i3 Verticals, Inc. 10-Q

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q, as well as our audited consolidated financial statements and related notes as disclosed in our Annual Report on Form 10-K for the year ended September 30, 2025 (“Form 10-K”), filed with the SEC on November 21, 2025. The terms “i3 Verticals,” “we,” “us” and “our” and similar references refer to i3 Verticals, Inc. and, where appropriate, its subsidiaries. Note Regarding Forward-looking Statements This Quarterly Report on Form 10-Q includes statements that express our opinions, expectations, beliefs, plans, objectives, assumptions or projections regarding future events or future results and therefore are, or may be deemed to be, “forward-looking statements” within the meaning of the federal securities laws. All statements other than statements of historical facts contained in this report may be forward-looking statements. These forward-looking statements can generally be identified by the use of forward-looking terminology, including the terms “believes,” “estimates,” “pro forma,” “continues,” “anticipates,” “expects,” “seeks,” “projects,” “intends,” “plans,” “may,” “will,” “would” or “should” or, in each case, their negative or other variations or comparable terminology. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. These factors include, but are not limited to, the following: • our ability to protect our systems and data from continually evolving cybersecurity risks or other technological risks, including the impact of any cybersecurity incidents or security breaches; • liability and reputation damage from unauthorized disclosure, destruction or modification of data or disruption of our services; • technical, operational and regulatory risks related to our information technology systems and third-party providers’ systems; • our ability to execute on our strategy and achieve our goals following the completion of the sale of our Merchant Services Business and our Healthcare RCM Business; • our ability to successfully manage our intellectual property; • the impact of any potential of impairment charges associated with our fair-valued assets, including goodwill and intangible assets, in the event of a decline in the price of our Class A common stock or otherwise; • our ability to generate revenues sufficient to maintain profitability and positive cash flow; • competition in our industry and our ability to compete effectively; • consolidation in the banking and financial services industry; • risk of shortages, price increases, changes, delays or discontinuations of hardware due to supply chain disruptions with respect to our limited number of suppliers; • risks related to economic and geopolitical conditions, including the impact of inflation and fluctuations in interest rates (including current elevated interest rate levels) and tariff and trade-related developments; • our ability to keep pace with rapid developments and changes in our industry and provide new products and services; • reliance on third parties for significant services; • exposure to economic conditions and political risks affecting consumer, commercial and government spending, including as a result of budgetary and political pressures to reduce government spending, as well as any decline in the use of credit cards; • changes in the budgets or regulatory environments of our public sector customers, primarily local and state governments, that could negatively impact spending; • our ability to increase our existing market share, grow within the current public sector markets in which we operate and execute our growth strategy; 51 • our ability to successfully identify acquisition targets, complete those acquisitions and effectively integrate those acquisitions into our services; • potential degradation of the quality of our products, services and support; • our ability to retain customers; • our ability to attract, recruit, retain and develop key personnel and qualified employees; • 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, 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; • the impact of claims, litigation and government investigations; • risks related to our international operations; • our indebtedness and our ability to maintain compliance with the financial covenants in our 2023 Senior Secured Credit Facility (as defined below); • our ability to meet our liquidity needs; • our ability to raise additional funds on terms acceptable to us, if at all, whether through debt, equity or a combination thereof; • operating and financial restrictions imposed by our 2023 Senior Secured Credit Facility; and • the "Risk Factors" included in our Form 10-K and included in Part II, Item 1A of this Quarterly Report on Form 10-Q, if any. Although we base these forward-looking statements on assumptions that we believe are reasonable when made, we caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and industry developments may differ materially from statements made in or suggested by the forward-looking statements contained in this Quarterly Report on Form 10-Q. The matters summarized in “Risk Factors” in our Form 10-K, and in subsequent filings could cause our actual results to differ significantly from those contained in our forward-looking statements. In addition, even if our results of operations, financial