IIIV 10-K & 10-Q changes, risk factors and insider trading

The current cyber threat environment presents increased risk for all companies, in our industry and otherwise, including as a result of cyberattacks as well as ransomware attacks (through which an attacker renders an organization’s computer files inaccessible and demands a payment to return them or reinstate access), malicious software, advanced persistent threats, phishing and other attempts by malicious threat actors, including nation-state actors, ransomware groups and others to access, acquire, use disclose, shut down or manipulate information, systems, databases, processes and people. Like other companies in our industry, our systems are subject to recurring attempts by third parties to access information, manipulate data or disrupt our operations. Although we proactively employ multiple measures to defend our systems against intrusions and attacks and to protect the data we collect, our measures may not prevent unauthorized access or use of sensitive data. In addition, the cybersecurity-related threats that we face may remain undetected for an extended period of time. In addition, the rapid evolution and increased adoption of artificial intelligence (“AI”) and other emerging technologies also may heighten our cybersecurity risks by making cyberattacks and social engineering more difficult to detect, contain and mitigate.

While we have experienced cyber threats and incidents, we have not (whether directly or indirectly, including through our third-party vendors, customers or other business relations) been subject to a cybersecurity event of which we are aware that has had a material impact on us, including our business strategy, financial condition or results of operations. However, despite our security measures, there is no assurance that we, or the third parties with which we interact, will not experience a cybersecurity incident in the future that materially impacts us. If such an event were to occur it could materially disrupt our operations, expose us to liability under data breach laws, adversely impact our reputation, impact our customer relationships or subject us to other material losses or liability. In addition, a breach of our system or a third-party system upon which we rely may subject us to material losses or liability, including payment network fines, assessments and claims for unauthorized purchases with misappropriated credit, debit or card information, impersonation or other similar fraud claims. A misuse of such data or a cybersecurity breach could harm our reputation and deter our customers and potential customers from using electronic payments generally and our products and services specifically, thus reducing our revenue. In addition, any such misuse or breach could cause us to incur costs to correct the breaches or failures, increase our risk of regulatory scrutiny, subject us to lawsuits and result in the imposition of material penalties and fines under state and federal laws (including HIPAA) or by the payment networks. These risks may be heightened in connection with employees working from remote work environments, as our dependency on certain service providers, such as video conferencing and web conferencing services, has significantly increased. In addition, to access our network, products and services, customers and other third parties may use personal mobile devices or computing devices that are outside of our network environment and subject to their own security risks. While we maintain insurance coverage that may, subject to policy terms and conditions, cover certain aspects of cyber risks, such insurance coverage may exclude certain types of claims and otherwise be insufficient to cover all losses. A significant cybersecurity breach could also result in payment networks prohibiting us from processing transactions on their networks or the loss of our financial institution sponsorship that facilitates our participation in the payment networks, either of which could materially impede our ability to conduct business. In addition, as cybersecurity threats continue to evolve, we have expended, and expect to continue to expend, significant resources to continue to modify or enhance our protective measures or to investigate and remediate any information security vulnerabilities, but we still might be unable to successfully prevent certain cyberattacks.

We rely on third parties for specific services, software and hardware used in providing our products and services. These third parties, including hosting providers such as AWS, are necessary for our internal business needs and for the delivery of various cloud and other hosted solutions to customers. These hosting providers rely on the uninterrupted operation of data centers and the ability to protect computer equipment and information stored in these data centers against unanticipated failures, intrusions, viruses, acts of terrorism and similar damaging events. If one or more of our hosting providers were unable to support our requirements for an extended period, and we are not able to find an alternative solution in a timely fashion, our customer relationships could be at risk of termination, and our business, financial condition and results of operation could be adversely impacted. In addition, to the extent a third party service provider relies on AI, improper processing of data by those service providers could harm our reputation, business and clients, or expose us to legal liability.

Since inception in 2012, we have been engaged in growth activities and have made a significant number of acquisitions that have grown our business. This acquisition activity requires substantial capital and other expenditures. While we had substantialnet income attributable to i3 Verticals, Inc. in the years ended September 30, 2025 and 2024 as a result of, among other things, the gains associated with the divestitures of our Healthcare RCM Business during fiscal year 2025 and our Merchant Services Business during fiscal year 2024, respectively, we incurred a net incomeloss attributable to i3 Verticals, Inc. in the year ended September 30, 2024 as a result of the gain associated with the divestiture of our Merchant Services Business, taking into account the factors above, we incurred net losses attributable to i3 Verticals, Inc. in the years ended September 30, 2023 and 2022 and prior years, and we may continue to incur losses in the future. A substantial portion of our historical revenue growth has resulted from acquisitions. For the year ended September 30, 2024,2025, the incremental impact of revenues attributable to the acquisitions we completed in 2023the 2024 and 20242025 fiscal years were $2.4$5.9 million, or 1.0%2.7% of our total revenues, net of intercompany eliminations.revenues. We expect our cash needs to increase for the next several years as we:

As a result of these continuing costs and expenses, we need to generate significant revenues to attain and maintain profitability and positive cash flow. To date, our operations have been supported by equity and debt financings. If we do not continue to increase our revenues, our business, results of operations and financial condition could be materially and adversely affected.

The vertical marketenterprise software industry is competitive. Such competition could adversely affect the revenue we receive, and as a result, our margins, business, financial condition and results of operations.

Other software providers of payment processing services have established a sizable market share in our verticalpublic sector markets and service more customers than we do. Our growth will largely depend on our ability to increase our market share.

Our competitors in the vertical marketenterprise software industry include, among others, Tyler Technologies, Inc., Constellation Software, Inc.Inc., Verra Mobility Corp, EverCommerce Inc., Roper Technologies, Inc., Axon Technologies,Enterprise, Inc., Paymentus Holdings, Inc., Flywire Corp, Weave Communications Inc., Phreesia Inc.Corporation and WaystarCellebrite HoldingDI Corp.Ltd.

