i3 Verticals, Inc. 10-Q

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q, as well as our audited consolidated financial statements and related notes as disclosed in our Annual Report on Form 10-K for the year ended September 30, 2024 (“Form 10-K”), filed with the SEC on November 25, 2024. The terms “i3 Verticals,” “we,” “us” and “our” and similar references refer to i3 Verticals, Inc. and, where appropriate, its subsidiaries. Note Regarding Forward-looking Statements This Quarterly Report on Form 10-Q includes statements that express our opinions, expectations, beliefs, plans, objectives, assumptions or projections regarding future events or future results and therefore are, or may be deemed to be, “forward-looking statements” within the meaning of the federal securities laws. All statements other than statements of historical facts contained in this report may be forward-looking statements. These forward-looking statements can generally be identified by the use of forward-looking terminology, including the terms “believes,” “estimates,” “pro forma,” “continues,” “anticipates,” “expects,” “seeks,” “projects,” “intends,” “plans,” “may,” “will,” “would” or “should” or, in each case, their negative or other variations or comparable terminology. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. These factors include, but are not limited to, the following: • our ability to protect our systems and data from continually evolving cybersecurity risks or other technological risks, including the impact of any cybersecurity incidents or security breaches; • liability and reputation damage from unauthorized disclosure, destruction or modification of data or disruption of our services; • technical, operational and regulatory risks related to our information technology systems and third-party providers’ systems; • our ability to execute on our strategy and achieve our goals following the completion of the sale of our Merchant Services Business and our Healthcare RCM Business; • risks related to ongoing and future economic and geopolitical conditions, including the impact of inflationary pressures, elevated interest rates, current geopolitical instability (including in connection with current tensions between India and Pakistan), and tariff and trade-related developments; • our ability to successfully manage our intellectual property; • the triggering of impairment testing of our fair-valued assets, including goodwill and intangible assets, in the event of a decline in the price of our Class A common stock or otherwise; • our ability to generate revenues sufficient to maintain profitability and positive cash flow; • competition in our industry and our ability to compete effectively; • consolidation in the banking and financial services industry; • risk of shortages, price increases, changes, delays or discontinuations of hardware due to supply chain disruptions with respect to our limited number of suppliers; • impact of inflation and fluctuations in interest rates (including current elevated interest rate levels) and the potential effect of such fluctuations on revenues, expenses and resulting margins; • our ability to keep pace with rapid developments and changes in our industry and provide new products and services; • reliance on third parties for significant services; • exposure to economic conditions and political risks affecting consumer, commercial and government spending, including as a result of budgetary and political pressures to reduce government spending, as well as any decline in the use of credit cards; • changes in the budgets or regulatory environments of our public sector customers, primarily local and state governments, that could negatively impact spending; 56 • our ability to increase our existing vertical markets, grow within the current vertical markets in which we operate and execute our growth strategy; • our ability to successfully identify acquisition targets, complete those acquisitions and effectively integrate those acquisitions into our services; • potential degradation of the quality of our products, services and support; • our ability to retain customers; • our ability to attract, recruit, retain and develop key personnel and qualified employees; • risks related to laws, regulations, and industry standards; • risk of chargeback liabilities if our customers refuse or cannot reimburse chargebacks resolved in favor of their customers; • the impact of recent decisions of the U.S. Supreme Court regarding the actions of federal agencies; • the impact of government investigations, claims, and litigation; • risks related to our international operations; • our indebtedness and our ability to maintain compliance with the financial covenants in our 2023 Senior Secured Credit Facility (as defined below); • our ability to meet our liquidity needs; • our ability to raise additional funds on terms acceptable to us, if at all, whether through debt, equity or a combination thereof; • operating and financial restrictions imposed by our 2023 Senior Secured Credit Facility; and • the "Risk Factors" included in our Form 10-K and included in Part II, Item 1A of this Quarterly Report on Form 10-Q, if any. Although we base these forward-looking statements on assumptions that we believe are reasonable when made, we caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and industry developments may differ materially from statements made in or suggested by the forward-looking statements contained in this Quarterly Report on Form 10-Q. The matters summarized in “Risk Factors” in our Form 10-K, and in subsequent filings could cause our actual results to differ significantly from those contained in our forward-looking statements. In addition, even if our results of operations, financial condition and liquidity, and industry developments are consistent with the forward-looking statements contained in this filing, those results or developments may not be indicative of results or developments in subsequent periods. In light of these risks and uncertainties, we caution you not to place undue reliance on these forward-looking statements. Any forward-looking statement that we make in this filing speaks only as of the date of such statement, and we undertake no obligation to update any forward-looking statement or to publicly announce the results of any revision to any of those statements to reflect future events or developments, except as required by applicable law. Comparisons of results for current and any prior periods are not intended to express any future trends or indications of future performance, unless specifically expressed as such, and should only be viewed as historical data. Executive Overview After giving effect to the sale of our Healthcare RCM Business (as defined below) on May 5, 2025, as described below, the Company provides mission-critical enterprise software solutions to its public sector customers. These comprehensive cloud-native solutions address a broad range of government functions, including courts, transportation, utilities, revenue and schools. The Company’s mission is to enable state and local governments and related agencies to serve their constituents in an effective and efficient manner. With thousands of software installations across all 50 states and Canada, i3 Verticals is a leader in the public sector vertical. 