i3 Verticals, Inc.

Good day, everyone, and welcome to the I3 Vertical's first quarter 2021 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 719-457-0820, and the code is 392-0238. The replay may also be accessed for 30 days at the company's websites. At this time for opening remarks, I would like to turn the call over to Mr. Scott Merriweather, Chief Operating Officer. Please go ahead, sir.

Good morning and welcome to the first quarter 2021 conference call for I3 Verticals. Joining me on this call are Greg Daley, 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 of that measure to the most directly comparable financial measure calculated according to GAAP by 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 and 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. And now I'll turn the call over to the company's Chairman and CEO, Greg Daly.

Thanks, Scott, and good morning to all of you. We're pleased with our first quarter 2021 results. i3's focus has been to be squarely in the intersection of software and payments. Our IPO gave us the ability to further pursue our vision of being a software-led company. We are executing on that strategy. In Q1 of 2018, 12% of our net revenue was from software-related revenue. Our first fiscal quarter of 2021, 36% of our net revenue was from software-related revenue. We expect this revenue stream to increase in the future. These statistics do not include the payments revenue driven by our own software. Our integrated payment volume has grown to 56% and we expect continued growth in this area. We believe software and integrated payments are the future in our market. Our core business continues to recover. As expected, there was volatility in our payment volume in the first fiscal quarter as COVID-19 restrictions were reinstituted around the holiday season. We will see some of these effects in our second fiscal quarter, but are encouraged by the discussions to reopen more of the economy. The progress in vaccinations, financial stimulus talks should also aid in the return in our core business. The increases in our software revenue that I mentioned previously have offset some of the impact of our payment volume volatility. Approximately half of our payment revenue within K through 12 comes from lunch payments and free lunch program for students will continue through the end of the current school year. We are hopeful about the coming school year and remain committed to this vertical. After pausing our M&A activity at the onset of COVID in early 2020, we began to re-engage on the M&A front and have completed eight acquisitions since July 1. Our most recent acquisition was BIS. It's our largest acquisition to date. The purchase consideration for this transaction included both cash and stock, so we have continued headroom under our credit facility covenants to continue future M&A deals. BIS has a variety of public sector software offerings, some of which include clerk solutions, DMV solutions, and property assessment and tax solutions. BIS expands our state level and local level product offerings. We can now market to public sector vertical at all levels. We have software that performs for individual courts, for cities and municipalities and for statewide systems. We welcome the DIS employees to the I3 family and are excited about the impact they will have on I3. The events of the last year have cemented the I3 vision to execute our acquisition strategy, continue our vertical focus, increase our integrated software and payments, improve our organic growth metrics, and maintain a healthy and entrepreneurial culture. This vision is our foundation. I'll now turn this call over to Clay and he will provide more details on our first quarter financial performance. Following Clay's comments, Rick will provide an M&A update and then we'll open up the call for questions.