Q4 2024 i3 Verticals Inc Earnings Call
Unknown Executive: Good day everyone, and welcome to the i3 Verticals 4th Quarter 2024 Earnings Conference Call. Today's call is being recorded and a replay will be available starting today through November 26th. The number for the replay is 877-344-7529. And the code is 1-487-344-7529.
Good day, everyone and welcome to the I three verticals fourth quarter 2024 earnings conference call.
Today's call is being recorded and a replay will be available starting today through November 26.
The number for the replay is 87734 475 to nine.
And the code is one is four eight.
Unknown Executive: Excuse me, and the code is 4184020.
Speaker Change: Excuse me and the code is 4184020.
Unknown Executive: The replay may also be accessed for 30 days at the company's website.
Speaker Change: The replay Miss all May also be accessed for 30 days at the Companys website.
Clay Whitson: At this time, for opening remarks, I would like to turn the call over to Clay Whitson, Chief Strategy Officer.
Speaker Change: At this time for opening remarks, I would like to turn the call over to Clay Whitson Chief strategy Officer. Please go ahead Sir.
Clay Whitson: Please go ahead, sir. Good morning, and welcome to the fourth quarter 2024 conference call for i3 Verticals. Joining me on this call are Greg Daly, our chairman and CEO. Rick Stanford, our President, Geoff Smith, our Chief Financial Officer, and Paul Christians, our Chief Revenue Officer.
Speaker Change: Good morning, and welcome to the fourth quarter 2024 conference call for <unk> verticals. Joining me on this call are Greg Daily our chairman and CEO.
Speaker Change: Rick Stanford our president.
Speaker Change: Smith, our Chief Financial Officer, and Paul Christians, Our Chief revenue Officer.
Clay Whitson: 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 performance. 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 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.
Speaker Change: It is the company's intent to provide non-GAAP financial information to enhance understanding of its consolidated GAAP financial performance.
Speaker Change: non-GAAP financial information should be considered by each individual in addition to and not instead of GAAP financial statements.
Clay Whitson: 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 the important factors, among others, set forth in the company's earnings release and in reports that are filed or furnished to the SEC. Consequently, actual operations and results may differ materially from those discussed in the forelooking statement.
Speaker Change: 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.
Speaker Change: For this purpose any statements made during this call that are not statements of historical fact may be deemed to be forward looking statements.
Speaker Change: You are hereby cautioned that these forward looking statements may be affected by the important factors among others set forth in the company's earnings release and in 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.
Clay Whitson: 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 Taylor. Thanks, Clay. Good morning to everyone on the call. Each year that goes by, we look back and are amazed at all that has changed. We've never been a company that stood still outside our 50 acquisitions as an example.
Speaker Change: I will now turn the call over to the company's chairman and CEO Greg Daily.
Greg Daily: Thanks Clay.
Greg Daily: Good morning to everyone on the call.
Greg Daily: Each year that goes by we look back and are amazed at all that has changed.
Greg Daily: We've never been a company that should still outside of our 50 acquisitions in <unk>. As an example, however, I don't think we've ever had a year as transformational as fiscal year 2024.
Gregory Daily: However, I don't think we've ever had a year as transformational as fiscal year 2024. Our team worked exceptionally hard this year to advance our transition to a pure play vertical market software business and set the table for our next stage of growth. We exit the year as a streamlined and scaled vertical market software provider. As we look ahead at our opportunities in front of us for fiscal year 25, we're excited about our position. We have great solutions that are mission critical to our customers in underserved markets. We're building great new products, which we'll discuss further.
Greg Daily: Our team worked exceptionally hard this year to advance our transition to a pure play vertical market software business and set the table for our next stage of growth.
Greg Daily: We exit the year is a streamline and scale vertical market software provider.
Greg Daily: As we look ahead at our opportunities in front of us for fiscal year 'twenty five.
Greg Daily: We're excited about our position.
Greg Daily: We have great solutions that are mission critical to our customers in underserved markets.
Greg Daily: We're building, great new products, which rich will discuss further.
Gregory Daily: We have infrastructure to do it efficiently. We have the best in class payment facilitation platform that helps us maximize revenue opportunities. And we are de-levered and posed to add more great businesses through M&A.
Greg Daily: We have infrastructure to do it efficiently we.
Greg Daily: We have the best in part class payment facilitation platform it helps us maximize revenue opportunities.
Greg Daily: And we are de Levered.
Greg Daily: Imposed to add more great businesses through M&A.
Gregory Daily: We believe we have set the stage for a great fiscal year 2025 and beyond. Our visibility. Our sales funnel and products we have coming to market give us confidence in our long term guidance of high single digit organic growth. We remain focused on growth. and excellent investment choice.
Greg Daily: We believe we have set the stage for a great fiscal year 2025 and beyond.
Greg Daily: Our visibility.
Greg Daily: Our sales funnel and products, we have coming to market give us confidence in our long term guidance of high single digit organic growth.
Greg Daily: We remain focused on growth.
Greg Daily: And excellent investment choices.
Geoffrey Smith: I'll now turn the call over to Clay. I'm sorry, to Jeff. And he will provide you more detail on our financial performance.
Greg Daily: Now ill turn the call over to clay I'm sorry, Jeff.
Jeff: And he will provide you more detail on our financial performance.
Rick Stanford: And when he's finished, Rick will add commentary on the business.
Jeff: And when he is finished Rick will add commentary on the business and finally, Paul will discuss revenue and then we will open up the call for questions.
Paul Christians: And finally, Paul will discuss revenue.
Unknown Executive: And then we'll open up the call for questions.
Gregory Daily: Thanks, Greg.
Speaker Change: Thanks, Greg the.
Geoffrey Smith: The following pertains to the fourth quarter of our fiscal year 2024, which is the quarter ended September 30. Please refer to the slide presentation titled Supplemental Information on our website for reference with this discussion. Due to the sale of our merchant services business, we have classified that portion of our company as discontinued operation. The actual results and outlook section, which we will discuss, pertain to continuing operations only. which we also call Romainco.
Speaker Change: The following pertains to the fourth quarter of our fiscal year 2024, which is the quarter ended September 30.
Speaker Change: Please refer to the slide presentation titled supplemental information on our website for reference with this discussion.
Speaker Change: Due to the sale of our merchant services business, we have classified that portion of our company's discontinued operations. The actual results and outlook section, which we will discuss pertain to continuing operations only.
Speaker Change: We also call remain co.
Geoffrey Smith: This is a transitional reporting period as we completed the sale during September. Revenues for the fourth quarter of fiscal 2024 increased 4% to $60.9 million from $58.6 million for Q4 2023, reflecting organic growth of 2% and two months of revenue from our permitting and licensing acquisition in the public sector. Annualized recurring revenues increased 7.5% to $188.2 million as of Q4 2024, compared to $175.1 million as of Q4 2023. 77% of our revenues in the quarter came from recurring sources. Sass and Payments Revenue Group 8 Transaction based revenues grew 11% while maintenance and recurring software services grew 6%.