57 Prior to the disposition of the Healthcare RCM Business, we had two operating segments and reportable segments, a Public Sector segment and a Healthcare Segment, as reflected in the Company’s consolidated financial statements for the three months ended March 31, 2025. After giving effect to 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. See Note 16 to our condensed consolidated financial statements for additional information. Recent Developments Inflationary pressures, elevated interest rate levels, monetary policy, the current geopolitical situation (including in connection with the military conflicts in the Middle East and Ukraine as well as the current tensions between India and Pakistan), tariff and trade-related developments, and budgetary and political pressures to reduce government spending are causing broad economic uncertainty and could potentially cause new, or exacerbate existing, economic challenges that may impact us. For example, we have business operations in Canada, and the determination of Canadian governmental authorities or businesses to cancel or not renew contracts, or otherwise reduce business, with U.S. companies as a result of current trade tensions with the United States, as has been advocated by certain Canadian governmental authorities, could adversely impact our financial results. As the future magnitude, duration and effects of these conditions are difficult to predict at this time, we are unable to predict the extent of the potential effect on our financial results. Liquidity At June 30, 2025, we had $55.5 million of cash and cash equivalents and $400.0 million of available capacity under our 2023 Senior Secured Credit Facility subject to our financial covenants. As of June 30, 2025, we were in compliance with these covenants with a consolidated interest coverage ratio and total leverage ratio 87.1x, and 0.0x, respectively. For additional information about our Exchangeable Notes and 2023 Senior Secured Credit Facility, see the section entitled “Liquidity and Capital Resources” below. Sale of Healthcare RCM Business On May 5, 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, 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 $96.4 million, 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. The Healthcare RCM Business contributed $3.6 million and $22.5 million of revenue for the three and nine months ended June 30, 2025, respectively. As a result of the sale of the Healthcare RCM Business, the results of operations for the Healthcare RCM Business have been reclassified as discontinued operations in our condensed consolidated statements of operations for all periods presented. Refer to Note 2 for additional information. Sale of Merchant Services Business 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 the Merchant Services Sellers as set forth in the Merchant Services Purchase Agreement), Payroc Buyer, LLC 58 (“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. 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 $439.5 million paid in cash at closing, after giving effect to post-closing net working capital, indebtedness and cash adjustments. As a result of the sale of the Merchant Services Business, the results of operations for the Merchant Services Business have been reflected as discontinued operations in our condensed consolidated statements of operations for all periods presented. Refer to Note 2 to additional information. Acquisitions A core component of our growth strategy includes a disciplined approach to acquisitions of companies and technology, evidenced by numerous platform acquisitions and tuck-in acquisitions since our inception in 2012. Our acquisitions have increased the number of businesses and organizations to whom we provide solutions and augmented our existing proprietary payment facilitator platform and software solutions and capabilities. Acquisitions during the nine months ended June 30, 2025 On April 1, 2025, the Company completed the acquisition of a business to expand the Company’s Public Sector utility billing software offerings. Total purchase consideration was $10.3 million, including $9.0 million in cash funded by proceeds from the Company's revolving credit facility and $1.3 million in the acquisition date estimated fair value of contingent cash consideration (the final amount of such contingent cash payment of up to $5.0 million is dependent upon achievement of specified financial performance targets, as defined in the purchase agreement). During the nine months ended June 30, 2025, we also completed the acquisition of certain assets of a business to expand our customer footprint. Total purchase consideration was $2.0 million in cash funded from cash on hand. Acquisitions during the nine months ended June 30, 2024 During the nine months ended June 30, 2024, we completed the acquisition of one business to expand our software offerings. Total purchase consideration was $1.3 million, including $1.1 million in cash funded by the proceeds from our revolving credit facility and $0.2 million in the acquisition date estimated fair value of contingent cash consideration (the final amount of such contingent cash payment of up to of up to $22.0 million is dependent upon achievement of specified financial performance targets, as defined in the purchase agreement). Our Revenue and Expenses Revenues We generate revenue from software and related services revenue, including the sale of subscriptions, recurring services, ongoing support, licenses, and installation and implementation services specific to software. We also generate revenue from volume-based payment processing fees (“discount fees”) that we provide to our customers directly through our software. Volume-based fees represent a percentage of the dollar amount of each credit or debit transaction processed. Revenues are also derived from a variety of fixed transaction or service fees, including authorization fees, convenience fees, statement fees, annual fees and fees for other miscellaneous services, such as handling chargebacks. 59 Interchange and network fees. Interchange and network fees consist primarily of pass-through fees that make up a portion of discount fee revenue. These include assessment fees payable to card associations, which are a percentage of the processing volume we generate from Visa and Mastercard. These fees are presented net of revenue. Expenses Other costs of services . Other costs of services include costs directly related to our software and related services. Additionally, other costs of services include costs directly attributable related 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 our 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 our Merchant Services Business in the fourth quarter of fiscal year 2024, our core business has been providing software solutions. Given the change in our business model following the sale of our Merchant Services Business, we reclassified certain expenses to better align with the primary industry in which we operate. During the first quarter of fiscal year 2025, we revised our presentation of certain expenses in the Condensed Consolidated Statements of Operations from selling, general and administrative expenses to other costs of services. We reclassified