Investment Thesis
i3 Verticals shows deteriorating profitability fundamentals with net income down 32.6% and EPS down 84.8% YoY despite 11.5% revenue growth, indicating operational margin compression. Microscopic returns (ROE 0.6%, ROA 0.3%, 1.8% net margin) and extremely low cash position ($7.1M) create financial fragility, though positive free cash flow ($23.4M) provides limited cushion.
Strengths
- Solid revenue growth of 11.5% YoY demonstrates market demand
- Strong free cash flow generation at $23.4M with 21.3% FCF margin despite low net income
- Moderate leverage with 0.26x debt-to-equity ratio provides debt capacity
Risks
- Severe profitability collapse with net income down 32.6% and EPS down 84.8% YoY signals operational distress
- Abnormally high gross margin of 151.8% suggests data irregularities or one-time charges requiring investigation
- Critical cash shortage with only $7.1M cash against $110.2M revenue; insufficient liquidity cushion
- Abysmal returns with ROE of 0.6% and ROA of 0.3% indicate capital is not productively deployed
Key Metrics to Watch
- Quarterly net income and operating margin trend to confirm whether profitability recovery occurs
- Gross margin normalization and detailed breakdown to verify data accuracy
- Cash balance trajectory and working capital management given extremely tight liquidity
- Operating cash flow sustainability and whether FCF remains positive without earnings recovery
Financial Metrics
Revenue
110.2M
Net Income
1.9M
EPS (Diluted)
$0.08
Free Cash Flow
23.4M
Total Assets
636.4M
Cash
7.1M
Profitability Ratios
Gross Margin
151.8%
Operating Margin
4.9%
Net Margin
1.8%
ROE
0.6%
ROA
0.3%
FCF Margin
21.3%
Balance Sheet & Liquidity
Current Ratio
1.34x
Quick Ratio
1.29x
Debt/Equity
0.26x
Debt/Assets
31.1%
Interest Coverage
N/A
Long-term Debt
81.0M
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-05-09T11:11:45.761506 |
Data as of: 2026-03-31 |
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