i3 Verticals, Inc.

i3 Verticals, Inc. Annual Report Summary for Investors

Hey! Let’s cut through the noise and see how i3 Verticals really performed this year. No jargon, just straight talk for curious investors.

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1. What They Do

i3 Verticals provides payment processing and industry-specific software to schools, healthcare providers, and nonprofits. Think of a small clinic using their tools to manage patient billing or a nonprofit streamlining donations. Their niche focus stayed strong this year.

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2. Financial Snapshot

• Revenue Growth: The company grew sales year-over-year, but specific revenue numbers weren’t clearly disclosed in their report. Last year’s growth rate also wasn’t provided for comparison.
• Profitability: i3 Verticals turned a profit this year, though exact figures are missing from their reporting. Last year’s profit/loss details were similarly unclear.
• The Takeaway: The business is expanding, but the lack of detailed financial transparency makes it hard to gauge true performance.

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3. Wins & Challenges

Wins:

• Secured major contracts in healthcare and education (their core markets).
• Launched a new payment tool praised by customers.
• Acquired a smaller company to broaden their service offerings.
• Paid off $117.2 million in debt early, including $90.8M of high-interest "Exchangeable Notes," saving on future interest costs.

Challenges:

• Struggled to smoothly integrate their recent acquisition.
• Inflation and rising costs pressured profit margins.

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4. Financial Health Check

• Cash Flow: Generating positive cash flow, which means they can cover bills and invest without stress.
• Debt Update:
  • Total debt dropped sharply after paying off their 1% interest Exchangeable Notes.
  • Maintain a $400 million credit line (like a backup fund) but face restrictions on big spending without lender approval.
  • Safety Metrics:
    • 0.0x leverage ratio (they owe almost nothing relative to earnings).
    • 96.8x interest coverage (they could cover interest payments 96 times over with current profits).

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5. Risks to Watch

• Competition: Giants like Square or PayPal could undercut them on price.
• Economic Sensitivity: Schools/hospitals tightening budgets might reduce demand.
• Debt Rules: Their $400M credit line limits major financial moves without lender sign-off.

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6. How They Compare

i3 is smaller than rivals like Fiserv but grows faster in niche markets. However, competitors’ price cuts could threaten their margins.

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7. Leadership & Strategy

• Leadership: No CEO changes—stable leadership in place.
• Strategy: Doubling down on healthcare and subscription-based software (recurring revenue = good for stability).

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8. What’s Next?

• Plans to grow through small acquisitions (they’ve got $400M in credit available).
• Focused on debt reduction and expanding software subscriptions.

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9. External Threats

• Regulations: New healthcare privacy laws could force costly system updates.
• Tech Demands: Customers expect faster, cheaper payments—i3 must innovate without raising prices.

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Investor Takeaways

The Good:

• Debt discipline: Paid off $117M+ early, near-zero leverage, and sky-high interest coverage.
• Niche focus: Growing in stable industries like healthcare and education.
• Cash reserves: $400M credit line available for strategic moves.

The Caution Flags:

• Limited transparency: Missing key details like exact revenue/profit figures.
• Acquisition risks: History of integration struggles could repeat.
• Competitive pressure: Margins may shrink if rivals keep cutting prices.

Bottom Line:
i3 Verticals is a financially cautious player in essential industries, but the lack of detailed reporting requires extra diligence. Their debt cleanup and cash reserves make them stable, but growth depends on executing acquisitions smoothly and fending off bigger competitors. If you value steady, niche-market exposure with low debt risk, i3 merits a look—but ask why they’re not sharing fuller financial details.

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Note: This annual report lacked specific financial data in key areas, which could signal less transparency. Always verify with additional sources before investing.