i3 Verticals, Inc.

everyone and welcome to the i3 verticals year-end 2020 earnings conference call. Today's conference is being recorded and a replay will be available starting today through November 27th. The number for the replay is 719-457-0820 and the code is 427-1451. 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 Scott Merriweather, Chief Operating Officer. Please go ahead, sir.

Good morning, and welcome to the fourth quarter 2020 conference call for i3 Verticals. Joining me on this call are Greg Daly, our Chairman and CEO, Clay Whitson, our CFO, and Rick Sanford, our President. To the extent any non-GAAP financial measure is discussed in today's call, you will also find a reconciliation of that measure to the most directly comparable financial measure calculated according to GAAP for reviewing yesterday's earnings release. It is the company's intent to provide non-GAAP financial information to enhance understanding of its consolidated financial information as prepared in accordance with GAAP. This non-GAAP information should be considered by each individual in addition to, but not instead of, the financial statements prepared in accordance with GAAP. 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 and the expected potential impact of the COVID-19 pandemic. 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, including risk and uncertainties associated with the COVID-19 pandemic. Consequently, actual operations and results may differ materially from the results 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 Daly. Thanks, Scott.

And good morning to all of you. We are pleased with our fourth quarter and our full 2020 fiscal year. We're optimistic about how we are exiting fiscal year 20 as our core business continues to recover and we execute on our M&A strategy. Payment volumes have continued to improve over the last two quarters, though there are lingering effects from continued government regulations or restrictions. For fiscal year 2020, our adjusted net revenue increased 10%, and our adjusted EBITDA was relatively flat with the prior year due to the effects of the pandemic. We expect there will be some continued volatility in our payment volume in the coming months, but the increase in our software revenue will reduce some of that impact. We are confident in our company's market position moving forward. We continue to execute our software-driven payment strategy. After pausing our M&A activity at the onset of COVID, we began to reengage on the M&A front and have completed seven acquisitions since July 1st. All seven acquisitions are focused on software payments. Four of them are in the public sector, which continues to grow as our fastest vertical. We have announced six of these acquisitions previously, and I will discuss the seventh one momentarily. We also now have our first software footholds in nonprofit and healthcare, which were big strategic steps for us forward. We will continue to pursue additional opportunities in these verticals. We continue to streamline our payment technology platforms and work toward developing existing software product offerings. We believe these acquisitions and a return to normal economic conditions in fiscal year 21 will help us deliver strong results next year and going forward. Our recent acquisition was ImageSoft, a public sector company positioned as a leader in paperless processes. E-filings within courts is one of their key products, and we are excited about ImageSoft's product suites enhancing our current offering in the public sector market. This will be our largest office from a headcount perspective, and we welcome the ImageSoft employees to the i3 family. We've seen major wins across the company during the last quarter. We have had the greatest number of monthly approved payment accounts in the history of the company, which is a continued, the strong run that began in June. Within our public sector teams, we signed several significant new projects in Louisiana and Texas. And despite the continued shutdown of restaurant activity on the West Coast, we shipped out a record amount of POS systems in October. Winds like this gives me excitement about the upcoming year. The education vertical remains depressed as many students continue to participate in online or remote environments. The federal government extended free lunch program for students through the end of the current school year. Over half of our payment revenue within K through 12 education comes from lunch payments. We currently expect this program will end at the start of next school year, but we will continue to monitor federal actions in this vertical and will respond accordingly. We've signed many new school districts this year, but the depressed lunch payment volume has outweighed our customer gains. We are still believers in this vertical and its long-term potential. Our integrated payment volume continues to grow. 57% of our payment volume was integrated during Q4, up from 54% in Q4 of 2019. As all of our recent acquisitions have been software-based, we believe we will be able to drive this metric higher in the future. Now I will turn the call over to Clay, and he will provide you some details on our fourth quarter financial performance. And following Clay's comments, Rick will provide an M&A update, and then we'll open up the call for questions.

