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i3 Verticals Reports Fourth Quarter and Full Year 2018 Financial Results

Provides Updated Financial Outlook for Fiscal 2019

NASHVILLE, Tenn., Nov. 28, 2018 (GLOBE NEWSWIRE) -- i3 Verticals, Inc. (IIIV) (“i3 Verticals” or the “Company”) today reported its financial results for the fiscal fourth quarter and year ended September 30, 2018.

Highlights for the fiscal fourth quarter and full year of 2018 vs. 2017

  • Fourth quarter revenue was $84.1 million, an increase of 17% over the prior year's fourth quarter; Full year revenue was $323.5 million, an increase of 23% over the prior year.

  • Fourth quarter net revenue1, which excludes interchange and related network fees, was $28.1 million, an increase of 38% over the prior year's fourth quarter; Full year net revenue1 was $109.0 million, an increase of 48% over the prior year.

  • Fourth quarter net income was $2.9 million; Full year net loss was $5.0 million.

  • Fourth quarter adjusted EBITDA1 was $7.8 million, an increase of 36% over the prior year's fourth quarter; Full year adjusted EBITDA1 was $30.3 million, an increase of 58% over the prior year.

  • Fourth quarter adjusted EBITDA1 as a percentage of net revenue1 was 28%, compared to 28% in the prior year's fourth quarter; Full year adjusted EBITDA1 as a percentage of net revenue1 was 28%, an increase from 26% in the prior year.

  • Fourth quarter diluted net income per share available to Class A common stock was $0.09; Full year diluted net loss per share available to Class A common stock2 was $0.08.

  • Fourth quarter and full year pro forma adjusted diluted earnings per share1, which gives pro forma effect to the Company's going forward effective tax rate following its Up-C reorganization in connection with its initial public offering (“IPO”), was $0.19 and $0.57, respectively.

  • Integrated payments3 were 45% and 43% of payment volume for the three months and full year ended September 30, 2018, respectively.

  • Debt was reduced by $74.1 million during the year ended September 30, 2018, primarily with net proceeds from the Company’s IPO and the conversion of a portion of its junior subordinated notes in connection with the IPO. At September 30, 2018, the ratio of consolidated debt-to-EBITDA, as defined in the Company's Senior Secured Credit Facility, was 1.27x.

  • Since the third quarter earnings release issued on August 9, 2018, the Company has completed three acquisitions, all within the Proprietary Software and Payments reporting segment. Two of the acquisitions were within the public sector vertical, and the third acquisition provided technology that enhances the Burton Platform. One of the public sector acquisitions was completed during the fourth quarter. The other two acquisitions were completed subsequent to September 30, 2018. The aggregate purchase price, excluding contingent consideration, for these three acquisitions was $27.1 million.

  1. Represents a non-GAAP financial measure. For additional information (including reconciliation information), see the attached schedules to this release.

  2. Diluted loss per Class A common stock is presented only for the period after the Company’s Reorganization Transactions (as defined in the Company's prospectus, dated June 20, 2018, filed with the Securities and Exchange Commission).

  3. Integrated payments represents payment transactions that are generated in situations where payment technology is embedded within the Company's own proprietary software, a client’s software or critical business process.

Greg Daily, Chairman and CEO of i3 Verticals, commented, “We are pleased with our fourth quarter performance. Our strategy to grow in strategic vertical markets continues to be validated as we saw healthy organic sales growth, particularly within our Proprietary Software and Payments segment, in the quarter. In addition, we continue to strengthen our strategy through complementary acquisitions, as we now provide a comprehensive suite of software products in our public sector vertical, including solutions for property assessments, tax collection, court payments and sheriff office payments. Our acquisitions have also accelerated the development of our Burton Platform, and we now offer point-to-point encryption and have expanded the number of EMV-enabled devices that process on the Burton Platform. These enhancements reduce the scope of PCI compliance costs for our ISV customers and our clients. We continue to have a strong balance sheet with adequate debt capacity, and our acquisition pipeline is active and healthy. We believe the expansion of our integrated payments, coupled with our proprietary technology, positions us to deliver continued growth in the coming years.”

