Q3 2024 i3 Verticals Inc Earnings Call

August 9, 2024

Okay.

Operator: Good day, everyone, and welcome to the i3 Verticals 3rd Quarter 2024 Earnings Conference Call. Today's call is being recorded, and a replay will be available starting today through August 16th. The number for the replay is 877-344-0111, and the access code is 269, 7-7, 5 to 6.

Unknown Executive: Good day, everyone, and welcome to the i3 Verticals 3rd quarter, 2024 earnings conference call. Today's call is being recorded, and a replay will be available starting today through August 16th. The number for the replay is 877-344-7529, and the access code is 269-7756. The replay may also be accessed for 30 days at the company's website.

Speaker Change: Good day, everyone and welcome to the I three vertical <unk> third quarter 2024 earnings conference call.

Speaker Change: Today's call is being recorded and a replay will be available starting today through August 16th.

Speaker Change: The number for the replay is 877.

Speaker Change: 344.

Speaker Change: Seven five to nine in.

Speaker Change: And the access code is 2697.

Speaker Change: 775.

Speaker Change: Five six.

The replay may also be accessed for 30 days at the Companys website.

Geoffrey Smith: At this time for opening remarks, I'd like to turn the conference call over to Geoff Smith, SVP Finance. Please go ahead, sir. To be sent in a non-GAAP financial measure is discussed in today's call; you will also find a reconciliation to the most directly comparable GAAP financial measure by reviewing yesterday's earnings release. This is a company's intent to provide non-GAAP financial information to enhance understanding of its consolidated GAAP financial information.

Operator: The replay may also be accessed for 30 days at the company's website. At this time, for opening remarks, I'd like to turn the conference call over to Geoff Smith, SVP of Finance. Please go ahead, sir.

Speaker Change: At this time for opening remarks, I'd like to turn the conference call over to Jeff Smith SVP of Finance. Please go ahead Sir.

Geoffrey Smith: Good morning, and welcome to the third quarter 2024 conference call for i3 Verticals. Joining me on this call are Greg Daily, our Chairman and CEO, Clay Whitson, our CFO, Rick Stanford, our President, and Paul Christians, our CRO.

Speaker Change: Good morning, and welcome to the third quarter 2024 conference call for <unk> verticals joining.

Speaker Change: On this call are Greg daily, our chairman and CEO Clay Whitson, our CFO, Rick Stanford, our President and Paul Christians are C. R.

Geoffrey Smith: To the extent any non-GAAP financial measure is discussed in today's call, you will also find a reconciliation to the most directly comparable GAAP financial measure by reviewing yesterday's earnings release. It is the company's intent to provide non-GAAP financial information to enhance understanding of its consolidated GAAP financial statements. This non-GAAP financial information should be considered by each individual in addition to, but not instead of, the GAAP financial statement.

Speaker Change: To the extent any non-GAAP financial measures discussed in today's call. You will also find a reconciliation to the most directly comparable GAAP financial measure by reviewing yesterday's earnings release is.

Speaker Change: Is the company's intent to provide non-GAAP financial information to enhance understanding of its consolidated GAAP financial information.

Geoffrey Smith: This non-gap financial information should be considered for each individual in addition to the not-instead-of the gap financial statements.

Speaker Change: This non-GAAP financial information should be considered by each individual in addition to but not instead of the GAAP financial statements.

Geoffrey Smith: This conference call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements, among others, regarding the company's expected financial and operating performance. For this purpose, any statements made during this call, they are not statements of historical fact, may be deemed to be forward-looking statements. You are hereby cautioned that these forward-looking statements may be affected by important factors, among others, set forth in the company's earnings release and reports that are filed or furnished to the SEC. Consequently, actual operations and results may defer materially from those discussed in the forward-looking statements.

Geoffrey Smith: This conference call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements, among others, regarding the company's expected financial and operating performance. For this purpose, any statements made during this call that are not statements of historical fact may be deemed to be forward-looking statements. You are hereby cautioned that these forward-looking statements may be affected by important factors, among others, set forth in the company's earnings release and in reports that are filed or furnished to the FCC.

Speaker Change: The conference call May contain forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995, including statements among others regarding the company's expected financial and operating performance.

Geoffrey Smith: Consequently, actual operations and results may differ materially from those discussed in the forward-looking statement. Finally, the information shared on this call is valid as of today's date, and the company undertakes no obligation to update it, except as may be required under applicable law. I will now turn the call over to the company's Chairman and CEO, Greg Daly. Thanks, Jeff. And good morning.

Speaker Change: For this purpose any statements made during this call. They are not statements of historical fact may be deemed to be forward looking statements.

Speaker Change: You are hereby cautioned that these are these forward looking statements may be affected by important factors among others set forth in the Companys earnings release, and our reports that are filed or furnished to the SEC.

Speaker Change: Consequently, actual operations and results may differ materially from those discussed in the forward looking statements.

Geoffrey Smith: Finally, the information shared on this call is valid as of today's date, and the company undertakes no obligation to update it except as may be required under applicable law.

Speaker Change: Finally, the information shared on this call is valid as of today's date and the company undertakes no obligation to update it except as may be required under applicable law.

Gregory Daily: I will now turn the call over to the company's Chairman and CEO, Greg Daley. Thanks, Jeff, and good morning to all of you on the call. We have a lot going on at I-3 these days, and we are excited to share with you this morning.

Speaker Change: I will now turn the call over to the company's chairman and CEO Greg Daily.

Gregory Daily: Thanks, Geoff, and good morning to all of you on the call. We have a lot going on at i3 these days, and we're excited to share with you this morning. First, it is my pleasure to announce our latest acquisition. Rick will elaborate on that this is a deal that is a perfect fit.

Greg Daily: Thanks, Jeff and good morning to all of you on the call.

Greg Daily: We've a lot going on in that three these days and we're excited to share with you. This morning.

Gregory Daily: First, it is my pleasure to announce our latest acquisition. Rick will elaborate that this is a deal that is a perfect fit with what we do. Require, integrate, vertical market software businesses within the public sector, and the best-of-class product, unrealized transactional revenue opportunities across self-potential, and a fantastic, founder-led team.

Greg Daily: First it is my pleasure to announce our latest acquisition.

Rick Stanford: Rick will elaborate.

This is a deal that is a perfect fit.

Gregory Daily: Acquire, and integrate vertical market software businesses, best-of-class products. Unrealized Transactional Revenue Opportunities, Cross-Sell Potential, and a fantastic founder-led team. 2024 has been a challenging year in multiple ways. Our realignment, and our divestiture of the merchant services business, have coincided with weaker-than-expected revenue from sources such as professional services and the sale of software licenses.

Rick Stanford: With what we did acquire integrate vertical market software businesses within the public sector.

Rick Stanford: Best of class products.

Rick Stanford: <unk> transactional revenue opportunities cross sell potential and a fantastic founder led team.

Gregory Daily: 2020-24 has been challenging in multiple ways. A re-alignment, our divestiture of the merchant services business has coincided with weaker-than-expected revenue from sources such as professional services in the sale of software licenses. We have had deals with the shop. We've made significant investments in products and opportunities for which we are not yet reaping the rewards.

2024 has been challenging year and multiple ways, a realignment our divestiture of the merchant services business.

Rick Stanford: <unk> sided with the weaker than expected revenue from sources, such as professional services and the sale of software licenses.

Gregory Daily: We have had deals to shout about. We have made significant investments in products and opportunities for which we are not yet reaping the rewards. We believe we have set the stage for a much stronger fiscal year 2025. Our visibility of our sales tunnel and the products we have coming to market give us confidence in our long-term guidance of high single-digit organic growth. That is our focus. Internal Growth and Execution. I'll now turn the call over to Clay, who will provide you with more detail on our financial performance. When he's finished, Rick will add commentary on the business, and finally, Paul will discuss revenue. Then we'll open up the call for questions.

Rick Stanford: We have been we have had deals push out.

Rick Stanford: We have made significant investments in products and opportunities for which we are not yet reaping the rewards.

Gregory Daily: We believe we have set the stage for a much stronger fiscal year 2025. Our visibility of our sales tunnel and the products we have coming to market give us confidence in our long-term guidance of high single-digit organic growth. That is our focus. Internal growth execution.

Rick Stanford: We believe we have set the stage for a much stronger fiscal year 2025, our visibility of our sales tunnel and the products, we have coming to market gives us confidence in our long term guidance of high single digit organic growth.

Rick Stanford: That is our focus.

Rick Stanford: Internal growth execution.

Gregory Daily: I'll now turn the call over to Clay, which he'll provide you more detail on our financial performance. When he's finished, Rick will add commentary on the business, and finally, Paul will discuss revenue, and we'll open up the call for questions. The following, thanks Greg.

Rick Stanford: I'll now turn the call over to clay, which he'll provide you more detail on our financial performance.

Rick Stanford: When he's finished Rick will add commentary on the business and finally, Paul will discuss revenue.

Speaker Change: Open up the call for questions.

Clay Whitson: Thanks, Greg. The following pertains to the third quarter of our fiscal year 2024, which is the quarter ending June 30, 2024. Please refer to the slide presentation titled Supplemental Information on our website for reference to this discussion. Due to the expected sale of our merchant services business, we have classified that portion of our company as a discontinued operation. The following will pertain to continuing operations, which we also call Remain Co. for quarterly results in the Outlook section. This is a transitional reporting period as we have announced the sale but have not yet closed.

Clay Whitson: The following thanks, Greg the following pertains to the third quarter of our fiscal year 2024, which is the quarter ended June 30th 2024.

Clay Whitson: The following pertains to the third quarter of our fiscal year 2024, which is the quarter end of June 30th, 2024. Please refer to the slide presentation titled "Supplemental Information" on our website for reference with this discussion.

Speaker Change: Please refer to the slide presentation titled supplemental information on our website for reference with this discussion.

Clay Whitson: Due to the expected sale of our merchant services business, we have classified that portion of our company as discontinued operations.

Speaker Change: Due to the expected sale of our merchant services business, we have classified that portion of our company as discontinued operations.

Clay Whitson: The following will pertain to continuing operations, which we also call Remainco for quarterly results and the outlook section. This is a transitional reporting period as we have announced the sale but have not yet closed. Revenue for the third quarter of fiscal 24 declined 2% to 56 million from 57.3 million per Q2, Q3, 23. Reflecting organic growth from recurring sources offset by declines and non-recurring sources. SAS and transaction-based software revenues grew 8% while payments revenues grew 9%. Non-recurring sales of software licenses declined by approximately 2 million, as expected, reflecting the ongoing shift to SAS. Professional services revenues declined by 1.1 million, principally a result of the delay in Celtic implementation with Manitoba caused by the public worker strike.

Speaker Change: Following will pertain to continuing operations, which we also call remain co.

Speaker Change: Our quarterly results and the outlook section this.

Speaker Change: This is a transitional reporting period, as we've announced the sale, but have not yet closed.

Clay Whitson: Revenues for the third quarter of fiscal 24 declined 2% to $56 million from $57.3 million in Q3-23, reflecting organic growth from recurring sources offset by declines in non-recurring sources. However, SAS and transaction-based software revenues grew 8%. While payments revenues grew 9%, non-recurring sales of software licenses declined by approximately 2 million, as expected, reflecting the ongoing shift to SAS. Professional services revenues declined by 1.1 million, principally as a result of the delay in Celtics implementation with Manitoba caused by the public worker strike.

Speaker Change: Revenues for the third quarter of fiscal 'twenty four declined 2% to 56 million from $57 3 million for Q2 Q3 23.

Speaker Change: Reflecting organic growth from recurring sources offset by declines in nonrecurring sources.

Speaker Change: SaaS and transaction based software revenues grew 8%.

Speaker Change: Payments revenues grew 9%.

Speaker Change: Nonrecurring sales of software licenses declined by approximately 2 million as expected, reflecting the ongoing shift to SaaS.

Speaker Change: Professional services revenues declined by 1.1 million principally a result of the delay in Celtic's implementation with Manitoba caused by the public worker strike.

Clay Whitson: ARR increased 4% to $181.3 million for Q3-24 compared to $174.5 million for Q3-23. Over 80% of our revenues in the quarter continued to come from recurring sources. Software and related services represented 74% of total revenues for Q3, with payments 21% and other 5%.

Clay Whitson: ARR increased 4% to 181.3 million for Q3, 24, compared to 174.5 million for Q3, 23. Over 80% of our revenues in the quarter continued to come from recurring sources. Software and related services represented 74% of total revenues for Q3, with payments 21% and other 5%. Adjusted EBITDA declined 11% to 12.9 million for Q3, 24, from 14.5 million for Q3, 23. Adjusted EBITDA as a percentage of revenues declined to 23% from 25.3% for Q3, 23. principally reflecting 2 million less in one-time software license sales, which fall to the bottom line in the quarter they land. This decline was partially offset by lower corporate expenses, resulting from the internal re-alignment discussed on previous quarterly calls.

Speaker Change: A R. R increased 4% to $181 3 million for Q3 'twenty four.

Speaker Change: <unk> to $174 5 million for Q3 23.

Speaker Change: Over 80% of our revenues in the quarter continued to come from recurring sources.

Speaker Change: Software and related services represented 74% of total revenues for Q3, but payments, 21% and other 5%.