Thanks. The following pertains to the fourth quarter of fiscal year 2020, which is the three-month period ended September 30, 2020. Please refer to the slide presentation titled Supplemental Performance on our website. for reference with this discussion. As we mentioned last quarter, our Q3 ended in June, was our worst quarter of the pandemic. For the fourth quarter ended in September, net revenues improved sequentially 22% to $38.4 million. EBITDA increased at a much higher rate, 37%, to $9.7 million, reflecting the operating leverage embedded in the model. The EBITDA margin improved sequentially from 22% to 25%. Proforma adjusted diluted earnings per share increased sequentially from 13 cents in Q3 to 20 cents in Q4. Again, please refer to the press release for a full description and reconciliation. Volumes have regained most of the altitude they lost in the spring. On a year-over-year basis, July and August were down 9%. while September was down 3%. On the face of it, volume in Q4 2020 was higher than Q4 last year, but this year included our nonprofit acquisition and 280 million of ACH volume we did not have last year, principally from tuition payments for the university we announced last quarter. Excluding ACH volume and the nonprofit acquisition, October was down 4% from the previous year. And so far, November seems similar to October. The laggards for us have been education, retail, and hospitality, which a number of companies have experienced. We have taken an aggressive approach during the pandemic, continuing to post record sales months while renewing acquisition activity that was postponed in the spring. We have fulfilled our goals of owning software and two additional verticals, healthcare and nonprofit, which gives us runway beyond our growing presence in public sector. We feel well positioned in the economy emerging from the pandemic. Our integration percentage improved to 55% for 2020 from just 36% before the IPO. As in Q4, software and related services represented 26% of total net revenues, up from 5% pre-IPO. This was a notable achievement in a quarter that saw a general recovery in payments revenues. Software revenues continued to build during the quarter and exceeded pre-COVID levels. The bright spot for us continues to be public sector, which drove our proprietary software and related payment segment results. In public sector, we had strong year-over-year growth in net revenues and EBITDA and improved the EBITDA margin in the vertical. Our nonprofit acquisition also had a strong quarter with impressive growth over the previous year. The healthcare acquisition is not included in our results until the December quarter. On a year-over-year basis, net revenues declined 5% to $38.4 million for Q4 2020 and $40.6 million in Q4 2019, reflecting the challenging economic conditions in several markets such as retail, hospitality, and education. Acquisitions contributed an increase of $3 million in the quarter. IPOS declined 2.5 million, reflecting not only the COVID impact in California, but also our ongoing transition to a SAS offering. Our net revenue yield, defined as net revenues divided by payment volume, declined to 97 basis points for Q4 2020, from 105 basis points to Q4 2019, mainly due to the aforementioned ACH volume from university tuition. For the full year, our revenue yield held steady at 105 basis points. Adjusted EBITDA declined 17% to $9.7 million for Q4 2020 from $11.7 million for Q4 2019, primarily due to weakness in education and hospitality. Please see the press release for reconciliation between net income and adjusted EBITDA. Adjusted EBITDA as a percentage of net revenues was 25.2% for Q4 2020, down from 28.9% for Q4 2019, reflecting fixed cost spread over lower net revenues due to the COVID-19 impact. In the normal course, we expect to improve our EBITDA margin for the same group of companies over time. Effective April 1st, we instituted previously disclosed cost savings, which included terminations and furloughs. These cost savings together with lower P&E expenses saved almost $3 million in the June quarter. We have since recalled roughly half of the furloughed employees as business has rebounded, but have retained about $1 million in savings quarterly on an ongoing basis. which allowed our corporate expenses as a percentage of net revenues to remain steady at 7.2% for Q4 19 and 20, despite lower net revenues. Segment performance. In our proprietary software and payment segment, net revenues increased 19% to 14.1 million for Q4 2020, from 11.9 million for Q4 19 principally reflecting growth in our public sector vertical, but also the inclusion of our nonprofit acquisition for the quarter. Adjusted EBITDA improved 2% to 4.9 million for Q4 2020 from 4.8 million for Q4 2019, reflecting mainly public sector growth, but also the nonprofit acquisition. These gains were partially offset by the anticipated decline in our education vertical. On our last conference call, we devoted some time to the outlook for education, and it is playing out about as expected. Most districts have reopened, but many are remote and others are staggering student schedules on campus. As mentioned earlier, the USDA has extended its free lunch program for all students for the remainder of the school year, which means we will not see a meaningful increase in payments until the new school year next August. Regardless of how the school year unfolds, we remain committed to the vertical and believe it will perform very well over the medium and long term. Our public sector vertical is coming on strong. In Q4, it represented roughly three-quarters of net revenues in the segment and even more on an EBITDA basis. As you heard from Greg, we are excited about the companies we have purchased since the IPO, including the most recent acquisitions and the future pipeline. Net revenues for our merchant services segment declined 14% to $24.8 million for Q4 2020, from $28.7 million for Q4 2019. Our hospitality vertical was hardest hit with the exposure to California and the transition to a SAS model. Other non-integrated face-to-face business and markets such as retail, restaurant, and T&E have been slower to recover. Adjusted EBITDA for our merchant services segment declined 23% to $7.5 million for Q4 2020 from $9.8 million for Q4 2019. The EBITDA margin was 30% for Q4 2020 versus 34% for Q4 2019. Again, reflecting fixed cost spread over a smaller revenue base. Balance sheet. Our balance sheet has allowed us to continue to execute our acquisition strategy. During the quarter, we completed a follow-on offering which netted the company $71.9 million in proceeds for debt repayment and strategic acquisition opportunities. Currently we have $44 million borrowed under our revolver, which is a $275 million facility. The face value of our convertible notes are $117 million. Our press release was not very clear last night, so I want to summarize our acquisition activity since June 30th. During Q4, we closed three deals for a total of $27.4 million. On October 5th, we announced three deals, totaling $19.6 million. And this week, we added ImageSoft for $40 million. Our total since June 30th is seven deals for total cash consideration of $87 million. Taking into account the acquisitions completed after September 30th, our pro forma total leverage ratio, which includes the convertible nodes, is currently in the low threes, while the current constraint is 5.5 times. The multiples paid on our recent deals conform to less than 10 times EBITDA. The interest rate for the convertible notes are 1%, while the interest rate for the revolver is currently less than 4%. Over time, we expect to convert roughly two-thirds of EBITDA into free cash flow, which can either be used for more acquisitions or debt repayment. Outlook. The company suspended guidance in the screen recognizing the uncertainty introduced by the COVID-19 pandemic. At this time, the company is not providing a financial outlook for fiscal year ending September 30th, 2021. A note on seasonality in relation to 2021. 2020 was an odd year from a quarterly mix perspective. We believe 2021 will unfold more like 2019 than 2020, with quarterly progression throughout the year. Since the COVID-19 outbreak, we have announced seven acquisitions which have altered our business mix. To give a better understanding of our current run rates, we have estimated the following representative net revenues by vertical. Public sector, 40%. healthcare 10%, B2B 10%, hospitality 10%, retail 10%, education 5%, nonprofit 5%, and other 10%. We continue to like our diversification. Hospitality and retail, which we consider the most challenging markets over the next few years, only represent 20% of our book. Our largest vertical is public sector, and we feel increasingly well positioned to there. Governments and schools do not go out of business. Healthcare is an essential service and B2B will grow over time. The software platform we acquired in a nonprofit niche has grown during the pandemic. Digitization of payments away from cash and check will continue, and we have differentiated payment solutions to offer our customers integrated through our software and other leading software providers. I will now turn the call over to Rick for company updates and M&A activity.

