Good day, everyone, and welcome to the i3 Verticals First Quarter 2023 Earnings Conference Call. Today's call is being recorded and a replay will be available starting today through February 16th. The number for the replay is 8773447529, and the code is 3132661. The replay may also be accessed for 30 days at the company's website. At this time, for opening remarks, I'd like to turn the floor over to Geoff Smith, SVP of Finance. Please go ahead, sir. Good morning, welcome to the first quarter 2023 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'll 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, but 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 important factors, among others, set forth in the company's earnings release and reports that are filed or furnished to the SEC. Consequently, actual operations and results may 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 now turn the call over to the company's Chairman and CEO, Greg Daily. Thanks, Geoff, good morning to all of you. We're excited to present to you our results for the first quarter of fiscal year 2023. To kick things off, we set new records in revenue and adjusted EBITDA, you will be pleased with our results of our focus on recurring revenue and adjusted EBITDA margin. Here today, adjusted EBITDA grew 29% from Q1 fiscal year 2022 to Q1 fiscal year 2023. The last several quarters you've heard me discuss recurring revenue, which has been above 80%. It was 84% this quarter, you will notice that we had a lighter quarter of software license deliveries as multiple projects pushed into Q2. The backlog of software sales has never been deeper, license revenue, which does not recur, can fluctuate. In a quarter like this one, the power of our model is reinforced. SaaS, software transaction-based revenue, payments, and other recurring revenue helped us achieve consistent quality earnings. This quarter includes our first results of the operation of Keltic. We were pleased with their results, but even more excited about what is to come. Keltic is already going to market with our 2021 acquisition, DIS. It has a much more robust sales function than Keltic could ever avail itself of. Keltic and DIS have complementary best-in-class products for transportation departments at the state level. We can't wait to expand our already significant footprint across the United States and Canada. When we talk about acquisition targets with untapped recurring revenue opportunities, Keltic is a fantastic example. Earlier this quarter, we announced an acquisition of AccuFund, a strategic product for public sector. We hosted an internal sales conference in Nashville this week, our sales team was ecstatic about how this product can be cross-sold in the public sector and the education verticals. Our teams are off to a great start. I'll turn the call over to Clay, he'll provide you more details on our first financial our first quarter financial performance. Following Clay's comments, Rick will provide an update on some role changes and address M&A, then we'll open up the call for questions. Thanks, Greg. The following pertains to the first quarter of our fiscal year 2023, which is the quarter ended December 31st, 2022. 2023, sorry. Please refer to the slide presentation titled Supplemental Information on our website for reference with this discussion. We had another great quarter with record revenues and adjusted EBITDA. Revenues for the first quarter increased 16%, in line with the seasonality comments we gave on the last call, to $86 million from $73.9 million for Q1 2022, reflecting organic growth and acquisitions. Our revenue yield improved to 146 basis points for the quarter from 139 basis points for Q1 2022. Organic growth for this quarter was approximately 8%. Annual recurring revenues totaled $290.2 million for Q1 2023, compared to $240.4 million for Q1 2022, a growth rate of 21%. Organic ARR growth generally runs a few percentage points above our total organic revenue growth. Over 80% of our revenues in the quarter continued to come from recurring sources. Software and related services remain the largest portion of our revenues, representing 48% for Q1. Payments represented 47% and other 5%. adjusted EBITDA increased 29% in line with expectations to $23.6 million for Q1 2023, from $18.3 million for Q1 2022, reflecting continued momentum in our software and services segment. Adjusted EBITDA as a percentage of revenues increased to 27.4% for Q1 2023, from 24.7% for Q1 2022, principally reflecting margin improvement in our software and services segment. Pro forma adjusted diluted earnings per share increased to $0.37 for Q1 2023 from $0.35 for Q1 2022. Again, please refer to the press release for a full description and reconciliation. Segment performance. Revenues in our software and services segment increased 19% to $53.2 million for Q1 2023, from $44.8 million for Q1 2022, principally reflecting growth in our flagship public sector vertical, which includes education. Revenues in our education vertical continued a strong rebound thanks to organic sales to new school districts and higher lunch and activity fees at existing districts. Federal and state subsidies for lunch have decreased significantly since the pandemic. Software license revenues were light for the first quarter at $1.2 million, down from a big Q4 of $3.5 million. This is the most variable and difficult line item for us to forecast. Installations depend on our customers' schedules, which can be a moving target, particularly in public sector. Greg mentioned some software license deliveries, which pushed from Q1 to Q2. If those had landed in this quarter, Q1 2023 would have approximated our Q1 2022 number of $2.1 million. While we are focused on SaaS and other recurring sources of revenue, licensed sales carry 90% gross