What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-05-08 compared with 2026-02-06 · 165 added, 100 removed, 295 unchanged (47% of the section changed)

30 unchanged sentences

• risk of chargeback liabilities if our customers refuse or cannot reimburse chargebacks resolved in favor of their customers;

• risks related to laws, regulations and industry standards, including our ability to comply with complex laws and regulations applicable to the industries in which we operate or to adjust our operations in response to changing laws and regulations, such as the evolving legal, ethical and regulatory landscape over artificial intelligence technologies;

• the impact of recent decisions of the U.S.

• risks related to laws, regulations and industry standards, including our ability to comply with complex laws and regulations applicable to the industries in which we operate or to adjust our operations in response to changing laws and regulations, such as the evolving legal, ethical, regulatory and operational landscape related to artificial intelligence technologies;

• the impact of decisions of the U.S.

Supreme Court regarding the actions of federal agencies;

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Economic Trends

Inflationary pressures, elevated interest rate levels, monetary policy, the current geopolitical situation (including the military conflicts in the Middle East and Ukraine), tariff and trade-related developments, and budgetary and political pressures to reduce government spending are causing broad economic uncertainty and could potentially cause new, or exacerbate existing, economic challenges that may impact us.

For example, we have business operations in Canada, and the determination of Canadian governmental authorities or businesses to cancel or not renew contracts, or otherwise reduce business, with U.S.

companies as a result of current trade tensions with the United States, as has been advocated by certain Canadian governmental authorities, could adversely impact our financial results.

Inflationary pressures, elevated interest rate levels, monetary policy, the current geopolitical situation (including military conflicts in the Middle East and Ukraine), tariff and trade-related developments, and budgetary and political pressures to reduce government spending are causing broad economic uncertainty and could potentially cause new, or exacerbate existing, economic challenges that may impact us.

The future magnitude, duration and effects of these macroeconomic and geopolitical conditions are difficult to predict, and as such we are unable to predict the extent of the potential effect of these conditions on our financial results.

At December 31, 2025, we had $37.5 million of cash and cash equivalents and $400.0 million of available capacity under our 2023 Senior Secured Credit Facility subject to our financial covenants.

As of December 31, 2025, we were in compliance with these covenants with a consolidated interest coverage ratio and total leverage ratio 94.9x, and 0.0x, respectively.

For additional information about our Exchangeable Notes and 2023 Senior Secured Credit Facility, see the section entitled “Liquidity and Capital Resources” below.

At March 31, 2026, we had $7.1 million of cash and cash equivalents and $319.0 million of available capacity under our 2023 Senior Secured Credit Facility subject to our financial covenants.

As of March 31, 2026, we were in compliance with these covenants with a consolidated interest coverage ratio and total leverage ratio 16.2x, and 1.2x, respectively.

For additional information about our 2023 Senior Secured Credit Facility, see the section entitled “Liquidity and Capital Resources” below.

Sale of Healthcare RCM Business

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On September 20, 2024, i3 Verticals, LLC, and i3 Holdings Sub, Inc., a wholly-owned subsidiary of i3 Verticals, LLC (“Corporation Seller,” and collectively with i3 Verticals, LLC, the “Merchant Services Sellers”) completed the transactions (such closing, the “Closing”) contemplated by that certain Securities Purchase Agreement dated as of June 26, 2024 (the “Merchant Services Purchase Agreement”), by and among i3 Verticals, LLC, Corporation Seller, the Company (solely for the purpose of providing a guaranty of the obligations of the Merchant Services Sellers as set forth in the Merchant Services Purchase Agreement), Payroc Buyer, LLC (“Merchant Services Buyer”), and Payroc WorldAccess, LLC (solely for the purpose of providing a guaranty of the obligations of Merchant Services Buyer as set forth in the Merchant Services Purchase Agreement).

Pursuant to the terms of the Merchant Services Purchase Agreement, the Merchant Services Sellers sold to Merchant Services Buyer the equity interests of certain direct and indirect wholly-owned subsidiaries of the Merchant Services Sellers (the “Merchant Services Acquired Entities”) primarily comprising the Company's merchant services business, including its associated proprietary technology (the “Merchant Services Business”), after giving effect to the contribution of certain assets and the assignment of certain liabilities associated with the Merchant

Services Business from i3 Verticals, LLC and certain affiliates to the Merchant Services Acquired Entities pursuant to a contribution agreement which was entered into immediately prior to the Closing.

Pursuant to the terms of the Merchant Services Purchase Agreement, Merchant Services Buyer paid to the Merchant Services Sellers an aggregate purchase price of approximately $439.5 million paid in cash at closing, after giving effect to post-closing net working capital, indebtedness and cash adjustments.

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Our acquisitions have increased the number of businesses and organizations to whom we provide solutions and augmented our existing proprietary payment facilitator platform and software solutions and capabilities.

Recent acquisitions

Effective January 1, 2026, we completed the acquisition of a business that operates in the transportation market at the state level.

Acquisitions during the six months ended March 31, 2026

During the six months ended March 31, 2026, we completed the acquisition of a business that operates in the transportation market at the state level.

The acquired business provides driver and motor vehicle insurance verification solutions.

