Good day, everyone, and welcome to the i3 Verticals second quarter 2022 earnings conference call. Today's call is being recorded, and a replay will be available starting today through May 17th. The number for the replay is 877-344-7529, and the code is 3376015. The replay may also be accessed for 30 days at the company's website. At this time, for opening remarks, I would like to turn the call over to Geoff Smith, VP of Finance. Please go ahead, sir. Good morning, and welcome to the second quarter 2022 conference call for i3 Verticals. Joining me on this call are Greg Daily, our Chairman and CEO, Clay Whitson, our CFO, and Rick Stanford, our President. 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 information. This non-GAAP financial information should be considered by each individual in addition to, and not instead of, the GAAP financial statements. 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 forward-looking statements. 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'll now turn the call over to the company's Chairman and CEO, Greg Daily. Thanks, Geoff, and good morning to all of you. We are happy with our second quarter 2022 results, and have had a fantastic first half of our fiscal year. We're now confident that we will be able to deliver again in the second half. This year, we set new records in revenue and EBITDA, which grew at 62% and 65% respectively for the six months ending March 31. Greater than 80% of our revenue comes from recurring sources. Last quarter, we highlighted software and related services had surpassed payments as our largest source of revenue, and as of this quarter, it represents 50% of our revenue. For context, how far we've come, software and related services represented 5% of our revenue in fiscal year 2017 before our IPO a few short years ago. We're extremely excited about our product offerings in both public sector and healthcare verticals, and we continue to make investments to improve our technology stack. We are seeing fruits of this investment in the form of excellent sales momentum in the public sector vertical. The second quarter of fiscal year 2022 included a full quarter's results from our December 31 public sector acquisitions. We are pleased how well this integration has gone and the addition of state-level offerings that it adds to our public sector vertical. Our healthcare vertical continues to shape up, and I am happy to announce another acquisition, which will be included in our results as of May 1. This business adds electronic health record platform and patient engagement suite, which is perfect complement to our revenue cycle product offerings. There are ample opportunities to cross-sell in both directions. The patient engagement software will help us further leverage our scale and expertise in payments. When we find software businesses that are under-monetizing payments, we know we can unlock this value thanks to our scale expertise in that market, which is a real strategic advantage. The success we've had and the lessons we've learned building out public sector vertical has helped us get off to a great start in healthcare. Now I'll turn the call over to Clay, and he'll provide you more details on our second quarter financial performance. Following Clay's comments, Rick will provide an M&A update, and then we'll open up the call for questions. Good morning. The following pertains to the second quarter of our fiscal 2022, which is the quarter ended March 31st, 2022. Please refer to the slide presentation titled Supplemental Information on our website for reference with this discussion. We had a great quarter with record revenues, adjusted EBITDA, and pro forma adjusted diluted earnings per share. Revenues for the second quarter increased 59% to $78.1 million from $49.2 million for Q2 2021, reflecting continued double-digit organic growth and acquisitions. The key metrics we track are headed in the right direction. Our integrated payments percentage improved to 62% for Q2 2022 from 59% for Q2 2021, which helped our revenue yield improve to 146 basis points for the quarter from 115 basis points for Q2 2021. Organic growth for this quarter was 16%. Software and related services revenue continued strong growth, representing a record 50% of revenues for the quarter, an important milestone in our evolution. From here on out, we expect to be a software and service company first, with a complementary integrated payments platform that helps us add value for our customers. Annual recurring revenues totaled $258.8 million in Q2 2022, compared to $173.3 million in Q2 2021, a growth rate of 47%. Over 80% of our revenues in the quarter came from recurring sources. Adjusted EBITDA increased 59% to $19.5 million for Q2 2022, from $12.2 million for Q2 2021. We showed strength across the board, with continued momentum in proprietary software and merchant services. Adjusted EBITDA as a percentage of revenues increased to 25% for Q2 2022, from 24.9% for Q2 2021, reflecting lower corporate overhead as a percentage of revenues. For the six months, the adjusted EBITDA margin expanded 50 basis points. Pro forma adjusted diluted