i3 Verticals, Inc. 10-K

Item 8. Financial Statements and Supplementary Data Index to Consolidated Financial Statements Page i3 Verticals, Inc. and its Subsidiaries Report of Independent Registered Public Accounting Firm (PCAOB ID 34 ) 72 Consolidated Balance Sheets as of September 30, 2025 and September 30, 2024 75 Consolidated Statements of Operations for the Years Ended September 30, 2025, 2024 and 2023 76 Consolidated Statements of Changes in Equity for the Years Ended September 30, 2025, 2024 and 2023 77 Consolidated Statements of Cash Flows for the Years Ended September 30, 2025, 2024 and 2023 79 Notes to Consolidated Financial Statements 81 71 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the shareholders and the Board of Directors of i3 Verticals, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of i3 Verticals, Inc. and subsidiaries (the "Company") as of September 30, 2025 and 2024, the related consolidated statements of operations, changes in equity, and cash flows, for each of the three years in the period ended September 30, 2025, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of September 30, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended September 30, 2025, in conformity with accounting principles generally accepted in the United States of America. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of September 30, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated November 21, 2025, expressed an unqualified opinion on the Company's internal control over financial reporting. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. 72 Revenue Recognition – Software and Related Services Contracts – Refer to Note 3 to the Financial Statements Critical Audit Matter Description The Company offers software and related services to customers, and arrangements related to such revenue may contain multiple performance obligations such as software as a service, transaction-based services, ongoing software maintenance and support, software licenses and other professional services related to the software offerings. The Company recognizes revenue upon transfer of control of promised products or services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those products or services. The revenue recognition accounting conclusions for software and related services contracts require significant judgment in the areas of: • For agreements that include multiple performance obligations, assessing whether performance obligations are distinct or should be combined. • Evaluating whether performance obligations will be satisfied at a point-in-time versus over time. • Allocation of the transaction price at inception of the arrangement to multiple performance obligations. We identified revenue recognition for significant software and related services contracts entered into during the fiscal year 2025 as a critical audit matter because of the significant judgments applied by management. This required a high degree of auditor judgment and an increased extent of effort when performing audit procedures to evaluate whether revenue was recognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those goods or services. How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to the Company’s revenue recognition for significant software and related services contracts entered into during fiscal year 2025 include the following, among others: • We tested the operating effectiveness of controls related to the identification of distinct performance obligations, determination of whether such performance obligations are satisfied over time or at a point in time, and allocation of the standalone selling prices. • We evaluated management’s significant accounting policies related to revenue recognition for reasonableness. • We selected a sample of contracts and performed the following procedures: ◦ Obtained and examined customer source documents and the contract for each selection, including master agreements and related amendments to evaluate if relevant contractual terms have been considered by management. ◦ Sent confirmations to customers regarding key contract terms that impact revenue recognition. ◦ Evaluated management’s application of their accounting policy and tested revenue recognition for specific performance obligations by comparing management’s conclusions to the underlying contract, master agreement, and any related amendments, if applicable. ◦ Evaluated management’s conclusions related to whether performance obligations are satisfied at a point in time or over time. 73 ◦ Tested the mathematical accuracy of management’s calculations of revenue recognized in the financial statements. ◦ Evaluated the reasonableness of management’s estimate of standalone selling prices for products and services that are not sold separately by performing the following: ▪ Assessing the appropriateness of the Company’s methodology and mathematical accuracy of the determined standalone selling prices. ▪ Testing the completeness and accuracy of the source data utilized in management's calculations. /s/ Deloitte & Touche LLP Nashville, Tennessee November 21, 2025 We have served as the Company's auditor since 2020. 74 i3 Verticals, Inc. CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share amounts) September 30, 2025 2024 Assets Current assets Cash and cash equivalents $ 66,672 $ 86,525 Accounts receivable, net 58,467 50,779 Settlement assets 411 632 Prepaid expenses and other current assets 12,075 9,973 Current assets held for sale — 5,484 Total current assets 137,625 153,393 Property and equipment, net 7,181 8,288 Restricted cash 250 2,424 Capitalized software, net 48,314 53,983 Goodwill 248,469 242,988 Intangible assets, net 135,797 140,748 Deferred tax asset 49,058 48,445 Operating lease right-of-use assets 4,577 6,331 Other assets 7,140 6,666 Long-term assets held for sale — 67,409 Total assets $ 638,411 $ 730,675 Liabilities and equity Liabilities Current liabilities Accounts payable $ 6,248 $ 4,886 Current portion of long-term debt — 26,223 Accrued expenses and other current liabilities 24,525 88,252 Settlement obligations 411 632 Deferred revenue 37,678 38,361 Current portion of operating lease liabilities 1,827 2,305 Current liabilities held for sale — 4,072 Total current liabilities 70,689 164,731 Long-term tax receivable agreement obligations 32,191 29,347 Operating lease liabilities, less current portion 2,964 4,890 Other long-term liabilities 14,844 14,921 Long-term liabilities held for sale — 1,427 Total liabilities 120,688 215,316 Commitments and contingencies (see Note 17) Stockholders' equity Preferred stock, par value $ 0.0001 per share, 10,000,000 shares authorized; 0 shares issued and outstanding as of September 30, 2025 and 2024 — — Class A common stock, par value $ 0.0001 per share, 150,000,000 shares authorized; 23,983,125 and 23,882,035 shares issued and outstanding as of September 30, 2025 and 2024, respectively 2 2 Class B common stock, par value $ 0.0001 per share, 40,000,000 shares authorized; 8,381,681 and 10,032,676 shares issued and outstanding as of September 30, 2025 and 2024, respectively 1 1 Additional paid-in-capital 271,310 279,335 Accumulated earnings 118,270 100,397 Total stockholders' equity 389,583 379,735 Non-controlling interest 128,140 135,624 Total equity 517,723 515,359 Total liabilities and equity $ 638,411 $ 730,675 See Notes to the Consolidated Financial Statements 75 i3 Verticals, Inc. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except share and per share amounts) Year ended September 30, 2025 2024 2023 Revenue $ 213,158 $ 191,232 $ 189,681 Operating expenses Other costs of services (excluding depreciation and amortization) (1) 66,587 60,517 54,811 Selling, general and administrative (1) 114,660 100,785 105,982 Depreciation and amortization 27,900 25,553 23,320 Change in fair value of contingent consideration 234 22 9,979 Total operating expenses 209,381 186,877 194,092 Income (loss) from operations 3,777 4,355 ( 4,411 ) Other (income) expenses Interest expense 2,299 29,263 25,128 Other income ( 9,406 ) ( 3,395 ) ( 1,224 ) Total other (income) expenses ( 7,107 ) 25,868 23,904 Income (loss) before income taxes 10,884 ( 21,513 ) ( 28,315 ) (Benefit from) provision for income taxes 5,266 ( 5,468 ) ( 3,507 ) Net income (loss) from continuing operations 5,618 ( 16,045 ) ( 24,808 ) Net income from discontinued operations, net of income taxes 20,885 191,175 22,156 Net income (loss) 26,503 175,130 ( 2,652 ) Net income (loss) from continuing operations attributable to non-controlling interest 1,991 ( 5,191 ) ( 8,192 ) Net income from discontinued operations attributable to non-controlling interest 6,639 66,980 6,351 Net income (loss) attributable to non-controlling interest 8,630 61,789 ( 1,841 ) Net income (loss) from continuing operations attributable to i3 Verticals, Inc. 3,627 ( 10,854 ) ( 16,616 ) Net income from discontinued operations attributable to i3 Verticals, Inc. 14,246 124,195 15,805 Net income (loss) attributable to i3 Verticals, Inc. $ 17,873 $ 113,341 $ ( 811 ) Net income (loss) per share attributable to Class A common stockholders from continuing operations: Basic $ 0.15 $ ( 0.46 ) $ ( 0.72 ) Diluted $ 0.14 $ ( 0.46 ) $ ( 0.72 ) Net income per share attributable to Class A common stockholders from discontinued operations: Basic $ 0.60 $ 5.30 $ 0.68 Diluted $ 0.56 $ 5.30 $ 0.68 Weighted average shares of Class A common stock outstanding: Basic, for continuing operations 23,911,250 23,419,421 23,137,586 Diluted, for continuing operations 25,070,838 23,419,421 23,137,586 Basic, for discontinued operations 23,911,250 23,419,421 23,137,586 Diluted, for discontinued operations 34,185,684 23,419,421 23,137,586 _________________________________________ 1. Refer to Note 3 for discussion of the change in the current and prior period presentation. See Notes to the Consolidated Financial Statements 76 i3 Verticals, Inc. CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (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, 2022 22,986,448 $ 2 10,118,142 $ 1 $ 241,958 $ ( 23,582 ) $ 89,309 $ 307,688 Adoption of ASU 2020-06 — — — — ( 23,382 ) 11,449 ( 11,933 ) Equity-based compensation — — — — 27,878 — — 27,878 Net loss — — — — — ( 811 ) ( 1,841 ) ( 2,652 ) Redemption of common units in i3 Verticals, LLC 24,748 — ( 24,748 ) — 224 — ( 224 ) — Establishment of liabilities under a tax receivable agreement and related changes to deferred tax assets associated with increases in tax basis — — — — 6,407 — — 6,407 Exercise or release of equity-based awards 159,906 — — — ( 1,092 ) — — ( 1,092 ) Allocation of equity to non-controlling interests — — — — ( 4,305 ) — 4,305 — Issuance of Class A common stock under the 2020 Inducement Plan 82,170 — — — 2,000 — — 2,000 Balance at September 30, 2023 23,253,272 2 10,093,394 1 249,688 ( 12,944 ) 91,549 328,296 Equity-based compensation — — — — 26,338 — — 26,338 Net income — — — — — 113,341 61,789 175,130 Distributions to non-controlling interest holders — — — — — — ( 25,608 ) ( 25,608 ) Redemption of common units in i3 Verticals, LLC 60,718 — ( 60,718 ) — 576 — ( 576 ) — Establishment of liabilities under a tax receivable agreement and related changes to deferred tax assets associated with increases in tax basis — — — — 3,543 — — 3,543 Exercise or release of equity-based awards 256,411 — — — ( 683 ) — — ( 683 ) Sale of exchangeable note hedges — — — — 1,483 — — 1,483 Repurchases of warrants — — — — ( 657 ) — — ( 657 ) Allocation of equity to non-controlling interests — — — — ( 8,470 ) — 8,470 — Issuance of Class A common stock under the 2020 Inducement Plan 311,634 — — — 7,517 — — 7,517 Balance at September 30, 2024 23,882,035 $ 2 10,032,676 $ 1 $ 279,335 $ 100,397 $ 135,624 $ 515,359 See Notes to the Consolidated Financial Statements 77 i3 Verticals, Inc. CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (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, 2024 23,882,035 $ 2 10,032,676 $ 1 $ 279,335 $ 100,397 $ 135,624 $ 515,359 Equity-based compensation — — — — 18,344 — — 18,344 Net income — — — — — 17,873 8,630 26,503 Distributions to non-controlling interest holders — — — — — — ( 3,021 ) ( 3,021 ) Redemption of common units in i3 Verticals, LLC 1,281,739 — ( 1,281,739 ) — 18,301 — ( 18,301 ) — 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 — — — — 1,778 — — 1,778 Exercise or release of equity-based awards 393,232 — — — ( 3,261 ) — — ( 3,261 ) Repurchases of Class A common stock ( 1,573,881 ) — — — ( 37,979 ) — — ( 37,979 ) Allocation of equity to non-controlling interests — — — — 481 — ( 481 ) — Balance at September 30, 2025 23,983,125 $ 2 8,381,681 $ 1 $ 271,310 $ 118,270 $ 128,140 $ 517,723 See Notes to the Consolidated Financial Statements 78 i3 Verticals, Inc. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Year ended September 30, 2025 2024 2023 Cash flows from operating activities: Net income (loss) $ 26,503 $ 175,130 $ ( 2,652 ) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 29,840 37,445 36,461 Equity-based compensation 18,344 26,338 27,878 Amortization of debt discount and issuance costs 961 1,175 1,514 Gain on repurchase of exchangeable notes — ( 2,397 ) — Loss on sale of exchangeable senior note hedges — 245 — Gain on repurchases of warrants — ( 105 ) — Net gain on sale of investments — — ( 295 ) Gain on sale of businesses ( 25,960 ) ( 205,576 ) — Write down of intangible asset — — 2,660 Provision for (Benefit from) deferred income taxes 4,974 434 ( 5,935 ) Non-cash lease expense 2,515 4,471 4,683 Other non-cash adjustments to net income (loss) 437 1,346 1,546 Increase (Decrease) in non-cash contingent consideration expense from original estimate 1,536 ( 690 ) 10,781 Changes in operating assets: Accounts receivable ( 7,411 ) 9,581 ( 7,657 ) Prepaid expenses and other current assets ( 2,182 ) ( 603 ) 1,530 Other assets ( 2,017 ) ( 1,673 ) ( 1,865 ) Changes in operating liabilities: Accounts payable 1,005 ( 3,237 ) 1,674 Accrued expenses and other current liabilities ( 32,080 ) 27,974 318 Acquisition escrow obligations ( 2,174 ) ( 1,791 ) ( 8,319 ) Deferred revenue ( 1,769 ) 2,026 ( 1,319 ) Operating lease liabilities ( 3,160 ) ( 4,603 ) ( 4,530 ) Other long-term liabilities ( 2,908 ) ( 10,515 ) — Contingent consideration paid in excess of original estimates ( 760 ) ( 6,567 ) ( 19,303 ) Net cash provided by operating activities 5,694 48,409 37,170 Cash flows from investing activities: Expenditures for property and equipment ( 1,941 ) ( 2,964 ) ( 4,204 ) Proceeds from sale of property and equipment 1,501 618 — Expenditures for capitalized software ( 8,194 ) ( 11,996 ) ( 12,171 ) Purchases of merchant portfolios and residual buyouts ( 12 ) ( 5,372 ) ( 2,191 ) Acquisitions of businesses, net of cash acquired ( 11,000 ) ( 19,100 ) ( 101,998 ) Proceeds from sale of Merchant Services Business, net of cash sold — 435,058 — Proceeds from sale of Healthcare RCM Business, net of cash sold 96,102 — — Payments for other investing activities — ( 94 ) ( 1,251 ) Proceeds from investments — — 295 Net cash provided by (used in) investing activities 76,456 396,150 ( 121,520 ) See Notes to the Consolidated Financial Statements 79 i3 Verticals, Inc. CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) (In thousands) Year ended September 30, 2025 2024 2023 Cash flows from financing activities: Proceeds from revolving credit facility 58,374 386,952 365,022 Payments on revolving credit facility ( 58,374 ) ( 659,458 ) ( 281,534 ) 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 ( 256 ) ( 930 ) ( 694 ) Payments for repurchases of Class A common stock ( 37,604 ) — — Net payments for settlement obligations ( 221 ) ( 4,241 ) ( 2,667 ) Cash paid for contingent consideration ( 817 ) ( 760 ) ( 6,832 ) Payments for required distributions to members or on behalf of members for tax obligations ( 25,267 ) ( 1,088 ) — Payments for required distributions to members under the Tax Receivable Agreement ( 10,032 ) — — Proceeds from stock option exercises 300 25 180 Payments for employee's tax withholdings from net settled stock option exercises and RSU releases ( 4,294 ) ( 708 ) ( 490 ) Net cash (used in) provided by financing activities ( 104,414 ) ( 367,362 ) 72,985 Net (decrease) increase in cash, cash equivalents, and restricted cash ( 22,264 ) 77,197 ( 11,365 ) Cash, cash equivalents, and restricted cash at beginning of period 89,597 12,400 23,765 Cash, cash equivalents, and restricted cash at end of period $ 67,333 $ 89,597 $ 12,400 Supplemental disclosure of cash flow information: Cash paid for interest $ 931 $ 29,492 $ 21,476 Cash paid for income taxes, net of refunds $ 34,867 $ 7,330 $ 3,236 The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the Consolidated Balance Sheets to that shown in the Consolidated Statements of Cash Flows: Year ended September 30, 2025 2024 2023 Beginning balance Cash and cash equivalents $ 86,541 $ 3,112 $ 3,490 Settlement assets 632 4,873 7,540 Restricted cash 2,424 4,415 12,735 Total cash, cash equivalents, and restricted cash $ 89,597 $ 12,400 $ 23,765 Ending balance Cash and cash equivalents $ 66,672 $ 86,541 $ 3,112 Settlement assets 411 632 4,873 Restricted cash 250 2,424 4,415 Total cash, cash equivalents, and restricted cash $ 67,333 $ 89,597 $ 12,400 See Notes to the Consolidated Financial Statements 80 i3 VERTICALS, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (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 public sector markets. The Company’s headquarters are in located 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 in 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 other owners (the “Continuing Equity Owners”). 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. As the Reorganization Transactions are considered transactions between entities under common control, the financial statements retroactively reflect the accounts of i3 Verticals, LLC for periods prior to the IPO and Reorganization Transactions. The Continuing Equity Owners who own Common Units in i3 Verticals, LLC may redeem at each of their options their Common Units for, at the election of i3 Verticals, LLC, cash or newly-issued shares of the Company's Class A common stock. As of September 30, 2025, i3 Verticals, Inc. owned 74.1 % of the economic interest in i3 Verticals, LLC. As of September 30, 2025, the Continuing Equity Owners owned Common Units in i3 Verticals, LLC representing approximately 25.9 % of the economic interest in i3 Verticals, LLC, shares of Class A common stock in the Company representing approximately 0.8 % of the economic interest and voting power in the Company, and shares of Class B common stock in i3 Verticals, Inc., representing approximately 25.9 % of the voting power in the Company. Combining the Class A common stock and Class B common stock, the Continuing Equity Holders hold approximately 26.7 % of the economic interest and voting power in i3 Verticals, Inc. 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 81 i3 VERTICALS, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except unit, share and per share amounts) “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 $ 96,252 , paid in cash at closing, after giving effect to post-closing net working capital, indebtedness and cash adjustments. 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 anticipated to be completed in the first quarter of fiscal 2026. In addition, the Infinx ELA terminated in accordance with its terms 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 consolidated statements of operations. Income under the Infinx TSA and Infinx ELA during the year ended September 30, 2025 was $ 5,250 . Aggregate costs incurred related to the sale of the Healthcare RCM Business during the year ended September 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 consolidated statements of operations. 82 i3 VERTICALS, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (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 consolidated statements of operations. The following table presents the aggregate carrying amounts of the classes of assets and liabilities of discontinued operations 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 83 i3 VERTICALS, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except unit, share and per share amounts) The financial results of the Healthcare RCM Business are presented as income from discontinued operations, net of income taxes on the Company’s consolidated statements of operations. The following table presents financial results of the Healthcare RCM Business for the years ended September 30, 2025, 2024 and 2023: Year ended September 30, 2025 2024 2023 Revenue $ 22,463 $ 39,104 $ 37,045 Operating expenses Other costs of services (excluding depreciation and amortization) 14,553 24,125 22,387 Selling, general and administrative 7,317 9,949 9,910 Depreciation and amortization 1,940 3,243 3,118 Change in fair value of contingent consideration 1,302 ( 712 ) 788 Total operating expenses 25,112 36,605 36,203 (Loss) income from operations ( 2,649 ) 2,499 842 Other income (including gain on disposal of $ 25,960 in the year ended September 30, 2025) ( 25,753 ) — — Income before income taxes from discontinued operations 23,104 2,499 842 Provision for (benefit from) income taxes 3,782 ( 200 ) ( 281 ) Net income from discontinued operations 19,322 2,699 1,123 Net income from discontinued operations attributed to non-controlling interest 6,081 767 329 Net income from discontinued operations attributable to i3 Verticals, Inc. $ 13,241 $ 1,932 $ 794 84 i3 VERTICALS, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except unit, share and per share amounts) The Company has elected to not separately disclose discontinued operations on its consolidated statement of cash flows. The following table presents cash flows from discontinued operations for major captions on the consolidated financial statements for the Healthcare RCM Business: Year ended September 30, 2025 2024 2023 Depreciation and amortization $ 1,940 $ 3,243 $ 3,118 Equity-based compensation $ 3,112 $ 2,783 $ 2,859 Gain on sale of Healthcare RCM Business $ ( 25,960 ) $ — $ — Non-cash lease expense $ 702 $ 1,235 $ 1,221 Increase (decrease) in non-cash contingent consideration expense from original estimate $ 1,302 $ ( 712 ) $ 788 Contingent consideration paid in excess of original estimates $ ( 700 ) $ — $ — Expenditures for property and equipment $ ( 156 ) $ ( 294 ) $ ( 119 ) Expenditures for capitalized software $ ( 263 ) $ ( 423 ) $ ( 397 ) Proceeds from sale of Healthcare RCM Business, net of cash sold $ 96,102 $ — $ — Cash paid for contingent consideration up to original estimates $ ( 800 ) $ — $ ( 385 ) The following table presents significant non-cash investing and financing activities for major captions on the consolidated financial statements: Year ended September 30, 2025 2024 2023 Right-of-use assets obtained in exchange for operating lease obligations $ 266 $ 327 $ ( 625 ) 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 “Sellers”) completed the transactions (such closing, the “Closing”) contemplated by that certain Securities Purchase Agreement dated as of June 26, 2024 (the “Purchase Agreement”), by and among i3 Verticals, LLC, Corporation Seller, the Company (solely for the purpose of providing a guaranty of the obligations of Sellers as set forth in the Purchase Agreement), Payroc Buyer, LLC (“Buyer”), and Payroc WorldAccess, LLC (solely for the purpose of providing a guaranty of the obligations of Buyer as set forth in the Purchase Agreement). Pursuant to the terms of the Purchase Agreement, the Sellers sold to Buyer the equity interests of certain direct and indirect wholly-owned subsidiaries of 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 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 "Transactions"). Pursuant to the terms of the Purchase Agreement, Buyer paid to Sellers an aggregate purchase price of approximately $ 439,516 , payable in cash at the Closing, after giving effect to post-closing purchase price 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 Transactions, the Company entered into a Transition Services Agreement, pursuant to which, among other things, the Company or affiliates thereof provide certain information technology and operational transition services to Payroc for a period of time after the closing, and a Processing 85 i3 VERTICALS, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except unit, share and per share amounts) Services Agreement with Payroc, pursuant to which the parties provide certain payment processing services to customers of each party following the closing in accordance with the terms thereof. Aggregate costs incurred related to the 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 Transactions. The expenses are reflected within selling, general and administrative expenses within the Company's consolidated statements of operations. The financial results of the Merchant Services Business are presented as income from discontinued operations, net of income taxes on the Company’s consolidated statements of operations. The following table presents financial results of the Merchant Services Business for the years ended September 30, 2025, 2024 and 2023: Year ended September 30, 2025 2024 2023 Revenue $ — $ 145,907 $ 143,517 Operating expenses Other costs of services (excluding depreciation and amortization) — 67,122 65,197 Selling, general and administrative — 45,880 42,005 Depreciation and amortization — 8,649 10,023 Change in fair value of contingent consideration — — 14 Total operating expenses — 121,651 117,239 Income from operations — 24,256 26,278 Other expenses (income) Interest expense, net — 43 — Other expense (income) (including gain on disposal of $ 205,576 in the year ended September 30, 2024) 661 ( 205,576 ) 2,660 Total other expenses (income) 661 ( 205,533 ) 2,660 (Loss) income become income taxes from discontinued operations ( 661 ) 229,789 23,618 (Benefit from) provision for income taxes ( 2,224 ) 41,313 2,585 Net (loss) income from discontinued operations 1,563 188,476 21,033 Net (loss) income from discontinued operations attributable to non-controlling interest 558 66,213 6,022 Net (loss) income from discontinued operations attributable to i3 Verticals, Inc. $ 1,005 $ 122,263 $ 15,011 86 i3 VERTICALS, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except unit, share and per share amounts) The Company has elected to not separately disclose discontinued operations on its consolidated statement of cash flows. The following table presents cash flows from discontinued operations for major captions on the consolidated financial statements for the Merchant Services Business: Year ended September 30, 2024 2023 Depreciation and amortization $ 8,649 $ 10,023 Equity-based compensation $ 8,160 $ 4,155 Provision for doubtful accounts $ 26 $ ( 19 ) Gain on sale of Merchant Services Business $ ( 205,576 ) $ — Amortization of capitalized customer acquisition costs $ 873 $ 746 Write down of intangible asset $ — $ 2,660 Provision for deferred income taxes $ 32 $ 378 Non-cash lease expense $ 802 $ 1,032 Contingent consideration paid in excess of original estimates $ — $ ( 3,211 ) Expenditures for property and equipment $ ( 705 ) $ ( 1,540 ) Expenditures for capitalized software $ ( 957 ) $ ( 1,612 ) Purchases of merchant portfolios and residual buyouts $ ( 5,372 ) $ ( 2,191 ) Acquisitions of businesses, net of cash and restricted cash acquired $ — $ ( 4,497 ) Acquisition of other intangibles $ ( 11 ) $ ( 420 ) Proceeds from sale of Merchant Services Business, net of cash sold $ 435,058 $ — The following table presents significant non-cash investing and financing activities for major captions on the consolidated financial statements: Year ended September 30, 2024 2023 Residual buyouts financed through principal and interest forgiveness of a loan $ — $ 5,860 Right-of-use assets obtained in exchange for operating lease obligations $ 1,741 $ 785 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the reporting and disclosure rules and regulations of the Securities and Exchange Commission (“SEC”). Reclassifications Certain prior period amounts have been reclassified to conform to the current period presentation. 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 consolidated statements of operations. Assets and liabilities subject to the sale of the Healthcare RCM Business have been reclassified as held for sale for all periods presented in the consolidated balance sheets. Refer to Note 2 for additional information. 87 i3 VERTICALS, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except unit, share and per share amounts) 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 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 Consolidated Balance Sheets, Consolidated Statements of Cash Flows or Consolidated Statement of Changes in Equity. 