Total purchase consideration was $60.0 million in cash payable at closing (which amount is subject to post-closing adjustment) funded by proceeds from our revolving credit facility and cash on hand, plus an additional amount of cash contingent consideration payable following the closing in an amount up to $20.0 million dependent upon the achievement of specified financial performance targets (as defined in the purchase agreement) following the closing, which contingent consideration is still being valued for purposes of our financial statements.

Acquisitions during the three months ended December 31, 2025

During the three months ended December 31, 2025, we did not complete any acquisitions.

Acquisitions during the three months ended December 31, 2024

During the three months ended December 31, 2024, we did not complete any acquisitions.

Total purchase consideration was $60.0 million in cash payable at closing funded by proceeds from our revolving credit facility and cash on hand, plus an additional amount of cash contingent consideration payable following the closing in an amount of up to $20.0 million, dependent upon the achievement of specified financial performance targets, as defined in the purchase agreement, for performance periods extending through May 2028.

The acquisition date estimated fair value of such cash contingent consideration is $7.6 million.

Acquisitions during the six months ended March 31, 2025

During the six months ended March 31, 2025, we did not complete any acquisitions.

Our Revenue and Expenses

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These fees are presented net of revenue.

Other costs of services .

Other costs of services include costs directly related to our software and related services, including personnel costs related to installation of our software, conversion of client data, training client personnel, customer support activities and various other services provided directly to customers and hosting and related software costs for directly supporting our customers.

Additionally, other costs of services include costs directly attributable related to payment processing services such as processing and bank sponsorship.

Losses resulting from chargebacks against a customer are included in other cost of services.

Costs of services .

Costs of services include costs directly related to our software and related services, including personnel costs related to installation of our software, conversion of client data, training client personnel, customer support activities and various other services provided directly to customers and hosting and related software costs for directly supporting our customers.

Additionally, costs of services include costs directly attributable related to payment processing services such as processing and bank sponsorship.

Losses resulting from chargebacks against a customer are included in costs of services.

Residual payments to our distribution partners and the cost of equipment sold is also included in cost of services.

Amortization arising from capitalized software development is not included in other cost of services.

Other costs of services are recognized at the time the related revenue is recognized.

Amortization arising from capitalized software development is not included in costs of services.

Costs of services are recognized at the time the related revenue is recognized.

Selling, general and administrative .

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The active contracts at the end of a reporting period used in calculating ARR may or may not be extended or renewed by our customers.

ARR from continuing operations for the three months ended December 31, 2025 and 2024 was $169.6 million and $156.4 million, respectively, representing a period-to-period growth rate of 8.4%.

ARR from continuing operations for the three months ended March 31, 2026 and 2025 was $183.5 million and $164.5 million, respectively, representing a period-to-period growth rate of 11.6%.

Adjusted EBITDA margin is used by the Company to measure operating performance and for purposes of making decisions.

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Prior period results of operations and balance sheet information have been recast to reflect this presentation, and the discussion below relates to our continuing operations after giving effect to the reclassification for the Merchant Services Business and the Healthcare RCM Business as discontinued operations.

Three Months Ended December 31, 2025 Compared to Three Months Ended December 31, 2024

Three Months Ended March 31, 2026 Compared to Three Months Ended March 31, 2025

The following table presents our historical results of operations for the periods indicated:

Three Months Ended December 31, Change

Three Months Ended March 31, Change

(in thousands) 2026 2025 Amount %

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Operating expenses

Other costs of services (excluding depreciation and amortization)

Costs of services (excluding depreciation and amortization)

17,138 16,580 558 3.4 %

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Depreciation and amortization 7,703 6,998 705 10.1 %

Change in fair value of contingent consideration (374) 1,252 (1,626) n/m

Change in fair value of contingent consideration (124) (786) 662 (84.2) %

Total operating expenses 53,775 49,074 4,701 9.6 %

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3,743 5,061 (1,318) (26.0) %

Other (income) expenses

Other expenses (income)

Interest expense 1,141 446 695 155.8 %

Other income (70) (593) 523 (88.2) %

Total other income

(180) (1,146) 966 (84.3) %

Total other expenses (income) 1,071 (147) 1,218 n/m

Income before income taxes 2,672 5,208 (2,536) (48.7) %

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2,194 2,323 (129) (5.6) %

Net (loss) income from discontinued operations, net of income taxes

(138) 318 (456) n/m

Net loss from discontinued operations, net of income taxes — (1,554) 1,554 n/m

Net income 2,194 769 1,425 185.3 %

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730 1,304 (574) (44.0) %

Net (loss) income from discontinued operations attributable to non-controlling interest

Net loss from discontinued operations attributable to non-controlling interest — (381) 381 n/m

Net income attributable to non-controlling interest 730 923 (193) (20.9) %

Net income from continuing operations attributable to i3 Verticals, Inc.

1,464 1,019 445 43.7 %

Net loss from discontinued operations attributable to i3 Verticals, Inc.

— (1,173) 1,173 n/m

Net income (loss) attributable to i3 Verticals, Inc.

$ 1,464 $ (154) $ 1,618 n/m

n/m = not meaningful

Revenue increased $3.4 million, or 6.2%, to $57.5 million for the three months ended March 31, 2026 from $54.1 million for the three months ended March 31, 2025.

The increase was driven by an increase of $4.8 million in recurring revenues, partially offset by a decrease of $1.4 million in non-recurring revenues.

