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i3 Verticals Inc

i3 Verticals, Inc. provides enterprise software and services to public sector entities in the United States and Canada. Its offerings include digital solutions for court systems, such as e-filing and revenue cycle management, as well as computer-aided dispatch, records management, evidence management, jail management, mobile solutions, and livescan. The company also provides software for vehicle title and registration, driver's license and permit management, and motor carrier compliance for departments of transportation. Additional solutions include digital customer engagement platforms, billing and back-office management, school lunch program management, government fund accounting, digital land records, computer-assisted mass appraisal, licensing and permitting, and tax and revenue collection. Founded in 2012, i3 Verticals is based in Nashville, Tennessee.

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I3 Verticals signals FY2027 mid-single-digit growth while targeting 100 to 200 bps margin expansion

I3 Verticals lowered its fiscal 2026 guidance and reset fiscal 2027 expectations to mid-single-digit revenue growth, while targeting 100 to 200 basis points of margin expansion. Chairman and CEO Gregory Daily said third-quarter results fell short of expectations, with the primary challenge being slower growth in less-recurring revenue streams. CFO Geoffrey Smith reported revenues of $53.1 million, up 2%, but organic revenue declined 2% due to a $1.8 million decrease in professional services, and non-recurring revenue sources fell 18% year-over-year. Annual recurring revenue grew 8% to $174.1 million, representing 82% of total revenue, with SaaS revenue up 38% and transaction-based revenue up 5%. The company updated its fiscal 2026 guidance to revenue of $216 million to $221 million, adjusted EBITDA of $57 million to $60 million, and adjusted diluted earnings per share of $1.08 to $1.12, which Smith said was meaningfully lower than prior guidance due to lower professional services and a deceleration of transaction revenues. For fiscal 2027, management expects mid-single-digit revenue growth, down from previously guided high single-digit growth, and sees margin expansion of 100 to 200 basis points, supported by cost actions, AI-driven efficiencies, and multiple go-lives.
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Heartland Value Fund Says AI Will Benefit I3 Verticals Despite Disruption Fears

Heartland Value Fund believes artificial intelligence will benefit I3 Verticals rather than disrupt it, according to the fund's second-quarter 2026 investor letter. The fund noted that shares of I3 Verticals, which provides enterprise software to public sector entities including school payment systems, slumped from around $34 last fall to below $20 in May over concerns that automation and machine learning technologies are disrupting software stocks. Heartland argued that the company's data, domain expertise, and technical knowledge in a slow-to-adopt public sector environment create a deeply embedded platform, and management has stated customers will likely adopt AI more slowly than the company can deliver. The fund sees earnings per share accelerating as recent application investments roll out and internal cost savings from automation take hold, and highlighted that the stock trades at just 10.3 times fiscal year 2026 EBITDA, a steep discount to its largest peer at 17.1 times despite similar growth and margins.
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