Many of our competitors may have substantially greater financial, technological, and marketing resources than we have. Accordingly, if these competitors specifically target our business model, they may be able to offer more attractive solutions to our customers. They also may be able to offer and provide products and services that we do not offer. Additionally, larger financial institutions may decide to perform in-house some or all of the services we provide or could provide, which may give them a competitive advantage in the market. There are also a large number of small providers of vertical market software services or payment processing services that provide various ranges of services to our customers and our potential customers. This competition may effectively limit the prices we can charge and requires us to control costs aggressively in order to maintain acceptable profit margins. Competition could also result in a loss of customers and greater difficulty attracting new customers. One or more of these factors could have a material adverse effect on our business, financial condition and results of operations.

The vertical marketenterprise software market is subject to constant and significant changes. This market is characterized by rapid technological evolution, new product and service introductions, evolving industry standards, changing customer needs and the entrance of non-traditional competitors. To remain competitive, we continually pursue initiatives to develop new products and services to compete in an effective manner. These projects carry risks, such as cost overruns, delays in delivery, performance problems and lack of customer acceptance. In addition, new products and offerings may not perform as intended or generate the business or revenue growth expected. Additionally, we look for acquisition opportunities, investments and alliance relationships with other businesses that will increase our market penetration and enhance our technological capabilities, product offerings and distribution capabilities. Any delay in the delivery of new products and services or the failure to differentiate our products and services or to accurately predict and address market demand could render our products and services less desirable, or even obsolete.Further, the development of AI is complex and uncertain, and presents various risks and uncertainties, including as the result of the rapidly evolving legal, regulatory and ethical landscape associated with the use of AI. Our inability to successfully or effectively implement AI initiatives, or other deficiencies or failures in our AI systems or initiatives, could subject us to competitive harm, legal and regulatory risk, and increase our cybersecurity, intellectual property, and privacy risks.obsolete. Any of the foregoing could have a material and adverse effect on our operating results and financial condition.

The continued growth and development of our software and related services will depend on our ability to anticipate and adapt to changes in consumer behavior. For example, our failure to timely integrate emerging payment methods into our software could cause us to lose traction among our customers ,customers, resulting in a corresponding loss of revenue.

Our payment processing technology offerings in connection with our software must also integrate with a variety of network, hardware, mobile and software platforms and technologies. Any failure to deliver an effective, reliable and secure service or any performance issue that arises could result in significant processing or reporting errors or other losses.Ourlosses. Our future success will depend in part on our ability to develop or adapt to technological changes and evolving industry standards. If we are unable to develop, adapt to or access technological changes or evolving industry standards on a timely and cost-effective basis, our business, financial condition and results of operations would be materially adversely affected.

Some of our solutions require or benefit from the use of third-party hardware products that we sell to our customers, such as kiosks, payment terminals and point of sale equipment. A number of such products come from limited number of suppliers. Due to our reliance on the products produced by a limited number of suppliers, we are subject to the risk of shortages and long lead times in the supply of certain products. Additionally, various sources of supply-chain risk, including strikes or shutdowns at delivery ports or loss of or damage to our products while they are in transit or storage, intellectual property theft, losses due to tampering, issues with quality or sourcing control, failure by our suppliers to comply with applicable laws and regulation, potential tariffs or other trade restrictions, or other similar problems could limit or delay the supply of our products or harm our reputation. In the event of a shortage or supply interruption from suppliers, we may not be able to develop alternate sources quickly, cost-effectively, or at all. Any interruption or delay in manufacturing supply, any increases in costs, or the inability to obtain these products from alternate sources at acceptable prices and within a reasonable amount of time, could harm our ability to provide products to our customers.

We are subject to risks associated with general economic and politicalgeopolitical risk,conditions, the business cycles of our customers and changes in the overall level of consumer and commercial spending, which could negatively impact our business, financial condition and results of operations.

These conditions make it extremely difficult for us to accurately forecast and plan future business activities. Moreover, if these business, macroeconomic or political conditions continue or worsen, our business, financial condition and results of operations could be materially adversely affected. In addition, our business, financial condition and results of operations could be materially adversely affected by outbreaks of illnesses, epidemics or pandemics, climate-related events, including extreme weather events and natural disasters, riots, strikes, civil insurrection or social unrest, terrorist or criminal activities, or other catastrophic events or other political and economic instability.

Our future growth and profitability depend, in part, upon our continued growth within the vertical markets in which we currently operate. As part of our strategy to expand into new customer bases, we look for acquisition opportunities and partnerships with other businesses that will allow us to increase our market penetration, technological capabilities, product offerings and distribution capabilities.

Growth in our current vertical markets also depends upon our ability to adapt existing technology or develop new technologies to meet the particular needs of new and existing customers. We may not have adequate financial or technological resources to develop effective and secure services that will satisfy the demands of these new customers. Penetrating these new customers in our existing vertical markets may also prove to be more challenging or costly or take longer than we may anticipate. If we fail to increase our penetration into existing vertical markets, we may not be able to continue to grow our revenues and earnings.

There are certain risks associated with the sale of our Merchant Services Business which was completed in September 2024.2024 and the sale of our Healthcare RCM Business which was completed in May 2025.

In September 2024, we completed the sale of our Merchant Services Business, and in May 2025, we completed the sale of our Healthcare RCM Business. There is no assurance that we will be able to realize the anticipated benefits from the disposition of our Merchant Services Business or our Healthcare RCM Business. Moreover, there are post-closing risks associated with the ancillary agreements entered into by us at the closing,closing includingof theeach transitionof servicesthese agreement, the processing services agreement, and the restrictive covenant agreement.businesses. In addition, pursuant to the Merchant Services Purchase Agreement, we agreed to indemnify Payroc with respect to certain matters and we agreed to retain certain liabilities related to the Merchant Services Business, which in any such case could result in liability to us following the closing. Further,We wehave received, and may in the future receive, indemnification claims from Payroc. We are nownot highlyable dependentto onpredict the successultimate outcome of these or future claims that Payroc may assert against us in connection with the sale of our twoMerchant remainingServices businessBusiness, segments,any of which could have a material adverse effect on our Publicresults Sectorof segmentoperations and financial condition. In addition, pursuant to the Healthcare segment.RCM Purchase Agreement, we agreed to indemnify Infinx with respect to certain matters, which could result in liability to us following the closing.