Speaker Change: This is a transitional reporting period as we completed the sale during September.
Speaker Change: Revenues for the fourth quarter of fiscal 2024 increased 4% to $60 9 million from $58 6 million for Q4 2023.
Speaker Change: <unk> organic growth of 2% and two months of revenue from our permitting and licensing acquisition and the public sector.
Speaker Change: Annualized recurring revenues increased seven 5% $288 2 million as of Q4 2024.
Speaker Change: <unk> to $175 1 million as of Q4 2023.
77% of our revenues in the quarter came from recurring sources SaaS.
Speaker Change: SaaS components revenue grew 8% transaction based revenues grew 11%, while maintenance and recurring software services grew 6%.
Geoffrey Smith: Non-recurring sales of software licenses declined 8%, reflecting the ongoing shift to SaaS. We did receive a $2 million license fee from our Midwest Utility customer, as expected. Professional services revenue declined 7% principally as a result of the delay in our implementation with Manitoba caused by the public workers union strike. Software related services represent 75% of total revenues for Q4 and payments 20% and other 5%.
Speaker Change: Nonrecurring sales of software licenses declined 8%, reflecting the ongoing shift to SaaS.
Speaker Change: We did receive a $2 million license fee from our Midwest utility customer as expected.
Speaker Change: Professional services revenue declined 7% principally as a result of the delay in our implementation with Manitoba caused by the public Workers' Union strike.
Speaker Change: Software and related services represented 75% of total revenues for Q4 and payments, 20% and other 5%.
Geoffrey Smith: We are introducing a new metric for Raman code, net dollar retention, which we will disclose annually. This applies to all recurring revenue line items, but with the exception of payment. Net dollar retention for fiscal year 2024 was 100%. Adjusted EBITDA increased 4% in line with revenues to $16.2 million for Q4 2024 from $15.7 million for Q4 2023. Adjusted EBITDA as a percentage of revenues was $26.7, a slight decline from $26.8 for Q4 2023, reflecting higher corporate expenses of $520K for a main cut.
Speaker Change: We are introducing a new metric for Mako net dollar retention, which we will disclose annually.
Speaker Change: Applies to all recurring revenue line items with the exception of payments.
Speaker Change: Net dollar retention for fiscal year 2024 was 100%.
Speaker Change: Adjusted EBITDA increased 4% in line with revenues to $16 2 million for Q4 2024 from $15 7 million for Q4 2023.
Speaker Change: Adjusted EBITDA as a percentage of revenues was $26 seven a slight decline from $26 eight for Q4 2023.
Speaker Change: Selecting higher corporate expenses of 520 K from bank.
Geoffrey Smith: Now that the divestiture is behind us, we anticipate lower corporate expenses in fiscal year 2025. Pro forma adjusted diluted earnings per share from continuing operations was $0.15 for Q4 2024. This number excludes discontinued operations, but notably includes consolidated cash net interest which discounted for pro forma taxes of 25% would come to $0.15.
Now the divestitures behind us, we anticipate lower corporate expenses in fiscal year 2025.
Speaker Change: Pro forma adjusted diluted earnings per share from continuing operations was <unk> 15 for Q4 2024.
Speaker Change: This number excludes discontinued operations, notably includes consolidated cash net interest expense, which discounted for pro forma taxes of 25% would come.
Speaker Change: Come to 15.
Geoffrey Smith: Again, please refer to the press release for a full description and reconciliation.
Speaker Change: Again, please refer to the press release for a full description and reconciliation.
Geoffrey Smith: segment performance. Following the sale of the merchant services business, we have segmented remain code by vertical, public sector, which includes education and healthcare. Other consists of corporate expenses and eliminations between segments. Revenues in our public sector vertical increased 6% to $49.6 million for Q4 2024 from $46.9 million for Q4 2023 and represented 81% of total revenues during the quarter. The increase was driven by recurring revenue streams such as SAS, transaction-based revenue, maintenance, and payments, which offset declines in sales of software licenses and professional services. Segments adjusted EBITDA increased 6% to $20.2M for Q4 2024 from $19M for Q4 2023.
Speaker Change: Segment performance following the sale of the merchant services business. We have segment at remain co by vertical public sector, which includes education and healthcare.
Speaker Change: Other consists of corporate expenses and eliminations between segments.
Speaker Change: Revenues in our public sector vertical increased 6% to $49 6 million for Q4 2024 from $46 9 million for Q4, 2023 and represented 81% of total revenues during the quarter.
Speaker Change: The increase was driven by recurring revenue streams, such as SaaS transaction based revenue maintenance and payments, which offset declines in sales of software licenses and professional services.
Speaker Change: The segment's adjusted EBITDA increased 6% to $20 2 million for Q4 2024 from 19 million for Q4 2023.
Geoffrey Smith: Adjusted EBITDA as a percentage of revenues increased to 40.7% for Q4 2024 and 40.6% for Q4 2023, reflecting growth in recurring revenue streams, which often have higher gross margins. Revenue from our healthcare segment declined 3% to $11.4 million for Q4 2024, from $11.7 million for Q4 2023. Consolidation is prevalent in health care and sometimes we lose customers that have been acquired by other health care providers. For the fiscal year, healthcare grew 2%, and we currently expect low single-digit revenue growth for fiscal 2025. Adjusted EBITDA declined 5% in Q4 2024 compared to the prior year, reflecting fixed costs that did not decline in proportion to revenue.
Speaker Change: Adjusted EBITDA as a percentage of revenues increased to 47% for Q4 2024 from 46% for Q4 2023.
Speaker Change: Growth in recurring revenue streams, which often have higher gross margins.
Speaker Change: Revenue from our healthcare segment declined 3% to $11 4 million for Q4, 2024%.
Speaker Change: From $11 7 million for Q4 2023.
Speaker Change: Consolidation is prevalent in health care and sometimes we lose customers that have been acquired by other health care providers.
Speaker Change: For the fiscal year health care grew 2% and we currently expect low single digit revenue growth for fiscal 2025.
Speaker Change: Adjusted EBITDA declined 5% in Q4 2024 compared to the prior year, reflecting fixed cost that did not decline in proportionate revenues.
Geoffrey Smith: Accordingly, adjusted EBITDA as a percentage of revenues declined to 18.9% for Q4 2024 from 19.4% for Q4 2023.
Speaker Change: Accordingly, adjusted EBITDA as a percentage of revenues declined to 18, 9% for Q4 2024 from 19, 4% for Q4 2023.
