545 ) ( 753 ) ( 8,298 ) Distributions to non-controlling interest holders — — — — — — ( 839 ) ( 839 ) Redemption of common units in i3 Verticals, LLC 20,000 — ( 20,000 ) — 192 — ( 192 ) — Establishment of liabilities under a tax receivable agreement and related changes to deferred tax assets associated with increases in tax basis — — — — 4,300 — — 4,300 Exercise of equity-based awards 6,180 — — — ( 450 ) — — ( 450 ) Allocation of equity to non-controlling interests — — — — ( 1,210 ) — 1,210 — Balance at June 30, 2024 23,442,698 $ 2 10,032,676 $ 1 $ 267,176 $ ( 17,513 ) $ 96,249 $ 345,915 See Notes to the Interim Condensed Consolidated Financial Statements 7 i3 Verticals, Inc. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (In thousands) Nine months ended June 30, 2025 2024 Cash flows from operating activities: Net income (loss) $ 22,302 $ ( 3,414 ) Adjustments to reconcile net income (loss) from operating activities: Depreciation and amortization 22,788 29,865 Equity-based compensation 15,142 17,387 Amortization of debt issuance costs 746 897 Gain on repurchase of exchangeable notes — ( 2,397 ) Loss on sale of exchangeable senior note hedges — 245 Gain on repurchases of warrants — ( 105 ) Provision for deferred income taxes 3,644 4,078 Adjustments to gain on sale of Merchant Services Business 661 — Gain on sale of Healthcare RCM Business ( 25,960 ) — Non-cash lease expense 1,933 3,534 Changes in non-cash contingent consideration expense from original estimate 1,743 ( 545 ) Other non-cash adjustments to net income 36 793 Changes in operating assets: Accounts receivable 1,955 7,574 Prepaid expenses and other current assets ( 922 ) ( 1,398 ) Other assets ( 1,023 ) ( 1,076 ) Changes in operating liabilities: Accounts payable ( 677 ) ( 415 ) Accrued expenses and other current liabilities ( 37,450 ) ( 6,718 ) Acquisition escrow obligations ( 2,174 ) ( 1,820 ) Deferred revenue ( 7,597 ) ( 3,141 ) Operating lease liabilities ( 2,561 ) ( 3,510 ) Other long-term liabilities ( 102 ) ( 2 ) Contingent consideration paid in excess of original estimates ( 760 ) ( 6,566 ) Net cash (used in) provided by operating activities ( 8,276 ) 33,266 Cash flows from investing activities: Expenditures for property and equipment ( 1,516 ) ( 2,434 ) Proceeds from sale of property and equipment 1,501 618 Expenditures for capitalized software ( 6,301 ) ( 9,223 ) Purchases of merchant portfolios and residual buyouts ( 12 ) ( 4,585 ) Acquisitions of businesses, net of cash and restricted cash acquired ( 11,000 ) ( 1,100 ) Proceeds from sale of Healthcare RCM Business, net of cash sold 96,102 — Payments for other investing activities — ( 39 ) Proceeds from other investing activities — 8 Net cash provided by (used in) investing activities 78,774 ( 16,755 ) See Notes to the Interim Condensed Consolidated Financial Statements 8 i3 Verticals, Inc. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (CONTINUED) (In thousands) Nine months ended June 30, 2025 2024 Cash flows from financing activities: Proceeds from revolving credit facility 58,024 296,043 Payments on revolving credit facility ( 58,024 ) ( 217,149 ) Payments to extinguish exchangeable notes ( 26,223 ) — Payments for repurchase of exchangeable notes — ( 87,840 ) Proceeds from sale of exchangeable senior note hedges — 1,238 Payments for repurchases of warrants — ( 552 ) Payments of debt issuance costs ( 249 ) ( 906 ) Payments for repurchases of Class A common stock ( 37,604 ) — Net payments for settlement obligations ( 614 ) ( 3,518 ) Cash paid for contingent consideration ( 800 ) ( 760 ) Payments for required distributions to members or on behalf of members for tax obligations ( 24,849 ) ( 1,117 ) Payments for required distributions to members under the Tax Receivable Agreement ( 9,954 ) — Proceeds from stock option exercises 150 25 Payments for employees' tax withholdings from net settled stock option exercises and RSU releases ( 4,140 ) ( 679 ) Net cash used in financing activities ( 104,283 ) ( 15,215 ) Net (decrease) increase in cash, cash equivalents and restricted cash ( 33,785 ) 1,296 Cash, cash equivalents and restricted cash at beginning of period 89,597 12,400 Cash, cash equivalents and restricted cash at end of period $ 55,812 $ 13,696 Supplemental disclosure of cash flow information: Cash paid for interest $ 763 $ 21,773 Cash paid for income taxes $ 35,112 $ 6,984 9 i3 Verticals, Inc. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (CONTINUED) (In thousands) The following tables provide reconciliations of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets to that shown in the condensed consolidated statements of cash flows: September 30, 2024 2023 Beginning balance Cash and cash equivalents $ 86,541 $ 3,112 Settlement assets 632 4,873 Restricted cash 2,424 4,415 Total cash, cash equivalents, and restricted cash $ 89,597 $ 12,400 June 30, 2025 2024 Ending balance Cash and cash equivalents $ 55,544 $ 9,745 Settlement assets 18 1,355 Restricted cash 250 2,596 Total cash, cash equivalents, and restricted cash $ 55,812 $ 13,696 See Notes to the Interim Condensed Consolidated Financial Statements 10 i3 VERTICALS, Inc. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (in thousands, except unit, share and per share amounts) 1. ORGANIZATION AND OPERATIONS i3 Verticals, Inc. (the “Company”) was formed as a Delaware corporation on January 17, 2018. The Company was formed for the purpose of completing an initial public offering (“IPO”) of its Class A common stock and other related transactions in order to carry on the business of i3 Verticals, LLC and its subsidiaries. i3 Verticals, LLC was founded in 2012 and delivers software solutions seamlessly integrated with our proprietary payment facilitator platform to customers in strategic vertical markets. The Company’s headquarters are located in Nashville, Tennessee, with operations throughout the United States. Unless the context otherwise requires, references to “we,” “us,” “our,” “i3 Verticals” and the “Company” refer to i3 Verticals, Inc. and its subsidiaries, including i3 Verticals, LLC. In connection with the IPO, the Company completed certain reorganization transactions, which, among other things, resulted in i3 Verticals, Inc. being the sole managing member of i3 Verticals, LLC (the “Reorganization Transactions”). Following the completion of the IPO and Reorganization Transactions, the Company is a holding company and the principal asset that it owns are the common units of i3 Verticals, LLC. i3 Verticals, Inc. operates and controls all of i3 Verticals, LLC's operations and, through i3 Verticals, LLC and its subsidiaries, conducts i3 Verticals, LLC's business. i3 Verticals, Inc. has a majority economic interest in i3 Verticals, LLC. As the sole managing member of i3 Verticals, LLC, i3 Verticals, Inc. consolidates the financial results of i3 Verticals, LLC and reports a non-controlling interest representing the Common Units of i3 Verticals, LLC held by owners other than i3 Verticals, Inc. (the “Continuing Equity Owners”). 2. DISCONTINUED OPERATIONS Healthcare RCM Business Divestiture During the three months ended June 30, 2025, i3 Verticals, LLC and i3 Healthcare Solutions, LLC, a wholly-owned subsidiary of i3 Verticals, LLC (“Healthcare RCM Seller,” and collectively with i3 Verticals, LLC, the “Healthcare RCM Seller Parties”), completed the sale of the equity interests of certain wholly-owned subsidiaries of the Healthcare RCM Seller (the “Healthcare RCM Acquired Entities”) which owned and operated the Company's healthcare revenue cycle management business, including its associated proprietary technology (the “Healthcare RCM Business”), to Infinx, Inc. (“Healthcare RCM Buyer”), a Texas corporation, pursuant to the terms of that certain Securities Purchase Agreement dated as of May 5, 2025, by and among Healthcare RCM Buyer and the Healthcare RCM Seller Parties (the “Healthcare RCM Purchase Agreement;” the transactions contemplated by the Healthcare RCM Purchase Agreement, the “Healthcare RCM Transactions”). In addition, immediately prior to the sale of the equity interests of the Healthcare RCM Acquired Entities pursuant to the Healthcare RCM Purchase Agreement, i3 Verticals, LLC and certain of its subsidiaries contributed and/or assigned certain assets and certain liabilities related to the Healthcare RCM Business to the Healthcare RCM Acquired Entities. The purchase price payable by Healthcare RCM Buyer to Healthcare RCM Seller for the equity interests of the Healthcare RCM Acquired Entities was $ 96,443 , paid in cash at closing. The final purchase price is subject to post-closing net working capital and other purchase price adjustments as provided in the Healthcare RCM Purchase Agreement. 11 i3 VERTICALS, Inc. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (in thousands, except unit, share and per share amounts) At the closing of the transactions contemplated by the Healthcare RCM Purchase Agreement, the Company entered into a transition services agreement with Infinx ("Infinx TSA"), pursuant to which, among other things, the Company or affiliates thereof are providing certain information technology and operational transition services to Infinx for a period of time after the closing, and an employee leasing agreement with Infinx ("Infinx ELA"), pursuant to which the Company leased employees of the Healthcare RCM Business to Infinx for a limited period of time following the closing in accordance with the terms thereof. The obligations under the Infinx TSA are planned to be complete in the first quarter of fiscal 2026. The Infinx ELA completed on July 31, 2025. Revenue earned under the Infinx TSA and Infinx ELA are reported in other income and expenses incurred for which the Company is reimbursed through the Infinx TSA and Infinx ELA are reported in selling, general and administrative expenses within the Company's condensed consolidated statements of operations. Income under the Infinx TSA and Infinx ELA during the three and nine months ended June 30, 2025 was $ 3,919 . Aggregate costs incurred related to the sale of the Healthcare RCM Business during the nine months ended June 30, 2025 that were not considered incremental direct costs to transact the sale, were approximately $ 1,332 and were expensed as incurred. These costs were primarily incurred during the third fiscal quarter of the fiscal year ended September 30, 2025 and include fees for third-party advisory, consulting, legal and professional services, as well as other items associated with the sale of the Healthcare RCM Business. The expenses are reflected within selling, general and administrative expenses within the Company's condensed consolidated statements of operations. 12 i3 VERTICALS, Inc. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (in thousands, except unit, share and per share amounts) The financial results of the Healthcare RCM Business are included in income from discontinued operations, net of income taxes on the Company’s condensed consolidated statements of operations. The following table presents the assets and liabilities of the Healthcare RCM Business as of September, 30, 2024: September 30, 2024 Assets Current assets Cash and cash equivalents $ 16 Accounts receivable, net 5,209 Prepaid expenses and other current assets 259 Total current assets 5,484 Property and equipment, net 389 Capitalized software, net 4,609 Goodwill 37,690 Intangible assets, net 22,068 Operating lease right-of-use assets 2,623 Other assets 30 Total assets $ 72,893 Liabilities and equity Liabilities Current liabilities Accounts payable $ 484 Accrued expenses and other current liabilities 1,720 Deferred revenue 668 Current portion of operating lease liabilities 1,200 Total current liabilities 4,072 Operating lease liabilities, less current portion 1,427 Total liabilities $ 5,499 13 i3 VERTICALS, Inc. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (in thousands, except unit, share and per share amounts) The following table presents financial results of Healthcare RCM Business for the three and nine months ended June 30, 2025 and 2024: Three months ended June 30, Nine months ended June 30, 2025 2024 2025 2024 Revenue $ 3,601 $ 9,993 $ 22,463 $ 29,426 Operating expenses Other costs of services (excluding depreciation and amortization) 3,023 6,109 14,553 17,834 Selling, general and administrative 2,491 2,450 7,317 7,530 Depreciation and amortization 275 812 1,940 2,422 Change in fair value of contingent consideration 10 ( 19 ) 1,302 ( 716 ) Total operating expenses 5,799 9,352 25,112 27,070 (Loss) income from operations ( 2,198 ) 641 ( 2,649 ) 2,356 Other income ( 25,960 ) — ( 25,998 ) — Income before income taxes from discontinued operations 23,762 641 23,349 2,356 Provision for income taxes 4,337 80 4,620 355 Net income from discontinued operations 19,425 561 18,729 2,001 Net income from discontinued operations attributed to non-controlling interest 6,130 192 6,041 710 Net income from discontinued operations attributable to i3 Verticals, Inc. $ 13,295 $ 369 $ 12,688 $ 1,291 14 i3 VERTICALS, Inc. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (in thousands, except unit, share and per share amounts) The Company has elected to not separately disclose discontinued operations on its condensed consolidated statement of cash flows. The following table presents cash flows from discontinued operations for major captions on the condensed consolidated financial statements: Nine months ended June 30, 2025 2024 Depreciation and amortization $ 1,940 $ 2,422 Equity-based compensation $ 3,112 $ 2,134 Gain on sale of Healthcare RCM Business $ ( 25,960 ) $ — Non-cash lease expense $ 702 $ 917 Increase (decrease) in non-cash contingent consideration expense from original estimate $ 1,302 $ ( 716 ) Contingent consideration paid in excess of original estimates $ ( 700 ) $ — Expenditures for property and equipment $ ( 156 ) $ ( 176 ) Expenditures for capitalized software $ ( 263 ) $ ( 321 ) Proceeds from sale of Healthcare RCM Business, net of cash sold $ 96,102 $ — Cash paid for contingent consideration $ ( 800 ) $ — The following table presents significant non-cash investing and financing activities for major captions on the consolidated financial statements: Nine months ended June 30, 2025 Right-of-use assets obtained in exchange for operating lease obligations $ 266 Merchant Services Business Divestiture During the year ended September 30, 2024, the Company made the strategic decision to discontinue a significant segment of its operations constituting its Merchant Services Business (as defined below). In this regard, on September 20, 2024, i3 Verticals, LLC, and i3 Holdings Sub, Inc., a wholly-owned subsidiary of i3 Verticals, LLC (“Corporation Seller,” and collectively with i3 Verticals, LLC, the “Merchant Services Sellers”) completed the transactions (such closing, the “Closing”) contemplated by that certain Securities Purchase Agreement dated as of June 26, 2024 (the “Merchant Services Purchase Agreement”), by and among i3 Verticals, LLC, Corporation Seller, the Company (solely for the purpose of providing a guaranty of the obligations of Merchant Services Sellers as set forth in the Merchant Services Purchase Agreement), Payroc Buyer, LLC (“Merchant Services Buyer”), and Payroc WorldAccess, LLC (solely for the purpose of providing a guaranty of the obligations of Merchant Services Buyer as set forth in the Merchant Services Purchase Agreement). Pursuant to the terms of the Merchant Services Purchase Agreement, the Merchant Services Sellers sold to Merchant Services Buyer the equity interests of certain direct and indirect wholly-owned subsidiaries of the Merchant Services Sellers (the “Merchant Services Acquired Entities”) primarily comprising the Company’s merchant services business, including its associated proprietary technology (the “Merchant Services Business”), after giving effect to the contribution of certain assets and the assignment of certain liabilities associated with the Merchant Services Business from i3 Verticals, LLC and certain affiliates to the Merchant Services Acquired Entities pursuant to a contribution agreement which was entered into immediately prior to the Closing (collectively, the "Merchant Services Transactions"). Pursuant to the terms of the Merchant Services Purchase Agreement, Merchant Services Buyer paid to the Merchant Services Sellers an aggregate purchase price of approximately $ 439,516 paid in cash at closing, after giving effect to post-closing net working capital, indebtedness and cash adjustments. The Merchant Services Business comprised the Company's entire former Merchant Services segment and a small portion of the Company's former Software and Services segment. In connection with the closing of the Merchant Services Transactions, the Company entered into a transition services agreement with Payroc ("Payroc TSA"), pursuant to which, among other things, the Company or affiliates thereof provides certain information technology and operational transition services to Payroc for a period of time 15 i3 VERTICALS, Inc. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (in thousands, except unit, share and per share amounts) after the closing, and a processing services agreement with Payroc ("Payroc PSA"), pursuant to which the parties provide certain payment processing services to customers of each party following the closing in accordance with the terms thereof. The obligations under the Payroc TSA are planned to be substantially complete is in the fourth quarter of fiscal 2025. The obligations under the Payroc PSA are planned to be complete is in the first quarter of fiscal 2029. Revenue earned under the Payroc TSA and Payroc PSA are reported in other income, and expenses incurred for which the Company is reimbursed through the Payroc TSA and Payroc PSA are reported in selling, general and administrative expenses within the Company's condensed consolidated statements of operations. Income under the Payroc TSA and Payroc PSA during the three and nine months ended June 30, 2025 was $ 318 and $ 1,274 , respectively. Aggregate costs incurred related to the Merchant Services Transactions during the year ended September 30, 2024 that were not considered incremental direct costs to transact the sale, were approximately $ 2,626 and were expensed as incurred. These costs were primarily incurred during the second and third fiscal quarters of the year ended September 30, 2024 and include fees for third-party advisory, consulting, legal and professional services, as well as other items associated with the Merchant Services Transactions. The expenses are reflected within selling, general and administrative expenses within the Company's condensed consolidated statements of operations. The financial results of the Merchant Services Business are included in income from discontinued operations, net of income taxes on the Company’s consolidated statements of operations. 16 i3 VERTICALS, Inc. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (in thousands, except unit, share and per share amounts) The following table presents financial results of Merchant Services Business for the three and nine months ended June 30, 2025 and 2024: Three months ended June 30, Nine months ended June 30, 2025 2024 2025 2024 Revenue $ — $ 38,383 $ — $ 111,893 Operating expenses Other costs of services (excluding depreciation and amortization) — 18,116 — 50,902 Selling, general and administrative — 10,305 — 31,484 Depreciation and amortization — 3,088 — 8,649 Total operating expenses — 31,509 — 91,035 Income from operations — 6,874 — 20,858 Other expenses Interest expense, net — — — 56 Other expense 4 — 661 — Total other expenses 4 — 661 56 (Loss) income before income taxes from discontinued operations ( 4 ) 6,874 ( 661 ) 20,802 Provision for (benefit from) income taxes — 1,326 ( 117 ) 3,852 Net (loss) income from discontinued operations ( 4 ) 5,548 ( 544 ) 16,950 Net (loss) income from discontinued operations attributed to non-controlling interest ( 1 ) 1,663 ( 176 ) 5,099 Net (loss) income from discontinued operations attributable to i3 Verticals, Inc. $ ( 3 ) $ 3,885 $ ( 368 ) $ 11,851 17 i3 VERTICALS, Inc. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (in thousands, except unit, share and per share amounts) The Company has elected to not separately disclose discontinued operations on its condensed consolidated statement of cash flows. The following table presents cash flows from discontinued operations for major captions on the condensed consolidated financial statements: Nine months ended June 30, 2025 2024 Depreciation and amortization $ — $ 8,649 Equity-based compensation $ — $ 2,576 Adjustments to gain on sale of Merchant Services Business $ 661 $ — Non-cash lease expense $ — $ 803 Expenditures for property and equipment $ — $ ( 626 ) Expenditures for capitalized software $ — $ ( 817 ) Purchases of merchant portfolios and residual buyouts $ — $ ( 4,585 ) The following table presents significant non-cash investing and financing activities for major captions on the consolidated financial statements: Nine months ended June 30, 2024 Right-of-use assets obtained in exchange for operating lease obligations $ 1,739 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and pursuant to the reporting and disclosure rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, such statements include all adjustments (consisting only of normal recurring items) which are considered necessary for fair presentation of the unaudited condensed consolidated financial statements of the Company and its subsidiaries as of June 30, 2025 and for the three and nine months ended June 30, 2025 and 2024. The results of operations for the three and nine months ended June 30, 2025 and 2024 are not necessarily indicative of the operating results for the full year. As permitted by the rules and regulations of the SEC, certain information and disclosures otherwise included in the notes to the consolidated financial statements have been condensed or omitted from the summary of significant accounting policies. The Company believes the disclosures are adequate to make the information presented not misleading. It is recommended that these interim condensed consolidated financial statements be read in conjunction with the Company's consolidated financial statements and related footnotes for the years ended September 30, 2024 and 2023, included in the Company’s Annual Report on Form 10-K for the year ended September 30, 2024 filed with the SEC on November 25, 2024. Principles of Consolidation These interim condensed consolidated financial statements include the accounts of the Company and its subsidiary companies. All intercompany accounts and transactions have been eliminated in consolidation. 18 i3 VERTICALS, Inc. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (in thousands, except unit, share and per share amounts) Restricted Cash Restricted cash represents funds held in escrow related to acquisitions or held-on-deposit with the processing bank pursuant to agreements to cover potential merchant losses. It is presented as long-term assets on the accompanying condensed consolidated balance sheets since the related agreements extend beyond the next twelve months. Following the adoption of Accounting Standards Update (“ASU”) 2016-18, Statement of Cash Flows: Restricted Cash (Topic 230), the Company includes restricted cash along with the cash and cash equivalents balance for presentation in the consolidated statements of cash flows. Settlement Assets and Obligations Settlement assets and obligations result when funds are temporarily held or owed by the Company on behalf of merchants, consumers, schools, and other institutions. Timing differences, interchange expenses, merchant reserves and exceptional items cause differences between the amount received from the card networks and the amount funded to counterparties. These balances arising in the settlement process are reflected as settlement assets and obligations on the accompanying consolidated balance sheets. With the exception of merchant reserves, settlement assets or settlement obligations are generally collected and paid within one to four days . Settlement assets and settlement obligations were $ 18 as of June 30, 2025 and $ 632 as of September 30, 2024, respectively. Reclassifications Certain prior period amounts have been reclassified in order to conform with the current period presentation. These reclassifications have no impact on the Company’s previously reported consolidated net income (loss). Discontinued operations The results of operations for the Company's Merchant Services Business and Healthcare RCM Business have been reclassified as discontinued operations for all periods presented in the condensed consolidated statements of operations. Refer to Note 2 for additional information. Change in presentation of certain costs to other costs of services Following the disposal of the Company's Merchant Services Business in the fourth quarter of fiscal year 2024, the Company’s core business has been providing software solutions. Given the change in the Company's business model following the sale of our Merchant Services Business, the Company reclassified certain expenses to better align with the primary industry in which it operates. During the first quarter of fiscal year 2025, the Company revised its presentation of certain expenses in the Condensed Consolidated Statements of Operations from selling, general and administrative expenses to other costs of services. The Company reclassified personnel costs related to installation of the Company's software, conversion of client data, training client personnel, customer support activities and various other services provided directly to customers from selling, general and administrative to other costs of services. The Company also reclassified certain hosting and related software costs for directly supporting the Company's customers from selling, general and administrative to other costs of services. Comparative amounts have been reclassified to conform to the current period presentation. This change has no impact on the Condensed Consolidated Balance Sheets, Condensed Consolidated Statements of Cash Flows or Condensed Consolidated Statement of Changes in Equity. 19 i3 VERTICALS, Inc. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (in thousands, except unit, share and per share amounts) This change has no impact on the total operating expenses or earnings per share as illustrated below. The following tables present the effects of the change in presentation within the Condensed Consolidated Statements of Operations: For the Three Months Ended June 30, 2024 As Previously Reported (1) Adjustment As Adjusted Operating expenses Other costs of services $ 4,200 $ 11,087 $ 15,287 Selling, general and administrative $ 37,135 $ ( 11,087 ) $ 26,048 __________________________ 1. This column is presented after giving effect to discontinued operations of the Merchant Services Business and the Healthcare RCM Business as discussed in Note 2. For the Nine Months Ended June 30, 2024 As Previously Reported (1) Adjustment As Adjusted Operating expenses Other costs of services $ 11,743 $ 32,680 $ 44,423 Selling, general and administrative $ 108,256 $ ( 32,680 ) $ 75,576 __________________________ 1. This column is presented after giving effect to discontinued operations of the Merchant Services Business and the Healthcare RCM Business as discussed in Note 2. Inventories Inventories consist of point-of-sale equipment to be sold to customers and are stated at the lower of cost, determined on a weighted average or specific basis, or net realizable value. Inventories were $ 2,380 and $ 2,423 at June 30, 2025 and September 30, 2024, respectively, and are included within prepaid expenses and other current assets on the accompanying condensed consolidated balance sheets. Acquisitions Business acquisitions have been recorded using the acquisition method of accounting in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 805, Business Combinations (“ASC 805”), and, accordingly, the purchase price has been allocated to the assets acquired and liabilities assumed based on their estimated fair value as of the date of acquisition. Where relevant, the fair value of contingent consideration included in an acquisition is calculated using a Monte Carlo simulation as well as a discounted cash flows analysis. The fair value of customer relationships and non-compete assets acquired is identified using the Income Approach. The fair values of trade names and internally-developed software acquired are identified using the Relief from Royalty Method. After the purchase price has been allocated, goodwill is recorded to the extent the total consideration paid for the acquisition, including the acquisition date fair value of contingent consideration, if any, exceeds the sum of the fair values of the separately identifiable acquired assets and assumed liabilities. Acquisition costs for business combinations are expensed when incurred and recorded in selling, general and administrative expenses in the accompanying condensed consolidated statements of operations. Acquisitions not meeting the accounting criteria to be accounted for as a business combination are accounted for as an asset acquisition. An asset acquisition is recorded at its purchase price, inclusive of acquisition costs, which is allocated among the acquired assets and assumed liabilities based upon their relative fair values at the date of acquisition. 20 i3 VERTICALS, Inc. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (in thousands, except unit, share and per share amounts) Lease Expense Leases are recorded in accordance with ASC 842, Leases ("ASC 842). The Company elected the accounting policy practical expedients for all classes of underlying assets to (i) combine associated lease and non-lease components in a lease arrangement as a combined lease component and (ii) exclude recording short-term leases as right-of-use assets on the condensed consolidated balance sheets. At contract inception the Company determines whether an arrangement is, or contains a lease, and for each identified lease, evaluates the classification as operating or financing. Leased assets and obligations are recognized at the lease commencement date based on the present value of fixed lease payments to be made over the term of the lease. Renewal and termination options are factored into determination of the lease term only if the option is reasonably certain to be exercised. The Company’s leases do not provide a readily determinable implicit interest rate and the Company uses its incremental borrowing rate to measure the lease liability and corresponding right-of-use asset. The incremental borrowing rate is a fully collateralized rate that considers the Company’s credit rating, market conditions and the term of the lease. The Company accounts for all components in a lease arrangement as a single combined lease component. Operating lease cost is recognized on a straight-line basis over the lease term. Total lease costs include variable lease costs, which are primarily comprised of the consumer price index adjustments and other changes based on rates, such as costs of insurance and property taxes. Variable payments are expensed in the period incurred and not included in the measurement of lease assets and obligations. Revenue Recognition and Deferred Revenue Revenue is recognized as each performance obligation is satisfied, in accordance with ASC 606, Revenue from Contracts with Customers (“ASC 606”). The Company accrues for rights of refund, processing errors or penalties, or other related allowances based on historical experience. The Company utilized the portfolio approach practical expedient within ASC 606-10-10-4 Revenue from Contracts with Customers—Objectives and the significant financing component practical expedient within ASC 606-10-32-18 Revenue from Contracts with Customers—The Existence of a Significant Financing Component in the Contract in performing the analysis. 21 i3 VERTICALS, Inc. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (in thousands, except unit, share and per share amounts) The Company's revenue from continuing operations for the three and nine months ended June 30, 2025 and 2024 is derived from the following sources: • Software and related services — Includes software as a service ("SaaS"), transaction-based fees, ongoing software maintenance and support, software licenses and other professional services related to our software offerings; • Proprietary payments — Includes volume-based payment processing fees (“discount fees”) and other related fixed transaction or service fees; and • Other — Includes sales of equipment, non-software related professional services, bundled performance obligations for software sales and equipment leasing and other revenues. Revenues from the Company’s software are recognized when the related performance obligations are satisfied. Sales of software licenses are categorized into one of two categories of intellectual property in accordance with ASC 606, functional or symbolic. The key distinction is whether the license represents a right to use (functional) or a right to access (symbolic) intellectual property. The Company generates sales of one-time software licenses, which is functional intellectual property, and right to access license sales, which are symbolic intellectual property. Revenue from functional intellectual property is recognized at a point in time, when control of the software license transfers to the customer, while revenue from symbolic intellectual property is recognized over-time, as control transfers to the customer. The Company also generates revenue from maintenance services related to these software licenses, which is recognized over the term of the agreement. The Company also offers access to its software under software-as-a-service (“SaaS”) arrangements, which represent services arrangements, and under which customers do not have the right to take possession of the software. Revenue from SaaS arrangements is recognized over time, over the term of the agreement. Contracts with professional services, such as training or installation, are evaluated to determine if the customer can benefit from these services independently, whether they can be provided by other available resources, or whether they are separately identifiable from other contract promises. Discount fees represent a percentage of the dollar amount of each credit or debit transaction processed or a specified per transaction amount, depending on the card type. The Company frequently enters into agreements with customers under which the customer engages the Company to provide both payment authorization services and transaction settlement services for all of the cardholder transactions of the customer, regardless of which issuing bank and card network to which the transaction relates. The Company’s core performance obligations are to stand ready to provide continuous access to the Company’s payment authorization services and transaction settlement services in order to be able to process as many transactions as its customers require on a daily basis over the contract term. These services are stand ready obligations, as the nature of the promise is to stand ready to process an undetermined quantity of transactions. Under a stand-ready obligation, the Company’s performance obligation is defined by each time increment rather than by the underlying activities satisfied over time based on days elapsed. Because the service of standing ready is substantially the same each day and has the same pattern of transfer to the customer, the Company has determined that its stand-ready performance obligation comprises a series of distinct days of service. Discount fees are recognized each day based on the volume or transaction count at the time the merchants’ transactions are processed. 