Revised 2019 Outlook

The Company's practice is to provide annual guidance, excluding future acquisitions and transaction-related costs. The outlook also excludes the effect of software deferred revenue write-downs resulting from acquisitions that have already closed.1 The Company is providing the following revised outlook for the fiscal year ending September 30, 2019:

(in thousands, except per share amounts)

Outlook Range

Fiscal year ended September 30, 2019

Adjusted net revenue (non-GAAP)

$

122,000

-

$

128,000

Adjusted EBITDA (non-GAAP)

$

35,000

-

$

36,000

Adjusted diluted earnings per share(2) (non-GAAP)

$

0.84

-

$

0.87

_______________________

  1. GAAP require companies to adjust, as necessary, beginning balances of acquired deferred revenue to fair value as part of acquisition accounting as defined by GAAP. For the 2019 outlook, the Company has removed the effect of these adjustments to acquisition date fair value from acquisitions that have closed as of the earnings release date.

  2. Assumes an effective pro forma tax rate of 25.0% (non-GAAP).

With respect to the “Revised 2019 Outlook” above, reconciliation of adjusted net revenue, adjusted EBITDA and adjusted diluted earnings per share guidance to the closest corresponding GAAP measure on a forward-looking basis is not available without unreasonable efforts. This inability results from the inherent difficulty in forecasting generally and quantifying certain projected amounts that are necessary for such reconciliations. In particular, sufficient information is not available to calculate certain adjustments required for such reconciliations, including changes in the fair value of contingent consideration, income tax expenses of i3 Verticals, Inc. and equity-based compensation expense. The Company expects these adjustments may have a potentially significant impact on future GAAP financial results.

Conference Call

The Company will host a conference call on Thursday, November 29, 2018, at 8:00 a.m. ET, to discuss financial results and operations. To listen to the call live via telephone, participants should dial (323) 794-2423 approximately 10 minutes prior to the start of the call. A telephonic replay will be available from 11:00 a.m. ET on November 29, 2018, through December 6, 2018, by dialing (719) 457-0820 and entering Confirmation Code 3349103.

To listen to the call live via webcast, participants should visit the “Investors” section of the Company’s website, www.i3verticals.com, and go to the “Events & Presentations” page approximately 10 minutes prior to the start of the call. The online replay will be available on this page of the Company’s website beginning shortly after the conclusion of the call and will remain available for 30 days.

Non-GAAP Measures

This press release contains information prepared in conformity with GAAP as well as non-GAAP information. It is management’s intent to provide non-GAAP financial information to enhance understanding of the Company's consolidated financial information as prepared in accordance with GAAP. This non-GAAP information should be considered by the reader in addition to, but not instead of, the financial statements prepared in accordance with GAAP. Each non-GAAP financial measure and the most directly comparable GAAP financial measure are presented so as not to imply that more emphasis should be placed on the non-GAAP measure. The non-GAAP financial information presented may be determined or calculated differently by other companies.

Additional information about non-GAAP financial measures, including, but not limited to, net revenue, pro forma adjusted net income, adjusted EBITDA and pro forma adjusted diluted EPS, and a reconciliation of those measures to the most directly comparable GAAP measures is included on pages 10-12 in the financial schedules of this release.

About i3 Verticals

Helping drive the convergence of software and payments, i3 Verticals delivers integrated payment and software solutions to small- and medium-sized businesses and other organizations in strategic vertical markets, such as education, non-profit, the public sector, property management, and healthcare and to the business-to-business payments market. With a broad suite of payment and software solutions that address the specific needs of its clients in each strategic vertical market, i3 Verticals processed approximately $11.6 billion in total payment volume for the 12 months ended September 30, 2018.