Geoffrey Smith: Regarding the balance sheet, following the sale of our merchant services business during September, our balance sheet is strong and well positioned for 2025. At quarter end, debt stood at $26.2 million, which is the remainder of our convertible notes, which mature in February. We still have $450 million of borrowing capacity under our revolving credit facility with a 5X leverage constraint. Our cash balance was $86.5 million on September 30th.
Speaker Change: Regarding the balance sheet following the sale of our merchant services business during September our balance sheet is strong and well positioned for 2025.
Speaker Change: At quarter end debt stood at $26 2 million the remaining which is the remainder of our convertible notes, which mature in February.
Speaker Change: We still have $450 million of borrowing capacity under our revolving credit facility, the five X leverage constraint or.
Speaker Change: Our cash balance was $86 5 million on September 30.
Geoffrey Smith: As a result of the sale of the merchant services business, we will need to make tax and tax-related payments of approximately $65 million in the spring. We also have approximately $8 million of non-tax costs related to the deal that have not been paid as of September 30th. These accruals are included in accrued expenses on the balance sheet.
Speaker Change: As a result of the sale of the merchant services business, we will we will need to make tax and tax related payments of approximately $65 million in the spring.
Speaker Change: We also have approximately $8 million of non tax costs related to the deal have not been paid as of September 30.
Speaker Change: These accruals are included in the accrued expenses on the balance sheet.
Speaker Change: Outlook.
Geoffrey Smith: The following reaffirms guidance for continuing operations for FY 2025, which we set forth in our fiscal Q3 press release dated August 8th, 2024. As a reminder, fiscal 2024 being a transitionary year with the sale of emergent services businesses, we released guidance for fiscal 2025 a quarter earlier than usual. GALIC does not include acquisitions that have not been announced or transaction related costs. Revenues, $243 to $263 million, Adjusted EBITDA, $63 to $71.5 million, 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.
Speaker Change: The following reaffirms guidance for continuing operations for FY 2025.
Speaker Change: We set forth in our fiscal Q3 press release dated August eight 2024.
As a reminder, fiscal 2024 being in transition transition every year with the sale of the merchant services businesses, We released guidance for fiscal 2025, a quarter earlier than usual.
Speaker Change: The outlook does not include acquisitions.
Speaker Change: I have not been announced or transaction related costs.
Speaker Change: Revenues $243 million to $263 million, adjusted EBITDA of 63% to $71 5 million.
Speaker Change: Appreciate and in internally developed software amortization $12 million to $14 million.
Speaker Change: Cash interest expense, one to 2 million pro forma adjusted diluted EPS.
Speaker Change: <unk> five to $1 25.
Geoffrey Smith: We continue to expect high single-digit organic revenue growth with annual adjusted EBITDA margin improvement of 50 to 100 basis points. The Manitoba project should return to a normal cadence and we expect continued momentum in the utilities market. The reduction in license sales in favor of SAS deals will be less of a drag on revenues and the education business has lapped the introduction of certain state subsidies for lunch.
Speaker Change: We continue to expect high single digit organic revenue growth with annual adjusted EBITDA margin improvement of 50 to 100 basis points.
Speaker Change: Manitoba projects should return to a normal cadence and we expect continued momentum in the utilities market the.
The reduction in license sales in favor of SaaS deals will be less of a drag on revenues and the education business has lapsed the introduction of certain state subsidies for lunch.
Geoffrey Smith: While acquisitions that have not yet closed are not included in the outlook, we do expect to resume acquisitions on a regular basis.
Speaker Change: Well acquisitions that have not yet closed are not included in the outlook, we do expect to resume acquisitions on a regular basis.
Geoffrey Smith: From a seasonality standpoint, we expect, we currently expect our revenue distribution to approximate the following. Q1, 23.5%, Q2, 26%, Q3, 25%, Q4, 25.5%. Although software license sales are less of a factor than last year, they will still represent the most variable line item in the forecast and can distort seasonality in any given quarter.
Speaker Change: From a seasonality standpoint, we expect we currently expect our revenue distribution to approximate the following Q1 'twenty three 5% Q2, 26% Q3, 25% Q4 25, 5%.
Speaker Change: Although software license sales are less of a factor than last year, but it will still represent the most variable line item and the forecast and can distort seasonality in any given quarter.
Rick Stanford: I will now turn the call over to Rick for company updates and M&A pipelines. Thank you, Jeff. Good morning, everyone. Over the past year, we have transitioned to a software centric organization focused on our vertical markets. We've made significant advancements to achieve our vision long term.
Speaker Change: I will now turn the call over to Rick for company updates and M&A pipeline.
Rick: Thank you Jeff Good morning, everyone over the past year, we have transitioned to a software centric organization focused on our vertical markets. We have made significant advancements to achieve our vision long term.
Rick Stanford: The divestiture of the merchant services business closed on September 20. And the process of transitioning that business is going smoothly. Running parallel with that, we are committed to refining operations to optimize internal processes and increase our effectiveness and efficiency in many areas. We're excited to announce progress in our technology transformation efforts as well, achieving operational efficiency, cost savings and enhanced customer service capabilities through consolidation of contracts and cloud migration. We have unified both customer-facing and internal support technologies, including our service desk and contact center platforms, into scalable, cost-effective cloud solutions. We are now delivering even more responsive and streamlined experience for our customers and employees alike.
Rick: Divestiture of the merchant services business closed on September 20th in the process of transitioning that business is going smoothly.
Rick: Running parallel with that we are committed to refining operations to optimize internal processes and increase our effectiveness and efficiency in many areas. We are excited to announce progress on our technology transformation efforts as well achieving operational efficiency cost savings and enhanced customer service capabilities through.
Rick: Consolidation of contracts and cloud migration.
Rick: We have unified both customer facing and internal support technologies, including our service desk and contact center platforms in the scalable cost effective cloud solutions, we are now delivering even more responsive and streamline experience for our customers and employees alike.
Rick Stanford: We are further centralizing cybersecurity measures using fully integrated Microsoft tools, including endpoint detection and response, mobile device management, and identity and access management solutions. Our AWS Cloud Consolidation Initiative is nearing successful completion with CoLake located and on-premise data centers successfully migrated to the cloud and unifying all subscriptions into an enterprise account, unlocking enterprise level support. To increase efficiency across departments, we have streamlined back-office technologies, including consolidating instant messaging, file sharing, and telephony solutions. We have reduced dependency on multiple vendors while creating efficiency and reducing expenses. Together, these initiatives support our commitment to operational efficiency and exceptional service delivery.
Rick: We are further centralizing cyber security measures using fully integrated Microsoft tools, including endpoint detection and response mobile device management and identity and access management solutions.
Rick: Our AWS cloud consolidation initiative is nearing successful completion with cold Lake located in on premise data centers successfully migrated to the cloud and unifying all subscriptions into an enterprise account unlocking enterprise level support to.