Thank you, Clay. Good morning, everyone. I want to highlight recent progress on a few operational matters before I talk about our M&A status, including a few updates on things I've addressed on previous calls. First, an update on our unified product offering in our public sector vertical, a topic that I've discussed before. Our goal is to make a comprehensive suite of products available to each county and city, and we are making progress towards that goal. For example, all initially contracted customers last quarter under UPO have been installed and are live. We are coupling our law enforcement product with traffic courts in both Texas and Georgia. We will kick off a series of roadshows for UPO to present the expanded product suite under UPO to existing and potential customers. We recently were able to secure a system sale in a new state for a court management system not currently in our footprint. Lastly, we are migrating certain customers from a legacy government accounting package to a newer version we recently acquired. We are motivated by these early UPO accomplishments and are gaining momentum in cross-pollination. Our pipeline for cross-pollination remains very large under UPO. Second, on the ISV front, our total number of signed and integrated ISVs at the end of our fourth fiscal quarter was 68, with two more in process of integration. Our pipeline for ISVs continues to grow quarter over quarter, and we are actively pursuing additional integrations. Third, our in-house team of engineers have developed two additional flavors of our electronic bill payment and presentment product, or EVPP, that are alternatives to our full-featured enterprise bill and pay product. These two new versions are Essentials and Pro. This development was done to accommodate the needs of small to midsize customers that did not require the deep enterprise version of the software. Lastly, a few comments about our M&A efforts. On October 1st, we announced the closing of three acquisitions. The first acquisition is within the public sector vertical. This business is based in the southeast and provides software and services for public safety and law enforcement customers. Their products include public safety that connects a customer's comm center to local public safety agencies, dispatch, records management, law enforcement mobile solutions, and criminal solutions available with mental health checks and interfaces to courts. All these products have an integration to the NCIC, National Crime Information Center, a shared FBI database used by law enforcement nationwide. The second October 1 acquisition is within the company's healthcare vertical and offers the following products, medical billing and scheduling, practice management software, electronic health records, and analytics reporting. This business is also headquartered in the Southeast, but serves customers across the country. The final October 1 acquisition offers proprietary technology that will augment the company's existing technology platform across several verticals. It is also based in the Southeast and serves customers on a nationwide basis. All three acquisitions enable us to offer new software to existing clients and to penetrate new geographies and markets. We are extremely pleased to now own software in both the healthcare and nonprofit verticals. I'm excited today to announce that on November 17th, Tuesday of this week, we closed another public sector acquisition, ImageSoft. ImageSoft was founded in 1996. The company is in Detroit, Michigan, and operates across the country. They sell a combination of proprietary and third-party software. Their software at a high level eliminates paper-based systems by creating integrated electronic workflows for courts and government agencies. Some of the products sold by ImageSoft are true filing, true sign, true certify or electronic certification of court documents, case share, the indexing, packaging, and transferring of case files from trial to appellate courts, a charge code management platform, a unified statewide database of charge codes, that provides cross-jurisdictional consistency, and lastly, digital evidence management. All these deals I've listed today continue our push to provide software across multiple verticals with embedded payment capabilities. We continue to be disciplined in our approach, and all four of these acquisitions conform to a 10X purchase multiple. Finally, our future M&A pipeline is very healthy and has an emphasis on public sector, education, and healthcare, and we look forward to sharing more on the acquisition front in the near term. This concludes my comments, Keith. At this point, we'll open the call for Q&A, please.