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 Consolidated Statements of Operations: September 30, 2024 As Previously Reported (1) Adjustment As Adjusted Operating expenses Other costs of services $ 16,108 $ 44,409 $ 60,517 Selling, general and administrative $ 145,194 $ ( 44,409 ) $ 100,785 __________________________ 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. September 30, 2023 As Previously Reported (1) Adjustment As Adjusted Operating expenses Other costs of services $ 13,306 $ 41,505 $ 54,811 Selling, general and administrative $ 147,487 $ ( 41,505 ) $ 105,982 __________________________ 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. Principles of Consolidation These consolidated financial statements include the accounts of the Company and its subsidiary companies. All intercompany accounts and transactions have been eliminated in consolidation . Cash and Cash Equivalents For purposes of reporting cash flows, the Company considers cash on hand, checking accounts, and savings accounts to be cash and cash equivalents. At times, the balance in these accounts may exceed federal insured limits. Cash equivalents are defined as financial instruments readily transferable into cash with an original maturity less than 90 days. 88 i3 VERTICALS, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (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 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 both $ 411 as of September 30, 2025 and $ 632 as of September 30, 2024, respectively. Accounts Receivable and Credit Policies Accounts receivable include amounts due from the sales of the Company’s technology solutions to its customers, ongoing transition activities with Infinx and Payroc related to the sale of the Healthcare RCM Business and Merchant Services Business, respectively, and other receivables from third parties. The carrying amount of accounts receivable is reduced by an allowance for doubtful accounts, if necessary, which reflects management’s best estimate of the amounts that will not be collected. The allowance is estimated based on management’s knowledge of its customers, historical loss experience and existing economic conditions. Accounts receivable and the allowance are written-off when, in management’s opinion, all collection efforts have been exhausted. The Company’s allowance for doubtful accounts was $ 687 and $ 452 as of September 30, 2025 and 2024, respectively; however, actual write-offs may exceed estimated amounts. In connection with the sale of the Healthcare RCM Business, $ 212 at September 30, 2024 of the Company's allowance for doubtful were classified as "Current assets held for sale" in the accompanying consolidated balance sheets and were not included in these amounts. 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 $ 2,516 and $ 2,423 at September 30, 2025 and 2024, respectively, and are included within prepaid expenses and other current assets on the accompanying consolidated balance sheets. Property and Equipment Property and equipment are stated at cost or, if acquired through a business combination or an asset acquisition, fair value at the date of acquisition. Depreciation and amortization are provided over the assets’ estimated useful lives (or, if obtained in connection with a business acquisition, over their estimated remaining useful lives) using the straight-line method, except for leasehold improvements, which are depreciated over the shorter of the estimated useful lives of the assets or the lease term. Expenditures for maintenance and repairs are expensed when incurred. Expenditures for renewals or betterments are capitalized. Management reviews long-lived assets for impairment when events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. The Company recognizes impairment when the sum of undiscounted estimated future cash flows expected to result from the use of the asset is less than the carrying value of the asset. There were no impairment charges from continuing operations during the years ended September 30, 2025, 2024 and 2023. 89 i3 VERTICALS, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except unit, share and per share amounts) Capitalized Software Development costs for software to be sold or leased to customers are capitalized once technological feasibility of the software product has been established. Costs incurred prior to establishing technological feasibility are expensed as incurred. Technological feasibility is established when the Company has completed a detailed program design and has determined that a product can be produced to meet its design specifications, including functions, features and technical performance requirements. Capitalization of costs ceases when the product is generally available to customers. Software development costs are amortized using the greater of the straight-line method or the usage method over its estimated useful life, which is generally estimated to be three years . Additionally, development costs for software to be used internally or for SaaS products sold to customers is capitalized under similar guidance as discussed above. Once the software product is in the application development stage, costs are required to be capitalized. Costs incurred during the preliminary product phase or post implementation stage are expensed as incurred. Overhead, general and administrative, and training costs are not capitalized. Software development costs may become impaired in situations where development efforts are abandoned due to the viability of a planned project becoming doubtful or due to technological obsolescence of a planned software product. Management evaluates the remaining useful lives and carrying values of capitalized software at least annually or when events and circumstances warrant such a review, to determine whether significant events or changes in circumstances indicate that impairment in value may have occurred. To the extent estimated net realizable values, which are estimated to equal future undiscounted cash flows, exceed the carrying value, no impairment is necessary. If estimated net realizable values are less than the carrying values, an impairment charge is recorded. There were no impairment charges from continuing operations during the years ended September 30, 2025, 2024 and 2023. Identifiable software technology intangible assets resulting from acquisitions are amortized using the straight-line method over periods not exceeding their remaining estimated useful lives. GAAP requires that intangible assets with estimated useful lives be amortized over their respective estimated useful lives to their residual values, and reviewed for impairment. Acquisition technology intangibles’ net book values are included in capitalized software, net in the accompanying consolidated balance sheets. Amortization expense related to capitalized software is recorded within depreciation and amortization on the consolidated statements of operations. 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 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, 90 i3 VERTICALS, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except unit, share and per share amounts) which is allocated among the acquired assets and assumed liabilities based upon their relative fair values at the date of acquisition. The operating results of an acquisition are included in the consolidated statements of operations from the date of such acquisition. Acquisitions completed during the year ended September 30, 2025 contributed $ 1,587 and $ 684 of revenue and net income, respectively, to the results in the Company's consolidated statements of operations for the year then ended. Goodwill In accordance with ASC 350, Intangibles—Goodwill and Other, the Company tests goodwill for impairment for each reporting unit on an annual basis in the fourth quarter, or when events or circumstances indicate the fair value of a reporting unit is below its carrying value. The Company’s goodwill represents the excess of the purchase price over the fair value of the net identifiable assets acquired in business combinations. The goodwill generated from the business combinations is primarily related to the value placed on the employee workforce and expected synergies. Judgment is involved in determining if an indicator or change in circumstances relating to impairment has occurred. Such changes may include, among others, a significant decline in expected future cash flows, a significant adverse change in the business climate, and unforeseen competition. The Company has the option of performing a qualitative assessment of impairment to determine whether any further quantitative testing for impairment is necessary. The option of whether or not to perform a qualitative assessment is made annually and may vary by reporting unit. Factors the Company considers in the qualitative assessment include general macroeconomic conditions, industry and market conditions, cost factors, overall financial performance of the Company’s reporting units, events or changes affecting the composition or carrying amount of the net assets of its reporting units, sustained decrease in its share price, and other relevant entity specific events. If the Company determines not to perform the qualitative assessment or if it determines, on the basis of qualitative factors, that the fair value of the reporting unit is more likely than not less than the carrying value, then the Company performs a quantitative test for that reporting unit. The fair value of each reporting unit is compared to the reporting unit’s carrying value, including goodwill. If the fair value of a reporting unit is less than its carrying value, the Company recognizes an impairment equal to the excess carrying value, not to exceed the total amount of goodwill allocated to that reporting unit. For a discussion of the estimation methodology, the qualitative factors considered when performing a qualitative assessment and the significance of various inputs, please see the subheading below titled “Use of Estimates.” The Company has determined that it has two reporting units as of the date of the most recent annual goodwill impairment test on July 1, 2025. In the year ended September 30, 2025, based on the qualitative assessment, there were not any indicators that would indicate that it is more likely than not that a reporting unit’s carrying value exceed the fair value. For each of the years ended September 30, 2025, 2024 and 2023 the Company determined that none of its reporting units were impaired. Intangible Assets Intangible assets include acquired customer relationships, trademarks, trade names, website development costs and non-compete agreements. Customer relationships represent the fair value of customer relationships purchased by the Company. The Company amortizes definite lived identifiable intangible assets using a method that reflects the pattern in which the economic benefits of the intangible asset are expected to be consumed or otherwise utilized. The estimated useful lives of the Company’s customer-related intangible assets approximate the expected distribution 91 i3 VERTICALS, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except unit, share and per share amounts) of cash flows, whether straight-line or accelerated, generated from each asset. The useful lives of contract-based intangible assets are equal to the terms of the agreement. Management evaluates the remaining useful lives and carrying values of long-lived assets, including definite lived intangible assets, at least annually, or when events and circumstances warrant such a review, to determine whether significant events or changes in circumstances indicate that a change in the useful life or impairment in value may have occurred. There were no impairment charges during the years ended September 30, 2025, 2024 and 2023. 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 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. 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. The amount provided for state income taxes is based upon the amounts of current and deferred taxes payable or refundable at the date of the consolidated financial statements as a result of all events recognized in the financial statements as measured by the provisions of enacted tax laws. Under GAAP, a tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. The Company reports a liability for unrecognized tax positions taken or expected to be taken in a tax return. The Company recognizes interest and penalties, if any, related to unrecognized tax benefits as part of income tax expense. See additional discussion in Note 13. 92 i3 VERTICALS, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except unit, share and per share amounts) Valuation of Contingent Consideration On occasion, the Company may have acquisitions which include contingent consideration. Accounting for business combinations requires the Company to estimate the fair value of any contingent purchase consideration at the acquisition date. For a discussion of the estimate methodology and the significance of various inputs, please see the subheading below titled “Use of Estimates.” Changes in estimates regarding the fair value contingent purchase consideration are reflected as adjustments to the related liability and recognized within operating expenses in the consolidated statements of operations. Short and long-term contingent liabilities are presented within accrued expenses and other current liabilities and other long-term liabilities on the Company's consolidated balance sheets, respectively. Classification of Financial Instruments The Company classifies certain financial instruments issued as either equity or as liabilities. Determination of classification is based upon the underlying properties of the instrument. See specific discussion regarding the nature of instruments issued, the presentation on the consolidated financial statements and the related valuation method applied in Notes 11, 15, and 16. 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. The Company's revenue from continuing operations for the years ended September 30, 2025, 2024 and 2023 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 the Company's 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 obligation 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. 