To increase efficiency across departments, we have streamlined back office technologies, including consolidating instant messaging file sharing and telephony solutions.
Rick: We have reduced dependency on multiple vendors, while creating efficiency and reducing expenses.
Rick: Gathered these initiatives support our commitment to operational efficiency and exceptional service delivery.
Rick Stanford: I mentioned last quarter the intention to hire an enterprise-level leader in product management. As Greg mentioned, we have hired Chad Finner as our new Chief Product Officer. He will help us drive our ongoing investment in web-native, configurable, next-generation applications. He will be responsible for designing and delivering our product vision, strategy, and roadmap and for communicating this vision. The addition of Chad to our team underscores our evolution into a pure play software company.
Speaker Change: I mentioned last quarter, the intention to hire an enterprise level leader and product management as Greg mentioned, we have hired Chad center as our new Chief product Officer.
Speaker Change: He will help us drive our ongoing investment in web native Configurable next generation applications. He will be responsible for designing and delivering our product vision strategy and roadmap and.
Speaker Change: And for communicating this vision. The addition of Chad to our team underscores our evolution into a pure play software company.
Rick Stanford: We have begun to rewrite our CAMA, Computer Assisted Mass Appraisal platform, and are looking forward to its release next year. We've also started work on our Justice Tech 3.0 platform, which will allow us to take our court management software across the U.S. and no longer be restrained by state lines. Given high demand in the utility market, we are adding to our portal software suite and related billing distribution models.
Speaker Change: We have begun to rewrite our camera computer assisted mass appraisal platform and are looking forward to its release next year. We've also started work on our Justice Tech three dot O platform, which will allow us to take our court management software across the U S and no longer be restrained by state lines.
Speaker Change: Given higher demand in the utility market, we are adding to our portal software suite and related billing distribution models last we've added another seven products to our roadmap for stock to type two cyber security compliance framework.
Rick Stanford: Last, we have added another seven products to our roadmap for SOC 2 Type 2 cybersecurity compliance framework.
Rick Stanford: Regarding M&A in general, our acquisition pipeline continues to be strong with deals in public sector. We looked at several deals again this quarter and continue to have conversations with some of those targets. Many of these targets are tuck-ins of new products and services to complement our existing offerings or will help us expand geographically.
Speaker Change: Regarding M&A in general our acquisition pipeline continues to be strong with deals in public sector.
Speaker Change: We looked at several deals again this quarter and continue to have conversations with some of those targets any.
Speaker Change: Many of these targets are tuck ins of new products and services to complement our existing offerings or will help us expand geographically I'll now turn the call over to Paul for final comments.
Paul Christians: I'll now turn the call over to Paul for final comments. Thank you, Rick. As Rick has shared, we've been transitioning into a cloud first business model. This shift has involved thoughtful investment in human capital, organizational structure, and technology. As a result, we are making tremendous strides in our goal to deliver a sophisticated and diverse platform of software and services tailored specifically to meet the needs of customers in our strategic vertical. To accelerate revenue growth, we have integrated our sales efforts into a unified domain structure supported by a dedicated resource group, including elements of marketing, product development and service delivery.
Thank you Rick as Rick shared we've been transitioning into a cloud first business model.
Paul Christians: This shift is involve thoughtful investment in human capital organizational structure and technology.
Paul Christians: As a result, we are making tremendous strides in our goal to deliver a sophisticated and diverse platform of software and services tailored specifically to meet the needs of customers in our strategic verticals.
Paul Christians: To accelerate revenue growth, we have integrated our sales efforts into a unified domain structure supported by dedicated resource group, including elements of marketing product development and service delivery.
Paul Christians: As stated in previous calls, this alignment enables us to stay closer to our customers, ensuring that we are not only responsive to their needs, but also proactive in capturing additional share of wallet. I am happy to report that sales activity and contracting are trending positively across the board, especially in enterprise utility, justice tech, public safety, ERP, and education sub vertical. We continue to see increased solution bundling on both an intra and inter-vertical basis. The addition of Chad Fenner as our CPO will accelerate cross vertical solution sales as we further integrate core enterprise solutions into our broader office.
Paul Christians: As stated in previous calls this alignment enables us to stay closer to our customers ensuring that we are not only responsive to their needs, but also proactive and capturing additional share of wallet.
Paul Christians: I am happy to report that sales activity and contracting are trending positively across the board, especially in enterprise utility Justice Tac public safety.
Paul Christians: And education sub verticals.
Paul Christians: We continue to see increased solutions bottom line on both in dry and per vertical basis, yes.
Paul Christians: The addition of Chad Center as our CPO will accelerate cross vertical solution sales as we further integrate core enterprise solutions into our broader offering.
Paul Christians: Examples of this include increased adoption of our digital customer engagement suite, and 12 new bundled contracts for law enforcement and court management software solutions in Georgia. In addition, we have fulfilled a significant software distribution solution for a multi-state tier one utility, as well as payment facilitation as part of a multi-year project. Sales Funnel Activity and Productivity in our new unifying Salesforce. continue it instance continue to trend positive Given that we anticipate the rate of positive sales activity and contracting results to increase through 2025.
Paul Christians: Samples of this include increased adoption of our digital customer engagement suite and 12, new bundled contracts for law enforcement and Corp management software solutions in Georgia.
Paul Christians: In addition, we have fulfilled a significant software distribution solution for a multistate tier one utility as well as payment facilitation as part of a multiyear project.
Paul Christians: Sales funnel activity and productivity in our in our new unified Salesforce instance, continue.
Speaker Change: Since continued to trend positively.
Given that we anticipate the rate positive sales activity and contracting results to increase through 2025.
Paul Christians: This concludes my comments, Betsy.
This concludes my comments Betsy at this time, we will open the call for Q&A. Please.
Unknown Executive: At this time, we will open the call for Q&A, please. We will now begin the question and answer session. To ask a question, you may press star, then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2.
Speaker Change: Yes.
Speaker Change: We will now begin the question and answer session.
To ask a question you May Press Star then one on your Touchtone phone.
Speaker Change: If youre using a speakerphone please pick up your handset before pressing the keys.
Speaker Change: Anytime Youre question has been addressed and you would like to withdraw your question. Please press Star then two.
Unknown Executive: At this time, we will pause momentarily to assemble our roster.
Speaker Change: At this time, we will pause momentarily to assemble our roster.
Speaker Change: Okay.
John Davis: The first question today comes from John Davis with Raymond James. Please go ahead. Hey, good morning, guys. If I look at fourth quarter revenue, it came in just the hair light of the midpoint of the guide. So just wondering, was there any kind of delayed implementations? Anything got pushed out? I heard you call it a total, but I wasn't sure if there was some expectation of revenue in the fourth quarter that didn't happen. Or just any other comments on fourth quarter revenue performance? Nothing in particular that pushed out. I mean, we always are, there's always a little bit of movement on the license line.