Clay Whitson: Adjusted EBITDA declined 11% to $12.9 million for Q3'24 from $14.5 million for Q3'23. Adjusted EBITDA as a percentage of revenues declined to 23% from 25.3% for Q3'23, principally reflecting $2 million less in one-time software license sales, which fall to the bottom line in the quarter they land. This decline was partially offset by lower corporate expenses resulting from the internal realignment discussed on previous quarterly calls.

Speaker Change: Adjusted EBITDA declined 11% to $12 9 million for Q3 24 from 14.5 million for Q3 23.

Speaker Change: Adjusted EBITDA as a percentage of revenues declined to 23% from 25, 3% for Q3, 23, principally reflecting 2 million less than one time software license sales, which fall to the bottom line in the quarter they land.

Speaker Change: This decline was partially offset by lower corporate expenses, resulting from the internal realignment discussed on previous quarterly calls.

Clay Whitson: We have provided a view of our revenue and adjusted EBITDA from continuing operations for fiscal 2023 and the previous quarters of fiscal 2024 and the supplemental information on our website, including reconciliation to the nearest GAAP number. Proforma adjusted diluted earnings per share from continuing operations was $0.70 for Q324. This number excludes discontinued operations, but includes consolidated an interest expense of $0.23. Again, please refer to the press release for a full description and reconciliation.

Clay Whitson: We have provided a view of our revenue and adjusted EBITDA from continuing operations for fiscal 2023 and the previous quarters of fiscal 2024 and the supplemental information on our website, including reconciliations to the nearest gap number. Proforma adjusted diluted earnings per share from continuing operations was $0.07 for Q3-24. This number excludes discontinued operations but includes consolidated interest expense of $0.23. Again, please refer to the press release for a full description and reconciliation.

Speaker Change: We have provided a view of our revenue and adjusted EBITDA from continuing operations for fiscal 'twenty to 'twenty three.

Speaker Change: And the previous quarters of fiscal 2024, and the supplemental information on our website, including reconciliations to the nearest GAAP number.

Speaker Change: Pro forma adjusted diluted earnings per share from continuing operations was seven cents for Q3 'twenty for this.

Speaker Change: This number excludes discontinued operations, but includes consolidated interest expense of 23 cents.

Speaker Change: Again, please refer to the press release for a full description and reconciliation.

Clay Whitson: Our balance sheet remains strong and well-positioned for 25. At quarter end, maroines under the revolver net of cash were 341.7 million. Our consolidated leverage ratio was 3.6 times. The current constraint is five times under our 450 million revolving credit.

Clay Whitson: Our balance sheet remains strong and well-positioned for 25. At quarter end, borrowings under the revolver net of cash were $341.7 million. Our consolidated leverage ratio was 3.6 times. The current constraint is five times under our $450 million revolving credit.

Speaker Change: Our balance sheet remains strong and well positioned for 25 at quarter end borrowings under the revolver net of cash worth $341 7 million.

Speaker Change: Our consolidated leverage ratio was three six times. The current constraint is five times under our 450 million revolving credit.

Clay Whitson: On August 1st, we acquired a permitting and licensing company in the public sector for 18 million in cash, plus 311,634 shares of Class A common stock. This acquisition will fit well with our existing businesses and provide a growth vehicle for the future. We pay it a multiple at the high end of our range due to above-average growth. The acquisition has a similar EBITDA margin profile as our existing remain co-business, excluding corporate overhead.

Clay Whitson: On August 1st, we acquired a permitting and licensing company in the public sector for $18 million in cash plus 311,634 shares of Class A common stock. This acquisition will fit well with our existing businesses and provide a growth vehicle for the future. We pay at a multiple at the high end of our range due to above average growth. The acquisition has a similar EBITDA margin profile as our existing RemainCo business, excluding corporate overhead.

Speaker Change: On August 1st we acquired a permitting and licensing company in the public sector for $18 million in cash plus 311634 shares of class a common stock.

Speaker Change: This acquisition will fit well with our existing businesses and provide a growth vehicle for the future. We paid a multiple at the high end of our range due to above average growth.

Speaker Change: Yeah.

Speaker Change: The acquisition has a similar EBITDA margin profile as our existing remain co business, excluding corporate overhead.

Speaker Change: [laughter].

Clay Whitson: Following the anticipated sale of our merchant services business, we will be a pure play vertical software and services company and plan to pay down all of our revolving credit facility, leaving us plenty of capacity for expansion in our existing verticals. Outlook This is a transitionary year, so I will first outline our outlook for revenues and adjusted EBITDA from continuing operations for fiscal year 24. We cannot currently guide fiscal year 24 pro forma adjusted diluted EPS because we cannot determine interest expense until we know the closing date for the anticipated merchant business sale. I will then give guidance for continuing operations for fiscal year 25. The outlook for both time periods does not include acquisitions that have not been announced or transaction-related costs.

Speaker Change: Following the anticipated sale of our merchant services business, we will be a pure play vertical software and services company and plan to pay down all of our revolving credit facility, leaving us plenty of capacity for expansion in our existing verticals.

Clay Whitson: Outlook. This is a transitionary year, so I will first outline our outlook for revenues and adjusted EBITDA from continuing operations for fiscal year 24. We cannot currently guide fiscal year 24, perform an adjusted diluted EPS because we cannot determine interest expense until we know the closing date for the anticipated merchant business sale. I will then give guidance for continuing operations for fiscal year 25. The outlook for both time periods does not include acquisitions that have not been announced or transaction-related costs. For fiscal year 24, our revised outlook follows. Revenues, 228 to 234 million; adjusted EBITDA 56 to 60 million.

Speaker Change: Outlook.

Speaker Change: This is a transition or a year. So I will first outline our outlook for revenues and adjusted EBITDA from continuing operations for fiscal year 'twenty four.

Speaker Change: We cannot currently guide fiscal year 'twenty for pro forma adjusted diluted EPS, because we cannot determine interest expense until we know the closing date for the anticipated merchant business sale.

Speaker Change: I will then give guidance for continuing operations for fiscal year 'twenty five.

Speaker Change: The outlook for both time periods do not include acquisitions that have not been announced or transaction related cost.

Clay Whitson: For fiscal year 24, our revised outlook is as follows: revenues, $228 to $234 million; adjusted EBITDA, $56 to $60 million. We continue to expect high single-digit organic revenue growth with annual EBITDA margin improvement of 50 to 100 basis points per year beginning in fiscal year 25. Some tailwinds that we have identified include the Manitoba Project returning to a normal cadence. Given continued momentum in the utilities market and the SAS transition becoming less of a short-term drag, the education business will also benefit from the introduction of certain state subsidies for lunch, which began during the back-to-school season in 2023.

Speaker Change: For fiscal year 'twenty for a revised outlook follows.

Speaker Change: Revenues $228 million to $234 million <unk>.

Speaker Change: Adjusted EBITDA $56 million to $60 million.

Clay Whitson: We continue to expect high single-digit organic revenue growth, with annual EBITDA margin improvement of 50 to 100 basis points per year, beginning in fiscal year 25. Some tailwinds that we have identified include the Manitoba Project returning to a normal cadence, continued momentum in the utilities market, and the SaaS transition becoming less of a short-term drag. The education business will also lap the introduction of certain state subsidies for lunch, which began during the back-to-school season in 2023. All acquisitions that have not yet closed are not included in the outlook. We do expect to resume acquisitions on a regular basis following the anticipated sale of our merchant business.

Speaker Change: We continue to expect high single digit organic revenue growth with annual EBITDA margin improvement of 50 to 100 basis points per year, beginning in fiscal year 'twenty five.

Speaker Change: Some tailwind that we have identified include the Manitoba, Manitoba project, returning to a normal cadence.

Speaker Change: And then you'd momentum in the utilities market.

Speaker Change: And the SaaS transition, becoming less of a short term drag.

Speaker Change: The education business, while also lap the introduction of certain state subsidies for lunch.

Speaker Change: Which began during the back to school season in 'twenty two 'twenty three.

Speaker Change: While acquisitions that have not yet closed are not included in the outlook. We do expect to resume acquisitions on a regular basis following the anticipated sale of our merchant business.

Clay Whitson: For fiscal year 25, our revised outlook follows. Revenue 243-263 million, adjusted EBITDA 63-71.5 million, depreciation, and internally developed software amortization, 12-14 million, cash interest expense, 1-2 million, pro forma adjusted diluted EPS $1.5-$1.25.

Clay Whitson: While acquisitions that have not yet closed are not included in the outlook, we do expect to resume acquisitions on a regular basis following the anticipated sale of our merchant business. For fiscal year 25, our revised outlook is as follows. Revenues 243 to 263 million, adjusted EBITDA 63 to 71.5 million, and appreciation and Internally Developed Software Amortization, $12 to $14 million. Cash Interest Expense, 1 to 2 million; Proforma Adjusted Diluted EPS, $1.05 to $1.25. I will now turn the call over to Rick for company updates in the M&A pipeline.

Speaker Change: For fiscal year 'twenty five of our revised outlook follows.

Speaker Change: Revenues 243 to 263 million.

Speaker Change: Adjusted EBITDA of 63 to 71.5 million.

Speaker Change: Depreciation and internally developed software amortization 12 to 14 million cash.

Speaker Change: Cash interest expense $1 2 million pro forma adjusted diluted EPS.

Speaker Change: $1 five to $1 25.

Rick: I will now turn the call over to Rick for company updates and the M&A pipeline. Thank you, Clay. Good morning, everyone.

I will now turn the call over to Rick for company updates and the M&A pipeline. Thank.

Frederick Stanford: Thank you, Clay. Good morning, everyone.

Rick Stanford: Thank you clay good morning, everyone before I begin my remarks, I wanted to share a quick update on the sale of our merchant services business that we announced in June after we executed a purchase agreement we are working towards closing that transaction and we still anticipate closing in our fiscal fourth quarter as.

Rick: Before I begin my remarks, I wanted to share a quick update on the sale of our merchant services business, and we announced in June after we executed a purchase agreement. We were working towards closing that transaction, and we still anticipated closing in our fiscal fourth quarter. As we have stated, this semester of transaction offers important strategic benefits to us, and we anticipate realizing those benefits in short order once the transaction closes.

Frederick Stanford: Before I begin my remarks, I wanted to share a quick update on the sale of our merchant services business that we announced in June after we executed a purchase agreement. We were working towards closing that transaction, and we still anticipated closing it in our fiscal fourth quarter. As we have stated, this divestiture transaction offers important strategic benefits to us, and we anticipate realizing those benefits in short order once the transaction closes.

Rick Stanford: As we have stated this divestiture transaction offers important strategic benefits to us and we anticipate realizing those benefits in short order once the transaction closes.

Rick: As we progress toward a software focus on our specific articles, we intend to further enhance our product team by adding an enterprise leader for that group. This leader will help us drive our ongoing investment in web-native configurable next-generation applications. This individual will be responsible for defining and delivering our product vision, strategy, and roadmap, and for communicating this vision. He or she will help determine a product strategy for a broad set of services tailored to a very customer base, driving research-led innovation while also focusing on commercialization and bringing new products to life.

Frederick Stanford: As we progress toward a software focus on our specific verticals, we intend to further enhance our product team by adding an enterprise leader for that group. This leader will help us drive our ongoing investment in web-native, configurable, next-generation applications. This individual will be responsible for defining and delivering our product vision, strategy, and roadmap, and for communicating this vision. He or she will help determine a product strategy for a broad set of services tailored to a varied customer base, driving research-led innovation, while also focusing on commercialization and bringing new products to life.

Rick Stanford: As we progress toward a software focus on a specific verticals, we intend to further enhance our product team by adding an enterprise leader for that group. This leader will help us drive our ongoing investment in web Native Configurable next generation applications. This individual will be responsible for defining and delivering our product vision.

Rick Stanford: <unk> strategy and roadmap for communicating this vision.

Speaker Change: She will help determine our product strategy for a broad set of services tailored to a very customer base driving research led innovation, while also focusing on commercialization and bringing new products to lie.

Rick: I wanted to touch briefly on our latest acquisition that we announced last night; the deal closed on August 1st, and it fits nicely in our public sector vertical. The company operates in 17 states today with its headquarters in the Southwestern US. The company specializes in permitting and licensing solutions for boards, commissions, and agencies, and is able to score over 150 regulatory license types today. Upgrading our offering and permitting and licensing market is attractive because of the massive size of the market, the ample opportunities to cross-sell through our existing public sector footprint, and the presence of significant transactional revenue opportunities, which are a core competency for our business.

Frederick Stanford: I wanted to touch briefly on our latest acquisition that we announced last night. The deal closed on August 1st, and it fits nicely into our public sector vertical. The company operates in 17 states today with its headquarters in the southwestern U.S.

Speaker Change: I wanted to touch briefly on our latest acquisition that we announced last night. The deal closed on August 1st and it fits nicely in our public sector vertical. The company operates in 17 states today with its headquarters in the southwestern U S.

Frederick Stanford: The company specializes in permitting and licensing solutions for boards, commissions, and agencies, and is able to support over 150 regulatory license types today. Upgrading our offering and the permitting and licensing market is attractive because of the massive size of the market, the ample opportunities to cross sell through our existing public sector footprint, and the presence of significant transactional revenue opportunities, which are a core competency for our business. In the United States, there are over 1,000 state-level licensing boards.