93 i3 VERTICALS, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except unit, share and per share amounts) 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. 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 years ended September 30, 2025, 2024 and 2023. 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 remaining to be satisfied. Revenue from the sale of equipment, is recognized upon transfer of ownership to the customer, after which there are no further performance obligations remaining to be satisfied. 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 94 i3 VERTICALS, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except unit, share and per share amounts) 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 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. However, 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 as well as other external circumstances such as customers being subject to annual budget approval for continued funding of contracts. The tables below present a disaggregation of the Company's revenue from contracts with customers for continuing operations by product. 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 the Company's 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. Year ended September 30, 2025 2024 2023 Software and related services revenue $ 149,044 $ 131,916 $ 134,391 Proprietary payments revenue 54,058 50,073 46,521 Other revenue 10,056 9,243 8,769 Total revenue $ 213,158 $ 191,232 $ 189,681 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 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. 95 i3 VERTICALS, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except unit, share and per share amounts) Year ended September 30, 2025 2024 2023 Revenue earned over time $ 193,532 $ 176,722 $ 170,435 Revenue earned at a point in time 19,626 14,510 19,246 Total revenue $ 213,158 $ 191,232 $ 189,681 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 September 30, 2025 and September 30, 2024, the Company’s contract assets from contracts with customers was $ 9,211 and $ 8,680 , respectively. 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 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 table presents the changes in deferred revenue as of and for the years ended September 30, 2025 and 2024: Balance at September 30, 2023 $ 32,253 Deferral of revenue 39,018 Recognition of unearned revenue ( 32,115 ) Balance at September 30, 2024 39,156 Deferral of revenue 37,691 Recognition of unearned revenue ( 38,361 ) Balance at September 30, 2025 $ 38,486 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 September 30, 2025 and 2024, the Company had $ 1,412 and $ 857 of capitalized contract costs, which relate to commissions paid to employees and agents as well as other incentives given to customers to obtain new sales, included within “Other assets" on the consolidated balance sheets. The Company recorded expense from continuing operations related to these costs for the years ended September 30, 2025, 2024 and 2023 of $ 293 , $ 92 and $ 46 respectively. 96 i3 VERTICALS, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (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 from continuing operations 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 the 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 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. Selling, General and Administrative Selling general and administrative expenses from continuing operations 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 and maintenance, sales and other functions. 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 the 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 consolidated statements of operations from selling, general and administrative expenses to other costs of services. Refer above for discussion of the change in the current and prior period presentation. Advertising and promotion costs are expensed as incurred. Advertising expense from continuing operations was $ 2,482 , $ 2,375 and $ 3,165 for the years ended September 30, 2025, 2024 and 2023, respectively, and is included in selling, general and administrative expenses in the Consolidated Statements of Operations. Equity-based Compensation The Company accounts for grants of equity awards to employees in accordance with ASC 718, Compensation—Stock Compensation. This standard requires compensation expense to be measured based on the estimated fair value of the share-based awards on the date of grant and recognized as expense on a straight-line basis over the requisite service period, which is generally the vesting period. Equity-based compensation from continuing operations was $ 15,232 , $ 15,396 and $ 20,864 for the years ended September 30, 2025, 2024 and 2023, respectively, and is included in other cost of services and selling, general and administrative expenses in the Consolidated Statements of Operations. 97 i3 VERTICALS, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except unit, share and per share amounts) Use of Estimates The preparation of 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 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. See Note 19 to the Company's consolidated financial statements for additional information. Recently Issued Accounting Pronouncements Recently Adopted Accounting Pronouncements 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 chief operating decision maker. 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. The Company has adopted ASU 2023-07 effective October 1, 2024. The adoption of ASU 2023-07 did not have a material impact on the Company’s consolidated financial statements, as the changes only include additional disclosures related to the Company’s reportable segment. See Note 19 to the Company's consolidated financial statements for additional information regarding segment reporting. 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 related to the income taxes paid and rate reconciliation, and how legislation changes may affect future capital allocation and cash flow forecasts. The amendment is intended to 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 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. 98 i3 VERTICALS, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except unit, share and per share amounts) 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. In September 2025, the FASB issued ASU No. 2025-06, Intangibles—Goodwill and Other—Internal-Use-Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software ("ASU 2025-06"). ASU 2025 removes the prescriptive software development “project stages” and requires capitalization of software costs once (1) management authorizes and commits funding and (2) completion and use are probable. Entities must evaluate significant development uncertainty related to technological innovations or performance requirements. The amendments also require Subtopic 360-10 disclosures for all capitalized internal-use software costs and clarify that intangible asset disclosures under Subtopic 350-30 are not required. The standard is effective for annual periods beginning after December 15, 2027, and interim periods within those annual reporting periods, with early adoption permitted. The Company will not be required to adopt ASU 2025-06 until October 1, 2028. The Company is currently evaluating the impact of the adoption of ASU 2025-06 on the Company’s financial statement disclosures. 4. CREDIT RISK AND OTHER CONCENTRATIONS The Company places its cash with high credit quality financial institutions which provide Federal Deposit Insurance Corporation insurance. The Company performs periodic evaluations of the relative credit standing of these institutions and does not expect any losses related to such concentrations. No single customer accounted for more than 10% of the Company's revenue from continuing operations during the years ended September 30, 2025, 2024 and 2023. The Company believes that the loss of any single customer would not have a material adverse effect on the Company's financial condition or results of operations. The Company uses a third party payment processor, which facilitates the majority of of our proprietary payments revenues from continuing operations for the years ended September 30, 2025, 2024, and 2023. 5. ACQUISITIONS During the years ended September 30, 2025, 2024 and 2023 the Company acquired the following businesses: 2025 Business Combinations 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). 99 i3 VERTICALS, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (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 15. 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 $ 96 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, net $ 796 Property and equipment 200 Capitalized software 380 Customer relationships 4,610 Trade name 100 Goodwill 5,129 Total assets acquired 11,215 Current liabilities 955 Net assets acquired $ 10,260 Other Business Combinations during the year ended September 30, 2025 During the year ended September 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 preliminary fair values of approximately $ 83 to property and equipment, approximately $ 1,700 to customer relationships, $ 141 to deferred revenue, $ 5 to non-compete agreements and the remainder, approximately $ 352 , to goodwill, all of which is deductible for tax purposes. The acquired customer relationships intangible asset has an estimated amortization period of fifteen years . 100 i3 VERTICALS, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (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 year ended September 30, 2025 had occurred on October 1, 2024. 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. Year ended September 30, 2025 2024 Revenue $ 214,595 $ 194,258 Net income (loss) from continuing operations $ 5,749 $ ( 15,846 ) 2024 Business Combinations 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 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 15. 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. 101 i3 VERTICALS, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except unit, share and per share amounts) Summary of inLumon The fair values assigned to certain assets and liabilities assumed, as of the acquisition date, were as follows: Accounts receivable, net $ 2,985 Property and equipment 20 Capitalized software 3,000 Customer relationships 11,800 Trade name 100 Goodwill 11,486 Total assets acquired 29,391 Accrued expenses and other current liabilities 1,723 Deferred revenue, current 191 Net assets acquired $ 27,477 Other Business Combinations during the year ended September 30, 2024 During the year ended September 30, 2024 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 acquisition date 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. 2023 Business Combinations Purchase of Celtic Cross Holdings, Inc. and Celtic Systems Pvt. Ltd. On October 1, 2022, the Company completed the acquisition of substantially all of the assets of Celtic Cross Holdings, Inc., in Scottsdale, Arizona and Celtic Systems Pvt. Ltd. in Vadodara, India (collectively "Celtic") to expand the Company’s software offerings in the Public Sector. Total purchase consideration consisted of $ 85,000 in cash consideration, funded by proceeds from the Company's revolving credit facility. The goodwill associated with the Celtic acquisition is deductible for tax purposes. The acquired customer relationships intangible assets has an estimated amortization period of eighteen years . The trade name and non-compete agreements associated with the acquisition have amortization periods of five and three years , respectively. The weighted-average amortization period for all intangibles acquired is eighteen years . The acquired capitalized software has a weighted-average amortization period of ten years . 102 i3 VERTICALS, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except unit, share and per share amounts) Acquisition-related costs for this acquisition amounted to approximately $ 1,782 and were expensed as incurred. Summary of Celtic Cross Holdings, Inc. and Celtic Systems Pvt. Ltd. The fair values assigned to certain assets and liabilities assumed, as of the acquisition date, were as follows: Accounts receivable, net $ 7,660 Prepaid expenses and other current assets 103 Property and equipment 5,233 Capitalized software 12,600 Customer relationships 33,800 Non-compete agreements 200 Trade name 600 Goodwill 43,899 Total assets acquired 104,095 Accounts payable 9 Accrued expenses and other current liabilities 3,182 Deferred revenue, current 2,741 Other long-term liabilities 13,162 Net assets acquired $ 85,001 Other Business Combinations during the year ended September 30, 2023 The Company completed the acquisition of substantially all of the assets of one other businesses within continuing operations to expand the Company's software offerings. The total purchase consideration was $ 15,260 , including $ 12,500 in cash consideration, funded by proceeds from the Company's revolving credit facility, $ 2,000 of the Company's Class A Common Stock, and $ 760 in the acquisition date estimated fair value of contingent consideration (the final amount of such contingent cash payment of up to $ 6,000 is dependent on achievement of specified financial performance targets, as defined in the purchase agreement). In connection with this acquisition, the Company allocated approximately $ 75 of the consideration to net working capital, approximately $ 335 to property and equipment, approximately $ 640 to capitalized software, approximately $ 6,920 to customer relationships, approximately $ 100 to trade names, and the remainder, approximately $ 9,365 , to goodwill, of which none is deductible for tax purposes, and approximately $ 2,178 to other long-term liabilities. The acquired capital software and customer relationships intangible assets have an estimated amortization period of seven and fifteen years , respectively. Acquisition-related costs for this business amounted to approximately $ 199 and were included in selling, general and administrative on our consolidated statement of operations and were expensed as incurred. 