- i3 Verticals completed a strategic transition in QQ2 2025, divesting its Merchant Services and Healthcare RCM segments and focusing on RemainCo, a higher-margin public sector software and payments business. RemainCo delivered solid top-line growth, with revenue of approximately $54.1 million (Q2 2025, RemainCo), up 11.6% year over year on a segment basis and supported by a 9% organic growth component plus approximately $1.2 million from the public sector permitting/licensing acquisition. Annual Recurring Revenue (ARR) rose 9.2% to $164.5 million, underscoring the durability of the service mix (SaaS + recurring software services). Adjusted EBITDA rose 17% to $15.8 million, representing a 29.3% EBITDA margin for RemainCo, aided by high-margin software sales. Despite these improvements, reported net income in QQ2 2025 was a modest loss (-$0.15 million) as the company navigates divestitures and non-operating items.
- The company closed the Acquisition of the Utility Billing Software business for $9 million after quarter-end, broadening the public sector footprint and enabling cross-sell opportunities in utilities, ERP, and related domains. Management emphasized disciplined capital allocation, including potential stock repurchases and substantial borrowing capacity under its revolving facility (>$400 million), with cash on hand around $64 million post-divestitures. Management also signaled a trajectory of margin improvement (50â100 bps per year) through higher software mix and cost discipline while guiding RemainCo to low-to-mid single-digit organic revenue growth in the absence of Healthcare RCM.
- The AI program received emphasis as a differentiator, including i3 Infrastructure Group and AI bot-enabled services across transportation, land records, e-portal, and customer service interfaces, designed to improve efficiency and customer outcomes. Investors should note execution risk around the Manitoba contract delays and the completion of ongoing integrations and product rollouts, which could influence near-term revenue cadence and profitability. Overall, the QQ2 2025 results reinforce a transition thesis: a more focused, cash-generative RemainCo with a strengthened M&A pipeline and an AI-enhanced product roadmap, but bearing execution risks as the company absorbs recent divestitures and integrates new acquisitions.