Company specializes in permitting and licensing solutions, where boards commissions and agencies and is able to support over 150 regulatory license types today.

Speaker Change: Upgrading our offering and permitting and licensing market is attractive because of the massive size of the market the ample opportunities to cross sell through our existing public public sector footprint and the presence of significant transactional revenue opportunities, which are a core competency for our business.

Speaker Change: Non as states there are over 1000 state level licensing board. These boards regulate various professions and occupations, ensuring that practitioners meet the required standards to provide services to the public.

Frederick Stanford: These boards regulate various professions and occupations, ensuring that practitioners meet the required standards to provide services to the public. Each state has its own set of boards that oversee professions such as healthcare, legal, engineering, accounting, real estate, and many others.

Speaker Change: Each state has its own set of boards that oversee professions, such as health care legal engineering accounting real estate and many others.

Frederick Stanford: Below the state level, there is another large market of local governments who have similar needs. The company boasts a strong pipeline across a wide cross-section of the available opportunities in the industry and sells both in a direct sales and reseller model. One of the other facets of this deal that is so attractive is that they are geographically unconstrained.

Rick: Below the state level is another large market of local governments who have similar needs. The company boasts a strong pipeline across a wide cross section of the available opportunities in the industry and sells both in a direct sales and reseller model. One of the other facets of this deal that is so attractive is that they are geographically unconstrained. This deal was completed with a combination of cash and stock within our standard multiple range.

Speaker Change: Although the state level is another large market of local governments, who have similar needs.

Speaker Change: Company most of the strong pipeline across a wide cross section of the available opportunities in the industry and sales both on a direct sales and reseller model.

Speaker Change: One of the other facets of this deal that is so attractive is that they are geographically unconstrained. This deal was completed with a combination of cash and stock within our standard multiple range.

Frederick Stanford: This deal was completed with a combination of cash and stock within our standard multiple range. Regarding M&A in general, our acquisition pipeline continues to be strong. However, we also continue to maintain strong discipline to ensure the acquisitions meet our return objectives and augment our offerings in our respective markets. We hope to be able to share more details on the M&A front in the near future. I'll now turn the call over to Paul for additional comments on the business.

Rick: Regarding M&A in general, our acquisition pipeline continues to be strong. However, we also continue to maintain a strong discipline to ensure the acquisitions meet our return objectives and augment our offerings and our respective markets.

Speaker Change: Regarding M&A in general our acquisition pipeline continues to be strong. However, we also continue to maintain a strong discipline to ensure the acquisitions meet our return objectives and augment our offering in our respective markets.

Rick: We hope to be able to share more details on the M&A front and near future.

Speaker Change: Hope to be able to share more details on the M&A front in the near future I'll now turn the call over to Paul for additional comments on the business.

Paul Christians: I'll now turn the call over to Paul for additional comments on the business. Thank you, Rick. i3 Verticals is a software company delivering strategic vertical offerings in the public sector and health care markets with our proprietary dynamic software. i3 empowers our clients to better serve their communities by streamlining processes through secure and accessible software solutions. The market is responding positively to our deep domain expertise, market history, and flexible solution. They're ready to move forward. The market has an eight with clients, both new and existing. Additionally, M&A continues to coalesce around each vertical to augment our product offerings, as detailed by Rick and his remarks.

Paul Christians: Thank you, Rick. i3 Verticals is a software company delivering strategic vertical offerings in the public sector and healthcare markets. With our proprietary dynamic software, i3 empowers our clients to better serve their communities by streamlining processes through secure and accessible software solutions. The market is responding positively to our deep domain expertise, market history, and flexible solutions that resonate with clients, both new and existing. Additionally, M&A continues to coalesce around each vertical to augment our product offerings, as detailed by Rick in his remarks.

Paul Christians: Thank you Rick.

Speaker Change: Three verticals as a software company deliberate strategic vertical offerings in the public sector and healthcare markets with our proprietary dynamic software.

Paul Christians: <unk> empowers our clients to better serve their communities by streamlining processes through secure and accessible software solutions.

Paul Christians: The market is responding positively to our deep domain expertise market history, and flexible solution that resonate with clients, both new and existing.

Paul Christians: Additionally, M&A continues to coalesce around each vertical to augment our product offerings as detailed by Rick in his remarks.

Paul Christians: Q3 2024, the health care vertical secured a major win with one of the United States' top five health care payers, expanding the use of our platform to over 7,000 users globally. In addition, we are also secured multiple six finger service engagements focusing on extending the value of our platform into new departments within these organizations. Robots cross selling opportunities with customers, acquire additional solutions across the breadth of our software offerings, which include electronic health records, customer portals, and bill presentment, and bill presentment. Our revenue cycle management service offerings are experiencing continued expansion among our academic medical institution clients.

Paul Christians: In Q3 2024, the healthcare vertical secured a major win with one of the United States' top five healthcare payers, expanding the use of our platform to over 7,000 users globally. In addition, we also secured multiple six-fingered service engagements focusing on extending the value of our platform. You can read the other interviews and feedback at the webinar, and Bill Presentment.

Rick Stanford: Q3, 2020 for the health care vertical secured a major win.

Rick Stanford: While the United States top five health care payers, expanding the use of our platform to over 7000 users globally.

Unknown Executive: Good day, everyone, and welcome to the i3 Verticals 3rd, quarter, 2024 earnings conference call Today's call is being recorded and a replay will be available starting today through August 16th The number for the replay is 877-344-7529 and the access code is 269-7756 The replay may also be accessed for 30 days at the company's website.

Rick Stanford: In addition, we also secured multiple six figure new service engagements focusing on extending the value of our platform.

Rick Stanford: To do departments within these organizations robust cross selling opportunities with customers acquiring additional solutions across the breadth of our software.

Rick Stanford: Offerings, which include electronic health records customer portals and Bill Presentment.

Paul Christians: Our revenue cycle management service offerings are experiencing continued expansion among our academic medical institution clients, and we are also pleased to experience an uptick in new mid-market accounts onboarding with our services over the last quarter. Education continues to expand its client footprint in our existing geographical markets with our established customer base and with our existing customer base. In addition, we have recently opened two new territories, North Carolina and Texas, where we are experiencing broad adoption of our fully integrated SaaS solutions. The public sector is made up of four sub-vertical segments, utilities, transportation, electronic resource planning, or ERP, and justice tech.

Rick Stanford: And Bill Presentment, our revenue cycle management service offerings are experiencing continued expansion among our academic medical institution clients and we're also pleased to have experience an uptick in new mid market accounts onboarding with our services over the last quarter.

Geoffrey Smith: At this time for opening remarks, I'd like to turn the conference call over to Geoff Smith, SVP Finance. Please go ahead, sir To be sent in a non-gap financial measure is discussed in today's call, you will also find a reconciliation to the most directly comparable gap financial measure by reviewing yesterday's earnings release.

Paul Christians: And we are also pleased to experience an uptick in new mid market accounts onboarding with our services over the last quarter. Education continues to expand our client footprint in our existing geographical markets with our established customer base and with our established customer base. In addition, we have recently opened two new territories, North Carolina and Texas, where we are experiencing broad adoption of our fully integrated staff solutions.

Rick Stanford: Education continues to expand our client our client footprint and our existing geographical markets with our established customer base and with our established customer base. In addition, we have recently opened two new territories, North Carolina and Texas.

Rick Stanford: We are experiencing broad adoption of our fully integrated SaaS solutions.

Paul Christians: The public sector is made up of four sub vertical segments: utilities, transportation, electronic resource planning, RERP, and justice tech. The utility segment is experiencing a broad adoption as well of our utility customer engagement, e-portal software suite. This staff solution has played a key role in helping more than 50% of our customers. Chief top rankings in customer satisfaction measurements has recognized by JD Power and other leading research organizations. We currently have more than 7 million utility customers under management. Built with the mobile first approach, i3 verticals, e-portal, design, seamless access across all devices. The portal's user-friendly interface ensures that customers can manage their utility services effortlessly, whether they are using a smartphone, tablet, or computer.

Speaker Change: The public sector is made up of four sub vertical segments utilities transportation electronic resource planning or ERP and Justice Tac, Utah.

Geoffrey Smith: This is a company's intent to provide non-gap financial information to enhance understanding of its consolidated gap financial information. This non-gap financial information should be considered for each individual in addition to the not-instead-of the gap financial statements.

Paul Christians: The utility segment is experiencing broad adoption as well of our utility customer engagement ePortal software suite. This SAS solution has played a key role in helping more than 50% of our customers achieve top rankings in customer satisfaction measurements, as recognized by J.D. Power and other leading research organizations.

Speaker Change: The utility segment is experiencing.

Speaker Change: Broad adoption as well of our utility customer engagement portal software suite. This SaaS solution has played a key role in helping more than 50% of our customers achieve top rankings in customer satisfaction measurement is recognized by J D power and <unk>.

Geoffrey Smith: This conference call may contain forward-looking statements within the meaning of the private securities litigation reform act of 1995, including statements, among others, regarding the company's expected financial and operating performance. For this purpose, any statements made during this call, they are not statements of historical fact may be deemed to be forward-looking statements. You are hereby caution that these forward-looking statements may be affected by important factors among others, set forth in the company's earnings release and reports that are filed or furnished to the SEC.

Geoffrey Smith: Consequently, actual operations and results may defer materially from those discussed in the forward-looking statements.

Speaker Change: Other leading research organizations.

Paul Christians: We currently have more than 7 million utility customers under management. Built with a mobile-first approach, i3 Verticals ePortal is designed for seamless access across all devices. The portal's user-friendly interface ensures that customers can manage their utility services effortlessly, whether they are using a smartphone, tablet, or computer. A notable achievement this year includes a prominent water utility serving over 3 million customers across eight states, which successfully implemented i3 Verticals within just five minutes.

Speaker Change: We currently have more than 7 million utility customers under management.

Speaker Change: With a mobile first approach highest re verticals E portal is designed for seamless access across all devices.

Speaker Change: Hurdles user friendly interface ensures that customers can manage their utility service services effortlessly, whether they are using a smartphone tablet or computer.

Geoffrey Smith: Finally, the information shared on this call is valid as of today's date, and the company undertakes no obligation to update it except as may be required under applicable law.

Paul Christians: A notable achievement this year includes the prominent water utility serving over 3 million customers across eight states, which successfully implemented i3 verticals e-portal within just five months. In addition to our utility customer digital engagement software, we are also in the process of installing a state-of-the-art gas transportation building system for a prominent multi-state utility provider. Leveraging the latest technology, this system is designed to offer exceptional configuration capabilities, minimizing the need for costly customization. The new solution, which is SaaS-based and hosted on AWS, ensures scalability, reliability, and top-tier security. It also streamlines operations, laying the foundation as a core architectural model for future solutions.

Speaker Change: A notable achievement. This year includes a prominent water utilities, serving over 3 million customers across eight states, which successfully implemented three verticals portal within just five months.

Gregory Daily: I will now turn the call over to the company's chairman and CEO, Greg Daley. Thanks, Jeff, and good morning to all of you on the call. We have a lot going on at I-3 these days, and we are excited to share with you this morning.

Paul Christians: In addition to our utility customer digital engagement software, we are also in the process of installing a state-of-the-art gas transportation billing system for a prominent multi-state utility provider. Leveraging the latest technology, this system is designed to offer exceptional configuration capabilities, minimizing the need for costly customization. The new solution, which is SaaS-based and hosted on AWS, ensures scalability, reliability, and top-tier security. It also streamlines operations, laying the foundation as a core architectural model for future solutions.

Speaker Change: In addition to our utility customer digital engagement software. We are also in the process of installing state of the art gas transportation billing system for a prominent multistate utility provider.

Gregory Daily: First, it is my pleasure to announce our latest acquisition. Rick will elaborate that this is a deal that is a perfect fit with what we do. Require, integrate, vertical market software businesses within the public sector, and the best-of-class product, unrealized transactional, revenue, opportunities across self-potential, and a fantastic, founder-led team.

Speaker Change: Leveraging the latest technology. This system is designed to offer exceptional configuration capabilities minimizing the need for costly customization.

New solution, which is SaaS based and hosted on AWS insurer scalability reliability and top tier security. It also streamlines operations laying the foundation.

At the core architectural model for future solutions.

Paul Christians: On a similar product evolution, though, we are also successfully deploying our upgraded customer information systems, utility building software focused on clients of less than 100,000 meters, which also follows our SaaS-hosted on AWS model.

Paul Christians: On a similar product evolution note, we are also successfully deploying our upgraded customer information systems utility billing software focused on clients with less than 100,000 meters, which also follows our SAS. Staffs hosted on AWS model. In transportation, we are seeing strong demand that spans our motor carrier, motor vehicle, and driver's license solutions, with increased interest across the spectrum as states are looking to modernize services. We have recently deployed solutions with successful installations in Florida, South Carolina, and phase two of three in Manitoba.

Speaker Change: On a similar product evolution.

Speaker Change: Also successfully deploying our upgraded customer information systems utility billing software focused on clients with less than 100000 meters, which also follows our SaaS.

Gregory Daily: 2020-24 has been challenging in multiple ways. A re-alignment, our divestiture of the merchant services business has coincided with weaker than expected revenue from sources such as professional services in the sale of software licenses. We have had deals with the shop. We've made significant investments in products and opportunities for which we are not yet reaping the rewards.