Our intellectual property is critical to our future success, particularly in our strategic verticals where we may offer proprietary software solutions to our customers.success. We rely on a combination of contractual license rights and copyright, trademark and trade secret laws to establish and protect our proprietary technology. Third parties may challenge, invalidate, circumvent, infringe or misappropriate our intellectual property or the intellectual property of our third-party licensors, or such intellectual property may not be sufficient to permit us to take advantage of current market trends or otherwise to provide competitive advantages, which could result in costly redesign efforts, discontinuance of certain service offerings or other competitive harm. Others, including our competitors, may independently develop similar technology, duplicate our products and services, design around or reverse engineer our intellectual property, and in such cases neither we nor our third-party licensors may be able to assert intellectual property rights against such parties. Further, our contractual license arrangements may be subject to termination or renegotiation with unfavorable terms to us, and our third-party licensors may be subject to bankruptcy, insolvency and other adverse business dynamics, any of which might affect our ability to use and exploit the products licensed to us by these third-party licensors. We may have to litigate to enforce or determine the scope and enforceability of our intellectual property rights (including litigation against our third-party licensors), which is expensive, could cause a diversion of resources and may not prove successful. Moreover, use of AI by our personnel, whether authorized or unauthorized, could increase the risk that our intellectual property and other proprietary information may be unintentionally disclosed. The loss of intellectual property protection or the inability to obtain third-party intellectual property could harm our business and ability to compete.

We depend on the ability and experience of a number of our key personnel who have substantial experience with our operations, the rapidly changing payment processing industry and the vertical markets in which we offer our products and services. Many of our key personnel have worked for us for a significant amount of time or were recruited by us specifically due to their experience. It is possible that the loss of the services of one or a combination of our senior executives or key managers could have a material adverse effect on our business, financial condition and results of operations. In addition, contractual obligations related to confidentiality and assignment of intellectual property rights may be ineffective or unenforceable, and departing employees may share our proprietary information with competitors in ways that could adversely impact us.

We have experienced in the past, and expect to continue to experience, seasonal fluctuations in our revenues. The number of business days in a month or quarter also may affect seasonal fluctuations. Certain revenues infrom our Publicpublic Sectorsector segmentcustomers fluctuate with the fiscal calendars of our customers. Transactional revenue for our Educationeducation customers is strongest in August, September, October, January and February, at the start of each semester, and generally weakens throughout the semester, with little revenue in the summer months of June and July. Operating expenses show less seasonal fluctuation, with the result that net income is subject to the same seasonal factors as our revenues. The growth in our business may have partially overshadowed seasonal trends to date, and seasonal impacts on our business may be more pronounced in the future. Volatility in our key operating metrics or their rates of growth could have a negative impact on our financial results and investor perceptions of our business prospects.

In the ordinary course of business, we are the subject of various claims and legal proceedings and may become the subject of claims, litigation or investigations, including commercial disputes and employee claims, such as claims of age discrimination, sexual harassment, gender discrimination, immigration violations or other local, state and federal labor law violations, and from time to time may be involved in governmental or regulatory investigationsinvestigations, audits or similar matters arising out of our current or future business. Any proceedings or claims asserted against us or our management, regardless of merit or eventual outcome, could harm our reputation or the reputation of our management and have an adverse impact on our relationship with our customers and other third parties and could lead to additional related claims. Further, any determination of noncompliance with applicable laws and regulations may result in criminal and/or civil penalties. In light of the potential cost and uncertainty involved in litigation, and the potential disruption to normal business operations, we have in the past and may in the future settle matters even when we believe we have a meritorious defense. Certain claims may seek injunctive relief, which could disrupt the ordinary conduct of our business and operations or increase our cost of doing business. Our insurance or indemnities may not fully cover all claims that may be asserted against us. Furthermore, there is no guarantee that we will be successful in defending ourselves in pending or future litigation or similar matters under various laws. Any judgments or settlements in any pending litigation or future claims, litigation or investigation could have a material adverse effect on our business, financial condition and results of operations.

We employ resources in India, to support our onshore operations. Countries outside of the United States may be subject to relatively higher degrees of political and social instability and may lack the infrastructure to withstand political unrest or natural disasters. The occurrence of natural disasters, pandemics, or political or economic instability in these countries could interfere with work performed by these labor sources or could result in our having to replace or reduce these labor sources. If countries in which we operate experience civil or political unrest or acts of terrorism, our operations in such countries could be materially impaired. For example, India has experienced civil unrest and terrorism and has experienced historical and recent tensions with Pakistan. The occurrence of any of these circumstances could result in disruptions to our resources in India. Our vendors in other countries could potentially shut down suddenly for any reason, including financial problems or personnel issues. Such disruptions could decrease efficiency, increase our costs and have an adverse effect on our business or results of operations.

We are subject to numerous federal and state laws and regulations that affect the electronicpublic paymentssector enterprise software industry and the other industries in which we provide services. Regulation of our industry has increased significantly in recent years and is constantly evolving. We are also subject to other laws and regulations, including those addressing U.S. financial services, consumer protection, escheat and privacy and information security, among other subjects. The cost of compliance with applicable laws and regulations is high and may increase in the future. Changes to statutes, regulations or industry standards, including interpretation and implementation of statutes, regulations or standards, could increase our cost of doing business or affect the competitive balance. Failure to comply with laws and regulations may result in substantial civil and/or criminal penalties and may otherwise have an adverse effect on our business, including as a result of the limitation, suspension or termination of services provided to, or by, third parties, and the imposition of other penalties or fines.parties. To the extent these laws and regulations negatively impact the business, operations or financial condition of our customers, our business and results of operations could be materially and adversely affected because, among other matters, our customers could have less capacity to purchase products and services from us, could decide to avoid or abandon certain lines of business, or could seek to pass on increased costs to us by negotiating price reductions. In addition, we could be required to invest a significant amount of time and resources in response to new or changes to existing laws, regulations or oversight, or to modify the manner in which we contract with or provide products and services to our customers; and those laws and regulations could directly or indirectly limit how much we can charge for our services. We may not be able to update our existing products and services, or develop new ones, to satisfy our customers’ needs. Any of these events, if realized, could have a material adverse effect on our business, results of operations and financial condition.