condition and liquidity, and industry developments are consistent with the forward-looking statements contained in this filing, those results or developments may not be indicative of results or developments in subsequent periods. In light of these risks and uncertainties, we caution you not to place undue reliance on these forward-looking statements. Any forward-looking statement that we make in this filing speaks only as of the date of such statement, and we undertake no obligation to update any forward-looking statement or to publicly announce the results of any revision to any of those statements to reflect future events or developments, except as required by applicable law. Comparisons of results for current and any prior periods are not intended to express any future trends or indications of future performance, unless specifically expressed as such, and should only be viewed as historical data. Executive Overview The Company provides mission-critical enterprise software solutions to its public sector customers. These comprehensive cloud-native solutions address a broad range of government functions, including courts, transportation, utilities, revenue and schools. The Company’s mission is to enable state and local governments and related agencies to serve their constituents in an effective and efficient manner. With thousands of software installations across all 50 states and Canada, i3 Verticals is a leader in the public sector vertical. The Company has one operating and reportable segment. See Note 16 to our condensed consolidated financial statements for additional information. 52 Economic Trends 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. Liquidity 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. Divestitures Sale of Healthcare RCM Business On May 5, 2025, i3 Verticals, LLC, and i3 Healthcare Solutions, LLC, a wholly-owned subsidiary of i3 Verticals, LLC (“Healthcare RCM Seller,” and collectively with i3 Verticals LLC, the “Healthcare RCM Seller Parties”), completed the sale of the equity interests of certain wholly-owned subsidiaries of the Healthcare RCM Seller (the “Healthcare RCM Acquired Entities”) which owned and operated the Company's healthcare revenue cycle management business, including its associated proprietary technology (the "Healthcare RCM Business"), to Infinx, Inc. (“Healthcare RCM Buyer”), a Texas corporation, pursuant to the terms of that certain Securities Purchase Agreement dated as of May 5, 2025, by and among Healthcare RCM Buyer and the Healthcare RCM Seller Parties (the “Healthcare RCM Purchase Agreement;” the transactions contemplated by the Healthcare RCM Purchase Agreement, the “Healthcare RCM Transactions”). In addition, immediately prior to the sale of the equity interests of the Healthcare RCM Acquired Entities pursuant to the Healthcare RCM Purchase Agreement, i3 Verticals, LLC and certain of its subsidiaries contributed and/or assigned certain assets and certain liabilities related to the Healthcare RCM Business to the Healthcare RCM Acquired Entities. The purchase price payable by Healthcare RCM Buyer to Healthcare RCM Seller for the equity interests of the Healthcare RCM Acquired Entities was $96.3 million, paid in cash at closing, after giving effect to post-closing net working capital, indebtedness and cash adjustments. As a result of the sale of the Healthcare RCM Business, the results of operations for the Healthcare RCM Business have been reclassified as discontinued operations in our condensed consolidated statements of operations for all periods presented. Refer to Note 2 for additional information. Sale of Merchant Services Business On September 20, 2024, i3 Verticals, LLC, and i3 Holdings Sub, Inc., a wholly-owned subsidiary of i3 Verticals, LLC (“Corporation Seller,” and collectively with i3 Verticals, LLC, the “Merchant Services Sellers”) completed the transactions (such closing, the “Closing”) contemplated by that certain Securities Purchase Agreement dated as of June 26, 2024 (the “Merchant Services Purchase Agreement”), by and among i3 Verticals, LLC, Corporation Seller, the Company (solely for the purpose of providing a guaranty of the obligations of the Merchant Services Sellers as set forth in the Merchant Services Purchase Agreement), Payroc Buyer, LLC (“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. 53 As a result of the sale of the Merchant Services Business, the results of operations for the Merchant Services Business have been reflected as discontinued operations in our condensed consolidated statements of operations for all periods presented. Refer to Note 2 for additional information. Acquisitions A core component of our growth strategy includes a disciplined approach to acquisitions of companies and technology, evidenced by numerous platform acquisitions and tuck-in acquisitions since our inception in 2012. Our acquisitions have increased the number of businesses and organizations to whom we provide solutions and augmented our existing proprietary payment facilitator platform and software solutions and capabilities. Acquisitions during the 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 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 Revenues We generate revenue from software and related services revenue, including the sale of subscriptions, recurring services, ongoing