Speaker Change: SaaS hosted on AWS model.

Paul Christians: In transportation, we are seeing strong demand that spans our motor carrier, motor vehicle, and driver's license solutions, with increased interest across the spectrum as stages are looking to modernize services. We have recently deployed solutions with successful installations in Florida, South Carolina, and Phase 2S3 in Manitoba.

Speaker Change: In transportation, we are seeing strong demand it spans our motor carrier motor vehicle and driver's license solutions with increased interest across the spectrum of states are looking to modernize services.

Speaker Change: We have recently deployed solutions with successful installations at Florida, South Carolina, and Phase II <unk> III in Manitoba.

Paul Christians: In the public sector's ERP, in the public sector's ERP unit, our software suite consists of financial management, human capital administration, property and business tax, appraisal, regulatory compliance, and official records management, all seamlessly integrated with payment processing interfaces. ERP demand is consistent with several products also being refreshed to meet our next generation cloud and configurability standards. I3 Justice Tech sub vertical encompasses our public safety core management solutions, e-filing and document management solutions. The justice tech at public safety vertical represents our deepest and broadest product line. In addition, we are developing our I3 Justice Tech 3.0 core management solution as we evolve our technology to web-native highly configurable solutions.

Paul Christians: In the public sector's ERP unit, our software suite consists of financial management, human capital administration, property and business tax, appraisal, regulatory compliance, and official records management, all seamlessly integrated with payment processing interfaces. ERP demand is consistent with several products also being refreshed to meet our next generation cloud and configurability standards. i3 Justice Tech Subvertical encompasses our public safety, court management solutions, e-filing, and document management solutions. Justice Tech, and the Public Safety Vertical represents our deepest and broadest product.

Speaker Change: And the public sectors ERP.

Speaker Change: And the public sector ERP unit, our software suite.

Speaker Change: <unk> consists of financial management Human capital administration property and business tax appraisal regulatory compliance and official records management, all seamlessly integrated with payment processing interfaces.

Gregory Daily: Internal growth execution.

Clay Whitson: I'll now turn the call over to Clay which he'll provide you more detail on our financial performance when he's finished Rick will add commentary on the business and finally Paul will discuss revenue and we'll open up the call for questions. The following, thanks Greg. The following pertains to the third quarter of our fiscal year 2024 which is the quarter end of June 30th, 2024.

Speaker Change: ERP demand is consistent with several products also being refreshed to meet our next generation cloud and configure ability standards.

Speaker Change: Hi, three justice textile vertical encompasses our public safety Court management solutions E filing a document managed solutions.

Speaker Change: The Justice Tech.

Speaker Change: Our public safety vertical represents our deepest and broadest product line in <unk>.

Clay Whitson: Please refer to the slide presentation titled Supplemental Information on our website for reference with this discussion. Due to the expected sale of our merchant services business, we have classified that portion of our company as discontinued operations. The following will pertain to continuing operations which we also call Remainco for quarterly results and the outlook section. This is a transitional reporting period as we have announced the sale but have not yet closed. Revenue is for the third quarter of fiscal 24 declined 2% to 56 million from 57.3 million per Q2, Q3, 23.

Paul Christians: In addition, we are developing our i3 Justice Tech 3.0 court management solution as we evolve our technology to web-native, highly configurable solutions. Sales and demand generation activity continues to grow with a focus on an expanded ARR model. We are seeing additional share opportunities in markets we have recently opened, as well as increased adoption in the local and municipal core markets that have not historically been a focus. I would also like to speak quickly about our vertical segment market leadership structure.

Speaker Change: <unk>, we are developing our <unk> III Justice tax three no court management solution.

Speaker Change: As we evolve our technology to web native highly Configurable solutions.

Paul Christians: Sales and demand generation activity continue to grow with the focus on an expanded ARR model. We are seeing additional share opportunities in markets we have recently opened, as well as increased adoption in the local municipal core markets that have not historically been focused.

Speaker Change: Sales and demand generation activity continued to grow with a focus on an expanded our model.

Speaker Change: We are seeing additional share opportunities in markets. We have recently opened as well as increased adoption at the local and municipal markets that have not historically been a focus.

Paul Christians: I would also like to speak quickly about our vertical segment market leadership structure. Each vertical or segment within verticals has highly seasoned leadership as well as dedicated staff for products, sales, marketing, and service delivery. This ensures continuity of domain expertise across the entire sales product and fulfillment spectrum.

Speaker Change: I would also like to speak quickly about our vertical segment market leadership structure, each vertical or segment within verticals is highly seasoned leadership.

Speaker Change: Well its dedicated staff for product sales marketing and service delivery.

Clay Whitson: Reflecting organic growth from recurring sources offset by declines and non-recurring sources. SAS and transaction-based software revenues grew 8% while payments revenues grew 9%. Non-recurring sales of software licenses declined by approximately 2 million as expected, reflecting the ongoing shift to SAS. Professional services revenues declined by 1.1 million, principally a result of the delay in Celtic implementation with Manitoba caused by the public worker strike. ARR increased 4% to 181.3 million for Q3, 24, compared to 174.5 million for Q3, 23.

Speaker Change: This ensures continuity of domain expertise across the entire sales product and fulfillment spectrum.

John Davis: The staff is further augmented by our corporate development, marketing, finance, legal, and HR teams. This concludes my comment, Jamie. At this time, we will open the call for Q and A. Please, ladies and gentlemen, at this time we will begin the question and answer session. To ask a question, you may press star and then one, using a touch tone telephone. To withdraw your questions, you may press star and two. If you are using a speaker phone, please pick up the handset prior to pressing the keys to ensure the best sound quality. Once again, that is star and then one to ask a question. We will pause momentarily to assemble the roster. In our first question today comes from John Davis from Raymond James. Please go ahead with your question. Hey, good morning, guys. I just wanted to touch on the EBITDA outlook for both this year and next year. I think we look at the midpoint EBITDA will be down slightly year over year for a main co. You called out several different headwinds. By my mask, you look like six to seven million dollars of headwind. That gets you back to kind of the 10% organic growth. My headwinds this year could give us some comfort on 10% organic EBITDA growth.

Speaker Change: <unk> is further augmented by our corporate development marketing finance legal and HR teams.

Paul Christians: Each vertical or segment within Verticals has highly seasoned leadership, as well as dedicated staff for product, sales, marketing, and service delivery. This ensures continuity of domain expertise across the entire sales product and fulfillment spectrum. The staff is further augmented by our corporate development, marketing, finance, legal, and HR team. This concludes my comments, Jamie. At this time, we will open the call for Q&A. Ladies and gentlemen, at this time, I would like to ask that you please stand by for the

Speaker Change: This concludes my comments Jamie at this time, we will open the call for Q&A. Please.

Operator: Ladies and gentlemen, at this time, we'll begin the question and answer session. To ask a question, you may press star and then one on the touchtone telephone. To withdraw your questions, you may press star and two. If you are using a speakerphone, we do ask that you please pick up the handset prior to pressing the keys to ensure the best sound quality. Once again, that is the star and then one to ask a question. And our first question today comes from... John Davis from Raymond James. Please go ahead with your question.

Jamie: Ladies and gentlemen at this time, we'll begin the question and answer session.

Speaker Change: To ask a question you May press Star and then one using a touchtone telephone to withdraw your questions you May press star two if.

Speaker Change: If you are using a speaker phone, we do ask that you. Please pick up the handset prior to pressing the keys to ensure the best sound quality.

Speaker Change: Once again that is star and then one to ask a question.

Pause momentarily to assemble the roster.

Clay Whitson: Over 80% of our revenues in the quarter continued to come from recurring sources. Software and related services represented 74% of total revenues for Q3 with payments 21% and other 5%. Adjusted EBITDA declined 11% to 12.9 million for Q3, 24, from 14.5 million for Q3, 23. Adjusted EBITDA as a percentage of revenues declined to 23% from 25.3% for Q3, 23, principally reflecting 2 million less in one time software license sales, which fall to the bottom line in the quarter they land. This decline was partially offset by lower corporate expenses, resulting from the internal re-alignment discussed on previous quarterly calls.

Speaker Change: And our first question today comes from.

Speaker Change: John Davis from Raymond James. Please go ahead with your question.

John Davis: Hey, good morning, guys. I just wanted to touch on the EBITDA outlook for both this year and next year. I think if we look at the midpoint, EBITDA will be down slightly year-over-year for RomainCo. You have called out several different headwinds. By my math, you look like $6 to $7 million of headwinds. That gets you back to kind of 10% organic growth. Minus headwinds this year could give us some comfort on 10% organic EBITDA growth next year. Is it fair to say the headwinds you called out are kind of $6 to $7 million or any other color and helping us size the different headwinds you called out in 2024?

John Davis: Hey, good morning, guys.

Speaker Change: Just wanted to touch on the EBITDA outlook for both this year and next year I think if you look at the midpoint EBITDA will be down slightly.

Speaker Change: Year over year for remain co you called out several different headwinds by my math, you look like $6 million to $7 million.

Speaker Change: And that gets you back to kind of the 10% organic growth headwinds.

Ted: Ted one of this year it could give us some comfort on 10% organic EBITDA growth next year, but is it fair to say that headwinds you called out are kind of $6 million to $7 million or any other color probably that size the different headwinds you called out in 2024.

John Davis: Next year, is it fair to say that the headwinds you called out are kind of six to seven million dollars or any other color, probably that size, the different headwinds you called out in 2024? I get a little more than that. Manitoba was a three million or is a three million headwind this year; the SAS transition is a five million headwind; and education is a four million headwind this year. So I got a 12 million headwind this year, which should not repeat next year. Right in play, I would just assume that's a high margin business.

Clay Whitson: I get a little more than that. Manitoba was a three million or is a three million headwind this year. The SAS transition is a five million headwind. And education is a $4 million headwind this year. So I get a $12 million headwind this year, which should not repeat next year.

Speaker Change: I get a little more than that.

Speaker Change: Manitoba was a $3 million or is a 3 million headwind this year.

Speaker Change: The SaaS transition is a $5 million headwind.

Clay Whitson: We have provided a view of our revenue and adjusted EBITDA from continuing operations for fiscal 2023 and the previous quarters of fiscal 2024 and the supplemental information on our website, including reconciliation to the nearest gap number. Proforma adjusted diluted earnings per share from continuing operations was $0.7 for Q324. This number excludes discontinued operations, but includes consolidated an interest expense of $0.23. Again, please refer to the press release for a full description and reconciliation.

Speaker Change: And education as a 4 million headwind this year, so I got a $12 million headwind this year.

Speaker Change: Which should not repeat next year.

John Davis: Right. And Clay, I just assume that's a high-margin business. I apologize.

Speaker Change: Great and glad I, just assume that high margin business of ours I was talking about EBITDA. So if.

John Davis: I was talking about EBITDA, so you know, if we look at the EBITDA, 59 going to 58 this year, that 12 million though, you know, I think you said the license revenue is very high margin, so, you know, I'm just looking at the EBITDA. God, so if you take that 12 million of revs, you know, maybe the 50% margin that would get you back to kind of a 10% EBITDA growth number for fiscal 24. Is that a reasonable statement? Yeah, yeah, correct. I was; my numbers were revenue numbers. Okay, no, that's helpful.

Clay Whitson: I was talking about EBITDA. So, you know, if we look at the EBITDA of 59 going to 58 this year, that 12 million, though, I think you said the license revenue is very high-margin. So, you know, I'm just looking at the EBITDA guide. So, if you take that 12 million REVs, you know, maybe the 50% margin, that would get you back to kind of a 10% EBITDA growth number for fiscal 24. Is that a reasonable statement? Yes. Yeah, that's correct.

Speaker Change: If we look at the EBITDA of 59.

Speaker Change: Go into 58, this year that $12 million, though I think you said the.

Speaker Change: The license revenue is very high margin. So I'm just looking at the EBITDA guide. So if you take that $12 million of revs you know, maybe the 50% margin that would get you back to kind of a 10% EBITDA growth number for fiscal 'twenty. Four is that a reasonable statement. Yes. You are correct I was my numbers were revenue numbers.

John Davis: Yeah, correct. I was told my numbers were revenue numbers.

Clay Whitson: Okay, no, that's helpful. And then, Rick, you talked about, or I forget, one of you, Rick Clay, said that the new acquisition, you know, high into the multiple range for better growth and higher growth, so just want to elaborate a little bit more on the growth profile of the August deal closed on August 1st.

Speaker Change: Okay.

Speaker Change: That's helpful.

John Davis: And then Rick, you talked about, I forget, one of you, either Rick Clay said that the new acquisition, you know, high into multiple range for better growth and higher growth. So just want to elaborate a little bit more on the growth profile of the August, of the deal close August 1st. We expect double-digit growth from that company and fiscal year 25. In recent years, it's been comfortably double-digit. You know, they have the ability to win some larger contracts, and so those can growth rates in any given year. Okay, that's helpful.

Speaker Change: And then Rick you talked about or I forget what the workplace said that the new acquisition high into the multiple range for better growth and higher growth. So just want to elaborate a little bit more on on the growth profile of the August the other deal close August 1st.