Various laws and regulations, including those in other industries in which we provide services, even if such laws and regulations are not directed at us, may require us to make significant efforts to change our products and services and may require that we incur additional compliance costs and change how we price our products and services to our customers .customers. Implementing new compliance risk mitigation strategies efforts can be significant with the complexity of regulatory requirements, and we are devoting and will continue to devote significant resources to address compliance requirements. Furthermore, regulatory actions may cause changes in business practices by us and other industry participants which could affect how we market, price and distribute our products and services, and which could materially adversely affect our business, financial condition and results of operations. In addition, even an inadvertent failure to comply with laws and regulations, as well as rapidly evolving social expectations of corporate fairness, could damage our business or our reputation.

If we violate the Family Educational Rights and Privacy Act ("FERPA") or Protection of Pupil Rights Amendment ("PPRA"), it could result in a material breach of contract with one or more of our customers in our Education sub-verticalcustomers and could harm our reputation. Further, if we disclose student information in violation of FERPA or PPRA, our access to student information could be suspended.

We strivestrived to structure our Healthcare RCM Business to comply with applicable healthcare laws, regulations and other requirements applicable to us directly and to our customers and contractors, but there can be no assurance that our operationswe will not be challenged or impacted by enforcement initiatives.initiatives with respect to conduct occurring prior to the sale of our Healthcare RCM Business. We have been, and in the future may become, involved in governmental investigations, audits, reviews and assessments. Violation of these laws may result in criminal and/or civil penalties, including substantial monetary penalties. Even an unsuccessful challenge by regulatory and other authorities or private whistleblowers could be expensive and time-consuming, could result in loss of business, exposure to adverse publicity and injury to our reputation and could adversely affect our ability to retain and attract customers.

Inflationary pressures, elevated interest rate levels, monetary policy, and the current geopolitical situation (including the military conflicts in the Middle East and Ukraine), tariff and trade-related developments, and budgetary and political pressures to reduce government spending are causing broad economic uncertainty and could potentially cause new, or exacerbate existing, economic challenges that may impact us. TheseFor conditionsexample, couldwe worsenhave business operations in Canada, and the determination of Canadian governmental authorities or businesses to cancel or not renew contracts, or otherwise reduce business, with U.S. companies as a result of adversecurrent economictrade developmentstensions impactingwith the U.S.United and/orStates, globalas economies.has Asbeen theadvocated by certain Canadian governmental authorities, could adversely impact our financial results. The future magnitude, duration and effects of these macroeconomic and geopolitical conditions are difficult to predictpredict, atand thisas time,such we are unable to predict the extent of the potential effect of these conditions on our financial results.

At September 30, 2024,2025, we had $86.5$66.7 million of cash and cash equivalents and $450.0$400.0 million of available capacity under our 2023 Senior Secured Credit FacilityFacility, subject to our financial covenants. As of September 30, 2024,2025, we were in compliance with these covenants with a consolidated interest coverage ratio and total leverage ratio 3.30x,96.8x, and 0.06x,0.0x, respectively. For additional information about our Exchangeable Notes and 2023 Senior Secured Credit Facility, see the section entitled “Liquidity and Capital Resources” below.

On September 20, 2024, i3 Verticals, LLC, and i3 Holdings Sub, Inc., a wholly-owned subsidiary of i3 Verticals, LLC (“Corporation Seller,” and collectively with i3 Verticals, LLC, the “Sellers”) completed the transactions (such closing, the “Closing”) contemplated by that certain Securities Purchase Agreement dated as of June 26, 2024 (the “Purchase Agreement”), by and among i3 Verticals, LLC, Corporation Seller, the Company (solely for the purpose of providing a guaranty of the obligations of Sellers as set forth in the Purchase Agreement), Payroc Buyer, LLC (“Buyer”), and Payroc WorldAccess, LLC (solely for the purpose of providing a guaranty of the obligations of Buyer as set forth in the Purchase Agreement), the entry into which Purchase Agreement was previously disclosed in a Current Report on Form 8-K filed by the Company on June 26, 2024. Pursuant to the terms of the Purchase Agreement, the Sellers sold to Buyer the equity interests of certain direct and indirect wholly-owned subsidiaries of Sellers (the “Merchant Services Acquired Entities”) primarily comprising the Company's merchant services business, including its associated proprietary technology (the “Merchant Services Business”), after giving effect to the contribution of certain assets and the assignment of certain liabilities associated with the Merchant Services Business from i3 Verticals, LLC and certain affiliates to the Merchant Services Acquired Entities pursuant to a contribution agreement which was entered into immediately prior to the Closing. Pursuant to the terms of the Purchase Agreement, Buyer paid to Sellers an aggregate purchase price of approximately $438$439.5 million (paid in cash at closing, after giving effect to estimatedpost-closing net working capital, indebtedness and cash adjustments), payable in cash at the Closing, subject to post-closing purchase price adjustments. The Merchant Services Business comprised our entire former Merchant Services segment and a small portion of our former Software and Services segment.

On August 1, 2024, we completed the acquisition of a business to expand our Public Sector permitting and licensing software offerings in the Public Sector vertical.offerings. Total purchase consideration was $18.0 million in cash funded by the proceeds from our revolving credit facility, the issuance of 311,634 shares of our Class A common stock in a private placement, and $2.0 million in the acquisition date estimated fair value of contingent consideration.cash consideration (the final amount of such contingent cash payment of up to of up to $22.0 million is dependent upon achievement of specified financial performance targets, as defined in the purchase agreement).