earnings per share increased 61% to $0.37 for Q2 2022, from $0.23 for Q2 2021. Again, please refer to the press release for a full description and reconciliation. Segment performance. Revenues in our proprietary software and payments segment more than doubled to a record $49 million for Q2 2022, from $23.8 million for Q2 2021, principally reflecting growth in our two largest verticals, public sector and healthcare. Revenues in our education vertical continued a strong rebound, increasing 43% Q2 to Q2, thanks to the reopening of existing customers and organic sales to new school districts. The segment's adjusted EBITDA improved 95% to $16.3 million for Q2 2022, from $8.4 million for Q2 2021, a new quarterly record. The growth was principally driven by our two largest verticals, public sector and healthcare. On a run rate basis, public sector represents roughly half of our consolidated business, while healthcare is an estimated 20%. Revenues for our merchant services segment increased 12% to $29.2 million for Q2 2022, from $26.1 million for Q2 2021, reflecting broad-based growth in hospitality and B2B. Adjusted EBITDA for our merchant services segment increased to $8.1 million for Q2 2022, from $7.6 million for Q2 2021. Our balance sheet. Our strong balance sheet has allowed us to continue to execute our acquisition strategy. On March 31st, we had $182 million borrowed under our revolver net of cash, under a $275 million facility. The face value of our convertible notes is $117 million. As of March 31st, our total leverage ratio was 3.9x, while the current constraint is 5.0x. As mentioned by Greg, we have subsequently completed a small healthcare acquisition, but we currently expect to remain below 4x for Q3, the June quarter. The interest rate for the convertible notes is 1%, while the interest rate for the revolver is currently around 4.25%, but will increase as the Fed continues to raise rates. Over time, we expect to convert roughly 2/3 of adjusted EBITDA into free cash flow, which can be used for debt repayment, acquisitions, and earn outs. We define free cash flow as adjusted EBITDA minus CapEx, internally capitalized software, cash interest and cash taxes. Outlook. Looking forward, our strong first half gives us confidence in raising guidance for fiscal year 2022. It excludes acquisitions that have not yet closed and transaction-related costs. Revenues, $300 million-$312 million. Adjusted EBITDA, $75 million-$81 million. Pro forma adjusted diluted EPS, $1.40-$1.47 per diluted share. From a seasonal standpoint, we have different verticals with different seasonal patterns, which generally counterbalance each other with the current mix of companies. One exception is our education business, which slows down during the June quarter when school lets out. As we become more software-centric, quarters might vary based upon perpetual license sales, even though our trend is generally toward more recurring revenue streams. I'll now turn the call over to Rick for company updates and M&A activity. Thank you, Clay. Good morning, everyone. Before I discuss M&A, I'll give an update on a few items. Our public sector unified product offering continues to have strong results with success in local, municipal, county, and state markets. Over the last quarter, we've expanded our product reach by adding new solution software sales in Georgia, Alabama, Tennessee, and Kentucky. In other words, we are beginning to bring products into states and customers where those products had not been utilized before. We expanded our territorial reach by entering four new states with contribution from four i3 public sector entities. Expansion includes additional instances of our public safety, courts, payment processing, digital signature, and certification, tax, records management, and digital customer engagement software solutions. We continue to implement on our recently announced LCRAA, Louisiana Clerks' Remote Access Authority software contract, which is supported by statewide e-filing. This effort is going extremely well. Our education product offerings have unified under the i3 Education brand with related marketing, sales, development, and support. Our education businesses are coordinated in bringing a full and robust solution to K -12 schools. To that end, we continue to make investments in our software. i3 Education has been responsive to school needs by installing technology that lessens traditional lunchroom interactions and leverages staff given labor shortages. We've been pleased with the results in education, which are being driven by successful focused sales campaigns, product line expansions, cost consolidations, and more relaxed COVID protocols. From a technology perspective, we continue to focus on moving infrastructure into AWS, which allows us to centrally manage and support our products across the enterprise. This effort is more than a change to a hosting environment and will bring significant enhancements to our products, including rapid scaling, increased geographic redundancy, and improved security oversight. In addition to modernizing infrastructure, we are investing in low-code