support, licenses, and installation and implementation services specific to software. We also generate revenue from volume-based payment processing fees (“discount fees”) that we provide to our customers directly through our software. Volume-based fees represent a percentage of the dollar amount of each credit or debit transaction processed. Revenues are also derived from a variety of fixed transaction or service fees, including authorization fees, convenience fees, statement fees, annual fees and fees for other miscellaneous services, such as handling chargebacks. Interchange and network fees. Interchange and network fees consist primarily of pass-through fees that make up a portion of discount fee revenue. These include assessment fees payable to card associations, which are a percentage of the processing volume we generate from Visa and Mastercard. These fees are presented net of revenue. Expenses 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 costs of services. Costs of services are recognized at the time the related revenue is recognized. Selling, general and administrative . Selling, general and administrative expenses include certain salaries and other employment costs, professional services, internal technology expenses, rent and utilities and other operating costs. Salaries and other employment costs within selling, general and administrative include individuals associated with shared services, product development and maintenance, sales and other functions. 54 Depreciation and amortization . Depreciation expense consists of depreciation on our investments in property, equipment and computer hardware and software. Depreciation expense is recognized on a straight-line basis over the estimated useful life of the asset. Amortization expense for acquired intangible assets and internally developed software is recognized straight-line, which we consider materially consistent with a proportional cash flow method. Amortization expense for internally developed software is recognized over the estimated useful life of the asset. The useful lives of contract-based intangible assets are equal to the terms of the agreement. Interest expense. Our interest expense consists of interest on our outstanding indebtedness under our 2023 Senior Secured Credit Facility, and prior to their maturity, the Exchangeable Notes, and amortization of or write offs of debt issuance costs. How We Assess Our Business As a result of the sale of the Merchant Services Business in 2024 and the Healthcare RCM Business in 2025, the results of operations for the Merchant Services Business and the Healthcare RCM Business have been reflected as discontinued operations in our condensed consolidated statements of operations for all periods presented. After giving effect to these developments, as further described above, the Company has one operating segment and reportable segment. The Company provides mission-critical enterprise software and services solutions to its public sector customers. These comprehensive solutions cover a broad range of applications, including cloud native enterprise software, all of which enable state and local governments and related agencies to serve their constituents in an efficient and seamless manner. Key Performance Indicators We evaluate our performance through various metrics, including the following key performance indicators: • Annualized recurring revenue ("ARR"); • Adjusted EBITDA margin ARR is the annualized revenue derived from recurring sources where we have an ongoing contract with our customers. We believe revenue from recurring sources is a strategic priority. ARR is comprised of software-as-a-service (“SaaS”) arrangements, transaction-based software-revenue, software maintenance, recurring software-based services, payments revenue and other recurring revenue sources within the quarter. The sum of these revenue categories is multiplied by four to calculate ARR. ARR excludes revenue that is not recurring or is one-time in nature. We believe this metric provides useful information to investors by providing visibility regarding the ongoing revenue potential of our business model and providing a clearer picture of our sustainable revenue base. Further, our management uses ARR as a metric because it helps us to assess the health and trajectory of our business. We believe that focusing on ARR can orient our sales and operations management towards long-term, reliable revenue growth. This focus on recurring revenue is particularly relevant for businesses operating under a subscription model, where customer retention and contract renewals play a significant role in long-term financial performance. ARR does not have a standardized definition and is therefore unlikely to be comparable to similarly titled measures presented by other companies. It should be reviewed independently of revenue, and it is not a forecast. Additionally, ARR does not take into account seasonality. The active contracts at the end of a reporting period used in calculating ARR may or may not be extended or renewed by our customers. ARR from continuing operations for the three months ended March 31, 2026 and 2025 was $183.5 million and $164.5 million, respectively, representing a period-to-period growth rate of 11.6%. 