0001728688-19-000092 | 10-Q | XBRL Viewer

Acquisitions - Additional Information (Details) - Residual buyouts $ in Thousands	9 Months Ended
	Jun. 30, 2019 USD ($)
Finite-Lived Intangible Assets [Line Items]
Intangible assets acquired	$ 2,708
Estimated amortization period	7 years

Condensed Consolidated Balance Sheet (Unaudited) - USD ($) $ in Thousands	Jun. 30, 2019	Sep. 30, 2018
Current assets
Cash and cash equivalents	$ 1,509	$ 572
Accounts receivable, net	13,173	12,500
Settlement assets	439	863
Prepaid expenses and other current assets	4,940	2,630
Total current assets	20,061	16,565
Property and equipment, net	3,835	2,958
Restricted cash	1,616	665
Capitalized software, net	14,999	3,372
Goodwill	165,865	83,954
Intangible assets, net	106,468	66,023
Deferred tax asset	28,344	1,152
Other assets	2,057	453
Total assets	343,245	175,142
Current liabilities
Accounts payable	7,409	4,114
Current portion of long-term debt	0	5,000
Accrued expenses and other current liabilities	15,622	11,538
Settlement obligations	439	863
Deferred revenue	4,916	4,927
Total current liabilities	28,386	26,442
Long-term debt, less current portion and debt issuance costs, net	137,645	31,776
Long-term tax receivable agreement obligations	23,904	791
Other long-term liabilities	12,932	3,935
Total liabilities	202,867	62,944
Commitments and contingencies (see Note 9)
Preferred stock, par value $0.0001 per share, 10,000,000 shares authorized; 0 shares issued and outstanding as of June 30, 2019 and September 30, 2018	0	0
Additional paid-in-capital	80,344	38,562
Accumulated (deficit) earnings	(1,379)	736
Total Stockholders' equity	78,967	39,301
Non-controlling interest	61,411	72,897
Total equity	140,378	112,198
Total liabilities and stockholders' equity	343,245	175,142
Class A Common Stock
Current liabilities
Common stock	1	1
Class B Common Stock
Current liabilities
Common stock	$ 1	$ 2

Condensed Consolidated Statements of Changes in Equity (Unaudited) - USD ($) $ in Thousands	Total	IPO	Class A	Class B	Redeemable Class A	Common Stock	Common Stock Class A	Common Stock Class A IPO	Common Stock Class B	Common Stock Class P	Additional Paid-in Capital	Additional Paid-in Capital IPO	Retained Earnings	Retained Earnings Class A	Retained Earnings Redeemable Class A	Noncontrolling Interest
Members' Equity, beginning at Sep. 30, 2017	$ 3,146					$ 1,240	$ 34,924			$ 0	$ 0		$ (33,018)			$ 0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	(7,168)												(7,168)
Issuance of common stock	104					104
Preferred return on Class A Units and Redeemable Class A Units	(168)		$ 0				774							$ (774)	$ (168)
Members' Equity, ending at Dec. 31, 2017	(4,086)					1,344	35,698			0	0		(41,128)			0
Members' Equity, beginning at Sep. 30, 2017	3,146					$ 1,240	34,924			0	0		(33,018)			0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss) attributable to i3 Verticals, Inc.	(7,732)		(47)
Net loss attributable to non-controlling interests	91		91
Net income (loss)	(7,823)		(138)
Preferred return on Class A Units and Redeemable Class A Units			(2,522)		$ (552)
Stockholders' Equity, ending (shares) at Jun. 30, 2018						9,091,903,000			17,213,806,000
Stockholders' Equity, ending at Jun. 30, 2018	108,288					$ 1			$ 2		37,514		(98)			70,869
Members' Equity, beginning at Dec. 31, 2017	(4,086)					1,344	35,698			0	0		(41,128)			0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	(655)												(655)
Preferred return on Class A Units and Redeemable Class A Units	(209)		0				898						898		(209)
Members' Equity, ending at Mar. 31, 2018	(4,950)					1,344	36,596			$ 0	0		(42,890)			0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss) attributable to i3 Verticals, Inc.	(564)		(47)
Net loss attributable to non-controlling interests	91		91
Net income (loss)	(655)		(138)
Establishment of liabilities under a tax receivable agreement and related changes to deferred tax assets associated with increases in tax basis	144										144
Issuance of class A common stock (shares)								7,647,500,000
Issuance of common stock		$ 92,447						$ 1				$ 92,446
Capitalization of public offering costs	3,792										3,792
Preferred return on Class A Units and Redeemable Class A Units	(175)		$ 0				$ 850							$ (850)	$ (175)
Exercise of Junior Subordinated Notes Warrants and Mezzanine Warrants	12,102					12,218					(116)
Effect of the Reorganization Transactions (shares)							824,861,000		17,597,223,000
Effect of the Reorganization Transactions	9,017					$ (13,562)	$ (37,446)		$ 2		804		43,726			15,493
Issuance of Class A common stock in conversion of Junior Subordinated Notes (Shares)							619,542,000
Issuance of Class A common stock in conversion of Junior Subordinated Notes	8,054										8,054
Purchase of common units in i3 Verticals, LLC from selling shareholder									(383,417,000)
Purchase of common units in i3 Verticals, LLC from selling shareholder	(4,635)															(4,635)
Non-controlling interests related to purchase of Common Units in i3 Verticals, LLC	0										(60,102)					60,102
Stockholders' Equity, ending (shares) at Jun. 30, 2018						9,091,903,000			17,213,806,000
Stockholders' Equity, ending at Jun. 30, 2018	108,288					$ 1			$ 2		37,514		(98)			70,869
Stockholders' Equity, beginning at Sep. 30, 2018	112,198						$ 1		$ 2		38,562		736			72,897
Stockholders' Equity, beginning (shares) at Sep. 30, 2018			9,112,042	17,213,806			9,112,042		17,213,806
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Equity-based compensation	951										951
Forfeitures of restricted Class A common stock (shares)							4,010
Net income (loss) attributable to i3 Verticals, Inc.													178
Net loss attributable to non-controlling interests																2,173
Net income (loss)	2,351
Distributions to Non-controlling Interest Holders	(934)															(934)
Stockholders' Equity, ending (shares) at Dec. 31, 2018							9,108,032		17,213,806
Stockholders' Equity, ending at Dec. 31, 2018	114,566						$ 1		$ 2		39,513		914			74,136
Stockholders' Equity, beginning at Sep. 30, 2018	112,198						$ 1		$ 2		38,562		736			72,897
Stockholders' Equity, beginning (shares) at Sep. 30, 2018			9,112,042	17,213,806			9,112,042		17,213,806
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss) attributable to i3 Verticals, Inc.	(2,115)		$ (2,115)
Net loss attributable to non-controlling interests	(2,651)		(2,651)
Net income (loss)	$ 536		536
Exercised (shares)	29,967
Preferred return on Class A Units and Redeemable Class A Units			$ 0		$ 0
Stockholders' Equity, ending (shares) at Jun. 30, 2019			14,420,199	12,921,637			14,420,199		12,921,637
Stockholders' Equity, ending at Jun. 30, 2019	$ 140,378						$ 1		$ 1		80,344		(1,379)			61,411
Stockholders' Equity, beginning at Dec. 31, 2018	114,566						$ 1		$ 2		39,513		914			74,136
Stockholders' Equity, beginning (shares) at Dec. 31, 2018							9,108,032		17,213,806
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Equity-based compensation	1,363										1,363
Forfeitures of restricted Class A common stock (shares)							(17,644)
Net income (loss) attributable to i3 Verticals, Inc.													(1,102)
Net loss attributable to non-controlling interests																(120)
Net income (loss)	(1,222)
Distributions to Non-controlling Interest Holders	(89)															(89)
Redemption of common units in i3 Verticals, LLC (shares)							101,642		(101,642)
Redemption of common units in i3 Verticals, LLC											291					(291)
Establishment of liabilities under a tax receivable agreement and related changes to deferred tax assets associated with increases in tax basis	117										117
Stockholders' Equity, ending (shares) at Mar. 31, 2019							9,192,030		17,112,164
Stockholders' Equity, ending at Mar. 31, 2019	114,735						$ 1		$ 2		41,284		(188)			73,636
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Equity-based compensation	1,808										1,808
Forfeitures of restricted Class A common stock (shares)							(1,124)
Net income (loss) attributable to i3 Verticals, Inc.	(1,191)		$ (1,191)										(1,191)
Net loss attributable to non-controlling interests	(598)		(598)													598
Net income (loss)	(593)		$ (593)
Distributions to Non-controlling Interest Holders	(1,037)															(1,037)
Redemption of common units in i3 Verticals, LLC (shares)							(4,190,527)		(4,190,527)
Redemption of common units in i3 Verticals, LLC	1								$ 1		(11,786)					11,786
Establishment of liabilities under a tax receivable agreement and related changes to deferred tax assets associated with increases in tax basis	3,962										3,962
Issuance of class A common stock (shares)							8,799	1,000,000
Issuance of common stock	225	$ 21,660									225	$ 21,660
Capitalization of public offering costs	(771)										(771)
Exercised (shares)							29,967
Exercise of equity-based awards	390										390
Stockholders' Equity, ending (shares) at Jun. 30, 2019			14,420,199	12,921,637			14,420,199		12,921,637
Stockholders' Equity, ending at Jun. 30, 2019	$ 140,378						$ 1		$ 1		$ 80,344		$ (1,379)			$ 61,411

Related Party Transactions (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Jun. 25, 2018
Related Party Transaction [Line Items]
Percent of tax benefits payable to continuing equity owners					85.00%
Junior Subordinated Notes \| Unsecured Debt \| Affiliated Entity
Related Party Transaction [Line Items]
Related party interest expense		$ 145		$ 457
Notes Payable \| Affiliated Entity
Related Party Transaction [Line Items]
Related party interest expense		315		952
Continuing Equity Owner \| Class B Common Stock
Related Party Transaction [Line Items]
Tax benefits due to Continuing Equity Owners	$ 23,929		$ 23,929
Axia Tech \| Affiliated Entity
Related Party Transaction [Line Items]
Net revenue from related party	$ 21	$ 13	$ 59	$ 37
i3Verticals, LLC \| Affiliated Entity
Related Party Transaction [Line Items]
Ownership interest in Axia Tech (percent)	2.00%		2.00%
Chief Executive Officer \| Affiliated Entity
Related Party Transaction [Line Items]
Ownership interest in Axia Tech (percent)	10.50%		10.50%
Chief Financial Officer \| Affiliated Entity
Related Party Transaction [Line Items]
Ownership interest in Axia Tech (percent)	0.40%		0.40%

Summary of Significant Accounting Policies

9 Months Ended

Jun. 30, 2019

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and pursuant to the reporting and disclosure rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, such statements include all adjustments (consisting only of normal recurring items) which are considered necessary for fair presentation of the unaudited condensed consolidated financial statements of the Company and its subsidiaries as of June 30, 2019 and for the

three and nine months ended June 30, 2019 and 2018. The results of operations for the three and nine months ended June 30, 2019 and 2018 are not necessarily indicative of the operating results for the full year. It is recommended that these interim condensed consolidated financial statements be read in conjunction with the Company's consolidated financial statements and related footnotes for the years ended September 30, 2018 and 2017, included in the Company’s Annual Report on Form 10-K for the year ended September 30, 2018.

Principles of Consolidation

These interim condensed consolidated financial statements include the accounts of the Company and its subsidiary companies. All significant intercompany accounts and transactions have been eliminated in consolidation.

Restricted Cash

Restricted cash represents funds held-on-deposit with processing banks pursuant to agreements to cover potential merchant losses. It is presented as long-term assets on the accompanying condensed consolidated balance sheets since the related agreements extend beyond the next twelve months. Following the adoption of Accounting Standards Update (“ASU”) No. 2016-18, Statement of Cash Flows: Restricted Cash (Topic 230), the Company includes restricted cash along with the cash and cash equivalents balance for presentation in the condensed consolidated statements of cash flows. The reconciliation between the condensed consolidated balance sheet and the condensed consolidated statement of cash flows is as follows:


	June 30, 2019		June 30, 2018
Cash and cash equivalents on condensed consolidated balance sheet	$	1,509	$	2,473
Restricted cash	1,616		665
Total cash, cash equivalents and restricted cash on condensed consolidated statement of cash flows	$	3,125	$	3,138

Inventories

Inventories consist of point-of-sale equipment to be sold to customers and are stated at the lower of cost, determined on a weighted average basis, or net realizable value. Inventories were $1,803 and $930 at June 30, 2019 and September 30, 2018, respectively, and are included within prepaid expenses and other current assets on the accompanying condensed consolidated balance sheets.

Acquisitions

Business acquisitions have been recorded using the acquisition method of accounting in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 805, Business Combinations (“ASC 805”), and, accordingly, the purchase price has been allocated to the assets acquired and liabilities assumed based on their estimated fair value as of the date of acquisition. When relevant, the fair value of material contingent consideration included in an acquisition is calculated using a Monte Carlo simulation. The fair value of merchant relationships and non-compete assets acquired is identified using the Income Approach. The fair values of trade names and internally-developed software acquired are identified using the Relief from Royalty Method. The fair value of deferred revenue is identified using the Adjusted Fulfillment Cost Method. After the purchase price has been allocated, goodwill is recorded to the extent the total consideration paid for the acquisition, including the acquisition date fair value of contingent consideration, if any, exceeds the sum of the fair values of the separately identifiable acquired assets and assumed liabilities. Acquisition costs for business combinations are expensed when incurred and recorded in selling general and administrative expenses in the accompanying condensed consolidated statements of operations.

An acquisition not meeting the accounting criteria to be accounted for as a business combination is accounted for as an asset acquisition. An asset acquisition is recorded at its purchase price, inclusive of acquisition costs, which is allocated among the acquired assets and assumed liabilities based upon their relative fair values at the date of acquisition.

The operating results of an acquisition are included in the Company’s condensed consolidated statements of operations from the date of such acquisition. Acquisitions completed during the nine months ended June 30, 2019 contributed $11,679 and $(2,490) to revenue and net loss, respectively, to the results in the Company's condensed consolidated statements of operations for the nine months then ended.

Revenue Recognition and Deferred Revenue

Revenue is recognized when it is realized or realizable and earned, in accordance with ASC 605, Revenue Recognition (“ASC 605”). Recognition occurs when all of the following criteria are met: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services have been performed; (3) the seller’s price to the buyer is fixed or determinable; and (4) collectability is reasonably assured. The Company accrues for rights of refund, processing errors or penalties, or other related allowances based on historical experience.

The majority of the Company's gross revenue for the nine months ended June 30, 2019 and 2018 is derived from volume-based payment processing fees (“discount fees”) and other related fixed transaction or service fees. The remainder is comprised of sales of software licensing subscriptions, ongoing support, and other POS-related solutions the Company provides to its clients directly and through its processing bank relationships.

Discount fees represent a percentage of the dollar amount of each credit or debit transaction processed. Discount fees are recognized at the time the merchants’ transactions are processed. The Company follows the requirements of ASC 605-45 Revenue Recognition—Principal Agent Considerations, in determining its merchant processing services revenue reporting. Generally, when the Company has control over merchant pricing, merchant portability, credit risk and ultimate responsibility for the merchant relationship, revenues are reported at the time of sale on a gross basis equal to the full amount of the discount charged to the merchant. This amount includes interchange fees paid to card issuing banks and assessments paid to payment card networks pursuant to which such parties receive payments based primarily on processing volume for particular groups of merchants. Revenues generated from merchant portfolios when the Company does not have control over merchant pricing, liability for merchant losses or credit risk or rights of portability are reported net of interchange and other fees.

Revenues are also derived from a variety of fixed transaction or service fees, including authorization fees, convenience fees, statement fees, annual fees, and fees for other miscellaneous services, such as handling chargebacks. Revenues derived from service fees are recognized at the time the services are performed and there are no further performance obligations. Revenues from the sale of equipment is recognized upon transfer of ownership and delivery to the customer, after which there are no further performance obligations.

Revenues from sales of the Company’s software licensing subscriptions are recognized when they are realized or realizable and earned. Contractual arrangements are evaluated for indications that multiple element arrangements may exist, including instances in which more-than-incidental software deliverables are included. Arrangements may contain multiple elements, such as hardware, software products, maintenance, and professional installation and training services. Revenues are allocated to each element based on the selling price hierarchy. The selling price for a deliverable is based on vendor specific objective evidence of selling price, if available, third party evidence, or estimated selling price. The Company establishes estimated selling price, based on the judgment of the Company's management, considering internal factors such as margin objectives, pricing practices and controls, customer segment pricing strategies and the product life cycle. In arrangements with multiple elements, the Company determines allocation of the transaction price at inception of the arrangement based on the relative selling price of each unit of accounting.