personnel costs related to installation of our 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. We also reclassified certain hosting and related software costs for directly supporting our 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. Selling, general and administrative . Selling, general and administrative expenses include certain salaries and other employment costs, professional services, internal technology expenses, rent and utilities and other operating costs. Salaries and other employment costs within selling, general and administrative include individuals associated with shared services, product development, sales and other functions. Following the disposal of our Merchant Services Business in the fourth quarter of fiscal year 2024, our core business has been providing software solutions. Given the change in our business model following the sale of our Merchant Services Business, we have reclassified certain expenses to better align with the primary industry in which we operate. During the first quarter of fiscal year 2025, we revised our presentation of certain expenses in the Condensed Consolidated Statements of Operations from selling, general and administrative expenses to other costs of services. Refer to Note 3 for discussion of the change in the current and prior period presentation. Depreciation and amortization . Depreciation expense consists of depreciation on our investments in property, equipment and computer hardware and software. Depreciation expense is recognized on a straight-line basis over the estimated useful life of the asset. Amortization expense for acquired intangible assets and internally developed software is recognized using a proportional cash flow method. Amortization expense for internally developed software is recognized over the estimated useful life of the asset. The useful lives of contract-based intangible assets are equal to the terms of the agreement. Interest expense. Our interest expense consists of interest on our outstanding indebtedness under our 2023 Senior Secured Credit Facility, and prior to their maturity, the Exchangeable Notes, and amortization of debt issuance costs. 60 How We Assess Our Business As a result of the sale of the Merchant Services Business in 2024, the results of operations for the Merchant Services Business have been reflected as discontinued operations in our condensed consolidated statements of operations for all periods presented. Additionally, as a result of the sale of the Healthcare RCM Business on May 5, 2025, the results of operations for the Healthcare RCM Business have been reclassified as discontinued operations in our condensed consolidated statements of operations for all periods presented. After giving effect to these developments, as further described above, the Company has one operating segment and reportable segment as of June 30, 2025. After giving effect to the sale of the Healthcare RCM Business as noted above, the Company provides mission-critical enterprise software and services solutions to its public sector customers. These comprehensive solutions cover a broad range of applications, including cloud native enterprise software, all of which enable state and local governments and related agencies to serve their constituents in an efficient and seamless manner. Key Performance Indicators We evaluate our performance through various metrics, including the following key performance indicators: • Annualized recurring revenue ("ARR"); • Adjusted EBITDA margin ARR is the annualized revenue derived from recurring sources where we have an ongoing contract with our customers. We believe revenue from recurring sources is a strategic priority. ARR is comprised of software-as-a-service (“SaaS”) arrangements, transaction-based software-revenue, software maintenance, recurring software-based services, payments revenue and other recurring revenue sources within the quarter. The sum of these revenue categories is multiplied by four to calculate ARR. ARR excludes revenue that is not recurring or is one-time in nature. We believe this metric provides useful information to investors by providing visibility regarding the ongoing revenue potential of our business model and providing a clearer picture of our sustainable revenue base. Further, our management uses ARR as a metric because it helps us to assess the health and trajectory of our business. We believe that focusing on ARR can orient our sales and operations management towards long-term, reliable revenue growth. This focus on recurring revenue is particularly relevant for businesses operating under a subscription model, where customer retention and contract renewals play a significant role in long-term financial performance. ARR does not have a standardized definition and is therefore unlikely to be comparable to similarly titled measures presented by other companies. It should be reviewed independently of revenue and it is not a forecast. Additionally, ARR does not take into account seasonality. The active contracts at the end of a reporting period used in calculating ARR may or may not be extended or renewed by our customers. ARR from continuing operations for the three months ended June 30, 2025 and 2024 was $160.8 million and $143.6 million, respectively, representing a period-to-period growth rate of 12%. Adjusted EBITDA margin is used by the Company to measure operating performance and for purposes of making decisions. Adjusted EBITDA margin for any particular period is adjusted EBITDA as a percentage of revenue for such period. Adjusted EBITDA is calculated as earnings adjusted to exclude interest, tax, depreciation, amortization, stock-compensation expense, non-cash changes in the fair value of contingent consideration, M&A-related expenses, and certain other adjustments that management believes are not reflective of our underlying operations. Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP financial measures. 61 Results of Operations As a result of the sale of the Merchant Services Business and the Healthcare RCM Business, the historical results of these two disposed businesses have been reflected as discontinued operations in our condensed consolidated financial statements. Prior period results of operations and balance sheet information have been recast to reflect this presentation, and the discussion below relates to our continuing operations after giving effect to the reclassification for the Merchant Services Business and Healthcare RCM Business as discontinued operations. Three Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024 The following table presents our historical results of operations for the periods indicated: Three Months Ended June 30, Change (in thousands) 2025 2024 Amount % Revenue $ 51,901 $ 46,183 $ 5,718 12.4 % Operating expenses Other costs of services (excluding depreciation and amortization) (1) 16,733 15,287 1,446 9.5 % Selling, general and administrative (1) 33,018 26,048 6,970 26.8 % Depreciation and amortization 6,989 6,157 832 13.5 % Change in fair value of contingent consideration (26) 1 (27) n/m Total operating expenses 56,714 47,493 9,221 19.4 % Loss from operations (4,813) (1,310) (3,503) 267.4 % Other (income) expenses Interest expense 806 7,906 (7,100) (89.8) % Other income (4,601) — (4,601) n/m Total other (income) expenses (3,795) 7,906 (11,701) n/m Loss before income taxes (1,018) (9,216) 8,198 (89.0) % (Benefit from) provision for income taxes (22) 5,191 (5,213) n/m Net loss from continuing operations (996) (14,407) 13,411 (93.1) % Net income from discontinued operations, net of income taxes 19,421 6,109 13,312 n/m Net income (loss) 18,425 (8,298) 26,723 n/m Net loss from continuing operations attributable to non-controlling interest (586) (2,608) 2,022 (77.5) % Net income from discontinued operations attributable to non-controlling interest 6,129 1,855 4,274 n/m Net income (loss) attributable to non-controlling interest 5,543 (753) 6,296 n/m Net loss from continuing operations attributable to i3 Verticals, Inc. (410) (11,799) 11,389 (96.5) % Net income from discontinued operations attributable to i3 Verticals, Inc. 13,292 4,254 9,038 n/m Net income (loss) attributable to i3 Verticals, Inc. $ 12,882 $ (7,545) $ 20,427 n/m n/m = not meaningful _________________________________________ 1. Refer to Note 3 for discussion of the change in the current and prior period presentation. 