application technologies that will allow us to rapidly deploy new products where we have gaps in our current offering or a need to modernize architecture. Low-code platforms will give us better access to data across the organization as solutions become more integrated. We've expanded training and are creating cross-divisional teams to build a platform on which we can launch full suite solutions. I'll now speak about M&A. As Greg mentioned, excuse me, we recently closed a tuck-in acquisition within the healthcare vertical. For nearly 20 years, this company has provided software solutions to a wide range of healthcare providers. The company was born out of a personal experience that the owner had with an antiquated healthcare system in the nineties. He realized that there were vast opportunities to improve operational efficiencies in the healthcare world. This personal backstory has allowed them to build products that do not lose sight of the patient first. This business offers an array of services, including electronic health records, electronic patient engagement or patient portal, revenue cycle management, population health and data analytics, and compliance program assistance. Their flagship product is their EHR offering, a solution that fills a much-needed gap in our healthcare product offering. This EHR solution, combined with their robust patient portal, brings us to a complete unified product offering in the healthcare space. The patient portal is a meaningful upgrade on our front-end patient engagement side of the house and fits nicely with our existing back-end solutions that our other healthcare businesses offer. This business is a natural strategic fit in i3's healthcare vertical, and in fact, they already do business with three of our existing healthcare companies. I wanted to note at this point, this acquisition fell within our standard range relative to multiples. Our healthcare vertical is reimagining the delivery of software products by bringing together complementary businesses. The current industry strains that came out of COVID required a commensurate pivot in the way we provide support services. For example, in response to the pandemic, we've built upon our invoicing systems to adapt best practices for our lab and mobile healthcare delivery clients, and we continue to educate providers and staff on the ever-changing requirements of telemedicine. Our M&A pipeline has an emphasis on public sector and healthcare in that order, and we look forward to sharing more on the acquisition front in the near term. This concludes my comments. At this time, we'll open the call up for Q&A, please. Thank you. We will now begin the question-and-answer session. To ask a question, you may press star, then one on your touch-tone 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 two. At this time, we will pause momentarily to assemble our roster. Our first question will come from John Davis with Raymond James. Please go ahead. Hey, good morning, guys. Clay, I wanna start with organic growth, both if you could give it for the quarter, but also maybe talk a little bit about, you know, longer-term growth. You have now 50% of software revenue, ARR is growing 47%. It seems like, you know, before long, we're gonna be tipping over into the low double digits on a sustainable basis. Just any comments on organic growth would be helpful. For the quarter, it was 16%. That follows 16% last quarter and 17% the previous quarter. The first half of the year, although December quarter had some COVID rebound in it, this quarter much less so. In the June quarter, I think it's gone altogether. We committed to double-digit growth for this year. I think we'll give guidance on that annually as we come around the turn and have better visibility into the economy and what to expect from our various verticals. Okay. No, fair enough. On the new deal, apologize if I missed it, but I didn't see its size. I know Rick said historical multiples, but based off your leverage comments, Clay, is it fair to assume kinda $20 million-$30 million range? No, that's too high. We'll publish the 10-Q today, and we'll make the statement that, including the upfront purchase price and the earn-outs we expect to pay, it all in, it'll be less than $10 million. It's a small deal. Okay. No, super helpful. Then last one for me. Clay, just on the margins. I think the implied margins in the guide are down about 50 basis points. I'm assuming that just has to do with business mix from all the acquisitions that you've done, but curious if there's anything else going on in the margin we should be aware of? Well, there are ranges in the guidance for both revenues and adjusted EBITDA. We could reach the same EBITDA number with higher or lower revenues. The fact that the midpoints imply a lower percentage than the guidance that we gave last quarter reflects our experience of stronger top-line revenues this quarter. We can't say with certainty what the composition of our revenues will be in the back half of the year. If you look at our annualized recurring revenue sheet or the composition of revenue sheet in the addendum, you see that