In multiple element arrangements in which more-than-incidental software deliverables are included, the Company applies the residual method to determine the amount of software license revenues to be recognized. Under the residual method, if fair value exists for undelivered elements in a multiple-element arrangement, such fair value of the undelivered elements is deferred with the remaining portion of the arrangement consideration recognized upon delivery of the software license or services arrangement. The Company allocates the fair value of each element of a software-related multiple-element arrangement based upon its fair value as determined by vendor specific objective evidence of selling price, with any remaining amount allocated to the software license. If

evidence of the fair value cannot be established for the undelivered elements of a software arrangement, then the entire amount of revenue under the arrangement is deferred until these elements have been delivered or objective evidence can be established. These amounts, if any, are included in deferred revenue in the condensed consolidated balance sheets. Revenues related to software licensing subscriptions, maintenance or other support services with terms greater than one month are recognized ratably over the term of the agreement.

Revenues from sales of the Company’s combined hardware and software element are recognized when they are realized or realizable and earned which has been determined to be upon the delivery of the product. Revenues derived from service fees are recognized at the time the services are performed and there are no further performance obligations. The Company’s training, installation, and repair services are recognized as revenue as these services are performed.

Deferred revenue represents amounts billed to customers by the Company for services contracts. The initial prepaid contract agreement balance is deferred. The balance is then recognized as the services are provided over the contract term. Deferred revenue that is expected to be recognized as revenue within one year is recorded as short-term deferred revenue and the remaining portion is recorded as other long-term liabilities in the condensed consolidated balance sheets.

Interchange and Network Fees and Other Cost of Services

Interchange and network fees consist primarily of fees that are directly related to discount fee revenue. These include interchange fees paid to issuers and assessment fees payable to card associations, which are a percentage of the processing volume the Company generates from Visa and Mastercard, as well as fees charged by card-issuing banks. Other costs of services include costs directly attributable to processing and bank sponsorship costs, which may not be based on a percentage of volume. These costs also include related costs such as residual payments to sales groups, which are based on a percentage of the net revenues generated from merchant referrals. In certain merchant processing bank relationships, the Company is liable for chargebacks against a merchant equal to the volume of the transaction. Losses resulting from chargebacks against a merchant are included in other cost of services on the accompanying condensed consolidated statement of operations. The Company evaluates its risk for such transactions and estimates its potential loss from chargebacks based primarily on historical experience and other relevant factors. The reserve for merchant losses is included within accrued expenses and other current liabilities on the accompanying condensed consolidated balance sheets. The cost of equipment sold is also included in other cost of services. Interchange and other costs of services are recognized at the time the merchant's transactions are processed.

The Company accounts for all governmental taxes associated with revenue transactions on a net basis.

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Such estimates include, but are not limited to, the value of purchase consideration paid and identifiable assets acquired and assumed in acquisitions, goodwill and intangible asset impairment review, warrant valuation, revenue recognition for multiple element arrangements, loss reserves, assumptions used in the calculation of equity-based compensation and in the calculation of income taxes, and certain tax assets and liabilities as well as the related valuation allowances. Actual results could differ from those estimates.

During the first quarter of fiscal year 2019, management determined it was appropriate to change the amortization rate for certain of our merchant contract intangible assets to reflect the expected distribution of future cash flows. This change was applied prospectively beginning on October 1, 2018.

Recently Issued Accounting Pronouncements

In August 2018, the FASB issued ASU No. 2018-15, Intangibles—Goodwill and Other—Internal-Use Software: Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (Subtopic 350-40). The amendments in ASU No. 2018-15 align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The amendments in this ASU are effective for public business entities for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, with early adoption permitted. As a public business entity, the Company is an emerging growth company and has elected to use the extended transition period provided for such companies. As a result, the Company is not required to adopt this ASU until October 1, 2021. Early adoption is permitted, including adoption in an interim period. The Company elected to early adopt this standard using the prospective method as of October 1, 2018. There was no impact on the Company’s condensed consolidated financial statements for the adoption of ASU No. 2018-15.

In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement: Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement (Topic 820). The amendments in ASU No. 2018-13 provide clarification and modify the disclosure requirements on fair value measurement in Topic 820, Fair Value Measurement. The amendments in this ASU are effective for public business entities for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, with early adoption permitted. As a public business entity, the Company is an emerging growth company and has elected to use the extended transition period provided for such companies. As a result, the Company will not be required to adopt this ASU until October 1, 2021. The Company is currently evaluating the impact of the adoption of this principle on the Company’s condensed consolidated financial statements.

In June 2018, the FASB issued ASU No. 2018-07, Compensation—Stock Compensation: Improvements to Nonemployee Share-Based Payment Accounting (Topic 718). The amendments in ASU No. 2018-07 expand the scope of Topic 718, Compensation—Stock Compensation to include share-based payments issued to nonemployees for goods or services. The amendments in this ASU are effective for public business entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. As a public business entity, the Company is an emerging growth company and has elected to use the extended transition period provided for such companies. As a result, the Company will not be required to adopt this ASU until October 1, 2020. Early adoption is permitted, but no earlier than a company’s adoption date of ASU No. 2014-09. The Company is currently evaluating the impact of the adoption of this principle on the Company’s condensed consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326). The amendments in ASU No. 2016-13 require the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. The amendments in this ASU are effective for public business entities for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, with early adoption permitted for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. As a public business entity, the Company is an emerging growth company and has elected to use the extended transition period provided for such companies. As a result, the Company will not be required to adopt this ASU until October 1, 2021. The Company is currently evaluating the impact of the adoption of this principle on the Company’s condensed consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”). This ASU amends the existing guidance by recognizing all leases, including operating leases, with a term longer than twelve months on the balance sheet and disclosing key information about the lease arrangements. The effective date of this update is for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted. As a public business entity, the Company is an emerging growth company and has elected to use the extended transition period provided for such companies. As a result, the Company will not be required to adopt this ASU until October 1, 2020. The update requires modified retrospective transition, with the

option to initially apply the new standard at the adoption date and recognize a cumulative-effect adjustment and elect various practical expedients. In July 2018, the FASB issued ASU 2018-10, Codification Improvements to Topic 842, Leases, which narrows aspects of the guidance issued in the amendments in ASU 2016-02, and ASU 2018-11, Leases—Targeted Improvements (Topic 842), by allowing lessees and lessors to recognize and measure existing leases at the beginning of the period of adoption without modifying the comparative period financial statements (which therefore will remain under prior GAAP, Topic 840, Leases). In December 2018, the FASB issued ASU 2018-20, Narrow-Scope Improvements for Lessors, which clarifies or simplifies certain narrows aspects of the guidance issued in the amendments in ASU 2016-02 for lessors. Since the Company has not yet adopted ASU 2016-02, the effective date and transition requirements will be the same as the effective date and transition requirements in ASU 2016-02. In March 2019, the FASB issued ASU 2019-01, Codification Improvements, which clarifies certain aspects of the guidance issued in the amendments in ASU 2016-02. The amendments in this ASU are effective for public business entities for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the impact of the adoption of these principles on the Company’s condensed consolidated financial statements.

In May 2014, the FASB issued ASU No. 2014-09, Revenue From Contracts With Customers (Topic 606) (“ASU 2014-09”). The ASU supersedes the revenue recognition requirements in ASC 605. The new standard provides a five-step analysis of transactions to determine when and how revenue is recognized, based upon the core principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new standard also requires additional disclosures regarding the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The new standard, as amended, is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, with early adoption permitted. As an emerging growth company, the Company will not be required to adopt this ASU until October 1, 2019. The amendment allows companies to use either a full retrospective or a modified retrospective approach to adopt this ASU. The FASB issued updates and clarifications to ASU 2014-09, including ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Gross versus Net) issued in March 2016, ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing issued in April 2016 and ASU 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients issued in May 2016. Since the Company has not yet adopted ASU 2014-09, the effective date and transition requirements of the related ASUs will be the same as the effective date and transition requirements in ASU 2014-09.

The Company has formed a project team, is developing a plan for adoption and is determining the impact on its revenue recognition policies, procedures and control framework and the resulting impact on its consolidated financial position, results of operations and cash flows. The Company has reviewed revenue sources and evaluated revenue populations by type to determine the appropriate distribution into portfolios that will result in materially consistent conclusions as if each revenue type was evaluated on a contract-by-contract basis under the new standard. The analysis of these portfolios is ongoing. This ASU could have a material impact on the amounts presented in certain categories on our consolidated statements of operations, but we do not expect it to have a material effect on our consolidated financial position, results of operations and cash flows. This analysis is subject to change as the Company continues to refine its assessment of the standard. The Company anticipates adopting this ASU on October 1, 2019 using the modified retrospective approach.

Equity-Based Compensation - Stock Option Activity (Details) $ / shares in Units, $ in Thousands	9 Months Ended
	Jun. 30, 2019 USD ($) $ / shares shares	Sep. 30, 2018 $ / shares
Stock Options
Outstanding at beginning of period (shares) \| shares	2,138,500
Granted (shares) \| shares	2,297,916
Exercised (shares) \| shares	(29,967)
Forfeited (shares) \| shares	(81,916)
Outstanding at end of period (shares) \| shares	4,324,533
Weighted Average Exercise Price
Outstanding at beginning of period, weighted average exercise price (in USD per share) \| $ / shares	$ 18.04	$ 13.13
Granted, weighted average exercise price (in USD per share) \| $ / shares	22.52
Exercised, weighted average exercise price (in USD per share) \| $ / shares	13.00
Forfeited, weighted average exercise price (in USD per share) \| $ / shares	17.62
Outstanding at end of period, weighted average exercise price (in USD per share) \| $ / shares	18.04	$ 13.13
Granted, weighted average grant date fair value (in USD per share) \| $ / shares	$ 7.15
Options exercisable at end of period (shares) \| shares	638,761
Unrecognized compensation expense related to unvested options at end of period \| $	$ 19,847
Period for recognition of unrecognized compensation cost	2 years 6 months

Commitments and Contingencies

9 Months Ended

Jun. 30, 2019

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

COMMITMENTS AND CONTINGENCIES

Leases

The Company utilizes office space and equipment under operating leases. Rent expense under these leases amounted to $615 and $1,640 during the three and nine months ended June 30, 2019, respectively, and $419 and $1,105 three and nine months ended June 30, 2018, respectively.

A summary of approximate future minimum payments under these leases as of June 30, 2019 is as follows:


Years ending September 30:
2019 (three months remaining)	$	652
2020	2,344
2021	1,817
2022	1,579
2023	1,482
Thereafter	1,405
Total	$	9,279

Minimum Processing Commitments

The Company has non-exclusive agreements with several processors to provide services related to transaction processing and transmittal, transaction authorization and data capture, and access to various reporting tools. Certain of these agreements require the Company to submit a minimum monthly number of transactions for processing. If the Company submits a number of transactions that is lower than the minimum, it is required to pay to the processor the fees it would have received if the Company had submitted the required minimum number of transactions. As of June 30, 2019, such minimum fee commitments were as follows:


Years ending September 30:
2019 (three months remaining)	$	634
2020	2,541
2021	1,457
2022	2,046
2023	2,646
Thereafter	243
Total	$	9,567

Litigation

With respect to all legal, regulatory and governmental proceedings, and in accordance with ASC 450-20, Contingencies—Loss Contingencies, the Company considers the likelihood of a negative outcome. If the Company determines the likelihood of a negative outcome with respect to any such matter is probable and the amount of the loss can be reasonably estimated, the Company records an accrual for the estimated amount of loss for the expected outcome of the matter. If the likelihood of a negative outcome with respect to material matters is reasonably possible and the Company is able to determine an estimate of the amount of possible loss or a range of loss, whether in excess of a related accrued liability or when there is no accrued liability, the Company discloses the estimate of the amount of possible loss or range of loss. However, the Company in some instances may be unable to estimate an amount of possible loss or range of loss based on the significant uncertainties involved in, or the preliminary nature of, the matter, and in these instances the Company will disclose the nature of the contingency and describe why the Company is unable to determine an estimate of possible loss or range of loss.

In addition, the Company is involved in ordinary course legal proceedings, which include all claims, lawsuits, investigations and proceedings, including unasserted claims, which are probable of being asserted, arising in the ordinary course of business. The Company has considered all such ordinary course legal proceedings in formulating its disclosures and assessments. After taking into consideration the evaluation of such legal matters by the Company’s legal counsel, the Company’s management believes at this time that such matters will not have a material impact on the Company’s consolidated financial position, results of operations or cash flows.

Other

The Company's subsidiary CP-PS, LLC has certain indemnification obligations in favor of FDS Holdings, Inc. related to the acquisition of certain assets of Merchant Processing Solutions, LLC in February 2014. The Company has incurred expenses related to these indemnification obligations in prior periods and may have additional expenses in the future. However, after taking into consideration the evaluation of such matters by the Company’s legal counsel, the Company’s management believes at this time that the anticipated outcome of any existing or potential indemnification liabilities related to this matter will not have a material impact on the Company’s consolidated financial position, results of operations or cash flows.

Segments (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
Segments (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Sep. 30, 2018
Segment Reporting Information [Line Items]
Revenue	$ 97,483	$ 84,536	$ 267,745	$ 239,455
Operating expenses
Interchange and network fees	63,263	55,705	173,777	158,577
Other costs of services	11,431	11,061	31,414	30,119
Selling general and administrative	17,587	10,696	44,422	29,737
Depreciation and amortization	4,425	3,000	11,875	8,876
Change in fair value of contingent consideration	(417)	1,151	1,736	3,280
Income from operations	1,194	2,923	4,521	8,866
Processing margin	27,388	21,619	74,735	61,406
Assets	343,245	166,680	343,245	166,680	$ 175,142
Goodwill	165,865	80,166	165,865	80,166	83,954
Merchant Services
Segment Reporting Information [Line Items]
Revenue	87,264	79,766	241,841	224,671
Operating expenses
Interchange and network fees	61,744	54,673	169,229	155,012
Other costs of services	10,527	10,693	29,648	28,949
Selling general and administrative	6,244	6,126	18,561	17,127
Depreciation and amortization	2,972	2,424	8,671	7,140
Change in fair value of contingent consideration	155	88	(554)	1,535
Income from operations	5,622	5,762	16,286	14,908
Processing margin	19,442	18,130	54,653	50,923
Assets	212,315	142,866	212,315	142,866
Goodwill	114,655	69,541	114,655	69,541	69,666
Residual expense	4,449	3,730	11,689	10,213
Proprietary Software and Payments
Segment Reporting Information [Line Items]
Revenue	10,219	4,770	25,904	14,788
Operating expenses
Interchange and network fees	1,519	1,032	4,548	3,565
Other costs of services	904	368	1,766	1,171
Selling general and administrative	6,066	1,908	12,728	5,546
Depreciation and amortization	1,308	517	2,811	1,615
Change in fair value of contingent consideration	(572)	1,063	2,290	1,745
Income from operations	994	(118)	1,761	1,146
Processing margin	7,946	3,489	20,082	10,486
Assets	97,043	18,941	97,043	18,941
Goodwill	51,210	10,625	51,210	10,625	14,288
Residual expense	150	119	492	434
Other
Segment Reporting Information [Line Items]
Revenue	0	0	0	(4)
Operating expenses
Interchange and network fees	0	0	0	0
Other costs of services	0	0	0	(1)
Selling general and administrative	5,277	2,662	13,133	7,064
Depreciation and amortization	145	59	393	121
Change in fair value of contingent consideration	0	0	0	0
Income from operations	(5,422)	(2,721)	(13,526)	(7,188)
Processing margin	0	0	0	(3)
Assets	33,887	4,873	33,887	4,873
Goodwill	0	0	0	0	$ 0
Residual expense	$ 0	$ 0	$ 0	$ 0

Acquisitions (Tables)

9 Months Ended

Jun. 30, 2019

Business Combinations [Abstract]

Schedule of Preliminary Purchase Consideration of the Acquired Assets and Assumed Liabilities

The preliminary fair values assigned to certain assets and liabilities assumed, as of the acquisition dates, during the nine months ended June 30, 2019 were as follows:


	Pace		Other		Total
Cash and cash equivalents	$	108	$	4,004	$	4,112
Accounts receivable	545		3,867		4,412
Settlement assets	—		20		20
Inventories	45		26		71
Prepaid expenses and other current assets	53		408		461
Property and equipment	527		592		1,119
Capitalized software	3,400		8,740		12,140
Acquired merchant relationships	13,400		31,380		44,780
Non-compete agreements	60		150		210
Trade name	500		1,240		1,740
Goodwill	42,705		39,175		81,880
Other assets	4		2		6
Total assets acquired	61,347		89,604		150,951

Accounts payable	722		84		806
Accrued expenses and other current liabilities	95		1,241		1,336
Settlement obligations	—		20		20
Deferred revenue, current	24		2,598		2,622
Other long-term liabilities	4,537		—		4,537
Net assets acquired	$	55,969	$	85,661	$	141,630

Pro Forma Information

This supplemental pro forma

information does not purport to be indicative of the results of operations that would have been attained had the acquisitions been made on these dates, or of results of operations that may occur in the future.