margin, so they favorably impact quarterly results, as we saw in Q4. Despite light license sales, the segment's adjusted EBITDA improved 38% to $18.9 million for Q1 2023 from $13.6 million for Q1 2022, outpacing revenues. The growth was principally driven by our public sector vertical, including education. Public sector represents over half of our consolidated business. adjusted EBITDA as a percentage of revenues improved to 35.4% for Q1 2023 from 30.5% for Q1 2022, reflecting high-margin software and services acquisitions such as Keltic over the past year, and a return to traditional high margins in education. The AccuFund acquisition, effective January first, is high margin as well. Revenues for our merchant services segment increased 13% to $32.8 million for Q1 2023 from $29.2 million for Q1 2022, principally reflecting growth in our ISO, ISV, and B2B channels. adjusted EBITDA for our merchant services segment increased 8% to $9.4 million for Q1 2023 from $8.7 million for Q1 2022, with higher revenues partially offset by higher residual expenses. In keeping with our strategy since the IPO, we have steadily redirected acquisition and internal resources from traditional merchant services into higher growth and higher margin software and services, coupled with integrated payments. Our strong balance sheet has allowed us to continue to execute our acquisition strategy. On December 31st, we had $259.6 million borrowed under our revolver net of cash under a $375 million facility. The face value of our convertible notes are $117 million. As of December 31st, our total leverage ratio was approximately 4x, while the current constraint is 5.25 x. The AccuFund purchase, effective January first, was $12.5 million cash plus $2 million in stock, for total consideration of $14.5 million at closing. We paid roughly 10 x for AccuFund, the high end of our range, because it is a strategic asset integral to our unified public offering. The interest rate for the convertible notes is 1%, while the interest rate for the revolver is currently around 8%, but will increase as the Fed continues to raise rates. Over time, we expect to convert roughly two-thirds of adjusted EBITDA into free cash flow, which can be used for net repayment, acquisitions, and earn outs. We define free cash flow as adjusted EBITDA minus CapEx, internally capitalized software, cash interest and cash taxes. Looking forward, the strong start to our fiscal year gives us confidence in the following guidance for fiscal year 2023. It excludes acquisitions that have not yet closed and transaction-related costs. Revenues $360 million-$380 million, no change. Adjusted EBITDA $95 million-$103 million. We increased $1 million to account for the AccuFund acquisition. Pro forma adjusted diluted EPS $1.50-$1.62, no change. From a seasonal standpoint, acquisition activity could prove different this year, but we still expect the quarters of fiscal year 2023 to follow a similar pattern to those of fiscal year 2022. As we become more software centric, orders might vary based upon perpetual license sales, even though our strand 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 want to comment on a few developments within our business. The public sector vertical continues to show exponential growth as we further develop our existing products and add new products, both from the ground up and via acquisition. We've seen enhanced levels of adoption. The combination of our motor carrier, title registration, and driver's licensing offerings into the i3 transportation sector has been well received by the market. The i3 Justice technology offering now effectively serves public safety as well as court offerings that span all levels of courts for a state. Financial ERP solutions are performing well, especially with the addition of the online general fund accounting company to our sector. In early January, we acquired AccuFund to lead our online general fund accounting, GFA, product suite. As a result of the architecture and configurable nature of the technology, we will deploy the AccuFund family of solutions to counties, municipalities, special districts, and select tribal nations. In addition, our modular solutions support a range of nonprofits, including social services, education, endowments, and faith-based organizations. We continue to expand our cross-vertical pollination. Our public education healthcare verticals will offer the enterprise AccuFund solution. As i3 Education looks to the future, we continue to see the normalization of school activities post-pandemic. In addition to lunch, there is an increase in broad-based student spending, inclusive of athletics, ticket sales, and club activities. Our core objective is to provide our customer base with a seamless software experience across multiple departments. We are experiencing increased revenue as a result of high levels of adoption. i3 Healthcare continues to refine and expand our product solutions through the application of the i3 Unified Product Offering or UPO disciplines. The depth and breadth of our healthcare offering, coupled with the responsiveness to our customer needs, is resulting in multiple i3 Healthcare subsidiaries participating in new contracts. We just signed three large-scale agreements with providers in Louisiana, Mississippi, and Texas. i3 Healthcare, like the public and education verticals, is seeing growth with a reduction of friction, increase of synergies, and cross-vertical collaboration. I'll now speak to M&A. We continue to pursue growth by performing acquisitions of companies that fit with our strategy, with an emphasis on companies in our public sector and healthcare verticals. On January sixth, we announced our latest acquisition. The acquired business, AccuFund, is a provider of fund accounting solutions for government