22 i3 VERTICALS, Inc. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (in thousands, except unit, share and per share amounts) The Company follows the requirements of ASC 606-10-55 Revenue from Contracts with Customers—Principal versus Agent Considerations , which states that the determination of whether a company should recognize revenue based on the gross amount billed to a customer or the net amount retained is a matter of judgment that depends on the facts and circumstances of the arrangement. The determination of gross versus net recognition of revenue requires judgment that depends on whether the Company controls the good or service before it is transferred to the merchant or whether the Company is acting as an agent of a third party. The assessment is provided separately for each performance obligation identified. Under its agreements, the Company incurs interchange and network pass-through charges from the third-party card issuers and card networks, respectively, related to the provision of payment authorization services. The Company has determined that it is acting as an agent with respect to these payment authorization services, based on the following factors: (1) the Company has no discretion over which card issuing bank will be used to process a transaction and is unable to direct the activity of the merchant to another card issuing bank, and (2) interchange and card network rates are pre-established by the card issuers or card networks, and the Company has no latitude in determining these fees. Therefore, revenue allocated to the payment authorization performance obligation is presented net of interchange and card network fees paid to the card issuing bank and card network, respectively, for the nine months ended June 30, 2025 and 2024. With regards to the Company's discount fees, generally, where the Company has control over merchant pricing, merchant portability, credit risk and ultimate responsibility for the merchant relationship, revenues are reported at the time of sale equal to the full amount of the discount charged to the merchant, less interchange and network fees. Revenues are also derived from a variety of transaction fees, which are charged for transacting on our proprietary payment facilitator platform and software solutions, and fees for other miscellaneous services. Revenues derived from such fees are recognized in the time the transactions occur and when there are no further performance obligations. Revenue from the sale of equipment, is recognized upon transfer of ownership to the customer, after which there are no further performance obligations. Arrangements may contain multiple performance obligations, such as payment authorization services, transaction settlement services, hardware, software products, SaaS, maintenance, and professional installation and training services. Revenues are allocated to each performance obligation based on the standalone selling price of each good or service. The selling price for a deliverable is based on standalone selling price, if available, the adjusted market assessment approach, estimated cost plus margin approach, or residual approach. The Company establishes estimated selling price, based on the judgment of the Company's management, considering internal factors such as margin objectives, pricing practices and controls, customer segment pricing strategies and the product life cycle. In arrangements with multiple performance obligations, the Company applies significant judgement in determining the allocation of the transaction price at inception of the arrangement and uses the standalone selling prices for the majority of the Company's revenue recognition. Revenues from sales of the Company ’ s hardware and software elements are recognized when each performance obligation has been satisfied which has been determined to be upon the delivery of the product. Revenues derived from service fees are recognized over time in accordance with our satisfaction of our performance obligations. Revenue from bundled performance obligations for software sales and equipment leasing is recognized over time as a single performance obligation. Lease income is recognized in accordance with ASC 842, and the leased equipment is classified as fixed assets and depreciated over its useful life. The Company’s professional services, including training, installation, and repair services are recognized as revenue as these services are performed. ASC 606 provides various optional practical expedients. The Company elected the use of the practical expedient relating to the disclosure of remaining performance obligations within a contract and will not disclose remaining performance obligations for contracts (i) with an original expected duration of one year or less or (ii) in which revenue from the satisfaction of the performance obligations is recognized in the amounts invoiced in accordance with ASC 606-10-55-18. The Company also has additional contracts with an original expected 23 i3 VERTICALS, Inc. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (in thousands, except unit, share and per share amounts) duration of greater than one year for which revenue had not yet been recognized. These contracts do not allow for termination for convenience, which reduces the risks related to future revenue recognition. The transaction price allocated to the remaining performance obligations related to these contracts is not considered useful to the users of the financial statements due to the exclusion of certain revenue based on the aforementioned practical expedients. The tables below present a disaggregation of the Company's revenue from contracts with customers for continuing operations by product by segment. The Company's products are defined as follows: • Software and related services — Includes SaaS, transaction-based fees, ongoing software maintenance and support, software licenses and other professional services related to our software offerings; • Proprietary payments — Includes discount fees and other related fixed transaction or service fees; and • Other — Includes sales of equipment, non-software related professional services, bundled performance obligations for software sales and equipment leasing and other revenues. Three months ended June 30, Nine months ended June 30, 2025 2024 2025 2024 Software and related services revenue $ 36,245 $ 31,963 $ 110,528 $ 95,428 Proprietary payments revenue 13,100 11,797 40,594 37,923 Other revenue 2,556 2,423 7,135 6,558 Total revenue $ 51,901 $ 46,183 $ 158,257 $ 139,909 The tables below present a disaggregation of the Company's revenue from contracts with customers from continuing operations by timing of transfer of goods or services. The Company's revenue included in each category are defined as follows: • Revenue earned over time — Includes SaaS, sales of software licenses sold as symbolic intellectual property, professional services, ongoing support, discount fees or other stand-ready obligations; and • Revenue earned at a point in time — Includes software licenses sold as functional intellectual property, equipment, or point in time service fees that are not stand-ready obligations. Three months ended June 30, Nine months ended June 30, 2025 2024 2025 2024 Revenue earned over time $ 47,543 $ 42,958 $ 142,457 $ 130,371 Revenue earned at a point in time 4,358 3,225 15,800 9,538 Total revenue $ 51,901 $ 46,183 $ 158,257 $ 139,909 Contract Assets The Company bills for certain software and related services sales and fixed fee professional services upon pre-determined milestones in the contracts. Therefore, the Company may have contract assets other than trade accounts receivable for performance obligations that are partially completed, which would typically represent consulting services provided before a milestone is completed in a contract. Additionally, contract assets also include software licenses sold as a right to use license but paid for under a non-cancellable subscription model. Under this structure, the license revenue is recognized upfront while a portion of the revenue is unbilled. Unbilled amounts associated with these professional services and software licenses sold under the subscription model are presented as accounts receivable as the Company has an unconditional right to payment for services performed. As of June 30, 2025 and September 30, 2024, the Company’s contract assets from contracts with customers was $ 9,417 and $ 8,680 , respectively. 24 i3 VERTICALS, Inc. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (in thousands, except unit, share and per share amounts) Contract Liabilities Deferred revenue represents amounts billed to customers by the Company for services contracts. Payment is typically collected at the start of the contract term. The initial prepaid contract agreement balance is deferred. The balance is then recognized as the services are provided over the contract term. Deferred revenue that is expected to be recognized as revenue within one year is recorded as short-term deferred revenue and the remaining portion is recorded as other long-term liabilities in the condensed consolidated balance sheets. The terms for most of the Company's contracts with a deferred revenue component are one year. Substantially all of the Company's deferred revenue is anticipated to be recognized within the next year. The following tables present the changes in deferred revenue as of and for the nine months ended June 30, 2025 and 2024, respectively: Balance at September 30, 2024 $ 39,156 Deferral of revenue 16,881 Recognition of unearned revenue ( 13,645 ) Balance at December 31, 2024 42,392 Deferral of revenue 9,841 Recognition of unearned revenue ( 14,973 ) Balance at March 31, 2025 37,260 Deferral of revenue 8,844 Recognition of unearned revenue ( 15,527 ) Balance at June 30, 2025 $ 30,577 Balance at September 30, 2023 $ 32,253 Deferral of revenue 18,612 Recognition of unearned revenue ( 14,127 ) Balance at December 31, 2023 36,738 Deferral of revenue 10,362 Recognition of unearned revenue ( 12,291 ) Balance at March 31, 2024 34,809 Deferral of revenue 8,975 Recognition of unearned revenue ( 14,154 ) Balance at June 30, 2024 $ 29,630 Costs to Obtain and Fulfill a Contract The Company capitalizes incremental costs to obtain new contracts and contract renewals and amortizes these costs on a straight-line basis as an expense over the benefit period, which is generally the expected customer life, unless a commensurate payment is not expected at renewal. As of June 30, 2025 and September 30, 2024, the Company had $ 1,140 and $ 857 , respectively, of capitalized contract costs, which relates to commissions paid to employees as well as other incentives given to customers to obtain new sales, included within “Other assets" on the condensed consolidated balance sheets. The Company recorded expense from continuing operations related to these costs of $ 30 and $ 241 for the three and nine months ended June 30, 2025 and $ 24 and $ 64 for the three and nine months ended June 30, 2024. 25 i3 VERTICALS, Inc. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (in thousands, except unit, share and per share amounts) The Company expenses sales commissions as incurred for the Company's sales commission plans that are paid on recurring monthly revenues, portfolios of existing customers, or have a substantive stay requirement prior to payment. Other Cost of Services Other costs of services include costs directly related to the Company's software and related services. Additionally, other costs of services include costs directly attributable to payment processing services such as processing and bank sponsorship. Losses resulting from chargebacks against a customer are included in other cost of services. Residual payments to the Company's distribution partners and the cost of equipment sold is also included in cost of services. Amortization arising from capitalized software development is not included in other cost of services. Other costs of services are recognized at the time the related revenue is recognized. Following the disposal of the Company's Merchant Services Business in the fourth quarter of fiscal year 2024, the Company’s core business has been providing software solutions. Given the change in the Company's business model following the sale of our Merchant Services Business, the Company has reclassified certain expenses to better align with the primary industry in which it operates. During the first quarter of fiscal year 2025, the Company revised its presentation of certain expenses in the Condensed Consolidated Statements of Operations from selling, general and administrative expenses to other costs of services. The Company reclassified personnel costs related to installation of the Company's software, conversion of client data, training client personnel, customer support activities and various other services provided directly to customers from selling, general and administrative to other costs of services. The Company also reclassified certain hosting and related software costs for directly supporting the Company's customers from selling, general and administrative to other costs of services. Refer to Note 3 for discussion of the change in the current and prior period presentation. The Company accounts for all governmental taxes associated with revenue transactions on a net basis. Use of Estimates The preparation of condensed consolidated financial statements and related disclosures in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Such estimates include, but are not limited to, the value of purchase consideration paid and identifiable assets acquired and assumed in acquisitions, goodwill and intangible asset impairment review, determination of performance obligations for revenue recognition, loss reserves, assumptions used in the calculation of equity-based compensation and in the calculation of income taxes, and certain tax assets and liabilities as well as the related valuation allowances. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results could differ from those estimates. Segment Information The Company has identified its Chief Executive Officer as the Company's Chief Operating Decision Maker ("CODM"). The Company’s CODM reviews discrete financial information on a consolidated basis for purposes of allocating resources and evaluating financial performance which is based on consolidated information about our revenues, income from operations, and other key financial data. All significant operating decisions are made by analyzing the Company as a single operating segment and as a result, the Company has determined that it operates as a single reportable segment as of June 30, 2025. See Note 16 to our condensed consolidated financial statements for additional information. Recent Accounting Pronouncements Recently Issued Accounting Pronouncements Not Yet Adopted In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740)—Improvements to Income Tax Disclosures (“ASU 2023-09”). ASU 2023-09 will provide improvements to the income tax disclosures primarily 26 i3 VERTICALS, Inc. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (in thousands, except unit, share and per share amounts) related to the income taxes paid and rate reconciliation, and how legislation changes may affect future capital allocation and cash flow forecasts. The amendment will improve the consistency in which companies provide tax information, and will further increase the transparency of related tax risks and operational opportunities. The amendments in ASU 2023-09 are effective for annual periods beginning after December 15, 2024, with early adoption permitted. The Company will not be required to adopt ASU 2023-09 until October 1, 2025. The Company is currently evaluating the impact of the adoption of ASU 2023-09 on the Company’s financial statement disclosures. In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280)—Improvements to Reportable Segment Disclosures (“ASU 2023-07”). ASU 2023-07 improves interim disclosure requirements for segment reporting, including clarifications regarding the measure of profit and loss used to assess segment performance and the allocation of resources. Further, it enhances the disclosures for reporting segment expenses and will require the Company to report significant expenses regularly provided by the CODM. The amendment will require companies to disclose a more granular level of information with regards to segment reporting to further enhance the transparency of what specified amounts are included within each segment. The amendments in ASU 2023-07 are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. This new ASU will be effective for us beginning with our Form 10-K for fiscal year 2025. The Company is currently evaluating the impact of the adoption of ASU 2023-07 on the Company’s financial statement disclosures. In November 2024, the FASB issued ASU No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40) ("ASU 2024-03"). ASU 2024-03 will require companies to disaggregate, within the notes to the financial statements, certain expenses presented on the face of the financial statements to enhance transparency and help investors better understand an entity's performance. The amendment will specifically require that an entity disclose the amounts related to purchases of inventory, employee compensation, depreciation and intangible asset amortization. Entities will also be required to provide a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively, disclose the total amount of selling expenses and, in annual reporting periods, provide a definition of what constitutes selling expenses. The amendments in ASU 2024-03 are effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The Company will not be required to adopt ASU 2024-03 until October 1, 2027. The Company is currently evaluating the impact of the adoption of ASU 2024-03 on the Company’s financial statement disclosures. 4. ACQUISITIONS During the nine months ended June 30, 2025 and 2024, the Company acquired the following businesses: Business Combinations during nine months ended June 30, 2025 Purchase of Utility Billing Software Company On April 1, 2025, the Company completed the acquisition of substantially all of the assets of a business (the "Utility Billing Software Company") to expand the Company’s public sector utility billing software offerings. Total purchase consideration was $ 10,260 , including $ 9,000 in cash funded by proceeds from the Company's revolving credit facility, and $ 1,260 in the acquisition date estimated fair value of contingent cash consideration (the final amount of such contingent cash payment of up to $ 5,000 is dependent upon achievement of specified financial performance targets, as defined in the purchase agreement). 27 i3 VERTICALS, Inc. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (in thousands, except unit, share and per share amounts) The additional cash consideration of up to $ 5,000 , in the aggregate, is to be paid based upon the achievement of specified financial performance targets, as defined in the purchase agreement, for performance periods extending through September 2027. The Company determines the acquisition date fair values of the liabilities for the contingent consideration using a Monte Carlo simulation as well as a discounted cash flow analysis. In each subsequent reporting period, the Company will reassess its current estimates of performance relative to the targets and adjust the contingent liabilities to their fair values through earnings. See additional disclosures in Note 12. The goodwill associated with the business acquisition is deductible for tax purposes. The acquired customer relationships intangible asset has an estimated amortization period of fifteen years . The acquired trade name has an amortization period of two years . The acquired capitalized software has an amortization period of seven years . Acquisition-related costs for this acquisition amounted to approximately $ 70 and were included in selling, general and administrative on our consolidated statement of operations and were expensed as incurred. Summary of the Utility Billing Software Company The preliminary fair values assigned to certain assets and liabilities assumed, as of the acquisition date, were as follows: Accounts receivable $ 912 Property and equipment 200 Capitalized software 380 Customer relationships 4,610 Trade name 100 Goodwill 4,996 Total assets acquired 11,198 Deferred revenue, current 938 Net assets acquired $ 10,260 Other Business Combinations nine months ended June 30, 2025 During the nine months ended June 30, 2025, the Company purchased certain assets of a business to expand the Company’s customer footprint. Total purchase consideration was $ 2,000 in cash funded from cash on hand. In connection with this purchase, the Company allocated approximately $ 83 to property and equipment, approximately $ 1,700 to customer relationships, $ 5 to non-compete agreements and the remainder, approximately $ 211 , to goodwill, all of which is deductible for tax purposes. The acquired customer relationships intangible asset has an estimated amortization period of fifteen years . 28 i3 VERTICALS, Inc. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (in thousands, except unit, share and per share amounts) Pro Forma Results of Operations for 2025 Business Combinations The following unaudited supplemental pro forma results of operations have been prepared as though each of the acquired businesses in the nine months ended June 30, 2025 had occurred on October 1, 2023. Pro forma adjustments were made to reflect the impact of depreciation and amortization, changes to executive compensation and the revised debt load, all in accordance with ASC 805. This supplemental pro forma information does not purport to be indicative of the results of operations that would have been attained had the acquisitions been made on these dates, or of results of operations that may occur in the future. Nine Months Ended June 30, 2025 2024 Revenue $ 1,437 $ 2,206 Net income (loss) $ 131 $ ( 12 ) Business Combinations during the year ended September 30, 2024 Purchase of Eduloka, Ltd. On August 1, 2024, the Company completed the acquisition of substantially all of the assets of Eduloka Ltd. ("inLumon") to expand the Company's permitting and licensing software offerings. Total purchase consideration was $ 27,477 , including $ 18,000 in cash funded by proceeds from the Company's revolving credit facility, the issuance of 311,634 shares of the Company's Class A common stock (valued at $ 7,517 ) and $ 1,960 in the acquisition date estimated fair value of contingent cash consideration the final amount of such contingent cash 29 i3 VERTICALS, Inc. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (in thousands, except unit, share and per share amounts) payment of up to $ 22,000 is dependent upon achievement of specified financial performance targets, as defined in the purchase agreement). The additional consideration of up to $ 22,000 , in the aggregate, is to be paid based upon the achievement of specified financial performance targets, as defined in the purchase agreement, through no later than July 2027. The Company determined the acquisition date fair value of the liability for the contingent consideration using a Monte Carlo simulation as well as a discounted cash flow analysis. In each subsequent reporting period, the Company will reassess its current estimates of performance relative to the targets and adjust the contingent liabilities to their fair values through earnings. See additional disclosures in Note 12. The goodwill associated with the inLumon acquisition is deductible for tax purposes. The acquired customer relationships intangible asset has an estimated amortization period of eighteen years . The acquired trade name has an amortization period of two years . The acquired capitalized software has an amortization period of seven years . Acquisition-related costs for this acquisition amounted to approximately $ 294 and were included in selling, general and administrative on our consolidated statement of operations and were expensed as incurred. Summary of inLumon The preliminary fair values assigned to certain assets and liabilities assumed, as of the acquisition date, were as follows: Accounts receivable $ 2,990 Property and equipment 20 Capitalized software 3,000 Customer relationships 11,800 Trade name 100 Goodwill 11,486 Total assets acquired 29,396 Accrued expenses and other current liabilities 1,728 Deferred revenue, current 191 Net assets acquired $ 27,477 30 i3 VERTICALS, Inc. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (in thousands, except unit, share and per share amounts) Other Business Combinations during the year ended September 30, 2024 During the three months ended December 31, 2023, the Company completed the acquisition of substantially all of the assets of a business to expand the Company’s software offerings. Total purchase consideration was $ 1,270 , including $ 1,100 in cash consideration, funded by proceeds from the Company's revolving credit facility, and $ 170 in the estimated fair value of contingent cash consideration, the final amount of such contingent cash payment of up to $ 750 is dependent upon achievement of specified financial performance targets, as defined in the purchase agreement). The additional consideration of up to $ 750 , in the aggregate, is to be paid based upon the achievement of specified financial performance targets, as defined in the purchase agreement, through no later than May 2026. In connection with this acquisition, the Company allocated approximately $ 5 to property and equipment, approximately $ 40 to capitalized software, approximately $ 220 to customer relationships and the remainder, approximately $ 1,005 , to goodwill, all of which is deductible for tax purposes. The acquired customer relationships intangible asset has an estimated amortization period of ten years . The acquired capitalized software has an amortization period of seven years . Acquisition-related costs for this acquisition amounted to approximately $ 8 and were expensed as incurred. 5. PREPAID EXPENSES AND OTHER CURRENT ASSETS A summary of the Company's prepaid expenses and other current assets as of June 30, 2025 and September 30, 2024 is as follows: June 30, September 30, 2025 2024 Inventory $ 2,380 $ 2,423 Prepaid licenses 6,714 5,013 Prepaid insurance 517 129 Notes receivable — current portion 195 195 Other current assets 2,964 2,213 Prepaid expenses and other current assets (1) $ 12,770 $ 9,973 __________________________ 1. In connection with the sale of the Healthcare RCM Business, $ 259 of the Company's prepaid expenses and other current assets was classified as "Current assets held for sale" as of September 30, 2024 in the accompanying condensed consolidated balance sheets and was not included in these amounts. 6. GOODWILL AND INTANGIBLE ASSETS Changes in the carrying amount of goodwill are as follows: Total Balance at September 30, 2024 (1) $ 242,988 Goodwill attributable to preliminary purchase price adjustments during the nine months ended June 30, 2025 5,207 Balance at June 30, 2025 $ 248,195 __________________________ 1. In connection with the sale of the Healthcare RCM Business, $ 37,688 of the Company's goodwill was classified as "Long-term assets held for sale" as of September 30, 2024 in the accompanying condensed consolidated balance sheets and was not included in this amount. 31 i3 VERTICALS, Inc. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (in thousands, except unit, share and per share amounts) Intangible assets consisted of the following as of June 30, 2025: Cost Accumulated Amortization Carrying Value Amortization Life and Method Finite-lived intangible assets: Customer relationships $ 179,650 $ ( 41,904 ) $ 137,746 9 to 20 years – straight-line Trade names 3,691 ( 2,860 ) 831 2 to 5 years – straight-line Non-compete agreements and other intangible assets 376 ( 261 ) 115 1 to 8 years – straight-line Total finite-lived intangible assets 183,717 ( 45,025 ) 138,692 Indefinite-lived intangible assets: Trademarks 16 — 16 Total identifiable intangible assets $ 183,733 $ ( 45,025 ) $ 138,708 Amortization expense from continuing operations for intangible assets amounted to $ 2,882 and $ 8,467 for the three and nine months ended June 30, 2025, and $ 2,621 and $ 7,969 for the three and nine months ended June 30, 2024. Based on net carrying amounts at June 30, 2025, the Company's estimate of future amortization expense for continuing operations for intangible assets are presented in the table below for fiscal years ending September 30: 2025 (three months remaining) $ 2,912 2026 11,222 2027 10,954 2028 10,766 2029 10,739 Thereafter 92,099 $ 138,692 32 i3 VERTICALS, Inc. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (in thousands, except unit, share and per share amounts) 7. ACCRUED EXPENSES AND OTHER LIABILITIES A summary of the Company's accrued expenses and other current liabilities as of June 30, 2025 and September 30, 2024 is as follows: June 30, September 30, 2025 2024 (1) Accrued wages, bonuses, commissions and vacation $ 9,380 $ 4,673 Accrued interest 171 43 Accrued contingent consideration — current portion 16 518 Escrow liabilities — 2,174 Accrued tax distributions — 24,276 Accrued income tax expense 2,004 30,528 Tax receivable agreement liability — current portion — 9,850 Customer deposits 996 611 Employee health self-insurance liability 30 649 Accrued Hyland expenses 2,744 1,165 Accrued interchange 1,987 1,946 Other accrued liabilities related to the Sale of the Merchant Services Business — 7,887 Other accrued liabilities related to the Sale of the Healthcare RCM Business 1,545 — Accrued liabilities owed to sellers 296 334 Other accrued expenses 2,746 3,598 Accrued expenses and other current liabilities $ 21,915 $ 88,252 __________________________ 1. In connection with the sale of the Healthcare RCM Business, $ 1,720 of the Company's accrued expenses and other current liabilities was classified as "Current liabilities held for sale" as of September 30, 2024 in the accompanying condensed consolidated balance sheets and was not included in these amounts. A summary of the Company's long-term liabilities as of June 30, 2025 and September 30, 2024 is as follows: June 30, September 30, 2025 2024 Accrued contingent consideration — long-term portion $ 3,778 $ 1,636 Deferred tax liability — long-term 9,380 11,402 Other long-term liabilities 2,300 1,883 Total other long-term liabilities $ 15,458 $ 14,921 33 i3 VERTICALS, Inc. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (in thousands, except unit, share and per share amounts) 8. LONG-TERM DEBT, NET A summary of long-term debt, net as of June 30, 2025 and September 30, 2024 is as follows: June 30, September 30, Maturity 2025 2024 Revolving lines of credit to banks under the 2023 Senior Secured Credit Facility May 8, 2028 $ — $ — 1 % Exchangeable Senior Notes due 2025 February 15, 2025 — 26,223 Total long-term debt — 26,223 Less current portion of long-term debt — ( 26,223 ) Long-term debt, net of current portion $ — $ — 2020 Exchangeable Notes Offering On February 18, 2020, i3 Verticals, LLC issued $ 138,000 aggregate principal amount of 1.0 % Exchangeable Senior Notes due 2025 (the “Exchangeable Notes”) in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”). The Company received approximately $ 132,762 in net proceeds from the sale of the Exchangeable Notes, as determined by deducting estimated offering expenses paid to third-parties from the aggregate principal amount. i3 Verticals, LLC issued the Exchangeable Notes pursuant to an Indenture, dated as of February 18, 2020, among i3 Verticals, LLC, the Company and U.S. Bank Trust Company National Association, as trustee (the “Indenture”). The Exchangeable Notes bore interest at a fixed rate of 1.00 % per year, payable semiannually in arrears on February 15 and August 15 of each year, beginning on August 15, 2020. In accordance with the terms of the Indenture, as of August 15, 2024, the Exchangeable Notes became exchangeable at the option of the holders at any time until the close of business on the second scheduled trading day immediately preceding the maturity date. The Exchangeable Notes matured and the remaining principal balance was repaid in full on February 15, 2025, as further described below. During the fiscal year ended September 30, 2020, we repurchased $ 21,000 in aggregate principal amount of Exchangeable Notes in open market purchases. In addition, on December 21, 2023, i3 Verticals, LLC entered into agreements to repurchase an additional portion of its Exchangeable Notes pursuant to privately negotiated transactions with a limited number of holders of the Exchangeable Notes (the "Exchangeable Note Repurchases"). The repurchase payments were determined by the Company’s average stock price over the 15 trading-day measurement period ended January 16, 2024. The closing of the Exchangeable Note Repurchases occurred on January 18, 2024, and the Company paid $ 87,391 to repurchase $ 90,777 in aggregate principal amount of its Exchangeable Notes and to repay approximately $ 386 in accrued interest on the repurchased portion of the Exchangeable Notes. The Company wrote off $ 926 of debt issuance costs in connection with the repurchase transactions. These repurchases resulted in a decrease in the Company's total leverage ratio, and following the completion of the repurchases of these Exchangeable Notes, approximately $ 26,223 in aggregate principal amount of the Exchangeable Notes remained outstanding, with terms unchanged. The Company recorded a gain on retirement of debt of $ 2,397 due to the estimated acquisition price exceeding the net carrying 34 i3 VERTICALS, Inc. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (in thousands, except unit, share and per share amounts) amount of the repurchased portion of the Exchangeable Notes, adjusted for unamortized debt issuance costs and costs and third-party fees related to the transaction. Upon maturity of the Exchangeable Notes in February 2025, we paid $ 26,223 for the remaining principal balance and $ 131 in accrued interest. Exchangeable Note Hedge Transactions On February 12, 2020, concurrently with the pricing of the Exchangeable Notes, and on February 13, 2020, concurrently with the exercise by the initial purchasers of their right to purchase additional Exchangeable Notes, i3 Verticals, LLC entered into exchangeable note hedge transactions with respect to Class A common stock (the “Note Hedge Transactions”) with certain financial institutions (collectively, the “Counterparties”). The Note Hedge Transactions covered, subject to anti-dilution adjustments substantially similar to those applicable to the Exchangeable Notes, the same number of shares of Class A common stock that initially underlied the Exchangeable Notes in the aggregate and were exercisable upon exchange of the Exchangeable Notes. The Note Hedge Transactions were intended to reduce potential dilution to the Class A common stock upon any exchange of the Exchangeable Notes. The Note Hedge Transactions expired upon the maturity of the Exchangeable Notes. The Note Hedge Transactions were separate transactions, entered into by i3 Verticals, LLC with the Counterparties, and were not part of the terms of the Exchangeable Notes. Holders of the Exchangeable Notes did not have any rights with respect to the Note Hedge Transactions. i3 Verticals, LLC used approximately $ 28,676 of the net proceeds from the offering of the Exchangeable Notes (net of the premiums received for the warrant transactions described below) to pay the cost of the Note Hedge Transactions. The Note Hedge Transactions did not require separate accounting as a derivative as they meet a scope exception for certain contracts involving an entity's own equity. The premiums paid for the Note Hedge Transactions have been included as a net reduction to additional paid-in capital within stockholders' equity. In December 2023, i3 Verticals, LLC received $ 250 from the Counterparties to terminate the portion of the Note Hedge Transactions corresponding to the Exchangeable Notes that were repurchased in fiscal year 2020. Also in December 2023, i3 Verticals, LLC entered into agreements with the Counterparties to terminate the portion of the Note Hedge Transactions corresponding to the Exchangeable Note Repurchases. On January 18, 2024, in connection with the Exchangeable Note Repurchases, the Company and i3 Verticals, LLC terminated the corresponding portions of the Note Hedge Transactions ("Note Hedge Unwinds"), and i3 Verticals, LLC received $ 987 for the sale of the Note Hedge Unwinds and recorded a loss on the sale of the Note Hedge Unwinds of $ 245 . The Note Hedge Transactions expired in February 2025 upon the maturity and payment in full of the Exchangeable Notes. Warrant Transactions On February 12, 2020, concurrently with the pricing of the Exchangeable Notes, and on February 13, 2020, concurrently with the exercise by the initial purchasers of their right to purchase additional Exchangeable Notes, the Company entered into warrant transactions to sell to the Counterparties warrants (the “Warrants”) to acquire, subject to customary adjustments, up to initially 3,376,391 shares of Class A common stock in the aggregate at an initial exercise price of $ 62.88 per share. The Company offered and sold the Warrants in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act. The Warrants expire over a ninety trading day period that began on May 15, 2025. The Warrants are separate transactions, entered into by the Company with the Counterparties, and are not part of the terms of the Exchangeable Notes. Holders of the Exchangeable Notes did not have any rights with respect to the Warrants. The Company received approximately $ 14,669 from the offering and sale of the Warrants. The Warrants do not require separate accounting as a derivative as they meet a scope exception for certain contracts involving an entity's own equity. The premiums paid for the Warrants have been included as a net increase to additional paid-in capital within stockholders' equity. 35 i3 VERTICALS, Inc. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (in thousands, except unit, share and per share amounts) In December 2023, the Company paid $ 119 to the Counterparties to terminate the portion of the Warrants corresponding to the Exchangeable Notes that were repurchased in fiscal year 2020. Also in December 2023, i3 Verticals, LLC entered into agreements with the Counterparties to terminate the portion of the Warrants corresponding to the Exchangeable Note Repurchases. On January 18, 2024, in connection with the Exchangeable Note Repurchases, the Company and i3 Verticals, LLC terminated the corresponding portions of the Warrants ("Warrant Unwinds"), and the Company paid $ 433 for the repurchase of the Warrant Unwinds and recorded a gain on the repurchase of the Warrant Unwinds of $ 105 . 2023 Senior Secured Credit Facility On May 8, 2023, i3 Verticals, LLC (the “Borrower”), entered into that certain Credit Agreement (as amended, the “2023 Senior Secured Credit Facility”) with the guarantors and lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent (“JPMorgan”). The 2023 Senior Secured Credit Facility replaced the prior senior secured credit facility of the Company which was entered into on May 9, 2019 (the "Prior Senior Secured Credit Facility"). Following an amendment to the Credit Facility entered into on May 5, 2025, as described below, the 2023 Senior Secured Credit Facility provides for aggregate commitments of $ 400,000 in the form of a senior secured revolving credit facility (the “Revolver”). The 2023 Senior Secured Credit Facility provides that the Borrower has the right to seek additional commitments to provide additional term loan facilities or additional revolving credit commitments in an aggregate principal amount up to, as of any date of determination, the sum of (i) the greater of $ 100,000 and 100 % of the Borrower’s consolidated EBITDA (as defined in the 2023 Senior Secured Credit Facility) for the most recently completed four quarter period, plus (ii) the amount of certain prepayments of certain indebtedness, so long as, among other things, after giving pro forma effect to the incurrence of such additional borrowings and any related transactions, the Borrower’s consolidated interest coverage ratio (as defined in the 2023 Senior Secured Credit Facility) would not be less than 3.0 to 1.0 and the Borrower’s consolidated total net leverage ratio (as defined in the 2023 Senior Secured Credit Facility) would not exceed 5.0 to 1.0. As of June 30, 2025, the Borrower's consolidated interest coverage ratio was 87.1 x and total leverage ratio was 0.0 x. The provision of any such additional amounts under the additional term loan facilities or additional revolving credit commitments are subject to certain additional conditions and the receipt of certain additional commitments by existing or additional lenders. The lenders under the 2023 Senior Secured Credit Facility are not under any obligation to provide any such additional term loan facilities or revolving credit commitments. The proceeds of the Revolver, together with proceeds from any additional amounts under the additional term loan facilities or additional revolving credit commitments, may only be used by the Borrower to (i) finance working capital, capital expenditures and other lawful corporate purposes, (ii) finance permitted acquisitions (as defined in the 2023 Senior Secured Credit Facility) and (iii) to refinance certain existing indebtedness. Borrowings under the Revolver will be made, at the Borrower’s option, at the Adjusted Term SOFR rate or the base rate, plus, in each case, an applicable margin. The Adjusted Term SOFR rate will be the rate of interest per annum equal to the Term SOFR rate (based upon an interest period of one, three or six months), plus 0.10 %, plus an applicable margin of 2.00 % to 3.00 % ( 2.00 % at June 30, 2025). The Adjusted Term SOFR rate shall not be less than 0 % in any event. The base rate is a fluctuating rate of interest per annum equal to the highest of (a) the greater of the federal funds rate or the overnight bank funding rate, plus ½ of 1%, (b) Wall Street Journal prime rate and (c) the Adjusted Term SOFR rate for an interest period of one month, plus 1 %, plus an applicable margin of 1.00 % to 2.00 % ( 1.00 % at June 30, 2025). The base rate shall not be less than 1 % in any event. 36 i3 VERTICALS, Inc. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (in thousands, except unit, share and per share amounts) The applicable margin is based upon the Borrower’s consolidated total net leverage ratio (as defined in the 2023 Senior Secured Credit Facility), as reflected in the schedule below: Consolidated Total Net Leverage Ratio Commitment Fee Letter of Credit Fee Term Benchmark Loans Base Rate Loans > 3.0 to 1.0 0.30 % 3.00 % 3.00 % 2.00 % > 2.5 to 1.0 but < 3.00 to 1.0 0.25 % 2.50 % 2.50 % 1.50 % > 2.0 to 1.0 but < 2.50 to 1.0 0.20 % 2.25 % 2.25 % 1.25 % < 2.0 to 1.0 0.15 % 2.00 % 2.00 % 1.00 % In addition to paying interest on outstanding principal under the Revolver, the Borrower will be required to pay a commitment fee equal to the product of between 0.15 % and 0.30 % (the applicable percentage depending on the Borrower’s consolidated total net leverage ratio as reflected in the schedule above, 0.15 % at June 30, 2025) times the actual daily amount by which $ 400,000 exceeds the total amount outstanding under the Revolver and available to be drawn under all outstanding letters of credit. The Borrower will be permitted to voluntarily reduce the unutilized portion of the commitment amount and repay outstanding loans under the 2023 Senior Secured Credit Facility, whether such amounts are issued under the Revolver or under the additional term loan facilities or additional revolving credit facilities, at any time without premium or penalty. In addition, if the total amount borrowed under the Revolver exceeds $ 400,000 at any time, the 2023 Senior Secured Credit Facility requires the Borrower to prepay such excess outstanding amounts. All obligations under the 2023 Senior Secured Credit Facility are unconditionally guaranteed by the Company, and each of the Company’s existing and future direct and indirect material, wholly owned domestic subsidiaries, subject to certain exceptions. The obligations are secured by first-priority security interests in substantially all tangible and intangible assets of the Borrower, the Company and each subsidiary guarantor, in each case whether owned on the date of the initial borrowings or thereafter acquired. The 2023 Senior Secured Credit Facility places certain restrictions on the ability of the Borrower, the Company and their subsidiaries to, among other things, incur debt and liens; merge, consolidate or liquidate; dispose of assets; enter into hedging arrangements; make certain restricted payments; undertake transactions with affiliates; enter into sale-leaseback transactions; make certain investments; prepay or modify the terms of certain indebtedness; and modify the terms of certain organizational agreements. The 2023 Senior Secured Credit Facility contains customary events of default, including payment defaults, breaches of representations and warranties, covenant defaults, cross-defaults to other material indebtedness, certain events of bankruptcy and insolvency, material judgments, certain events with respect to employee benefit plans, invalidity of loan documents and certain changes in control. On May 5, 2025, i3 LLC entered into that certain Second Amendment to Credit Agreement (the “Amendment”), which amended the 2023 Senior Secured Credit Facility, with the guarantors and the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent. The Amendment provided for certain amendments to the 2023 Senior Secured Credit Facility, including amendments that permitted and accommodated the execution of the Healthcare RCM Purchase Agreement and the consummation of the Healthcare RCM Transactions. The Amendment also permanently reduced the aggregate lender commitments under the Company’s revolving line of credit from $ 450,000 to $ 400,000 . 37 i3 VERTICALS, Inc. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (in thousands, except unit, share and per share amounts) Debt issuance costs The Company incurred $ 249 in debt issuance costs during both the three and nine months ended June 30, 2025 and $ 906 in debt issuance costs during both the three and nine months ended June 30, 2024. The Company's debt issuance costs are being amortized over the related term of the debt using the straight-line method, which is not materially different than the effective interest rate method, and are presented within other assets in the condensed consolidated balance sheets. The amortization of deferred debt issuance costs is included in interest expense and amounted to approximately $ 216 and $ 746 during the three and nine months ended June 30, 2025 and $ 221 and $ 897 during the three and nine months ended June 30, 2024. In connection with the Second Amendment to the Credit Agreement, the Company recorded $ 295 during the three and nine months ended June 30, 2025 for the write-off of debt issuance costs, which was recorded in interest expense in the condensed consolidated statements of operations. 9. STOCKHOLDERS' EQUITY Share Repurchase Program On August 8, 2024, the Company entered into a share repurchase program for the Company's Class A common stock, under which the Company was authorized to repurchase up to $ 50,000 of outstanding shares of our Class A common stock (exclusive of fees, commissions or other expenses related to such repurchases) (the "Prior Share Repurchase Program"). Pursuant to the Prior Share Repurchase Program, the Company was authorized to make repurchases of our Class A Common Stock in the open market, through privately negotiated transactions, or otherwise, including under Rule 10b5-1 plans. The Prior Share Repurchase Program terminated on August 8, 2025, and has been replaced by a new share repurchase program adopted by the Company as described below under Note 20. During the nine months ended June 30, 2025 the Company repurchased 1,573,881 shares of Class A Common Stock under the Prior Share Repurchase Program at an average price of $ 23.86 per share for a total cost inclusive of commissions and excise taxes of $ 37,979 . The repurchased shares were cancelled and retired, resulting in a permanent reduction in both the number of shares outstanding and the Company's total stockholders' equity. When the Company repurchases shares of Common Stock, the amount paid to repurchase the shares in excess of the par or stated value is allocated to additional paid-in-capital unless subject to limitation or the balance in additional paid-in-capital is exhausted. Remaining amounts are recognized as a reduction in retained earnings. As of June 30, 2025 the remaining total available authorization under the Prior Share Repurchase Program was $ 12,445 . 10. INCOME TAXES i3 Verticals, Inc. is taxed as a corporation and pays corporate federal, state and local taxes on income allocated to it from i3 Verticals, LLC based on i3 Verticals, Inc.’s economic interest in i3 Verticals, LLC. i3 Verticals, LLC's members, including the Company, are liable for federal, state and local income taxes based on their share of i3 Verticals, LLC's pass-through taxable income. i3 Verticals, LLC is not a taxable entity for federal income tax purposes but is subject to and reports entity level tax in both Tennessee and Texas. In addition, certain subsidiaries of i3 Verticals, LLC are corporations that are subject to state and federal income taxes. On July 4, 2025, the U.S. enacted the tax legislation known as the One Big Beautiful Bill Act which includes, among other provisions, changes to federal income tax provisions including the allowance of immediate 38 i3 VERTICALS, Inc. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (in thousands, except unit, share and per share amounts) expensing of qualifying research and development expenses and permanent extensions of certain provision within the Tax Cuts and Jobs Act. The legislation has multiple effective dates, with certain provisions effective in 2025 and others taking effect in later years. The Company is evaluating the future impact of these changes on its condensed consolidated financial statements. The Company’s tax provision for interim periods is determined using an estimate of its annual effective tax rate, adjusted for discrete items, if any, that are taken into account in the relevant period. When the estimate of the annual effective tax rate is unreliable, the Company records its income tax expense or benefit based upon a period to date effective tax rate. Each quarter, the Company updates its estimate of the annual effective tax rate, and if the Company’s estimated tax rate changes, it makes a cumulative adjustment in that period. The Company’s provision for income taxes for continuing operations was a benefit of $ 22 and a provision of $ 3,272 for the three and nine months ended June 30, 2025 and a provision of $ 5,191 and a provision of $ 3,153 during the three and nine months ended June 30, 2024. Tax Receivable Agreement On June 25, 2018, the Company entered into a Tax Receivable Agreement with i3 Verticals, LLC and each of the Continuing Equity Owners (the “Tax Receivable Agreement”) that provides for the payment by the Company to the Continuing Equity Owners of 85 % of the amount of certain tax benefits, if any, that it actually realizes, or in some circumstances, is deemed to realize in its tax reporting, as a result of (i) future redemptions funded by the Company or exchanges, or deemed exchanges in certain circumstances, of Common Units of i3 Verticals, LLC for Class A common stock of i3 Verticals, Inc. or cash, and (ii) certain additional tax benefits attributable to payments made under the Tax Receivable Agreement. These tax benefit payments are not conditioned upon one or more of the Continuing Equity Owners maintaining a continued ownership interest in i3 Verticals, LLC. If a Continuing Equity Owner transfers Common Units but does not assign to the transferee of such units its rights under the Tax Receivable Agreement, such Continuing Equity Owner generally will continue to be entitled to receive payments under the Tax Receivable Agreement arising in respect of a subsequent exchange of such Common Units. In general, the Continuing Equity Owners’ rights under the Tax Receivable Agreement may not be assigned, sold, pledged or otherwise alienated to any person, other than certain permitted transferees, without (a) the Company's prior written consent, which may not be unreasonably withheld, conditioned or delayed, and (b) such persons becoming a party to the Tax Receivable Agreement and agreeing to succeed to the applicable Continuing Equity Owner’s interest therein. The Company expects to benefit from the remaining 15 % of the tax benefits, if any, that the Company may realize. During the nine months ended June 30, 2025, the Company acquired an aggregate of 1,200,216 Common Units in i3 Verticals, LLC in connection with the redemption of Common Units from the Continuing Equity Owners, which resulted in an increase in the tax basis of our investment in i3 Verticals, LLC subject to the provisions of the Tax Receivable Agreement. As a result of the exchange, during the nine months ended June 30, 2025, the Company recognized an increase to its net deferred tax assets in the amount of $ 6,907 , and corresponding Tax Receivable Agreement liabilities of $ 5,871 , representing 85 % of the tax benefits due to Continuing Equity Owners. The Company made payments of $ 9,954 during the nine months ended June 30, 2025 under the Tax Receivable Agreement. The deferred tax asset and corresponding Tax Receivable Agreement liability balances were $ 39,178 and $ 35,117 , respectively, as of June 30, 2025. Payments to the Continuing Equity Owners related to exchanges through June 30, 2025 will range from $ 0 to $ 3,501 per year and are expected to be paid over the next 26 years. The amounts recorded as of June 30, 2025, approximate the current estimate of expected tax savings and are subject to change after the filing of the Company’s U.S. federal and state income tax returns. Future payments under the Tax Receivable Agreement with respect to subsequent exchanges would be in addition to these amounts. 39 i3 VERTICALS, Inc. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (in thousands, except unit, share and per share amounts) 11. LEASES The Company’s leases consist primarily of real estate leases throughout the markets in which the Company operates. At contract inception, the Company determines whether an arrangement is or contains a lease, and for each identified lease, evaluates the classification as operating or financing. The Company had no finance leases as of June 30, 2025. Leased assets and obligations are recognized at the lease commencement date based on the present value of fixed lease payments to be made over the term of the lease. Renewal and termination options are factored into determination of the lease term only if the option is reasonably certain to be exercised. The weighted-average remaining lease term at June 30, 2025 and 2024 were both 2 years. The Company had no significant short-term leases during the three and nine months ended June 30, 2025 and 2024. The Company’s leases do not provide a readily determinable implicit interest rate and the Company uses its incremental borrowing rate to measure the lease liability and corresponding right-of-use asset. The incremental borrowing rates were determined based on a portfolio approach considering the Company’s current secured borrowing rate adjusted for market conditions and the length of the lease term. The weighted-average discount rate used in the measurement of our lease liabilities was 7.4 % and 7.9 % as of June 30, 2025 and 2024, respectively. Operating lease cost is recognized on a straight-line basis over the lease term. Operating lease costs from continuing operations were $ 640 and $ 1,447 for the three and nine months ended June 30, 2025 and $ 686 and $ 2,095 for the three and nine months ended June 30, 2024, which are included in selling, general and administrative expenses in the condensed consolidated statements of operations. Total operating lease costs from continuing operations include variable lease costs of approximately $ 56 and $ 360 for the three and nine months ended June 30, 2025, and $ 140 and $ 187 for the three and nine months ended June 30, 2024, which are primarily comprised of costs of maintenance and utilities and changes in rates, and are determined based on the actual costs incurred during the period. Variable payments are expensed in the period incurred and not included in the measurement of lease assets and liabilities. Short-term rent expense from continuing operations was $ 61 and $ 111 for the three and nine months ended June 30, 2025, and $ 11 and $ 26 for the three and nine months ended June 30, 2024, and are included in selling, general and administrative expenses in the condensed consolidated statements of operations. As of June 30, 2025, maturities of lease liabilities for continuing operations are as follows: Fiscal Years ending September 30: 2025 (three months remaining) $ 671 2026 2,095 2027 1,378 2028 601 2029 591 Thereafter 621 Total future minimum lease payments (undiscounted) (1) 5,957 Less: present value discount ( 567 ) Present value of lease liability $ 5,390 __________________________ 1. Total future minimum lease payments excludes payments of $ 41 for leases designated as short-term leases, which are excluded from the Company's right-of-use assets. These payments will be made within the next twelve months. 40 i3 VERTICALS, Inc. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (in thousands, except unit, share and per share amounts) 12. FAIR VALUE MEASUREMENTS The Company applies the provisions of ASC 820, Fair Value Measurement , which defines fair value, establishes a framework for its measurement and expands disclosures about fair value measurements. Fair value is the price that would be received to sell an asset or the price paid to transfer a liability as of the measurement date. A three-tier, fair-value reporting hierarchy exists for disclosure of fair value measurements based on the observability of the inputs to the valuation of financial assets and liabilities. The three levels are: Level 1 — Quoted prices for identical instruments in active markets. Level 2 — Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. Level 3 — Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable in active exchange markets. The carrying value of the Company’s financial instruments, including cash and cash equivalents, restricted cash, settlement assets and obligations, accounts receivable, other assets, accounts payable, and accrued expenses, approximated their fair values as of June 30, 2025 and 2024, because of the relatively short maturity dates on these instruments. The carrying amount of debt approximates fair value as of June 30, 2025 and 2024, because interest rates on these instruments approximate market interest rates. The Company has no Level 1 or Level 2 financial instruments measured at fair value on a recurring basis. The following tables present the changes in the Company's Level 3 financial instruments that are measured at fair value on a recurring basis. Accrued Contingent Consideration Balance at September 30, 2024 (1) $ 2,154 Contingent consideration accrued at time of business combination 1,260 Change in fair value of contingent consideration included in operating expenses 440 Contingent consideration paid ( 60 ) Balance at June 30, 2025 $ 3,794 __________________________ 1. In connection with the sale of the Healthcare RCM Business, $ 198 of the Company's accrued contingent consideration was classified as "Current assets held for sale" as of September 30, 2024 in the accompanying condensed consolidated balance sheets and was not included in this amount. Accrued Contingent Consideration Balance at September 30, 2023 (1) $ 7,329 Contingent consideration accrued at time of business combination 170 Change in fair value of contingent consideration included in operating expenses 171 Contingent consideration paid ( 7,326 ) Balance at June 30, 2024 (2) $ 344 __________________________ 1. In connection with the sale of the Healthcare RCM Business, $ 19 and $ 891 of the Company's accrued contingent consideration was classified as "Current assets held for sale" and "Long-term assets held for sale", respectively, as of September 30, 2023 in the accompanying condensed consolidated balance sheets and was not included in this amount. 2. In connection with the sale of the Healthcare RCM Business, $ 194 of the Company's accrued contingent consideration was classified as "Current assets held for sale" and June 30, 2024 in the accompanying condensed consolidated balance sheets and was not included in this amount. 41 i3 VERTICALS, Inc. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (in thousands, except unit, share and per share amounts) The fair value of contingent consideration obligations includes inputs not observable in the market and thus represents a Level 3 measurement. The amount to be paid under these obligations is contingent upon the achievement of certain growth metrics related to the financial performance of the entities subsequent to acquisition. The fair value of material contingent consideration included in an acquisition is calculated using a Monte Carlo simulation as well as a discounted cash flows analysis. The contingent consideration is revalued each period until it is settled. Management reviews the historical and projected performance of each acquisition with contingent consideration and uses an income probability method to revalue the contingent consideration. The revaluation requires management to make certain assumptions and represent management's best estimate at the valuation date. The probabilities are determined based on a management review of the expected likelihood of triggering events that would cause a change in the contingent consideration paid. The Company develops the projected future financial results based on an analysis of historical results, market conditions, and the expected impact of anticipated changes in the Company's overall business and/or product strategies. Approximately $ 16 and $ 518 of contingent consideration was recorded in accrued expenses and other current liabilities as of June 30, 2025 and September 30, 2024, respectively. Approximately $ 3,778 and $ 1,636 of contingent consideration was recorded in other long-term liabilities as of June 30, 2025 and September 30, 2024, respectively. 13. EQUITY-BASED COMPENSATION A summary of equity-based compensation expense for continuing operations recognized during the three and nine months ended June 30, 2025 and 2024 is as follows: Three Months Ended June 30, Nine Months Ended June 30, 2025 2024 2025 2024 Stock options $ 1,610 $ 2,819 $ 5,435 $ 9,953 Restricted stock units 3,269 951 6,595 2,724 Equity-based compensation expense $ 4,879 $ 3,770 $ 12,030 $ 12,677 During the three and nine months ended June 30, 2025, $ 2,517 and $ 3,112 , respectively, was classified as within "net income from discontinued operations" in connection with the sale of the Healthcare RCM Business. In connection with the sale of the Merchant Services Business and the Healthcare RCM Business, $ 1,332 and $ 4,710 of the Company's equity-based compensation expense was classified within "net income from discontinued operations" in the accompanying condensed consolidated statements of operations during three and nine months ended June 30, 2024. Amounts are included in other costs of services and in selling, general and administrative expense on the condensed consolidated statements of operations. Current and deferred income tax benefits for continuing operations of $ 504 and expense $ 84 were recognized during the three and nine months ended June 30, 2025, respectively, and current and deferred income tax benefits of $ 596 and $ 2,066 during the three and nine months ended June 30, 2024, respectively. Stock Options In May 2018, the Company adopted the 2018 Equity Incentive Plan (the “2018 Plan”) under which the Company may grant up to 3,500,000 stock options and other equity-based awards to employees, directors and officers. The number of shares of Class A common stock available for issuance under the 2018 Plan includes an annual increase on the first day of each calendar year equal to 4.0 % of the outstanding shares of all classes of the Company's common stock as of the last day of the immediately preceding calendar year, unless the Company’s board of directors determines prior to the last trading day of December of the immediately preceding calendar year that the increase shall be less than 4.0 %. As of June 30, 2025, equity awards with respect to 2,256,952 shares of the Company's Class A common stock were available for grant under the 2018 Plan. 42 i3 VERTICALS, Inc. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (in thousands, except unit, share and per share amounts) In September 2020, the Company adopted the 2020 Acquisition Equity Incentive Plan (the “2020 Inducement Plan”) under which the Company may grant up to 1,500,000 stock options and other equity-based awards to individuals that were not previously employees of the Company or its subsidiaries in connection with acquisitions, as a material inducement to the individual's entry into employment with the Company or its subsidiaries within the meaning of Rule 5635(c)(4) of the Nasdaq Listing Rules. In May 2021, the Company amended the 2020 Inducement Plan to increase the number of shares of the Company's Class A common stock available for issuance from 1,500,000 to 3,000,000 shares. As of June 30, 2025, equity awards with respect to 1,710,793 shares of the Company's Class A common stock were available for grant under the 2020 Inducement Plan. Share-based compensation expense includes the estimated effects of forfeitures, which will be adjusted over the requisite service period to the extent actual forfeitures differ or are expected to differ from such estimates. A summary of stock option activity for the nine months ended June 30, 2025 is as follows: Stock Options Weighted Average Exercise Price Outstanding at September 30, 2024 9,120,944 $ 24.48 Granted 120,000 24.54 Exercised ( 556,458 ) 22.22 Forfeited ( 172,365 ) 28.06 Outstanding at June 30, 2025 8,512,121 $ 24.55 Exercisable at June 30, 2025 7,175,718 $ 25.07 The weighted-average grant date fair value of stock options granted during the nine months ended June 30, 2025 was $ 13.12 . As of June 30, 2025, total unrecognized compensation expense related to unvested stock options, including an estimate for pre-vesting forfeitures, was $ 11,154 , which is expected to be recognized over a weighted-average period of 2.4 years. The Company's policy is to account for forfeitures of stock-based compensation awards as they occur. The total fair value of stock options that vested during the three and nine months ended June 30, 2025 was $ 688 and $ 10,719 , respectively. In connection with the sale of the Healthcare RCM Business, the Company fully accelerated the vesting period for 40,853 options (to the extent not previously vested) held by employees of the Healthcare RCM Business immediately prior to the closing of the divestiture. Restricted Stock Units The Company has issued Class A common stock in the form of restricted stock units ("RSUs") under the 2018 Plan. 43 i3 VERTICALS, Inc. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (in thousands, except unit, share and per share amounts) A summary of activity related to restricted stock units for the nine months ended June 30, 2025 is as follows: Restricted Stock Units Weighted Average Grant Date Fair Value Outstanding at September 30, 2024 771,214 $ 22.71 Granted 722,649 26.33 Vested ( 284,257 ) 23.65 Forfeited ( 46,397 ) 23.08 Outstanding at June 30, 2025 1,163,209 $ 24.61 As of June 30, 2025, total unrecognized compensation expense related to unvested RSUs, including an estimate for pre-vesting forfeitures, was $ 18,812 , which is expected to be recognized over a weighted average period of 2.9 years. The total fair value of RSUs that vested during the three and nine months ended June 30, 2025 was $ 3,037 and $ 7,103 , respectively. In connection with the sale of the Healthcare RCM Business, the Company fully accelerated the vesting period for 96,613 RSUs (to the extent not previously vested) held by employees of the Healthcare RCM Business immediately prior to the closing of the divestiture. 