	Nine months ended June 30,
	2019		2018
Revenue	$	299,832	$	284,443
Net income (loss)	$	(4,772)	$	(16,113)

Fair Value Measurements (Details) - USD ($) $ in Thousands	9 Months Ended
Fair Value Measurements (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Jun. 30, 2018	Sep. 30, 2018
Accrued Expenses and Other Current Liabilities
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Contingent consideration	$ 7,162		$ 3,813
Other Long-term Liabilities
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Contingent consideration	6,694		$ 2,186
Accrued Contingent Consideration
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance, beginning	5,999	$ 3,340
Contingent consideration accrued at time of business combination	10,315	2,084
Contingent consideration paid	(4,194)	(1,791)
Balance, ending	13,856	6,913
Accrued Contingent Consideration \| Other expenses
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Change in the fair value		0
Accrued Contingent Consideration \| Operating expenses
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Change in the fair value	$ 1,736	3,280
Mezzanine Warrants
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance, beginning		767
Contingent consideration accrued at time of business combination		0
Contingent consideration paid		0
Balance, ending		0
Mezzanine Warrants \| Other expenses
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Change in the fair value		8,487
Mezzanine Warrants \| Operating expenses
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Change in the fair value		$ 0

Summary of Significant Accounting Policies (Tables)

9 Months Ended

Jun. 30, 2019

Accounting Policies [Abstract]

Reconciliation Between Cash on the Balance Sheet and the Statement of Cash Flows

The reconciliation between the condensed consolidated balance sheet and the condensed consolidated statement of cash flows is as follows:


	June 30, 2019		June 30, 2018
Cash and cash equivalents on condensed consolidated balance sheet	$	1,509	$	2,473
Restricted cash	1,616		665
Total cash, cash equivalents and restricted cash on condensed consolidated statement of cash flows	$	3,125	$	3,138

Commitments and Contingencies -Operating Leases (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Commitments and Contingencies Disclosure [Abstract]
Operating leases for office space and equipment	$ 615	$ 419	$ 1,640	$ 1,105
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract]
2019 (nine months remaining)	652		652
2020	2,344		2,344
2021	1,817		1,817
2022	1,579		1,579
2023	1,482		1,482
Thereafter	1,405		1,405
Total	$ 9,279		$ 9,279

Earnings Per Share (Details) - USD ($)
$ / shares in Units, $ in Thousands

3 Months Ended

9 Months Ended

Jun. 30, 2018

Jun. 30, 2019

Mar. 31, 2019

Dec. 31, 2018

Jun. 30, 2018

Jun. 25, 2018

Mar. 31, 2018

Dec. 31, 2017

Jun. 30, 2019

Jun. 30, 2018

Numerator

Net (loss) income

$ (189)

$ (593)

$ (1,222)

$ 2,351

$ (655)

$ 189

$ (655)

$ (7,168)

$ 536

$ (7,823)

Less: Net income attributable to non-controlling interests

598

(91)

2,651

(91)

Net loss attributable to Class A common stockholders

$ (1,191)

$ (564)

$ (2,115)

(7,732)

Denominator

Weighted average shares outstanding, basic and diluted (shares)

9,254,549

Basic and diluted (in USD per share)

$ (0.12)

^[1]

$ (0.01)

$ (0.23)

Class A Common Stock

Numerator

Net (loss) income

$ (593)

$ (138)

$ 536

(138)

Less: Net income attributable to non-controlling interests

598

(91)

2,651

(91)

Net loss attributable to Class A common stockholders

$ (1,191)

$ (47)

$ (2,115)

$ (47)

Denominator

Weighted average shares outstanding, basic and diluted (shares)

10,064,785

^[1]

8,812,630

Basic and diluted (in USD per share)

$ (0.01)

[1]	Basic and diluted net loss per Class A common stock are presented only for the period after the Company’s Reorganization Transactions. See Note 1 for a description of the Reorganization Transactions. See Note 13 for the calculation of income per common share.

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References + Details

- Definition

The consolidated profit or loss for the period, net of income taxes, including the portion attributable to the noncontrolling interest.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 220
-SubTopic 10
-Section 45
-Paragraph 1A
-Subparagraph (a)
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Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 810
-SubTopic 10
-Section 50
-Paragraph 1A
-Subparagraph (a)(1)
-URI http://asc.fasb.org/extlink&oid=109239629&loc=SL4573702-111684

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
-Topic 220
-SubTopic 10
-Section 45
-Paragraph 1B
-Subparagraph (a)
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Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
-Topic 810
-SubTopic 10
-Section 50
-Paragraph 1A
-Subparagraph (c)(1)
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Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 22
-URI http://asc.fasb.org/extlink&oid=115929826&loc=d3e8736-108599

Reference 6: http://www.xbrl.org/2003/role/exampleRef
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-Name Accounting Standards Codification
-Topic 810
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Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 230
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Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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-Paragraph 32
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-URI http://asc.fasb.org/extlink&oid=84234705&loc=SL4591552-111686

+ Details

Earnings Per Share - Antidilutive Securities (Details) - shares	3 Months Ended		9 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share (shares)	285,433
Restricted Class A Common Stock
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share (shares)		279,273	285,433	279,273
Class B Common Stock
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share (shares)	16,184,026	17,213,806	16,846,012	17,213,806
Out-of-the-Money Stock Options
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share (shares)	443,000		620,500
Stock Options
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share (shares)	1,188,987	377,537	974,402	377,537

Equity-Based Compensation - Additional Information (Details) - $ / shares		9 Months Ended
	Jun. 25, 2018	Jun. 30, 2019	Sep. 30, 2018	May 31, 2018
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options granted to directors and certain employees (shares)		2,297,916
Options granted, exercise price (in USD per share)		$ 22.52
2018 Equity Incentive Award Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares available for grant under the plan (shares)		4,552,873		3,500,000
Additional Class A common shares added at the beginning of calendar year as percentage of common stock outstanding at end of previous year (percent)		4.00%	4.00%
Directors and Certain Employees \| IPO \| Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options granted to directors and certain employees (shares)	2,045,000
Options granted, exercise price (in USD per share)	$ 13.00
Award vesting period	3 years

Non-Controlling Interest	9 Months Ended
Non-Controlling Interest	Jun. 30, 2019
Noncontrolling Interest [Abstract]
Non-Controlling Interest	NON-CONTROLLING INTEREST i3 Verticals, Inc. is the sole managing member of i3 Verticals, LLC, and as a result, consolidates the financial results of i3 Verticals, LLC and reports a non-controlling interest representing the Common Units of i3 Verticals, LLC held by the Continuing Equity Owners. Changes in i3 Verticals, Inc.’s ownership interest in i3 Verticals, LLC while i3 Verticals, Inc. retains its controlling interest in i3 Verticals, LLC will be accounted for as equity transactions. As such, future redemptions or direct exchanges of Common Units of i3 Verticals, LLC by the Continuing Equity Owners will result in a change in ownership and reduce or increase the amount recorded as non-controlling interest and increase or decrease additional paid-in capital when i3 Verticals, LLC has positive or negative net assets, respectively. As of June 30, 2019, i3 Verticals, Inc. owned 14,420,199 of i3 Verticals, LLC's Common Units, representing a 52.7% economic ownership interest in i3 Verticals, LLC.

Label	Element	Value
Adjustments to Additional Paid in Capital, Share-based Compensation, Requisite Service Period Recognition	us-gaap_AdjustmentsToAdditionalPaidInCapitalSharebasedCompensationRequisiteServicePeriodRecognitionValue	$ 38,000
Adjustments to Additional Paid in Capital, Share-based Compensation, Requisite Service Period Recognition	us-gaap_AdjustmentsToAdditionalPaidInCapitalSharebasedCompensationRequisiteServicePeriodRecognitionValue	38,000
Additional Paid-in Capital [Member]
Adjustments to Additional Paid in Capital, Share-based Compensation, Requisite Service Period Recognition	us-gaap_AdjustmentsToAdditionalPaidInCapitalSharebasedCompensationRequisiteServicePeriodRecognitionValue	38,000
Adjustments to Additional Paid in Capital, Share-based Compensation, Requisite Service Period Recognition	us-gaap_AdjustmentsToAdditionalPaidInCapitalSharebasedCompensationRequisiteServicePeriodRecognitionValue	38,000
Retained Earnings [Member]
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest	us-gaap_ProfitLoss	189,000
Net Income (Loss) Attributable to Parent	us-gaap_NetIncomeLoss	(98,000)
Noncontrolling Interest [Member]
Net Income (Loss) Attributable to Noncontrolling Interest	us-gaap_NetIncomeLossAttributableToNoncontrollingInterest	$ 91,000

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References + Details

- Definition

The consolidated profit or loss for the period, net of income taxes, including the portion attributable to the noncontrolling interest.

+ References

+ Details

Equity-Based Compensation - Fair Value of Stock Option Awards (Details) - Stock Options	3 Months Ended	9 Months Ended
	Sep. 30, 2018	Jun. 30, 2019
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected volatility (percent)	26.30%	27.00%
Expected dividend yield (percent)	0.00%	0.00%
Expected term	6 years	6 years
Risk-free interest rate (percent)	2.80%	2.50%

Fair Value Measurements

9 Months Ended

Jun. 30, 2019

Fair Value Disclosures [Abstract]

Fair Value Measurements

FAIR VALUE MEASUREMENTS

The Company applies the provisions of ASC 820, Fair Value Measurement, which defines fair value, establishes a framework for its measurement and expands disclosures about fair value measurements. Fair value is the price that would be received to sell an asset or the price paid to transfer a liability as of the measurement date. A three-tier, fair-value reporting hierarchy exists for disclosure of fair value measurements based on the observability of the inputs to the valuation of financial assets and liabilities. The three levels are:

Level 1 — Quoted prices for identical instruments in active markets.

Level 2 — Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets.

Level 3 — Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable in active exchange markets.

The carrying value of the Company’s financial instruments, including cash and cash equivalents, restricted cash, settlement assets and obligations, accounts receivable, other assets, accounts payable, and accrued expenses, approximated their fair values as of June 30, 2019 and 2018, because of the relatively short maturity dates on these instruments. The carrying amount of debt approximates fair value as of June 30, 2019 and 2018, because interest rates on these instruments approximate market interest rates.

The Company has no Level 1 or Level 2 financial instruments. The following tables present the changes in the Company's Level 3 financial instruments that are measured at fair value on a recurring basis.


	Accrued Contingent Consideration
Balance at September 30, 2018	5,999
Contingent consideration accrued at time of business combination	10,315
Change in fair value of contingent consideration included in Operating expenses	1,736
Contingent consideration paid	(4,194)
Balance at June 30, 2019	$	13,856


	Mezzanine Warrants		Accrued Contingent Consideration
Balance at September 30, 2017	$	767	$	3,340
Change in the fair value of warrant liabilities, included in Other expenses	8,487		—
Contingent consideration accrued at time of business combination	—		2,084
Change in fair value of contingent consideration included in Operating expenses	—		3,280
Contingent consideration paid	—		(1,791)
Balance at June 30, 2018	$	—	$	6,913

Approximately $7,162 and $3,813 of contingent consideration was recorded in accrued expenses and other current liabilities as of June 30, 2019 and September 30, 2018, respectively. Approximately $6,694 and $2,186 of contingent consideration was recorded in other long-term liabilities as of June 30, 2019 and September 30, 2018, respectively.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Subsequent Events	9 Months Ended
Subsequent Events	Jun. 30, 2019
Subsequent Events [Abstract]
Subsequent Events	SUBSEQUENT EVENTS Form S-3 Filing On August 8, 2019, the Company filed with the SEC an omnibus shelf registration statement on Form S-3 (File No. 333-233126), for the offer and sale of up to $250,000 of the Company's securities from time to time and in such amounts and at such prices and terms as are to be determined in the future by the Company directly or through agents, dealers or underwriters, as well as the possible resale by certain selling securityholders, including certain of our executive officers and directors, of up to 13,145,534 shares of Class A common stock to be sold from time to time and in such amounts and at such prices and terms as are to be determined in the future by the selling securityholders directly or through agents, dealers or underwriters. The S-3 was declared effective on August 9, 2019.

Equity-Based Compensation

9 Months Ended

Jun. 30, 2019

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Equity-Based Compensation

EQUITY-BASED COMPENSATION

A summary of equity-based compensation expense recognized during the three and nine months ended June 30, 2019 and 2018 is as follows:


	Three months ended June 30,						Nine months ended June 30,
	2019		2018		2019		2018
TRA non-participation compensatory shares	$	—	$	741	$	—	$	741
Stock options	1,808		76		4,122		76
Equity-based compensation expense	$	1,808	$	817	$	4,122	$	817

Amounts are included in general and administrative expense on the condensed consolidated statements of operations. Income tax benefits of $30 were recognized related to equity-based compensation during the three and nine months ended June 30, 2019 and 2018.

Stock Options

In May 2018, the Company adopted the 2018 Equity Incentive Plan (the “2018 Plan”) under which the Company may grant up to 3,500,000 stock options and other equity-based awards to employees, directors and officers. The number of shares of Class A common stock available for issuance under the 2018 Plan includes an

annual increase on the first day of each year, beginning with the 2019 calendar year, equal to 4.0% of the outstanding shares of all classes of the Company's common stock as of the last day of the immediately preceding calendar year, unless the Company’s board of directors determines prior to the last trading day of December of the immediately preceding calendar year that the increase shall be less than 4%. As of June 30, 2019, there are 4,552,873 options available to grant under the 2018 Plan.

In connection with the IPO, the Company granted 2,045,000 stock options to its directors and certain employees. The stock options were granted with an exercise price of $13.00 per share and vest ratably over a three-year period.

The fair value of the stock option awards during the nine months ended June 30, 2019 and from June 20, 2018 through September 30, 2018 was determined on the grant date using the Black-Scholes valuation model based on the following weighted-average assumptions:


	June 30, 2019		September 30, 2018
Expected volatility⁽¹⁾	27.0	%	26.3	%
Expected dividend yield⁽²⁾	—	%	—	%
Expected term⁽³⁾	6 years		6 years
Risk-free interest rate⁽⁴⁾	2.5	%	2.8	%

_________________

1.Expected volatility is based on the historical volatility of a selected peer group over a period equivalent to the expected term.

2.The Company has assumed a dividend yield of zero as management has no plans to declare dividends in the foreseeable future.

3.Expected term represents the estimated period of time until an award is exercised and was determined using the simplified method.

4.The risk-free rate is an interpolation of yields on U.S. Treasury securities with maturities equivalent to the expected term.

A summary of stock option activity for the nine months ended June 30, 2019 is as follows:


	Stock Options	Weighted Average Exercise Price
Outstanding at beginning of period	2,138,500	$	13.13
Granted	2,297,916	22.52
Exercised	(29,967)	13.00
Forfeited	(81,916)	17.62
Outstanding at end of period	4,324,533	$	18.04

The weighted-average grant date fair value of stock options granted during the nine months ended June 30, 2019 was $7.15. As of June 30, 2019, there were 4,324,533 stock options outstanding, of which 638,761 were exercisable. As of June 30, 2019, total unrecognized compensation expense related to unvested stock options, including an estimate for pre-vesting forfeitures, was $19,847, which is expected to be recognized over a weighted-average period of 2.5 years.

TRA Non-Participation Compensatory Shares

On June 25, 2018, the Company entered into a Tax Receivable Agreement with i3 Verticals, LLC and each of the Continuing Equity Owners as described in Note 6. The Former Equity Owners did not participate in the Tax Receivable Agreement. Therefore, as part of the Reorganization Transactions, the Class B common units held by the Former Equity Owners were converted into Class A common stock based on a conversion ratio that provided an equitable adjustment to reflect the full value of the Class B common units. For employees who are Former Equity Owners, this arrangement was a modification under ASC 718. We recognized stock-based compensation expense of $741 as part of the Reorganization Transactions as a result of this conversion for the three and nine months ended June 30, 2018.