Clay Whitson: We expect double-digit growth from that company in fiscal year 25. In recent years, it's been comfortably double-digit. You know, they have the ability to win some larger contracts, and so those can bump growth rates in any given year.

Clay Whitson: On August 1st, we acquired a permitting and licensing company in the public sector for 18 million in cash, plus 311,634 shares of class A common stop. This acquisition will fit well with our existing businesses and provide a growth vehicle for the future. We pay it a multiple at the high end of our range due to above average growth. The acquisition has a similar EBITDA margin profile as our existing remain co-business excluding corporate overhead.

Speaker Change: We expect double digit growth.

Speaker Change: From that company in fiscal year 'twenty five.

Speaker Change: In recent years its been.

Speaker Change: Comfortably double digit.

Speaker Change: They have the ability to win some larger contracts and so those can bump growth rates right in any given year Matt.

John Davis: Okay, that's helpful. And then last one for me, Clay, I think the implied margin expansion in the guide for 25 is about 150 basis points. Historically, you guys have been running closer to 50 to 100.

Okay. That's helpful. And then last one for me I think the implied margin expansion in the guide for 'twenty. Five is about 150 basis points. Historically, you guys have been running closer to 50 to 100.

John Davis: And then last one for me, Clay, I think the implied margin expansion and the guide for 25 is about 150 basis points. Historically, you guys have been running closer to 50 to 100. Is it some of that high margin revenue expected that got pushed out coming in next year? Is that what's driving it? Sounds like the acquisition is similar margins. And then maybe should we still think about 50 to 100 basis points longer term? Call it 26 and beyond that pair at this point. Well, license software sales is the highest margin, and we're not expecting a better year in that in 25. But revenues at the midpoint are growing 9.5%, and while expenses might be growing on the order of 7%, so that's leading to, and that's some leftover effects of the internal realignment that we've talked about in previous quarters.

Clay Whitson: Is it some of that high-margin revenue expected that got pushed out coming in next year? Is that what's driving it? It sounds like the acquisition is similar margins. And then maybe, should we still think about 50 to 100 basis points longer term, call it 26 and beyond, subpar at this point?

Speaker Change: Is it some of that high margin revenue expected that got pushed out coming in next year is that what's driving it sounds like the acquisition is similar margins.

Speaker Change: And then maybe should we still think about 50 to 100 basis points longer term call. It 26 and beyond what's out there at this point.

John Davis: Well, licensed software sales have the highest margin, and we're not expecting a better year in that, in 25. But revenues at the midpoint are growing 9.5%, and while expenses might be growing on the order of 7%. So that's leading to, and that's some leftover effects of the internal realignment that we've talked about in previous quarters.

Speaker Change: Well license software sales is the highest margin and we're not expecting a better year than that in 'twenty five but revenues at the midpoint, our growing nine 5% and while expenses might be growing on the order of 7%.

Clay Whitson: Outlook. This is a transitionary year, so I will first outline our outlook for revenues and adjusted EBITDA from continuing operations for fiscal year 24.

Clay Whitson: We cannot currently guide fiscal year 24, perform a adjusted diluted EPS because we cannot determine interest expense until we know the closing date for the anticipated merchant business sale. I will then give guidance for continuing operations for fiscal year 25. The outlook for both time periods do not include acquisitions that have not been announced or transaction-related costs. For fiscal year 24, our revised outlook follows. Revenues, 228 to 234 million, adjusted EBITDA 56 to 60 million.

Speaker Change: That's leading to and.

Speaker Change: And that's some leftover.

Speaker Change: The effects of the internal realignment that we've talked about in previous quarters.

John Davis: Okay, appreciate. Thanks.

John Davis: Okay, I appreciate it. Thanks, guys.

Okay I appreciate it thanks guys.

Matthew VanVliet: Our next question comes from Matt VanVliet from BTIG. Please go ahead with your question. Good morning. Thanks for taking the question.

Matthew VanVliet: Our next question comes from Matt VanVliet from BTIG. Please go ahead with your question.

Speaker Change: Our next question comes from Matt Vanvliet from BTG. Please go ahead with your question.

Paul Christians: Hey, good morning. Thanks for taking the question. I guess when you look at the acquisition you just announced, how much overlap do you have in some of these markets selling into kind of the appropriate buyers there? And then you also mentioned the ability to better monetize payment through that platform. What, if any, time frame will it take to build those integrations into the product?

Matt VanVliet: Hey, good morning, Thanks for taking my question I guess when you look at the acquisition was announced.

Matthew VanVliet: I guess when you look at the acquisition just announced, I guess how much overlap do you have in some of these markets selling into kind of the appropriate buyers there? And then you also mentioned the ability to better monetize payment through that platform.

Matt VanVliet: How much overlap do you have in some of these markets selling into kind of the appropriate buyers. There and then you also mentioned the ability to.

Speaker Change: Better monetize payments through that platform, what what if any time frame will it take to.

Paul Christians: What, what if any timeframe will it take to build those integrations into the product? Hi, Matt. This is Paul. There is we have a we have a similar product that is needing it would need attention to be refined. And so this will be our benchmark product in that arena, and we will we have begun planning to transition our historic to our new cost structures under the support mechanisms for the new product offering, and the new acquisition are appreciated. And that is in process as we speak, as well as other marketing activity to an expanded high three cost per base.

Speaker Change: Build those integrations into the into the product.

Paul Christians: Hi Matt, this is Paul. We have a similar product that would need attention to be refined, and so this will be our benchmark product in that arena, and we have begun planning to transition our historic to our new. The cost structures under the support mechanisms for the new for the new product offering a new acquisition are appreciably more favorable, and that is in process as we speak, as well as other marketing activity to an expanded i3 customer base.

Speaker Change: Hi, Matt This is Paul.

There is we haven't we have a similar product.

Speaker Change: Yes.

Speaker Change: Meeting would need attention to be.

Speaker Change: <unk> and so this will be our benchmark product in that arena and we will we have begun planning to transition. Our historic two are new cost structures under the support mechanisms for the new for the new product offering and the new acquisition are appreciably more favorable.

Speaker Change: And that is in process as we speak as well as other marketing activity to an expanded customer base.

Clay Whitson: We do expect to resume acquisitions on a regular basis following the anticipated sale of our merchant business.

Frederick Stanford: Matt, I'll add to that and say that our existing public sector group has been working with this acquisition prior to close, and we've exchanged several deals and quoted together on several deals, so we expect to get traction right away.

Rick: And I'll answer that and say that our existing public sector group has been working with this acquisition of prior to close, and we've exchanged several deals and quoted together on several deals. So we expect to get traction by the way.

Speaker Change: Matt I'll answer that and say that our existing public sector group has been working with this acquisition.

Matt: To close and we've exchanged several deals included together on several deals. So we expect to get traction by the way.

Rick: Okay, very helpful. And then, as you look at the M&A pipeline, this deal came in; you mentioned either at the high end or just above kind of the typical range. Is there any reason to think that now that you have a bigger platform you've sort of re re re-platformed or modernized some of your other products that at the higher end of the range is maybe more in line with the targets you're going to look at something a little higher growth, higher margin. Sort of ready made or should we still expect kind of a broad range of potential deals coming through in the next couple of years.

Matthew VanVliet: Okay, very helpful. And then, as you look at the M&A pipeline, this deal came in, you mentioned, either at the high end or just above kind of the typical range. Is there any reason to think that now that you have a bigger platform, you've sort of replatformed or modernized some of your other products, that at the higher end of the range is maybe more in line with the targets you're going to look at, something a little higher Or should we still expect a broad range of potential deals coming through in the next couple years? I mean,

Matt: Okay very helpful. And then as you look at your M&A pipeline.

Speaker Change: You came in you mentioned either at the high end or just above kind of the typical range.

Speaker Change: Is there any reason to think that now that you have a bigger platform you've sort of re.

Rick: I will now turn the call over to Rick for company updates and the M&A pipeline. Thank you, Clay. Good morning, everyone.

Speaker Change: Re platform to modernize some of your other products that at the higher end of the range is maybe more in line with the targets Youre going to look at something a little higher growth higher margin sort of ready made or should we still expect kind of a broad range of potential deals coming through.

Speaker Change: In the next couple of years.

Speaker Change: Yeah.

Rick: I mean, you know, these ranges we have are history that we're quoting, but obviously, if something's growing 20% plus, it deserves a higher multiple. If something's 100% SaaS, it deserves a higher multiple, so they're not really strict rules, but just following history. I would I would guess they would remain in our normal range, but we are flexible if, if you know companies have characteristics that warrant them.

Frederick Stanford: I mean, you know, these ranges we have are our history that we're quoting. But obviously, if something's growing 20 percent plus, it deserves a higher multiple. If something's 100 percent SAS, it deserves a higher multiple. So they're not really strict rules, but just following history. I would guess they would remain in our normal range, but we are flexible if companies have characteristics that warrant them.

Speaker Change: I mean.

Speaker Change: These ranges we have are our history that we're quoting but obviously if some things are growing 20% plus it deserves a higher multiple if some things are 100% SaaS. It deserves a higher multiple so theyre not really strict rules, but just following history.

Rick: As we progress toward a software focus on our specific articles, we intend to further enhance our product team by adding an enterprise leader for that group. This leader will help us drive our ongoing investment in web-native configurable next-generation applications. This individual will be responsible for defining and delivering our product vision, strategy, and roadmap, and for communicating this vision. He or she will help determine a product strategy for a broad set of services tailored to a very customer base, driving research led innovation while also focusing on commercialization and bringing new products to life.

Speaker Change: I would I would guess they would remain in our normal range, but we are flexible if if.

Speaker Change: Companies have characteristics that warrant them.

Rick: Okay, great. Thank you.

Speaker Change: Okay, great. Thank you.

Charles Nabhan: Our next question comes from Charles Nabum from Stevens. Please go with your question. Good morning, and thank you for taking my question. I wanted to get a little more color around the acquisition and confirm my understanding of the math and impact based on your comments. You would set it to the top end of your range, which I guess I'm thinking about that correctly would imply something a little more than two million in EBITDA. And assuming, you know, a margin in line with a book that gets you to about seven ish from a revenue standpoint, is that sort of a fair way of thinking about it? And also wanted to confirm that that is included in the fiscal year 25 guy as well.

Charles Nabhan: Our next question comes from Charles. Nabham from Stevens, please go ahead with your question.

Charles <unk>: Our next question comes from Charles <unk>.

Speaker Change: Naval from Stephens. Please go ahead with your question.

Clay Whitson: Good morning, and thank you for taking my question. I wanted to get a little more color around the acquisition and confirm my understanding of the math and impact based on your comments. You said it was the top end of your range, which I guess, if I'm thinking about that correctly, would imply something a little more than $2 million in EBITDA. And assuming, you know, a margin in line with the book, that gets you to about $7-ish from a revenue standpoint. Is that sort of a fair way of thinking about it? And I also wanted to confirm that that is included in the fiscal year 25 guide as well.

Speaker Change: Good morning, and thank you for taking my question I wanted to get a little more color around the acquisition and confirm my understanding of the math and impact based on your comments you had said at the top end of your range, which I guess, if I'm thinking about that correctly would imply something a little more than $2 million.

Rick: I wanted to touch briefly on our latest acquisition that we announced last night, the deal closed on August 1st, and it fits nicely in our public sector vertical. The company operates in 17 states today with its headquarters in the southwestern US. The company specializes in permitting and licensing solutions for boards, commissions, and agencies, and is able to score over 150 regulatory license types today. Upgrading our offering and permitting and licensing market is attractive because of the massive size of the market, the ample opportunities to cross sell through our existing public sector footprint, and the presence of significant transactional revenue opportunities, which are a core competency for our business.

Speaker Change: EBITDA and assuming a margin in line with the book that gets you to about <unk>.

Speaker Change: Seven ish from a revenue standpoint is that is that sort of a fair way of thinking about it and also wanted to confirm that that is included in the fiscal year 'twenty guide as well.

Charles Nabhan: Yeah, that's a reasonable approach, Chuck, and it is included in the guide.

Charles Nabhan: Yeah, that's a reasonable approach, Chuck, and it is included in the guide. Got it, so I guess that be in the case, you know, should we think about I guess that would get you to organic roughly in the six to seven percent range from thinking about that correctly.

Speaker Change: Yeah, that's that's a reasonable approach Chuck.

Speaker Change: It is included in the guidance.

Charles Nabhan: Got it. So I guess that being the case, you know, should we think about it, I guess that would get you to organic roughly in the six to seven percent range if I'm thinking about that correctly. I guess my follow-up would be, with respect to the guidance, I know you're not giving quarterly guidance, but as we think about the cadence through the year, should we think about it as sort of a gradual step up as we move through fiscal year 25, or do you anticipate any disproportionate acceleration at any point in the year?

Chuck: Got it so I guess that being the case.

Chuck: Should we think about I guess that would get you know organic roughly in the 6% to 7% range, if I'm thinking about that correctly.

Rick: In the United States, there are over 1,000 state-level licensing boards. These boards regulate various professions and occupations, ensuring that practitioners meet the required standards to provide services to the public. Each state has its own set of boards that oversee professions such as health care, legal, engineering, accounting, real estate and many others. Below the state level is another large market of local governments who have similar needs. The company boasts a strong pipeline across a wide cross section of the available opportunities in the industry and sells both in a direct sales and reseller model.