14. COMMITMENTS AND CONTINGENCIES Leases The Company utilizes office space and equipment under operating leases. Rent expense from continuing operations under these leases amounted to $ 700 and $ 1,557 during the three and nine months ended June 30, 2025, and $ 697 and $ 2,121 during the three and nine months ended June 30, 2024. Refer to Note 11 for further discussion and a table of the future minimum payments under these leases. Litigation With respect to all legal, regulatory and governmental proceedings, and in accordance with ASC 450-20, Contingencies—Loss Contingencies , the Company considers the likelihood of a negative outcome. If the Company determines the likelihood of a negative outcome with respect to any such matter is probable and the amount of the loss can be reasonably estimated, the Company records an accrual for the estimated amount of loss for the expected outcome of the matter. If the likelihood of a negative outcome with respect to material matters is reasonably possible and the Company is able to determine an estimate of the amount of possible loss or a range of loss, whether in excess of a related accrued liability or where there is no accrued liability, the Company discloses the estimate of the amount of possible loss or range of loss. However, the Company in some instances may be unable to estimate an amount of possible loss or range of loss based on the significant uncertainties involved in, or the preliminary nature of, any such material matter, and in these instances the Company will disclose the nature of the contingency and describe why the Company is unable to determine an estimate of possible loss or range of loss. The Company is involved in ordinary course legal proceedings, which include all claims, lawsuits, investigations and proceedings, including unasserted claims, which are probable of being asserted, arising in the ordinary course of business. The Company has considered all such ordinary course legal proceedings in formulating its disclosures and assessments. After taking into consideration the evaluation of such legal matters by the Company's legal counsel, the Company's management believes at this time such matters will not have a material impact on the Company's consolidated balance sheet, results of operations or cash flows. 44 i3 VERTICALS, Inc. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (in thousands, except unit, share and per share amounts) PaySchools Litigation On May 16, 2025, Suzanne Hess, individually and on behalf of a putative class of citizens of the State of New York, filed a Class Action Complaint and Demand for Jury Trial (the “Complaint”), in the Supreme Court of the State of New York, Nassau County, against i3 Verticals, LLC and CP-DBS, LLC d/b/a “PaySchools”, a subsidiary of i3 Verticals, LLC. The claimed damages relate to services offered by PaySchools that enable parents, guardians and caregivers to fund lunches for students in certain New York school districts, and allegedly unlawful practices by PaySchools related to the fees charged for these school lunch services. The plaintiff seeks unspecified monetary damages, restitution, disgorgement, and attorneys’ fees and costs, as well as injunctive relief prohibiting PaySchools from charging transaction-based fees. On June 20, 2025, the matter was removed to the United States District Court for the Eastern District of New York, where the case remains pending. The Company is unable to predict the outcome of this litigation. While the Company does not believe that this matter will have a material adverse effect on its business or financial condition, the Company cannot give assurance that this matter will not have a material effect on its results of operations or cash flows for any particular reporting period. S&S Litigation On June 2, 2021, the State of Louisiana, Division of Administration (the “State”) and a putative class of Louisiana sheriffs ("Sheriffs") and law enforcement districts ("Districts") (collectively "Plaintiffs") filed a Petition (as amended on October 4, 2021, the “Petition”), in the 19 th Judicial District Court for the Parish of East Baton Rouge against i3-Software & Services, LLC (“S&S”), a subsidiary of the Company located in Shreveport, Louisiana, the Company, i3 Verticals, LLC, the current leader of the S&S business, the former leader of the S&S business, and 1120 South Pointe Properties, LLC (“South Pointe”), the former owner of the assets of the S&S business (collectively "Defendants") . See State of Louisiana, by and through its Division of Administration, East Baton Rouge Parish Law Enforcement District, by and through the duly elected East Baton Rouge Parish Sheriff, Sid J. Gautreaux, III, et. al., individually and as class representatives vs. i3-Software & Services, LLC; 1120 South Pointe Properties, LLC, formerly known as Software and Services of Louisiana, L.L.C.; i3 Verticals, Inc.; i3 Verticals, LLC; Gregory R. Teeters; and Scott Carrington . The Petition was amended on October 4, 2021 to amend and expand the putative class and subsequently removed to federal court. The Petition seeks monetary damages for the cost of network remediation of $ 15,000 purportedly spent by the State and $ 7,000 purportedly spent by the Sheriffs and Districts, return of purchase prices, potential additional expenses related to remediation and any obligation to notify parties of an alleged data breach as and if required by applicable law, and reasonable attorneys’ fees. The claimed damages relate to a third-party remote access software product used in connection with services provided by S&S to certain Louisiana law enforcement districts and alleged inadequacies in the Company’s cybersecurity practices. On February 22, 2024, the case was remanded to the 19th Judicial District Court for the Parish of East Baton Rouge, where the case remains pending. All Defendants filed pleading-stage motions to dismiss, some of which were granted. The Court allowed plaintiffs to re-plead certain claims and has severed the claims brought by the Division of Administration from the claims brought by the parish Sheriffs and Districts. The State chose not to re-plead their claims, which leaves some of their claims now dismissed with prejudice. The Sheriffs and Districts re-plead their claims. Certain Defendants filed renewed pleading-stage motions to dismiss that the Court denied on April 14, 2025. The case is now in the discovery phase of litigation. The assets of the S&S business were acquired from South Pointe by the Company in 2018 for $ 17,000 , including upfront cash consideration and contingent consideration, and provides software and payments services to local government agencies almost exclusively in Louisiana. 45 i3 VERTICALS, Inc. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (in thousands, except unit, share and per share amounts) The Company is unable to predict the outcome of this litigation. While the Company does not believe that this matter will have a material adverse effect on its business or financial condition, the Company cannot give assurance that this matter will not have a material effect on its results of operations or cash flows for any particular reporting period. 15. RELATED PARTY TRANSACTIONS In connection with the Company’s IPO, the Company and i3 Verticals, LLC entered into a Tax Receivable Agreement with the Continuing Equity Owners that provides for the payment by the Company to the Continuing Equity Owners of 85 % of the amount of certain tax benefits, if any, that it actually realizes, or in some circumstances, is deemed to realize in its tax reporting, as a result of (i) future redemptions funded by the Company or exchanges, or deemed exchanges in certain circumstances, of Common Units of i3 Verticals, LLC for Class A common stock of i3 Verticals, Inc. or cash, and (ii) certain additional tax benefits attributable to payments made under the Tax Receivable Agreement. See Note 10 for further information. As of June 30, 2025, the total amount due under the Tax Receivable Agreement was $ 35,117 . On January 23, 2025, the Company and i3 Verticals, LLC effected certain recapitalization actions in order to reduce excess cash held at the Company as a result of its “Up-C” structure following a tax distribution received by the Company and the Continuing Equity Owners earlier in January 2025 (the “LLC Tax Distribution”) related to the taxable income associated with the gain on the sale of the Merchant Services Business completed in September 2024 that was anticipated to be recognized for 2024 federal income tax purposes by members of the Company. As a result of differences in the amount of net taxable income allocable to the Company and to the Continuing Equity Owners and the higher assumed tax rate of the Continuing Equity Owners than the tax rate of the Company, this LLC Tax Distribution resulted in the Company holding cash in excess of the Company’s tax liabilities, its obligation to make payments under its the Tax Receivable Agreement, and any other expected liabilities of the Company. Accordingly, in order to make such cash held by the Company accessible in connection with our operations, on January 23, 2025, the Company contributed approximately $ 21,396 in cash (the “Capital Contribution”) held by the Company to i3 LLC in exchange for 896,763 newly-issued common units of i3 Verticals, LLC (“Common Units”) at a price per Common Unit of $ 23.86 , such price being equal to the to the 50 -day volume-weighted average price of the Company’s Class A common stock for the period ended January 22, 2025. Immediately following the Capital Contribution, the Common Units were recapitalized through a reverse unit split of the Common Units at a ratio of approximately 0.9631 to 1 (the “Reverse Unit Split”) which caused the number of Common Units held by the Company immediately following the Reverse Unit Split to equal to the number of Common Units held by the Company immediately prior to the Contribution, thereby maintaining a one -to-one ratio between the number of Common Units owned by the Company and the number of outstanding shares of Class A Common Stock. Upon the effectiveness of the Reverse Unit Split, 369,256 outstanding shares of Class B common stock of the Company were retired without consideration, thereby maintaining a one -to-one ratio between the number of Common Units owned by the Continuing Equity Owners after giving to the Reverse Unit Split and the number of outstanding shares of Class B Common Stock. After giving effect to these recapitalization actions, as of January 23, 2025, the Company held approximately 70.83 % of the outstanding Common Units (an increase of approximately 0.78 % compared to the Company’s ownership of approximately 70.05 % of the outstanding Common Units immediately prior to giving effect to these recapitalization actions) and the Continuing Equity Owners hold approximately 29.17 % of the outstanding Common Units (a decrease of approximately 0.78 % compared to the Continuing Equity Owners’ ownership of approximately 29.95 % of the outstanding Common Units immediately prior to giving effect to these recapitalization actions). 46 i3 VERTICALS, Inc. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (in thousands, except unit, share and per share amounts) 16. SEGMENTS The Company determines its operating segments based on ASC 280, Segment Reporting , in alignment with how the CODM monitors and manages the performance of the business as well as the level at which financial information is reviewed. As noted above, on September 20, 2024, the Company completed the transactions contemplated by the Merchant Services Purchase Agreement dated June 26, 2024, and sold the equity interests of the Merchant Services Acquired Entities comprising the Merchant Services Business. The Merchant Services Business comprised the Company's entire former Merchant Services segment and a small portion of the Company's former Software and Services segment. As a result of the sale of the Merchant Services Business, the historical results of the Merchant Services Business have been reflected as discontinued operations in our consolidated financial statements, and the Company ceased presenting a Merchant Services segment. See Note 2 to our condensed consolidated financial statements for additional information. Additionally, as noted above, on May 5, 2025, the Company completed the sale of the equity interests of the subsidiaries of the Company which owned and operated the Company's Healthcare RCM Business. The Healthcare RCM business comprised a majority of the Company's former Healthcare segment. As a result of the sale of the Healthcare RCM business, the historical results of the Healthcare RCM Business have been reflected as discontinued operations in the Company's consolidated financial statements. See Note 2 to our condensed consolidated financial statements for additional information. Prior to giving effect to the disposition of the Healthcare RCM Business, the Company had two operating segments and reportable segments, a Public Sector segment and a Healthcare segment, as reflected in the Company’s condensed consolidated financial statements for the three and six months ended March 31, 2025. After giving effect to the disposition of the Healthcare RCM Business, the Company's core business for continuing operations is providing mission-critical enterprise software solutions to its public sector customers. Taking into account the impact of the disposition of the Healthcare RCM Business, the Company has updated its segment presentation, and has determined that it has one operating segment and reportable segment as of June 30, 2025. This change in our segment presentation is consistent with how the CODM reviews financial information presented on a consolidated basis for purposes of allocating resources and evaluating financial performance (which is based on consolidated information) as further noted below. The Company's business has products and solutions that create an efficient flow of information. The Company's public sector software solutions help its customers provide more responsive and efficient services to their citizens and stakeholders. As the Company has a single operating segment and single reportable segment and is managed on a consolidated basis, the measure of segment profit or loss that the CODM uses to allocate resources and assess performance is consolidated net income as reported in the condensed consolidated statements of operations. The CODM uses this measure to evaluate operating performance and for the purpose of making decisions about allocating resources. 47 i3 VERTICALS, Inc. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (in thousands, except unit, share and per share amounts) 17. NON-CONTROLLING INTEREST i3 Verticals, Inc. is the sole managing member of i3 Verticals, LLC, and as a result, consolidates the financial results of i3 Verticals, LLC and reports a non-controlling interest representing the Common Units of i3 Verticals, LLC held by the Continuing Equity Owners. Changes in i3 Verticals, Inc.’s ownership interest in i3 Verticals, LLC while i3 Verticals, Inc. retains its controlling interest in i3 Verticals, LLC will be accounted for as equity transactions. As such, future redemptions or direct exchanges of Common Units of i3 Verticals, LLC by the Continuing Equity Owners will result in a change in ownership and reduce or increase the amount recorded as non-controlling interest and increase or decrease additional paid-in capital when i3 Verticals, LLC has positive or negative net assets, respectively. As of June 30, 2025 and 2024, respectively, i3 Verticals, Inc. owned 23,780,915 and 23,442,698 of i3 Verticals, LLC's Common Units, representing a 73.8 % and 70.0 % economic ownership interest in i3 Verticals, LLC. The following table summarizes the impact on equity due to changes in the Company's ownership interest in i3 Verticals, LLC: Nine Months Ended June 30, 2025 2024 Net income attributable to non-controlling interest $ 7,518 $ 1,155 Transfers (from) to non-controlling interests: Distributions to non-controlling interest holders ( 347 ) ( 839 ) Redemption of common units in i3 Verticals, LLC ( 17,070 ) ( 576 ) Recapitalization from contribution to i3 Verticals, LLC 5,689 — Allocation of equity (from) to non-controlling interests ( 3,588 ) 4,960 Net transfers (from) to non-controlling interests ( 15,316 ) 3,545 Change from net income attributable to non-controlling interests and net transfers (from) to non-controlling interests $ ( 7,798 ) $ 4,700 See Note 15 for information regarding certain recapitalization actions the Company and i3 Verticals, LLC effected during the nine months ended June 30, 2025 in order to reduce excess cash held at the Company as a result of its “Up-C” structure, which adjusted the Company’s and the Continuing Equity Holders’ respective ownership interests in i3 Verticals, LLC. 18. EARNINGS PER SHARE Basic earnings per share of Class A common stock is computed by dividing net income available to i3 Verticals, Inc. by the weighted-average number of shares of Class A common stock outstanding during the period. Diluted earnings per share of Class A common stock is computed by dividing net income available to i3 Verticals, Inc. by the weighted-average number of shares of Class A common stock outstanding adjusted to give effect to potentially dilutive securities. 