Non-Controlling Interest (Details) - i3Verticals, LLC	Jun. 30, 2019 shares
Noncontrolling Interest [Line Items]
Non-controlling interest, common units (shares)	14,420,199
Non-controlling interest, ownership interest (percent)	52.70%

Goodwill and Intangible Assets - Intangible Assets (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Sep. 30, 2018
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, cost	$ 151,011		$ 151,011
Finite-lived intangible assets, accumulated amortization	(44,578)		(44,578)
Finite-lived intangible assets, carrying value	106,433		106,433
Total identifiable intangible assets, cost	151,046		151,046
Total identifiable intangible assets, carrying value	106,468		106,468		$ 66,023
Amortization expense of intangible assets	3,233	$ 2,376	9,054	$ 7,007
Trademarks
Finite-Lived Intangible Assets [Line Items]
Indefinite-lived Intangible Assets	35		35
Merchant relationships
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, cost	139,571		139,571
Finite-lived intangible assets, accumulated amortization	(40,987)		(40,987)
Finite-lived intangible assets, carrying value	98,584		$ 98,584
Merchant relationships \| Minimum
Finite-Lived Intangible Assets [Line Items]
Amortization life			12 years
Merchant relationships \| Maximum
Finite-Lived Intangible Assets [Line Items]
Amortization life			19 years
Non-compete agreements
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, cost	1,770		$ 1,770
Finite-lived intangible assets, accumulated amortization	(515)		(515)
Finite-lived intangible assets, carrying value	1,255		$ 1,255
Non-compete agreements \| Minimum
Finite-Lived Intangible Assets [Line Items]
Amortization life			2 years
Non-compete agreements \| Maximum
Finite-Lived Intangible Assets [Line Items]
Amortization life			5 years
Website development costs
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, cost	77		$ 77
Finite-lived intangible assets, accumulated amortization	(15)		(15)
Finite-lived intangible assets, carrying value	62		$ 62
Amortization life			3 years
Trade names
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, cost	3,992		$ 3,992
Finite-lived intangible assets, accumulated amortization	(1,087)		(1,087)
Finite-lived intangible assets, carrying value	2,905		$ 2,905
Trade names \| Minimum
Finite-Lived Intangible Assets [Line Items]
Amortization life			3 years
Trade names \| Maximum
Finite-Lived Intangible Assets [Line Items]
Amortization life			7 years
Residual buyouts
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, cost	4,701		$ 4,701
Finite-lived intangible assets, accumulated amortization	(1,753)		(1,753)
Finite-lived intangible assets, carrying value	2,948		$ 2,948
Residual buyouts \| Minimum
Finite-Lived Intangible Assets [Line Items]
Amortization life			2 years
Residual buyouts \| Maximum
Finite-Lived Intangible Assets [Line Items]
Amortization life			8 years
Referral and exclusivity
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, cost	900		$ 900
Finite-lived intangible assets, accumulated amortization	(221)		(221)
Finite-lived intangible assets, carrying value	$ 679		$ 679
Referral and exclusivity \| Minimum
Finite-Lived Intangible Assets [Line Items]
Amortization life			5 years
Referral and exclusivity \| Maximum
Finite-Lived Intangible Assets [Line Items]
Amortization life			10 years

Summary of Significant Accounting Policies (Details) - USD ($) $ in Thousands	9 Months Ended
	Jun. 30, 2019	Sep. 30, 2018	Jun. 30, 2018	Sep. 30, 2017
Concentration Risk [Line Items]
Cash and cash equivalents on consolidated balance sheet	$ 1,509	$ 572	$ 2,473
Restricted cash	1,616		665
Total cash and cash equivalents on consolidated statement of cash flows	3,125	1,237	$ 3,138	$ 1,968
Inventories	1,803	$ 930
Revenue from acquisitions	11,679
Net income from acquisitions	$ (2,490)

Long-Term Debt, Net - Summary of Long-term Debt (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Sep. 30, 2018
Debt Instrument [Line Items]
Debt issuance costs, net	$ (1,932)	$ (1,474)
Total long-term debt, net of issuance costs	137,645	36,776
Less current portion of long-term debt	0	(5,000)
Long-term debt, net of current portion	137,645	31,776
Secured Debt \| Term loans to bank under the Senior Secured Credit Facility
Debt Instrument [Line Items]
Long-term debt	0	35,000
Line of Credit \| Revolving lines of credit to banks under the Senior Secured Credit Facility \| Revolving Credit Facility
Debt Instrument [Line Items]
Long-term debt	0	3,250
Line of Credit \| 2019 Senior Secured Credit Facility \| Revolving Credit Facility
Debt Instrument [Line Items]
Long-term debt	$ 139,577	$ 0

Cover Page - shares	9 Months Ended
Cover Page - shares	Jun. 30, 2019	Aug. 13, 2019
Document Information [Line Items]
Entity Small Business	false
Entity Emerging Growth Company	true
Entity Registrant Name	i3 Verticals, Inc.
Entity File Number	001-38532
Entity Central Index Key	0001728688
Current Fiscal Year End Date	--09-30
Entity Filer Category	Non-accelerated Filer
Document Type	10-Q
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Jun. 30, 2019
Local Phone Number	465-4487
Entity Address, Postal Zip Code	37215
City Area Code	615
Entity Address, State or Province	TN
Entity Address, City or Town	Nashville
Entity Address, Address Line Two	Suite 415
Entity Address, Address Line One	40 Burton Hills Blvd.
Entity Tax Identification Number	82-4052852
Entity Incorporation, State or Country Code	DE
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q3
Amendment Flag	false
Entity Current Reporting Status	Yes
Title of 12(b) Security	Class A Common Stock, $0.0001 Par Value
Trading Symbol	IIIV
Security Exchange Name	NASDAQ
Entity Interactive Data Current	Yes
Entity Shell Company	false
Entity Ex Transition Period	false
Class A Common Stock
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		14,426,424
Class B Common Stock
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		12,921,637

Earnings Per Share (Tables)

9 Months Ended

Jun. 30, 2019

Earnings Per Share [Abstract]

Schedule of Reconciliations of the Numerators and Denominators Used to Compute Basic and Diluted Earnings Per Share

The following table sets forth reconciliations of the numerators and denominators used to compute basic and diluted earnings per share of Class A common stock for the three and nine months ended June 30, 2019 and 2018:


	Three months ended June 30,						Nine months ended June 30,
	2019		2018		2019		2018
Basic and diluted⁽²⁾ net loss per share:
Numerator
Net (loss) income	$	(593)	$	(138)	$	536	$	(138)
Less: Net income (loss) attributable to non-controlling interest	598		(91)		2,651		(91)
Net loss attributable to Class A common stockholders	$	(1,191)	$	(47)	$	(2,115)	$	(47)
Denominator
Weighted average shares of Class A common stock outstanding⁽¹⁾	10,064,785		8,812,630		9,254,549		8,812,630
Basic and diluted net loss per share	$	(0.12)	$	(0.01)	$	(0.23)	$	(0.01)

____________________

1.Excludes 285,433 restricted Class A common stock units.

2.For the three and nine months ended June 30, 2019, the following securities were excluded from the weighted average effect of dilutive securities in the computation of diluted earnings per share of Class A common stock:

a.16,184,026 and 16,846,012 shares of weighted average Class B common stock for the three and nine months ended June 30, 2019, respectively, and 17,213,806 shares of weighted average Class B common stock for the three and nine months ended June 30, 2018 along with the reallocation of net income assuming conversion of these shares, were excluded because the effect would have been anti-dilutive,

b.443,000 and 620,500 stock options for the three and nine months ended June 30, 2019, respectively, were excluded because the exercise price of these stock options exceeded the average market price of our Class A common stock during the period (“out-of-the-money”) and the effect of including them would have been anti-dilutive, and

c.1,188,987 and 974,402 shares for the three and nine months ended June 30, 2019, respectively, and 377,537 shares for the three and nine months ended June 30, 2018 resulting from estimated stock option exercises as calculated by the treasury stock method, and 285,433 restricted Class A common units for the three and nine months ended June 30, 2019 and 279,273 restricted Class A common units for the three and nine months ended June 30, 2018 were excluded because the effect of including them would have been anti-dilutive.

Significant Non-cash Transactions

9 Months Ended

Jun. 30, 2019

Cash Flow, Noncash Investing and Financing Activities Disclosure [Abstract]

Significant Non-cash Transactions

SIGNIFICANT NON-CASH TRANSACTIONS

The Company engaged in the following significant non-cash investing and financing activities during the nine months ended June 30, 2019 and 2018:


	Nine months ended June 30,
	2019		2018
Common Units issued as part of acquisitions' purchase consideration	$	—	$	104
Restricted Class A common stock issued as part of acquisitions' purchase consideration (Note 3)	$	225	$	—
Acquisition date fair value of contingent consideration in connection with business combinations	$	10,315	$	2,084
Replacement of the 2016 Senior Secured Credit Facility with the 2017 Senior Secured Credit Facility	$	—	$	87,525
Replacement of the 2017 Senior Secured Credit Facility with the 2019 Senior Secured Credit Facility	$	100,229	$	—
Mezzanine Notes net settled with Mezzanine Warrant exercises	$	—	$	14
Unsecured notes payable to related and unrelated creditors net settled with Junior Subordinated Notes Warrants	$	—	$	2,565
Settlement of warrant liability with equity as a result of Mezzanine Warrant exercise	$	—	$	9,253
Preferred return on Redeemable Class A Units	$	—	$	552
Preferred return on Class A Units	$	—	$	2,522
Debt issuance costs financed with proceeds from the 2017 Senior Secured Credit Facility	$	—	$	904
Debt issuance costs and accrued interest financed with proceeds from the 2019 Senior Secured Credit Facility	$	1,271	$	—
Increase in accrued equity issuance costs	$	—	$	760
Conversion of notes payable to related and unrelated creditors to Class A common stock	$	—	$	8,054

Condensed Consolidated Balance Sheet (Unaudited) Parenthetical - $ / shares	Jun. 30, 2019	Sep. 30, 2018
Preferred Stock, par value (in USD per share)	$ 0.0001	$ 0.0001
Preferred Stock authorized (shares)	10,000,000	10,000,000
Preferred Stock issued (shares)	0	0
Preferred Stock outstanding (shares)	0	0
Class A Common Stock
Common Stock, par value (in USD per share)	$ 0.0001	$ 0.0001
Common Stock authorized (shares)	150,000,000	150,000,000
Common Stock issued (shares)	14,420,199	9,112,042
Common Stock, outstanding (shares)	14,420,199	9,112,042
Class B Common Stock
Common Stock, par value (in USD per share)	$ 0.0001	$ 0.0001
Common Stock authorized (shares)	40,000,000	40,000,000
Common Stock issued (shares)	12,921,637	17,213,806
Common Stock, outstanding (shares)	12,921,637	17,213,806

Organization and Operations	9 Months Ended
Organization and Operations	Jun. 30, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Organization and Operations	ORGANIZATION AND OPERATIONS i3 Verticals, Inc. (the “Company”) was formed as a Delaware corporation on January 17, 2018. The Company was formed for the purpose of completing an initial public offering (“IPO”) of its Class A common stock and other related transactions in order to carry on the business of i3 Verticals, LLC and its subsidiaries. i3 Verticals, LLC was founded in 2012 and delivers seamlessly integrated payment and software solutions to small- and medium-sized businesses (“SMBs”) and organizations in strategic vertical markets. The Company’s headquarters are located in Nashville, Tennessee, with operations throughout the United States. Unless the context otherwise requires, references to “we,” “us,” “our,” “i3 Verticals” and the “Company” refer to i3 Verticals, Inc. and its subsidiaries, including i3 Verticals, LLC. Initial Public Offering On June 25, 2018, the Company completed the IPO of 7,647,500 shares of its Class A common stock at a public offering price of $13.00 per share. The Company received approximately $92.5 million of net proceeds, after deducting underwriting discounts and commissions, which the Company used to purchase newly issued common units from i3 Verticals, LLC (the “Common Units”), and Common Units from a selling Common Unit holder, in each case at a price per Common Unit equal to the price per share paid by the underwriters for shares of the Company's Class A common stock in the IPO. Reorganization Transactions In connection with the IPO, the Company completed the following transactions (the “Reorganization Transactions”): •i3 Verticals, LLC amended and restated its existing limited liability company agreement to, among other things, (1) convert all existing Class A units, common units (including common units issued upon the exercise of existing warrants) and Class P units of ownership interest in i3 Verticals, LLC into either Class A voting common units of i3 Verticals, LLC (such holders of Class A voting common units referred to herein as the “Continuing Equity Owners”) or Class B non-voting common units of i3 Verticals, LLC (such holders of Class B non-voting common units referred to herein as the “Former Equity Owners”), and (2) appoint i3 Verticals, Inc. as the sole managing member of i3 Verticals, LLC upon its acquisition of Common Units in connection with the IPO; •the Company amended and restated its certificate of incorporation to provide for, among other things, Class A common stock and Class B common stock; •i3 Verticals, LLC and the Company consummated a merger among i3 Verticals, LLC, i3 Verticals, Inc. and a newly formed wholly-owned subsidiary of i3 Verticals, Inc. (“MergerSub”) whereby: (1) MergerSub merged with and into i3 Verticals, LLC, with i3 Verticals, LLC as the surviving entity; (2) Class A voting common units converted into newly issued Common Units in i3 Verticals, LLC together with an equal number of shares of Class B common stock of i3 Verticals, Inc., and (3) Class B non-voting common units converted into Class A common stock of i3 Verticals, Inc. based on a conversion ratio that provided an equitable adjustment to reflect the full value of the Class B non-voting common units; and •the Company issued shares of its Class A common stock pursuant to a voluntary private conversion of certain subordinated notes (the “Junior Subordinated Notes”) by certain related and unrelated creditors of i3 Verticals, LLC. Following the completion of the IPO and Reorganization Transactions, the Company became a holding company and its principal asset is the Common Units in i3 Verticals, LLC that it owns. i3 Verticals, Inc. operates and controls all of i3 Verticals, LLC's operations and, through i3 Verticals, LLC and its subsidiaries, conducts i3 Verticals, LLC's business. i3 Verticals, Inc. has a majority economic interest in i3 Verticals, LLC. Public Offering On June 10, 2019, the Company completed a secondary public offering (the “June 2019 Secondary Public Offering”) of 5,165,527 shares of its Class A common stock, at a public offering price of $22.75 per share, which included a full exercise of the underwriters' option to purchase 673,764 additional shares of Class A Common Stock from the Company. The Company received approximately $111,640 of net proceeds, after deducting underwriting discounts and commissions, but before offering expenses. The Company used the net proceeds to purchase (1) 1,000,000 Common Units directly from i3 Verticals, LLC, and (2) 4,165,527 Common Units (including 673,764 Common Units due to the exercise of the underwriters' option to purchase additional shares in full) and an equivalent number of Class B common stock (which shares were then canceled) from certain Continuing Equity Owners, in each case at a price per Common Unit equal to the price per share paid by the underwriters for shares of our Class A common stock in the offering. i3 Verticals, LLC received $20,870 in net proceeds from the sale of Common Units to the Company, which it used to repay outstanding indebtedness. •As of June 30, 2019, i3 Verticals, Inc. owned 52.7% of the economic interest in i3 Verticals, LLC. •As of June 30, 2019, the Continuing Equity Owners owned Common Units in i3 Verticals, LLC representing approximately 47.3% of the economic interest in i3 Verticals, LLC, shares of Class A common stock in the Company representing approximately 0.8% of the economic interest and voting power in the Company, and shares of Class B common stock in i3 Verticals, Inc., representing approximately 47.3% of the voting power in the Company. •The Continuing Equity Owners who own Common Units in i3 Verticals, LLC may redeem at each of their options (subject in certain circumstances to time-based vesting requirements) their Common Units for, at the election of i3 Verticals, LLC, cash or newly-issued shares of the Company's Class A common stock. •Combining the Class A common stock and Class B common stock, the Continuing Equity Owners hold approximately 48.1% of the economic interest and voting power in i3 Verticals, Inc. i3 Verticals, Inc. is the sole managing member of i3 Verticals, LLC and as a result, consolidates the financial results of i3 Verticals, LLC and reports a non-controlling interest representing the Common Units of i3 Verticals, LLC held by the Continuing Equity Owners. As the Reorganization Transactions are considered transactions between entities under common control, the financial statements retroactively reflect the accounts of i3 Verticals, LLC for periods prior to the IPO and Reorganization Transactions.

Goodwill and Intangible Assets - Changes in Goodwill (Details) - USD ($) $ in Thousands	9 Months Ended
	Jun. 30, 2019	Sep. 30, 2018
Goodwill [Roll Forward]
Goodwill, beginning	$ 83,954
Goodwill attributable acquisitions	81,911
Goodwill, ending	165,865
Measurement period adjustments related to acquisitions in previous fiscal year	31
Merchant Services
Goodwill [Roll Forward]
Goodwill, beginning	69,666
Goodwill attributable acquisitions	44,989
Goodwill, ending	114,655
Accumulated impairment losses		$ 11,458
Proprietary Software and Payments
Goodwill [Roll Forward]
Goodwill, beginning	14,288
Goodwill attributable acquisitions	36,922
Goodwill, ending	51,210
Accumulated impairment losses		0
Other
Goodwill [Roll Forward]
Goodwill, beginning	0
Goodwill attributable acquisitions	0
Goodwill, ending	$ 0
Accumulated impairment losses		$ 0

Goodwill and Intangible Assets (Tables)

9 Months Ended

Jun. 30, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Changes in Carrying Amount of Goodwill

Changes in the carrying amount of goodwill are as follows:


	Merchant Services		Proprietary Software and Payments		Other		Total
Balance at September 30, 2018 (net of accumulated impairment losses of $11,458, $0 and $0, respectively)	$	69,666	$	14,288	$	—	$	83,954
Goodwill attributable to acquisition activity during the nine months ended June 30, 2019⁽¹⁾	44,989		36,922		—		81,911
Balance at June 30, 2019	$	114,655	$	51,210	$	—	$	165,865

____________________

1.Includes $31 of measurement period adjustments related to acquisitions in the previous fiscal year.