During the year ended September 30, 2024, we also completed the acquisition of one other business to expand our software offerings. Total purchase consideration was $1.3 million, including $1.1 million in cash funded by the proceeds from our revolving credit facility and $0.2 million in the acquisition date estimated fair value of contingent consideration.cash consideration (the final amount of such contingent cash payment of up to of up to $0.8 million is dependent upon achievement of specified financial performance targets, as defined in the purchase agreement).

Depreciation and amortization. Depreciation expense consists of depreciation on our investments in property, equipment and computer hardware and software. Depreciation expense is recognized on a straight-line basis over the estimated useful life of the asset. Amortization expense for acquired intangible assets and internally developed software is recognized usingstraight-line, which we consider materially consistent with a proportional cash flow method. Amortization expense for internally developed software is recognized over the estimated useful life of the asset. The useful lives of contract-based intangible assets are equal to the terms of the agreement.

Interest expense, net.expense. Our interest expense consists of interest on our outstanding indebtedness under our 2023 Senior Secured Credit Facility, our Prior Senior Secured Credit Facility andand, prior to their maturity, the Exchangeable Notes, and amortization of or write offs of debt issuance costs. Interest income is generated from cash and cash equivalents held at financial institutions.

As a result of the sale of the Merchant Services Business pursuantin to2024 and the PurchaseHealthcare Agreement,RCM Business in 2025, the historical results of operations for the Merchant Services segmentBusiness and a small portion of the historicalHealthcare Software and Services segment which had been included in the Merchant ServicesRCM Business have been reflected as discontinued operations in our consolidated financialstatements statements.of Afteroperations givingfor effectall toperiods these developments, the Company has two reportable segments, Public Sector and Healthcare, and an Other category.presented.

ARR is the annualized revenue derived from software-as-a-service (“SaaS”) arrangements, transaction-based software-revenue, software maintenance, recurring software-based services, payments revenue and other recurring revenue sources within the quarter. This excludes contracts that are not recurring or are one-time in nature. We focus on ARR because it helps us to assess the health and trajectory of our business. ARR does not have a standardized definition and is therefore unlikely to be comparable to similarly titled measures presented by other companies. It should be reviewed independently of revenue and it is not a forecast. Additionally, ARR does not take into account seasonality. The active contracts at the end of a reporting period used in calculating ARR may or may not be extended or renewed by our customers. ARR from continuing operations for the three months ended September 30, 20242025 and 20232024 was $188.2$165.3 million and $175.1$151.4 million, respectively, representing a period-to-period growth rate of 7.5%.9.2%.

Adjusted EBITDA margin is used by the Company to measure operating performance and for purposes of making decisions about allocating resources to our business segments.decisions. Adjusted EBITDA margin for any particular period is adjusted EBITDA as a percentage of revenue for such period. Adjusted EBITDA is calculated as earnings adjusted to exclude interest, tax, depreciation, amortization, stock-compensation expense, non-cash changes in the fair value of contingent consideration, M&A-related expenses, and certain other adjustments that management believes are not reflective of our underlying operations. Adjusted EBITDA and Adjustedadjusted EBITDA margin are presented at a segment level in our financial statement footnotes in accordance with ASC 280 – “Segment Reporting.” Adjusted EBITDA margin for our public sector segment was 40% for each of the years ended September 30, 2024 and 2023. Further, Adjusted EBITDA margin for our healthcare segment was 20% for the year ended September 30, 2024, and 21% for the year ended September 30, 2023. For additional information regarding Adjusted EBITDA and Adjusted EBITDA margin, see Note 18 to our consolidated financial statements. Adjusted EBITDA and Adjusted EBITDA margin, when presented on a consolidated basis in our other public disclosures, are non-GAAP financial measures.

As a result of the sale of the Merchant Services Business and the Healthcare RCM Business, the historical results of thethese Merchanttwo Servicesdisposed Businessbusinesses have been reflected as discontinued operations in our consolidated financial statements. Prior period results of operations and balance sheet information have been recast to reflect this presentation, and the discussion below relates to our continuing operations after giving effect to the reclassification for the Merchant Services Business and the Healthcare RCM Business as discontinued operations.

•operating and financial restrictions imposed by our 2023 Senior Secured Credit Facility; and

At MarchJune 31,30, 2026, we had $7.1$2.6 million of cash and cash equivalents and $319.0$285.7 million of available capacity under our 2023 Senior Secured Credit Facility subject to our financial covenants. As of MarchJune 31,30, 2026, we were in compliance with these covenants with a consolidated interest coverage ratio and total leverage ratio 16.2x,13.5x, and 1.2x,1.9x, respectively. For additional information about our 2023 Senior Secured Credit Facility, see the section entitled “Liquidity and Capital Resources” below.

Acquisitions during the sixnine months ended MarchJune 31,30, 2026

During the sixnine months ended MarchJune 31,30, 2026, we completed the acquisition of a business that operates in the transportation market at the state level. The acquired business provides driver and motor vehicle insurance verification solutions. Total purchase consideration was $60.0 million in cash payable at closing funded by proceeds from our revolving credit facility and cash on hand, plus an additional amount of cash contingent consideration payable following the closing in an amount of up to $20.0 million, dependent upon the achievement of specified financial performance targets, as defined in the purchase agreement, for performance periods extending through May 2028. The acquisition date estimated fair value of such cash contingent consideration is $7.6 million.

Acquisitions during the sixnine months ended MarchJune 31,30, 2025

Costs of services. Costs of services include costs directly related to our software and related services, including personnel costs related to installation of our software, conversion of client data, training client personnel, customer support activities and various other services provided directly to customers and hosting and related software costs for directly supporting our customers. Additionally, costs of services include costs directly attributable related to payment processing services such as processing and bank sponsorship. Losses resulting from chargebacks against a customer are included in costs of services. Residual payments to our distribution partners and the cost of equipment sold is also included in costcosts of services. Amortization arising from capitalized software development is not included in costs of services. Costs of services are recognized at the time the related revenue is recognized.