Costs of Services

Costs of services increased $0.6 million, or 3.4%, to $17.1 million for the three months ended March 31, 2026 from $16.6 million for the three months ended March 31, 2025.

The increase was primarily driven by an increase in software costs of $1.4 million, partially offset by a decrease in people costs of $0.8 million for the three months ended March 31, 2026 from the three months ended March 31, 2025.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased $2.8 million, or 10.6%, to $29.1 million for the three months ended March 31, 2026 from $26.3 million for the three months ended March 31, 2025.

The increase was driven by an increase in people costs (including stock compensation expense) of $1.1 million as well as increases in other expenses, including the provision for doubtful accounts, rent expense, professional fees and marketing expense for the three months ended March 31, 2026 from the three months ended March 31, 2025.

Depreciation and Amortization

Depreciation and amortization increased $0.7 million, or 10.1%, to $7.7 million for the three months ended March 31, 2026 from $7.0 million for the three months ended March 31, 2025.

Amortization expense increased $0.6 million for the three months ended March 31, 2026 from three months ended March 31, 2025, primarily due to an increase in capitalized software project releases, driving an increase in amortization expense, and amortization expense recorded for intangible assets and capitalized software acquired from current year and prior year acquisitions.

Depreciation expense increased $0.1 million for the three months ended March 31, 2026 from three months ended March 31, 2025.

Change in Fair Value of Contingent Consideration

Change in fair value of contingent consideration to be paid in connection with acquisitions was a benefit of $0.1 million for the three months ended March 31, 2026 related to adjustments to the expected present value of consideration to be paid for earnouts.

The change in fair value of contingent consideration for the three months ended March 31, 2025 was a benefit of $0.8 million.

Interest Expense

Interest expense increased $0.7 million, or 155.8%, to $1.1 million for the three months ended March 31, 2026 from $0.4 million for the three months ended March 31, 2025.

The increase reflects a higher average outstanding debt balance for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025.

Other income was $0.1 million during the three months ended March 31, 2026 compared to $0.6 million during the three months ended March 31, 2025.

Other income during the three months ended March 31, 2026 reflects income from the transition services agreement and processing services agreement related to the sale of the Merchant Services Business, income from the transition services agreement entered into at the closing of the sale of the Healthcare RCM Business and interest income generated from cash held at financial institutions.

Other income during the three months ended March 31, 2025 reflects income from the transition services agreement and processing services agreement related to the sale of the Merchant Services Business of $0.5 million and income generated from cash held at financial institutions of $0.1 million.

Provision for Income Taxes

The provision for income taxes decreased to a provision for $0.5 million for the three months ended March 31, 2026 from a provision for $2.9 million for three months ended March 31, 2025.

Our effective tax rate was 18% for the three months ended March 31, 2026.

Our effective tax rate differs from the federal statutory rate of 21% primarily due to the tax structure of the Company, valuation allowance activity, stock compensation and state tax expense.

The income of majority-owned i3 Verticals, LLC is not taxed at the entity-level.

i3 Verticals, Inc.

is subject to federal, state and local income taxes with respect to its allocable share of any taxable income of i3 Verticals, LLC and is taxed at the prevailing corporate tax rates.

Net Loss from Discontinued Operations, Net of Income Taxes

We had no net income from discontinued operations, net of income tax, for the three months ended March 31, 2026.

For the three months ended March 31, 2025, we had a net loss from discontinued operations, net of income tax, of $1.6 million.

See Note 2 to our condensed consolidated financial statements for additional information and detail on the financial results of discontinued operations.

The net loss from discontinued operations, net of income tax, for the three months ended March 31, 2025 reflects adjustments to the gain on the sale of the Merchant Services Business and a complete quarter of business activity for the Healthcare RCM Business, including revenue of $9.1 million, operating expenses of $10.2 million and a provision for income taxes of $0.1 million.

Six Months Ended March 31, 2026 Compared to Six Months Ended March 31, 2025

The following table presents our historical results of operations for the periods indicated:

Six Months Ended March 31, Change

(in thousands) 2026 2025 Amount %

Revenue $ 110,189 $ 106,356 $ 3,833 3.6 %

Operating expenses

Costs of services (excluding depreciation and amortization)

34,720 32,156 2,564 8.0 %

Selling, general and administrative

56,047 52,761 3,286 6.2 %

Depreciation and amortization 14,568 13,859 709 5.1 %

Change in fair value of contingent consideration (498) 466 (964) n/m

Total operating expenses 104,837 99,242 5,595 5.6 %

Income from operations

5,352 7,114 (1,762) (24.8) %

Other expenses (income)

Interest expense 1,522 1,126 396 35.2 %

Other income (631) (2,419) 1,788 (73.9) %

Total other expenses (income) 891 (1,293) 2,184 n/m

Income before income taxes 4,461 8,407 (3,946) (46.9) %

Provision for income taxes 1,182 3,294 (2,112) (64.1) %

Net income from continuing operations

3,279 5,113 (1,834) (35.9) %

Net loss from discontinued operations, net of income taxes (138) (1,236) 1,098 n/m

Net income 3,141 3,877 (736) (19.0) %

Net income from continuing operations attributable to non-controlling interest

1,239 2,239 (1,000) (44.7) %

Net loss from discontinued operations attributable to non-controlling interest (46) (264) 218 n/m

Net income attributable to non-controlling interest

1,193 1,975 (782) (39.6) %

Net income from continuing operations attributable to i3 Verticals, Inc.