Schedule of Finite-Lived Intangible Assets

Intangible assets, net consisted of the following as of June 30, 2019:


	Cost		Accumulated Amortization		Carrying Value		Amortization Life and Method
Finite-lived intangible assets:
Merchant relationships	$	139,571	$	(40,987)	$	98,584	12 to 19 years – accelerated or straight-line
Non-compete agreements	1,770		(515)		1,255		2 to 5 years – straight-line
Website development costs	77		(15)		62		3 years – straight-line
Trade names	3,992		(1,087)		2,905		3 to 7 years – straight-line
Residual buyouts	4,701		(1,753)		2,948		2 to 8 years – straight-line
Referral and exclusivity agreements	900		(221)		679		5 to 10 years – straight-line
Total finite-lived intangible assets	151,011		(44,578)		106,433

Indefinite-lived intangible assets:
Trademarks	35		—		35
Total identifiable intangible assets	$	151,046	$	(44,578)	$	106,468

Schedule of Indefinite-Lived Intangible Assets

Intangible assets, net consisted of the following as of June 30, 2019:


	Cost		Accumulated Amortization		Carrying Value		Amortization Life and Method
Finite-lived intangible assets:
Merchant relationships	$	139,571	$	(40,987)	$	98,584	12 to 19 years – accelerated or straight-line
Non-compete agreements	1,770		(515)		1,255		2 to 5 years – straight-line
Website development costs	77		(15)		62		3 years – straight-line
Trade names	3,992		(1,087)		2,905		3 to 7 years – straight-line
Residual buyouts	4,701		(1,753)		2,948		2 to 8 years – straight-line
Referral and exclusivity agreements	900		(221)		679		5 to 10 years – straight-line
Total finite-lived intangible assets	151,011		(44,578)		106,433

Indefinite-lived intangible assets:
Trademarks	35		—		35
Total identifiable intangible assets	$	151,046	$	(44,578)	$	106,468

Schedule of Future Amortization Expense of Finite-lived Intangible Assets

Based on net carrying amounts at June 30, 2019, the Company's estimate of future amortization expense for intangible assets are presented in the table below for fiscal years ending September 30:


2019 (three months remaining)	$	3,299
2020	11,734
2021	10,181
2022	9,042
2023	8,090
Thereafter	64,087
	$	106,433

Organization and Operations (Details) - USD ($) $ / shares in Units, $ in Thousands			9 Months Ended
	Jun. 10, 2019	Jun. 25, 2018	Jun. 30, 2019	Sep. 30, 2018
IPO
Subsidiary, Sale of Stock [Line Items]
Shares issued (shares)		7,647,500
Public offering price (in USD per share)		$ 13.00
Net proceeds from public offering		$ 92,500
i3Verticals, LLC
Subsidiary, Sale of Stock [Line Items]
Non-controlling interest, ownership interest (percent)			52.70%
i3Verticals, LLC
Subsidiary, Sale of Stock [Line Items]
Net proceeds from public offering	$ 20,870
Common units, purchased (in units)	1,000,000		4,292,169
Continuing Equity Owner
Subsidiary, Sale of Stock [Line Items]
Common units, purchased (in units)	4,165,527
Shareholders ownership interest (percent)				48.10%
Class B Common Stock \| Continuing Equity Owner
Subsidiary, Sale of Stock [Line Items]
Shareholders ownership interest (percent)			47.30%
Class A Common Stock \| June 2019 Secondary Public Offering
Subsidiary, Sale of Stock [Line Items]
Shares issued (shares)	5,165,527
Public offering price (in USD per share)	$ 22.75
Net proceeds from public offering	$ 111,640
Underwriters exercised option to purchase additional shares (in shares)	673,764
Class A Common Stock \| Continuing Equity Owner
Subsidiary, Sale of Stock [Line Items]
Shareholders ownership interest (percent)			0.80%

Segments

9 Months Ended

Jun. 30, 2019

Segment Reporting [Abstract]

Segments

SEGMENTS

The Company determines its operating segments based on ASC 280, Segment Reporting, how the chief operating decision making group monitors and manages the performance of the business and the level at which financial information is reviewed. The Company’s operating segments are strategic business units that offer different products and services.

The Company's core business is delivering seamlessly integrated payment and software solutions to SMBs and organizations in strategic vertical markets. This is accomplished through the Merchant Services and Proprietary Software and Payments segments.

The Merchant Services segment provides comprehensive payment solutions to businesses and organizations. The Merchant Services segment includes third-party integrated payment solutions as well as traditional payment services across the Company's strategic vertical markets.

The Proprietary Software and Payments segment delivers embedded payment solutions to the Company's clients through company-owned software. Payments are delivered through both the payment facilitator (“PayFac”) model and the traditional merchant processing model. The Company's Proprietary Software and Payments clients are primarily in the education, property management and public sector markets.

The Other category includes corporate overhead expenses when presenting reportable segment information.

The Company primarily uses processing margin to measure operating performance. The following is a summary of reportable segment operating performance for the three and nine months ended June 30, 2019 and 2018.


	As of and for the Three Months Ended June 30, 2019
	Merchant Services		Proprietary Software and Payments		Other		Total
Revenue	$	87,264	$	10,219	$	—	$	97,483

Operating expenses
Interchange and network fees	61,744		1,519		—		63,263
Other costs of services	10,527		904		—		11,431
Selling general and administrative	6,244		6,066		5,277		17,587
Depreciation and amortization	2,972		1,308		145		4,425
Change in fair value of contingent consideration	155		(572)		—		(417)
Income (loss) from operations	$	5,622	$	994	$	(5,422)	$	1,194

Processing margin⁽¹⁾	$	19,442	$	7,946	$	—	$	27,388
Total assets	$	212,315	$	97,043	$	33,887	$	343,245
Goodwill	$	114,655	$	51,210	$	—	$	165,865

__________________________

1.Processing margin is equal to revenue less interchange and network fees, less other costs of services. $4,449, $150 and $0 of residual expense, a component of other costs of services, are added back to the Merchant Services segment, Proprietary Software and Payments segment, and Other category, respectively.


	For the Nine Months Ended June 30, 2019
	Merchant Services		Proprietary Software and Payments		Other		Total
Revenue	$	241,841	$	25,904	$	—	$	267,745

Operating expenses
Interchange and network fees	169,229		4,548		—		173,777
Other costs of services	29,648		1,766		—		31,414
Selling general and administrative	18,561		12,728		13,133		44,422
Depreciation and amortization	8,671		2,811		393		11,875
Change in fair value of contingent consideration	(554)		2,290		—		1,736
Income (loss) from operations	$	16,286	$	1,761	$	(13,526)	$	4,521

Processing margin⁽¹⁾	$	54,653	$	20,082	$	—	$	74,735
Total assets	$	212,315	$	97,043	$	33,887	$	343,245
Goodwill	$	114,655	$	51,210	$	—	$	165,865

__________________________

1.Processing margin is equal to revenue less interchange and network fees, less other costs of services. $11,689, $492 and $0 of residual expense, a component of other costs of services, are added back to the Merchant Services segment, Proprietary Software and Payments segment, and Other category, respectively.


	As of and for the Three Months Ended June 30, 2018
	Merchant Services		Proprietary Software and Payments		Other		Total
Revenue	$	79,766	$	4,770	$	—	$	84,536

Operating expenses
Interchange and network fees	54,673		1,032		—		55,705
Other costs of services	10,693		368		—		11,061
Selling general and administrative	6,126		1,908		2,662		10,696
Depreciation and amortization	2,424		517		59		3,000
Change in fair value of contingent consideration	88		1,063		—		1,151
Income (loss) from operations	$	5,762	$	(118)	$	(2,721)	$	2,923

Processing margin⁽¹⁾	$	18,130	$	3,489	$	—	$	21,619
Total assets	$	142,866	$	18,941	$	4,873	$	166,680
Goodwill	$	69,541	$	10,625	$	—	$	80,166

__________________________

1.Processing margin is equal to revenue less interchange and network fees, less other costs of services. $3,730, $119 and $0 of residual expense, a component of other costs of services, are added back to the Merchant Services segment, Proprietary Software and Payments segment, and Other category, respectively.


	For the Nine Months Ended June 30, 2018
	Merchant Services		Proprietary Software and Payments		Other		Total
Revenue	$	224,671	$	14,788	$	(4)	$	239,455

Operating expenses
Interchange and network fees	155,012		3,565		—		158,577
Other costs (benefits) of services	28,949		1,171		(1)		30,119
Selling general and administrative	17,127		5,546		7,064		29,737
Depreciation and amortization	7,140		1,615		121		8,876
Change in fair value of contingent consideration	1,535		1,745		—		3,280
Income (loss) from operations	$	14,908	$	1,146	$	(7,188)	$	8,866

Processing margin⁽¹⁾	$	50,923	$	10,486	$	(3)	$	61,406
Total assets	$	142,866	$	18,941	$	4,873	$	166,680
Goodwill	$	69,541	$	10,625	$	—	$	80,166

__________________________

1.Processing margin is equal to revenue less interchange and network fees, less other costs of services. $10,213, $434 and $0 of residual expense, a component of other costs of services, are added back to the Merchant Services segment, Proprietary Software and Payments segment, and Other category, respectively.

Long-Term Debt, Net (Tables)

9 Months Ended

Jun. 30, 2019

Debt Disclosure [Abstract]

Summary of Long-term Debt

A summary of long-term debt, net as of June 30, 2019 and September 30, 2018 is as follows:


		June 30,		September 30,
	Maturity	2019		2018
Term loans to bank under the 2017 Senior Secured Credit Facility	October 30, 2022	—		35,000
Revolving lines of credit to banks under the 2017 Senior Secured Credit Facility	October 30, 2022	—		3,250
Revolving lines of credit to banks under the 2019 Senior Secured Credit Facility	May 9, 2024	139,577		—
Debt issuance costs, net		(1,932)		(1,474)
Total long-term debt, net of issuance costs		137,645		36,776
Less current portion of long-term debt		—		(5,000)
Long-term debt, net of current portion		$	137,645	$	31,776

- Definition

Tabular disclosure of long-debt instruments or arrangements, including identification, terms, features, collateral requirements and other information necessary to a fair presentation. These are debt arrangements that originally required repayment more than twelve months after issuance or greater than the normal operating cycle of the entity, if longer.

+ References

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Reference 7: http://fasb.org/us-gaap/role/ref/legacyRef
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Reference 8: http://fasb.org/us-gaap/role/ref/legacyRef
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Reference 9: http://fasb.org/us-gaap/role/ref/legacyRef
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Reference 10: http://fasb.org/us-gaap/role/ref/legacyRef
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-Name Accounting Standards Codification
-Topic 505
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-URI http://asc.fasb.org/extlink&oid=109259400&loc=d3e21475-112644

+ Details

Related Party Transactions	9 Months Ended
Related Party Transactions	Jun. 30, 2019
Related Party Transactions [Abstract]
Related Party Transactions	RELATED PARTY TRANSACTIONS Prior to the Company's IPO and Reorganization Transactions, portions of the Junior Subordinated Notes held by related creditors were outstanding. Interest expense to related parties for the Company’s Junior Subordinated Notes amounted to $145 and $457 during the three and nine months ended June 30, 2018, respectively. Prior to the Company's IPO and Reorganization Transactions, the Mezzanine Notes held by related creditors were outstanding. Interest expense to related parties for the Company’s Mezzanine Notes amounted to $315 and $952 during the three and nine months ended June 30, 2018, respectively. In April, 2016, the Company entered into a purchase agreement to purchase certain assets of Axia, LLC. On April 29, 2016, the Company entered into a Processing Services Agreement (the “Axia Tech Agreement”) with Axia Technologies, LLC (“Axia Tech”), an entity controlled by the previous owner of Axia, LLC. Under the Axia Tech Agreement, the Company agreed to provide processing services for certain merchants as designated by Axia Tech from time to time. In accordance with ASC 605-45, revenue from the processing services is recognized net of interchange, residual expense and other fees. The Company earned net revenues related to the Axia Tech Agreement of $21 and $59 during the three and nine months ended June 30, 2019, respectively, and $13 and $37 during the three and nine months ended June 30, 2018, respectively. i3 Verticals, LLC, Greg Daily, the Company’s CEO and Clay Whitson, the Company’s CFO, own 2.0%, 10.5% and 0.4%, respectively, of the outstanding equity of Axia Tech. In connection with the Company’s IPO, the Company and i3 Verticals, LLC entered into a Tax Receivable Agreement with the Continuing Equity Owners that provides for the payment by the Company to the Continuing Equity Owners of 85% of the amount of certain tax benefits, if any, that it actually realizes, or in some circumstances, is deemed to realize in its tax reporting, as a result of (i) future redemptions funded by the Company or exchanges, or deemed exchanges in certain circumstances, of Common Units of i3 Verticals, LLC for Class A common stock of i3 Verticals, Inc. or cash, and (ii) certain additional tax benefits attributable to payments made under the Tax Receivable Agreement. See Note 6 for further information. As of June 30, 2019, the total amount due under the Tax Receivable Agreement was $23,929.