Forward-Looking Statements

This release contains forward-looking statements that are subject to risks and uncertainties. All statements other than statements of historical fact or relating to present facts or current conditions included in this release are forward-looking statements including any statements regarding guidance and statements of a general economic or industry specific nature. Forward-looking statements give the Company's current expectations and projections relating to its financial condition, results of operations, guidance, plans, objectives, future performance and business. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as “anticipate,” “estimate,” “expect,” “project,” “plan,” “intend,” “believe,” “may,” “will,” “should,” “could have,” “exceed,” “significantly,” “likely” and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events.

The forward-looking statements contained in this release are based on assumptions that we have made in light of the Company's industry experience and its perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances. As you review and consider information presented herein, you should understand that these statements are not guarantees of future performance or results. They depend upon future events and are subject to risks, uncertainties (many of which are beyond the Company's control) and assumptions. Although we believe that these forward-looking statements are based on reasonable assumptions, you should be aware that many factors could affect the Company's actual future performance or results and cause them to differ materially from those anticipated in the forward-looking statements. Certain of these factors and other risks are discussed in the Company's filings with the U.S. Securities and Exchange Commission (the “SEC”) and include, but are not limited to: (i) the ability to generate revenues sufficient to attain and maintain profitability and positive cash flow; (ii) competition in the Company's industry and the ability to compete effectively; (iii) the dependence on non-exclusive distribution partners to market the Company's products and services; (iv) the ability to keep pace with rapid developments and changes in the Company's industry and provide new products and services; (v) liability and reputation damage from unauthorized disclosure, destruction or modification of data or disruption of the Company's services; (vi) technical, operational and regulatory risks related to the Company's information technology systems and third-party providers’ systems; (vii) reliance on third parties for significant services; (viii) exposure to economic conditions and political risks affecting consumer and commercial spending, including the use of credit cards; (ix) the ability to increase the Company's existing vertical markets, expand into new vertical markets and execute the Company's growth strategy; (x) the ability to successfully complete acquisitions and effectively integrate those acquisitions into the Company's services; (xi) degradation of the quality of the Company's products, services and support; (xii) the ability to retain clients, many of which are SMBs, which can be difficult and costly to retain; (xiii) the Company's ability to successfully manage its intellectual property; (xiv) the ability to attract, recruit, retain and develop key personnel and qualified employees; (xv) risks related to laws, regulations and industry standards; (xvi) the Company's indebtedness and potential increases in its indebtedness; and (xvii) operating and financial restrictions imposed by the Company's senior secured credit facility. Should one or more of these risks or uncertainties materialize, or should any of these assumptions prove incorrect, the Company's actual results may vary in material respects from those projected in these forward-looking statements. More information on potential factors that could affect the Company’s financial results and performance is included in the “Risk Factors” section of the Company’s recently filed registration statement on Form S-1, as amended, and other filings with the SEC.

Any forward-looking statement made by us in this release speaks only as of the date of this release. Factors or events that could cause the Company's actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. The Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.

Contacts:

Clay Whitson

Scott Meriwether

Chief Financial Officer

Senior Vice President - Finance

(615) 988-9890

(615) 942-6175

cwhitson@i3verticals.com

smeriwether@i3verticals.com


i3 Verticals, Inc. Consolidated Statements of Operations
($ in thousands, except share and per share amounts)

Three months ended September 30,

Year ended September 30,

2018

2017

% Change

2018

2017

% Change

(unaudited)

(unaudited)

(unaudited)

Revenue

$

84,053

$

71,779

17

%

$

323,508

$

262,571

23

%

Operating expenses

Interchange and network fees

55,966

51,433

9

%

214,543

189,112

13

%

Other costs of services

10,195

8,002

27

%

40,314

28,798

40

%

Selling general and administrative

10,848

8,029

35

%

40,585

27,194

49

%

Depreciation and amortization

2,963

2,632

13

%

11,839

10,085

17

%

Change in fair value of contingent consideration

586

(395

)