Thank you. If you would like to ask a question, please signal by pressing star 1 on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, that's star 1 to ask a question. And we'll now take our first question. It comes from John Davis of Raymond James. Please go ahead.

Hey, good morning, guys. So, Greg, maybe you just want to start off, or Clay, appreciate the commentary on the multiple paid for the four recent acquisitions. Just curious from a margin perspective, you know, similar to, you know, the current corporate margin, slightly above, slightly below. They're just trying to think about the total kind of revenue and the EBITDA impact of the four recent acquisitions.

Software companies can run as much as 50% margin. ImageSoft is a little bit lower at more like 20%. The others would be, you know, between 40 and 50, I would say.

Okay, that's helpful. And then specifically on ImageSoft, it seems like a pretty exciting deal that you could leverage throughout all the different regions where you have courts. So just, you know, maybe talk a little bit more about kind of the plans, you know, how easy is this to integrate with your existing court infrastructure across the different regions where you have court systems? And then, you know, any idea of how fast it was growing and maybe what you think you could grow it given that it feels like it's pretty synergistic from a revenue perspective.

Yeah, John, thank you for your question. You know, we had several of our public sector CEOs preview this deal during diligence, and to say they're excited is an understatement. Every time we do an acquisition in public sector, there's some small overlap with the product suite, but this one brings us a lot of products that fill gaps in our current unified product offering. We think one of the big gains we're going to see with this company is cross-selling their products into our existing states and courts. And everybody's excited about it. We think it's going to be easy to do. It'll immediately be put under our unified product offering as an augmentation to our existing technology. So we're excited about it, very excited. I want to also mention that extremely talented group of folks that we're bringing on with ImageSoft.