Speaker Change: The first question today comes from John Davis with Raymond James. Please go ahead.
Speaker Change: Hey, good morning, guys, Yes, if I look at fourth quarter revenue came in just a hair light or above the midpoint of the guide. So just wondering was there any kind of delayed implementations anything got pushed out I heard you caught me a total but I wasn't sure if there was.
The expectation of revenue in the fourth quarter that didn't happen or just any other comments on our fourth quarter revenue performance.
Speaker Change: Okay.
Speaker Change: Nothing in particular that pushed out.
Speaker Change: We always are there's always a little bit of movement on the license line, we did get the big thing $2 million that were expected.
Gregory Daily: We did get the big thing, two million dollars that we were expected. It was good.
Speaker Change: So it's good.
Gregory Daily: We're back to school and kind of getting a sense of how that's going to shake out, but there was nothing we saw in Q4 that changed what we were expecting for fiscal 2025. So, that's helpful. And then, I appreciate the NRR, the retention of 100% this year. Obviously, it was a transition year.
Speaker Change: We're back to school and kind of getting a sense of how thats going to shake out, but there was nothing we saw in Q4 the change what we're expecting for fiscal 2025.
Speaker Change: So that's why.
Speaker Change: Well that's helpful and then I appreciate the.
Speaker Change: And our our.
Speaker Change: The retention of a 100% this year, obviously it was a transition year. So as we go into 'twenty five and beyond how should we think about how the growth. Although it is for you to get to that high single digit organic revenue growth number should we expect.
Gregory Daily: So, as we go into 2025 and beyond, how should we think about kind of the growth algo at i3 to get to that high single digit organic revenue growth number? You know, should we expect, you know, maybe 105-ish NRR plus a new logo growth? Just how are you guys thinking about the longer term NRR as it pertains to the growth algo at i3? Well, JD, we do want to improve the 100%. But I think the growth algorithm with that 100% are organic for 25 is about 7.5% implied at the midpoint. And so that would imply seven and a half percent coming from new logos during the year.
Speaker Change: Yes.
Speaker Change: Maybe 105 ish.
Speaker Change: There are.
Speaker Change: New logo growth just how are you guys thinking about that.
Speaker Change: Longer term.
Speaker Change: As it pertains to the growth I'll go with that.
Well, Jay we do want to improve the 100%, but I think the growth algorithm.
Speaker Change: With that 100%.
Our organic for 25 is about seven 5% implied at the midpoint.
Speaker Change: And so that would imply seven 5% coming from new logos during the year, but we do we do have a goal of improving that 100% net revenue retention from our existing book every year.
Gregory Daily: But we do we do have a goal of improving that 100% net revenue retention from our existing book every year. One of the points to make on that, I want to make sure it was noted that the payments revenue is not included in that number, two different data sets and different customer names. We'll see if we can get to that in the future. I think if you lay it on the payments revenue, that probably, you know, you pick up that growth you get from your existing customers growing in their volume. So probably push the net dollar retention a little bit higher.
Speaker Change: One other points to make.
Speaker Change: I want to make sure. It was noted that the payments revenue is not included in that number.
Speaker Change: Two different data sets and different customer names, we will see if we can get to that in the future.
Speaker Change: I think if you laid on the payments revenue, that's probably where you can pick up that growth you get from your existing customers growing and their volume.
Speaker Change: So it probably pushed the net dollar retention a little bit higher.
And.
Gregory Daily: You know, I think it's also just reflects that we're not aggressive pursuers of price increases. But the crazy point. You know, as the cross-sell story improves. Tax-Free Make Choices on Price Increases, we do think that that number is going to go high. Okay, that's helpful.
Speaker Change: I think Thats also just reflects that we are not aggressive pursuit of price increases.
Speaker Change: Yes.
Speaker Change: The <unk> point.
Speaker Change: As the cross sell story improves as a task they make choices on price increases, we do think that that that number's going to go higher.
Speaker Change: Okay. That's helpful. And then just quickly on health care.
Gregory Daily: And then, just quickly on healthcare, you know, understand some validation there's was driving the revenue declines. You know, as you said, most single digit for 25 longer term, how should we think about growth of that business as a mid single digits of the corporate average? And when do you lap the kind of some big customer losses as we think about modeling 25? Our current expectation is for low single digit for health care over the medium term, high single digit for education and public sector, high single digit.
Understand consolidation there is what's driving the revenue declines.
Speaker Change: As you said low single digit for 'twenty five longer term, how should we think about growth of that business in the mid single digits of the corporate average.
Speaker Change: And when do you lap the.
Speaker Change: Some customer losses, as we think about modeling point Bob.
Speaker Change: Our current expectation is for low single digit for healthcare over the medium term.
Speaker Change: High single digit for education and public sector.
Speaker Change: High single digit.
Gregory Daily: Okay, thanks guys.
Speaker Change: Okay. Thanks Bill.
Mark Palmer: The next question comes from Mark Palmer with the Benchmark Company. Please go ahead. Yes, thanks for taking my questions. I wanted to see if you could give us an update on your utility initiative. You made reference to it in the prepared remarks. And when would the company be in a position to begin to roll out the technology it derived from its initial project to various other utilities across the country?
Speaker Change: The next question comes from Mark Palmer with the Benchmark Company. Please go ahead.
Speaker Change: Yes, thanks for taking my questions.
Speaker Change: Wanted to see if you could give us an update on your utility initiatives, you've made reference to it in the prepared remarks, and when would the company be in a position to.
Begin to rollout the technology it derived from its initial project to various other.
Speaker Change: Utilities across the country.
Rick Stanford: Good morning, Mark. On this initial project, we are in the process on the portal side of rolling that out today, and we see that accelerating. And on the distribution side of the business, we would anticipate the sales activities to begin in that as well, although that's a much more specific and measured particular module that is not as broadly used in the industry. So are we then looking at that activity beginning in the first quarter of 2025 and then accelerating through the year? How should we think about the cadence? Yeah, that's the pair of something.
Speaker Change: Good morning.
Speaker Change: Mark on the initial on this initial project.
Speaker Change: We're in the process on the portal side of rolling that out today, and we see that accelerating and.
Speaker Change: Distribution side of the business.
Speaker Change: We would anticipate the sales activities to begin in that as well, although thats a much more specific and measured.
Speaker Change: Particular module that is not as broadly used in the industry.
Speaker Change: So are we looking at.
Speaker Change: That activity.
Speaker Change: Beginning in the first quarter of 'twenty, five and then accelerating through the year, how should we think about the cadence.
Speaker Change: Yes.
