I3 VERTICALS INC-CLASS A (NASDAQ:IIIV) Stock Falls on Weak FY2026 Guidance Despite Q4 Beat

i3 Verticals Inc-Class A (NASDAQ:IIIV) has reported its financial results for the fiscal fourth quarter and full year ended September 30, 2025. The earnings release presents a mixed financial picture, with the company meeting revenue expectations but facing a significant negative reaction in after-market trading.

Quarterly Performance Versus Estimates

The company's performance against analyst expectations for the fourth quarter reveals a nuanced story. i3 Verticals reported revenue of $54.9 million, which narrowly surpassed the analyst consensus estimate of $54.76 million. This represents a 7.0% increase over the prior year's fourth quarter.

However, the market's focus appears to have been on the bottom line. The company reported adjusted diluted earnings per share (EPS) from continuing operations of $0.27. While this figure exceeded the analyst estimate of $0.2465, it was not enough to prevent a sharp decline in the stock's after-market value, which fell approximately 9.1%.

Key quarterly financial highlights include:

• Revenue: $54.9 million (Reported) vs. $54.76 million (Estimated)
• Adjusted Diluted EPS: $0.27 (Reported) vs. $0.2465 (Estimated)
• Adjusted EBITDA from continuing operations: $14.4 million, a slight decrease of 1.5% from the prior year.

Full-Year Results and Strategic Shift

For the full fiscal year 2025, i3 Verticals demonstrated solid growth, with revenue from continuing operations reaching $213.2 million, an 11.5% increase over the prior year. The company's strategic shift towards a pure-play public sector software provider was a central theme, following the completion of the sales of its merchant services and healthcare RCM businesses.

Full-year financial and operational highlights include:

• Annual Recurring Revenue (ARR): Grew to $165.3 million, a 9.2% period-to-period increase.
• Adjusted EBITDA: Reached $57.5 million, a 14.0% increase year-over-year.
• Software Focus: SaaS revenue grew 23% compared to the prior year.
• Strategic Wins: The company announced a new contract with the Supreme Court of Appeals of West Virginia to implement its case management software statewide.

Forward-Looking Guidance and Market Reaction

The company provided its financial outlook for the fiscal year ending September 30, 2026. This guidance can be directly compared to existing analyst estimates, providing context for the market's reaction.

The company's 2026 outlook versus analyst estimates is as follows:

• Revenue Guidance: $217 million to $232 million.
  • Analyst Estimate for FY2026 Sales: $233.93 million.
  • The midpoint of the company's guidance ($224.5 million) falls short of the analyst consensus.
• Adjusted Diluted EPS Guidance: $1.06 to $1.16.
  • Analyst Estimate for FY2026 EPS: $1.2036.
  • The midpoint of the company's guidance ($1.11) is also below the analyst expectation.

The company's guidance, particularly its revenue and EPS projections falling below the street's estimates, is a likely contributor to the negative after-market price action. Despite beating on the most recent quarter's EPS, investors may be concerned about the growth trajectory and profitability for the upcoming fiscal year.

Conclusion

i3 Verticals delivered a fourth quarter that beat analyst EPS estimates and slightly exceeded revenue forecasts. The company has successfully repositioned itself around its public sector software solutions, evidenced by strong ARR and SaaS revenue growth. However, the market's negative reaction appears to be driven by a 2026 outlook that does not meet the growth expectations embedded in current analyst estimates. The company will need to demonstrate an ability to exceed its own guidance to rebuild investor confidence moving forward.

For a more detailed look at historical earnings and future analyst estimates for i3 Verticals, you can review the data here.

Disclaimer: This article is for informational purposes only and is not intended as investment advice.