2,040 2,874 (834) (29.0) %

Net (loss) income from discontinued operations attributable to i3 Verticals, Inc.

Net loss from discontinued operations attributable to i3 Verticals, Inc.

(92) (972) 880 n/m

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n/m = not meaningful

Revenue increased $0.5 million, or 0.9%, to $52.7 million for the three months ended December 31, 2025 from $52.2 million for the three months ended December 31, 2024.

Revenue increased $3.8 million, or 3.6%, to $110.2 million for the six months ended March 31, 2026 from $106.4 million for the six months ended March 31, 2025.

The increase was driven by an increase of $8.1 million in recurring revenues, partially offset by a decrease of $4.2 million in non-recurring revenues.

Other Costs of Services

Other costs of services increased $2.0 million, or 12.9%, to $17.6 million for the three months ended December 31, 2025 from $15.6 million for the three months ended December 31, 2024.

The increase was primarily driven by an increase in software costs of $1.6 million and an increase in other costs of $0.3 million for the three months ended December 31, 2025 from the three months ended December 31, 2024.

Costs of Services

Costs of services increased $2.6 million, or 8.0%, to $34.7 million for the six months ended March 31, 2026 from $32.2 million for the six months ended March 31, 2025.

The increase was primarily driven by an increase in software costs of $3.0 million, other costs of $0.5 million and payments costs of $0.3 million, partially offset by a decrease in people costs of $1.3 million for the six months ended March 31, 2026 from the six months ended March 31, 2025.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased $0.5 million, or 1.9%, to $27.0 million for the three months ended December 31, 2025 from $26.5 million for the three months ended December 31, 2024.

The increase was driven by an increase in internal and external personnel costs of $1.5 million partially offset by a decrease in internal software costs of $0.4 million and a decrease in M&A-related expenses of $0.4 million for the three months ended December 31, 2025 from the three months ended December 31, 2024.

Selling, general and administrative expenses increased $3.3 million, or 6.2%, to $56.0 million for the six months ended March 31, 2026 from $52.8 million for the six months ended March 31, 2025.

The increase was driven by an increase in people costs (including stock compensation expense) of $2.6 million as well as increases in other expenses, including the provision for doubtful accounts, rent expense, professional fees and marketing expense for the six months ended March 31, 2026 from the six months ended March 31, 2025.

Depreciation and Amortization

Depreciation and amortization remained consistent at $6.9 million for both the three months ended December 31, 2025 and 2024.

Amortization expense was $6.2 million and depreciation expense was $0.7 million for both the three months ended December 31, 2025 and 2024.

Depreciation and amortization increased $0.7 million, or 5.1%, to $14.6 million for the six months ended March 31, 2026 from $13.9 million for the six months ended March 31, 2025.

Amortization expense increased $0.6 million for the six months ended March 31, 2026 from six months ended March 31, 2025, primarily due to an increase in capitalized software project releases, driving an increase in amortization expense, and amortization expense recorded for intangible assets and capitalized software acquired from current year and prior year acquisitions.

Depreciation expense increased $0.1 million for the six months ended March 31, 2026 from six months ended March 31, 2025.

Change in Fair Value of Contingent Consideration

Change in fair value of contingent consideration to be paid in connection with acquisitions was a benefit of $0.4 million for the three months ended December 31, 2025 related to adjustments to the expected present value of consideration to be paid for earnouts.

The change in fair value of contingent consideration for the three months ended December 31, 2024 was a charge of $1.3 million.

Change in fair value of contingent consideration to be paid in connection with acquisitions was a benefit of $0.5 million for the six months ended March 31, 2026 related to adjustments to the expected present value of consideration to be paid for earnouts.

The change in fair value of contingent consideration for the six months ended March 31, 2025 was a charge of $0.5 million.

Interest Expense

Interest expense decreased $0.3 million, or 44.0%, to $0.4 million for the three months ended December 31, 2025 from $0.7 million for the three months ended December 31, 2024.

The decrease reflects a lower average outstanding debt balance for the three months ended December 31, 2025, as compared to the three months ended December 31, 2024.

Other income was $0.6 million during the three months ended December 31, 2025 compared to $1.8 million during the three months ended December 31, 2024.

Other income during the three months ended December 31, 2025 reflects income from the transition services agreement entered into at the closing of the sale of the Healthcare RCM Business of $0.1 million and interest income generated from cash held at financial institutions of $0.5 million.

Other income during the three months ended December 31, 2024 reflects income generated from cash held at financial institutions of $0.7 million, a gain on disposal of property and equipment of $0.6 million related to the sale of a building and automobiles purchased through previous acquisitions and income from the transition services agreement and processing services agreement related to the sale of the Merchant Services Business of $0.5 million.

Interest expense increased $0.4 million, or 35.2%, to $1.5 million for the six months ended March 31, 2026 from $1.1 million for the six months ended March 31, 2025.

The increase reflects a higher average outstanding debt balance for the six months ended March 31, 2026, as compared to the six months ended March 31, 2025.

Other income was $0.6 million during the six months ended March 31, 2026 compared to $2.4 million during the six months ended March 31, 2025.