48 i3 VERTICALS, Inc. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (in thousands, except unit, share and per share amounts) The following table sets forth reconciliations of the numerators and denominators used to compute basic and diluted earnings per share of Class A common stock from continuing operations for the three and nine months ended June 30, 2025 and 2024: Three Months Ended June 30, Nine Months Ended June 30, 2025 2024 2025 2024 Basic net (loss) income per share: Numerator Net (loss) income $ ( 996 ) $ ( 14,407 ) $ 4,117 $ ( 22,365 ) Less: Net (loss) income attributable to non-controlling interest ( 586 ) ( 2,608 ) 1,653 ( 4,654 ) Net (loss) income attributable to Class A common stockholders $ ( 410 ) $ ( 11,799 ) $ 2,464 $ ( 17,711 ) Denominator Weighted average shares of Class A common stock outstanding 24,345,826 23,420,811 23,909,714 23,339,598 Basic net (loss) income per share (1) $ ( 0.02 ) $ ( 0.50 ) $ 0.10 $ ( 0.76 ) Diluted net (loss) income per share: Numerator Net (loss) income attributable to Class A common stockholders $ ( 410 ) $ 2,464 Reallocation of net loss assuming conversion of common units (2) ( 446 ) — Net (loss) income attributable to Class A common stockholders – diluted $ ( 856 ) $ 2,464 Denominator Weighted average shares of Class A common stock outstanding 24,345,826 23,909,714 Weighted average effect of dilutive securities (3) 8,637,499 913,921 Weighted average shares of Class A common stock outstanding – diluted 32,983,325 24,823,635 Diluted net (loss) income per share $ ( 0.03 ) $ 0.10 __________________________ 1. For the three and nine months ended June 30, 2024, all potentially dilutive securities were anti-dilutive, so diluted net loss per share was equivalent to basic net loss per share. The following securities were excluded from the weighted average effect of dilutive securities in the computation of diluted net loss per share of Class A common stock for continuing operations: a. 10,052,017 and 10,079,057 weighted average shares of Class B common stock for the three and nine months ended June 30, 2024, respectively, along with the reallocation of net income assuming conversion of these shares, were excluded because the effect would have been anti-dilutive, b. 7,764,984 and 7,981,615 stock options for the three and nine months ended June 30, 2024, respectively, were excluded because the exercise price of these stock options exceeded the average market price of our Class A common stock during the period (“out-of-the-money”) and the effect of including them would have been anti-dilutive, and c. 234,503 and 363,171 shares for the three and nine months ended June 30, 2024, respectively, resulting from estimated stock option exercises and restricted stock units vesting as calculated by the treasury stock method were excluded because of the effect of including them would have been anti-dilutive. 49 i3 VERTICALS, Inc. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (in thousands, except unit, share and per share amounts) 2. The reallocation of net income assuming conversion of common units represents the tax effected net income attributable to non-controlling interest using the effective income tax rates described in Note 10 above and assuming all common units of i3 Verticals, LLC were exchanged for Class A common stock at the beginning of the period. The common units of i3 Verticals, LLC held by the Continuing Equity Owners are potentially dilutive securities, and the computations of diluted net income per share assume that all common units of i3 Verticals, LLC were exchanged for shares of Class A common stock at the beginning of the period. 3. For the three and nine months ended June 30, 2025, the following securities were excluded from the weighted average effect of dilutive securities in the computation of diluted net (loss) income per share of Class A common stock for continuing operations: a. 9,359,632 weighted average shares of Class B common stock for the nine months ended June 30, 2025, along with the reallocation of net income assuming conversion of these shares, were excluded because the effect would have been anti-dilutive, b. 4,362,416 and 4,436,416 stock options for the three and nine months ended June 30, 2025, respective, were excluded because the exercise price of these stock options exceeded the average market price of our Class A common stock during the period (“out-of-the-money”) and the effect of including them would have been anti-dilutive, and c. 952,796 shares for the three months ended June 30, 2025 resulting from estimated stock option exercises and restricted stock units vesting as calculated by the treasury stock method were excluded because of the effect of including them would have been anti-dilutive. 50 i3 VERTICALS, Inc. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (in thousands, except unit, share and per share amounts) The following table sets forth reconciliations of the numerators and denominators used to compute basic and diluted earnings per share of Class A common stock from discontinued operations for the three and nine months ended June 30, 2025 and 2024: Three Months Ended June 30, Nine Months Ended June 30, 2025 2024 2025 2024 Basic net income per share: Numerator Net income $ 19,421 $ 6,109 $ 18,185 $ 18,951 Less: Net income attributable to non-controlling interest 6,129 1,855 5,865 5,809 Net income attributable to Class A common stockholders $ 13,292 $ 4,254 $ 12,320 $ 13,142 Denominator Weighted average shares of Class A common stock outstanding 24,345,826 23,420,811 23,909,714 23,339,598 Basic net income per share (1) $ 0.55 $ 0.18 $ 0.52 $ 0.56 Diluted net income per share: Numerator Net income attributable to Class A common stockholders $ 12,320 Reallocation of net income assuming conversion of common units (2) 4,459 Net income attributable to Class A common stockholders – diluted $ 16,779 Denominator Weighted average shares of Class A common stock outstanding 23,909,714 Weighted average effect of dilutive securities (3) 10,273,553 Weighted average shares of Class A common stock outstanding – diluted 34,183,267 Diluted net income per share $ 0.49 __________________________ 1. For the three months ended June 30, 2025 and for three and nine months ended June 30, 2024, net income (loss) from continuing operations attributable to i3 Verticals, Inc. was in a loss position, so diluted net income per share of Class A common stock for discontinued operations is computed in the same manner as basic net income per share of Class A common stock for discontinued operations. The following securities were excluded from the weighted average effect of dilutive securities in the computation of diluted net loss per share of Class A common stock for discontinued operations: a. 8,637,499, 10,052,017 and 10,079,057 weighted average shares of Class B common stock for the three months ended June 30, 2025 and the three and nine months ended June 30, 2024, respectively,along with the reallocation of net income assuming conversion of these shares, were excluded because the effect would have been anti-dilutive, b. 4,362,416 , 7,764,984 and 7,981,615 stock options for the three months ended June 30, 2025 and the three and nine months ended June 30, 2024, respectively, were excluded because the exercise price of these stock options exceeded the average market price of our Class A common stock during the period (“out-of-the-money”) and the effect of including them would have been anti-dilutive, and c. 952,796, 234,503 and 363,171 shares for the three months ended June 30, 2025 and the three and nine months ended June 30, 2024, respectively, resulting from estimated stock option exercises and restricted stock units vesting as calculated by the treasury stock method were excluded because of the effect of including them would have been anti-dilutive. 51 i3 VERTICALS, Inc. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (in thousands, except unit, share and per share amounts) 2. The reallocation of net income assuming conversion of common units represents the tax effected net income attributable to non-controlling interest using the effective income tax rates described in Note 10 above and assuming all common units of i3 Verticals, LLC were exchanged for Class A common stock at the beginning of the period. The common units of i3 Verticals, LLC held by the Continuing Equity Owners are potentially dilutive securities, and the computations of diluted net income per share assume that all common units of i3 Verticals, LLC were exchanged for shares of Class A common stock at the beginning of the period. 3. For the nine months ended June 30, 2025, the following securities were excluded from the weighted average effect of dilutive securities in the computation of diluted net income per share of Class A common stock for discontinued operations: a. 4,436,416 stock options for the nine months ended June 30, 2025, were excluded because the exercise price of these stock options exceeded the average market price of our Class A common stock during the period (“out-of-the-money”) and the effect of including them would have been anti-dilutive. 52 i3 VERTICALS, Inc. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (in thousands, except unit, share and per share amounts) The following table sets forth reconciliations of the numerators and denominators used to compute basic and diluted earnings per share of Class A common stock from the consolidated operations for three and nine months ended June 30, 2025 and 2024: Three Months Ended June 30, Nine Months Ended June 30, 2025 2024 2025 2024 Basic net income (loss) per share: Numerator Net income (loss) $ 18,425 $ ( 8,298 ) $ 22,302 $ ( 3,414 ) Less: Net income (loss) attributable to non-controlling interest 5,543 ( 753 ) 7,518 1,155 Net (loss) income attributable to Class A common stockholders $ 12,882 $ ( 7,545 ) $ 14,784 $ ( 4,569 ) Denominator Weighted average shares of Class A common stock outstanding 24,345,826 23,420,811 23,909,714 23,339,598 Basic net income (loss) per share (1) $ 0.53 $ ( 0.32 ) $ 0.62 $ ( 0.20 ) Diluted net income per share: Numerator Net income attributable to Class A common stockholders $ 12,882 $ 14,784 Reallocation of net income assuming conversion of common units (2) 4,214 5,716 Net income attributable to Class A common stockholders – diluted $ 17,096 $ 20,500 Denominator Weighted average shares of Class A common stock outstanding 24,345,826 23,909,714 Weighted average effect of dilutive securities (3) 9,590,295 10,273,553 Weighted average shares of Class A common stock outstanding – diluted 33,936,121 34,183,267 Diluted net income per share $ 0.50 $ 0.60 __________________________ 1. For the three and nine months ended June 30, 2024, all potentially dilutive securities were anti-dilutive, so diluted net loss per share was equivalent to basic net loss per share. The following securities were excluded from the weighted average effect of dilutive securities in the computation of diluted net loss per share of Class A common stock for consolidated operations: a. 10,052,017 and 10,079,057 weighted average shares of Class B common stock for the three and nine months ended June 30, 2024, respectively,along with the reallocation of net income assuming conversion of these shares, were excluded because the effect would have been anti-dilutive, b. 7,764,984 and 7,981,615 stock options for the three and nine months ended June 30, 2024, respectively, were excluded because the exercise price of these stock options exceeded the average market price of our Class A common stock during the period (“out-of-the-money”) and the effect of including them would have been anti-dilutive, and c. 234,503 and 363,171 shares for the three and nine months ended June 30, 2024, respectively, resulting from estimated stock option exercises and restricted stock units vesting as calculated by the treasury stock method were excluded because of the effect of including them would have been anti-dilutive. 53 i3 VERTICALS, Inc. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (in thousands, except unit, share and per share amounts) 2. The reallocation of net income assuming conversion of common units represents the tax effected net income attributable to non-controlling interest using the effective income tax rates described in Note 10 above and assuming all common units of i3 Verticals, LLC were exchanged for Class A common stock at the beginning of the period. The common units of i3 Verticals, LLC held by the Continuing Equity Owners are potentially dilutive securities, and the computations of diluted net income per share assume that all common units of i3 Verticals, LLC were exchanged for shares of Class A common stock at the beginning of the period. 3. For the three and nine months ended June 30, 2025, the following securities were excluded from the weighted average effect of dilutive securities in the computation of diluted net income per share of Class A common stock for consolidated operations: a. 4,362,416 and 4,436,416 stock options for the three and nine months ended June 30, 2025, respectively, were excluded because the exercise price of these stock options exceeded the average market price of our Class A common stock during the period (“out-of-the-money”) and the effect of including them would have been anti-dilutive. In September 2022 the Company made the irrevocable election to settle the principal portion of its Exchangeable Notes only in cash, the Company uses the treasury stock method for calculating any potential dilutive effect of the conversion spread on diluted net loss per share, if applicable. The conversion spread had a dilutive impact on diluted net loss per share of common stock when the average market price of the Company's Class A common stock for a given period exceeded the exchange price of $ 40.87 per share for the Exchangeable Notes. The Exchangeable Notes matured in February 2025 and we paid the entire remaining principal balance. The Warrants sold in connection with the issuance of the Exchangeable Notes are considered to be dilutive when the average price of the Company's Class A common stock during the period exceeds the Warrants' stock price of $ 62.88 per share. The effect of the additional shares that may be issued upon exercise of the Warrants will be included in the weighted average shares of Class A common stock outstanding—diluted using the treasury stock method. The Warrants expire over a ninety trading day period that began on May 15, 2025. The Note Hedge Transactions purchased in connection with the issuance of the Exchangeable Notes are considered to be anti-dilutive and therefore do not impact our calculation of diluted net income per share. The Note Hedge Transactions expired in February 2025 upon the maturity and payment in full of the Exchangeable Notes. Refer to Note 8 for further discussion regarding the Exchangeable Notes. Shares of the Company's Class B common stock do not participate in the earnings or losses of the Company and are therefore not participating securities. As such, separate presentation of basic and diluted earnings per share of Class B common stock under the two-class method has not been presented. 19. SIGNIFICANT NON-CASH TRANSACTIONS The Company engaged in the following significant non-cash investing and financing activities related to continuing operations during the nine months ended June 30, 2025 and 2024: Nine months ended June 30, 2025 2024 Acquisition date fair value of contingent consideration in connection with business combinations $ 1,260 $ 170 Right-of-use assets obtained in exchange for operating lease obligations $ 22 $ 538 20. SUBSEQUENT EVENTS New Share Repurchase Program On August 7, 2025, the Company announced that its Board of Directors had approved a new share repurchase program for the Company’s Class A common stock, under which the Company may repurchase up to $ 50,000 of outstanding shares of Class A common stock (exclusive of fees, commissions or other expenses 54 i3 VERTICALS, Inc. NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (in thousands, except unit, share and per share amounts) related to such repurchases). This new share purchase program will replace the Prior Share Repurchase Program which terminated on August 8, 2025, as described above in Note 9. This share repurchase program will terminate on the earlier of September 30, 2026, or when the maximum dollar amount under the authorization 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, including under Rule 10b5-1 plans. In addition, any repurchases under this share repurchase program 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), compliance with contractual restrictions under the 2023 Senior Secured Credit Facility and other factors. This share repurchase program does not require the Company to acquire any particular amount of shares of Class A common stock, and may be extended, modified, suspended or discontinued at any time at the Company’s discretion. 55