Summary of Significant Accounting Policies (Policies)	9 Months Ended
Summary of Significant Accounting Policies (Policies)	Jun. 30, 2019
Accounting Policies [Abstract]
Basis of Presentation	Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and pursuant to the reporting and disclosure rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, such statements include all adjustments (consisting only of normal recurring items) which are considered necessary for fair presentation of the unaudited condensed consolidated financial statements of the Company and its subsidiaries as of June 30, 2019 and for the three and nine months ended June 30, 2019 and 2018. The results of operations for the three and nine months ended June 30, 2019 and 2018 are not necessarily indicative of the operating results for the full year. It is recommended that these interim condensed consolidated financial statements be read in conjunction with the Company's consolidated financial statements and related footnotes for the years ended September 30, 2018 and 2017, included in the Company’s Annual Report on Form 10-K for the year ended September 30, 2018.
Principles of Consolidation	Principles of Consolidation These interim condensed consolidated financial statements include the accounts of the Company and its subsidiary companies. All significant intercompany accounts and transactions have been eliminated in consolidation.
Restricted Cash	Restricted Cash Restricted cash represents funds held-on-deposit with processing banks pursuant to agreements to cover potential merchant losses. It is presented as long-term assets on the accompanying condensed consolidated balance sheets since the related agreements extend beyond the next twelve months. Following the adoption of Accounting Standards Update (“ASU”) No. 2016-18, Statement of Cash Flows: Restricted Cash (Topic 230), the Company includes restricted cash along with the cash and cash equivalents balance for presentation in the condensed consolidated statements of cash flows.
Inventories	Inventories Inventories consist of point-of-sale equipment to be sold to customers and are stated at the lower of cost, determined on a weighted average basis, or net realizable value.
Acquisitions	Acquisitions Business acquisitions have been recorded using the acquisition method of accounting in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 805, Business Combinations (“ASC 805”), and, accordingly, the purchase price has been allocated to the assets acquired and liabilities assumed based on their estimated fair value as of the date of acquisition. When relevant, the fair value of material contingent consideration included in an acquisition is calculated using a Monte Carlo simulation. The fair value of merchant relationships and non-compete assets acquired is identified using the Income Approach. The fair values of trade names and internally-developed software acquired are identified using the Relief from Royalty Method. The fair value of deferred revenue is identified using the Adjusted Fulfillment Cost Method. After the purchase price has been allocated, goodwill is recorded to the extent the total consideration paid for the acquisition, including the acquisition date fair value of contingent consideration, if any, exceeds the sum of the fair values of the separately identifiable acquired assets and assumed liabilities. Acquisition costs for business combinations are expensed when incurred and recorded in selling general and administrative expenses in the accompanying condensed consolidated statements of operations. An acquisition not meeting the accounting criteria to be accounted for as a business combination is accounted for as an asset acquisition. An asset acquisition is recorded at its purchase price, inclusive of acquisition costs, which is allocated among the acquired assets and assumed liabilities based upon their relative fair values at the date of acquisition. The operating results of an acquisition are included in the Company’s condensed consolidated statements of operations from the date of such acquisition.
Revenue Recognition and Deferred Revenue	Revenue Recognition and Deferred Revenue Revenue is recognized when it is realized or realizable and earned, in accordance with ASC 605, Revenue Recognition (“ASC 605”). Recognition occurs when all of the following criteria are met: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services have been performed; (3) the seller’s price to the buyer is fixed or determinable; and (4) collectability is reasonably assured. The Company accrues for rights of refund, processing errors or penalties, or other related allowances based on historical experience. The majority of the Company's gross revenue for the nine months ended June 30, 2019 and 2018 is derived from volume-based payment processing fees (“discount fees”) and other related fixed transaction or service fees. The remainder is comprised of sales of software licensing subscriptions, ongoing support, and other POS-related solutions the Company provides to its clients directly and through its processing bank relationships. Discount fees represent a percentage of the dollar amount of each credit or debit transaction processed. Discount fees are recognized at the time the merchants’ transactions are processed. The Company follows the requirements of ASC 605-45 Revenue Recognition—Principal Agent Considerations, in determining its merchant processing services revenue reporting. Generally, when the Company has control over merchant pricing, merchant portability, credit risk and ultimate responsibility for the merchant relationship, revenues are reported at the time of sale on a gross basis equal to the full amount of the discount charged to the merchant. This amount includes interchange fees paid to card issuing banks and assessments paid to payment card networks pursuant to which such parties receive payments based primarily on processing volume for particular groups of merchants. Revenues generated from merchant portfolios when the Company does not have control over merchant pricing, liability for merchant losses or credit risk or rights of portability are reported net of interchange and other fees. Revenues are also derived from a variety of fixed transaction or service fees, including authorization fees, convenience fees, statement fees, annual fees, and fees for other miscellaneous services, such as handling chargebacks. Revenues derived from service fees are recognized at the time the services are performed and there are no further performance obligations. Revenues from the sale of equipment is recognized upon transfer of ownership and delivery to the customer, after which there are no further performance obligations. Revenues from sales of the Company’s software licensing subscriptions are recognized when they are realized or realizable and earned. Contractual arrangements are evaluated for indications that multiple element arrangements may exist, including instances in which more-than-incidental software deliverables are included. Arrangements may contain multiple elements, such as hardware, software products, maintenance, and professional installation and training services. Revenues are allocated to each element based on the selling price hierarchy. The selling price for a deliverable is based on vendor specific objective evidence of selling price, if available, third party evidence, or estimated selling price. The Company establishes estimated selling price, based on the judgment of the Company's management, considering internal factors such as margin objectives, pricing practices and controls, customer segment pricing strategies and the product life cycle. In arrangements with multiple elements, the Company determines allocation of the transaction price at inception of the arrangement based on the relative selling price of each unit of accounting. In multiple element arrangements in which more-than-incidental software deliverables are included, the Company applies the residual method to determine the amount of software license revenues to be recognized. Under the residual method, if fair value exists for undelivered elements in a multiple-element arrangement, such fair value of the undelivered elements is deferred with the remaining portion of the arrangement consideration recognized upon delivery of the software license or services arrangement. The Company allocates the fair value of each element of a software-related multiple-element arrangement based upon its fair value as determined by vendor specific objective evidence of selling price, with any remaining amount allocated to the software license. If evidence of the fair value cannot be established for the undelivered elements of a software arrangement, then the entire amount of revenue under the arrangement is deferred until these elements have been delivered or objective evidence can be established. These amounts, if any, are included in deferred revenue in the condensed consolidated balance sheets. Revenues related to software licensing subscriptions, maintenance or other support services with terms greater than one month are recognized ratably over the term of the agreement. Revenues from sales of the Company’s combined hardware and software element are recognized when they are realized or realizable and earned which has been determined to be upon the delivery of the product. Revenues derived from service fees are recognized at the time the services are performed and there are no further performance obligations. The Company’s training, installation, and repair services are recognized as revenue as these services are performed. Deferred revenue represents amounts billed to customers by the Company for services contracts. The initial prepaid contract agreement balance is deferred. The balance is then recognized as the services are provided over the contract term. Deferred revenue that is expected to be recognized as revenue within one year is recorded as short-term deferred revenue and the remaining portion is recorded as other long-term liabilities in the condensed consolidated balance sheets. Interchange and Network Fees and Other Cost of Services Interchange and network fees consist primarily of fees that are directly related to discount fee revenue. These include interchange fees paid to issuers and assessment fees payable to card associations, which are a percentage of the processing volume the Company generates from Visa and Mastercard, as well as fees charged by card-issuing banks. Other costs of services include costs directly attributable to processing and bank sponsorship costs, which may not be based on a percentage of volume. These costs also include related costs such as residual payments to sales groups, which are based on a percentage of the net revenues generated from merchant referrals. In certain merchant processing bank relationships, the Company is liable for chargebacks against a merchant equal to the volume of the transaction. Losses resulting from chargebacks against a merchant are included in other cost of services on the accompanying condensed consolidated statement of operations. The Company evaluates its risk for such transactions and estimates its potential loss from chargebacks based primarily on historical experience and other relevant factors. The reserve for merchant losses is included within accrued expenses and other current liabilities on the accompanying condensed consolidated balance sheets. The cost of equipment sold is also included in other cost of services. Interchange and other costs of services are recognized at the time the merchant's transactions are processed. The Company accounts for all governmental taxes associated with revenue transactions on a net basis.
Use of Estimates	Use of Estimates The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Such estimates include, but are not limited to, the value of purchase consideration paid and identifiable assets acquired and assumed in acquisitions, goodwill and intangible asset impairment review, warrant valuation, revenue recognition for multiple element arrangements, loss reserves, assumptions used in the calculation of equity-based compensation and in the calculation of income taxes, and certain tax assets and liabilities as well as the related valuation allowances. Actual results could differ from those estimates. During the first quarter of fiscal year 2019, management determined it was appropriate to change the amortization rate for certain of our merchant contract intangible assets to reflect the expected distribution of future cash flows. This change was applied prospectively beginning on October 1, 2018.
Recently Issued Accounting Pronouncements	Recently Issued Accounting Pronouncements In August 2018, the FASB issued ASU No. 2018-15, Intangibles—Goodwill and Other—Internal-Use Software: Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (Subtopic 350-40). The amendments in ASU No. 2018-15 align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The amendments in this ASU are effective for public business entities for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, with early adoption permitted. As a public business entity, the Company is an emerging growth company and has elected to use the extended transition period provided for such companies. As a result, the Company is not required to adopt this ASU until October 1, 2021. Early adoption is permitted, including adoption in an interim period. The Company elected to early adopt this standard using the prospective method as of October 1, 2018. There was no impact on the Company’s condensed consolidated financial statements for the adoption of ASU No. 2018-15. In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement: Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement (Topic 820). The amendments in ASU No. 2018-13 provide clarification and modify the disclosure requirements on fair value measurement in Topic 820, Fair Value Measurement. The amendments in this ASU are effective for public business entities for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, with early adoption permitted. As a public business entity, the Company is an emerging growth company and has elected to use the extended transition period provided for such companies. As a result, the Company will not be required to adopt this ASU until October 1, 2021. The Company is currently evaluating the impact of the adoption of this principle on the Company’s condensed consolidated financial statements. In June 2018, the FASB issued ASU No. 2018-07, Compensation—Stock Compensation: Improvements to Nonemployee Share-Based Payment Accounting (Topic 718). The amendments in ASU No. 2018-07 expand the scope of Topic 718, Compensation—Stock Compensation to include share-based payments issued to nonemployees for goods or services. The amendments in this ASU are effective for public business entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. As a public business entity, the Company is an emerging growth company and has elected to use the extended transition period provided for such companies. As a result, the Company will not be required to adopt this ASU until October 1, 2020. Early adoption is permitted, but no earlier than a company’s adoption date of ASU No. 2014-09. The Company is currently evaluating the impact of the adoption of this principle on the Company’s condensed consolidated financial statements. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326). The amendments in ASU No. 2016-13 require the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. The amendments in this ASU are effective for public business entities for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, with early adoption permitted for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. As a public business entity, the Company is an emerging growth company and has elected to use the extended transition period provided for such companies. As a result, the Company will not be required to adopt this ASU until October 1, 2021. The Company is currently evaluating the impact of the adoption of this principle on the Company’s condensed consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”). This ASU amends the existing guidance by recognizing all leases, including operating leases, with a term longer than twelve months on the balance sheet and disclosing key information about the lease arrangements. The effective date of this update is for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted. As a public business entity, the Company is an emerging growth company and has elected to use the extended transition period provided for such companies. As a result, the Company will not be required to adopt this ASU until October 1, 2020. The update requires modified retrospective transition, with the option to initially apply the new standard at the adoption date and recognize a cumulative-effect adjustment and elect various practical expedients. In July 2018, the FASB issued ASU 2018-10, Codification Improvements to Topic 842, Leases, which narrows aspects of the guidance issued in the amendments in ASU 2016-02, and ASU 2018-11, Leases—Targeted Improvements (Topic 842), by allowing lessees and lessors to recognize and measure existing leases at the beginning of the period of adoption without modifying the comparative period financial statements (which therefore will remain under prior GAAP, Topic 840, Leases). In December 2018, the FASB issued ASU 2018-20, Narrow-Scope Improvements for Lessors, which clarifies or simplifies certain narrows aspects of the guidance issued in the amendments in ASU 2016-02 for lessors. Since the Company has not yet adopted ASU 2016-02, the effective date and transition requirements will be the same as the effective date and transition requirements in ASU 2016-02. In March 2019, the FASB issued ASU 2019-01, Codification Improvements, which clarifies certain aspects of the guidance issued in the amendments in ASU 2016-02. The amendments in this ASU are effective for public business entities for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the impact of the adoption of these principles on the Company’s condensed consolidated financial statements. In May 2014, the FASB issued ASU No. 2014-09, Revenue From Contracts With Customers (Topic 606) (“ASU 2014-09”). The ASU supersedes the revenue recognition requirements in ASC 605. The new standard provides a five-step analysis of transactions to determine when and how revenue is recognized, based upon the core principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new standard also requires additional disclosures regarding the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The new standard, as amended, is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, with early adoption permitted. As an emerging growth company, the Company will not be required to adopt this ASU until October 1, 2019. The amendment allows companies to use either a full retrospective or a modified retrospective approach to adopt this ASU. The FASB issued updates and clarifications to ASU 2014-09, including ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Gross versus Net) issued in March 2016, ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing issued in April 2016 and ASU 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients issued in May 2016. Since the Company has not yet adopted ASU 2014-09, the effective date and transition requirements of the related ASUs will be the same as the effective date and transition requirements in ASU 2014-09. The Company has formed a project team, is developing a plan for adoption and is determining the impact on its revenue recognition policies, procedures and control framework and the resulting impact on its consolidated financial position, results of operations and cash flows. The Company has reviewed revenue sources and evaluated revenue populations by type to determine the appropriate distribution into portfolios that will result in materially consistent conclusions as if each revenue type was evaluated on a contract-by-contract basis under the new standard. The analysis of these portfolios is ongoing. This ASU could have a material impact on the amounts presented in certain categories on our consolidated statements of operations, but we do not expect it to have a material effect on our consolidated financial position, results of operations and cash flows. This analysis is subject to change as the Company continues to refine its assessment of the standard. The Company anticipates adopting this ASU on October 1, 2019 using the modified retrospective approach.
Fair Value Measurement	The Company applies the provisions of ASC 820, Fair Value Measurement, which defines fair value, establishes a framework for its measurement and expands disclosures about fair value measurements. Fair value is the price that would be received to sell an asset or the price paid to transfer a liability as of the measurement date. A three-tier, fair-value reporting hierarchy exists for disclosure of fair value measurements based on the observability of the inputs to the valuation of financial assets and liabilities. The three levels are: Level 1 — Quoted prices for identical instruments in active markets. Level 2 — Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. Level 3 — Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable in active exchange markets.

Condensed Consolidated Statements of Operations (Unaudited) - USD ($)
$ in Thousands

3 Months Ended

9 Months Ended

Jun. 30, 2019

Jun. 30, 2018

Jun. 30, 2019

Jun. 30, 2018

Income Statement [Abstract]

Revenue

$ 97,483

$ 84,536

$ 267,745

$ 239,455

Operating expenses

Interchange and network fees

63,263

55,705

173,777

158,577

Other costs of services

11,431

11,061

31,414

30,119

Selling general and administrative

17,587

10,696

44,422

29,737

Depreciation and amortization

4,425

3,000

11,875

8,876

Change in fair value of contingent consideration

(417)

1,151

1,736

3,280

Total operating expenses

96,289

81,613

263,224

230,589

Income from operations

1,194

2,923

4,521

8,866

Other expenses

Interest expense, net

1,918

2,644

3,987

7,649

Change in fair value of warrant liability

242

8,487

Total other expenses

1,918

2,886

3,987

16,136

(Loss) income before income taxes

(724)

534

(7,270)

(Benefit from) provision for income taxes

(131)

692

(2)

553

Net (loss) income

(593)

(655)

536

(7,823)

Net income (loss) attributable to non-controlling interest

598

(91)

2,651

(91)

Net loss attributable to Class A common stockholders

$ (1,191)

$ (564)

$ (2,115)

$ (7,732)

Net income per share available to Class A common stockholders(1):

Basic (in USD per share)

$ (0.12)

^[1]

$ (0.01)

$ (0.23)

$ (0.01)

Diluted (in USD per share)

$ (0.12)

^[1]

$ (0.01)

$ (0.23)

$ (0.01)

Weighted average shares of Class A common stock outstanding:

Basic (shares)

10,064,785

^[1]

8,812,630

9,254,549

8,812,630

Diluted (shares)

10,064,785

^[1]

8,812,630

9,254,549

8,812,630

[1]	Basic and diluted net loss per Class A common stock are presented only for the period after the Company’s Reorganization Transactions. See Note 1 for a description of the Reorganization Transactions. See Note 13 for the calculation of income per common share.

Subsequent Events (Details) - USD ($)		3 Months Ended
Subsequent Events (Details) - USD ($)	Aug. 08, 2019	Jun. 30, 2019	Dec. 31, 2017
Subsequent Event [Line Items]
Issuance of common stock		$ 225,000	$ 104,000
Maximum \| Subsequent Event
Subsequent Event [Line Items]
Issuance of common stock	$ 250,000,000
Issuance of class A common stock (shares)	131,455.34

Earnings Per Share

9 Months Ended

Jun. 30, 2019

Earnings Per Share [Abstract]

Earnings Per Share

EARNINGS PER SHAREBasic earnings per share of Class A common stock is computed by dividing net income available to i3 Verticals, Inc. by the weighted-average number of shares of Class A common stock outstanding during the period. Diluted earnings per share of Class A common stock is computed by dividing net income available to i3 Verticals, Inc. by the weighted-average number of shares of Class A common stock outstanding adjusted to give effect to potentially dilutive securities.

Prior to the IPO, the i3 Verticals, LLC membership structure included Class A units, common units and Class P units. The Company analyzed the calculation of earnings per unit for periods prior to the IPO using the two-class method and determined that it resulted in values that would not be meaningful to the users of these condensed consolidated financial statements. Therefore, earnings per share information for the three and nine months ended June 30, 2018 represents only the period from June 25 through June 30, 2018.


	Three months ended June 30,						Nine months ended June 30,
	2019		2018		2019		2018
Basic and diluted⁽²⁾ net loss per share:
Numerator
Net (loss) income	$	(593)	$	(138)	$	536	$	(138)
Less: Net income (loss) attributable to non-controlling interest	598		(91)		2,651		(91)
Net loss attributable to Class A common stockholders	$	(1,191)	$	(47)	$	(2,115)	$	(47)
Denominator
Weighted average shares of Class A common stock outstanding⁽¹⁾	10,064,785		8,812,630		9,254,549		8,812,630
Basic and diluted net loss per share	$	(0.12)	$	(0.01)	$	(0.23)	$	(0.01)

____________________

1.Excludes 285,433 restricted Class A common stock units.

Shares of the Company's Class B common stock do not participate in the earnings or losses of the Company and are therefore not participating securities. As such, separate presentation of basic and diluted earnings per share of Class B common stock under the two-class method has not been presented.

Equity-Based Compensation (Tables)

9 Months Ended

Jun. 30, 2019

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Summary of Equity-Based Compensation Expense

A summary of equity-based compensation expense recognized during the three and nine months ended June 30, 2019 and 2018 is as follows:


	Three months ended June 30,						Nine months ended June 30,
	2019		2018		2019		2018
TRA non-participation compensatory shares	$	—	$	741	$	—	$	741
Stock options	1,808		76		4,122		76
Equity-based compensation expense	$	1,808	$	817	$	4,122	$	817

Fair Value of Stock Option Awards


	June 30, 2019		September 30, 2018
Expected volatility⁽¹⁾	27.0	%	26.3	%
Expected dividend yield⁽²⁾	—	%	—	%
Expected term⁽³⁾	6 years		6 years
Risk-free interest rate⁽⁴⁾	2.5	%	2.8	%

_________________

1.Expected volatility is based on the historical volatility of a selected peer group over a period equivalent to the expected term.