Other income during the six months ended March 31, 2026 reflects interest income generated from cash held at financial institutions of $0.5 million, income from the transition services agreement entered into at the closing of the sale of the Healthcare RCM Business of $0.2 million and income from the transition services agreement and processing services agreement related to the sale of the Merchant Services Business of $0.1 million, partially offset by a loss on disposal of property and equipment of $0.1 million related to the sale of a building purchased through a previous acquisition.

Other income during the six months ended March 31, 2025 reflects income from the transition services agreement and processing services agreement related to the sale of the Merchant Services Business of $1.0 million, income generated from cash held at financial institutions of $0.9 million, and a gain on disposal of property and equipment of $0.6 million related to the sale of a building purchased through previous acquisitions.

Provision for Income Taxes

The provision for income taxes increased to a provision for $0.7 million for the three months ended December 31, 2025 from a provision for $0.4 million for three months ended December 31, 2024.

Our effective tax rate was 39% for the three months ended December 31, 2025.

The provision for income taxes decreased to a provision for $1.2 million for the six months ended March 31, 2026 from a provision of $3.3 million for six months ended March 31, 2025.

Our effective tax rate was 26% for the six months ended March 31, 2026.

Our effective tax rate differs from the federal statutory rate of 21% primarily due to the tax structure of the Company, valuation allowance activity, stock compensation and state tax expense.

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is subject to federal, state and local income taxes with respect to its allocable share of any taxable income of i3 Verticals, LLC and is taxed at the prevailing corporate tax rates.

Net Income from Discontinued Operations, Net of Income Taxes

We had $0.1 million in net loss from discontinued operations, net of income tax, for the three months ended December 31, 2025 compared to $0.3 million in net income from discontinued operations, net of income tax, for the three months ended December 31, 2024.

Net Loss from Discontinued Operations, Net of Income Taxes

We had $0.1 million in net loss from discontinued operations, net of income tax, for the six months ended March 31, 2026 compared to $1.2 million in net loss from discontinued operations, net of income tax, for the six months ended March 31, 2025.

See Note 2 to our condensed consolidated financial statements for additional information and detail on the financial results of discontinued operations.

The net loss from discontinued operations, net of income tax, for the three months ended December 31, 2025 reflects adjustments to the gain on the sale of the Healthcare RCM Business of $0.2 million.

The net income from discontinued operations, net of income tax, for the three months ended December 31, 2024 reflects adjustments to the gain on the sale of the Merchant Services Business and a complete quarter of business activity for the Healthcare RCM Business, including revenue of $9.7 million, operating expenses of $9.1 million and a provision for income taxes of $0.1 million.

The net loss from discontinued operations, net of income tax, for the six months ended March 31, 2026 reflects adjustments to the gain on the sale of the Healthcare RCM Business.

The net loss from discontinued operations, net of income tax, for the six months ended March 31, 2025 reflects adjustments to the gain on the sale of the Merchant Services Business, net of income tax, of $0.5 million and a complete six months of business activity for the Healthcare RCM Business, including revenue of $18.9 million, operating expenses of $19.3 million and a provision for income taxes of $0.3 million.

We have experienced in the past, and may continue to experience, seasonal fluctuations in our revenues as a result of consumer and business spending patterns.

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Operating expenses show less seasonal fluctuation, with the result that net income is subject to the same seasonal factors as our revenues.

The growth in our business may have partially overshadowed seasonal trends to date, and seasonal impacts on our business may be more pronounced in the future.

Liquidity and Capital Resources

We have historically financed our operations and working capital through net cash from operating activities.

As of December 31, 2025, we had $37.5 million of cash and cash equivalents and available borrowing capacity of $400.0 million under our 2023 Senior Secured Credit Facility, subject to the financial covenants.

As of March 31, 2026, we had $7.1 million of cash and cash equivalents and available borrowing capacity of $319.0 million under our 2023 Senior Secured Credit Facility, subject to the financial covenants.

We usually minimize cash balances by making payments on our revolving line of credit to minimize borrowings and interest expense.

As of December 31, 2025, we had no borrowings outstanding under the 2023 Senior Secured Credit Facility.

As of March 31, 2026, we had borrowings outstanding of $81.0 million under the 2023 Senior Secured Credit Facility.

For additional information about our 2023 Senior Secured Credit Facility, see the section entitled "2023 Senior Secured Credit Facility" below.

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Our 2023 Senior Secured Credit Facility, as amended, requires us to maintain a consolidated interest coverage ratio not less than 3.0 to 1.0 and total leverage ratio not exceeding 5.0 to 1.0.

As of December 31, 2025, we were in compliance with these covenants with a consolidated interest coverage ratio and total leverage ratio of 94.9x and 0.0x, respectively.

Although we believe our liquidity position remains strong, there can be no assurance that we will be able to raise additional funds, in the form of debt or equity, or to amend our 2023 Senior Secured Credit Facility on terms acceptable to us, if at all, even if we determined such actions were necessary in the future.

As of March 31, 2026, we were in compliance with these covenants with a consolidated interest coverage ratio and total leverage ratio of 16.2x and 1.2x, respectively.