it was pretty strong on services this quarter, which leads to higher revenues. For the six months, our adjusted EBITDA was ahead of the previous year by 50 basis points. Okay. No, no, that's helpful. Basically, no underlying changes, it's just business mix, if anything. You're not investing more in the back half or anything like that, it's just business mix? Right. Yeah. Okay. Thanks, guys. Thanks, JD. Our next question will come from Peter Heckmann with D.A. Davidson. Please go ahead. Hey, good morning, everyone. Thanks for taking the question. Just wanted to see if you could talk a little bit about any early success on the more of the pure software companies, both on the public sector side and with healthcare. Any early success in cross-selling payments or a little too early in those cases? Peter, we are having successes cross-selling payments into those businesses. I think what's got our focus right now, even more so, is we're able to go in with multiple sub-companies as one and compete very well as one organization in winning deals from our competition. The payments is going as expected. That's great. As regards just the American Rescue Plan, the federal stimulus program that was gonna potentially stimulate a little bit of IT spend. I think you had noted that seeing a little bit of procurement activity that may have been funded by that. Any update in that regard? Are municipalities starting to get the word that those funds are available? Yeah. There's something like $350 billion available to state and local governments. You know, we had pent-up demand that we saw during the heat of the pandemic, and that stuff's starting to implement as we speak, but we are seeing an uptick in RFPs. It's hard to determine whether we can link those directly to those funds. We know a lot of our customers are still discussing how that money's gonna be spent. I would expect that we'll see a rollout of those funds relative to new implementations, probably as a tailwind over the next couple of years. All right. Thank you. Our next question will come from George Mihalos with Cowen. Please go ahead. Good morning. This is Allison on for George. Congrats on the results, and thank you for taking my questions. I wanted to start on the guidance raise for the full year. Is that really just a flow-through of the strong 2Q results, or is there any contribution from the healthcare tuck-in, you know, understanding that it's small or better expectations embedded over 2H in there as well? Well, it does flow through the beat, but it also adds in the healthcare acquisition we just made. The acquisition adds about $1 million for the five months we'll have it this year. The five months in revenues. Okay, great. Thank you. That's super helpful. Clay, as a follow-up to that, can you remind us your expectations for interest expense embedded within the outlook for the full year? Yeah, we've added 50 basis point increase in May, which has already happened, another 50 basis point in June, and then a third half point in July is our current assumption. That should come to cash interest between $8.5 million and $9 million for the entire year. Okay, great. Thank you. That's super helpful. Then last one from me. On the merchant segment, margins there came in below our expectations and were down year-over-year. I heard B2B was a revenue driver there. You know, just curious, is there anything else to call out there driving that performance? How should we think about segment margins over 2H? Thanks again. Yeah, the merchant margin, sort of the last vertical to rebound out of COVID was our hospitality vertical, particularly on the West Coast, and that's generally a thinner margin. It also carries higher residual expense. So that's kind of. We saw a surge in that. In certain sectors, we saw 100% surge in payment volumes. You know, California had remained shut down, for much longer than the rest of the country, and Hawaii as well. So that's the biggest thing. Then B2B, you rightly pointed out, is thin margin, but we're very happy to see a resurgence in that as well. Great. Thanks again. Our next question will come from James Faucette with Morgan Stanley. Please go ahead. Hey, guys. This is Jeff Goldstein on for James. I was hoping for some more color on the M&A market. You'd said in the past that your targets don't really track public valuations, but just curious if that's still the case and if your pipeline still hasn't been impacted by what's going on in the public markets right now. Yeah, there's the pipeline's still very good. Again, we self-source our deals and we go after people that weren't necessarily looking to sell. They wanna be part of a larger team. You know, we haven't seen any impact, as steady as it goes as far as M&A for us and our pipeline. It seems like each deal is different. If they're growing nicely, you know, we've kind of argue a lot about valuations. Other companies, you know, they understand the market that fintech is down, so they're sympathetic to a lower LOI. Each deal is different. We're getting a reputation. We've got lots of references for these old software owners to call. We're seeing more