55 Adjusted EBITDA margin is used by the Company to measure operating performance and for purposes of making decisions. Adjusted EBITDA margin for any particular period is adjusted EBITDA as a percentage of revenue for such period. Adjusted EBITDA is calculated as earnings adjusted to exclude interest, tax, depreciation, amortization, stock-compensation expense, non-cash changes in the fair value of contingent consideration, M&A-related expenses, and certain other adjustments that management believes are not reflective of our underlying operations. Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP financial measures. 56 Results of Operations As a result of the sale of the Merchant Services Business and the Healthcare RCM Business, the historical results of these two disposed businesses have been reflected as discontinued operations in our condensed consolidated financial statements. Prior period results of operations and balance sheet information have been recast to reflect this presentation, and the discussion below relates to our continuing operations after giving effect to the reclassification for the Merchant Services Business and the Healthcare RCM Business as discontinued operations. 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 March 31, Change (in thousands) 2026 2025 Amount % Revenue $ 57,518 $ 54,135 $ 3,383 6.2 % Operating expenses Costs of services (excluding depreciation and amortization) 17,138 16,580 558 3.4 % Selling, general and administrative 29,058 26,282 2,776 10.6 % Depreciation and amortization 7,703 6,998 705 10.1 % Change in fair value of contingent consideration (124) (786) 662 (84.2) % Total operating expenses 53,775 49,074 4,701 9.6 % Income from operations 3,743 5,061 (1,318) (26.0) % Other expenses (income) Interest expense 1,141 446 695 155.8 % Other income (70) (593) 523 (88.2) % Total other expenses (income) 1,071 (147) 1,218 n/m Income before income taxes 2,672 5,208 (2,536) (48.7) % Provision for income taxes 478 2,885 (2,407) (83.4) % Net income from continuing operations 2,194 2,323 (129) (5.6) % Net loss from discontinued operations, net of income taxes — (1,554) 1,554 n/m Net income 2,194 769 1,425 185.3 % Net income from continuing operations attributable to non-controlling interest 730 1,304 (574) (44.0) % 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 57 Revenue 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 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. 58 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. 59 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 from discontinued operations attributable to i3 Verticals, Inc. (92) (972) 880 n/m Net income attributable to i3 Verticals, Inc. $ 1,948 $ 1,902 $ 46 2.4 % n/m = not meaningful Revenue 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. 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. 60 Selling, General and Administrative Expenses 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 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 $0.5 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 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 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 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. 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 $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. 61 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. Seasonality We have experienced in the past, and may continue to experience, seasonal fluctuations in our revenues as a result of consumer and business spending patterns. The number of business days in a month or quarter also may affect seasonal fluctuations. Certain revenues fluctuate with the fiscal calendars of our customers. Transactional revenue for our education customers is strongest in August, September, October, January and February, at the start of each semester, and generally weakens throughout the semester, with little revenue in the summer months of June and July. Operating expenses show less seasonal fluctuation, with the result that net income is subject to the same seasonal factors as our revenues. Liquidity and Capital Resources We have historically financed our operations and working capital through net cash from operating activities. 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 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. Our primary cash needs are to fund working capital requirements, make capital expenditures and otherwise invest in our technology infrastructure, fund acquisitions and related contingent consideration, make scheduled principal and interest payments on our outstanding indebtedness, pay tax distributions to members of i3 Verticals, LLC as discussed below, and make repurchases of shares of Class A common stock under our share repurchase program as discussed below. We consistently have positive cash flow provided by operations and expect that our cash flow from operations, current cash and cash equivalents and available borrowing capacity under the 2023 Senior Secured Credit Facility will be sufficient to fund our cash needs as described above for at least the next twelve months and foreseeable future. Our growth strategy includes acquisitions. We expect to fund acquisitions through a combination of cash on hand, net cash from operating activities, borrowings under our 2023 Senior Secured Credit Facility and through the issuance of equity and debt securities. As a holding company, we depend on distributions or loans from i3 Verticals, LLC to access funds earned by our operations. The covenants contained in the 2023 Senior Secured Credit Facility may restrict i3 Verticals, LLC’s ability to provide funds to i3 Verticals, Inc. Our 2023 Senior Secured Credit Facility, as amended, requires us to maintain a consolidated interest coverage ratio not less than 3.0 to 1.0 and total leverage ratio not exceeding 5.0 to 1.0. As of 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. 