Company: IIIV
Filing Date: 2025-05-09
Form Type: 10-Q
Source: 0001728688-25-000089
Chunk: 64

Company: i3 Verticals, Inc.
Filing Date: 2025-05-09
Form: 10-Q
Item: Part I, Item 1
Chunk 64
---
Deferral of revenue19,156 Recognition of unearned revenue(14,681)Balance at December 31, 202337,460 Deferral of revenue11,005 Recognition of unearned revenue(12,820)Balance at March 31, 2024$35,645 Costs to Obtain and Fulfill a ContractThe Company capitalizes incremental costs to obtain new contracts and contract renewals and amortizes these costs on a straight-line basis as an expense over the benefit period, which is generally the expected customer life, unless a commensurate payment is not expected at renewal. As of March 31, 2025 and September 30, 2024, the Company had $871 and $857, respectively, of capitalized contract costs, which relates to commissions paid to employees and agents as well as other incentives given to customers to obtain new sales, included within “Other assets" on the condensed consolidated balance sheets. The Company recorded expense from continuing operations related to these costs of $181 and $212 for the three and six months ended March 31, 2025 and $22 and $40 for the three and six months ended March 31, 2024. The Company expenses sales commissions as incurred for the Company's sales commission plans that are paid on recurring monthly revenues, portfolios of existing customers, or have a substantive stay requirement prior to payment.

22

i3 VERTICALS, Inc.NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)(in thousands, except unit, share and per share amounts)

Other Cost of Services Other costs of services include costs directly related to the Company's software and related services. Additionally, other costs of services include costs directly attributable to payment processing services such as processing and bank sponsorship. Losses resulting from chargebacks against a customer are included in other cost of services. Residual payments to the Company's distribution partners and the cost of equipment sold is also included in cost of services. Amortization arising from capitalized software development is not included in other cost of services. Other costs of services are recognized at the time the related revenue is recognized. Following the disposal of the Company's Merchant Services Business in the fourth quarter of fiscal year 2024, the Company’s core business is providing software solutions for key verticals. Given the change in the Company's business model following the sale of our Merchant Services Business, the Company has reclassified certain expenses to better align with the primary industry in which it now operates.