2.The Company has assumed a dividend yield of zero as management has no plans to declare dividends in the foreseeable future.

3.Expected term represents the estimated period of time until an award is exercised and was determined using the simplified method.

4.The risk-free rate is an interpolation of yields on U.S. Treasury securities with maturities equivalent to the expected term.

Summary of Stock Option Activity

A summary of stock option activity for the nine months ended June 30, 2019 is as follows:


	Stock Options	Weighted Average Exercise Price
Outstanding at beginning of period	2,138,500	$	13.13
Granted	2,297,916	22.52
Exercised	(29,967)	13.00
Forfeited	(81,916)	17.62
Outstanding at end of period	4,324,533	$	18.04

Acquisitions

9 Months Ended

Jun. 30, 2019

Business Combinations [Abstract]

Acquisitions

ACQUISITIONSOn January 14, 2019, the Company made an investment of $1,000 in the equity of a hospitality software and payments company. The acquired asset is accounted for as a cost method investment.

During the nine months ended June 30, 2019, the Company also acquired the following intangible assets and businesses:

Residual Buyouts

From time to time, the Company acquires future commission streams from sales agents in exchange for an upfront cash payment. This results in an increase in overall gross processing volume to the Company. The residual buyouts are treated as asset acquisitions, resulting in recording a residual buyout intangible asset at cost on the date of acquisition. These assets are amortized using a method of amortization that reflects the pattern in which the economic benefits of the intangible asset are expected to be utilized over their estimated useful lives.

During the nine months ended June 30, 2019, the Company purchased $2,708 in residual buyouts using a combination of cash on hand and borrowings on the Company's revolving line of credit. The acquired residual buyout intangible assets have a weighted-average amortization period of seven years.

Business Combinations

During the nine months ended June 30, 2019, the Company completed the acquisitions of unrelated businesses, including Pace Payment Systems, Inc.

Purchase of Pace Payment Systems, Inc.

On May 31, 2019, i3-SDCR acquired all of the stock of Pace Payment Systems, Inc. (“Pace”) via a reverse triangular merger involving Pace and a special acquisition subsidiary of i3-SDCR. The Company acquired Pace to expand its software offerings, primarily in the public sector and education verticals. The total purchase consideration was $55,969, including $52,408 in cash consideration, funded by proceeds from the Company's revolving line of credit, $3,336 of contingent consideration and $225 of restricted shares of Class A common stock in i3 Verticals. Certain of the purchase price allocations assigned for this acquisition are preliminary.

The goodwill associated with the acquisition is not deductible for tax purposes. The acquired merchant relationships intangible asset has an estimated amortization period of 15 years. The non-compete agreement and trade name have estimated amortization periods of 3 and 5 years, respectively. The weighted-average estimated amortization period of all intangibles acquired is 15 years. The acquired capitalized software has an estimated amortization period of 7 years. The acquisition also included a deferred tax asset related to net operating losses, which we have fully valued as of June 30, 2019.

Acquisition-related costs for Pace amounted to approximately $292 and were expensed as incurred.

Certain provisions in the merger agreement provide for additional consideration of up to $20,000 in the aggregate, to be paid based upon achievement of specified financial performance targets, as defined in the purchase agreement, in the 24 months from January 1, 2020 through December 31, 2021. The Company determined the acquisition date fair value of the liability for the contingent consideration based on a discounted cash flow analysis. In each subsequent reporting period, the Company will reassess the current estimates of performance relative to the targets and adjust the contingent liability to its fair value through earnings. See additional disclosures in Note 7.

Other Business Combinations

The Company completed the acquisitions of other businesses to expand the Company’s software offerings in the public sector vertical market, provide technology that enhances the Company’s Burton Platform and expand the Company's merchant base. Total purchase consideration was $85,661, including $78,682 in revolving line of credit proceeds and $6,979 of contingent consideration. Certain of the purchase price allocations assigned for these acquisitions are preliminary.

For all except one of these business acquired, the goodwill associated with the acquisitions is deductible for tax purposes, and goodwill associated with the acquisition of one of the businesses is not deductible for tax

purposes. The acquired merchant relationships intangible assets have estimated amortization periods of between thirteen and nineteen years. The non-compete agreement and trade names have weighted-average amortization periods of three and five years, respectively. The weighted-average amortization period for all intangibles acquired is sixteen years. The acquired capitalized software has an estimated amortization period of six years.

Acquisition-related costs for these businesses amounted to approximately $863 and were expensed as incurred.

Certain provisions in the purchase agreements provide for additional consideration of up to $24,100, in the aggregate, to be paid based upon the achievement of specified financial performance targets, as defined in the purchase agreements, through no later than May 2021. The Company determined the acquisition date fair values of the liabilities for the contingent consideration based on probability forecasts and discounted cash flow analyses. In each subsequent reporting period, the Company will reassess its current estimates of performance relative to the targets and adjust the contingent liabilities to their fair values through earnings. See additional disclosures in Note 7.

Summary of Business Combinations

The preliminary fair values assigned to certain assets and liabilities assumed, as of the acquisition dates, during the nine months ended June 30, 2019 were as follows:


	Pace		Other		Total
Cash and cash equivalents	$	108	$	4,004	$	4,112
Accounts receivable	545		3,867		4,412
Settlement assets	—		20		20
Inventories	45		26		71
Prepaid expenses and other current assets	53		408		461
Property and equipment	527		592		1,119
Capitalized software	3,400		8,740		12,140
Acquired merchant relationships	13,400		31,380		44,780
Non-compete agreements	60		150		210
Trade name	500		1,240		1,740
Goodwill	42,705		39,175		81,880
Other assets	4		2		6
Total assets acquired	61,347		89,604		150,951

Accounts payable	722		84		806
Accrued expenses and other current liabilities	95		1,241		1,336
Settlement obligations	—		20		20
Deferred revenue, current	24		2,598		2,622
Other long-term liabilities	4,537		—		4,537
Net assets acquired	$	55,969	$	85,661	$	141,630

Pro Forma Results of Operations for Business Combinations

The following unaudited supplemental pro forma results of operations have been prepared as though each of the businesses that were acquired during the nine month period ended June 30, 2019 had occurred on October 1, 2017. Pro forma adjustments were made to reflect the impact of depreciation and amortization, changes to executive compensation and the revised debt load, all in accordance with ASC 805. This supplemental pro forma


	Nine months ended June 30,
	2019		2018
Revenue	$	299,832	$	284,443
Net income (loss)	$	(4,772)	$	(16,113)

Long-Term Debt, Net

9 Months Ended

Jun. 30, 2019

Debt Disclosure [Abstract]

Long-Term Debt, Net

LONG-TERM DEBT, NET

A summary of long-term debt, net as of June 30, 2019 and September 30, 2018 is as follows:


		June 30,		September 30,
	Maturity	2019		2018
Term loans to bank under the 2017 Senior Secured Credit Facility	October 30, 2022	—		35,000
Revolving lines of credit to banks under the 2017 Senior Secured Credit Facility	October 30, 2022	—		3,250
Revolving lines of credit to banks under the 2019 Senior Secured Credit Facility	May 9, 2024	139,577		—
Debt issuance costs, net		(1,932)		(1,474)
Total long-term debt, net of issuance costs		137,645		36,776
Less current portion of long-term debt		—		(5,000)
Long-term debt, net of current portion		$	137,645	$	31,776

2019 Senior Secured Credit Facility

On May 9, 2019, the Company replaced its existing 2017 Senior Secured Credit Facility (defined below) with a new credit agreement (the “2019 Senior Secured Credit Facility”). The Company concluded that the replacement of the 2017 Senior Secured Credit Facility should be accounted for as a debt modification based on the guidance in ASC 470-50. In connection with the replacement of the 2017 Senior Secured Credit Facility, the Company recorded a debt extinguishment charge of $152 for the write-off of deferred financing costs, which was recorded in interest expense in the condensed consolidated statements of operations. The 2019 Senior Secured Credit Facility consists of a $300,000 revolving line of credit, together with an option to increase the revolving line of credit and/or obtain incremental term loans in an additional principal amount of up to $50,000 in the aggregate (subject to the receipt of additional commitments for any such incremental loan amounts). The 2019 Senior Secured Credit Facility accrues interest at LIBOR (based upon an interest period of one, two, three or six months or, under some circumstances, up to twelve months) plus an applicable margin of 2.25% to 3.25% (2.50% as of June 30, 2019), or the base rate (defined as the highest of (x) the Bank of America prime rate, (y) the federal funds rate plus 0.50% and (z) LIBOR plus 1.00%), plus an applicable margin of 0.25% to 1.25% (0.50% as of June 30, 2019), in each case depending upon the consolidated total leverage ratio, as defined in the agreement. Interest is payable at the end of the selected interest period, but no less frequently than quarterly. Additionally, the 2019 Senior Secured Credit Facility requires the Company to pay unused commitment fees of 0.15% to 0.30% (0.20% as of June 30, 2019) on any undrawn amounts under the revolving line of credit and letter of credit fees of up to 3.25% on the maximum amount available to be drawn under each letter of credit issued under the

agreement. The maturity date of the 2019 Senior Secured Credit Facility is May 9, 2024. As of June 30, 2019, there was $160,423 available for borrowing under the revolving line of credit.

The 2019 Senior Secured Credit Facility is secured by substantially all assets of the Company. The lenders under the 2019 Senior Secured Credit Facility hold senior rights to collateral and principal repayment over all other creditors.

The provisions of the 2019 Senior Secured Credit Facility place certain restrictions and limitations upon the Company. These include, among others, restrictions on liens, investments, indebtedness, fundamental changes and dispositions; maintenance of certain financial ratios; and certain non-financial covenants pertaining to the activities of the Company during the period covered. The Company was in compliance with such covenants as of June 30, 2019. In addition, the 2019 Senior Secured Credit Facility restricts the Company's ability to make dividends or other distributions to the holders of the Company's equity. The Company is permitted to (i) make cash distributions to the holders of the Company's equity in order to pay taxes incurred by owners of equity in i3 Verticals, LLC, by reason of such ownership, (ii) move intercompany cash between subsidiaries that are joined to the 2019 Senior Secured Credit Facility, (iii) repurchase equity from employees, directors, officers or consultants in an aggregate amount not to exceed $3,000 per year, (iv) make certain payments in connection with the Tax Receivable Agreement, and (v) make other dividends or distributions in an aggregate amount not to exceed 5% of the net cash proceeds received from any additional common equity issuance. The Company is also permitted to make non-cash dividends in the form of additional equity issuances. Each subsidiary may make ratable distributions to persons that own equity interests in such subsidiary. All other forms of dividends or distributions are prohibited under the 2019 Senior Secured Credit Facility.

2017 Senior Secured Credit Facility

On October 30, 2017, the Company replaced its existing credit facility with the 2017 Senior Secured Credit Facility (the “2017 Senior Secured Credit Facility”). The 2017 Senior Secured Credit Facility consisted of term loans in the original principal amount of $40,000 and a $110,000 revolving line of credit. The 2017 Senior Secured Credit Facility accrued interest, payable monthly, at the prime rate plus a margin of 0.50% to 2.00% or at the 30-day LIBOR rate plus a margin of 2.75% to 4.00%, in each case depending on the ratio of consolidated debt-to-EBITDA, as defined in the agreement. Additionally, the 2017 Senior Secured Credit Facility required the Company to pay unused commitment fees of 0.15% to 0.30% on any undrawn amounts under the revolving line of credit. The maturity date of the 2017 Senior Secured Credit Facility was October 30, 2022. Principal payments of $1,250 were due on the last day of each calendar quarter until the maturity date, when all outstanding principal and accrued and unpaid interest are due.

The 2017 Senior Secured Credit Facility was secured by substantially all assets of the Company. The lenders under the 2017 Senior Secured Credit Facility held senior rights to collateral and principal repayment over all other creditors.

As previously mentioned, on May 9, 2019, the Company replaced its existing 2017 Senior Secured Credit Facility with the 2019 Senior Secured Credit Facility.

Mezzanine Warrants

During 2013, the Company issued notes payable in the aggregate principal amount of $10,500 (the “Mezzanine Notes”) to three creditors. In June 2018, all of the outstanding aggregate principal balance and accrued interest on the Mezzanine Notes was repaid with proceeds from the Company’s IPO.

In connection with the issuance of the Mezzanine Notes, the Company granted warrants (the “Mezzanine Warrants”) to purchase 1,423,688 common units in i3 Verticals, LLC. The Mezzanine Warrants were determined to have no material value as of the grant date. On June 25, 2018, in conjunction with the Reorganization Transactions described in Note 1, all existing Mezzanine Warrants were exercised for common units in i3 Verticals, LLC. The intrinsic value of the Mezzanine Warrants at that date was $9,241. The change in the fair market value of the warrants for the three and nine months ended June 30, 2018 is reflected within the condensed consolidated statement of operations.

Debt issuance costs

During the three and nine months ended June 30, 2019, the Company incurred debt issuance costs totaling $1,229, in connection with the issuance of long-term debt. During the three and nine months ended June 30, 2018, the Company incurred debt issuance costs totaling $5 and $1,171, respectively, in connection with the issuance of long-term debt. The debt issuance costs are being amortized over the related term of the debt using the straight-line method and are presented net against long-term debt in the condensed consolidated balance sheets. As part of the April 2016 amendment to the Company’s previous senior credit facility (the “2016 Senior Secured Credit Facility”), the Company expensed a nominal amount of unamortized debt issuance costs related to the exit of a participating bank from the 2016 Senior Secured Credit Facility. The amortization of deferred debt issuance costs is included in interest expense and amounted to approximately $154 and $619 during the three and nine months ended June 30, 2019, respectively, and $370 and $835 during the three and nine months ended June 30, 2018, respectively.

Equity-Based Compensation (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Equity-based compensation expense	$ 1,808	$ 817	$ 4,122	$ 817
Income tax benefits related to equity-based compensation	30	30	30	30
TRA Non-participation Compensatory Shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Equity-based compensation expense	0	741	0	741
Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Equity-based compensation expense	$ 1,808	$ 76	$ 4,122	$ 76

Commitments and Contingencies (Tables)

9 Months Ended

Jun. 30, 2019

Commitments and Contingencies Disclosure [Abstract]

Schedule of Approximate Future Minimum Rental Payments for Operating Leases

A summary of approximate future minimum payments under these leases as of June 30, 2019 is as follows:


Years ending September 30:
2019 (three months remaining)	$	652
2020	2,344
2021	1,817
2022	1,579
2023	1,482
Thereafter	1,405
Total	$	9,279

Minimum Fee Commitments

As of June 30, 2019, such minimum fee commitments were as follows:


Years ending September 30:
2019 (three months remaining)	$	634
2020	2,541
2021	1,457
2022	2,046
2023	2,646
Thereafter	243
Total	$	9,567

Significant Non-cash Transactions (Details) - USD ($) $ in Thousands	3 Months Ended			9 Months Ended
	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Jun. 30, 2019	Jun. 30, 2018
Other Significant Noncash Transactions [Line Items]
Common units issued as part of acquisitions' purchase consideration				$ 0	$ 104
Acquisition date fair value of contingent consideration in connection with business combinations				10,315	2,084
Mezzanine Notes net settled with Mezzanine Warrant exercises				0	14
Unsecured notes payable to related and unrelated creditors net settled with Junior Subordinated Notes Warrants				0	2,565
Settlement of warrant liability with equity as a result of Mezzanine Warrant exercise				0	9,253
Preferred return on Class A Units and Redeemable Class A Units	$ 175	$ 209	$ 168
Increase in accrued equity issuance costs				0	760
Conversion of notes payable to related and unrelated creditors to Class A common stock				0	8,054
Redeemable Class A
Other Significant Noncash Transactions [Line Items]
Preferred return on Class A Units and Redeemable Class A Units				0	552
Class A Common Stock
Other Significant Noncash Transactions [Line Items]
Common units issued as part of acquisitions' purchase consideration				225	0
Preferred return on Class A Units and Redeemable Class A Units	$ 0	$ 0	$ 0	0	2,522
2017 Senior Secured Credit Facility \| Line of Credit
Other Significant Noncash Transactions [Line Items]
Replacement of Senior Secured Facility				0	87,525
Debt issuance costs financed with proceeds from Senior Secured Credit Facility				0	904
2019 Senior Secured Credit Facility \| Line of Credit
Other Significant Noncash Transactions [Line Items]
Replacement of Senior Secured Facility				100,229	0
Debt issuance costs financed with proceeds from Senior Secured Credit Facility				$ 1,271	$ 0

Fair Value Measurements (Tables)

9 Months Ended

Jun. 30, 2019

Fair Value Disclosures [Abstract]

Changes in Level 3 Financial Instruments Measured on a Recurring Basis

The following tables present the changes in the Company's Level 3 financial instruments that are measured at fair value on a recurring basis.