Charles Nabhan: I guess my follow-up would be with respect to the guide. I know you're not giving quarterly guidance, but as we think about the cadence through the year, should we think about it as sort of a gradual step up as we move through fiscal year 25, or do you anticipate any disproportionate acceleration at any point in the year? Q4, our September quarter, is always our best quarter. Back to school is the strongest during that quarter. I would look at history as a seasonality guide. Our Q3 is usually very flat on an organic basis with our Q2.

Speaker Change: I guess my follow up would be with respect to the guide.

Speaker Change: I know youre, not giving quarterly guidance, but as we think about the cadence through the year.

Speaker Change: Should we think about it as sort of a gradual step up.

Speaker Change: As we move through fiscal year, 'twenty, five or do you anticipate.

Speaker Change: Any disproportionate acceleration at any point in the year.

Clay Whitson: Q4, our September quarter, is always our best quarter, and Back to School is the strongest during that quarter. I would look at history as a seasonality guide. For example, our Q3, is usually very flat on an organic basis compared to our Q2. And then the payment processing, which is less of a factor now, but it's weakest in the calendar fourth quarter. So I would just look at prior year history to be the best guide for that.

Speaker Change: Q4, our September quarter is always our best quarter.

Speaker Change: Back to school is the strongest during that quarter.

Speaker Change: I would look at history as a seasonality guide our Q3.

Rick: One of the other facets of this deal that is so attractive is that they are geographically unconstrained. This deal was completed with combination of cash and stock within our standard multiple range. Regarding M&A in general, our acquisition pipeline continues to be strong. However, we also continue to maintain a strong discipline to ensure the acquisitions meet our return objectives and augment our offerings and our respective markets.

Speaker Change: Is usually very flat on an organic basis with our Q2.

Speaker Change:

Charles Nabhan: And then the payment processing, which is less of a factor now, but it's weakest in the calendar fourth quarter. So I would just look at prior year history to be the best guide for that. We don't have as much the one time software sales were 10,000,000, 10,500,000 in 23, less than five in 24. So that's less of a distortion than it was in prior years. Got it.

Speaker Change: And then the payment processing, which is less of a factor now, but its weakest in the calendar fourth quarter. So I would just look at prior year history to be the best guide for that we don't have as much the onetime software sales were $10 million 10, and a half million in 'twenty three.

Clay Whitson: We don't have as much. The one-time software sales were ten million, ten and a half million, and twenty-three, less than 5 in 24, so that's less of a distortion than it was in prior years.

Rick: We hope to be able to share more details on the M&A front and near future.

Speaker Change: Less than five and 24, so that's less of a distortion than it was in prior years.

Paul Christians: I'll now turn the call over to Paul for additional comments on the business. Thank you, Rick, i3 Verticals is a software company delivering strategic vertical offerings in the public sector and health care markets with our proprietary dynamic software, i3 empowers our clients to better serve their communities by streamlining processes through secure and accessible software solutions. The market is responding positively to our deep domain expertise, market history, and flexible solution.

Charles Nabhan: Got it. Okay.

Speaker Change: Got it okay.

Charles Nabhan: Okay. And as a follow up, I had a sort of a high level question. It sounds like things are trending pretty well from a demand and a business standpoint, which is consistent with comments from one of your competitors a few weeks ago. I wanted to get your thoughts on some of the underlying tailwinds to that demand. I know they talked about cyber security concerns as a catalyst. I know there's still some federal funds out there that are providing a tailwind as well, but any additional thoughts around just the demand environment and the underlying tailwinds would be helpful.

Speaker Change: And as a follow up I had a sort of a high level question. It sounds like things are.

Charles Nabhan: As a follow-up, I had a sort of high-level question. It sounds like things are trending pretty well from a demand and a business standpoint, which is consistent with comments from one of your competitors a few weeks ago. I wanted to get your thoughts on some of the underlying tailwinds to that demand. I know they talked about cybersecurity concerns as a catalyst. I know there's still some federal funds out there that are providing a tailwind as well, but any additional thoughts around, you know, just the demand environment and the underlying tailwinds would be helpful.

Speaker Change: Trending pretty well from a demand and a business standpoint, which is consistent with comments from one of your competitors a few weeks ago.

Speaker Change: I wanted to get your thoughts on some of the underlying tailwind to that demand I know they talked about.

Cyber security concerns as a catalyst I know theres still some federal funds out there that are providing a tailwind as well, but any additional thoughts around just the demand environment and the underlying tailwind would be helpful.

Paul Christians: They're ready to move forward. The market has an eight with clients, both new and existing. Additionally, M&A continues to coalesce around each vertical to augment our product offerings as detailed by Rick and his remarks. Q3 2024, the health care vertical secured a major win with one of the United States top five health care payers, expanding the use of our platform to over 7,000 users globally. In addition, we are also secured multiple six finger service engagements focusing on extending the value of our platform into new departments within these organizations.

Clay Whitson: Well, we agree that cyber is a concern and, you know, it takes additional resources, and it also can have the impact of taking longer to get people live as you coordinate, you know, throughput on all the systems to make sure they're there. From a general demand perspective, given the markets that we're focused on, we're fairly durable, you know, with a heavy orientation in utilities and public. You know, utility bills have to be paid every month, and they're not really going down.

Charles Nabhan: Well, we agree that cyber is a concern, and it takes additional resources and also can have the impact of taking longer to get people live as you coordinate, you know, throughput and all the systems to make sure they're there from a general demand perspective given our given the markets that we're focused on. We're fairly durable. You know, they have the orientation and utilities, and public utility bills have to be paid every month, and they're not really going down. So our mix for that gives us a nice degree of protection that we don't that others may not necessarily experience.

Speaker Change: Well, we agree that cyber is a concern.

Speaker Change: It takes additional resources on it also.

Speaker Change: It can have the impact of taking longer to get people live as you coordinate throughput at all of the systems to make sure they're there.

Speaker Change: From a general demand perspective, given our given the markets that we're focused on.

Speaker Change: We're fairly durable with a heavy orientation and utilities and public utility bills have to be paid every month.

Paul Christians: Robots cross selling opportunities with customers, acquire additional solutions across the breadth of our software offerings, which include electronic health records, customer portals, and bill presentment, and bill presentment. Our revenue cycle management service offerings are experiencing continued expansion among our academic medical institution clients. And we are also pleased to experience an uptick in new mid market accounts onboarding with our services over the last quarter. Education continues to expand our client footprint in our existing geographical markets with our established customer base and with our established customer base. In addition, we have recently opened two new territories, North Carolina and Texas, where we are experiencing broad adoption of our fully integrated staff solutions.

Clay Whitson: So our mix for that gives us a nice degree of protection that we don't, you know, that others may not necessarily experience, generally from the Customer Demand and Capability System of things. We're not really seeing less demand. Our RFP activities are up, and our engagement with customers trying to modernize is also up. But customers also have constraints on needing to do that across the entire spectrum of their software services. So we're expanding our positions on configurability for software to make transitions for them easier and make it more seamless, and also enhance the ability to facilitate their data transitions in the process.

Speaker Change: We're not really going down so our mix for that it gives us.

Speaker Change: Nice degree of protection.

Speaker Change: We don't.

That others may not necessarily experience.

Speaker Change: Okay.

Charles Nabhan: Generally, from a customer demand and capability system of things, we're not really seeing less demand or RFP activities or our engagement with customers trying to modernize or also up, but customers also have constraints on needing to do that across the entire spectrum of their software services. So, we're expanding our positions on configurability for software to make transitions for them easier and make it more seamless and also enhance the ability to facilitate their data transitions in the process. Got it. I appreciate all that, Collar.

Speaker Change: Generally from.

Speaker Change: Our customer demand and capability system.

Speaker Change: Things were not really seeing less demand our RFP activities are up.

Speaker Change: And our.

Speaker Change: Engagement with customers trying to modernize.

Speaker Change: Are also up.

Speaker Change: Customers also have constraints on.

Speaker Change: Needing to do that across the entire spectrum of their software service and so.

Speaker Change: We're expanding our positions on configure ability for software to make transitions for them easier and make it more seamless and also enhanced the ability to.

Paul Christians: The public sector is made up of four sub vertical segments, utilities, transportation, electronic resource planning, RERP, and justice tech. The utility segment is experiencing a broad adoption as well of our utility customer engagement, e-portal software suite. This staff solution has played a key role in helping more than 50% of our customers. Chief top rankings in customer satisfaction measurements has recognized by JD Power and other leading research organizations. We currently have more than 7 million utility customers under management.

Speaker Change: Facilitate their data transmissions in the process.

Charles Nabhan: Got it. I appreciate all that, caller. Thank you.

Speaker Change: Got it I appreciate all that color. Thank you.

Charles Nabhan: Thank you.

James Faucette: Our next question comes from James Faucette from Oregon Stanley. Please go ahead with your question. Hi, thank you for keeping my question.

James Faucette: Our next question comes from James Faucette from Morgan Stanley. Please go ahead with your question. Hi, thank you for taking my question. I'm asking a question on behalf of...

James Faucette: Our next question comes from James Faucette from Morgan Stanley. Please go ahead with your question. Bye. Thank you for taking my question. I'm out.

Speaker Change: Our next question comes from James Faucette from Morgan Stanley. Please go ahead with your question.

James Faucette: Hi, Thank you for taking my question I'm asking question on behalf of John I was wondering what the competitive environment is looking like in the software space now that youre at solely software company.

James Faucette: I'm asking a question on behalf of James. I was wondering what the competitive environment is looking like in the software space, now that you're a solely software-focused company, if there's any changes there, and then secondly, what do you think your key differentiator versus peers is like now with this new realignment? It's relatively consistent to what it has been. We were heavily focused on software and then the downstream monetization of that with integrated payments. So that hasn't changed. Our alignments into our verticals and our sub verticals has allowed us to be more responsive and ensure execution and continuity of certainty of delivery across our spectrum.

If there's any changes there and then secondly, what do you think you are a key differentiator versus peers. It's like now with this new realignment.

Paul Christians: Built with the mobile first approach, i3 verticals, e-portal, design, seamless access across all devices. The portals user friendly interface ensures that customers can manage their utility services effortlessly, whether they are using a smartphone, tablet, or computer.

Unknown Executive: It's relatively consistent with what it has been. You know, we were heavily focused on software and then the downstream monetization of that with integrated payments. So that hasn't changed.

Speaker Change: It's relatively consistent to what it has been we were heavily focused on software and then the downstream monetization of that integrated payments.

Unknown Executive: Our alignments into our verticals and our sub-verticals have allowed us to be more responsive and ensure execution, continuity, and certainty of delivery across our spectrum. I think that is one of the key differentiators as well, that when we sell something, we do execute on it, and we do get it live. And that's a critical piece in our business that's culturally very important to us. Our next question comes from Alex Markgraff.

Speaker Change: So that hasnt changed our alignments into our verticals and our sub verticals.

Speaker Change: It has allowed us to be to be more responsive and ensure.

Speaker Change: Execution and continuity of.

Uncertainty of delivery across our spectrum I think that is one of the key differentiators as well.

James Faucette: I think that is one of the key differentiators as well. When we sell something, we do execute on it, and we do get a lot, and that's a critical piece in our business that's culturally very important to us.

Speaker Change: When we when we sell something we do execute on it and we do get a lot.

Speaker Change: And that's a critical piece in our in our business. This culturally very important to us.

Paul Christians: The new solution, which is SaaS-based and hosted on AWS, ensures scalability, reliability, and top tier security. It also streamlines operations, laying the foundation as a core architectural model for future solutions. On a similar product evolution, though, we are also successfully deploying our upgraded customer information systems, utility building software focused on clients of less than 100,000 meters, which also follows our SaaS-hosted on AWS model.

Alexander Markgraff: Our next question comes from Alex Markraff from KeyBank Capital Markets. Please go ahead with your question. Hi, everyone. Thanks for taking my question. Just one for me for Paul and Orkley.

Alex Markgraff: Our next question comes from Alex Markgraff from KeyBank Capital. Hey everyone, thanks for taking my question.

Alex <unk>: Our next question comes from Alex <unk> from Keybanc capital markets. Please go ahead with your question.

Alex <unk>: Hey, everyone. Thanks for taking my question just one from me for Paul and just sort of curious to get your thoughts on what.

Alexander Markgraff: Just sort of curious to get your thoughts on what the growth opportunity around cross sell is and sort of like what that could represent on an annual basis in terms of growth contribution. Thank you.

Alex <unk>: The growth opportunity around cross sell is in sort of like what that could represent on an annual basis in terms of growth contribution. Thank you.

Paul Christians: This is Paul. I'll take that one. I'll start with that one, the profile.

Paul Christians: At this fall, I'll take that when I'll start with that one. Cross sell opportunities are profound. They're significant. We started that several years ago with our initial UPO offering, and then each of our steps since that have been in position to further refine our market offering and expand that. And we're via the realignments. We're organizationally highly defined and highly effective, and being able to execute in that arena. So we think we think those are profound as we're doing that in terms of what that would mean for us.

Alex <unk>: This is Paul I'll take that one I'll start with that one cross sell opportunities.

Paul Christians: In transportation, we are seeing strong demand that spans our motor carrier, motor vehicle, and driver's license solutions, with increased interest across the spectrum as stage are looking to modernize services. We have recently deployed solutions with successful installations in Florida, South Carolina, and Phase 2S3 in Manitoba.