Fair assumption.
Rick Stanford: Very good. And.
Speaker Change: Very good and.
Rick Stanford: One other question with regard to the M&A environment, Rick, you had said on the last call that you were seeing more rationality in the market as it pertained to the kinds of multiples that sellers were demanding. Any update on that front in terms of what you're seeing in the market and how that would potentially contribute to M&A activity in the coming quarter? Yeah, so obviously, there's still extremes on either end, but the people we're talking to. seem to be more realistic as to their value and their future growth. I don't see that changing much this year.
Speaker Change: One other question with regard to the M&A environment Ricky.
Rick you had said.
On the last call that you were seeing.
Speaker Change: More rationality in the market as it pertained to the kinds of multiples that sellers were.
Speaker Change: Demanding.
Any update on that front in terms of.
What youre seeing in the market.
Speaker Change: How that would potentially contribute to M&A.
Speaker Change: M&A activity in the coming quarters.
Speaker Change: Yes, so obviously theres still extremes on either in but the people we're talking to seems.
Speaker Change: Seem to be more realistic as to their value and their future growth.
Speaker Change: I don't see that changing much this year our pipeline is very strong.
Rick Stanford: Our pipeline's very strong. We're still continuing to contact through initial conversations, a lot of public sector deals. We are looking at some education, but I think we're in a good place for 25 to Generate somewhere between three to five acquisitions this year, and we're excited about the conversations we're having with our current pipeline target. It seems like timing is more important than... It's very important. ...valuation. Yeah. Valuation's important, but... comes down to timing. Yep, exactly.
Speaker Change: Still continuing to contact.
Through initial conversations a lot of public sector deals we are looking into some education, but I think we're in a good place for 25 to gen.
Speaker Change: Generally somewhere between three to five acquisitions this year.
Speaker Change: And we're excited about the conversations we're having with our current pipeline targets. It seems like timing is more important than very important valuation.
Speaker Change: Taxation is important but.
Speaker Change: It comes down to time, yes exactly.
Rick Stanford: Very good. Thank you.
Speaker Change: Very good thank you.
Speaker Change: Yeah.
James Faucette: The next question comes from James Faucette with Morgan Stanley. Please go ahead. Hi, thank you for taking my question.
Speaker Change: The next question comes from James Fawcett with Morgan Stanley. Please go ahead.
Speaker Change: Hi, Thank you for taking my question. This is Jeff I'll, It's Matt <unk> on for James I wanted to touch on the macro a bit just how youre thinking about it in 25, the general health that Youre getting from customers I know you touched upon what's going on in health care and just anything to note in certain prior to call us in the public sector.
Shefali Tamaskar: This is Shefali Tamaskar on for James. Wanted to touch on the macro a bit, just how you're thinking about it in 25, the general health that you're getting from customers. I know you touched upon what's going on in health care and just anything to note in certain verticals in the public sector. That kind of informs your outlook. We, we are seeing in the public sector. Very, very consistent increased demand to get to, you know, configurable web native application. It's really driven by their need to get to that technology set, but also people constraints in the public sector arena, and the evolution of the software that we've developed over the last several years to support that is being very well received, and we now have enough examples in the market that it's providing additional comfort of certainty of execution.
Speaker Change: That kind of informs your outlook.
Speaker Change: We.
Speaker Change: We are seeing in the public sector.
Speaker Change: Very very consistent increased demand to get to.
Speaker Change: Configurable web native applications.
It's really driven by.
Speaker Change: Their need to get to that technology set but also people constraints in the public sector Arena.
Speaker Change: And the evolution of the software that we've developed over the last several years to support that it's being very well received.
Speaker Change: And it's because we now have enough examples in the market that it's providing additional comfort of certainty of execution.
Gregory Daily: Okay, that's great to hear. And then just one on organic growth, what gives you confidence in that high single digit organic number? And is there any visibility you might have in terms of like those new logos that you're anticipating?
Speaker Change: Okay, that's great to hear and then just one on organic credits what gives you confidence in that high single digit organic number and is there any visibility you might have in terms of like those net new logos that you're anticipating.
Gregory Daily: Well, I think we, on previous calls, we spoke to some of the headwinds that we faced in fiscal year 24. Manitoba was a big one, about $3 million we should have seen in 24 that can resume now. The SAS transition was a $5 million headwind. And that, we believe, this coming year, our software license sales will be about the same as they were in 24. and then education. Certain states stepped in this last year, but education actually grew 9% in the fourth quarter as we anniversaried those states stepping in. The last one is our large midwestern utility customer who we've talked a lot about.
Speaker Change: Well I think we on previous calls we spoke to some of the headwinds that we faced in fiscal year 'twenty four.
Speaker Change: Manitoba was a big one about $3 million, we should've seen in 'twenty four and resume now.
Speaker Change: SaaS transition was a $5 million headwind.
Speaker Change: And that we believe this coming year, our software license sales will be about the same as they were in 2004.
Speaker Change: And then education.
Speaker Change: Certain states step in this last year, but education actually grew 9% in the fourth quarter.
Speaker Change: As we anniversary those states stepping in.
Speaker Change: The last one is our large mezz Midwestern utility customer, who we've talked a lot about we anticipate that growing as well this year.
Gregory Daily: We anticipate that growing as well this year.
Alexander Markgraff: Okay, thank you. The next question comes from Alex Markgraff with KeyBank Capital Markets. Please go ahead. Hey, everyone. Thanks for taking my question. Maybe just to quickly touch on margin expansion, I think in the press release, it was noted 100 basis points or more. Geoff, I thought I heard you say 50 to 100. I apologize if I misheard you. Just a clarification there and then maybe just walk through some of the sources of that 100 plus basis points for 25. This next year, I think we have a pretty Easy list to get to that point.
Speaker Change: Okay. Thank you.
Speaker Change: The next question comes from Alex Mark Graf with Keybanc capital markets. Please go ahead.
Speaker Change: Hey, everyone. Thanks for taking my question.
Speaker Change: Maybe just to quickly touch on margin expansion I think in the press release noted 100 basis points or more.
Speaker Change: Jeff I thought I heard you say 50 to 100 I apologize if I misheard you just clarification, there and then.
Speaker Change: Maybe just walk through some of the sources of that 100 plus basis points for 25.
Jeff I'll: Sure. So yes, you're correct, we said 50 to 100.
Speaker Change: <unk>.
Speaker Change: <unk>.
Speaker Change: This next year I think we have a pretty.
Speaker Change: Easy lift to get to that point.
Geoffrey Smith: A lot of our margin expansion, we've always kind of cited the fact that, you know, our corporate overhead to grow inflationary rates, and revenue should outpace that. So we should naturally get some margin expansion as that goes. With that in mind, we do see like long term margin expansion, not just kind of a one year thing.
