i3 Verticals, Inc. Q2 FY2026 earnings call

• Greg Daly noted revenue growth, annualized recurring revenue increase, investment in public sector markets like justice tech, and cost control/margin expansion efforts. - Jeff Smith walked through financial results, including revenue details, adjusted EBITDA, and guidance. - Rick Stanford discussed AI-powered capabilities in products, including ad hoc query and reporting tool, AI-assisted document analysis and management platform, and improvements in product development with AI assistance and automated testing. - Paul Christians provided revenue updates, noting healthy demand across core markets, buying patterns, and activity in various verticals like justice tech, transportation, licensing and permitting, utilities, and education.

Revenue from continuing operations grew 6% year over year to $57.5 million in Q2 2026 from $54.1 million in Q2 2025. Organic revenue was flat, hampered by a $2.2 million decrease in professional services in the utilities market. Annual recurring revenues increased 12% to $183.5 million. SaaS revenues grew 37%, transaction-based revenue grew 7%. 80% of revenues in the quarter came from recurring sources. Adjusted EBITDA increased 5% to $16.6 million, with adjusted EBITDA as a percentage of revenues at 28.8%. Corporate expenses as a percentage of revenues were 9.3%. Adjusted diluted earnings per share from continuing operations increased 10% to $0.32. Debt stood at $81 million and cash balance was $7.1 million with $319 million borrowing capacity under revolving credit facility.

• Revenue guidance for FY2026 is 221 million to 229 million. - Adjusted EBITDA guidance is 61 million to 65 million. - Adjusted diluted earnings per share guidance is $1.09 to $1.15. - Expect recurring revenues to continue double-digit growth. - View of non-recurring professional services deteriorated, leading to guiding down revenue midpoint. - Expect margin improvement in back half of FY2026. - Better growth expected in 2027 and beyond with factors like justice tech ARR growth, transportation transaction-based revenue opportunities, and insurance verification acquisition expansion.

Q: Madison Sher asked about non-recurring side and confidence in long-term growth rate, and key verticals driving acceleration.

A: Justice market, transportation, and insurance verification acquisition are key.

Q: Madison Sher followed up on 2026 outlook and margin management.

A: Margins expected to be stronger in back half, with cost management and AI benefits.

Q: Peter Heckman asked about auto insurance verification acquisition share.

A: No scenario of state bifurcating insurance verification, with multiple states in implementation and flexible revenue model.

Q: Alec Markgraf asked about AI in model and sales from new customers.

A: AI shows up early in sales process, benefits revenue and margin; about half of education sales are from new customers