(248

)%

3,866

(218

)

n/m

Total operating expenses

80,558

69,701

16

%

311,147

254,971

22

%

Income from operations

3,495

2,078

68

%

12,361

7,600

63

%

Other expenses

Interest expense, net

849

1,975

(57

)%

8,498

6,936

23

%

Change in fair value of warrant liability

(357

)

n/m

8,487

(415

)

n/m

Total other expenses

849

1,618

(48

)%

16,985

6,521

160

%

Income (loss) before income taxes

2,646

460

475

%

(4,624

)

1,079

(529

)%

(Benefit from) provision for income taxes

(216

)

76

(384

)%

337

177

90

%

Net income (loss)

2,862

384

645

%

(4,961

)

902

(650

)%

Net income attributable to non-controlling interest

2,028

n/m

1,937

n/m

Net income (loss) attributable to i3 Verticals, Inc.

$

834

$

384

117

%

$

(6,898

)

$

902

(865

)%

Net income per share available to Class A common stock(1):

Basic

$

0.09

$

0.08

Diluted

$

0.09

$

0.08

Weighted average shares of Class A common stock outstanding(1):

Basic

8,812,630

8,812,630

Diluted

26,891,688

26,873,878

__________________________

  1. Basic and diluted net income per Class A common stock are presented only for the period after the Company’s Reorganization Transactions.


i3 Verticals, Inc. Financial Highlights
(Unaudited)
($ in thousands, except per share amounts)

Three months ended September 30,

Year ended September 30,

2018

2017

% Change

2018

2017

% Change

Net revenue (non-GAAP)

$

28,087

$

20,346

38

%

$

108,965

$

73,459

48

%

Adjusted EBITDA (non-GAAP)

7,849

5,751

36

%

30,348

19,264

58

%

Pro forma adjusted diluted earnings per share (non-GAAP)

$

0.19

$

0.57


i3 Verticals, Inc. Supplemental Volume Information
(Unaudited)
($ in thousands)

Three months ended September 30,

Year ended September 30,

2018

2017

2018

2017

Payment volume(1)

$

2,971,220

$

2,772,308

$

11,554,806

$

10,269,435

__________________________

  1. Payment volume is the net dollar value of both 1) Visa, Mastercard and other payment network transactions processed by the Company's clients and settled to clients by us and 2) ACH transactions processed by the Company's clients and settled to clients by the Company.


i3 Verticals, Inc. Segment Summary
(Unaudited)
($ in thousands)

As of and for the Three Months Ended September 30, 2018

Merchant Services

Proprietary Software and Payments

Other

Total

Revenue

$

78,258

$

5,795

$

$

84,053

Operating expenses

Interchange and network fees

54,683

1,283

55,966

Other costs of services

9,450

746

(1

)

10,195

Selling general and administrative

6,164

2,057

2,627

10,848

Depreciation and amortization

2,395

482

86

2,963

Change in fair value of contingent consideration

237

349

586

Income (loss) from operations

$

5,329

$

878

$

(2,712

)

$

3,495

Payment volume

$

2,850,503

$

120,717

$

$

2,971,220


As of and for the Year ended September 30, 2018

Merchant Services

Proprietary Software and Payments

Other

Total

Revenue

$

302,929

$

20,582

$

(3

)

$

323,508

Operating expenses

Interchange and network fees

209,695

4,848

214,543

Other costs of services

38,399

1,916

(1

)

40,314

Selling general and administrative

23,291

7,602

9,692

40,585

Depreciation and amortization

9,535

2,097

207

11,839

Change in fair value of contingent consideration

1,772

2,094

3,866

Income (loss) from operations

$

20,237

$

2,025

$

(9,901

)

$

12,361

Payment volume

$

11,072,266

$

482,540

$

$

11,554,806


i3 Verticals, Inc. Segment Summary (continued)
(Unaudited)
($ in thousands)