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. 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 62 Company holding cash in excess of the Company’s tax liabilities, its obligation to make payments under its tax receivables agreement, and any other expected liabilities of the Company. Thereafter, on January 23, 2025, the Company and i3 Verticals, LLC effected certain recapitalization actions in order to reduce excess cash held at the Company following this LLC Tax Distribution. For additional information regarding the ownership interest of the Company in i3 Verticals, LLC and the capitalization of i3 Verticals, LLC, see Note 1 to the accompanying unaudited condensed consolidated financial statements contained in this report. For additional information regarding these recapitalization transactions, see Note 15 to the accompanying unaudited condensed consolidated financial statements contained in this report. Cash Flows The discussion of our cash flows that follows does not include the impact of any adjustments to remove the Merchant Services Business and the Healthcare RCM Business as discontinued operations and is stated on a total company consolidated basis. The following table presents a summary of cash flows from operating, investing and financing activities for the following comparative periods. Six Months Ended March 31, 2026 and 2025 Six months ended March 31, 2026 2025 (in thousands) Net cash provided by (used in) operating activities $ 24,150 $ (15,627) Net cash used in investing activities $ (64,658) $ (3,675) Net cash used in financing activities $ (16,708) $ (60,029) Cash Flow from Operating Activities 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 $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. 63 Cash Flow from Financing Activities 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 On May 8, 2023, i3 Verticals, LLC (the “Borrower”), entered into that certain Credit Agreement (as amended by the first amendment dated June 26, 2024, and the second amendment dated May 5, 2025, the “2023 Senior Secured Credit Facility”) with the guarantors and lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent (“JPMorgan”). The 2023 Senior Secured Credit Facility replaced the prior senior secured credit facility of the Company which was entered into on May 9, 2019 (the "Prior Senior Secured Credit Facility"). As amended by the Second Amendment described below, the 2023 Senior Secured Credit Facility provides for aggregate commitments of $400.0 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. Such reduction became effective as of September 27, 2024, which is the date that the Borrower paid down the outstanding balance of the revolving loans with proceeds of the sale of the Merchant Services Business and achieved a consolidated total net leverage ratio of less than 2.0 to 1.0, instead of November 26, 2024, which is the date that the Borrower delivered its compliance certificate for the fiscal quarter ending September 30, 2024. Further, on May 5, 2025, the Borrower entered into a second amendment (the “Second Amendment”) to the 2023 Senior Secured Credit Facility to permit the Healthcare RCM Transactions. The Second Amendment also permanently reduced the aggregate lender commitments under the Revolver from $450.0 million to $400.0 million. The 2023 Senior Secured Credit Facility provides that the Borrower has the right to seek additional commitments to provide additional term loan facilities or additional revolving credit commitments in an aggregate principal amount up to, as of any date of determination, the sum of (i) the greater of $100.0 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 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. 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. 64 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 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 March 31, 2026). The base rate shall not be less than 1% in any event. The applicable margin is based upon the Borrower’s consolidated total net leverage ratio (as defined in the 2023 Senior Secured Credit Facility), as reflected in the schedule below: Consolidated Total Net Leverage Ratio Commitment Fee Letter of Credit Fee Term Benchmark Loans Base Rate Loans > 3.0 to 1.0 0.30 % 3.00 % 3.00 % 2.00 % > 2.5 to 1.0 but < 3.0 to 1.0 0.25 % 2.50 % 2.50 % 1.50 % > 2.0 to 1.0 but < 2.5 to 1.0 0.20 % 2.25 % 2.25 % 1.25 % < 2.0 to 1.0 0.15 % 2.00 % 2.00 % 1.00 % In addition to paying interest on outstanding principal under the Revolver, the Borrower will be required to pay a commitment fee equal to the product of between 0.15% and 0.30% (the applicable percentage depending on the Borrower’s consolidated total net leverage ratio as reflected in the schedule above, 0.15% at 