62 Revenue Revenue increased $5.7 million, or 12.4%, to $51.9 million for the three months ended June 30, 2025 from $46.2 million for the three months ended June 30, 2024. This increase included incremental revenue from current and prior year acquisitions of $2.2 million. The remaining increase was primarily driven by an increase of $2.9 million in recurring revenues and an increase of $0.4 million software license revenue. Other Costs of Services Other costs of services increased $1.4 million, or 9.5%, to $16.7 million for the three months ended June 30, 2025 from $15.3 million for the three months ended June 30, 2024. The increase was primarily driven by an increase in internal and external personnel costs of $0.9 million an increase in software costs of $0.7 million for the three months ended June 30, 2025 from the three months ended June 30, 2024. Selling, General and Administrative Expenses Selling, general and administrative expenses increased $7.0 million, or 26.8%, to $33.0 million for the three months ended June 30, 2025 from $26.0 million for the three months ended June 30, 2024. The increase was driven by an increase in M&A-related expenses of $3.4 million, which increased primarily due to activity that is for non-recurring expenses for which we are reimbursed through the transition services agreements, employee leasing arrangement, and processing services agreement with Infinx and Payroc, and for which revenue is recognized in other income. Additional increases were driven by an increase in internal and external personnel costs of $2.9 million for the three months ended June 30, 2025 from the three months ended June 30, 2024. Depreciation and Amortization Depreciation and amortization increased $0.8 million, or 13.5%, to $7.0 million for the three months ended June 30, 2025 from $6.2 million for the three months ended June 30, 2024. Amortization expense increased $0.9 million to $6.4 million for the three months ended June 30, 2025 from $5.5 million for the three months ended June 30, 2024 primarily due to amortization expense recorded for intangible assets and capitalized software acquired from current year and prior year acquisitions as well as an increase in capitalized software project releases, driving an increase in amortization expense. Depreciation expense decreased slightly by $0.1 million to $0.6 million for the three months ended June 30, 2025 from $0.7 million for the three months ended June 30, 2024. Change in Fair Value of Contingent Consideration Change in fair value of contingent consideration to be paid in connection with acquisitions was a benefit of $26.0 thousand for the three months ended June 30, 2025 related to adjustments to the expected present value of consideration to be paid for earnouts. The change in fair value of contingent consideration for the three months ended June 30, 2024 was a charge of $1 thousand. Interest Expense Interest expense decreased $7.1 million, or 89.8%, to $0.8 million for the three months ended June 30, 2025 from $7.9 million for the three months ended June 30, 2024. The decrease reflects a lower average outstanding debt balance for the three months ended June 30, 2025, as compared to the three months ended June 30, 2024. Other Income Other income was $4.6 million during the three months ended June 30, 2025, and there was no other income during the three months ended June 30, 2024. Other income during the three months ended June 30, 2025 reflects income from the transition services agreement and employee leasing arrangement entered into at the closing of the sale of the Healthcare RCM Business of $3.9 million, income from the transition services agreement and processing services agreement entered into at the closing of the sale of the Merchant Services Business of $0.3 million and interest income generated from cash held at financial institutions of $0.4 million. 63 (Benefit from) Provision for Income Taxes The provision for income taxes decreased to a benefit of $22 thousand for the three months ended June 30, 2025 from a provision for $5.2 million for three months ended June 30, 2024. Our effective tax rate was 2% for the three months ended June 30, 2025. Our effective tax rate differs from the federal statutory rate of 21% primarily due to the tax structure of the Company. The income of majority-owned i3 Verticals, LLC is not taxed at the entity-level. i3 Verticals, Inc. is subject to federal, state and local income taxes with respect to its allocable share of any taxable income of i3 Verticals, LLC and is taxed at the prevailing corporate tax rates. Net Income from Discontinued Operations, Net of Income Taxes We had $19.4 million in net income from discontinued operations, net of income tax, for the three months ended June 30, 2025 compared to $6.1 million in net income from discontinued operations, net of income tax, for the three months ended June 30, 2024. See Note 2 to our condensed consolidated financial statements for additional information and detail on the financial results of discontinued operations. The net income from discontinued operations, net of income tax, for the three months ended June 30, 2025 reflects the gain on the sale of the Healthcare RCM Business of $26.0 million and a complete quarter of business activity for the Healthcare RCM Business, including revenue of $3.6 million, operating expenses of $5.8 million and a provision for income taxes of $4.3 million. The net income from discontinued operations, net of income tax, for the three months ended June 30, 2024 included a complete quarter of business activity for both the Merchant Services Business and the Healthcare RCM Business, including revenue of $48.4 million, operating expenses of $40.9 million and a provision for income taxes of $1.4 million. 