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01/10 18:20
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call indicates strong financial performance with significant revenue growth, SaaS expansion, and margin improvement. Despite some regulatory and supply chain challenges, the optimistic guidance and strategic acquisitions enhance the company's offerings. The share repurchase program and strong cash position further support a positive outlook. Although there are competitive pressures and acquisition risks, the overall sentiment is positive, with high single-digit organic revenue growth expected and a proactive approach to potential challenges.
RemainCo Revenues $54.1 million for Q2 2025, an increase of 11.6% from $48.5 million for Q2 2024, reflecting $4.4 million of organic growth (9%) and $1.2 million from the permitting and licensing acquisition.
Annual Recurring Revenues $164.5 million for Q2 2025, up 9.2% from $150.6 million for Q2 2024.
SaaS Revenue Growth 23% growth in SaaS revenue for Q2 2025.
Transaction-Based Revenue Growth 8% growth in transaction-based revenue for Q2 2025.
Recurring Software Services Growth 12% growth in recurring software services for Q2 2025.
Non-Recurring Sales of Software Licenses Increased to $2.8 million for Q2 2025 from $1 million for Q2 2024.
Adjusted EBITDA $15.8 million for Q2 2025, a 17% increase from $13.5 million for Q2 2024, with adjusted EBITDA margin increasing to 29.3% from 27.9% due to higher software sales.
Net Debt $4 million as of March 31, 2025.
Cash Position Approximately $64 million as of March 31, 2025.
Borrowing Capacity $400 million under revolving credit facility.
Sale of Healthcare RCM Business Sold for $96 million plus transaction costs and taxes of almost $18 million.
Utility Billing Software Acquisition Acquired for $9 million, expected to enhance offerings in the utilities market.
AI Service Agent: Release of an AI service agent in the transportation market deployed across 95 counties.
Generative AI Bots: Initial release focuses on generative AI bots capable of handling complex end-to-end transactions.
Land Records Application Module: New module in land records application focused on automated indexing, improving accuracy and efficiency.
Public Sector Expansion: Acquisition of a Utility Billing Software Company expands business into new states and enhances market presence.
Public Education Contracts: New contracts in five new markets including Idaho, Texas, Oklahoma, North Carolina, and Delaware.
JusticeTech Market: Finalizing contract for a statewide court system.
Revenue Growth: RemainCo revenues increased 11.6% to $54.1 million, with SaaS revenue growth of 23%.
Adjusted EBITDA: Adjusted EBITDA for RemainCo increased 17% to $15.8 million, with a margin of 29.3%.
Cash Position: Current cash position is approximately $64 million with $400 million borrowing capacity.
Divestiture of RCM Business: Divestiture of Healthcare RCM business to focus on public sector verticals.
Acquisition Strategy: Strong acquisition pipeline focused on public sector verticals.
Regulatory Issues: The company is monitoring the geopolitical landscape and sees opportunities emerging at the state and local levels tied to evolving efficiency requirements, but it is too early to determine if these represent a trend.
Supply Chain Challenges: There are ongoing delays with the Manitoba contract, which have resulted in the removal of about $2.5 million of revenues from the fiscal 2025 outlook.
Economic Factors: The company has removed projected revenues due to recent trade friction between the U.S. and Canada, indicating potential economic risks affecting revenue forecasts.
Competitive Pressures: The company acknowledges the need for better software solutions for government efficiency, indicating competitive pressures in the public sector software market.
Acquisition Risks: The recent acquisition of a Utility Billing Software Company may present integration challenges and risks associated with entering new markets.
Acquisition of Utility Billing Software Company: i3 Verticals acquired a Utility Billing Software Company for $9 million, expanding its business in various states and enhancing its offerings in the utilities market.
Focus on Public Sector Vertical: Post divestiture of the Healthcare RCM business, i3 Verticals is focused on the public sector vertical market, which had a second quarter revenue growth of 12%.
AI Applications Development: i3 is enhancing its AI market offerings, including the release of generative AI bots capable of handling complex transactions, improving customer satisfaction.
Fiscal 2025 Revenue Guidance: i3 Verticals expects revenues for RemainCo to be between $207 million and $217 million.
Fiscal 2025 Adjusted EBITDA Guidance: Adjusted EBITDA is expected to be between $56 million and $61 million.
Pro Forma Adjusted Diluted EPS Guidance: Pro forma adjusted diluted earnings per share is projected to be between $0.96 and $1.06.
Organic Revenue Growth Expectation: The company anticipates high single-digit organic revenue growth for RemainCo.
Adjusted EBITDA Margin Improvement: i3 expects adjusted EBITDA margin improvement of 50 to 100 basis points per year.
Share Repurchase Program: The company intends to use cash and any borrowings for acquisitions and potential stock repurchases.
The earnings call presents a mixed outlook. Positive factors include revenue growth, strong recurring revenues, and a solid cash position with no debt, alongside plans for stock repurchases and M&A. However, concerns arise from declining high-margin revenues, non-recurring revenue decrease, and vague management responses. The shift to SaaS and potential risks in Justice and utility investments add uncertainty. Overall, these elements balance out, leading to a neutral stock price prediction over the next two weeks.
The earnings call presents a mixed sentiment. The basic financial performance shows growth, but concerns about expenses related to CarOffer's wind-down and unclear management responses create uncertainty. Product development and market strategy show potential with AI tools and cross-selling, but risks remain with competition and market conditions. The shareholder return plan wasn't highlighted, leaving its impact uncertain. Overall, the sentiment is balanced, leading to a neutral stock price prediction.
The earnings call summary and Q&A reveal mixed signals. The company is focusing on growth sectors like Justice Tech and maintaining high single-digit organic revenue growth. However, the lack of tightened guidance, deceleration in organic growth due to past license deals, and management's reluctance to provide specific future projections create uncertainty. The strategic focus on public sector verticals and AI Infrastructure is positive, but the market's reaction may be tempered by these uncertainties. Overall, the sentiment is neutral, with potential for both positive and negative stock price movements.
The earnings call indicates strong financial performance with significant revenue growth, SaaS expansion, and margin improvement. Despite some regulatory and supply chain challenges, the optimistic guidance and strategic acquisitions enhance the company's offerings. The share repurchase program and strong cash position further support a positive outlook. Although there are competitive pressures and acquisition risks, the overall sentiment is positive, with high single-digit organic revenue growth expected and a proactive approach to potential challenges.
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