103 i3 VERTICALS, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except unit, share and per share amounts) 6. PREPAID EXPENSES AND OTHER CURRENT ASSETS A summary of the Company's prepaid expenses and other current assets as of September 30, 2025 and 2024 is as follows: 2025 2024 (1) Inventory $ 2,516 $ 2,423 Prepaid licenses 5,874 5,013 Prepaid insurance 222 129 Notes receivable — current portion 195 195 Other current assets 3,268 2,213 Prepaid expenses and other current assets $ 12,075 $ 9,973 __________________________ 1. In connection with the sale of the Healthcare RCM Business, $ 259 of the Company's prepaid expenses and other current assets (as of September 30, 2024) were classified as "Current assets held for sale" in the accompanying consolidated balance sheets and were not included in these amounts. 7. PROPERTY AND EQUIPMENT, NET A summary of the Company's property and equipment as of September 30, 2025 and 2024 is as follows: Estimated Useful Life 2025 2024 (1) Buildings 20 years 2,741 3,724 Computer equipment and software (2) 3 years 4,833 4,273 Furniture and fixtures 7 years 1,725 2,025 Terminals 2 to 5 years 908 171 Office equipment 3 to 5 years 1,236 1,924 Automobiles 3 years 73 74 Leasehold improvements 2 to 7 years 1,286 2,261 Accumulated depreciation ( 5,621 ) ( 6,164 ) Property and equipment, net $ 7,181 $ 8,288 ____________________ 1. In connection with the sale of the Healthcare RCM Business, $ 389 of the Company's property and equipment, net (as of September 30, 2024) were classified as "Long-term assets held for sale" in the accompanying consolidated balance sheets and were not included in these amounts. 2. Includes computer software of $ 352 and $ 330 as of September 30, 2025 and 2024, respectively. Depreciation expense for continuing operations for the years ended September 30, 2025, 2024 and 2023 amounted to $ 2,536 , $ 2,590 and $ 2,266 , respectively. 104 i3 VERTICALS, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except unit, share and per share amounts) 8. CAPITALIZED SOFTWARE, NET A summary of the Company's capitalized software as of September 30, 2025 and 2024 is as follows: Estimated Useful Life 2025 2024 (1) Software development costs 3 to 10 years $ 74,700 $ 75,640 Development in progress 12,052 8,803 Accumulated amortization ( 38,438 ) ( 30,460 ) Capitalized software, net $ 48,314 $ 53,983 __________________________ 1. In connection with the sale of the Healthcare RCM Business, $ 4,609 of the Company's capitalized software, net (as of September 30, 2024) were classified as "Long-term assets held for sale" in the accompanying consolidated balance sheets and were not included in these amounts. The Company capitalized software development costs (including acquisitions) for continuing operations totaling $ 8,311 and $ 13,656 during the years ended September 30, 2025 and 2024, respectively. Amortization expense for continuing operations for capitalized software development costs amounted to $ 13,985 , $ 12,261 and $ 9,962 during the years ended September 30, 2025, 2024 and 2023, respectively. There were no amounts written down to net realizable value for continuing operations during the years ended September 30, 2025, 2024 and 2023, respectively. 9. GOODWILL AND INTANGIBLE ASSETS Changes in the carrying amount of goodwill are as follows: Total Balance at September 30, 2023 (1) $ 230,293 Goodwill attributable to preliminary purchase price adjustments and acquisition activity during the year ended September 30, 2024 12,695 Balance at September 30, 2024 (1) 242,988 Goodwill attributable to preliminary purchase price adjustments and acquisition activity during the year ended September 30, 2025 5,481 Balance at September 30, 2025 $ 248,469 __________________________ 1. In connection with the sale of the Merchant Services Business and Healthcare RCM Business, $ 37,690 and $ 179,270 at September 30, 2024 and 2023, respectively, of the Company's goodwill were classified as "Long-term assets held for sale" in the accompanying consolidated balance sheets and were not included in these amounts. 105 i3 VERTICALS, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except unit, share and per share amounts) Intangible assets, net consisted of the following as of September 30, 2025: Cost Accumulated Amortization Carrying Value Amortization Life and Method Finite-lived intangible assets: Customer relationships $ 179,650 $ ( 44,592 ) $ 135,057 9 to 20 years – straight-line Trade names 3,691 ( 3,060 ) 631 2 to 5 years – straight-line Non-compete agreements and other intangible assets 376 ( 283 ) 93 1 to 8 years – straight-line Total finite-lived intangible assets 183,717 ( 47,936 ) 135,781 Indefinite-lived intangible assets: Trademarks 16 — 16 Total identifiable intangible assets $ 183,733 $ ( 47,936 ) $ 135,797 Intangible assets, net consisted of the following as of September 30, 2024 (1) : Cost Accumulated Amortization Carrying Value Amortization Life and Method Finite-lived intangible assets: Customer relationships $ 173,340 $ ( 34,080 ) $ 139,260 9 to 20 years – straight-line Trade names 3,591 ( 2,286 ) 1,305 2 to 5 years – straight-line Non-compete agreements and other intangible assets 359 ( 193 ) 166 3 to 8 years – straight-line Total finite-lived intangible assets 177,290 ( 36,559 ) 140,731 Indefinite-lived intangible assets: Trademarks 17 — 17 Total identifiable intangible assets $ 177,307 $ ( 36,559 ) $ 140,748 __________________________ 1. In connection with the sale of the Healthcare RCM Business, $ 22,068 of the Company's intangible assets, net (as of September 30, 2024) were classified as "Long-term assets held for sale" in the accompanying consolidated balance sheets and were not included in these amounts. Amortization expense for intangible assets for continuing operations amounted to $ 11,379 , $ 10,702 and $ 11,092 during the years ended September 30, 2025, 2024 and 2023, respectively. 106 i3 VERTICALS, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except unit, share and per share amounts) Based on gross carrying amounts at September 30, 2025, the Company's estimate of future amortization expense for intangible assets are presented in this table as follows for each fiscal year ending September 30: 2026 $ 11,222 2027 10,954 2028 10,766 2029 10,739 2030 10,694 Thereafter 81,406 $ 135,781 10. ACCRUED EXPENSES AND OTHER LIABILITIES A summary of the Company's accrued expenses and other current liabilities as of September 30, 2025 and 2024 is as follows: 2025 2024 (1) Accrued wages, bonuses, commissions and vacation $ 6,587 $ 4,673 Accrued interest 155 43 Accrued contingent consideration — current portion 82 518 Escrow liabilities — 2,174 Accrued tax distributions 2,147 24,276 Accrued income tax expense 2,760 30,528 Tax receivable agreement liability — current portion 2,720 9,850 Customer deposits 461 611 Employee health self-insurance liability 13 649 Accrued third-party software expenses 2,674 1,165 Accrued interchange 3,139 1,946 Other accrued liabilities related to the Sale of the Merchant Services Business — 7,887 Accrued liabilities owed to sellers — 334 Other accrued expenses 3,787 3,598 Accrued expenses and other current liabilities $ 24,525 $ 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 (as of September 30, 2024) were classified as "Current liabilities held for sale" in the accompanying consolidated balance sheets and were not included in these amounts. 107 i3 VERTICALS, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except unit, share and per share amounts) A summary of the Company's long-term liabilities as of September 30, 2025 and 2024 is as follows: 2025 2024 Accrued contingent consideration — long-term portion $ 3,489 $ 1,636 Deferred tax liability — long-term 8,994 11,402 Other long-term liabilities 2,361 1,883 Total other long-term liabilities $ 14,844 $ 14,921 11. LONG-TERM DEBT, NET A summary of long-term debt, net as of September 30, 2025 and September 30, 2024 is as follows: Maturity 2025 2024 Revolving lines of credit to banks under the 2023 Senior Secured Credit Facility May 8, 2028 $ — $ — 1.0 % 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 1.00 % 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 108 i3 VERTICALS, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except unit, share and per share amounts) recorded a gain on retirement of debt of $ 2,397 due to the estimated acquisition price exceeding the net carrying 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 cover, 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 underlie the Exchangeable Notes in the aggregate and are 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 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 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 expired over a 90 trading day period that began on May 15, 2025. The Warrants were separate transactions, entered into by the Company 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 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 109 i3 VERTICALS, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except unit, share and per share amounts) 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. 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 September 30, 2025, the Borrower's consolidated interest coverage ratio was 96.8 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 September 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 September 30, 2025). The base rate shall not be less than 1 % in any event. 110 i3 VERTICALS, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (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 < 3.0 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 September 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 . 111 i3 VERTICALS, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except unit, share and per share amounts) Debt issuance costs The Company incurred $ 256 , $ 930 and $ 3,079 in debt issuance costs during the years ended September 30, 2025, 2024 and 2023, respectively. 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 consolidated balance sheets. The amortization of debt issuance costs is included in interest expense and amounted to approximately $ 961 , $ 1,175 and $ 1,514 during the years ended September 30, 2025, 2024 and 2023, respectively. In connection with the replacement of our prior Senior Secured Credit Facility (which was replaced by the 2023 Senior Secured Credit Facility), the Company recorded a debt extinguishment charge of $ 203 during the year ended September 30, 2023, for the write-off of deferred financing costs, which was recorded in interest expense in the consolidated statements of operations. In connection with the Second Amendment to the Credit Agreement, the Company recorded $ 295 during the year ended September 30, 2025, for the write-off of debt issuance costs, which was recorded in interest expense in the consolidated statements of operations. 12. STOCKHOLDERS' EQUITY Share Repurchase Program 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 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 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. 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 and an aggregate repurchase amount (inclusive of commissions and excise taxes) of $ 37,979 during the year ended September 30, 2025, prior to the termination of such program as noted above. The shares of Class A Common Stock purchased during this period represent the total number of shares of Class A Common Stock purchased under the Prior Share Repurchase Program since its adoption. 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. 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 $ 50,000 of outstanding shares of Class A common stock (exclusive of fees, commissions or other expenses related to such repurchases). This New Share Repurchase 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 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 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 terms of the New Share Repurchase Program provide that, immediately prior to repurchases of Class 112 i3 VERTICALS, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except unit, share and per share amounts) 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 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 did not make any repurchases under the New Share Repurchase Program during the year ended September 30, 2025, and the remaining total available authorization as of September 30, 2025, under the New Share Repurchase Program was $ 50,000 . 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. 13. 