64 Nine Months Ended June 30, 2025 Compared to Nine Months Ended June 30, 2024 The following table presents our historical results of operations for the periods indicated: Nine Months Ended June 30, Change (in thousands) 2025 2024 Amount % Revenue $ 158,257 $ 139,909 $ 18,348 13.1 % Operating expenses Other costs of services (excluding depreciation and amortization) (1) 48,889 44,423 4,466 10.1 % Selling, general and administrative (1) 85,779 75,576 10,203 13.5 % Depreciation and amortization 20,848 18,794 2,054 10.9 % Change in fair value of contingent consideration 440 171 269 157.3 % Total operating expenses 155,956 138,964 16,992 12.2 % Income from operations 2,301 945 1,356 143.5 % Other (income) expenses Interest expense 1,932 22,307 (20,375) (91.3) % Other income (7,020) (2,150) (4,870) 226.5 % Total other (income) expenses (5,088) 20,157 (25,245) n/m Income (loss) before income taxes 7,389 (19,212) 26,601 n/m Provision for income taxes 3,272 3,153 119 3.8 % Net income (loss) from continuing operations 4,117 (22,365) 26,482 n/m Net income from discontinued operations, net of income taxes 18,185 18,951 (766) n/m Net income (loss) 22,302 (3,414) 25,716 n/m Net income (loss) from continuing operations attributable to non-controlling interest 1,653 (4,654) 6,307 n/m Net income from discontinued operations attributable to non-controlling interest 5,865 5,809 56 n/m Net income attributable to non-controlling interest 7,518 1,155 6,363 550.9 % Net income (loss) from continuing operations attributable to i3 Verticals, Inc. 2,464 (17,711) 20,175 n/m Net income from discontinued operations attributable to i3 Verticals, Inc. 12,320 13,142 (822) n/m Net income (loss) attributable to i3 Verticals, Inc. $ 14,784 $ (4,569) $ 19,353 n/m n/m = not meaningful _________________________________________ 1. Refer to Note 3 for discussion of the change in the current and prior period presentation. Revenue Revenue increased $18.3 million, or 13.1%, to $158.3 million for the nine months ended June 30, 2025 from $139.9 million for the nine months ended June 30, 2024. This increase included incremental revenue from current and prior year acquisitions of $4.6 million. The remaining increase was primarily driven by an increase of $8.8 million in recurring revenues and an increase of $4.6 million in software license revenue. 65 Other Costs of Services Other costs of services increased $4.5 million, or 10.1%, to $48.9 million for the nine months ended June 30, 2025 from $44.4 million for the nine months ended June 30, 2024. The increase was primarily driven by an increase in internal and external personnel costs of $2.9 million and an increase in software costs of $1.5 million for the nine months ended June 30, 2025 from the nine months ended June 30, 2024. Selling, General and Administrative Expenses Selling, general and administrative expenses increased $10.2 million, or 13.5%, to $85.8 million for the nine months ended June 30, 2025 from $75.6 million for the nine months ended June 30, 2024. The increase was primarily driven by an increase in M&A-related expenses of $3.6 million, which primarily increased due to activity that is for non-recurring expenses for which we are reimbursed through the transition services agreements, employee leasing arrangement, and processing services agreement with Infinx and Payroc, and for which revenue is recognized in other income. Additional increases were driven by an increase in internal and external personnel costs of $5.0 million and software costs of $1.4 million for the nine months ended June 30, 2025 from the nine months ended June 30, 2024. Depreciation and Amortization Depreciation and amortization increased $2.1 million, or 10.9%, to $20.8 million for the nine months ended June 30, 2025 from $18.8 million for the nine months ended June 30, 2024. Amortization expense increased $2.1 million to $19.0 million for the nine months ended June 30, 2025 from $16.9 million for the nine months ended June 30, 2024 primarily due to an increase in capitalized software project releases, driving an increase in amortization expense, as well as amortization expense recorded for intangible assets and capitalized software acquired from current year and prior year acquisitions. Depreciation expense was $1.9 million for both the nine months ended June 30, 2025 and 2024. Change in Fair Value of Contingent Consideration Change in fair value of contingent consideration to be paid in connection with acquisitions was a charge of $0.4 million for the nine months ended June 30, 2025 related to adjustments to the expected present value of consideration to be paid for earnouts. The change in fair value of contingent consideration for the nine months ended June 30, 2024 was a charge of $0.2 million. Interest Expense Interest expense decreased $20.4 million, or 91.3%, to $1.9 million for the nine months ended June 30, 2025 from $22.3 million for the three months ended June 30, 2024. The decrease reflects a lower average outstanding debt balance for the nine months ended June 30, 2025, as compared to the nine months ended June 30, 2024. Other Income Other income was $7.0 million during the nine months ended June 30, 2025, and other income was $2.2 million during the nine months ended June 30, 2024. Other income during the the nine months ended June 30, 2025 reflects income generated from the transition services agreement and employee leasing arrangement entered into at the closing of the sale of the Healthcare RCM Business of $3.9 million, income from the transition services agreement and processing services agreement entered into at the closing of the sale of the Merchant Services Business of $1.3 million, interest income generated from cash held at financial institutions of $1.2 million, and a gain on disposal of property and equipment of $0.6 million related to the sale of a building purchased through previous acquisitions. Other income during the nine months ended June 30, 2024 reflects the gain on the Exchangeable Note Repurchases and gain on Warrant Unwinds, net of the loss on Note Hedge Unwinds and loss on the sale of a building purchased through acquisition. Provision for Income Taxes The provision for income taxes increased to a provision for $3.3 million for the nine months ended June 30, 2025 from a provision of $3.2 million for nine months ended June 30, 2024. Our effective tax rate was 44% for the nine months ended June 30, 2025. Our effective tax rate differs from the federal statutory rate of 21% primarily due to the tax structure of the Company. The income of majority-owned i3 Verticals, LLC is not taxed at the entity-level. i3 Verticals, Inc. is subject to federal, state and local income taxes with respect to its allocable share of any taxable income of i3 Verticals, LLC and is taxed at the prevailing corporate tax rates. 