i3 Verticals, Inc. reported first‑quarter 2026 financial results that surpassed analyst expectations, with revenue of $52.7 million—up 0.9% year‑over‑year—and adjusted diluted earnings per share of $0.26, beating the consensus estimate of $0.24 by $0.02. The earnings beat was driven by disciplined cost management and a strong mix of high‑margin SaaS contracts, which grew 24% to $12.6 million, offsetting a modest decline in professional services revenue.
Revenue growth was largely powered by a 8.4% increase in recurring revenue, reflecting the company’s continued shift toward subscription‑based public‑sector software. The recurring revenue expansion was supported by higher sales in the JusticeTech and Utilities segments, while the Public Administration segment maintained steady demand. However, the company’s adjusted EBITDA margin contracted to 25.8% from 27.9% in the same quarter a year earlier, and from 26.2% in the prior quarter, due to higher hosting costs, increased investments in justice and utility markets, and a decline in professional services income.
Net income from continuing operations fell to $1.1 million, down from $2.8 million a year earlier, as the company’s operating expenses rose in line with its expansion plans. Adjusted EBITDA for the quarter was $13.6 million, a decline from $14.6 million in Q1 2025, reflecting the margin compression and the impact of higher cost inputs.
Management reiterated its fiscal 2026 guidance, projecting revenue of $223 million to $234 million and adjusted EBITDA of $61 million to $66 million. The guidance remains unchanged from the prior quarter, indicating confidence in the company’s long‑term growth trajectory despite short‑term margin pressure. CEO Greg Daily noted that “the quarter’s results demonstrate the strength of our recurring revenue model and the effectiveness of our cost‑control initiatives, even as we invest heavily in AI and market‑specific solutions.”
Analysts reacted to the earnings beat with caution, citing the margin contraction and the company’s continued investment in high‑cost hosting and market‑entry initiatives. The market’s tempered response underscores the importance of margin sustainability in the public‑sector software space, even as revenue and earnings exceed expectations.
The company also completed a $60 million cash acquisition of a driver and motor vehicle insurance verification software firm on January 1 2026, a move that aligns with its strategy to broaden its public‑sector portfolio and enhance its AI capabilities. The acquisition, priced at roughly 15× EBITDA, is expected to add incremental recurring revenue and support the company’s transition to a pure‑play public‑sector software provider.
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