As of and for the Three Months Ended September 30, 2017

Merchant Services

Proprietary Software and Payments

Other

Total

Revenue

$

67,560

$

4,239

$

(20

)

$

71,779

Operating expenses

Interchange and network fees

50,360

1,073

51,433

Other costs of services

7,459

563

(20

)

8,002

Selling general and administrative

4,383

1,926

1,720

8,029

Depreciation and amortization

2,097

504

31

2,632

Change in fair value of contingent consideration

(400

)

5

(395

)

Income (loss) from operations

$

3,661

$

168

$

(1,751

)

$

2,078

Payment volume

$

2,668,734

$

103,574

$

$

2,772,308


As of and for the Year ended September 30, 2017

Merchant Services

Proprietary Software and Payments

Other

Total

Revenue

$

248,005

$

14,582

$

(16

)

$

262,571

Operating expenses

Interchange and network fees

185,141

3,971

189,112

Other costs of services

27,350

1,559

(111

)

28,798

Selling general and administrative

13,858

7,194

6,142

27,194

Depreciation and amortization

8,029

1,938

118

10,085

Change in fair value of contingent consideration

192

(410

)

(218

)

Income (loss) from operations

$

13,435

$

330

$

(6,165

)

$

7,600

Payment volume

$

9,883,947

$

385,488

$

$

10,269,435


i3 Verticals, Inc. Consolidated Balance Sheets
($ in thousands, except share and per share amounts)

September 30,

September 30,

2018

2017

(unaudited)

Assets

Current assets

Cash and cash equivalents

$

572

$

955

Accounts receivable, net

12,500

8,412

Settlement assets

863

5,196

Prepaid expenses and other current assets

2,630

1,141

Total current assets

16,565

15,704

Property and equipment, net

2,958

1,420

Restricted cash

665

1,013

Capitalized software, net

3,372

3,778

Goodwill

83,954

58,517

Intangible assets, net

66,023

59,259

Other assets

1,605

300

Total assets

$

175,142

$

139,991

Liabilities, Redeemable Class A Units and equity

Liabilities

Current liabilities

Accounts payable

4,114

1,600

Current portion of long-term debt

5,000

4,000

Accrued expenses and other current liabilities

11,538

6,706

Settlement obligations

863

5,196

Deferred revenue

4,927

2,719

Total current liabilities

26,442

20,221

Long-term debt, less current portion and debt issuance costs, net

31,776

106,836

Other long-term liabilities

4,726

2,065

Total liabilities

62,944

129,122

Commitments and contingencies

Redeemable Class A units; 0 and 4,900,000 Units authorized, issued and outstanding as of September 30, 2018 and September 30, 2017, respectively

7,723

Stockholders' / Members' equity

Members' equity

36,164

Preferred stock, par value $0.0001 per share, 10,000,000 shares authorized; 0 shares issued and outstanding as of September 30, 2018

Class A common stock, par value $0.0001 per share, 150,000,000 shares authorized; 9,112,042 shares issued and outstanding as of September 30, 2018

1

Class B common stock, par value $0.0001 per share, 40,000,000 shares authorized; 17,213,806 shares issued and outstanding as of September 30, 2018

2

Additional paid-in-capital

38,562

Accumulated earnings (deficit)

736

(33,018

)

Total Stockholders' / Members' equity

39,301

3,146

Non-controlling interest

72,897

Total equity

112,198

3,146

Total liabilities, Redeemable Class A Units and members' / stockholders' equity (deficit)

$

175,142

$

139,991


i3 Verticals, Inc. Consolidated Cash Flow Data
($ in thousands)

Year ended September 30,

2018

2017

(unaudited)

Net cash provided by operating activities

$

18,080

$

8,330

Net cash used in investing activities

$

(38,055

)

$

(47,903

)

Net cash provided by financing activities

$

19,244

$

37,352


Reconciliation of GAAP to Non-GAAP Financial Measures

The Company believes that non-GAAP financial measures are important to enable investors to understand and evaluate its ongoing operating results. Accordingly, i3 Verticals includes non-GAAP financial measures when reporting its financial results to shareholders and potential investors in order to provide them with an additional tool to evaluate the Company’s ongoing business operations. i3 Verticals believes that the non-GAAP financial measures are representative of comparative financial performance that reflects the economic substance of i3 Verticals’ current and ongoing business operations.