66 Net Income from Discontinued Operations, Net of Income Taxes We had $18.2 million in net income from discontinued operations, net of income tax, for the nine months ended June 30, 2025 compared to $19.0 million in net income from discontinued operations, net of income tax, for the nine months ended June 30, 2024. See Note 2 to our condensed consolidated financial statements for additional information and detail on the financial results of discontinued operations. The net income from discontinued operations, net of income tax, for the nine months ended June 30, 2025 reflects the gain on the sale of the Healthcare RCM Business of $26.0 million and a complete nine months of business activity for the Healthcare RCM Business, including revenue of $22.5 million, operating expenses of $25.1 million and a provision for income taxes of $4.6 million. The net income from discontinued operations, net of income tax, for the nine months ended June 30, 2024 included a complete nine months of business activity for both the Merchant Services Business and the Healthcare RCM Business, including revenue of $141.3 million, operating expenses of $118.1 million, and a provision for income taxes of $4.2 million. Seasonality We have experienced in the past, and may continue to experience, seasonal fluctuations in our revenues as a result of consumer and business spending patterns. The number of business days in a month or quarter also may affect seasonal fluctuations. Certain revenues fluctuate with the fiscal calendars of our customers. Transactional revenue for certain education customers is strongest in August, September, October, January and February, at the start of each semester, and generally weakens throughout the semester, with little revenue in the summer months of June and July. Operating expenses show less seasonal fluctuation, with the result that net income is subject to the same seasonal factors as our revenues. The growth in our business may have partially overshadowed seasonal trends to date, and seasonal impacts on our business may be more pronounced in the future. Liquidity and Capital Resources We have historically financed our operations and working capital through net cash from operating activities. As of June 30, 2025, we had $55.5 million of cash and cash equivalents and available borrowing capacity of $400.0 million under our 2023 Senior Secured Credit Facility, subject to the financial covenants. We usually minimize cash balances by making payments on our revolving line of credit to minimize borrowings and interest expense. As of June 30, 2025, we had no borrowings outstanding under the 2023 Senior Secured Credit Facility. For additional information about our 2023 Senior Secured Credit Facility, see the section entitled "— 2023 Senior Secured Credit Facility" below. Our primary cash needs are to fund working capital requirements, make capital expenditures and otherwise invest in our technology infrastructure, fund acquisitions and related contingent consideration, make scheduled principal and interest payments on our outstanding indebtedness, pay tax distributions to members of i3 Verticals, LLC as discussed below, and make repurchases of shares of Class A common stock under our share repurchase program as discussed below. We consistently have positive cash flow provided by operations and expect that our cash flow from operations, current cash and cash equivalents and available borrowing capacity under the 2023 Senior Secured Credit Facility will be sufficient to fund our cash needs as described above for at least the next twelve months and foreseeable future. Our growth strategy includes acquisitions. We expect to fund acquisitions through a combination of cash on hand, net cash from operating activities, borrowings under our 2023 Senior Secured Credit Facility and through the issuance of equity and debt securities. As a holding company, we depend on distributions or loans from i3 Verticals, LLC to access funds earned by our operations. The covenants contained in the 2023 Senior Secured Credit Facility may restrict i3 Verticals, LLC’s ability to provide funds to i3 Verticals, Inc. Our 2023 Senior Secured Credit Facility, as amended, requires us to maintain a consolidated interest coverage ratio not less than 3.0 to 1.0 and total leverage ratio not exceeding 5.0 to 1.0. As of June 30, 2025, we were in compliance with these covenants with a consolidated interest coverage ratio and total leverage ratio of 87.1x and 0.0x, respectively. Although we believe our liquidity position remains strong, there can be no assurance that we will be able to raise additional funds, in the form of debt or equity, or to amend our 2023 Senior Secured Credit Facility on terms acceptable to us, if at all, even if we determined such actions were necessary in the future. Although we believe our liquidity position remains strong, there can be no assurance that we will be able to 67 raise additional funds, in the form of debt or equity, or to amend our 2023 Senior Secured Credit Facility on terms acceptable to us, if at all, even if we determined such actions were necessary in the future. In January 2025, i3 Verticals, LLC, a pass-through entity in which the Company holds a majority ownership interest, made a tax distribution (the “LLC Tax Distribution”) to the Company and the other members of i3 Verticals, LLC (the “Continuing Equity Owners”) 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 tax receivables agreement, and any other expected liabilities of the Company. Thereafter, on January 23, 2025, the Company and i3 Verticals, LLC effected certain recapitalization actions in order to reduce excess cash held at the Company following this LLC Tax Distribution. For additional information regarding the ownership interest of the Company in i3 Verticals, LLC and the capitalization of i3 Verticals, LLC, see Note 1 to the accompanying unaudited condensed consolidated financial statements contained in this report. For additional information regarding these recapitalization transactions, see Note 15 to the accompanying unaudited condensed consolidated financial statements contained in this report. Cash Flows The discussion of our cash flows that follows does not include the impact of any adjustments to remove the Merchant Services Business as discontinued operations and is stated on a total company consolidated basis. The following table presents a summary of cash flows from operating, investing and financing activities for the following comparative periods. Nine Months Ended June 30, 2025 and 2024 Nine months ended June 30, 2025 2024 (in thousands) Net cash (used in) provided by operating activities $ (8,276) $ 33,266 Net cash provided by (used in) investing activities $ 78,774 $ (16,755) Net cash used in financing activities $ (104,283) $ (15,215) Cash Flow from Operating Activities Net cash provided by operating activities decreased $41.5 million to net cash used in operating activities of $8.3 million for the nine months ended June 30, 2025 from net cash provided by operating activities of $33.3 million for the nine months ended June 30, 2024. Our net loss changed from $3.4 million for the nine months ended June 30, 2024 to net income of $22.3 million for the nine months ended June 30, 2025, primarily driven by the gain on the sale of the Healthcare RCM Business of $26.0 million during the nine months ended June 30, 2025. The primary driver of the decrease in cash provided by operating activities was cash paid for income taxes of $35.1 million during the nine months ended June 30, 2025, primarily consisting of income taxes related to the sale of the Merchant Services Business, which were accrued in fiscal year 2024, but paid in the nine months ended June 30, 2025. The decrease in cash provided by operating activities was also driven by reductions in net operating assets and liabilities, excluding the impact of income taxes, of $11.9 million, which are impacted by the timing of collections and payments, for the nine months ended June 30, 2025 compared to the nine months ended June 30, 2024. In addition, this was partially offset by a decrease in contingent consideration paid in excess of original estimates of $5.8 million, for the nine months ended June 30, 2025 compared to the nine months ended June 30, 2024. 