Okay. And then just maybe switching over to the education vertical, maybe just give us a sense in total kind of what you see from a revenue and EBITDA perspective. I don't know any stats you can give us on percentage of schools open. And then I think one of the things I wanted to clarify is when a school is closed, I guess, and for students in the actual school, and they're doing it from home, what does the revenue picture look like? Is that down 80? Is it down 90? Is it down 50? Just trying to think bigger picture, how should we think about the education vertical over the next couple months, which are probably going to be pretty challenging.

Well, last quarter, I think we framed it that we have about $10 million from payment revenues, gross profit. estimated we thought we would lose half of that this year and looking at our most recent quarter we still we still think this is causing a five million dollar revenue and profit hole for 2021 our software revenues have actually increased but the lunch pre-launch for everybody that started in the summer, that's a big hit. It's very hard on administration budgets. And so we do think next year it'll come back. But for this, looking at this fiscal year, we think it's a $5 million hit to us.

Okay, thanks. And the last one for me. Clay, I think you mentioned the pro forma leverage for all these deals is in the low threes. I think you have a 5% cap. But our math suggests if you were to kind of take it up to four times, you still have, call it $50, $60 million of capacity for future M&A without having to raise additional capital. Is that somewhere in the ballpark with how you guys think about it?

Yeah, our leverage ratio is... covenant constraint is 5.0 times. But I think we have a stated intention of keeping that close to four as a maximum in the current environment.

Okay. All right. Thanks, guys.

Thanks, JD.

Our next question comes from George Mahalos of Cowan. Please go ahead.

Hey guys, good morning. I wanted to kind of follow up on the M&A front. And just maybe specifically, Rick, when you look at the pipeline that's out there, I mean, lately you've been more active in verticals outside of public sector. Just curious, when you look at the pipeline right now, how do some of these non-public sector verticals kind of stack up? Are there opportunities there? And are there any sort of complications or maybe sort of push-outs now as maybe COVID seems to have come back into play more aggressively.

Yeah, thank you for the question, George. We did, you know, it's no secret that we've been looking for several years to get into nonprofit healthcare. We've looked at a lot of deals. We just haven't found the right fit. Those two verticals, it's probably taken us four or five years to find the right partner. and those fell into place coincidentally at the same time in the same quarter. The pipeline is still relatively full with public sector. I would say greater than 50% of the deals that we're looking at is public sector. But we are continuing to look at education and healthcare. We feel like we've got some things we want to buy to augment our existing proprietary software, and we're going to go get those things. As far as the environment, our partners waited on us when we asked them to wait and stand down on closing the acquisition. We're glad they hung in there. They showed that they're the right partner for us. I don't see the acceleration. I still think we can do four to five deals next year. If we're lucky, we may do seven again. But nothing's slowing us down, and I don't see any indicator that we're going to be see any kind of headwinds towards completing our M&A strategy next year like we did this year.

Okay, that's helpful. And then a question for Greg and Clay. I know you've obviously had a win now on the higher education side. I'm just curious, what does that pipeline look like? You know, was that recent win more one-off? Are there other opportunities there? And then how do you think about that subsegment of education, higher ed versus kind of the K-12 schools? performing in a COVID environment? I would assume there's less focus on meal plans and the like, but just curious how you're thinking about that business.

Well, in the current environment, George, I'd be surprised if we made another acquisition before the COVID situation clears up. There's just a little bit too much uncertainty. In higher ed, that's performed very well. We have one university, as you know. And it was very interesting watching their volume come in the last few months. It was heavily weighted towards tuition and mainly ACH, which is pretty thin margin. So it's a great account. We'll probably get another tuition spike in January. We'd like to add one or two of these every year. It'd be a great compliment. Our existing software works, so it's just a brand new market for us.