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. In addition, if the total amount borrowed under the Revolver exceeds $400.0 million (as of the effectiveness of the Second Amendment) at any time, the 2023 Senior Secured Credit Facility requires the Borrower to prepay such excess outstanding amounts. All obligations under the 2023 Senior Secured Credit Facility are unconditionally guaranteed by the Company, and each of the Company’s existing and future direct and indirect material, wholly owned domestic subsidiaries, subject to certain exceptions. The obligations are secured by first-priority security interests in substantially all tangible and intangible assets of the Borrower, the Company and each subsidiary guarantor, in each case whether owned on the date of the initial borrowings or thereafter acquired. The 2023 Senior Secured Credit Facility places certain restrictions on the ability of the Borrower, the Company and their subsidiaries to, among other things, incur debt and liens; merge, consolidate or liquidate; dispose of assets; enter into hedging arrangements; make certain restricted payments; undertake transactions with affiliates; enter into sale-leaseback transactions; make certain investments; prepay or modify the terms of certain indebtedness; and modify the terms of certain organizational agreements. The 2023 Senior Secured Credit Facility contains customary events of default, including payment defaults, breaches of representations and warranties, covenant defaults, cross-defaults to other material indebtedness, certain events of bankruptcy and insolvency, material judgments, certain events with respect to employee benefit plans, invalidity of loan documents and certain changes in control. As of 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. 65 Exchangeable Notes On February 18, 2020, i3 Verticals, LLC issued $138.0 million aggregate principal amount of its 1.0% Exchangeable Notes due February 15, 2025. Prior to their maturity, the Exchangeable Notes bore interest at a fixed rate of 1.0% per year, payable semiannually in arrears on February 15 and August 15 of each year, beginning on August 15, 2020. The Exchangeable Notes were exchangeable into cash, shares of the Company's Class A common stock, or a combination thereof, at i3 Verticals, LLC's election, provided that in September 2022, the Company made the irrevocable election to settle the principal portion of its Exchangeable Notes only in cash. As of August 15, 2024, the Exchangeable Notes became exchangeable by the holders thereof at any time until the close of business on the second scheduled trading day immediately preceding the maturity date. The net proceeds from the sale of the Exchangeable Notes were approximately $132.8 million, after deducting discounts and commissions to the certain initial purchasers and other estimated fees and expenses. i3 Verticals, LLC used a portion of the net proceeds of the Exchangeable Notes offering to pay down outstanding borrowings under the Prior Senior Secured Credit Facility in connection with the effectiveness of the operative provisions of the amendment to the Prior Senior Secured Credit Facility and to pay the cost of the Note Hedge Transactions. On December 21, 2023, i3 Verticals, LLC entered into agreements to repurchase a portion of its Exchangeable Notes pursuant to privately negotiated transactions with a limited number of holders of the Exchangeable Notes (the "Exchangeable Note Repurchases"). The Exchangeable Note Repurchases were completed on January 18, 2024, and the Company paid $87.4 million to repurchase $90.8 million in aggregate principal amount of its Exchangeable Notes and to repay approximately $0.4 million in accrued interest on the repurchased portion of the Exchangeable Notes. The Exchangeable Notes matured and were repaid in full on February 15, 2025, and we paid $26.4 million in satisfaction of the outstanding principal and accrued interest in connection therewith. For additional information, see Note 8 to our condensed consolidated financial statements. Material Cash Requirements The following table summarizes our material cash requirements as of March 31, 2026, including those related to leases and borrowings: Payments Due by Period Contractual Obligations Total Less than 1 year 1 to 3 years 3 to 5 years More than 5 years (in thousands) Contract minimum fees (1) $ 18,268 $ 11,841 $ 5,896 $ 531 $ — Facility leases (2) 5,584 2,252 2,173 1,159 — 2023 Senior Secured Credit Facility and related interest (3) 91,940 5,152 86,788 — — Contingent consideration (4) 10,673 1,023 9,650 — — Total $ 126,465 $ 20,268 $ 104,507 $ 1,690 $ — __________________________ 1. 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. 2. In addition to the facility leases presented, we have $58 thousand in short-term leases. These payments will be made within the next twelve months. 3. 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. 