Interest expense. Our interest expense consists of interest on our outstanding indebtedness under our 2023 Senior Secured Credit Facility, and prior to their maturity, the Exchangeable Notes,Facility and amortization of or write offs of debt issuance costs.

ARR does not have a standardized definition and is therefore unlikely to be comparable to similarly titled measures presented by other companies. It should be reviewed independently of revenue, and it is not a forecast. Additionally, ARR does not take into account seasonality. The active contracts at the end of a reporting period used in calculating ARR may or may not be extended or renewed by our customers. ARR from continuing operations for the three months ended MarchJune 31,30, 2026 and 2025 was $183.5$174.1 million and $164.5$160.8 million, respectively, representing a period-to-period growth rate of 11.6%.8.3%.

Three Months Ended MarchJune 31,30, 2026 Compared to Three Months Ended MarchJune 31,30, 2025

Revenue increased $3.4$1.2 million, or 6.2%,2.2%, to $57.5$53.1 million for the three months ended MarchJune 31,30, 2026 from $54.1$51.9 million for the three months ended MarchJune 31,30, 2025. The increase was driven by an increase of $4.8$3.3 million in recurring revenues, partially offset by a decrease of $1.4$2.2 million in non-recurring revenues.

Costs of services increaseddecreased $0.6$0.4 million, or 3.4%,2.5%, to $17.1$16.3 million for the three months ended MarchJune 31,30, 2026 from $16.6$16.7 million for the three months ended MarchJune 31,30, 2025. The increasedecrease was primarily driven by a decrease in people costs of $1.8 million, partially offset by an increase in software costs of $1.4 million, partially offset by a decrease in people costs of $0.8$1.5 million for the three months ended MarchJune 31,30, 2026 from the three months ended MarchJune 31,30, 2025.

Selling, general and administrative expenses increaseddecreased $2.8$4.2 million, or 10.6%,12.6%, to $29.1$28.9 million for the three months ended MarchJune 31,30, 2026 from $26.3$33.0 million for the three months ended MarchJune 31,30, 2025. The increasedecrease was driven by a decrease in M&A-related expenses of $5.2 million, which was higher during three months ended June 30, 2025. In the prior period, we incurred higher expenses, for which we were reimbursed through the transition services agreements with Infinx and Payroc, the employee leasing arrangement with Infinx, and the processing services agreement with Payroc, and for which revenue is recognized in other income. This decrease was partially offset by an increase in people costs (including stock compensation expense) of $1.1$0.5 million as well as increases in other expenses, including the provision for doubtful accounts, rent expense, professional fees and marketing expense for the three months ended MarchJune 31,30, 2026 from the three months ended MarchJune 31,30, 2025.

Depreciation and amortization increased $0.7$0.4 million, or 10.1%,5.2%, to $7.7$7.3 million for the three months ended MarchJune 31,30, 2026 from $7.0 million for the three months ended MarchJune 31,30, 2025. Amortization expense increased $0.6$0.2 million for the three months ended MarchJune 31,30, 2026 from three months ended MarchJune 31,30, 2025, primarily due to an increase in capitalized software project releases, driving an increase in amortization expense, and amortization expense recorded for intangible assets and capitalized software acquired from current year and prior year acquisitions. Depreciation expense increased $0.1 million for the three months ended MarchJune 31,30, 2026 from three months ended MarchJune 31,30, 2025.

Change in fair value of contingent consideration to be paid in connection with acquisitions was a benefitcharge of $0.1$1.4 million for the three months ended MarchJune 31,30, 2026 related to adjustments to the expected present value of consideration to be paid for earnouts. The change in fair value of contingent consideration for the three months ended MarchJune 31,30, 2025 was a benefit of $0.8$26 million.thousand.

Interest expense increased $0.7$1.0 million, or 155.8%,125.8%, to $1.1$1.8 million for the three months ended MarchJune 31,30, 2026 from $0.4$0.8 million for the three months ended MarchJune 31,30, 2025. The increase reflects a higher average outstanding debt balance for the three months ended MarchJune 31,30, 2026, as compared to the three months ended MarchJune 31,30, 2025.

Other income was $0.1$9.9 million during the three months ended MarchJune 31,30, 2026 compared to $0.6$4.6 million during the three months ended MarchJune 31,30, 2025. Other income during the three months ended MarchJune 31,30, 2026 reflects incomean fromunrealized gain on an investment of $9.9 million due to adjusting the transitioncarrying servicesvalue agreementof anda processingminority servicesequity agreement relatedinvestment to its fair value as the saleresult of thea Merchantthird Servicesparty Business,investment income fromin the transitionentity servicesunderlying agreementour entered into at the closing of the sale of the Healthcare RCM Businessinvestment and interest income generated from cash held at financial institutions. Other income during the three months ended MarchJune 31,30, 2025 reflects income from the transition services agreement and employee leasing arrangement entered into at the closing of the sale of the Healthcare RCM Business of $3.9 million, income from the transition services agreement and processing services agreement relatedentered tointo at the closing of the sale of the Merchant Services Business of $0.5$0.3 million and interest income generated from cash held at financial institutions of $0.1$0.4 million.

The provision for income taxes decreasedincreased to a provision for $0.5$1.3 million for the three months ended MarchJune 31,30, 2026 from a provisionbenefit forof $2.9$22 millionthousand for three months ended MarchJune 31,30, 2025. Our effective tax rate was 18% for the three months ended MarchJune 31,30, 2026. Our effective tax rate differs from the federal statutory rate of 21% primarily due to the tax structure of the Company, valuation allowance activity, stock compensation and state tax expense. The income of majority-owned i3 Verticals, LLC is not taxed at the entity-level. i3 Verticals, Inc. is subject to federal, state and local income taxes with respect to its allocable share of any taxable income of i3 Verticals, LLC and is taxed at the prevailing corporate tax rates.