Although non-GAAP financial measures are often used to measure the Company's operating results and assess its financial performance, they are not necessarily comparable to similarly titled measures of other companies due to potential inconsistencies in the method of calculation. i3 Verticals believes that its provision of non-GAAP financial measures provides investors with important key financial performance indicators that are utilized by management to assess the Company's operating results, evaluate the business and make operational decisions on a prospective, going-forward basis. Hence, management provides disclosure of non-GAAP financial measures to give shareholders and potential investors an opportunity to see i3 Verticals as viewed by management, to assess i3 Verticals with some of the same tools that management utilizes internally and to be able to compare such information with prior periods. i3 Verticals believes that inclusion of non-GAAP financial measures provides investors with additional information to help them better understand its financial statements just as management utilizes these non-GAAP financial measures to better understand the business, manage budgets and allocate resources.


i3 Verticals, Inc. Reconciliation of GAAP Net Income to Non-GAAP Pro Forma Adjusted Net Income and Non-GAAP Adjusted EBITDA
(Unaudited)
($ in thousands)

Three months ended September 30,

Year ended September 30,

2018

2017

2018

2017

Net income (loss) attributable to i3 Verticals, Inc.

$

834

$

384

$

(6,898

)

$

902

Net income attributable to non-controlling interest

2,028

1,937

Non-GAAP Adjustments:

(Benefit from) provision for income taxes

(216

)

76

337

177

Offering-related expenses(1)

124

Non-cash change in fair value of contingent consideration(2)

586

(395

)

3,866

(218

)

Non-cash change in fair value of warrant liability(3)

(357

)

8,487

(415

)

Equity-based compensation(4)

750

1,567

Acquisition-related expenses(5)

53

430

531

766

Acquisition intangible amortization(6)

2,378

2,003

9,384

7,669

Non-cash interest expense(7)

233

124

1,072

453

Other taxes(8)

2

11

60

36

Legal settlement(9)

995

995

Non-GAAP pro forma adjusted income before taxes

6,648

3,271

20,467

10,365

Pro forma taxes at effective tax rate(10)

(1,662

)

(818

)

(5,117

)

(2,591

)

Pro forma adjusted net income(11)

$

4,986

$

2,453

$

15,350

$

7,774

Cash interest expense, net(12)

616

1,851

7,426

6,483

Pro forma taxes at effective tax rate(13)

1,662

818

5,117

2,591

Depreciation and internally developed software amortization(14)

585

629

2,455

2,416

Adjusted EBITDA

$

7,849

$

5,751

$

30,348

$

19,264

______________

  1. Includes costs associated with forming i3 Verticals, Inc. and other expenses directly related to the Reorganization Transactions (as defined in the Company's prospectus, dated June 20, 2018, filed with the Securities and Exchange Commission).

  2. Non-cash change in fair value of contingent consideration reflects the changes in management’s estimates of future cash consideration to be paid in connection with prior acquisitions from the amount estimated as of the later of the most recent balance sheet date forming the beginning of the income statement period or the original estimates made at the closing of the applicable acquisition.

  3. Non-cash change in warrant liability reflects the fair value change in certain warrants for the Company's common units associated with the Company's mezzanine notes in the aggregate principal amount of $10.5 million. These warrants are accounted for as liabilities on the Company's consolidated balance sheets and were repaid with proceeds from its IPO.