68 Cash Flow from Investing Activities Net cash used in investing activities decreased $95.5 million to net cash provided by investing activities of $78.8 million for the nine months ended June 30, 2025 from net cash used in investing activities of $16.8 million for the nine months ended June 30, 2024. The largest driver of the change to cash provided by investing activities was $96.1 million in proceeds from the sale of the Healthcare RCM Business during the nine months ended June 30, 2025. Additional contributions to the decrease in net cash used in investing activities were a decrease of $4.6 million in purchases of merchant portfolios and residual buyouts, a decrease of $2.9 million in expenditures for capitalized software, a decrease of $0.9 million in expenditures for property and equipment, and an increase of $0.9 million in proceeds from the sale of property and equipment during the nine months ended June 30, 2025 compared to the nine months ended June 30, 2024. These increases to net cash provided by investing activities are partially offset by an increase of $9.9 million in cash used in acquisitions (net of cash acquired) during the nine months ended June 30, 2025 compared to the nine months ended June 30, 2024. Cash Flow from Financing Activities Net cash used in financing activities increased $89.1 million to $104.3 million net cash used in financing activities for the nine months ended June 30, 2025 from $15.2 million net cash used by financing activities for the nine months ended June 30, 2024. The increase in net cash used in financing activities was driven by a decrease in net borrowings from in excess of payments on the revolving credit facility of $78.9 million during the nine months ended June 30, 2025 from the nine months ended June 30, 2024, as well as an increase of $23.7 million in payments for required distributions on behalf of members for tax obligations and an increase in payments for employees' tax withholdings from net settled stock option exercises and RSU releases of $3.5 million. Additionally, during the nine months ended June 30, 2025, we used cash from financing activities for multiple purposes for which we did not use cash from financing activities during the nine months ended June 30, 2024, including $37.6 million in payments for repurchases of Class A common stock, $26.2 million in payments to extinguish the Exchangeable Notes and $10.0 million in payments for required distributions to members under the Tax Receivable Agreement. These increases in uses of cash for financing activities for the nine months ended June 30, 2025 from the nine months ended June 30, 2024 were partially offset by $87.8 million in payments for repurchases of Exchangeable Notes during the nine months ended June 30, 2024, which did not recur during the nine months ended June 30, 2025, and a decrease in net payments for settlement obligations of $2.9 million during the nine months ended June 30, 2025 compared to the nine months ended June 30, 2024. 2023 Senior Secured Revolving Credit Facility On May 8, 2023, i3 Verticals, LLC (the “Borrower”), entered into that certain Credit Agreement (as amended by the first amendment dated June 26, 2024, 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"). As amended by the Second Amendment described below, the 2023 Senior Secured Credit Facility provides for aggregate commitments of $400 million in the form of a senior secured revolving credit facility (the “Revolver”). In addition, on February 11, 2025, the Borrower entered into a letter agreement with the administrative agent and the lenders under the 2023 Senior Secured Credit Facility providing the Borrower with a one-time consent to an earlier reduction in the pricing of the revolving loans than what is otherwise permitted by the terms of the 2023 Senior Secured Credit Facility. Such reduction became effective as of September 27, 2024, which is the date that the Borrower paid down the outstanding balance of the revolving loans with proceeds of the sale of the Merchant Services Business and achieved a consolidated total net leverage ratio of less than 2.0 to 1.0, instead of November 26, 2024, which is the date that the Borrower delivered its compliance certificate for the fiscal quarter ending September 30, 2024. Further, on May 5, 2025, the Borrower entered into a second amendment (the “Second Amendment”) to the 2023 Senior Secured Credit Facility to permit the Healthcare RCM Transactions. The Second Amendment also permanently reduced the aggregate lender commitments under the Revolver from $450 million to $400 million. 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 million 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 69 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 87.1x and total leverage ratio was 0.0x. 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. 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 < 3.0 to 1.0 0.25 % 2.50 % 2.50 % 1.50 % > 2.0 to 1.0 but < 2.5 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 million (as of the effectiveness of the Second Amendment) 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 million (as of the effectiveness of the Second Amendment) 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 70 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. As of June 30, 2025, we were in compliance with these covenants, with a consolidated interest coverage ratio and total leverage ratio of 87.1x and 0.0x, respectively. Exchangeable Notes On February 18, 2020, i3 Verticals, LLC issued $138.0 million aggregate principal amount of its 1.0% Exchangeable Notes due February 15, 2025. Prior to their maturity, the Exchangeable Notes bore interest at a fixed rate of 1.0% per year, payable semiannually in arrears on February 15 and August 15 of each year, beginning on August 15, 2020. The Exchangeable Notes were exchangeable into cash, shares of the Company's Class A common stock, or a combination thereof, at i3 Verticals, LLC's election. As of August 15, 2024, the Exchangeable Notes became exchangeable by the holders thereof at any time until the close of business on the second scheduled trading day immediately preceding the maturity date. The net proceeds from the sale of the Exchangeable Notes were approximately $132.8 million, after deducting discounts and commissions to the certain initial purchasers and other estimated fees and expenses. i3 Verticals, LLC used a portion of the net proceeds of the Exchangeable Notes offering to pay down outstanding borrowings under the Prior Senior Secured Credit Facility in connection with the effectiveness of the operative provisions of the amendment to the Prior Senior Secured Credit Facility and to pay the cost of the Note Hedge Transactions. On December 21, 2023, i3 Verticals, LLC entered into agreements to repurchase a 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 Exchangeable Note Repurchases were completed on January 18, 2024, and the Company paid $87.4 million to repurchase $90.8 million in aggregate principal amount of its Exchangeable Notes and to repay approximately $0.4 million in accrued interest on the repurchased portion of the Exchangeable Notes. The Exchangeable Notes matured and were repaid in full on February 15, 2025, and we paid $26.4 million in satisfaction of the outstanding principal and accrued interest in connection therewith. For additional information, see Note 8 to our condensed consolidated financial statements. 