Net (Loss) Income from Discontinued Operations, Net of Income Taxes

We had no net income from discontinued operations, net of income tax, for the three months ended March 31, 2026. For the three months ended March 31, 2025, we had a net loss from discontinued operations, net of income tax, of $1.6$0.2 million for the three months ended June 30, 2026. For the three months ended June 30, 2025, we had net income from discontinued operations, net of income tax, of $19.4 million. See Note 2 to our condensed consolidated financial statements for additional information and detail on the financial results of discontinued operations.

The net loss from discontinued operations, net of income tax, for the three months ended MarchJune 31,30, 20252026 reflects the adjustments to the gain on the sale of the MerchantHealthcare ServicesRCM Business. The net income from discontinued operations, net of income tax, for the three months ended June 30, 2025 reflects the gain on the sale of the Healthcare RCM Business of $26.0 million and a completepartial quarter of business activity for the Healthcare RCM Business, including revenue of $9.1$3.6 million, operating expenses of $10.2$5.8 million and a provision for income taxes of $0.1$4.3 million.

SixNine Months Ended MarchJune 31,30, 2026 Compared to SixNine Months Ended MarchJune 31,30, 2025

Revenue increased $3.8$5.0 million, or 3.6%,3.2%, to $110.2$163.3 million for the sixnine months ended MarchJune 31,30, 2026 from $106.4$158.3 million for the sixnine months ended MarchJune 31,30, 2025. The increase was driven by an increase of $8.1$11.4 million in recurring revenues, partially offset by a decrease of $4.2$6.4 million in non-recurring revenues.

Costs of services increased $2.6$2.1 million, or 8.0%,4.4%, to $34.7$51.0 million for the sixnine months ended MarchJune 31,30, 2026 from $32.2$48.9 million for the sixnine months ended MarchJune 31,30, 2025. The increase was primarily driven by an increase in software costs of $3.0$4.5 million,million and other costs of $0.5 million and payments costs of $0.3$0.9 million, partially offset by a decrease in people costs of $1.3$3.1 million for the sixnine months ended MarchJune 31,30, 2026 from the sixnine months ended MarchJune 31,30, 2025.

Selling, general and administrative expenses increaseddecreased $3.3$0.9 million, or 6.2%,1.0%, to $56.0$84.9 million for the sixnine months ended MarchJune 31,30, 2026 from $52.8$85.8 million for the sixnine months ended MarchJune 31,30, 2025. The increasedecrease was driven by a decrease in M&A-related expenses of $6.0 million, which was higher during nine months ended June 30, 2025. In the prior period, we incurred higher expenses, for which we were reimbursed through the transition services agreements with Infinx and Payroc, the employee leasing arrangement with Infinx, and the processing services agreement with Payroc, and for which revenue is recognized in other income. This decrease was partially offset by an increase in people costs (including stock compensation expense) of $2.6$3.1 million as well as increases in other expenses, including the provision for doubtful accounts, rentmarketing expense,expense and professional fees and marketing expense for the sixnine months ended MarchJune 31,30, 2026 from the sixnine months ended MarchJune 31,30, 2025.

Depreciation and amortization increased $0.7$1.1 million, or 5.1%, to $14.6$21.9 million for the sixnine months ended MarchJune 31,30, 2026 from $13.9$20.8 million for the sixnine months ended MarchJune 31,30, 2025. Amortization expense increased $0.6$0.8 million for the sixnine months ended MarchJune 31,30, 2026 from sixnine months ended MarchJune 31,30, 2025, primarily due to an increase in capitalized software project releases, driving an increase in amortization expense, and amortization expense recorded for intangible assets and capitalized software acquired from current year and prior year acquisitions. Depreciation expense increased $0.1$0.3 million for the sixnine months ended MarchJune 31,30, 2026 from sixnine months ended MarchJune 31,30, 2025.

Change in fair value of contingent consideration to be paid in connection with acquisitions was a benefitcharge of $0.5$0.9 million for the sixnine months ended MarchJune 31,30, 2026 related to adjustments to the expected present value of consideration to be paid for earnouts. The change in fair value of contingent consideration for the sixnine months ended MarchJune 31,30, 2025 was a charge of $0.5$0.4 million.

Interest expense increased $0.4$1.4 million, or 35.2%,73.0%, to $1.5$3.3 million for the sixnine months ended MarchJune 31,30, 2026 from $1.1$1.9 million for the sixnine months ended MarchJune 31,30, 2025. The increase reflects a higher average outstanding debt balance for the sixnine months ended MarchJune 31,30, 2026, as compared to the sixnine months ended MarchJune 31,30, 2025.

Other income was $0.6$10.5 million during the sixnine months ended MarchJune 31,30, 2026 compared to $2.4$7.0 million during the sixnine months ended MarchJune 31,30, 2025. Other income during the sixnine months ended MarchJune 31,30, 2026 reflects an unrealized gain on an investment of $9.9 million due to adjusting the carrying value of a minority equity investment to its fair value as the result of a third party investment in the entity underlying our investment, as well as interest income generated from cash held at financial institutions of $0.5 million, income from the transition services agreement entered into at the closing of the sale of the Healthcare RCM Business of $0.2 million and income from the transition services agreement and processing services agreement related to the sale of the Merchant Services Business of $0.1 million, partially offset by a loss on disposal of property and equipment of $0.1 million related to the sale of a building purchased through a previous acquisition. Other income during the sixnine months ended MarchJune 31,30, 2025 reflects income generated from the transition services agreement and employee leasing arrangement entered into at the closing of the sale of the Healthcare RCM Business of $3.9 million, income from the transition services agreement and processing services agreement relatedentered tointo at the closing of the sale of the Merchant Services Business of $1.0$1.3 million, interest income generated from cash held at financial institutions of $0.9$1.2 million, and a gain on disposal of property and equipment of $0.6 million related to the sale of a building purchased through previous acquisitions.