Alex <unk>: Our.

Paul Christians: They're significant. We started that several years ago with our initial UPO offering, and then each of our steps since then have been in a position to further refine our market offering and expand that. And via the realignments, we're organizationally highly defined and highly effective in being able to execute in that arena. So we think these are profound as we're doing that. In terms of, you know, what that would mean for us, I'm relatively fresh in this role, so I haven't had the opportunity to really tie all those numbers back out as we coalesce around those segments. So that'll be for another time.

Paul Christians: Profile, they're significant we started that several years ago with our initial offering in that each of our staff since that had been in a position to further refine our market offering and expanded our Edward via the realignments were organizationally.

Paul Christians: Highly defined and highly effective in being able to execute in that arena. So we think we think those are profound as we're doing that.

Paul Christians: In the public sector's ERP, in the public sector's ERP unit, our software suite consists of financial management, human capital administration, property and business tax, appraisal, regulatory compliance, and official records management, all seamlessly integrated with payment processing interfaces. ERP demand is consistent with several products also being refreshed to meet our next generation cloud and configurability standards. I3 justice tech sub vertical encompasses our public safety core management solutions, e-filing and document management solutions.

Paul Christians: In terms of.

Speaker Change: What that would mean for us I'm relatively fresh in the initial roll so I haven't had the opportunity to really.

Paul Christians: I'm relatively fresh in this role. So I haven't had the opportunity to really tie all those numbers back out as we go last around those segments. So that'll be for a future time. Thank you.

Speaker Change: Hi, all of those numbers back out as we coalesced around those segments, so that would be for a future time.

Thank you.

Peter Heckmann: You know, our next question comes from Peter Heckmann from the A. Davidson. Please go ahead with your question. Hey, good morning, everyone. I wanted to follow up on Manitoba and just see if you had any additional line of sight. Remind us of, you know, what, what, what is still to be recognized there and if you have line of sight as to when it gets ramped and when we might see the project completed.

Peter Heckmann: And our next question comes from Peter Heckmann from D.A. Davidson. Please go ahead with your question.

Speaker Change: And our next question comes from Peter Heckmann from D. A Davidson. Please go ahead with your question.

Unknown Executive: Hey, good morning, everyone. I wanted to follow up on Manitoba and just see if you had any additional line of sight. Remind us what is still to be recognized there and if you have any idea as to when it gets re-ramped and when we might see that project completed.

Peter Heckmann: Hey, good morning, everyone I wanted to follow up on Manitoba, and just see if you had any additional line of sight remind us what what is still to be recognized.

Paul Christians: The justice tech at public safety vertical represents our deepest and broadest product line. In addition, we are developing our I3 justice tech 3.0 core management solution as we evolve our technology to web native highly configurable solutions. Sales and demand generation activity continue to grow with the focus on an expanded ARR model. We are seeing additional share opportunities in markets we have recently opened as well as increased adoption in the local municipal core markets that have not historically been focused.

If you have line of sight as to when it would get so we ramped up and when we might see.

That project completed.

Jeff: This is Jeff, so there's approximately $7 million US dollars telling you to be recognized on that project as far as the timeline of when that will be recognized. What's in our forecast right now is about half of that is coming fiscal year and about half the next year. As far as weather will stay on that time, and we'll just have to keep you a prize for that. This is a project that has experienced significant delays over the periods that we've had it. And we think we've got the numbers dialed in conservatively, but you know, we'll just caution that we don't have a perfect line of sight on this.

Unknown Executive: This is Jeff. So there's approximately 7 million US dollars, something to be recognized on that project. As part of the timeline of when that will be recognized, what's in our forecast right now is about half of that for the coming fiscal year and about half of that for the next year. As far as whether we'll stay on that timeline, we'll just have to keep you apprised of that. This is a project that has experienced significant delays over the periods that we've had it, and we think we've got the numbers dialed in conservatively. But, you know, we would just caution that we don't have a perfect line of sight on this.

Peter Heckmann: This is Jeff. So there is approximately 7 million U S. Dollars is telling me recognize on that project.

Speaker Change: As far as the timeline of when that will be recognized.

Speaker Change #100: What's in our forecast right now is about half of that.

Speaker Change #100: Fiscal year and about half the next year.

Speaker Change #100: As far as whether it will stay on that time, and we'll just have to keep you apprised to that this is a project that has experienced significant delays over the periods that we've had it.

Speaker Change #100: And we think we've got the numbers dialed in conservatively.

Speaker Change #100: We would just caution that we don't have perfect line of sight on this.

Jeff: Right. And so, yeah, certainly when we do hit those milestones, would we expect it to be relatively lumpy? No, it actually will probably come indecently smooth.

Unknown Executive: Right. And so certainly, when we do hit those milestones, it'll be expected to be relatively lumpy. Now, it actually is.

John Davis: The staff is further augmented by our corporate development, marketing, finance, legal, and HR teams This concludes my comment, Jamie, at this time we will open the call for Q and A, please ladies and gentlemen, at this time we will begin the question and answer session, to ask a question you may press star and then one, using a touch tone telephone, to withdraw your questions you may press star and two, if you are using a speaker phone, please pick up the handset prior to pressing the keys to ensure the best sound quality, once again that is star and then one to ask a question, we will pause momentarily to assemble the roster, in our first question today comes from, John Davis from Raymond James, please go ahead with your question, Hey, good morning guys, I just wanted to touch on the EBITDA outlook for both this year and next year, I think we look at the midpoint EBITDA will be down slightly year over year for a main co, you called out several different headwinds by my mask, you look like six to seven million dollars of headwind, that gets you back to kind of the 10% organic growth, my headwinds this year could give us some comfort on 10% organic EBITDA growth. Next year, is it fair to say that the headwinds you called out are kind of six to seven million dollars or any other color, probably that size, the different headwinds you called out in 2024? I get a little more than that, Manitoba was a three million or is a three million headwind this year, the SAS transition is a five million headwind, and education is a four million headwind this year.

Speaker Change #100: Right.

Speaker Change #100: So.

Speaker Change #100: Yes.

Speaker Change #100: Certainly when we do hit those milestones will be expected to be relatively lumpy.

Unknown Executive: It actually will probably come in decently smooth. This is a project that was sold before we did this acquisition, and it was using primarily professional services, not pursuing transactional revenue, or SAS revenue like we would sometimes. I'd like to see eventually a nice chunk of maintenance revenue turn on for this project, but we're a little ways out from that. So as we kind of work towards completion, essentially, it's getting recognized on a percent complete basis. So as our estimate kind of moves forward, revenue will kind of come in gradually.

Speaker Change #101: So it actually will probably come in decently Smedes. This is a project that was sold before we did this acquisition and it was using primarily professional services not pursuing transactional revenue and SaaS revenue likelihood sometimes.

Jeff: This is a project that was sold before we did this acquisition, and it was using primarily professional services, not pursuing transactional revenue. It's asked for me likely with sometimes I like to see eventually a nice chunk of maintenance revenue will turn on on this project, but we're a little ways out from that. So, as we kind of work towards completion, essentially, it's getting recognized on a percent complete basis. So, as our estimate kind of moves forward, the revenue will kind of come in gradually.

Speaker Change #102: I'd like to see eventually.

Speaker Change #102: A nice chunk of maintenance revenue will turn on this project, but we're a little ways out from that so as we kind of work towards completion, essentially it's getting recognized on a percent complete basis. So as our estimate kind of moves forward. The revenue will kind of come in gradually.

Jeff: Okay, that's all mine. Got it. Okay. And then just on the American Rescue Plan, you haven't really called that out as a real driver or catalyst for spend necessarily. But I think that the funds need to be earmarked here by the end of the year. Do you think that's going to cause any kind of end of your budget flush, or would we have already seen it? The American Rescue Plan. I don't believe it will. I think we are what we're going to see. We've already seen. I appreciate it. It's hard for us to really have visibility into that.

Speaker Change #103: Okay. That's helpful.

Unknown Executive: Got it. Got it. Okay. And then just on the American Rescue Plan, you haven't really called that out as a real driver or catalyst for spending, necessarily. But I think that transcripts provided by Transcription Outsourcing, LLC.

Speaker Change #104: Got it got it Okay and then just on the.

Speaker Change #105: American Rescue plan, you haven't really called that out as it is a real driver or catalyst for spend necessarily but I think that the funds needed to be earmarked here by the end of the year. What do you think that's been a pause.

Speaker Change #106: Any kind of end of year budget flush.

Speaker Change #107: Or would we have already seen it.

Unknown Executive: The American Rescue Plan. I think we would. I don't I don't believe it. Well, I think we are what we're going to see. We've already seen it.

Speaker Change #107: The American rescue again, I think I don't I don't believe it will I think we are what we're going to see we've already largely seen.

Speaker Change #107: Yes.

Unknown Executive: It's hard for us to really have visibility into that, um, It's whatever our clients choose to tell us about it, which, and what they know about it. It's kind of murky. Thanks for asking us to get our arms around it. Okay. Okay. I appreciate it. I look forward to talking to you soon.

Speaker Change #108: Okay I appreciate it thank you.

Yes, it's hard for us to really have visibility into that.

Speaker Change #108: Hum.

Jeff: It's whatever our clients choose to tell us about it, which and what they know about it. It's kind of a murky thing for us to get our arms around. Got it. Okay. I appreciate it.

Speaker Change #109: It's it's whatever our clients choose to tell us about it which and what they know about it it's kind of a murky.

For us we've got our arms around.

Speaker Change #109: Got it got it okay I appreciate it look forward to talking to you soon.

Unknown Executive: I look forward to talking to you this evening. Once again, if you would like to ask a question, please press star. And then one to withdraw your questions, you may press star and two.

John Davis: So I got a 12 million headwind this year, which should not repeat next year. Right in play, I would just assume that's high margin business. I was talking about EBITDA, so you know, if we look at the EBITDA, 59 going to 58 this year, that 12 million though, you know, I think you said the license revenue is very high margin, so, you know, I'm just looking at the EBITDA God, so if you take that 12 million of revs, you know, maybe the 50% margin that would get you back to kind of a 10% EBITDA growth number for fiscal 24. Is that a reasonable statement? Yeah, yeah, correct. I was, my numbers were revenue numbers. Okay, no, that's helpful.

Once again, if you would like to ask a question. Please press star and then one to withdraw your question you May press Star and two.

Rufus Hahn: Our next question comes from Rufus Hahn from BMO Capital Markets. Please go ahead with your question. Hey, guys. Good morning. Thanks. So maybe just a numbers related question. And Clay, I think you called out about 12 million of revenue headwinds in 24. So if I, if I adjust the 24 revenue guide for those 12 million of headwinds, then it looks like the midpoint of the 25 revenue guide applies about 4% growth year over year. So I guess what do you need to happen beyond those headwinds rolling off to get back to the high single-digit organic growth?

Rufus Hone: Once again, if you would like to ask a question, please press star and then 1. To withdraw your questions, you may press star and then. Our next question comes from Rufus Hone from BMO Capital Markets. Please go ahead with your question. Hey guys, good morning.

Speaker Change #109: Our next question comes from Rufus Horn from BMO capital markets. Please go ahead with your question.

Rufus Hone: Hey guys, good morning. Thanks. So maybe just a numbers-related question, and Clay, I think you called out about 12 million revenue headwinds in 24. So if I adjust the 24 revenue guide for those 12 million headwinds, then it looks like the midpoint of the 25 revenue guide implies about 4% growth year over year. So, I guess, what do you need to happen beyond those headwinds rolling off to get back to high single-digit organic growth, and what are your thoughts around timing? Thanks.

Rufus Horn: Hey, guys. Good morning. Thanks, So maybe just a numbers related question and clay I think you called out about $12 million of revenue headwinds in 'twenty four so if I if I adjust the 24 revenue guide for those $12 million.

Rufus Horn: Headwinds then it looks like the midpoint of the 25 or a revenue guide implies about 4% growth year over year.

So I guess, what do you need to happen beyond those headwinds rolling off to get back to the high single digit organic growth and what are your thoughts around timing.

Rufus Hahn: And what are your thoughts around timing? Thanks.

John Davis: And then Rick, you talked about, I forget, one of you, either Rick Clay said that the new acquisition, you know, high into multiple range for better growth and higher growth. So just want to elaborate a little bit more on the growth profile of the August, of the deal close August 1st. We expect double digit growth from that company and fiscal year 25. In recent years, it's been comfortably double digit. You know, they have the ability to win some larger contracts, and so those can growth rates in any given year.

Thanks.

Clay Whitson: Uh, well, so there are those headwinds which reverse on top of that. We have been through an internal realignment, which we think will impact our sales organization favorably. But it's finding a little time to get its footing, you know, new commission plans, new organizational structures to unify the sales organization as opposed to being in smaller groups of the companies we purchase. I also believe that the carve-out transaction we've been engaged in for the better part of a year, you know, has been a little bit of a distraction. We're, we'll be very happy to, refocus all of our efforts on just growing the software and services business.

