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NASHVILLE - i3 Verticals, Inc. (NASDAQ:IIIV), a software company focused on vertical markets, has finalized the sale of its merchant services business to Payroc WorldAccess, LLC for approximately $438 million in cash, the companies announced today. This divestiture aligns i3 Verticals more closely with its core sectors of Public Sector, including Education, and Healthcare.
Chairman and CEO of i3 Verticals, Greg Daily, highlighted the significance of the transaction, expressing confidence in the transition of employees to Payroc. Payroc's CEO, Jim Oberman, also welcomed the closure of the deal, anticipating the integration of i3 team members into their operations.
In conjunction with the sale, i3 Verticals revealed changes in its executive team. Geoff Smith has been promoted from Senior Vice President of Finance to Chief Financial Officer, taking over from Clay Whitson, who is transitioning to the role of Chief Strategy Officer. Whitson will now concentrate on capital allocation, mergers and acquisitions, and investor relations, while maintaining his position on the Board of Directors.
The transaction is expected to streamline i3 Verticals' focus on its strategic vertical markets, enhancing its software solutions for public and private sector entities. Payroc, a merchant acquirer and payment processor, aims to leverage the acquisition to reinforce its payment processing technology and global reach.
The press release also included forward-looking statements regarding potential risks and uncertainties following the closure of the deal. These statements reflect the company's expectations but are subject to various factors that could cause actual results to differ.
This news is based on a press release statement issued by i3 Verticals, Inc.
In other recent news, i3 Verticals reported its Q3 2024 results, revealing a decline in revenues and adjusted EBITDA, primarily due to lower one-time software license sales. Despite this, the company anticipates high-single-digit organic revenue growth and EBITDA margin improvement for fiscal years 2024 and 2025. A significant development for i3 Verticals is its recent acquisition in the Public Sector vertical, which is projected to drive double-digit growth in fiscal year 2025. The company also mentioned its robust balance sheet and strategy to reduce debt through paying down its revolving credit facility.
i3 Verticals also highlighted its expansion in the Education sector and a major win in the Healthcare vertical. The company is developing new software solutions to meet market demands, with strong demand expected in the utilities and public sectors. While revenue headwinds are anticipated in 2024, the company expects these to be offset by internal realignment and growth in software and services. These are some of the recent developments in i3 Verticals' business operations.
InvestingPro Insights
As i3 Verticals, Inc. (NASDAQ:IIIV) sharpens its focus on its core sectors through the recent divestiture, investors and stakeholders may find the following insights from InvestingPro valuable for understanding the company's financial health and market position.
With a market capitalization of approximately $522.4 million, i3 Verticals shows a strong revenue growth of 46.48% in the last twelve months as of Q3 2024, indicating a robust expansion in its business scale. Despite the impressive top-line growth, analysts have voiced concerns, with seven analysts revising their earnings downwards for the upcoming period, which may suggest potential challenges in profitability or costs management.
One of the key InvestingPro Tips indicates that i3 Verticals is expected to become profitable this year, reflecting a potential turnaround from the unprofitability over the last twelve months. This is further supported by the company's solid gross profit margin of 77.69%, which points to a healthy ability to control costs relative to revenue. Additionally, the company's liquid assets surpass its short-term obligations, suggesting a strong liquidity position that could support operational needs and potential investments.
Investors should note that the company does not pay a dividend, focusing instead on reinvesting earnings back into the business. This strategy may appeal to growth-oriented investors seeking capital appreciation rather than income. Moreover, the stock's price movements have been quite volatile, a factor that risk-averse investors may need to consider.
For those interested in deeper analysis, there are additional InvestingPro Tips available at https://www.investing.com/pro/IIIV, providing a comprehensive view on i3 Verticals' financial metrics and market expectations.
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