In January 2025, i3 Verticals, LLC, a pass-through entity in which the Company holds a majority ownership interest, made a tax distribution (the “LLC Tax Distribution”) to the Company and the other members of i3 Verticals, LLC (the “Continuing Equity Owners”) related to the taxable income associated with the gain on the sale of the Merchant Services Business completed in September 2024 that was anticipated to be recognized for 2024 federal income tax purposes by members of 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 tax receivables agreement, and any other expected liabilities of the Company.

Company holding cash in excess of the Company’s tax liabilities, its obligation to make payments under its tax receivables agreement, and any other expected liabilities of the Company.

Thereafter, on January 23, 2025, the Company and i3 Verticals, LLC effected certain recapitalization actions in order to reduce excess cash held at the Company following this LLC Tax Distribution.

For additional information regarding the ownership interest of the

Company in i3 Verticals, LLC and the capitalization of i3 Verticals, LLC, see Note 1 to the accompanying unaudited condensed consolidated financial statements contained in this report.

For additional information regarding the ownership interest of the Company in i3 Verticals, LLC and the capitalization of i3 Verticals, LLC, see Note 1 to the accompanying unaudited condensed consolidated financial statements contained in this report.

For additional information regarding these recapitalization transactions, see Note 15 to the accompanying unaudited condensed consolidated financial statements contained in this report.

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The following table presents a summary of cash flows from operating, investing and financing activities for the following comparative periods.

Three Months Ended December 31, 2025 and 2024

Three months ended December 31,

Six Months Ended March 31, 2026 and 2025

Six months ended March 31,

(in thousands)

Net cash provided by operating activities $ 14,123 $ 11,495

Net cash provided by (used in) operating activities $ 24,150 $ (15,627)

Net cash used in investing activities $ (64,658) $ (3,675)

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Cash Flow from Operating Activities

Net cash provided by operating activities increased $2.6 million to $14.1 million for the three months ended December 31, 2025 from $11.5 million for the three months ended December 31, 2024.

The increase in net cash provided by operating activities was driven by increases in cash provided by changes in net operating assets and liabilities of $4.9 million during the three months ended December 31, 2025 from the three months ended December 31, 2024, which are impacted by the timing of collections and payments.

Partially offsetting the increases driven by changes in net operating assets and liabilities, our net income changed from $3.1 million for the three months ended December 31, 2024 to net income of $0.9 million for the three months ended December 31, 2025.

Net cash provided by operating activities increased $39.8 million to $24.2 million net cash provided by operating activities for the six months ended March 31, 2026 from net cash used in operating activities of $15.6 million for the six months ended March 31, 2025.

The increase in net cash provided by operating activities was driven by increases in cash provided by changes in net operating assets and liabilities of $41.5 million during the six months ended March 31, 2026 from the six months ended March 31, 2025, which are impacted by the timing of collections and payments.

Income taxes and other liabilities related to the sale of the Merchant Services Business in September 2024 were accrued in fiscal year 2024, but paid during the six months ended March 31, 2025, driving most of the increases in net operating assets and liabilities during the six months ended March 31, 2026 from the six months ended March 31, 2025

Partially offsetting the increases driven by changes in net operating assets and liabilities, our net income decreased from $3.9 million for the six months ended March 31, 2025 to $3.1 million for the six months ended March 31, 2026.

Cash Flow from Investing Activities

Net cash used in investing activities increased $0.4 million to $1.8 million for the three months ended December 31, 2025 from $1.4 million for the three months ended December 31, 2024.

Proceeds from the sale of property and equipment decreased $1.0 million during the three months ended December 31, 2025 from the three months ended December 31, 2024.

This change was partially offset by a decrease of $0.4 million in expenditures for capitalized software and a decrease of $0.2 million in expenditures for property and equipment during the three months ended December 31, 2025 compared to the three months ended December 31, 2024.

Net cash used in investing activities increased $61.0 million to $64.7 million for the six months ended March 31, 2026 from $3.7 million for the six months ended March 31, 2025.

The largest driver of the increase in cash used in investing activities was the $60.0 million in cash paid for acquisitions (net of cash acquired) during the six months ended March 31, 2026, whereas we had no cash paid for acquisitions (net of cash acquired) during the six months ended March 31, 2025.

Additionally, proceeds from the sale of property and equipment decreased $1.1 million during the six months ended March 31, 2026 from the six months ended March 31, 2025.

Cash Flow from Financing Activities

Net cash used in financing activities increased $30.0 million to $40.5 million for the three months ended December 31, 2025 from $10.5 million for the three months ended December 31, 2024.

The increase in net cash used in financing activities was driven by an increase of $26.7 million in payments for repurchases of Class A common stock and an increase of $3.6 million in payments for employees' tax withholdings from net settled stock option exercises and RSU releases during the three months ended December 31, 2025 compared to the three months ended December 31, 2024.

Net cash used in financing activities decreased $43.3 million to $16.7 million for the six months ended March 31, 2026 from $60.0 million for the six months ended March 31, 2025.

The decrease in net cash used in financing activities was driven by an increase in net borrowings on the revolving credit facility of $69.0 million, a decrease of $22.2 million in payments for required distributions on behalf of members for tax obligations and a decrease of $7.4 million in required distributions to members under the Tax Receivable Agreement.

The decrease was also related to the $26.2 million in payments for repurchases of Exchangeable Notes during the six months ended March 31, 2025.