The provision for income taxes decreased to a provision for $1.2$2.5 million for the sixnine months ended MarchJune 31,30, 2026 from a provision of $3.3 million for sixnine months ended MarchJune 31,30, 2025. Our effective tax rate was 26%21% for the sixnine months ended MarchJune 31,30, 2026. Our effective tax rate differs from the federal statutory rate of 21% primarily due to the tax structure of the Company, valuation allowance activity, stock compensation and state tax expense. The income of majority-owned i3 Verticals, LLC is not taxed at the entity-level. i3 Verticals, Inc. is subject to federal, state and local income taxes with respect to its allocable share of any taxable income of i3 Verticals, LLC and is taxed at the prevailing corporate tax rates.

Net (Loss) Income from Discontinued Operations, Net of Income Taxes

We had $0.1$0.4 million in net loss from discontinued operations, net of income tax, for the sixnine months ended MarchJune 31,30, 2026 compared to $1.2$18.2 million in net lossincome from discontinued operations, net of income tax, for the sixnine months ended MarchJune 31,30, 2025. See Note 2 to our condensed consolidated financial statements for additional information and detail on the financial results of discontinued operations.

The net loss from discontinued operations, net of income tax, for the sixnine months ended MarchJune 31,30, 2026 reflects adjustments to the gain on the sale of the Healthcare RCM Business. The net lossincome from discontinued operations, net of income tax, for the sixnine months ended MarchJune 31,30, 2025 reflects adjustments to the gain on the sale of the MerchantHealthcare ServicesRCM Business, netBusiness of income tax, of $0.5$26.0 million and a nearly complete sixnine months of business activity for the Healthcare RCM Business, including revenue of $18.9$22.5 million, operating expenses of $19.3$25.1 million and a provision for income taxes of $0.3$4.6 million.

We have historically financed our operations and working capital through net cash from operating activities. As of MarchJune 31,30, 2026, we had $7.1$2.6 million of cash and cash equivalents and available borrowing capacity of $319.0$285.7 million under our 2023 Senior Secured Credit Facility, subject to the financial covenants. We usually minimize cash balances by making payments on our revolving line of credit to minimize borrowings and interest expense. As of MarchJune 31,30, 2026, we had borrowings outstanding of $81.0$114.3 million under the 2023 Senior Secured Credit Facility. For additional information about our 2023 Senior Secured Credit Facility, see the section entitled "2023 Senior Secured Credit Facility" below.

Our 2023 Senior Secured Credit Facility, as amended, requires us to maintain a consolidated interest coverage ratio not less than 3.0 to 1.0 and total leverage ratio not exceeding 5.0 to 1.0. As of MarchJune 31,30, 2026, we were in compliance with these covenants with a consolidated interest coverage ratio and total leverage ratio of 16.2x13.5x and 1.2x,1.9x, respectively. Although we believe our liquidity position remains strong, there can be no assurance that we will be able to raise additional funds, in the form of debt or equity, or to amend our 2023 Senior Secured Credit Facility on terms acceptable to us, if at all, even if we determined such actions were necessary in the future. For additional information about our 2023 Senior Secured Credit Facility, see Note 6 to our condensed consolidated financial statements.

SixNine Months Ended MarchJune 31,30, 2026 and 2025

Net cash provided by operating activities increased $39.8$46.7 million to $24.2$38.4 million netfor cashthe providednine bymonths ended June 30, 2026 from $8.3 million used in operating activities for the sixnine months ended MarchJune 31, 2026 from net cash used in operating activities of $15.6 million for the six months ended March 31,30, 2025.

The increase in net cash provided by operating activities was drivenprimarily bydue increases in cash provided byto changes in net operating assets and liabilities of $41.5$46.2 million during the sixnine months ended MarchJune 31,30, 2026 from the sixnine months ended MarchJune 31,30, 2025, which are impacted by the timing of collections and payments. IncomeIn the prior year, income taxes and other liabilities related to the sale of the Merchant Services Business in September 2024 were accrued in fiscal year 2024,2024 butwere paid during the sixnine months ended MarchJune 31,30, 2025, driving most of the increases in net operating assets and liabilities during the six months ended March 31, 2026 from the six months ended March 31, 2025 Partially offsetting the increases driven by changes in net operating assets and liabilities, our net income decreased from $3.9 million for the six months ended March 31, 2025 to $3.1 million for the six months ended March 31, 2026.liabilities.

Net cash used in investing activities increased $61.0$146.9 million to $64.7$68.1 million for the sixnine months ended MarchJune 31,30, 2026 from $3.7$78.8 million provided by investing activities for the sixnine months ended MarchJune 31,30, 2025. The largest driversale of the increaseHealthcare inRCM Business during the nine months ended June 30, 2025 contributed $96.1 million to net cash usedprovided inby investing activitiesactivities. was the $60.0 million inAdditionally, cash paid for acquisitions (net of cash acquired) duringincreased the$49.0 sixmillion months ended March 31, 2026, whereas we had no cash paid for acquisitions (net of cash acquired) during the six months ended March 31, 2025. Additionally,and proceeds from the sale of property and equipment decreased $1.1 million during the sixnine months ended MarchJune 31,30, 2026 from the sixnine months ended MarchJune 31,30, 2025.

Net cash used in financing activities decreased $43.3$72.1 million to $16.7$32.2 million for the sixnine months ended MarchJune 31,30, 2026 from $60.0$104.3 million for the sixnine months ended MarchJune 31,30, 2025. The decrease in net cash used in financing activities was driven by an increase in net borrowings on the revolving credit facility of $69.0$114.3 million, a decrease of $22.2$22.6 million in payments for required distributions on behalf of members for tax obligations and a decrease of $7.4 million in required distributions to members under the Tax Receivable Agreement. The decrease was also related to the $26.2 million in payments for repurchases of the Company's previously outstanding 1.0% Exchangeable Senior Notes due February 15, 2025 during the sixnine months ended MarchJune 31,30, 2025. Partially offsetting these decreases in net cash used in financing activities for the sixnine months ended MarchJune 31,30, 2026 from the sixnine months ended MarchJune 31,30, 2025 was an increase of $77.3$99.3 million in payments for repurchases of Class A common stock and an increase of $4.6 million in payments for employees' tax withholdings from net settled stock option exercises and RSU releases.stock.