  4. Equity-based compensation expense consisted of $750 and $826 related to stock options issued under the Company's 2018 Equity Incentive Plan during the three months and year ended September 30, 2018, respectively. Additionally, during the year ended September 30, 2018, the Company incurred $741 related to tax receivables agreement (TRA) non-participation compensatory shares. TRA non-participation compensatory shares were issued to former equity owners as part of the Reorganization Transactions in conjunction with the IPO.

  5. Acquisition-related expenses are the professional service and related costs directly related to the Company's acquisitions and are not part of its core performance.

  6. Acquisition intangible amortization reflects amortization of intangible assets and software acquired through business combinations, acquired customer portfolios, acquired referral agreements and related asset acquisitions.

  7. Non-cash interest expense reflects amortization of deferred financing costs.

  8. Other taxes consist of franchise taxes, commercial activity taxes and other non-income based taxes. Taxes related to salaries or employment are not included.

  9. Legal settlement is a charge from certain legal proceedings.

  10. Pro forma corporate income tax expense is based on Non-GAAP adjusted income before taxes and is calculated using tax rates of 25.0% for 2018 and 2017, based on blended federal and state tax rates, considering the Tax Reform Act for 2018.

  11. Pro forma adjusted net income assumes that the effect of the Reorganization Transactions and the Company's IPO occurred prior to the year ended September 30, 2018, and that all net income during that period is available to the Class A common shareholders. Further, pro forma adjusted diluted earnings per share assumes that all Common Units in i3 Verticals, LLC and the associated non-voting Class B common stock were exchanged for Class A common stock at the beginning of the period on a one for one basis.

  12. Cash interest expense, net represents all interest expense recorded on statement of operations other than non-cash interest expense, which represents amortization of deferred financing costs.

  13. Pro forma corporate income tax expense is based on Non-GAAP adjusted income before taxes and is calculated using tax rates of 25.0% for 2018 and 2017, based on blended federal and state tax rates, considering the Tax Reform Act for 2018.

  14. Depreciation and internally developed software amortization reflects depreciation on the Company's property, plant and equipment, net, and amortization expense on its internally developed capitalized software.


i3 Verticals, Inc. GAAP Diluted EPS and Non-GAAP Pro Forma Adjusted Diluted EPS
(Unaudited)
($ in ones)

Three months ended September 30, 2018

Year ended September 30, 2018

Diluted net income (loss) available to Class A common stock per share

$

0.09

$

0.08

Pro forma adjusted diluted earnings per share (non-GAAP)(1)

$

0.19

$

0.57

Pro forma weighted average shares of adjusted diluted Class A common stock outstanding(2)

26,891,688

26,873,878

_______________

  1. Pro forma adjusted diluted earnings per share is calculated using pro forma adjusted net income and the pro forma weighted average shares of adjusted diluted Class A common stock outstanding. It presumes that the effect of the Reorganization Transactions and the Company's IPO occurred prior to the year ended September 30, 2018, and that all net income during that period is available to the Class A common shareholders. Further, pro forma adjusted diluted earnings per share assumes that all Common Units in i3 Verticals, LLC and the associated non-voting Class B common stock were exchanged for Class A common stock at the beginning of the period on a one for one basis.

  2. Pro forma weighted average shares of adjusted diluted Class A common stock outstanding include 17,213,806 outstanding shares of Class A common stock issuable upon the exchange of Common Units in i3 Verticals, LLC and 865,252 and 847,442 shares of unvested Class A common stock and options for the three months and year ended September 30, 2018, respectively.


i3 Verticals, Inc. Reconciliation of GAAP Revenue to Non-GAAP Net Revenue
(Unaudited)
($ in thousands)

Three months ended September 30,

Year ended September 30,

2018

2017

2018

2017

Revenue

$

84,053

$

71,779

$

323,508

$

262,571

Interchange and network fees

55,966

51,433

214,543

189,112

Net Revenue

$

28,087

$

20,346

$

108,965

$

73,459