Partially offsetting these decreases in net cash used in financing activities for the six months ended March 31, 2026 from the six months ended March 31, 2025 was an increase of $77.3 million in payments for repurchases of Class A common stock and an increase of $4.6 million in payments for employees' tax withholdings from net settled stock option exercises and RSU releases.

2023 Senior Secured Revolving Credit Facility

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The 2023 Senior Secured Credit Facility replaced the prior senior secured credit facility of the Company which was entered into on May 9, 2019 (the "Prior Senior Secured Credit Facility").

As amended by the Second Amendment described below, the 2023 Senior Secured Credit Facility provides for

aggregate commitments of $400.0 million in the form of a senior secured revolving credit facility (the “Revolver”).

As amended by the Second Amendment described below, the 2023 Senior Secured Credit Facility provides for aggregate commitments of $400.0 million in the form of a senior secured revolving credit facility (the “Revolver”).

In addition, on February 11, 2025, the Borrower entered into a letter agreement with the administrative agent and the lenders under the 2023 Senior Secured Credit Facility providing the Borrower with a one-time consent to an earlier reduction in the pricing of the revolving loans than what is otherwise permitted by the terms of the 2023 Senior Secured Credit Facility.

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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 $100.0 million and 100% of the Borrower’s consolidated EBITDA (as defined in the 2023 Senior Secured Credit Facility) for the most recently completed four quarter period, plus (ii) the amount of certain prepayments of certain indebtedness, so long as, among other things, after giving pro forma effect to the incurrence of such additional borrowings and any related 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 December 31, 2025, the Borrower's consolidated interest coverage ratio was 94.9x and total leverage ratio was 0.0x.

As of March 31, 2026, the Borrower's consolidated interest coverage ratio was 16.2x and total leverage ratio was 1.2x.

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.

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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 December 31, 2025).

plus an applicable margin of 2.00% to 3.00% (2.00% at March 31, 2026).

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 December 31, 2025).

plus an applicable margin of 1.00% to 2.00% (1.00% at March 31, 2026).

The base rate shall not be less than 1% in any event.

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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 December 31, 2025) times the actual daily amount by which $400.0 million (as of the effectiveness of the Second Amendment) exceeds the total amount outstanding under the Revolver and available to be drawn under all outstanding letters of credit.

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 March 31, 2026) times the actual daily amount by which $400.0 million (as of the effectiveness of the Second Amendment) exceeds the total amount outstanding under the Revolver and available to be drawn under all outstanding letters of credit.

The Borrower will be permitted to voluntarily reduce the unutilized portion of the commitment amount and repay outstanding loans under the 2023 Senior Secured Credit Facility, whether such amounts are issued under the Revolver or under the additional term loan facilities or additional revolving credit facilities, at any time without premium or penalty.

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The 2023 Senior Secured Credit Facility contains customary events of default, including payment defaults, breaches of representations and warranties, covenant defaults, cross-defaults to other material indebtedness, certain events of bankruptcy and insolvency, material judgments, certain events with respect to employee benefit plans, invalidity of loan documents and certain changes in control.

As of December 31, 2025, we were in compliance with these covenants, with a consolidated interest coverage ratio and total leverage ratio of 94.9x and 0.0x, respectively.

As of March 31, 2026, we were in compliance with these covenants, with a consolidated interest coverage ratio and total leverage ratio of 16.2x and 1.2x, respectively.

Exchangeable Notes

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The Exchangeable Note Repurchases were completed on January 18, 2024, and the Company paid $87.4 million to repurchase $90.8 million in aggregate principal amount of its Exchangeable Notes and to repay approximately $0.4 million in accrued interest on the repurchased portion of the Exchangeable Notes.

The Exchangeable Notes matured and were repaid in full on

February 15, 2025, and we paid $26.4 million in satisfaction of the outstanding principal and accrued interest in connection therewith.

The Exchangeable Notes matured and were repaid in full on February 15, 2025, and we paid $26.4 million in satisfaction of the outstanding principal and accrued interest in connection therewith.

For additional information, see Note 8 to our condensed consolidated financial statements.

Material Cash Requirements

The following table summarizes our material cash requirements as of December 31, 2025, including those related to leases and borrowings:

The following table summarizes our material cash requirements as of March 31, 2026, including those related to leases and borrowings:

Payments Due by Period

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These payments will be made within the next twelve months.

We estimated interest payments through the maturity of our 2023 Senior Secured Credit Facility by the unused fee rate of 0.15% in effect as of December 31, 2025.

We estimated interest payments through the maturity of our 2023 Senior Secured Credit Facility by applying the interest rate of 5.77% in effect on the outstanding balance as of March 31, 2026, plus unused fee rate of 0.15% in effect as of March 31, 2026.

In connection with certain of our acquisitions, we may be obligated to pay the seller of the acquired entity certain amounts of contingent consideration as set forth in the relevant purchasing documents, whereby additional consideration may be due upon the achievement of certain specified financial performance targets.

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New Share Repurchase Program

On February 5, 2026, the Company announced that our Board of Directors had approved a share repurchase program for the Company's Class A common stock (the “New Share Purchase Program”), under which the Company is authorized to repurchase up to $60.0 million of outstanding shares of our Class A common stock (exclusive of fees, commissions or other expenses related to such repurchases).