71 Material Cash Requirements The following table summarizes our material cash requirements as of June 30, 2025, including those related to leases and borrowings: Payments Due by Period Contractual Obligations Total Less than 1 year 1 to 3 years 3 to 5 years More than 5 years (in thousands) Facility leases (1) $ 5,957 $ 2,342 $ 2,256 $ 1,149 $ 210 2023 Senior Secured Credit Facility and related interest (2) 1,714 600 1,114 — — Contingent consideration (3) 3,794 16 3,778 — — Total $ 11,465 $ 2,958 $ 7,148 $ 1,149 $ 210 __________________________ 1. In addition to the facility leases presented, we have $41 thousand in short-term leases. These payments will be made within the next twelve months. 2. We estimated interest payments through the maturity of our 2023 Senior Secured Credit Facility by the unused fee rate of 0.15% in effect as of June 30, 2025. 3. In connection with certain of our acquisitions, we may be obligated to pay the seller of the acquired entity certain amounts of contingent consideration as set forth in the relevant purchasing documents, whereby additional consideration may be due upon the achievement of certain specified financial performance targets. i3 Verticals, Inc. accounts for the fair values of such contingent payments in accordance with the Level 3 financial instrument fair value hierarchy at the close of each subsequent reporting period. The acquisition-date fair value of contingent consideration is valued using a Monte Carlo simulation. i3 Verticals, Inc. subsequently reassesses such fair value based on probability estimates with respect to the acquired entity’s likelihood of achieving the respective financial performance targets. Potential payments under the Tax Receivable Agreement are not reflected in this table. See “—Tax Receivable Agreement” below. Share Repurchase Programs On August 8, 2024, the Company announced that our Board of Directors had approved a share repurchase program for the Company's Class A common stock, under which the Company is authorized to repurchase up to $50.0 million 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 terms of the Prior Share Repurchase Program provided that, immediately prior to repurchases of Class A common stock under the Prior Share Repurchase Program, i3 Verticals, LLC redeemed for cash an equal number of units held by the Company in i3 Verticals, LLC in order to fund such repurchases and maintain a 1-1 ratio between the number of outstanding shares of Class A common stock and the units held by the Company in i3 Verticals, LLC. The Prior Share Repurchase Program terminated on August 8, 2025. On August 7, 2025, the Company announced that our Board of Directors had approved a new share repurchase program (the “New Share Repurchase Program”) for the Company’s Class A common stock, under which the Company may repurchase up to $50 million of outstanding shares of Class A common stock (exclusive of fees, commissions or other expenses related to such repurchases). This New Share Purchase Program replaced the Prior Share Repurchase Program which terminated on August 8, 2025, as described above. The New 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 the New Share Repurchase Program, 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 the New 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. The New Share Repurchase Program provides that, immediately prior to repurchases of Class A common stock under the New Share Repurchase Program, i3 Verticals, LLC will redeem for cash an equal number of units held by the Company in i3 Verticals, LLC in order to fund such repurchases and maintain a 1-1 ratio between the number of outstanding shares of Class A common stock and the units held by the Company 72 in i3 Verticals, LLC. The New 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 our discretion. 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 and an aggregate repurchase amount inclusive of commissions and excise taxes of $38.0 million under the Prior Share Repurchase Program during the nine months ended June 30, 2025. The shares of Class A Common Stock purchased during this nine-month period represent the total number of shares of Class A Common Stock purchased under the Prior Share Repurchase Program since its adoption. Tax Receivable Agreement We are a party to a Tax Receivable Agreement with i3 Verticals, LLC and each of the Continuing Equity Owners, as described in Note 10 of our condensed consolidated financial statements. As a result of the Tax Receivable Agreement, we have been required to establish a liability in our condensed consolidated financial statements. That liability, which will increase upon the redemptions or exchanges of Common Units for our Class A common stock, generally represents 85% of the estimated future tax benefits, if any, relating to the increase in tax basis associated with the Common Units we received as a result of the reorganization transactions entered into in connection with our IPO and other redemptions or exchanges by holders of Common Units. If this election is made, the accelerated payment will be based on the present value of 100% of the estimated future tax benefits and, as a result, the associated liability reported on our condensed consolidated financial statements may be increased. We expect that the payments required under the Tax Receivable Agreement will be substantial. The actual increase in tax basis, as well as the amount and timing of any payments under the Tax Receivable Agreement, will vary depending upon a number of factors, including the timing of redemptions or exchanges by the holders of Common Units, the price of our Class A common stock at the time of the redemption or exchange, whether such redemptions or exchanges are taxable, the amount and timing of the taxable income we generate in the future and the tax rate then applicable as well as the portion of our payments under the Tax Receivable Agreement constituting imputed interest. We intend to fund the payment of the amounts due under the Tax Receivable Agreement out of the cash savings that we actually realize in respect of the attributes to which the Tax Receivable Agreement relates. As of June 30, 2025, the total amount due under the Tax Receivable Agreement was $35.1 million, and payments to the Continuing Equity Owners related to exchanges through June 30, 2025 will range from $0 to $3.5 million 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. Critical Accounting Estimates Our discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. On an ongoing basis, we evaluate our estimates, including those related to revenue recognition, goodwill and intangible assets, contingent consideration, and equity-based compensation. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. Critical accounting policies are those that we consider the most critical to understanding our financial condition and results of operations. As of June 30, 2025, there have been no significant changes to our critical accounting estimates disclosed in the Form 10-K filed with the SEC on November 25, 2024. 73