Company: IIIV
Filing Date: 2025-08-08
Form Type: 10-Q
Source: 0001728688-25-000108
Chunk: 117

Company: i3 Verticals, Inc.
Filing Date: 2025-08-08
Form: 10-Q
Item: Part I, Item 1
Chunk 117
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 to these developments, as further described above, the Company has one operating segment and reportable segment as of June 30, 2025.

After giving effect to the sale of 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 metrics, 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 software-based services, payments revenue and other recurring revenue sources within the quarter. The sum of these revenue categories is multiplied by four to calculate ARR. ARR excludes revenue that is not recurring or is one-time in nature.

We believe this metric provides useful information to investors by providing visibility regarding the ongoing revenue potential of our business model and providing a clearer picture of our sustainable revenue base. Further, our management uses ARR as a metric because it helps us to assess the health and trajectory of our business. We believe that focusing on ARR can orient our sales and operations management towards long-term, reliable revenue growth. This focus on recurring revenue is particularly relevant for businesses operating under a subscription model, where customer retention and contract renewals play a significant role in long-term financial performance.

ARR does not have a standardized definition and is therefore unlikely to be comparable to similarly titled measures presented by other companies. It should be reviewed independently of revenue and it is not a forecast. Additionally, ARR does not take into account seasonality. The active contracts at the end of a reporting period used in calculating ARR may or may not be extended or renewed by our customers. ARR from continuing operations for the three months ended June 30, 2025 and 2024 was $160.8 million and $143.6 million, respectively, representing a period-to-period growth rate of 12%.

Adjusted EBITDA margin is used by the Company to measure operating performance and for purposes of making decisions. Adjusted EBITDA margin for any particular period is adjusted EBITDA as a percentage of revenue for such period. Adjusted