Speaker Change: A lot of our margin expansion, we've always kind of cited the fact that our corporate overhead to grow inflationary rates and revenue should outpace that so it should naturally get some margin expansion as that goes with that in mind, we do see like long term margin expansion not just kind of a one year thing.
Geoffrey Smith: But this year in particular, you know, as we turn the page after the sales immersion services business, we've got Because the corporate overhead has come down some, but not pro-rata, the increase of revenue just makes a bigger impact on margin than it would have previously. We're still transitioning out some costs, and we're confident in that $5,200. It should be a...
Speaker Change: But this year in particular.
Speaker Change: As we turn the page after the.
So the merchant services business, we've got.
Speaker Change: Kind of a because the corporate overhead has come down some but not pro rata yes.
Speaker Change: The increase of revenue just makes it a bigger impact on margins than it would have previously.
Speaker Change: We're still transitioning out some costs.
Speaker Change: And.
Speaker Change: We're confident in that 50 to 100 it should be.
Speaker Change: Yes.
Speaker Change: It should be.
Speaker Change: Pretty fair target for us to hit in long run still feel good about progression on that as well.
Geoffrey Smith: I might add that our deal didn't close until September the 20th, so we had a full complement of staff all the way through the quarter. Okay, understood. Thank you both. And then just maybe one quick margin follow up at the segment level, just around health care margins. If you just add some color on the nature of the Delta versus public sector and what sort of margin upside there might be in the health care segment over time. And so the healthcare segment, we have a couple different services there. A piece of that is outsourced RCM services, which can be an arms and legs business.
Speaker Change: I might add that our deal didn't close until September the 20th So we had a full complement of staff all the way through the quarter.
Speaker Change: Okay understood. Thank you and then just maybe one quick margin follow up.
Speaker Change: Segment level.
Speaker Change: Just around health care margins.
Speaker Change: As you can just add some color on the nature of the delta versus public sector, and what sort of margin upside.
Speaker Change: There might be in the healthcare segment overtime.
Speaker Change: Yes, so the healthcare segment, we have a couple of different services there.
Speaker Change: Or that is outsourced RCM services, which can be an arms and <unk> businesses.
Geoffrey Smith: So there's a disproportionately high number of bodies in the healthcare segment compared to public sector. And as a result, the profile on that revenue is just a lower margin profile. It's a big chunk of revenue. We love it because it is recurring. It's very stable and consistent, but it is a lower margin piece of the business. The growth in health care is coming from more of the software pieces, and so over time... I'm hopeful that we can upsize that margin profile in healthcare. We also have some, you know, the RCM business is a space where there's a few things that are in our plans to work on the cost side of that, you know, technology, outsourcing, things like that.
Speaker Change: And disproportionately high number of bodies in the healthcare segment compared to public sector.
Speaker Change: As a result that is the profile on that revenue is just lower margin profile.
The big chunk of revenue, we love it because it is recurring it's very stable and consistent.
But it is a lower margin piece of the business.
Speaker Change: The growth in healthcare is coming for more of the software pieces so over time.
Speaker Change: Hopeful that we can upsize that margin profile in healthcare, we also have.
The RCM business is a space, where there is a few things that are in our plans to work on the cost side of that.
Speaker Change: Technology outsourcing things like that those are some of those.
Geoffrey Smith: Those are some of the... Those are some things that will kind of come. further into the focus on health care over the next couple years. So we would expect margin expansion over time.
Speaker Change: Those are some things that will kind of come.
Speaker Change: Further into the focus on health care over the next couple of years. So we would expect margin expansion over time.
Speaker Change: Okay.
Peter Heckmann: Okay. Thanks, Geoff. The next question comes from Peter Heckmann with D.A. Davidson. Please go ahead. Hey, good morning. Most of my questions have been asked. One thing I wanted to follow up on in terms of the seasonality commentary you provided. I appreciate that.
Speaker Change: Okay. Thanks, Jeff.
Speaker Change: The next question comes from Peter Heckmann with D. A Davidson. Please go ahead.
Peter Heckmann: Hey, good morning, most of my questions have been asked one file one thing I wanted to follow up on in terms of the seasonality commentary you provided I appreciate that but anything you would call out there in terms of the timing of relatively larger.
Geoffrey Smith: But anything you would call out there in terms of the timing of relatively larger software payments or milestone payments that we should be thinking about as we map out 2025? Well, that is the software license sales are by far the biggest variable. We currently have a disproportionate amount slated for Q2, the March quarter. And that's why we have 26 percent in that quarter. That could come early, it could come late, so you'll just have to be patient with us. When that happens, we'll tell you it came early or it came late or it came on time.
Peter Heckmann: Software and payments or milestone payments that we should be thinking about as we map out 235.
Speaker Change: Well that is the software license sales are by far the biggest variable.
Speaker Change: We currently have a disproportionate amount slated for Q2, the March quarter, and Thats, why we have 26% in the quarter.
Speaker Change: That could come early it could come late.
Speaker Change: No.
Speaker Change: You just have to be patient with us when that happens will tell you. It came early or it came late or came on time.
Unknown Executive: Okay, okay. And then I'm out of the office today. So I don't have access to my notes.
Speaker Change: Okay, Okay, and then I'm out of the office today. So have access my notes, but just can you refresh us on that.
Rick Stanford: But just can you refresh us on that on the project for the tier one utility in terms of I'm not sure I heard Rick's comment correctly in terms of the stage of development and roll out of that. But could you refresh us on that? And then and then how do you expect? How would you characterize the revenue that you expect to get in 2025 in terms of, you know, milestone payments, software versus more recurring revenue streams? Do you want to speak to revenues, the type of revenues? Sure. Yeah, so that project is going to have a little bit of everything in terms of types of revenue.
Speaker Change: Project for the tier one.
Speaker Change: Utility in terms of.
Speaker Change: I'm not sure I heard Rick's comment correctly in terms of the stage of <unk>.
Speaker Change: Development and rollout of that but could you refresh us on that and then how do you expect how would you characterize the revenue that you expect to get in 2025 in terms of MAU.
Speaker Change: Milestone payments software versus more recurring.
Speaker Change: While our revenue streams.
Speaker Change: Do you want to speak to revenue.
Speaker Change: The type of revenues sure yes.
Speaker Change: That project is.
Speaker Change: We're going to have a little bit of everything in terms of types of revenue.
Geoffrey Smith: We have, you know, we obviously recognize the $2 million license amount this quarter. That is not the full amount of license. There will be more to come, although probably early in 2020, fiscal year 2026, not 2025. So there's nothing modeled in there for additional licenses here. But the bigger amounts will come in 2026. We're in implementation mode right now. For the first phase of the project, and that's part of why we have, we have a good line of sight towards more revenue in 2025, there's a very healthy amount of professional services revenue attached to this project, and that is ticking up this coming year.
