GuruFocus -
- Revenue: Increased 4% to $60.9 million from $58.6 million in Q4 2023.
- Recurring Revenue: Increased 7.5% to $188.2 million compared to $175.1 million in Q4 2023.
- SaaS and Payments Revenue Growth: Grew 8%.
- Transaction-Based Revenue Growth: Grew 11%.
- Non-Recurring Sales of Software (ETR:SOWGn) Licenses: Declined 8%.
- Adjusted EBITDA: Increased 4% to $16.2 million from $15.7 million in Q4 2023.
- Adjusted EBITDA Margin: 26.7%, slightly down from 26.8% in Q4 2023.
- Pro Forma Adjusted Diluted EPS: $0.15 for Q4 2024.
- Public Sector Revenue: Increased 6% to $49.6 million, representing 81% of total revenues.
- Healthcare Segment Revenue: Declined 3% to $11.4 million.
- Debt: $26.2 million remaining from convertible notes.
- Cash Balance: $86.5 million as of September 30.
- Fiscal 2025 Revenue Guidance: $243 million to $263 million.
- Fiscal 2025 Adjusted EBITDA Guidance: $63 million to $71.5 million.
- Fiscal 2025 Pro Forma Adjusted Diluted EPS Guidance: $1.05 to $1.25.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- i3 Verticals Inc (NASDAQ:IIIV) reported a 4% increase in revenues for Q4 2024, reaching $60.9 million, reflecting organic growth and contributions from recent acquisitions.
- Recurring revenues grew by 7.5% to $188.2 million, with 77% of total revenues coming from recurring sources, indicating a stable revenue base.
- The company has successfully transitioned to a pure play vertical market software business, enhancing its focus on high-growth areas.
- i3 Verticals Inc (NASDAQ:IIIV) has a strong balance sheet with $86.5 million in cash and $450 million of borrowing capacity, positioning it well for future growth and acquisitions.
- The company is optimistic about high single-digit organic growth for fiscal year 2025, supported by a robust sales funnel and new product developments.
- Non-recurring sales of software licenses declined by 8%, indicating a shift towards SaaS that may impact short-term revenue.
- Professional services revenue declined by 7% due to project delays, such as the Manitoba implementation affected by a public workers union strike.
- Healthcare segment revenues declined by 3% in Q4 2024, with expectations of low single-digit growth due to industry consolidation.
- Adjusted EBITDA margin slightly declined from 26.8% to 26.7% due to higher corporate expenses.
- The company faces ongoing challenges in the healthcare sector due to customer consolidation, which may continue to impact growth.
A: Geoffrey C. Smith, CFO: There were no significant delays or issues. The $2 million license fee from our Midwest utility customer was received as expected. The revenue performance did not change our expectations for 2025.
Q: How should we think about the growth algorithm for achieving high single-digit organic revenue growth in 2025?
A: Clay Whitson, Chief Strategy Officer: We aim to improve our net revenue retention from 100%. The growth algorithm implies 7.5% organic growth from new logos in 2025, with a goal to enhance net revenue retention annually.
Q: Can you provide an update on the utility initiative and when the technology will be rolled out to other utilities?
A: Paul Christians, Chief Revenue Officer: The portal side is currently being rolled out, and sales activities for the distribution side will begin soon. We expect this to accelerate in the first quarter of 2025.
Q: What is the outlook for M&A activity, and how are market conditions affecting this?
A: Rick Stanford, President: The M&A pipeline is strong, with more realistic valuations from sellers. We anticipate 3 to 5 acquisitions in 2025, focusing on public sector and education deals.
Q: What gives you confidence in achieving high single-digit organic growth in 2025?
A: Clay Whitson, Chief Strategy Officer: We expect growth from our large Midwest utility customer, a return to normal growth rates in education, and the resumption of the Manitoba project. The SaaS transition will also stabilize.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.