4. In connection with certain of our acquisitions, we may be obligated to pay the seller of the acquired entity certain amounts of contingent consideration as set forth in the relevant purchasing documents, whereby additional consideration may be due upon the achievement of certain specified financial performance targets. i3 Verticals, Inc. accounts for the fair values of such contingent payments in accordance with the Level 3 financial instrument fair value hierarchy at the close of each subsequent reporting period. The acquisition-date fair value of contingent consideration is valued using a Monte Carlo simulation. i3 Verticals, Inc. subsequently reassesses such fair value based on probability estimates with respect to the acquired entity’s likelihood of achieving the respective financial performance targets. Potential payments under the Tax Receivable Agreement are not reflected in this table. See “—Tax Receivable Agreement” below. 66 Share Repurchase Programs 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 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). 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 such program. 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 On August 7, 2025, the Company entered into the August 2025 Share Repurchase Program, under which the Company was authorized to repurchase up to $50.0 million of outstanding shares of our Class A common stock (exclusive of fees, commissions or other expenses related to such repurchases). The August 2025 Share Repurchase Program replaced a prior share repurchase program entered into by the Company on August 8, 2024 (the “August 2024 Share Repurchase Program”) as further described below, which August 2024 Share Repurchase Program expired on August 8, 2025. Under the terms of August 2025 Share Repurchase Program, such program would terminate on the earlier of September 30, 2026, or when the maximum dollar amount under the authorization was expended. Pursuant to the August 2025 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 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. 67 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 On August 8, 2024, the Company announced that our Board of Directors had approved the August 2024 Share Repurchase Program, under which the Company was authorized to repurchase up to $50.0 million of outstanding shares of our Class A common stock (exclusive of fees, commissions or other expenses related to such repurchases). Under the terms of the August 2024 Share Repurchase Program, such program would terminate on the earlier of August 8, 2025, or when the maximum dollar amount under the authorization was expended. Pursuant to the August 2024 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 August 2024 Share Repurchase Program provided that, immediately prior to repurchases of Class A common stock under the August 2024 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 August 2024 Share Repurchase Program terminated on August 8, 2025. 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 reduction in both the number of shares outstanding and the Company's total stockholders' equity. Tax Receivable Agreement We are a party to a Tax Receivable Agreement with i3 Verticals, LLC and each of the Continuing Equity Owners, as described in Note 10 of our condensed consolidated financial statements. As a result of the Tax Receivable Agreement, we have been required to establish a liability in our condensed consolidated financial statements. That liability, which will increase upon the redemptions or exchanges of Common Units for our Class A common stock, generally represents 85% of the estimated future tax benefits, if any, relating to the increase in tax basis associated with the Common Units we received as a result of the reorganization transactions entered into in connection with our IPO and other redemptions or exchanges by holders of Common Units. If this election is made, the accelerated payment will be based on the present value of 100% of the estimated future tax benefits and, as a result, the associated liability reported on our condensed consolidated financial statements may be increased. We expect that the payments required under the Tax Receivable Agreement will be substantial. The actual increase in tax basis, as well as the amount and timing of any payments under the Tax Receivable Agreement, will vary depending upon a number of factors, including the timing of redemptions or exchanges by the holders of Common Units, the price of our Class A common stock at the time of the redemption or exchange, whether such redemptions or exchanges are taxable, the amount and timing of the taxable income we generate in the future and the tax rate then applicable as well as the portion of our payments under the Tax Receivable Agreement constituting imputed interest. We intend to fund the payment of the amounts due under the Tax Receivable Agreement out of the cash savings that we actually realize in respect of the attributes to which the Tax Receivable Agreement relates. 68 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. Future payments under the Tax Receivable Agreement with respect to subsequent exchanges would be in addition to these amounts. Critical Accounting Estimates Our discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. On an ongoing basis, we evaluate our estimates, including those related to revenue recognition, goodwill and intangible assets, contingent consideration, and equity-based compensation. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. Critical accounting policies are those that we consider the most critical to understanding our financial condition and results of operations. As of 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.