Company: IIIV
Filing Date: 2025-11-21
Form Type: 10-K
Source: 0001728688-25-000122
Chunk: 97

Company: i3 Verticals, Inc.
Filing Date: 2025-11-21
Form: 10-K
Item: Item 7
Chunk 97
---
, product development and maintenance, sales and other functions. During the first quarter of fiscal year 2025, following the disposal of our Merchant Services Business, we revised our presentation of certain expenses in the consolidated statements of operations from selling, general and administrative expenses to other costs of services. Refer to Note 3 to the accompanying consolidated financial statements contained in this report for discussion of the change in the current and prior period presentation.

53

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

How We Assess Our Business

As a result of the sale of the Merchant Services Business in 2024 and the Healthcare RCM Business in 2025, the results of operations for the Merchant Services Business and the Healthcare RCM Business have been reflected as discontinued operations in our consolidated statements of operations for all periods presented. 

After giving effect to these developments, as further described above, the Company has one operating segment and reportable segment.

After giving effect to the sale of the Merchant Services Business and the Healthcare RCM Business as noted above, the Company provides mission-critical enterprise software and services solutions to its public sector customers. These comprehensive solutions cover a broad range of applications, including cloud native enterprise software, all of which enable state and local governments and related agencies to serve their constituents in an efficient and seamless manner.

Key Performance Indicators

We evaluate our performance through various meters, including the following key performance indicators:

•Annualized recurring revenue ("ARR");

•Adjusted EBITDA margin

ARR is the annualized revenue derived from recurring sources where we have an ongoing contract with our customers. We believe revenue from recurring sources is a strategic priority. ARR is comprised of software-as-a-service (“SaaS”) arrangements, transaction-based software-revenue, software maintenance, recurring