and more of them at conferences now that COVID's over. It's business as usual. It's kinda back to normal. The pipeline's good. We're being very picky with who we kinda add to the team 'cause we kinda like what we've got put together today. Got it. That's a very helpful color. Then I think you touched on this a little earlier, but can you update us on what you're seeing in the competitive environment within your public sector and healthcare verticals when it comes to kinda RFPs? Just anything notable to call out there that has maybe changed in recent quarters? Thanks. I don't think it's really changed. We see Tyler Technologies in public sector, and that's kind of the most notable person that we feel like we go up against. There's still lots of little guys, very fragmented. In healthcare, you know, it's so much larger than public sector. We like with the offering that we've put together with our team. There's probably 600 people in that vertical, and it's still early compared to where we are with public sector, though. Competition really hasn't changed. Thanks for the color. Thank you. Again, if you have a question, please press star then one. Our next question will come from Chris Donat with Piper Sandler. Please go ahead. Good morning, gentlemen. Thanks for taking my question. I'm trying to figure out the right way to ask this in a way you can answer it, but as economic concerns have been rising in the last few weeks, I'm trying to understand, with your public sector and healthcare businesses, how likely they are to be resilient. I would imagine public sector very much resilient, particularly with some of the government initiatives. On healthcare, is there any way to break healthcare down into discretionary and non-discretionary, or any way to think about healthcare and how that might perform in a more challenging economic environment? Gosh, I don't know if I can. I don't have any statistics on discretionary versus non-discretionary. Our experience with healthcare during COVID was that it was one of our more resilient verticals. You know, healthcare is not something people can postpone for very long. I mean, they might be able to postpone a few months, but it's something that generally needs to be kept up with and insurance provides for. I do think of it as a very defensive vertical. Okay. Just to be clear there, it was resilient in the pandemic, so we've already had sort of some example of people in a challenging environment continuing to like your revenues remaining solid during that period, right? Yes, that's consistent with what we said on the conference calls during that period. Okay. Yep. Just, yeah, trying to think forward on how it might play out. Looking at the supplemental and the composition of revenue, the recurring software services revenue that's been growing, how should we think about that trajectory? Is that still likely to grow with some of the businesses you've added on recently, or was there anything that really drove it the last two quarters that was unique? Well, I think the big step up you see was in the December quarter, and that reflects the healthcare acquisition we made October 1st. That's kind of a new level. You see it stepped all the way from $3.2 million to $10.3 million, and then this last quarter it was $11.1 million. That's kind of a new level we're at as a result of that acquisition on that particular line item. Okay. But it was two full quarters. I mean, full quarter for the March 31st quarter, full quarter for the December 31st quarter, right? Correct. It was October 1st, the acquisition date. Right. Okay. Just one more on education. I know it's a smaller vertical for you, but where are we in the recovery of that vertical? Well, it's definitely outperformed our expectations this year. The return to school it was the biggest factor. We still have free lunch, which is a drag. If that goes away, and there's a lot of to and fro over that right now, but if it goes away, I think it will add $3.5 million to our bottom line on an annual basis. In the meantime, we've figured out a lot of ways to supplement our revenue streams there. One is through more software sold to districts, which help alleviate their staffing shortages. We have a number of things in the works we're excited about, which I won't say on this call because we feel like we've got a lead on our competitors in that regard. We're very excited about the education vertical, and it's been amazingly resilient in the face of free lunch for everybody. Okay, got it. There's definitely some areas where that could improve. I mean, you got momentum and potential areas to improve. Okay. Thanks very much. This concludes our question -and -answer session. I would like to turn the conference back over to Greg Daily for any closing remarks. Thanks, everyone. I hope we've got the message across that all parts, all verticals of the company are doing very well. I'd also like to thank our 1,400 employees that we have. What an incredible effort they're doing every day. We look forward to updating you next quarter. Thank you again for your interest. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.