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 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. There was no material impact to the Company's effective tax rate for the year ended September 30, 2025. The Company's income tax (benefit) expense for continuing operations during the years ended September 30, 2025, 2024 and 2023 were the following: Year ended September 30, 2025 2024 2023 Current: Federal tax expense $ 3,494 $ 2,383 $ 2,363 State tax expense 1,191 735 1,156 Deferred: Federal tax (benefit) expense ( 492 ) 561 ( 8,129 ) State tax expense (benefit) 1,073 ( 9,147 ) 1,103 Income tax expense (benefit) $ 5,266 $ ( 5,468 ) $ ( 3,507 ) 113 i3 VERTICALS, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except unit, share and per share amounts) A reconciliation of income tax expense (benefit) from continuing operations computed at the U.S. federal statutory income tax rate to the Company’s effective income tax rate is as follows: Year ended September 30, 2025 2024 2023 Expected U.S. federal income taxes at statutory rate $ 2,458 22.6 % $ ( 4,518 ) 21.0 % $ ( 5,944 ) 21.0 % Partnership income not taxed at federal level ( 2,134 ) ( 19.7 ) % 476 ( 2.2 ) % 1,813 ( 6.5 ) % Valuation allowance 874 8.0 % 2,331 ( 10.8 ) % ( 1,753 ) 6.2 % State and local income taxes, net of federal benefit 1,383 12.7 % ( 2,716 ) 12.6 % 2,207 ( 7.8 ) % Nondeductible expenses and other permanent items 71 0.7 % 53 ( 0.2 ) % 69 ( 0.2 ) % Revaluation of debt and other debt transaction differences ( 96 ) ( 0.9 ) % ( 261 ) 1.2 % 536 ( 1.9 ) % Equity-based compensation 2,405 22.1 % 11 ( 0.1 ) % 4 — % Change in liability for uncertain tax positions ( 3 ) — % 218 ( 1.0 ) % 155 ( 0.5 ) % Return to provision adjustments 652 6.0 % ( 239 ) 1.1 % ( 290 ) 1.0 % Federal tax credits ( 348 ) ( 3.2 ) % ( 773 ) 3.6 % ( 411 ) 1.5 % Other 4 — % ( 50 ) 0.2 % 107 ( 0.4 ) % Income tax expense (benefit) $ 5,266 48.4 % $ ( 5,468 ) 25.4 % $ ( 3,507 ) 12.4 % 114 i3 VERTICALS, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except unit, share and per share amounts) Deferred income taxes are provided for the temporary differences between the financial reporting basis and tax basis of the Company’s assets and liabilities. Net deferred taxes spanning multiple jurisdictions as of September 30, 2025 and 2024 were as follows: September 30, 2025 2024 Deferred tax assets: Investment in partnership $ 50,997 $ 52,039 Stock-based compensation 13,228 15,241 Accrued expenses 49 59 Net operating loss carryforwards 992 367 Section 163j carryforward 5,003 4,604 Federal tax credits 181 — Operating lease liabilities 154 286 Other 75 17 Gross deferred tax assets 70,679 72,613 Valuation allowance ( 15,026 ) ( 17,631 ) Deferred tax liabilities: Intangible assets ( 15,019 ) ( 17,131 ) Operating lease right of use assets ( 145 ) ( 267 ) Other ( 425 ) ( 541 ) Net deferred tax asset $ 40,064 $ 37,043 Deferred tax assets associated with federal net operating loss carryforwards were $ 213 as of September 30, 2025, and begin to expire 2035. Deferred tax assets for federal tax credits were $ 181 as of September 30, 2025, and begin to expire in 2045. State net operating loss carryforwards as of September 30, 2025 totaled $ 15,217 on a pre-tax-effected basis, resulting in a deferred tax asset of $ 947 . The state net operating loss carryforwards will begin to expire in 2027. The Company maintains a valuation allowance of $ 15,026 against a portion of the gross deferred tax asset, primarily related to the portion of its deductible outside basis difference in its investment in i3 Verticals, LLC, that is capital in nature. The change in the valuation allowance resulted in an increase of $ 874 , an increase of $ 2,331 , and a decrease of $ 1,753 to income tax expense in the years ended September 30, 2025, 2024 and 2023, respectively. If the Company determines that the likelihood of realization of existing deferred tax assets changes, a corresponding increase or decrease to valuation allowances will be recognized as an increase or reduction to income tax expense in the period that determination is made. 115 i3 VERTICALS, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except unit, share and per share amounts) The following table summarizes the activity related to our gross unrecognized tax benefits, excluding accrued interest and penalties, as of September 30, 2025 and 2024, respectively: Gross unrecognized tax benefits as of September 30, 2022 $ 83 Increase in current year tax positions 108 Increase in prior year tax positions 73 Settlements and other reductions 26 Gross unrecognized tax benefits as of September 30, 2023 238 Increase in current year tax positions 197 Increase in prior year tax positions 78 Settlements and other reductions 57 Gross unrecognized tax benefits as of September 30, 2024 456 Increase in current year tax positions 87 Decrease in prior year tax positions ( 116 ) Settlements and other reductions — Gross unrecognized tax benefits as of September 30, 2025 $ 427 Estimated interest and penalties related to the underpayment of income taxes are classified as a component of tax expense in the consolidated statements of operations and totaled $ 26 for the year ended September 30, 2025, and $ 0 for the years ended September 30, 2024 and 2023. As of September 30, 2025, 2024 and 2023, accrued interest and penalties related to income taxes and potential income tax penalties were $ 26 . As of September 30, 2024 and 2023, we had no accrued interest and penalties related to income taxes and potential income tax penalties. These totals are reflected in noncurrent Other long-term liabilities in the consolidated balance sheets The Company is no longer subject to U.S. federal, state, or local examinations by tax authorities for years before 2021. As of September 30, 2025, 2024 and 2023, there were unrecognized tax benefits of $ 427 , $ 456 , and $ 238 , respectively, that if recognized would affect the annual effective tax rate. 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 should 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. 116 i3 VERTICALS, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except unit, share and per share amounts) When Class B common stock is exchanged for Class A common stock, this triggers an increase in the tax basis of the Company's Common Units in i3 Verticals, LLC subject to the provisions of the Tax Receivable Agreement. During the year ended September 30, 2023, the Company acquired an aggregate of 24,748 common units of i3 Verticals, LLC in connection with the redemption of common units, 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 these exchanges, during the year ended September 30, 2023, the Company recognized an increase to its net deferred tax assets in the amount of $ 208 , and corresponding Tax Receivable Agreement liabilities of $ 177 , representing 85 % of the tax benefits due to the Continuing Equity Owners. The Company also recognized a decrease to its net deferred tax assets of $ 932 across all exchanges as a result of a tax rate change during the year ended September 30, 2023. During the year ended September 30, 2024, the Company acquired an aggregate of 60,718 common units of i3 Verticals, LLC in connection with the redemption of common units, 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 these exchanges, during the year ended September 30, 2024, the Company recognized an increase to its net deferred tax assets in the amount of $ 426 , and corresponding Tax Receivable Agreement liabilities of $ 362 , representing 85 % of the tax benefits due to the Continuing Equity Owners. The Company also recognized a decrease to its net deferred tax assets of $ 1,187 across all exchanges as a result of a tax rate change during the year ended September 30, 2024. During the year ended September 30, 2025, the Company acquired an aggregate of 1,281,739 common units of i3 Verticals, LLC in connection with the redemption of common units, 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 these exchanges, during the year ended September 30, 2025, the Company recognized an increase to its net deferred tax assets in the amount of $ 9,398 , and corresponding Tax Receivable Agreement liabilities of $ 6,211 , representing 85 % of the tax benefits due to the Continuing Equity Owners. The Company also recognized a decrease to its net deferred tax assets of $ 805 across all exchanges as a result of a tax rate change during the year ended September 30, 2025. The deferred tax asset balance was $ 37,872 as of September 30, 2025. The Company also has a corresponding Tax Receivable Agreement liability of $ 34,911 , of which $ 2,720 was recorded in accrued expenses and other current liabilities and $ 32,191 was recorded in long-term tax receivable agreement obligations as of September 30, 2025. Payments to the Continuing Equity Owners related to exchanges through September 30, 2025 will range from $ 0 to $ 5,364 per year and are expected to be paid over the next 22 years. The amounts recorded as of September 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. 117 i3 VERTICALS, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except unit, share and per share amounts) 14. 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 September 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 for continuing operations at September 30, 2025 and 2024 was four years for both periods. The Company had no significant short-term leases during the years ended September 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 7.0 % and 8.0 % as of September 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 for the years ended September 30, 2025, 2024 and 2023, were $ 2,072 , $ 2,829 and $ 2,924 , respectively, which are included in selling, general and administrative expenses in the consolidated statements of operations. Total variable lease costs within operating lease costs from continuing operations were not significant for the years ended September 30, 2025, 2024 and 2023. The variable lease costs 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 were not significant for the years ended September 30, 2025, 2024 and 2023. Short-term rent expense is included in selling, general and administrative expenses in the consolidated statements of operations. As of September 30, 2025, maturities of lease liabilities for continuing operations are as follows: Years ending September 30: 2026 $ 2,185 2027 1,465 2028 682 2029 591 2030 515 Thereafter 106 Total future minimum lease payments (undiscounted) (1) 5,544 Less: present value discount ( 753 ) Present value of lease liability $ 4,791 _________________________ 1. Total future minimum lease payments excludes payments of $ 69 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. 118 i3 VERTICALS, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except unit, share and per share amounts) 15. 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 September 30, 2025 and 2024, because of the relatively short maturity dates on these instruments. The carrying amount of debt approximates fair value as of September 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, 2023 (1) $ 7,329 Contingent consideration accrued at time of business combination 2,130 Change in fair value of contingent consideration included in Operating expenses 22 Contingent consideration paid ( 7,327 ) Balance at September 30, 2024 (2) 2,154 Contingent consideration accrued at time of business combination 1,260 Change in fair value of contingent consideration included in Operating expenses 234 Contingent consideration paid ( 77 ) Balance at September 30, 2025 $ 3,571 __________________________ 1. In connection with the sale of the Healthcare RCM Business, $ 19 and $ 891 of the Company's accrued contingent consideration (as of September 30, 2023) were classified as "Current liabilities held for sale" and "Long-term liabilities held for sale", respectively, in the accompanying consolidated balance sheets and were not included in these amounts. 2. In connection with the sale of the Healthcare RCM Business, $ 198 of the Company's accrued contingent consideration (as of September 30, 2024) were classified as "Current liabilities held for sale" in the accompanying consolidated balance sheets and were not included in these 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 119 i3 VERTICALS, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except unit, share and per share amounts) 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 $ 82 and $ 518 of contingent consideration was recorded in accrued expenses and other current liabilities as of September 30, 2025 and 2024, respectively. Approximately $ 3,489 and $ 1,636 of contingent consideration was recorded in other long-term liabilities as of September 30, 2025 and 2024, respectively. 16. EQUITY-BASED COMPENSATION A summary of equity-based compensation expense for continuing operations recognized during the years ended September 30, 2025, 2024 and 2023 is as follows: Year ended September 30, 2025 2024 2023 Stock options $ 6,613 $ 11,850 $ 18,349 Restricted stock units 8,619 3,546 2,515 Equity-based compensation expense $ 15,232 $ 15,396 $ 20,864 In connection with the sale of the Merchant Services Business and Healthcare RCM Business, $ 3,112 , $ 10,942 and $ 7,014 of the Company's equity-based compensation expense was classified as "net income from discontinued operations" in the accompanying consolidated statements of operations during the years ended September 30, 2025, 2024, and 2023, respectively. Amounts are included in other costs of services and in selling, general and administrative expense on the consolidated statements of operations. Current and deferred income tax benefits for continuing operations of $ 78 , $ 2,668 and $ 3,784 were recognized related to equity-based compensation during the years ended September 30, 2025, 2024, and 2023, 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 year, beginning with the 2019 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 September 30, 2025, there were 2,541,852 shares of equity awards available to grant under the 2018 Plan. 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 September 30, 2025, there were 1,914,822 shares of equity awards available for grant under the 2020 Inducement Plan. 120 i3 VERTICALS, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except unit, share and per share amounts) 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. The Company has issued stock option awards under the 2018 Plan and the 2020 Inducement Plan. The fair value of the stock option awards during the years ended September 30, 2025 and 2024 was determined on the grant date using the Black-Scholes valuation model based on the following weighted-average assumptions: September 30, 2025 September 30, 2024 Expected volatility (1) 49.8 % 52.1 % Expected dividend yield (2) — % — % Expected term (3) 6 years 6 years Risk-free interest rate (4) 4.1 % 4.1 % _________________ 1. For the year ended September 30, 2025, expected volatility is based on the volatility of the Company's own share price. For the year ended September 30, 2024, expected volatility is based on the historical volatility of a selected peer group over a period equivalent to the expected term. 2. The Company has assumed a dividend yield of zero as management has no plans to declare dividends in the foreseeable future. 3. Expected term represents the estimated period of time until an award is exercised and was determined using the simplified method as details of employee exercise behavior are limited due to limited historical data. 4. The risk-free rate is an interpolation of yields on U.S. Treasury securities with maturities equivalent to the expected term. A summary of stock option activity for the year ended September 30, 2025 is as follows: Stock Options Weighted Average Exercise Price Outstanding at September 30, 2024 9,120,944 $ 24.48 Granted 140,000 25.62 Exercised ( 1,137,563 ) 23.02 Forfeited and cancelled ( 242,145 ) 27.63 Outstanding at September 30, 2025 7,881,236 $ 24.61 Exercisable at September 30, 2025 6,650,666 $ 25.11 The weighted-average grant date fair value of stock options granted during the year ended September 30, 2025 was $ 13.66 . As of September 30, 2025, there were 7,881,236 stock options outstanding, of which 6,650,666 were exercisable. As of September 30, 2025, total unrecognized compensation expense related to unvested stock options, including an estimate for pre-vesting forfeitures, was $ 10,174 , which is expected to be recognized over a weighted-average period of 2.2 years. The total fair value of stock options that vested during the year ended September 30, 2025 was $ 11,942 . In connection with the sale of the Merchant Services Business, during the year ended September 30, 2024, the Company fully accelerated the vesting period for 188,482 options (to the extent not previously vested) held by employees of the Merchant Services Business immediately prior to the closing of the divestiture. In connection with the sale of the Healthcare RCM Business, during the year ended September 30, 2025, 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. 