i3 Verticals’ third quarter of fiscal 2024 (quarter ended June 30, 2024) reflects a transitional period as the company executes the realignment and advances toward a pure-play vertical software and services model. In continuing operations (RemainCo), Q3 revenue declined 2% year-over-year to $56.0 million, driven by a reduction in non-recurring software license sales, partially offset by growth in recurring revenue sources. ARR expanded 4% year-over-year to $181.3 million, underscoring the resilience of the company’s recurring revenue base even as non-recurring revenue declines weigh on reported profitability. EBITDA in the quarter was $6.3 million (margin ~11.2%), down from $6.95–$7.5 million in the prior-year period depending on the exact comparison, with the EBITDA margin compressing from about 25% in Q3 2023 to roughly 23% in Q3 2024, largely due to $2.0 million less software license revenue and ongoing transition costs.
Management characterized 2024 as a transitional year and reiterated a constructive long-term growth framework: high-single-digit organic growth with margin improvement of 50–100 basis points per year starting in fiscal 2025, driven by SaaS monetization, a normalization of Manitoba-related revenue, and ongoing momentum in the utilities and education verticals. The August 1 acquisition of a permitting and licensing company enhances the Public Sector footprint and introduces further transactional revenue opportunities, with management signaling double-digit growth from that platform in fiscal 2025. Looking ahead, management provided 2025 targets of $243–$263 million in revenues and $63–$71.5 million in adjusted EBITDA, implying continued deleveraging after the anticipated sale of the Merchant Services business and a scaled, more capital-light growth trajectory. The firm also highlighted a strong M&A pipeline and a commitment to resume acquisitions post-divestiture, reflecting an emphasis on cross-sell and vertical expansion.
Overall, the QQ3 results underscore a company undergoing structural change toward a more software-centric, higher-mix recurring revenue model, supported by a diversified Public Sector footprint, strategic healthcare wins, and a disciplined capital agenda. Investors should monitor the execution of the SaaS transition, Manitoba cadence restoration, cross-sell contribution, and the timing/composition of acquisitions as key drivers of the 2025 outlook.