Great. Just last question for me as we think about 2021, and I know you're not providing an outlook, but when we look at the hospitality business, the point-of-sale business, and some of the momentum there, Clay, can you just remind us how much of a headwind the SaaS transition specifically was to fiscal 2020? And then, again, without getting into specifics, when we think about the sales momentum you've had there, the SaaS shift, is there any reason why that business shouldn't be in the black from a growth perspective next year?

Well, it was about a $10 million... equipment and software bundle that we were selling and the headwind was seven million or six point seven two-thirds of it if we went a hundred percent SAS October 1st of last year which we knew would not happen but we laid out the most conservative case we probably only got half of that this year We're full throttle now. We're selling a lot of essentials. Our customers like it. It's given us a new tool to compete with. Everybody likes it from our salespeople to our customers to us in management. But we're only probably halfway through it. So we'll get the other half of it this year. So I'd say there's a $3 million headwind. And then I think we'll start growing in 2022.

Okay, thank you.

Our next question comes from Jason Kopferberg of Bank of America. Please go ahead.

Hi, guys. This is Cassie for Jason. I just wanted to touch a little bit on margins. I know you guys had pretty significant margin improvement quarter over quarter, almost 300 basis points. Is that level sustainable, and how should we think about the puts and takes for that going forward? Thank you.

That level is sustainable depending on the general economic activity. You know, we had a very harsh contraction in the June quarter. And then in the September quarter, we were up to maybe 80% of the revenue level we normally see. It kind of feels like we plateaued here at 80%. you know, a vaccine could change that picture, new shutdowns could change that picture the other way. But November, so far, feels about like October did. But it gets down to our fixed costs, and more revenues means a bigger margin, and less revenues means a lower margin. The only thing I would call out is that education was a pretty big hit to our margins. If you take five million of profit out. You know, this quarter alone, we probably lost a million and a half of profit from education. So that's a big factor. If it comes back in 2022, that'll be a big windfall for us. And then our acquisition activity has moved towards more public sector, nonprofit, healthcare. Those carry higher margins. Assuming a stable economic environment, one like we're seeing right now, I think our margins will improve over time.

Got it. That's really helpful. And switching gears toward revenues, just wanted to ask, so it seems like the spread between your volume and revenue growth kind of widened pretty significantly, and that's kind of to be expected. But, you know, are you expecting a similar spread in the coming quarters? And piggybacking off of that, what are your kind of expectations for potential revenue growth turning positive either like next quarter or maybe it's more of a calendar 2021 thing? Thank you.

Yep. Well, the biggest reason for that divergence this quarter was education, which we've just talked about. not only losing the lunch program, which are very small ticket items and high margin items, but also the ACH with tuition, that's something which you'll see in the September quarter and again in the March quarter. But the other two quarters, you will not see that big ACH activity, which depresses margins. But going forward, I think our ongoing mixed shifts will help our margins on a quarter-over-quarter basis, meaning comparing the December quarter to the December quarter, the March quarter to the March quarter, and so on going forward.

Got it. It's all super helpful. Thanks so much for taking my question.

Thank you.

Our next question comes from Peter Heckman of Davidson.

Hey, good morning, gentlemen. Thanks for taking the questions. Just in terms of thinking about your adjusted organic revenue calculation, I think you said about $3 million in total acquired revenue in the quarter. So if you're taking out the shift to subscription, would we be thinking something in the decline of something in the mid to high single digits for the fourth quarter and And just based on October and November so far, would you expect kind of about the same or perhaps a little bit of improvement?

So we were about negative five in the fourth quarter. And you've identified the acquisition at 3 million IPOS and negative 2.5 million. Going forward, It depends on economic activity. If there were no COVID, we believe we would be high single digit like we were heading into COVID. Our acquisitions are blending us towards a higher growth profile over time. But really it all depends on acquisition activity. Do we improve from here or do we go backwards from here with shutdowns? That's the big variable for us.

That's fair. That's fair. And then just in terms of the trailing acquisitions and the acquisitions, the seven deals done since the end of June, can you give us kind of a range of expected acquired revenue for the fiscal first quarter?