Rufus Hahn: Well, so there are those headwinds which reverse on top of that. We have been through an internal realignment, which we think will impact our sales organization favorably, but it's been a little time to get its footing. You know, new commission plans, new organizational structures to unify the sales organization as opposed to being in smaller groups of the companies we purchased. I also believe that the CarBout transaction we've been engaged in for the better part of a year, you know, has been a little bit of a distraction, where we'll be very happy to refocus all of our efforts on just growing the software and services business.

Speaker Change #111: Well, so there are those headwinds which reverse.

Speaker Change #112: On top of that.

Speaker Change #113: We have been through an internal realignment, which we.

Speaker Change #113: We think it will impact our sales organization favorably.

Speaker Change #113: But its finding a little time to get its footing.

Speaker Change #113: You know New commission plans, new organizational structures to.

Speaker Change #113: Unify the sales organization as opposed to being in a smaller groups of the.

Speaker Change #113: Companies, we purchased.

John Davis: Okay, that's helpful. And then last one for me, Clay, I think the implied margin expansion and the guide for 25 is about 150 basis points. Historically, you guys have been running closer to 50 to 100. Is it some of that high margin revenue expected that got pushed out coming in next year? Is that what's driving it sounds like the acquisition is similar margins? And then maybe should we still think about 50 to 100 basis points longer term?

Speaker Change #113: But I also believe I also believe that.

Speaker Change #113: The carve out transaction, we've been engaged in for the better part of a year.

You know has been a little bit of a distraction, where we will be very.

Speaker Change #113: Happy there.

Speaker Change #113: If all of our efforts on just growing the software and services business.

John Davis: Call it 26 and beyond that pair at this point. Well, license software sales is the highest margin and we're not expecting a better year in that in 25 but revenues at the midpoint are growing 9.5% and while expenses might be growing on the order of 7%, so that's leading to and that's some leftover effects of the internal realignment that we've talked about in previous quarters.

Rufus Hahn: Great, thanks very much.

John Davis: Okay, appreciate.

Speaker Change #114: Great. Thanks very much.

Gregory Daily: And ladies and gentlemen, at this time, in showing no additional questions, I'd like to turn the floor back over to Greg Daily for any closing remarks. Well, thanks everyone. I am excited that 24s in the books almost over. It's been a busy, transitional year, and very excited for the team and for 2025, what we have in our pipeline, our visibility, and you know, we're excited about the future, and we appreciate your interest.

Gregory Daily: And ladies and gentlemen, at this time, if there are no additional questions, I'd like to turn the floor back over to Greg Daly for any closing remarks. Go to Beadaholique.com for all of your beading supplies needs!

Speaker Change #114: And ladies and gentlemen at this time in showing no additional questions I'd like to turn the floor back over to Greg daily for any closing remarks.

Gregory Daily: Well, thanks, everyone. I am excited that 24 is in the books and almost over. It's been a busy transitional year, and I'm very excited for the team and for 2025, what we have in our pipeline. Transcripts provided by Transcription Outsourcing, LLC. And, you know, we're excited about the future, and we appreciate your interest.

Speaker Change #114: Sure.

Greg Daily: Well thanks, everyone.

Greg Daily: I am excited that 20 fours in the books almost over its Ben.

Speaker Change #115: Disney transitional year end.

John Davis: Thanks.

Speaker Change #115: Very excited for the team in 2025.

Matthew VanVliet: Our next question comes from Matt VanVliet from BTIG. Please go ahead with your question.

What we have in our pipeline.

Our visibility.

Paul Christians: Good morning. Thanks for taking the question. I guess when you look at the acquisition just announced, I guess how much overlap do you have in some of these markets selling into kind of the appropriate buyers there? And then you also mentioned the ability to better monetize payment through that platform. What, what if any timeframe will it take to build those integrations into the into the product?

Speaker Change #115: And.

Speaker Change #115: We're excited about the future and we appreciate your interest.

Speaker Change #115: Okay.

Unknown Executive: And ladies and gentlemen, with that we will conclude today's conference call and presentation. We do thank you for joining. You may now disconnect your.

Operator: And ladies and gentlemen, with that, we will conclude today's conference call and presentation. We do thank you for joining us. You may now disconnect your lines.

Speaker Change #116: And ladies and gentlemen, with that we will conclude today's conference call and presentation. We do thank you for joining you may now disconnect your lines.

Speaker Change #116: Okay.

Paul Christians: Hi, Matt. This is Paul.

Paul Christians: There is we have a we have a similar product that is needing it would need attention to be refined. And so this will be our benchmark product in that arena and we will we have begun planning to transition our historic to our new cost structures under the support mechanisms for the new for the new product offering and the new acquisition are appreciated. And that is in process as we speak as well as other marketing activity to an expanded high three cost per base.

Paul Christians: And I'll answer that and say that our existing public sector group has been working with this acquisition of prior to close and we've exchanged several deals and quoted together on several deals. So we expect to get traction by the way.

Matthew VanVliet: Okay, very helpful.

Rick: And then as you look at the M&A pipeline, this deal came in, you mentioned either at the high end or just above kind of the typical range. Is there any reason to think that now that you have a bigger platform you've sort of re re re-platformed or modernize some of your other products that at the higher end of the range is maybe more in line with the targets you're going to look at something a little higher growth, higher margin.

Rick: Sort of ready made or should we still expect kind of a broad range of potential deals coming through in the next couple years. I mean, you know, these ranges we have are history that we're quoting but obviously if something's growing 20% plus it deserves a higher multiple. If something's 100% SaaS it deserves a higher multiple so they're not really strict rules but just following history. I would I would guess they would remain in our normal range but we are flexible if if you know companies have characteristics that warrant them. Okay, great. Thank you.

Charles Nabhan: Our next question comes from Charles Nabum from Stevens, please go with your question. Good morning, and thank you for taking my question. I wanted to get a little more color around the acquisition and confirm my understanding of the math and impact based on your comments. You would set it to the top end of your range, which I guess I'm thinking about that correctly would imply something a little more than two million in EBITDA.

Charles Nabhan: And assuming, you know, a margin in line with a book that gets you to about seven ish from a revenue standpoint, is that is that sort of a fair way of thinking about it and also wanted to confirm that that is included in the fiscal year 25 guy as well. Yeah, that's a reasonable approach, Chuck, and it is included in the guide. Got it, so I guess that be in the case, you know, should we think about I guess that would get you to organic roughly in the six to seven percent range from thinking about that correctly.

Charles Nabhan: I guess my follow up would be with respect to the guide. I know you're not giving quarterly guidance, but as we think about the cadence through the year, should we think about it as sort of a gradual step up as we move through fiscal year 25 or do you anticipate any disproportionate acceleration at any point in the year. Q4, our September quarter is always our best quarter back to school is the strongest during that quarter.

Charles Nabhan: I would look at history as a seasonality guide. Our Q3 is usually very flat on an organic basis with our Q2. And then the payment processing, which is less of a factor now, but it's weakest in the calendar fourth quarter. So I would just look at prior year history to be the best guide for that. We don't have as much the one time software sales were 10,000,000, 10,500,000 in 23 less than five in 24. So that's less of a distortion than it was in prior years. Got it. Okay.

Charles Nabhan: And as a follow up, I had a sort of a high level question. It sounds like things are trending pretty well from a demand and a business standpoint, which is consistent with comments from one of your competitors a few weeks ago. I wanted to get your thoughts on some of the underlying tailwinds to that demand. I know they talked about cyber security concerns as a catalyst. I know there's still some federal funds out there that are providing a tailwind as well, but any additional thoughts around just the demand environment and the underlying tailwinds would be helpful.

Charles Nabhan: Well, we agree that cyber is a concern and it takes additional resources and also can have the impact of taking longer to get people live as you coordinate, you know, throughput and all the systems to make sure they're there from a general demand perspective given our given the markets that we're focused on. We're fairly durable. You know, they have the orientation and utilities and public utility bills have to be paid every month and they're not really going down. So our mix for that gives us a nice degree of protection that we don't that others may not necessarily experience.

Charles Nabhan: Generally from a customer demand and capability system of things, we're not really seeing less demand or RFP activities or our engagement with customers trying to modernize or also up, but customers also have constraints on needing to do that across the entire spectrum of their software services, so we're expanding our positions on configurability for software to make transitions for them easier and make it more seamless and also enhance the ability to facilitate their data transitions in the process. Got it. I appreciate all that Collar. Thank you.

James Faucette: Our next question comes from James Faucette from Oregon Stanley. Please go ahead with your question. Hi, thank you for keeping my question. I'm asking a question on behalf of James.

Gregory Daily: I was wondering what the competitive environment is looking like in the software space, now that you're a solely software focused company, if there's any changes there, and then secondly, what do you think your key differentiator versus peers is like now with this new realignment? It's relatively consistent to what it has been. We were heavily focused on software and then the downstream monetization of that with integrated payments. So that hasn't changed. Our alignments into our verticals and our sub verticals has allowed us to be more responsive and ensure execution and continuity of certainty of delivery across our spectrum. I think that is one of the key differentiators as well.

Gregory Daily: When we sell something, we do execute on it and we do get a lot, and that's a critical piece in our business that's culturally very important to us.

Alexander Markgraff: Our next question comes from Alex Markraff from Keybank Capital Markets. Please go ahead with your question. Hi, everyone. Thanks for taking my question. Just one for me for Paul and Orkley. Just sort of curious to get your thoughts on what the growth opportunity around cross sell is and sort of like what that could represent on an annual basis in terms of growth contribution. Thank you.

Paul Christians: At this fall, I'll take that when I'll start with that one. Cross sell opportunities are profound. They're significant. We started that several years ago with our initial UPO offering and then each of our steps since that have been in position to further refine our market offering and expand that. And we're via the realignments. We're organizationally highly defined and highly effective and being able to execute in that arena. So we think we think those are profound as we're doing that in terms of what that would mean for us.

Peter Heckmann: You know, our next question comes from Peter Heckmann from the A. Davidson. Please go ahead with your question.

Jeff: Hey, good morning, everyone. I wanted to follow up on Manitoba and just see if you had any additional line of sight. Remind us of, you know, what, what, what is still to be recognized there and if you have line of sight as to when it gets we ramped and when we might see the project completed. This is Jeff, so there's approximately $7 million US dollars telling you to be recognized on that project as far as the timeline of when that will be recognized.

Jeff: What's in our forecast right now is about half of that is coming fiscal year and about half the next year. As far as weather will stay on that time, and we'll just have to keep you a prize for that. This is a project that has experienced significant delays over the periods that we've had it. And we think we've got the numbers dialed in conservatively, but you know, we'll just caution that we don't have a perfect line of sight on this.

Jeff: Right. And so, yeah, certainly when we do hit those milestones, would we expect it to be relatively lumpy? No, it actually will probably come indecently smooth. This is a project that was sold before we did this acquisition, and it was using primarily professional services, not pursuing transactional revenue. It's asked for me likely with sometimes I like to see eventually a nice chunk of maintenance revenue will turn on on this project, but we're a little ways out from that. So as we kind of work towards completion, essentially, it's getting recognized on a percent complete basis. So as our estimate kind of moves forward, the revenue will kind of come in gradually.

Peter Heckmann: Okay, that's all mine. Got it. Okay.

Peter Heckmann: And then just on the American Rescue Plan, you haven't really called that out as a real driver or catalyst for spend necessarily. But I think that the funds need to be earmarked here by the end of the year. Do you think that's going to cause any kind of end of your budget flush or would we have already seen it? The American Rescue Plan. I don't believe it will. I think we are what we're going to see.

Peter Heckmann: We've already seen. I appreciate it. It's hard for us to really have visibility into that. It's whatever our clients choose to tell us about it, which and what they know about it. It's kind of a murky thing for us to get our arms around. Got it.

Unknown Executive: Okay. I appreciate it. I look forward to talking to you this evening. Once again, if you would like to ask a question, please press star. And then one to withdraw your questions, you may press star and two.

Rufus Hahn: Our next question comes from Rufus Hahn from BMO Capital Markets.

Rufus Hahn: Please go ahead with your question. Hey, guys. Good morning. Thanks. So maybe just a numbers related question. And Clay, I think you called out about 12 million of revenue headwinds in 24. So if I, if I adjust the 24 revenue guide for those 12 million of headwinds, then looks like the midpoint of the 25 revenue guide applies about 4% growth year over year. So I guess what do you need to happen beyond those headwinds rolling off to get back to the high single digit organic growth?

Rufus Hahn: And what are your thoughts around timing? Thanks. Well, so there are those headwinds which reverse on top of that. We have been through an internal realignment which we think will impact our sales organization favorably, but it's been a little time to get its footing. You know, new commission plans, new organizational structures to unify the sales organization as opposed to being in smaller groups of the companies we purchased. I also believe that the CarBout transaction we've been engaged in for the better part of a year, you know, has been a little bit of a distraction where we'll be very happy to refocus all of our efforts on just growing the software and services business.

Rufus Hahn: Great, thanks very much.

Gregory Daily: And ladies and gentlemen, at this time in showing no additional questions, I'd like to turn the floor back over to Greg Daily for any closing remarks. Well, thanks everyone. I am excited that 24s in the books almost over. It's been a busy, transitional year and very excited for the team and for 2025, what we have in our pipeline, our visibility, and you know, we're excited about the future and we appreciate your interest.

Unknown Executive: And ladies and gentlemen, with that we will conclude today's conference call and presentation. We do thank you for joining. You may now disconnect your

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