Speaker Change: We have.
Speaker Change: We obviously recognize that $2 million license amount this quarter.
Speaker Change: It is not the full amount of license there will be more to come although probably early in 2020 fiscal year 2026 2025.
Speaker Change: So there's nothing model than their traditional license this year.
Speaker Change: Bigger amounts.
Speaker Change: What kind of in 2026.
We're in implementation mode right now for.
Speaker Change: For the first phase of the project and that's part of why we have we have good line of sight towards more revenue in 2025 is a very healthy amount of professional services revenue attached to this project and that is ticking up this coming year. It will tick up even further next year.
Geoffrey Smith: It will tick up even further the next year. And then payments is You know, a big piece of the story in the utilities market. It's just a great space for attachment of our payment solution. And that's relevant here. So we'll have recurring revenue from payments. We'll have recurring revenue from maintenance as well, once that turns on. And we're, the professional services, while not necessarily explicitly recurring, is going to be extremely consistent for years to come. So you're kind of touching all things there. As it relates to 2025, basically expect the payments to turn on and expect a really healthy dose of professional services.
Speaker Change: And then payments is.
A big piece of the story in the utilities market, it's just a great space for attachment of our payment solutions.
Speaker Change: And that's relevant here. So we will have recurring revenue from payments will have recurring revenue from from maintenance as well once that turns on.
Speaker Change: And were the professional services, while not necessarily explicitly recurring is going to be extremely consistent for years to come.
Speaker Change: So you're kind of touching all things there.
Speaker Change: As it relates to 2025 basically expect the payments to turn on and expect a really healthy dose of professional services and then expect all of that to just increase the next year plus.
Geoffrey Smith: And then expect all of that to just increase the next year.
Speaker Change: Plus license revenue.
Geoffrey Smith: Licensed by the Department of Education. That's helpful and good to hear.
Speaker Change: Okay. That's helpful and good to hear I appreciate it.
Rufus Hone: I appreciate it. As a reminder, if you would like to ask a question, please press star then 1 to be joined into the question queue. The next question comes from Rufus Hone with BMO Capital Markets. Please go ahead. Hey, guys, good morning. Thanks for the question. I wanted to come back on the organic growth. So you mentioned seven and a half percent organic growth implied for 2025. You just did 2% organic growth this quarter. Is most of that acceleration you're expecting in 2025, just the headwinds you mentioned reversing? Or is there some fundamental acceleration you're expecting?
Speaker Change: As a reminder, if you would like to ask a question. Please press Star then one to be joined into the question queue.
Speaker Change: The next question comes from Rufus town with BMO capital markets. Please go ahead.
Speaker Change: Hey, guys. Good morning. Thanks for the question I wanted to come back on the organic growth. So you mentioned seven 5% organic growth implied for 2025, you just did 2% organic growth. This quarter is most of that acceleration you're expecting in 2025, just the headwinds you mentioned reversing or is there some.
Speaker Change: Fundamental acceleration youre expecting thanks.
Gregory Daily: Thanks. Well, our large Midwestern utility customer, that is just a customer that's growing. So that didn't have anything to do with 24.
Speaker Change: Well, our large Midwestern utility customer that is just a customer thats growing.
Speaker Change: Didn't have anything to do with 24, it's just an acceleration going forward.
Gregory Daily: It's just an acceleration going forward. Education, I mentioned, went back to what we consider a normal growth rate 9% in Q4. It was temporarily It had a one-time setback in 24. The SAS transition levels out. So it's not that it's neither a headwind or a tailwind in 25. It's just it will stop shrinking in 25.
Speaker Change: Education, I mentioned went back to what we consider a normal growth rate of 9% in Q4.
Speaker Change: It was temporarily.
Speaker Change: It had a onetime setback in 'twenty four.
Speaker Change: The SaaS transition levels out so it's not that it's it's neither a headwind or a tailwind in 'twenty five.
Speaker Change: Yes, it will stop shrinking in 'twenty five.
Gregory Daily: And then Manitoba is the resumption of, again, you know, kind of a one-time setback. Okay, thanks.
Speaker Change: And then Manitoba.
Sharon: I'm Sharon.
Sharon: Again.
Sharon: A onetime setback.
Gregory Daily: I wanted to ask on on health care as well. You mentioned low single digit revenue growth in health care in 25. Is that mostly from the consolidation you referenced? Or is there anything else weighing on that segment? That's the headwind, is consolidation. It's been an ongoing thing in healthcare. We don't see it going away anytime soon. Thank you.
Sharon: Alright, Thanks, I wanted to ask on health care as well you mentioned low single digit revenue growth in healthcare and <unk> 25 is that mostly from the consolidation you referenced or is there anything else weighing on that segment.
Sharon: Thanks.
Sharon: That's.
Sharon: That's a headwind as consolidation.
Sharon: It's been an ongoing thing in health care, we don't see it going away anytime soon.
Speaker Change: Thank you.
Unknown Executive: This concludes our question and answer session.
Speaker Change: This concludes our question and answer session I would like to turn the conference back over to Greg Daily for any closing remarks.
Gregory Daily: I would like to turn the conference back over to Greg Daly for any closing remarks. Thank you, everyone.
Greg Daily: Thank you everyone.
Gregory Daily: It's nice to have 2024 over. It was a dramatic trans transformational of the year, especially a shout out to the emergency services team led by Tom DeBoer You guys were awesome. You did what was best for the company. I thank you for that. We miss you, and I'm sure you're going to thrive with our good friends at Payrock. I've been impressed with the conversion. It seems to have gone well.
Greg Daily: It's nice to have 2024 over it was.
Speaker Change: Dramatic trends transformational.
Speaker Change: The year.
Speaker Change: Essentially a shout out to the merchant services team led by Tom to Board.
Speaker Change: You guys were awesome.
You did what was best for the company.
Speaker Change: Thank you for that we Miss you and I am sure Youre going to thrive with our good friends at pay rock, but.
Speaker Change: I've been impressed with the conversion.
Speaker Change: It seems to have gone well and.
Unknown Executive: Anybody else on the call has anything of interest? I appreciate you dialing in today, but call us if you need us. Thank you.
Speaker Change: Anybody else on the call has anything of interest I. Appreciate you dialing in today, but call us if you need us. Thank you.
Speaker Change: Thank you.
Unknown Executive: The number for the replay is 877-344-7529 and the code is 418-4020.
Speaker Change: Number for the replay is 870 734 475 to nine and the code is 41840 Tuesday al.
Unknown Executive: The conference is now concluded. Thank you for attending today's presentation.
Speaker Change: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Unknown Executive: You may now disconnect.
Okay.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: Yes.
Yes.
Yes.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Yes.