121 i3 VERTICALS, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except unit, share and per share amounts) Restricted Stock Units The Company has issued Class A common stock in the form of restricted stock units ("RSUs") under the 2018 Plan. A summary of activity related to restricted stock units as of September 30, 2025 is as follows: Restricted Stock Units Weighted Average Exercise Price Outstanding at September 30, 2024 771,214 $ 22.71 Granted 755,649 26.58 Vested ( 299,763 ) 23.55 Forfeited and cancelled ( 66,459 ) 23.30 Outstanding at September 30, 2025 1,160,641 $ 24.89 The weighted-average grant date fair value of RSUs granted during the year ended September 30, 2025 was $ 26.58 . As of September 30, 2025, total unrecognized compensation expense related to unvested RSUs, including an estimate for pre-vesting forfeitures, was $ 17,645 , which is expected to be recognized over a weighted average period of 2.8 years. The total fair value of RSUs that vested during the year ended September 30, 2025 was $ 7,220 . In connection with the sale of the Merchant Services Business, during the year ended September 30, 2024, the Company fully accelerated the vesting period for 173,230 RSUs (to the extent not previously vested) held by employees of the Merchant Services Business immediately prior to the closing of the divestiture. In connection with the sale of the Healthcare RCM Business, during the year ended September 30, 2025, 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. 17. COMMITMENTS AND CONTINGENCIES Leases The Company utilizes office space and equipment under operating leases. Rent expense from continuing operations under these leases amounted to $ 2,236 , $ 2,859 and $ 2,927 during the years ended September 30, 2025, 2024 and 2023, respectively. Refer to Note 14 for further discussion and a table of the future minimum payments under these leases. 122 i3 VERTICALS, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except unit, share and per share amounts) Contract Commitments We have contractual obligations primarily for third-party technology services and licenses. Certain agreements are fixed for the duration of the contracts and may require us to pay minimum fees. As of September 30, 2025, the remaining aggregate minimum contractual commitment under these arrangements was approximately $ 15,857 , which exclude contract commitments that have been prepaid. Future minimum payments, including contracts with a remaining term of less than one year, based on these contractual agreements are as follows: Years ending September 30: 2026 $ 7,953 2027 6,654 2028 1,042 2029 61 2030 13 Thereafter 134 Total $ 15,857 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. 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 (as amended on October 10, 2025, 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 damages claimed in the Complaint 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. PaySchools filed a motion to dismiss the Complaint on October 30, 2025, which remains pending. 123 i3 VERTICALS, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (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. 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. 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. 18. 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 124 i3 VERTICALS, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except unit, share and per share amounts) 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 13 for further information. As of September 30, 2025, the total amount due under the Tax Receivable Agreement was $ 34,911 . 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 i3 Verticals, LLC. 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). 19. SEGMENT REPORTING The Company determines its operating segments based on ASC 280, Segment Reporting , in alignment with how the chief operating decision monitors and manages the performance of the business as well as the level at which financial information is reviewed. The accounting policies of the Company’s one reportable segment are the same as those described in the summary of significant accounting policies in Note 3. As noted above, on September 20, 2024, the Company completed the transactions contemplated by the 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 125 i3 VERTICALS, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except unit, share and per share amounts) Company no longer presents a Merchant Services segment. See Note 2 to our 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 Healthcare RCM Acquired Entities, which owned and operated the Healthcare RCM Business, including its associated proprietary technology. 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 have been reflected as discontinued operations in our consolidated financial statements, and the Company no longer presents a Healthcare segment. See Note 2 to our consolidated financial statements for additional information. 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 determined that it had one operating segment and one reportable segment as of June 30, 2025, and accordingly has updated its segment presentation to reflect this determination. This change in our segment presentation is consistent with how the chief operating decision maker ("CODM"), the Company's Chief Executive Officer, 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. The Company has one operating and reportable segment, which derives revenues from a broad range of offerings tailored to its market. The Company's revenue is primarily derived from enterprise software solutions, which can include SaaS, transaction-based fees, ongoing software maintenance and support, software licenses, and other professional services related to the Company's software offerings. Additional revenue is derived from enabling payments within the Company's software platforms. 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 Consolidated Statements of Operations. The CODM uses this key measure to evaluate operating performance and considers budget-to-actual variances on a quarterly basis when making decisions about the allocation of operating and capital resources to the segment. 126 i3 VERTICALS, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except unit, share and per share amounts) The following is a summary of reportable segment operating performance and significant expenses, reconciled to the Company's consolidated net income (loss) for continuing operations for the years ended September 30, 2025, 2024 and 2023: As of and for the Year ended September 30, 2025 2024 2023 Revenue $ 213,158 $ 191,232 $ 189,681 Less: Other costs of services (excluding depreciation and amortization) (1) 65,847 59,638 53,294 People operating expenses (1) 62,936 56,140 59,203 Technology operating expenses (1) 8,887 7,340 6,500 Other operating expenses (2) 17,953 17,651 18,892 Other segment expenses (3) 51,917 66,508 76,600 Net income $ 5,618 $ ( 16,045 ) $ ( 24,808 ) ____________________ 1. Refer to Note 3 for discussion of the change in the current and prior period presentation. 2. Other operating expenses includes rent expense, travel and entertainment, office expense, professional services expense, advertising and trade shows expense and immaterial miscellaneous other operating expenses. 3. Other segment expenses includes stock compensation expense, M&A-related expenses, other taxes and one-time expenses, depreciation and amortization, change in fair value of contingent consideration, interest expense, other (income) expense, and income tax expense. Revenues from external customers are attributed to geographic areas based on the location of the customer. For the years ended September 30, 2025, 2024 and 2023, the majority of the Company’s revenues were derived from customers located in the United States, the Company’s country of domicile. Revenues from foreign countries, primarily Canada, were not considered significant for separate disclosure. The basis for attributing revenues to geographic areas is the location of the customer receiving the goods or services. The Company has not disclosed expenditures on long-lived assets as such expenditures are not reviewed by or provided to the chief operating decision maker. The measure of segment assets is reported on the balance sheet as total consolidated assets. 20. 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 September 30, 2025, and 2024, respectively, i3 Verticals, Inc. owned 23,983,125 and 23,882,035 of i3 Verticals, LLC's Common Units, representing a 74.1 % and 70.4 % economic ownership interest in i3 Verticals, LLC. 127 i3 VERTICALS, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except unit, share and per share amounts) The following table summarizes the impact on equity due to changes in the Company's ownership interest in i3 Verticals, LLC: Year ended September 30, 2025 2024 2023 Net income (loss) attributable to non-controlling interest $ 8,630 $ 61,789 $ ( 1,841 ) Transfers to (from) non-controlling interests: Distributions to non-controlling interest holders ( 3,021 ) ( 25,608 ) — Redemption of common units in i3 Verticals, LLC ( 18,301 ) ( 576 ) ( 224 ) Recapitalization from contribution to i3 Verticals, LLC 5,689 — — Allocation of equity (from) to non-controlling interests ( 481 ) 8,470 4,305 Net transfers (from) to non-controlling interests ( 16,114 ) ( 17,714 ) 4,081 Change from net income attributable (from) to non-controlling interests and transfers to non-controlling interests $ ( 7,484 ) $ 44,075 $ 2,240 See Note 18 for information regarding certain recapitalization actions the Company and i3 Verticals, LLC effected during the year ended September 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. 128 i3 VERTICALS, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except unit, share and per share amounts) 21. 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. 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: Year ended September 30, 2025 2024 2023 Basic and diluted net income (loss) per share: Numerator Net income (loss) $ 5,618 $ ( 16,045 ) $ ( 24,808 ) Less: Net income (loss) attributable to non-controlling interests 1,991 ( 5,191 ) ( 8,192 ) Net income (loss) attributable to Class A common stockholders $ 3,627 $ ( 10,854 ) $ ( 16,616 ) Denominator Weighted average shares of Class A common stock outstanding 23,911,250 23,419,421 23,137,586 Basic and diluted net income (loss) per share (2) $ 0.15 $ ( 0.46 ) $ ( 0.72 ) Dilutive net income per share: Numerator Net income attributable to Class A common stockholders - diluted (1) $ 3,627 Denominator Weighted average shares of Class A common stock outstanding 23,911,250 Weighted average effect of dilutive securities (1) 1,159,588 Weighted average shares of Class A common stock outstanding - diluted 25,070,838 Diluted net income per share $ 0.14 ____________________ 1. For the year ended September 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: a. 9,114,846 shares of weighted average Class A common stock along with the reallocation of net income assuming conversion of these shares (which represents the tax effected net income attributable to non-controlling interest using the effective income tax rates described in Note 13 above and assuming all common units of i3 Verticals, LLC were exchanged for Class A common stock at the beginning of the period), were excluded because the effect would have been anti-dilutive, and b. 3,421,605 stock options 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. 2. For the years ended September 30, 2024 and 2023, 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 earnings per share of Class A common stock: a. 10,067,399 and 10,109,247 shares of weighted average Class A common stock for the years ended September 30, 2024 and 2023, respectively, along with the reallocation of net income assuming conversion of these shares (which represents the tax effected net income attributable to non-controlling interest using the effective income tax rates described in Note 13 above and assuming all common units of i3 Verticals, LLC were exchanged for Class A common stock at the beginning of the period), were excluded because the effect would have been anti-dilutive, b. 7,701,564 and 5,580,144 options to purchase shares of Class A common stock for the years ended September 30, 2024 and 2023, respectively, were excluded because the exercise price of these options exceeded the average market price of the Company's Class A common stock during the period (“out-of-the-money”) and the effect of including them would have been anti-dilutive, and 129 i3 VERTICALS, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except unit, share and per share amounts) c. 392,343 and 723,898 shares of Class A common stock for the years ended September 30, 2024 and 2023, respectively, resulting from estimated stock option exercises and restricted stock units vesting as calculated by the treasury stock method were excluded because the effect of including them would have been anti-dilutive. 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: Year ended September 30, 2025 2024 2023 Basic net income per share: Numerator Net income $ 20,885 $ 191,175 $ 22,156 Less: Net income attributable to non-controlling interests 6,639 66,980 6,351 Net income attributable to Class A common stockholders $ 14,246 $ 124,195 $ 15,805 Denominator Weighted average shares of Class A common stock outstanding 23,911,250 23,419,421 23,137,586 Basic net income per share (3) $ 0.60 $ 5.30 $ 0.68 Dilutive net income per share: Numerator Net income attributable to Class A common stockholders $ 14,246 Reallocation of net income assuming conversion of common units (1) 5,066 Net income attributable to Class A common stockholders - diluted $ 19,312 Denominator Weighted average shares of Class A common stock outstanding 23,911,250 Weighted average effect of dilutive securities (2) 10,274,434 Weighted average shares of Class A common stock outstanding - diluted 34,185,684 Diluted net income per share $ 0.56 __________________________ 1. 