entities, including education and nonprofits in the United States. The addition of this talented team will fuel growth in many of our verticals. We're very proud to have the AccuFund deal done and look forward to exciting things to come with this product and team. I would like to note that this deal fell within our normal range of multiples. Our pipeline remains healthy with opportunities for acquisitions in public sector and healthcare that are similar in size to many of our acquisitions today. This concludes my comments, Jamie. At this time, we'll open the call for Q&A, please. Ladies and gentlemen, at this time, we'll begin the question and answer session. To get in the question queue, you may press star and then one. To withdraw your questions, you may press star and two. If you are using a speakerphone, we do ask you please pick up the handset prior to pressing the numbers to ensure the best sound quality. Once again, that is star and then one to join the question queue. Our first question today comes from John Davis from Raymond James. Please go ahead with your question. Hey, good morning, guys. First, wanted to touch on Clay on your comments about the pushout and license revenue. Just wanna make sure I got it right. It was about $900,000 difference. I think it was $1.2 million, versus you said it would have been closer to $2.1 million. I wanted to clarify that. That's correct. Okay. On the margins, I think, you know, those were better than expected, and you obviously raised margins for the full year despite, you know, some of the software mix in 1Q. Have you guys taken any cost actions maybe that weren't planned three months ago to help offset it, or is it just business mix and things performing better? It's mainly business mix, and education. The rebound in education has brought it back to its historical margin. Okay. Then, you know, maybe Greg, big picture changes in macro versus where we were three months ago, maybe comment on January trends versus kind of your first quarter. You know, any changes in your view for the full year from a, from a macro perspective for your verticals? Good question. Last three months, you know, obviously, we've been talking about a recession for nine months. We're not seeing it in our verticals. you know, it seems like we're in for a soft landing. it's, you know, we're kind of protected in government and in our verticals. no real changes. Just kind of feel like our timing is good. We're kind of in a sweet spot, and, I think we'll finish the year strong. Okay, thanks. Then any commentary on January? How January, I know we're lapping some Omicron from a year ago, so, you know, some of your peers have seen some acceleration in January. Just curious, you know, how your January looked relative to the summer quarter. You know, we never read much into January or February for that matter. They're the two weakest months of the year. You get a lot of returns from Christmas spending. I don't know that we've seen anything notable in January or February so far. Okay. All right. Appreciate it, I'll go with you guys. Thanks. Thanks, JD. Once again, if you would like to ask a question, please press star and then one. To withdraw your questions, you may press star and two. Our next question comes from James Faucette from Morgan Stanley. Please go ahead with your question. Thanks. This is Sandy Beatty for James. First, a question on M&A. It feels like your team continues to execute here. What would slow or stop the pace of deal closures for your team? Just mindful of a potential slowdown in growth or increase in interest rates or even the balance sheet. Is there anything on the horizon that would challenge the cadence that your team has generally been pretty consistent with? I don't see us slowing down. We are pickier because I think we've done 46 deals. We've got hundreds of products, very defined by verticals. This latest one, AccuFund, was like a bullseye of exactly what we needed. Took a while to talk this guy into joining the team, but we have gotten him involved, excited. You know, we don't worry about capital. You know, if we had a large deal, you know, we'd probably do an offering and say, "Guys, the reason we're out here doing it is because this large deal was too good to be true," or we needed it. I think, you know, four a year, five a year is kind of what we can digest comfortably. I'd like them to be larger, but, it's not our sweet spot. It's still $2 million-$5 million of EBITDA. Got it. That's helpful. Just one follow-up. Looking at ARR and ARR growth, it looks like it slowed a little bit on a sequential basis, so the year-on-year growth numbers, but also just versus 4Q. I wanted to ask if there was anything to piece out just with regards to seasonality, any correlation with the comments on licensed sales, even the organic growth profile. Anything that we should keep in mind within that ARR piece? Well, ARR does not include the license sales, but from an organic standpoint, each million dollars of license sales is 1.4% of organic growth. If Q1 this year had been like Q1 last year, we would have been at 9.4% organic instead of 8%. That is a. Then in Q4, of course, we jumped up to 12% because we had three and a half million dollars on that line. That is a pretty good line to look at if you're looking at small variations in organic growth. That's really been the difference in the last several quarters. You know, it jumped from 10% to 12% in Q4, and the reason was that line. This quarter, it's 8%. The reason is that line. That seems to be the big variable for us. Got it. Thank you for the questions. Thank you. Thank you. Once again, if you would like to ask a question, please press star and then one. Our next question comes from Charles Nabhan from Stephens. Please go ahead with your question. Hi, good morning, and