i3 Verticals Inc (IIIV)

History and Background

i3 Verticals, Inc. was founded in 2012 by Greg Daily. The company focuses on providing vertically-specialized payment and software solutions to small- and medium-sized businesses and other organizations in strategic vertical markets. The company has grown through a combination of organic growth and acquisitions.

Core Business Areas

• Merchant Services: Offers payment processing services, including credit card processing, debit card processing, and other payment solutions. This segment generates revenue through transaction fees, interchange fees, and other related charges.
• Software and Services: Provides software solutions and related services tailored to specific vertical markets such as education, government, healthcare, and non-profits. This includes enterprise resource planning (ERP) software, payment facilitation software, and related value-added services, recurring revenues from software licenses, maintenance, and support.

Leadership and Structure

Greg Daily serves as the Chairman and CEO. The company operates with a functional organizational structure, dividing its business into merchant services and software and services. The C-suite includes the CFO, CTO, and other key executives who oversee various functional areas.

Key Offerings

• Payment Processing: Offers secure and efficient payment processing solutions for merchants. Competitors include Fiserv (FI), Global Payments (GPN), and Block (SQ). Market share for i3 Verticals individually is hard to pinpoint, however the company is a small part of the overal payments landscape. Overall payment processing accounts for the majority of revenues for i3 Verticals.
• Education Software: Provides software solutions for K-12 schools and higher education institutions. Includes solutions such as student information systems, payment portals, and other administrative tools. Competitors include Blackbaud (BLKB) and PowerSchool. Specific market share data is not readily available. This segment generates recurring revenues from subscriptions and support.
• Government Software: Provides software solutions for municipal and local government agencies. Includes solutions such as tax and utilities bill payment platforms, court management software, etc. Specific market share data is not readily available. This segment generates recurring revenues from subscriptions and support. Competitors include Tyler Technologies (TYL).

Industry Overview

The payment processing industry is characterized by consolidation, technological advancements, and increasing regulatory scrutiny. The demand for integrated software and payment solutions is rising in various vertical markets. The education, government, and healthcare sectors are experiencing a shift towards digital solutions, creating opportunities for companies offering specialized software.

Positioning

i3 Verticals is positioned as a provider of vertically-focused payment and software solutions, offering integrated services to specific niche markets. Its competitive advantage lies in its industry-specific expertise and tailored solutions. The company targets smaller businesses within niche markets.

Total Addressable Market (TAM)

The overall market value of the vertically-focused payment and software solutions is estimated to be several hundred billion dollars. The education, government, and healthcare verticals represent significant opportunities. i3 Verticals is targeting niche markets where it can establish a strong presence and benefit from the increasing demand for digital solutions. TAM is a long way to go and lots of growth available for i3 Verticals.

Key Competitors

• FISV
• GPN
• SQ
• TYL
• BLKB

Competitive Landscape

i3 Verticals faces intense competition from larger, more established companies. Its advantage lies in its vertical specialization. Smaller than FISV or GPN, but has a niche business model.

PACE Payment Systems

• Year: 2022
• Acquisition Price (USD millions): 52
• Strategic Rationale: Expanded presence in the public sector vertical.

Virtual Utility Solutions

• Year: 2021
• Acquisition Price (USD millions): 22
• Strategic Rationale: Enhances capabilities in the utilities payments market.

Historical Growth: Historical growth has been driven by a combination of organic growth and acquisitions.

Future Projections: Analyst estimates project continued revenue growth through acquisitions and expansion into new vertical markets. Profitability is expected to improve as the company realizes synergies from acquisitions.

Recent Initiatives: Recent initiatives include acquisitions of companies in target vertical markets, investment in technology infrastructure, and expansion of sales and marketing efforts.

i3 Verticals is a vertically-focused payment and software solutions provider that has grown primarily through acquisitions. Its strategy is to target niche markets. i3 Verticals' smaller size and reliance on acquisitions pose challenges. The company must continue to execute its integration strategy effectively to improve profitability and manage debt.

• FISV
• GPN
• WSO
• JKHY
• PSFE

Data Sources:

• Company Website
• SEC Filings (10-K, 10-Q)
• Analyst Reports
• Market Research Reports

Disclaimers:

This analysis is based on publicly available information and is intended for informational purposes only. It does not constitute financial advice. Market share data is approximate. Financial data is presented as a summary and should be verified with official filings.