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 13 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. 2. For the years ended September 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: a. 3,421,605 stock options 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. 3. For the years ended September 30, 2024 and 2023, 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 income per share of Class A common stock for discontinued operations: a. 10,067,399 and 10,109,247 shares of weighted average Class A common stock for the years ended September 30, 2024 and 2023, respectively, along with the reallocation of net income assuming conversion of these shares, were excluded because the effect would have been anti-dilutive, b. 7,701,564 and 5,580,144 stock options for the years ended September 30, 2024 and 2023, respectively, were excluded because the exercise price of these stock options exceeded the average market price of the Company's Class A common stock during the period (“out-of-the-money”) and the effect of including them would have been anti-dilutive, and c. 392,343 and 723,898 shares of Class A common stock for the years ended September 30, 2024 and 2023, respectively, resulting from estimated stock option exercises and restricted stock units vesting as calculated by the treasury stock method were excluded because the effect of including them would have been anti-dilutive. 130 i3 VERTICALS, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (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 consolidated operations: Year ended September 30, 2025 2024 2023 Basic net income (loss) per share: Numerator Net income (loss) $ 26,503 $ 175,130 $ ( 2,652 ) Less: Net income (loss) attributable to non-controlling interests 8,630 61,789 ( 1,841 ) Net income (loss) attributable to Class A common stockholders $ 17,873 $ 113,341 $ ( 811 ) Denominator Weighted average shares of Class A common stock outstanding 23,911,250 23,419,421 23,137,586 Basic net income (loss) per share $ 0.75 $ 4.84 $ ( 0.04 ) Dilutive net income (loss) per share: Numerator Net income (loss) attributable to Class A common stockholders $ 17,873 $ 113,341 $ ( 811 ) Reallocation of net income (loss) assuming conversion of common units (1) 6,586 46,978 ( 1,391 ) Net income (loss) attributable to Class A common stockholders - diluted $ 24,459 $ 160,319 $ ( 2,202 ) Denominator Weighted average shares of Class A common stock outstanding 23,911,250 23,419,421 23,137,586 Weighted average effect of dilutive securities (2) 10,274,434 10,459,742 10,109,247 Weighted average shares of Class A common stock outstanding - diluted 34,185,684 33,879,163 33,246,833 Diluted net income (loss) per share $ 0.72 $ 4.73 $ ( 0.07 ) __________________________ 1. 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 13 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. 2. For the years ended September 30, 2025, 2024 and 2023 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: a. 3,421,605 , 7,701,564 and 5,580,144 stock options for the years ended September 30, 2025, 2024 and 2023, respectively, were excluded because the exercise price of these stock options exceeded the average market price of the Company's Class A common stock during the period (“out-of-the-money”) and the effect of including them would have been anti-dilutive, and b. 723,898 shares for the year ended September 30, 2023 resulting from estimated stock option exercises and restricted stock units vesting as calculated by the treasury stock method were excluded because the effect of including them would have been anti-dilutive. 131 i3 VERTICALS, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except unit, share and per share amounts) Since 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 income per share, if applicable. The conversion spread would have a dilutive impact on diluted net income per share of common stock when the average market price of the Company's Class A common stock for a given period exceeds the exchange price of $ 40.87 per share for the Exchangeable Notes. The Exchangeable Notes matured in February 2025 and the Company 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 have been issued upon exercise of the Warrants would be included in the weighted average shares of Class A common stock outstanding—diluted using the treasury stock method. The Note Hedge Transactions purchased in connection with the issuance of the Exchangeable Notes were considered to be anti-dilutive and therefore did 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 11 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. 22. SIGNIFICANT NON-CASH TRANSACTIONS The Company engaged in the following significant non-cash investing and financing activities during the years ended September 30, 2025, 2024, and 2023, which are reported on a consolidated basis. See Note 2 for significant non-cash investing and financing activities from discontinued operations for major captions on the consolidated financial statements. Year ended September 30, 2025 2024 2023 Restricted Class A common stock issued as part of acquisition purchase consideration (Note 5) $ — $ 7,517 $ 2,000 Acquisition date fair value of contingent consideration in connection with business combinations $ 1,260 $ 2,130 $ 760 Residual buyouts financed through principal and interest forgiveness of a loan $ — $ — $ 5,860 Replacement of the Prior Senior Secured Credit Facility with the 2023 Senior Secured Credit Facility $ — $ — $ 284,000 Debt issuance costs financed with proceeds from the 2023 Senior Secured Credit Facility $ — $ — $ 2,386 Accrued interest financed with proceeds from the 2023 Senior Secured Credit Facility $ — $ — $ 1,617 Right-of-use assets obtained in exchange for operating lease obligations $ 288 $ 2,605 $ 927 132 i3 VERTICALS, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except unit, share and per share amounts) 23. QUARTERLY INFORMATION (UNAUDITED) The tables below present summarized unaudited quarterly results of operations for the years ended September 30, 2025 and 2024. Management believes that all necessary adjustments have been included in the amounts stated below for a fair presentation of the results of operations for the periods presented when read in conjunction with the consolidated financial statements for the years ended September 30, 2025 and 2024. Results of operations for a particular quarter are not necessarily indicative of results of operations for an annual period and are not predictive of future periods. Three Months Ended September 30, June 30, March 31, December 31, Fiscal Year 2025: Revenue $ 54,901 $ 51,901 $ 54,135 $ 52,221 Other costs of services 17,698 16,733 16,580 15,576 Income (loss) from operations 1,476 ( 4,813 ) 5,061 2,053 Net income (loss) from continuing operations attributable to i3 Verticals, Inc. 1,163 ( 410 ) 1,019 1,855 Net income (loss) from discontinued operations attributable to i3 Verticals, Inc. 1,926 13,292 ( 1,173 ) 201 Net income (loss) attributable to i3 Verticals, Inc. $ 3,089 $ 12,882 $ ( 154 ) $ 2,056 Basic net income (loss) per share from continuing operations attributable to i3 Verticals, Inc $ 0.05 $ ( 0.02 ) $ 0.04 $ 0.08 Diluted net income (loss) per share from continuing operations attributable to i3 Verticals, Inc. (1)(8) $ 0.04 $ ( 0.03 ) $ 0.04 $ 0.08 Basic net income (loss) per share from discontinued operations attributable to i3 Verticals, Inc $ 0.08 $ 0.55 $ ( 0.05 ) $ 0.01 Diluted net income (loss) per share from discontinued operations attributable to i3 Verticals, Inc. (2)(3)(8) $ 0.07 $ 0.55 $ ( 0.05 ) $ 0.01 Fiscal Year 2024: Revenue $ 51,323 $ 46,183 $ 48,504 $ 45,222 Other costs of services 16,094 15,287 15,194 13,942 Income (loss) from operations 3,411 ( 1,310 ) 1,979 276 Net income (loss) from continuing operations attributable to i3 Verticals, Inc. 6,462 ( 11,799 ) ( 1,982 ) ( 3,535 ) Net income from discontinued operations attributable to i3 Verticals, Inc. 111,448 4,254 3,860 4,633 Net income (loss) attributable to i3 Verticals, Inc. $ 117,910 $ ( 7,545 ) $ 1,878 $ 1,098 Basic net income (loss) per share from continuing operations attributable to i3 Verticals, Inc. $ 0.27 $ ( 0.50 ) $ ( 0.08 ) $ ( 0.15 ) Diluted net income (loss) per share from continuing operations attributable to i3 Verticals, Inc. (4)(5)(8) $ 0.19 $ ( 0.50 ) $ ( 0.08 ) $ ( 0.15 ) Basic net income per share from discontinued operations attributable to i3 Verticals, Inc $ 4.71 $ 0.18 $ 0.17 $ 0.20 Diluted net income per share from discontinued operations attributable to i3 Verticals, Inc. (6)(7)(8) $ 4.61 $ 0.18 $ 0.17 $ 0.20 133 i3 VERTICALS, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except unit, share and per share amounts) 1. For the three months ended September 30, 2025; June 30, 2025; March 31, 2025; and December 31, 2024, 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 from continuing operations: a. 9,408,427 weighted average shares of Class B common stock for the three months ended March 31, 2025, along with the reallocation of net income assuming conversion of these shares, were excluded because the effect would have been anti-dilutive, b. 1,681,255 , 4,362,416 , 4,227,718 and 6,236,721 stock options for the three months ended September 30, 2025; June 30, 2025; March 31, 2025; and December 31, 2024, respectively, were excluded because the exercise price of these stock options exceeded the average market price of the Company's Class A common stock during the period (“out-of-the-money”) and the effect of including them would have been anti-dilutive. 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. 2. For the three months ended September 30, 2025, March 31, 2025 and December 31, 2024, 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 from discontinued operations: a. 9,408,427 and 10,026,180 weighted average shares of Class B common stock for the three months ended March 31, 2025, and December 31, 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. 1,681,255 , 4,227,718 and 6,236,721 stock options for the three months ended September 30, 2025, March 31, 2025, and December 31, 2024, were excluded because the exercise price of these stock options exceeded the average market price of the Company's Class A common stock during the period (“out-of-the-money”) and the effect of including them would have been anti-dilutive, and c. 299,505 shares for the three months ended March 31, 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. 3. For the three months ended June 30, 2025, 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 from discontinued operations: a. 8,637,499 weighted average shares of Class B common stock, along with the reallocation of net income assuming conversion of these shares, were excluded, b. 4,362,416 stock options were excluded because the exercise price of these stock options exceeded the average market price of the Company's 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 resulting from estimated stock option exercises and restricted stock units vesting as calculated by the treasury stock method were excluded. 4. For the three months ended September 30, 2024 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 from continuing operations: a. 6,679,386 stock options were excluded because the exercise price of these stock options exceeded the average market price of the Company's Class A common stock during the period (“out-of-the-money”) and the effect of including them would have been anti-dilutive. 5. For the three months ended June 30, 2024; March 31, 2024; December 31, 2023, 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 from continuing operations: a. 10,052,017 , 10,091,604 and 10,093,394 weighted average shares of Class B common stock for the three months ended June 30, 2024; March 31, 2024; and December 31, 2023, 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 , 7,852,595 and 7,496,394 stock options for the three months ended June 30, 2024; March 31, 2024; and December 31, 2023, respectively, were excluded because the exercise price of these stock options exceeded the average market price of the Company's 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 , 387,235 and 467,777 shares for the three months ended June 30, 2024; March 31, 2024; and December 31, 2023, 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. 134 i3 VERTICALS, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except unit, share and per share amounts) 6. For the three months ended September 30, 2024 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 from discontinued operations: a. 6,679,386 stock options were excluded because the exercise price of these stock options exceeded the average market price of the Company's Class A common stock during the period (“out-of-the-money”) and the effect of including them would have been anti-dilutive. 7. For the three months ended June 30, 2024; March 31, 2024; and December 31, 2023, 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 from discontinued operations: a. 10,052,017 , 10,091,604 , and 10,093,394 weighted average shares of Class B common stock for the three months ended June 30, 2024; March 31, 2024; and December 31, 2023, respectively, along with the reallocation of net income assuming conversion of these shares, were excluded, b. 7,764,984 , 7,852,595 , and 7,496,394 stock options for the three months ended June 30, 2024; March 31, 2024; and December 31, 2023, respectively, were excluded because the exercise price of these stock options exceeded the average market price of the Company's 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 , 387,235 , and 467,777 shares for the three months ended June 30, 2024; March 31, 2024; and December 31, 2023, respectively, resulting from estimated stock option exercises and restricted stock units vesting as calculated by the treasury stock method were excluded. 8. 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 13 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. 135 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures None.