thanks for taking my question. Just a quick follow-up on M&A. wanted to get a sense for if you're seeing anything different in terms of seller expectations on valuation. I know in the past you've commented that you're seeing valuations at the lower end of your target range, and wanted to just get a sense for the environment right now. Great question. We're not seeing any changes right now. Keep in mind that we're kind of the smaller sweet spot, and the trickle-down of that kind of activity takes a while to get there. We feel like we're in a good position to negotiate at the lower end of our range on most of our deals. You know, if it's a high-growth company, it's a great fit in our product suite, we may pay a little at the higher end of our range, but we're not seeing any changes right now. I think the key thing you do is you self-source your deals, so. Yeah. These aren't guys that are getting called four and five times a week. We're typically the only ones talking to them, and these are a referral from one of our existing companies. We're in a good position going in, and our model's drastically different than some of the guys out there with a lot of cash. We don't expect to, you know, lay off half the staff post-acquisition to justify the price, and they like that. Got it. Just as a quick follow-up, I know you touched on the spend environment in public sector being favorable. In the past, you've commented on federal funding, providing a bit of a tailwind to spend. I wanted to drill into that a little further and just get a sense for any particular areas of strength, whether from a geographic standpoint or a sector standpoint that you're seeing, you know, areas of strength and weakness. Any general comments you might have on public sector spending, I think would be helpful as well. I'll talk to the spending, and maybe Greg can chime in on any strengths or weaknesses. You know, the ARPA was $2.1 trillion, I believe, and government entities have it through 2024 to use those funds. We don't think a lot of governments have fully spent the funds. We're still in the process of educating them on the money that they have available to them and where they could use it. I don't see any weakness there. I just see people taking their time. There were a lot of projects that pushed during the pandemic, and those are first order of business, and then new sales are gradually coming in. We are responding to a lot of RFPs. We're pleased with the uptick in RFPs and the fact that we have multiple subsidiaries combining efforts on one RFP is giving us the best success level on those RFPs. I feel like education and the utilities are on fire. Yeah. As exciting as education can get, which is limited, but they are investing in technology. The things cost more, inflation has helped us. Utilities, we have this one particular company internally called Milestone that has a pipeline that's insane. We're pretty confident about that over the next couple of years. Geographic. Got it. Yeah. Geographically, I think it follows our acquisitions, but we're strong in the Southeast, Texas, the Midwest. We've got a smattering out West, but that's our current geographic strength. Got it. Thank you. Our next question comes from Peter Heckmann from D.A. Davidson. Please go ahead with your question. Morning, everyone. Just on healthcare, wanted to talk a little bit about where you know, which solutions you lead with and how are you, in terms of kind of bundling solutions, focused on individual niches within healthcare. I mean, where do you think you're strongest in terms of solution set and niche market within healthcare? Our strongest product is our RCM. You know, we do quite a bit of coding work. We have a portal, patient portal today. We're enhancing the features and capabilities of that portal. We think that'll be strong in the future. Obviously, the addition of AccuFund, some products are in the works are gonna fill out our product suite a lot better. I will tell you that, last quarter, I guess, we announced that Paul Christians had been promoted to COO. One of his three initiatives is to create the unified product offering within healthcare, similar to how we did it in public sector. We're extremely pleased with the amount of work that's been done in a short period of time in healthcare. I think we'll have some more exciting things to talk about in Healthcare the next quarter. I think the icing on the cake in healthcare is payments. We just really haven't scratched the surface yet. You know, it takes a few quarters or a few years to get that put in place. We haven't even... you know, we're first base on that. I'm excited about payments. Agreed. That's great to hear. Then just back to public sector. On the statewide deals, I think between a number of your deals, you have, you know, easily a thousand states, maybe close to 2,000 on a statewide deal. You know, as you continue to grow that business and get more reference ability, do you expect that we could see some deal sizes that get, you know, quite a bit larger, and could be notable on a quarter-to-quarter basis? Yeah. The combination of Keltic and DIS is strong in the market. Keltic, as you know, is in 18 different states and a couple of provinces in Canada. We think all of those deals that they land are gonna be higher end deals for us. We're optimistic, but don't put it in your model yet. All right. Well, we will stay tuned. I appreciate it. Ladies and gentlemen, with that, we'll conclude today's question and answer session. I'd like to turn the conference call back over to Greg Daily for any closing remarks. Thank you for your interest. Thanks for joining us this morning. Call us if you need us. Ladies and gentlemen, with that, we'll conclude today's conference call and presentation. You may now disconnect your lines.