This New Share Repurchase Program replaced a prior share repurchase program entered into by the Company on August 8, 2025 (the “August 2025 Share Repurchase Program”) as further described below, which August 2025 Share Repurchase Program is no longer in effect following the Company expending the maximum dollar amount under this program.

This New Share Repurchase Program will terminate on the earlier of February 4, 2027, or when the maximum dollar amount under the authorization has been expended.

Pursuant to this New Share Repurchase Program, the Company is 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 this New Share Repurchase Program provide that, immediately prior to repurchases of Class A common stock under this 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.

In addition, repurchases under this New Share Repurchase Program are subject to prevailing market conditions, liquidity and cash flow considerations, applicable securities laws requirements (including under Rule 10b-18 and Rule 10b5-1 of the Securities Exchange Act of 1934, as applicable), compliance with contractual restrictions under the 2023 Senior Secured Credit Facility and other factors.

This 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 the Company’s discretion.

On February 5, 2026, the Company announced that our Board of Directors had approved a share repurchase program for the Company's Class A common stock (the “New Share Repurchase Program”), under which the Company is authorized to repurchase up to $60.0 million of outstanding shares of our Class A common stock (exclusive of fees, commissions or other expenses related to such repurchases).

Pursuant to this New 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 this New Share Repurchase Program provided that, immediately prior to repurchases of Class A common stock under this New Share Repurchase Program, i3 Verticals, LLC would 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.

In addition, repurchases under this New Share Repurchase Program were subject to prevailing market conditions, liquidity and cash flow considerations, applicable securities laws requirements (including under Rule 10b-18 and Rule 10b5-1 of the Securities Exchange Act of 1934, as applicable), compliance with contractual restrictions under the 2023 Senior Secured Credit Facility and other factors.

This New Share Repurchase Program did not require the Company to acquire any particular amount of shares of Class A common stock, and was permitted to be extended, modified, suspended or discontinued at any time at the Company’s discretion.

The Company repurchased 1,703,682 shares of Class A Common Stock under the New Share Repurchase Program at an average price of $22.48 and an aggregate repurchase amount inclusive of commissions and excise taxes of $38.7 million, during the six months ended March 31, 2026.

The repurchased shares were cancelled and retired, resulting in a reduction in both the number of shares outstanding and the Company's total stockholders' equity.

Since March 31, 2026, the maximum dollar amount under the New Share Repurchase Program has been expended, and the New Share Repurchase Program is no longer in effect.

August 2025 Share Repurchase Program

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The terms of the August 2025 Share Repurchase Program provided that, immediately prior to repurchases of Class A common stock under the August 2025 Share Repurchase Program, i3 Verticals, LLC would 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 maximum dollar amount under the August 2025 Share Repurchase Program has been expended , and as such the August 2025 Share Repurchase Program is no longer in effect.

The Company repurchased 1,522,838 shares of Class A Common Stock under the August 2025 Share Repurchase Program at an average price of $24.88 and an aggregate repurchase amount inclusive of commissions and excise taxes of $38.3 million, during the three months ended December 31, 2025.

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.

The Company repurchased 2,039,892 shares of Class A Common Stock under the August 2025 Share Repurchase Program at an average price of $24.51 and an aggregate repurchase amount inclusive of commissions and excise taxes of $50.6 million, during the six months ended March 31, 2026.

The repurchased shares were cancelled and retired, resulting in a reduction in both the number of shares outstanding and the Company's total stockholders' equity.

The maximum dollar amount under the August 2025 Share Repurchase Program was expended during the three months ended March 31, 2026, and the August 2025 Share Repurchase Program is no longer in effect.

August 2024 Share Repurchase Program

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The Company repurchased 1,573,881 shares of Class A Common Stock under the August 2024 Share Repurchase Program at an average price of $23.86 per share and an aggregate repurchase amount (inclusive of commissions and excise taxes) of $38.0 million during the year ended September 30, 2025, prior to the termination of such program as noted above.

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.

The repurchased shares were cancelled and retired, resulting in a reduction in both the number of shares outstanding and the Company's total stockholders' equity.

Tax Receivable Agreement

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We intend to fund the payment of the amounts due under the Tax Receivable Agreement out of the cash savings that we actually realize in respect of the attributes to which the Tax Receivable Agreement relates.

As of December 31, 2025, the total amount due under the Tax Receivable Agreement was $34.9 million, and payments to the Continuing Equity Owners related to exchanges through December 31, 2025 will range from $0 to $5.4 million per year and are expected to be paid over the next 22 years.

The amounts recorded as of December 31, 2025, approximate the current estimate of expected tax savings and are subject to change after the filing of the Company’s U.S.

As of March 31, 2026, the total amount due under the Tax Receivable Agreement was $32.4 million, and payments to the Continuing Equity Owners related to exchanges through March 31, 2026 will range from $0 to $5.4 million per year and are expected to be paid over the next 22 years.

The amounts recorded as of March 31, 2026, 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.

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Critical accounting policies are those that we consider the most critical to understanding our financial condition and results of operations.

As of December 31, 2025, there have been no significant changes to our critical accounting estimates disclosed in the Form 10-K filed with the SEC on November 21, 2025.

As of March 31, 2026, there have been no significant changes to our critical accounting estimates disclosed in the Form 10-K for the fiscal year ended September 30, 2025.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis