What they do
i3 Verticals, based in Nashville, Tennessee, sells cloud software and payment tools to state and local governments: courts, transportation agencies, utilities and schools.
Why we picked it
- 0126.3M
Fewer shares. Class A plus Class B shares fell to 26.3M at 6 Aug 2026 from 32.3M a year earlier, down 18.4%. In the nine months to June the company bought back 6.06M shares for $137.9M, about $22.77 each.
- 0250,000
The founder is buying. CEO Greg Daily bought 50,000 shares in the open market on 14 May 2026 at a $19.23 average, about $962K. The stock closed at $16.60 on 15 Oct, 13.7% below his price. Directors and officers hold 32.9% of the voting power.
- 03$174.1M
Recurring revenue is still growing. Annualized recurring revenue from continuing operations was $174.1M at 30 Jun 2026, up 8.3%, a figure that includes a business bought on 1 Jan 2026. Q3 adjusted EBITDA rose 4.6% to $13.3M, a 25.1% margin.
- 04$436.9M
About 9x to 10x guided EBITDA. Market value of $436.9M plus $111.6M of net debt is $548.6M, 9.1x to 9.6x the fiscal 2026 adjusted EBITDA guidance of $57M to $60M.
The risk
The catch: the June quarter came in below management's own plan. Fiscal 2026 guidance was cut to $216M-$221M of revenue (from $221M-$229M) and $57M-$60M of adjusted EBITDA (from $61M-$65M), and the buybacks were paid partly with borrowed money: cash fell from $66.7M to $2.6M and the revolver went from zero to $114.3M in nine months.
The full analysis
i3 Verticals ($IIIV): fewer shares, and the founder bought in May
Our view: bullish, because the company has cut its share count by 18% in a year, its founder bought about $962K of stock in May at a price above today's, and the stock trades at about 9x to 10x this year's guided adjusted EBITDA after a guidance cut the market has already punished.
The thesis
i3 Verticals sells cloud software and payment tools to state and local governments: courts, transportation agencies, utilities and schools. After selling its merchant services business in 2024 and its healthcare revenue cycle business in 2025, it is a smaller public-sector software company that has spent heavily to buy back its own stock. The June quarter came in below management's plan and guidance came down, which is why the stock sits at $16.60. We think the share count and the insider buying matter more than one soft quarter.
The evidence
The share count is falling fast. Class A plus Class B shares were 26.3M at 6 Aug 2026, against 32.3M a year earlier, down 18.4% (10-Q covers). In the nine months to June the company bought back 6.06M shares for $137.9M, about $22.77 each. A new $100M program approved in May runs to May 2027.
The founder is buying. CEO Greg Daily bought 50,000 shares in the open market on 14 May 2026 at a $19.23 average, about $962K (Form 4). The stock is 13.7% below his price. Directors and officers control 32.9% of the voting power, Daily 23.5% on his own (proxy, January 2026).
Recurring revenue is still growing. Annualized recurring revenue from continuing operations was $174.1M at 30 Jun 2026, up 8.3% from $160.8M. That run rate includes a state transportation-market business bought on 1 Jan 2026 for $60M in cash; the company does not say how much of the growth it accounts for. Adjusted EBITDA for the June quarter rose 4.6% to $13.3M, a 25.1% margin (Q3 release, 6 Aug 2026).
The price is reasonable. At $16.60 the market value is $436.9M. Add $114.3M of revolver debt and take away $2.6M of cash and enterprise value is $548.6M, 9.1x to 9.6x the fiscal 2026 adjusted EBITDA guidance of $57M to $60M.
What the market is missing
The buybacks and the insider buying point the same way, and the balance sheet just got more room. On 9 Oct 2026 the company replaced its 2023 credit agreement with a $350M senior secured revolver led by JPMorgan (8-K). Total leverage under the old facility was 1.9x at the end of June, and the new facility allows net leverage of up to 4.00x.
The risks
The June quarter came in below management's own expectations. Management cut fiscal 2026 guidance to $216M to $221M of revenue (from $221M to $229M) and $57M to $60M of adjusted EBITDA (from $61M to $65M), after a quarter the CEO tied to weakness in some non-recurring revenue and implementation delays. The buybacks were paid partly with borrowed money: cash fell from $66.7M at 30 Sep 2025 to $2.6M, and the revolver went from zero to $114.3M. The stock is down 48% in a year, so most of those shares were bought above today's price (about $22.77 on average). Adjusted EBITDA is a company measure, not GAAP, and June-quarter GAAP income included a $9.9M unrealized gain on an investment.
What would change our mind
Fiscal 2026 results in November (last year's came on 17 Nov) below the new $57M EBITDA floor, or more debt-funded buybacks that push leverage well above 2x while recurring revenue stops growing.
Sources: i3 Verticals Q3 FY2026 release (6 Aug 2026) and 10-Q (7 Aug 2026); 10-Q and 10-K cover pages, Nov 2024 to Aug 2026; Form 4 (14 May 2026); proxy (15 Jan 2026); 8-Ks (12 May 2026, 9 Oct 2026); close from Yahoo Finance and Nasdaq, 15 Oct 2026.
By the numbers
| Quarter | Revenue | Gross margin | Net income | Cash | Debt | Diluted shares | Filing |
|---|---|---|---|---|---|---|---|
| Q2 2630 June 2026 | $53.1M | n/a | $3.5M | $2.6M | $114.3M | 19.5M | 10-Q, 7 August 2026 |
| Q1 2631 March 2026 | $57.5M | n/a | $1.5M | $7.1M | $81.0M | 30.6M | 10-Q, 8 May 2026 |
| Q4 2531 December 2025 | $52.7M | n/a | $484K | $37.5M | n/a | 25.1M | 10-Q, 6 February 2026 |
| Q3 25*30 September 2025 | $54.9M | n/a | $3.1M | $66.7M | $0 | n/a | 10-K, 21 November 2025 |
| Q2 2530 June 2025 | $51.9M | n/a | $12.9M | $55.5M | $0 | 33.9M | 10-Q, 7 August 2026 |
| Q1 2531 March 2025 | $54.1M | n/a | -$154K | $7.7M | $12.0M | n/a | 10-Q, 8 May 2026 |
| Q4 2431 December 2024 | $52.2M | n/a | $2.1M | $85.6M | $26.2M | 34.1M | 10-Q, 6 February 2026 |
| Q3 24*30 September 2024 | $51.3M | n/a | $117.9M | $86.5M | $26.2M | n/a | 10-K, 21 November 2025 |
Source: the company's 10-Q and 10-K filings on SEC EDGAR, as tagged in their XBRL data. Each quarter uses the most recent filing that reports it, so restated quarters compare cleanly. Quarters are labelled by the calendar quarter they end in. Debt is current plus long-term debt; net income is as reported, including any discontinued operations. *Fourth quarter: the full year in the 10-K less the first nine months. n/a: not reported for that quarter on its own.
Insiders
Directors and executive officers as a group (13 persons), combined voting power own 32.9% of the shares (Gregory Daily, CEO, 23.5% on his own), according to the DEF 14A filed 15 January 2026, as of 2 January 2026.
| Date | Who | Shares bought | Price | Value | Filing |
|---|---|---|---|---|---|
| 14 May 2026 | Gregory S DailyChief Executive Officer | 50,000 | $19.23 | $962K | Form 4 |
Open-market purchases (Form 4, transaction code P) over the last twelve months. Sales, grants and option exercises are not shown.
What to watch
- Mid-November 2026
Fiscal 2026 results (year ended 30 Sep), the test of the cut guidance of $216M-$221M revenue and $57M-$60M adjusted EBITDA. The date is not announced; last year's results came on 17 Nov 2025. Q4 FY2025 release (17 Nov 2025); Q3 FY2026 release (6 Aug 2026)
- By 11 May 2027
The $100M buyback approved on 12 May 2026 runs to 11 May 2027; $26.6M of it was used by 30 Jun 2026, and the new $350M revolver signed 9 Oct 2026 replaces the facility that funded the buybacks. 8-K (12 May 2026); 10-Q Q3 FY2026 (7 Aug 2026); 8-K (9 Oct 2026)
Sources: 10-Q Q3 FY2026 (7 Aug 2026), Q3 FY2026 release (6 Aug 2026), 8-K (9 Oct 2026), close 15 Oct 2026.