Well, if you take our – I think you know the start dates of the acquisitions. And if you take our aggregate purchase prices – and divide by 10, we've been paying higher in higher towards the high end of our range recently because they've all been software acquisitions. But anyway, if you just divide by 10 and then for revenues, you could multiply times two because most of the software companies have margins close to 50% with the exception of image soft, which is 20%. So I think you can, calculate your way there. All right.

I'll do that and run it through the model. Thank you.

Once again, if you would like to ask a question, please signal by pressing star 1 on your telephone keypad.

We'll now take our next question from Josh Beck of KeyBank. Thanks for taking the question.

You know, maybe just one for you, Greg. I'm just kind of curious. We have seen some stability, as was just mentioned by Clay, in this kind of 80%, you know, call it, rebound. So, you know, strategically, is the playbook pretty much maybe where it was pre-COVID? Or just curious with that backdrop if you've, you know, maybe –

reoriented initiative here there just would be curious to hear your thoughts yeah so the team has performed amazing the last eight months through this crazy environment and we've given us an opportunity to invest some more in our marketing efforts our sales efforts We're doing some enhancements to our payments platforms that we have two of, combining those to be more in-aligned with each other. The ISVs are performing exceedingly well. They're kind of in verticals that have been effective a little bit. The game plan really hadn't changed. The public sector people have been amazing. M&A has been on fire. Rick's kind of our golden goose when it comes to that on a regular basis. And then adding ImageSoft, which is a major deal for us that we're overly excited about. Josh, if things get back to normal, It's going to be insane. It's going to be incredible. What we have added, we're just not seeing quite yet because either they won't install or they delayed the install. I think that come a vaccine, we're back bigger and better than ever.

Okay, good to hear. Sounds like the underlying momentum is really encouraging. You know, I wanted to follow up on maybe with Rick on the Unified platform. You kind of said you're going to do this roadshow. So I'm just kind of curious, you know, is this mainly a roadshow about, you know, getting the awareness up, getting new logos? Just kind of curious what what some of the goals there are.

Yeah, so the road shows start in the spring. There are seven dates currently. There'll be people in attendance at those shows. The purpose is to show existing customers additional products we've acquired since they came on as a customer. And there'll be a subset of people that will be new prospects. and we'll be showing the entire suite of UPO to those public sector prospects. We're very excited about it. We've talked to several groups, and they're excited as well, so we think attendance will be high, and we'll have representation of all of our products under public sector at each of those roadshows.

Okay, good to hear. And then, Clay, I just wanted to go back to your comment on how we should think about seasonality. Obviously, like you said, this year is hopefully a huge anomaly in our lives. But you said 2019 might be a better framework. I guess my only question is with 2019, which, you know, from what I remember, kind of built up, you know, sequentially as we went into September. certainly um you know i think i think education is kind of of part of that so are there any maybe adjustments you know that we should be thinking about or is that a pretty good the best template i guess that we have to think about 21 at this point as i look at it it's a pretty good 2019 is a pretty good framework and really 2019 will look a lot you know

a lot of our years should look like 2019 to 2020 has been a real anomaly, you know, having a very strong first half and then having COVID hit. So I just want to make sure you toss out 2020 when you're looking at all this.

Okay. Okay. That's a, That makes sense. And then just to clarify, maybe your point on the vertical exposure is, is that a bit of a snapshot currently meaning, you know, if, if certainly some verticals come back next year because you have the vaccine does well, and people are more confident, it can look a bit different. Just, just want to understand that.

Yeah, that's more of a forward run, right? As we look at 21, that's kind of the way we see the verticals contributing. Now, if education comes back, it would pop up to a higher number. And if the general economy comes back, face-to-face comes back, retail, restaurant might get a little bigger again. If the current environment lasts for the remainder of the year, we think that's what it would look like.

Okay, that's really helpful. Thanks, Steve. It appears there are no further questions at this time.

I would like to turn the call back to Greg Daley for any closing comments.

Well, thank you for your interest and attendance this morning. And especially thanks to my team. What an incredible job they've done the last couple of quarters through this environment. So anyway, if you need us, call us. We're around. Thank you. Appreciate it.

This concludes today's conference. Thank you for your participation. You may now disconnect.