i3 Verticals Reports Modest Revenue Growth and Higher Profit in Fiscal Third Quarter 2026
NASHVILLE, Tenn. — i3 Verticals, Inc. (Nasdaq: IIIV) has released its financial results for the third quarter of fiscal 2026, highlighting steady growth in recurring revenue, improved profitability, and continued investments in expanding its software platform despite facing softer-than-expected performance in certain business areas.
The company reported that revenue from continuing operations reached $53.1 million for the quarter ended June 30, 2026, representing a 2.2% increase compared with the same quarter a year earlier. For the first nine months of fiscal 2026, revenue climbed to $163.3 million, up 3.2% from the corresponding period in fiscal 2025. The results reflect the company’s ongoing transformation following the divestitures of its Merchant Services and Healthcare Revenue Cycle Management businesses, with continuing operations now focused on software and technology solutions across public sector and healthcare markets.
Profitability improved significantly during the quarter. Net income from continuing operations totaled $5.9 million, a sharp turnaround from the $1.0 million net loss reported in the same quarter last year. For the nine-month period, net income from continuing operations increased to $9.2 million, more than doubling the $4.1 million earned during the comparable period in fiscal 2025.
Net income attributable to i3 Verticals shareholders also strengthened. The company generated $3.6 million in third-quarter net income attributable to common shareholders compared with a $0.4 million loss in the prior-year quarter. For the first nine months of the fiscal year, attributable earnings reached $5.7 million, compared with $2.5 million during the same period last year.
The company’s operating profitability continued to improve as adjusted EBITDA from continuing operations increased 4.6% year over year to $13.3 million during the third quarter. For the nine-month period, adjusted EBITDA reached $43.5 million, representing a modest 0.9% increase over the prior-year period.
Adjusted EBITDA margin also showed improvement during the quarter, rising to 25.1% of revenue compared with 24.5% a year earlier. For the nine-month period, however, the margin measured 26.7%, slightly below the 27.3% reported during the first nine months of fiscal 2025.
Diluted earnings per share also reflected the company’s stronger financial performance. Diluted net income per share from continuing operations attributable to Class A common shareholders reached $0.19 during the third quarter compared with a $0.03 loss per share in the prior-year quarter. For the first nine months of fiscal 2026, diluted earnings per share increased to $0.25, compared with $0.10 during the same period last year.
On a non-GAAP basis, adjusted diluted earnings per share improved to $0.25 for the quarter, compared with $0.23 in the prior-year period. During the first nine months of fiscal 2026, adjusted diluted EPS reached $0.82, exceeding the $0.78 reported during the comparable period in fiscal 2025.
One of the company’s strongest performance indicators continued to be recurring revenue. Annualized Recurring Revenue (ARR), which measures the annualized value of recurring customer contracts, increased to $174.1 million compared with $160.8 million one year earlier. The increase represents 8.3% year-over-year growth, demonstrating continued customer demand for subscription-based software, transaction processing, maintenance services, and recurring technology solutions.
Management noted that recurring revenue remains central to the company’s long-term growth strategy because it provides greater revenue visibility and creates a more predictable financial foundation. ARR includes software-as-a-service subscriptions, recurring transaction revenue, software maintenance, software-enabled services, payments revenue, and other contractual recurring revenue streams while excluding one-time sales.
i3 Chairman and Chief Executive Officer Greg Daily acknowledged that overall quarterly performance fell short of management’s internal expectations, citing continued softness in several non-recurring revenue categories and delays in customer implementations that affected quarterly results.
i3 Despite these short-term headwinds, Daily emphasized that the company’s long-term strategy remains intact. He pointed to continued growth in recurring revenue and several important operational milestones achieved during the quarter that are expected to contribute to future expansion.
i3 Among those milestones was the successful deployment of four major statewide services within the company’s Transportation business. According to management, these implementations are expected to strengthen recurring revenue generation in future periods as customers transition from implementation phases into ongoing operational usage.
Daily also highlighted the company’s continued capital allocation strategy through aggressive share repurchases. Since October 2024, i3 Verticals has repurchased more than 20% of its outstanding shares under previously authorized buyback programs. Management views these repurchases as a reflection of confidence in the company’s long-term business outlook and commitment to enhancing shareholder value.
i3 Although the company reported improved profitability, management revised its financial outlook for the remainder of fiscal 2026 to reflect current operating conditions.
For the fiscal year ending September 30, 2026, i3 Verticals now expects revenue to range between $216 million and $221 million, compared with its previous guidance of $221 million to $229 million.
The company also lowered its adjusted EBITDA forecast. Management now expects adjusted EBITDA to range between $57 million and $60 million, compared with previous guidance of $61 million to $65 million.
Similarly, adjusted diluted earnings per share guidance was revised downward. The company now forecasts adjusted diluted EPS between $1.08 and $1.12, compared with its earlier expectation of $1.09 to $1.15.
i3 Management explained that these projections exclude the impact of potential future acquisitions as well as transaction-related expenses. The non-GAAP earnings guidance also assumes a long-term effective tax rate of 25%, reflecting a blended federal and state tax estimate.
Because of uncertainties surrounding future contingent consideration adjustments, stock-based compensation, and income tax impacts, the company stated that it is unable to provide a reconciliation of forward-looking non-GAAP guidance to corresponding GAAP measures without unreasonable effort.
The i3 financial statements presented for fiscal 2026 reflect significant changes to the company’s operating structure. Results from both the Merchant Services business, sold in September 2024, and the Healthcare Revenue Cycle Management business, divested in May 2025, are now classified as discontinued operations. Historical financial statements have been recast accordingly to provide a consistent comparison of continuing operations across reporting periods.
Management believes this presentation provides investors with a clearer picture of the company’s remaining core software and technology operations following the strategic divestitures.
Looking ahead, i3 Verticals remains focused on expanding recurring software revenue, accelerating implementation of newly awarded government contracts, improving operational execution, and leveraging its specialized technology platforms across public sector and healthcare markets.
Company executives believe that continued investment in software innovation, combined with growing adoption of statewide digital services and disciplined capital allocation, positions the business for sustainable long-term growth despite near-term revenue challenges.
To discuss the quarterly results in greater detail, i3 Verticals will host a conference call on Friday, August 7, 2026, at 8:30 a.m. Eastern Time. Investors and analysts will have the opportunity to hear management’s commentary on financial performance, operational developments, and the revised fiscal 2026 outlook. A live webcast and replay will also be available through the Investor Relations section of the company’s website.
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