	Accrued Contingent Consideration
Balance at September 30, 2018	5,999
Contingent consideration accrued at time of business combination	10,315
Change in fair value of contingent consideration included in Operating expenses	1,736
Contingent consideration paid	(4,194)
Balance at June 30, 2019	$	13,856


	Mezzanine Warrants		Accrued Contingent Consideration
Balance at September 30, 2017	$	767	$	3,340
Change in the fair value of warrant liabilities, included in Other expenses	8,487		—
Contingent consideration accrued at time of business combination	—		2,084
Change in fair value of contingent consideration included in Operating expenses	—		3,280
Contingent consideration paid	—		(1,791)
Balance at June 30, 2018	$	—	$	6,913

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
Cash flows from operating activities:
Net income (loss)	$ 536	$ (7,823)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	11,875	8,876
Equity-based compensation	4,122	817
Provision for doubtful accounts	43	33
Amortization of deferred financing costs	619	835
Debt extinguishment costs	152	0
Loss on disposal of assets	8	5
(Benefit from) deferred income taxes	(36)	(468)
Non-cash change in fair value of warrant liability	0	8,487
Increase in non-cash contingent consideration expense from original estimate	1,736	3,280
Changes in operating assets:
Accounts receivable	3,758	2,205
Prepaid expenses and other current assets	(1,779)	1,433
Other assets	(2,369)	(2,994)
Changes in operating liabilities:
Accounts payable	2,489	724
Accrued expenses and other current liabilities	(616)	2,936
Deferred revenue	(2,633)	(3,033)
Other long-term liabilities	(48)	160
Contingent consideration paid in excess of original estimates	(1,560)	(814)
Net cash provided by operating activities	16,297	14,659
Cash flows from investing activities:
Expenditures for property and equipment	(585)	(1,309)
Expenditures for capitalized software	(1,478)	(760)
Purchases of merchant portfolios and residual buyouts	(2,708)	(1,207)
Acquisitions of businesses, net of cash acquired	(126,862)	(26,862)
Acquisition of other intangibles	(72)	(818)
Net cash used in investing activities	(131,705)	(30,956)
Cash flows from financing activities:
Proceeds from revolving credit facility	149,919	19,250
Payments of revolving credit facility	(14,862)	(90,850)
Proceeds from notes payable to banks	0	24,671
Payments of notes payable to banks	(35,000)	(3,750)
Payment of notes payable to mezzanine lenders	0	10,486
Payment of unsecured notes payable to related and unrelated creditors	0	5,489
Payment of debt issuance costs	(152)	(266)
Proceeds from the exercise of Mezzanine Warrants and Junior Subordinated Notes Warrants	0	270
Proceeds from issuance of Class A common stock sold in public offering, net of underwriting discounts and offering costs	21,660	0
Proceeds from issuance of Class A common stock sold in initial public offering, net of underwriting discounts and offering costs	0	89,729
Payments for Common Units in i3 Verticals, LLC from selling shareholder	0	4,635
Cash paid for contingent consideration	(2,634)	(977)
Required distributions to members for tax obligations	(2,025)	0
Proceeds from stock option exercises	390	0
Net cash provided by financing activities	117,296	17,467
Net increase (decrease) in cash, cash equivalents, and restricted cash	1,888	1,170
Cash, cash equivalents, and restricted cash at beginning of period	1,237	1,968
Cash, cash equivalents, and restricted cash at end of period	3,125	3,138
Supplemental disclosure of cash flow information:
Cash paid for interest	2,980	8,961
Cash paid for income taxes	$ 24,611	$ 137

Goodwill and Intangible Assets - Future Amortization Expense (Details) $ in Thousands	Jun. 30, 2019 USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]
2019 (six months remaining)	$ 3,299
2020	11,734
2021	10,181
2022	9,042
2023	8,090
Thereafter	64,087
Finite-lived intangible assets, carrying value	$ 106,433

Significant Non-cash Transactions (Tables)

9 Months Ended

Jun. 30, 2019

Cash Flow, Noncash Investing and Financing Activities Disclosure [Abstract]

Schedule of Significant Noncash Transactions

The Company engaged in the following significant non-cash investing and financing activities during the nine months ended June 30, 2019 and 2018:


	Nine months ended June 30,
	2019		2018
Common Units issued as part of acquisitions' purchase consideration	$	—	$	104
Restricted Class A common stock issued as part of acquisitions' purchase consideration (Note 3)	$	225	$	—
Acquisition date fair value of contingent consideration in connection with business combinations	$	10,315	$	2,084
Replacement of the 2016 Senior Secured Credit Facility with the 2017 Senior Secured Credit Facility	$	—	$	87,525
Replacement of the 2017 Senior Secured Credit Facility with the 2019 Senior Secured Credit Facility	$	100,229	$	—
Mezzanine Notes net settled with Mezzanine Warrant exercises	$	—	$	14
Unsecured notes payable to related and unrelated creditors net settled with Junior Subordinated Notes Warrants	$	—	$	2,565
Settlement of warrant liability with equity as a result of Mezzanine Warrant exercise	$	—	$	9,253
Preferred return on Redeemable Class A Units	$	—	$	552
Preferred return on Class A Units	$	—	$	2,522
Debt issuance costs financed with proceeds from the 2017 Senior Secured Credit Facility	$	—	$	904
Debt issuance costs and accrued interest financed with proceeds from the 2019 Senior Secured Credit Facility	$	1,271	$	—
Increase in accrued equity issuance costs	$	—	$	760
Conversion of notes payable to related and unrelated creditors to Class A common stock	$	—	$	8,054

Long-Term Debt, Net - Additional Information (Details) - USD ($)		3 Months Ended		9 Months Ended
	May 09, 2019	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Jun. 25, 2018	Oct. 30, 2017	Dec. 31, 2013
Debt Instrument [Line Items]
Debt issuance costs incurred		$ 1,229,000	$ 5,000	$ 1,229,000	$ 1,171,000
Amortization of deferred debt issuance costs		$ 154,000	$ 370,000	619,000	$ 835,000
Term loans to bank under the Senior Secured Credit Facility \| Secured Debt
Debt Instrument [Line Items]
Original principal amount							$ 40,000,000
Senior Secured Credit Facility \| Line of Credit
Debt Instrument [Line Items]
Revolving line of credit borrowing capacity							$ 110,000,000
Quarterly principal payment				$ 1,250,000
Senior Secured Credit Facility \| Line of Credit \| Minimum
Debt Instrument [Line Items]
Unused commitment fee (percent)				0.15%
Senior Secured Credit Facility \| Line of Credit \| Maximum
Debt Instrument [Line Items]
Unused commitment fee (percent)				0.30%
Senior Secured Credit Facility \| Line of Credit \| Prime Rate \| Minimum
Debt Instrument [Line Items]
Basis spread on variable rate (percent)				0.50%
Senior Secured Credit Facility \| Line of Credit \| Prime Rate \| Maximum
Debt Instrument [Line Items]
Basis spread on variable rate (percent)				2.00%
Senior Secured Credit Facility \| Line of Credit \| LIBOR \| Minimum
Debt Instrument [Line Items]
Basis spread on variable rate (percent)				2.75%
Senior Secured Credit Facility \| Line of Credit \| LIBOR \| Maximum
Debt Instrument [Line Items]
Basis spread on variable rate (percent)				4.00%
Notes payable to Mezzanine Lenders \| Notes Payable
Debt Instrument [Line Items]
Original principal amount								$ 10,500,000
Warrants outstanding (shares)		1,423,688		1,423,688
Intrinsic value of warrants						$ 9,241,000
2019 Senior Secured Credit Facility \| Line of Credit
Debt Instrument [Line Items]
Revolving line of credit borrowing capacity	$ 300,000,000
Line if Credit, Optional Addition to Borrowing Capacity	50,000,000
Unused commitment fee (percent)		0.20%
Remaining borrowing capacity		$ 160,423,000		$ 160,423,000
Debt covenant, equity repurchase limit from employees, directors, officers or consultants	$ 3,000,000
Debt covenant, dividend or distribution limit as percent of net cash proceeds from additional common equity issuance (percent)				5.00%
2019 Senior Secured Credit Facility \| Line of Credit \| Minimum
Debt Instrument [Line Items]
Unused commitment fee (percent)	0.15%
2019 Senior Secured Credit Facility \| Line of Credit \| Maximum
Debt Instrument [Line Items]
Unused commitment fee (percent)	0.30%
2019 Senior Secured Credit Facility \| Line of Credit \| Maximum \| Letter of Credit
Debt Instrument [Line Items]
Unused commitment fee (percent)	3.25%
2019 Senior Secured Credit Facility \| Line of Credit \| LIBOR
Debt Instrument [Line Items]
Basis spread on variable rate (percent)	1.00%
2019 Senior Secured Credit Facility \| Line of Credit \| One, Two, Three or Six-Month LIBOR
Debt Instrument [Line Items]
Basis spread on variable rate (percent)		2.50%
2019 Senior Secured Credit Facility \| Line of Credit \| One, Two, Three or Six-Month LIBOR \| Minimum
Debt Instrument [Line Items]
Basis spread on variable rate (percent)	2.25%
2019 Senior Secured Credit Facility \| Line of Credit \| One, Two, Three or Six-Month LIBOR \| Maximum
Debt Instrument [Line Items]
Basis spread on variable rate (percent)	3.25%
2019 Senior Secured Credit Facility \| Line of Credit \| Federal Funds Rate
Debt Instrument [Line Items]
Basis spread on variable rate (percent)	0.50%
2019 Senior Secured Credit Facility \| Line of Credit \| LIBOR Plus 1%
Debt Instrument [Line Items]
Basis spread on variable rate (percent)		0.50%
2019 Senior Secured Credit Facility \| Line of Credit \| LIBOR Plus 1% \| Minimum
Debt Instrument [Line Items]
Basis spread on variable rate (percent)	0.25%
2019 Senior Secured Credit Facility \| Line of Credit \| LIBOR Plus 1% \| Maximum
Debt Instrument [Line Items]
Basis spread on variable rate (percent)	1.25%

Acquisitions (Details) - USD ($)		9 Months Ended
Acquisitions (Details) - USD ($)	May 31, 2019	Jun. 30, 2019	Jun. 30, 2018	Jan. 14, 2019	Sep. 30, 2018
Business Acquisition [Line Items]
Investment owned, at cost				$ 1,000,000
Total purchase consideration		$ 45,829,000
Cash consideration		41,224,000
Contingent cash consideration		4,605,000
Consideration transferred, equity interests		0	$ 104,000
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net [Abstract]
Goodwill		$ 165,865,000	80,166,000		$ 83,954,000
Trade name
Business Acquisition [Line Items]
Estimated amortization period		5 years
Class A Common Stock
Business Acquisition [Line Items]
Consideration transferred, equity interests		$ 225,000	$ 0
Pace Payment Systems, Inc.
Business Acquisition [Line Items]
Total purchase consideration	$ 55,969,000
Cash consideration	52,408,000
Contingent cash consideration	$ 3,336,000
Estimated amortization period	15 years
Acquisition-related costs	$ 292,000
Potential additional consideration	20,000,000
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net [Abstract]
Cash and cash equivalents	108,000
Accounts receivable	545,000
Settlement assets	0
Inventories	45,000
Prepaid expenses and other current assets	53,000
Property and equipment	527,000
Goodwill	42,705,000
Other assets	4,000
Total assets acquired	61,347,000
Accounts payable	722,000
Accrued expenses and other current liabilities	95,000
Settlement obligations	0
Deferred revenue, current	24,000
Other long-term liabilities	4,537,000
Net assets acquired	$ 55,969,000
Pace Payment Systems, Inc. \| Capitalized software
Business Acquisition [Line Items]
Estimated amortization period	7 years
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net [Abstract]
Intangible assets	$ 3,400,000
Pace Payment Systems, Inc. \| Acquired merchant relationships
Business Acquisition [Line Items]
Estimated amortization period	15 years
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net [Abstract]
Intangible assets	$ 13,400,000
Pace Payment Systems, Inc. \| Trade name
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net [Abstract]
Intangible assets	500,000
Pace Payment Systems, Inc. \| Non-compete agreements
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net [Abstract]
Intangible assets	$ 60,000
Pace Payment Systems, Inc. \| Minimum \| Non-compete agreements
Business Acquisition [Line Items]
Estimated amortization period	3 years
Pace Payment Systems, Inc. \| Maximum \| Non-compete agreements
Business Acquisition [Line Items]
Estimated amortization period	5 years
Pace Payment Systems, Inc. \| Class A Common Stock
Business Acquisition [Line Items]
Consideration transferred, equity interests	$ 225,000
Other Business Combinations
Business Acquisition [Line Items]
Total purchase consideration		85,661,000
Cash consideration		78,682,000
Contingent cash consideration		$ 6,979,000
Estimated amortization period		16 years
Acquisition-related costs		$ 863,000
Potential additional consideration		24,100,000
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net [Abstract]
Cash and cash equivalents		4,004,000
Accounts receivable		3,867,000
Settlement assets		20,000
Inventories		26,000
Prepaid expenses and other current assets		408,000
Property and equipment		592,000
Goodwill		39,175,000
Other assets		2,000
Total assets acquired		89,604,000
Accounts payable		84,000
Accrued expenses and other current liabilities		1,241,000
Settlement obligations		20,000
Deferred revenue, current		2,598,000
Other long-term liabilities		0
Net assets acquired		$ 85,661,000
Other Business Combinations \| Capitalized software
Business Acquisition [Line Items]
Estimated amortization period		6 years
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net [Abstract]
Intangible assets		$ 8,740,000
Other Business Combinations \| Acquired merchant relationships
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net [Abstract]
Intangible assets		31,380,000
Other Business Combinations \| Trade name
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net [Abstract]
Intangible assets		$ 1,240,000
Other Business Combinations \| Non-compete agreements
Business Acquisition [Line Items]
Estimated amortization period		3 years
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net [Abstract]
Intangible assets		$ 150,000
Other Business Combinations \| Minimum \| Acquired merchant relationships
Business Acquisition [Line Items]
Estimated amortization period		13 years
Other Business Combinations \| Maximum \| Acquired merchant relationships
Business Acquisition [Line Items]
Estimated amortization period		19 years
2019 Acquisitions
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net [Abstract]
Cash and cash equivalents		$ 4,112,000
Accounts receivable		4,412,000
Settlement assets		20,000
Inventories		71,000
Prepaid expenses and other current assets		461,000
Property and equipment		1,119,000
Goodwill		81,880,000
Other assets		6,000
Total assets acquired		150,951,000
Accounts payable		806,000
Accrued expenses and other current liabilities		1,336,000
Settlement obligations		20,000
Deferred revenue, current		2,622,000
Other long-term liabilities		4,537,000
Net assets acquired		141,630,000
2019 Acquisitions \| Capitalized software
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net [Abstract]
Intangible assets		12,140,000
2019 Acquisitions \| Acquired merchant relationships
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net [Abstract]
Intangible assets		44,780,000
2019 Acquisitions \| Trade name
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net [Abstract]
Intangible assets		1,740,000
2019 Acquisitions \| Non-compete agreements
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net [Abstract]
Intangible assets		$ 210,000

Commitments and Contingencies - Minimum Fee Commitments (Details) $ in Thousands	Jun. 30, 2019 USD ($)
Commitments and Contingencies Disclosure [Abstract]
2019 (nine months remaining)	$ 634
2020	2,541
2021	1,457
2022	2,046
2023	2,646
Thereafter	243
Total	$ 9,567

Goodwill and Intangible Assets

9 Months Ended

Jun. 30, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

GOODWILL AND INTANGIBLE ASSETS

Changes in the carrying amount of goodwill are as follows:


	Merchant Services		Proprietary Software and Payments		Other		Total
Balance at September 30, 2018 (net of accumulated impairment losses of $11,458, $0 and $0, respectively)	$	69,666	$	14,288	$	—	$	83,954
Goodwill attributable to acquisition activity during the nine months ended June 30, 2019⁽¹⁾	44,989		36,922		—		81,911
Balance at June 30, 2019	$	114,655	$	51,210	$	—	$	165,865

____________________

1.Includes $31 of measurement period adjustments related to acquisitions in the previous fiscal year.

Intangible assets, net consisted of the following as of June 30, 2019:


	Cost		Accumulated Amortization		Carrying Value		Amortization Life and Method
Finite-lived intangible assets:
Merchant relationships	$	139,571	$	(40,987)	$	98,584	12 to 19 years – accelerated or straight-line
Non-compete agreements	1,770		(515)		1,255		2 to 5 years – straight-line
Website development costs	77		(15)		62		3 years – straight-line
Trade names	3,992		(1,087)		2,905		3 to 7 years – straight-line
Residual buyouts	4,701		(1,753)		2,948		2 to 8 years – straight-line
Referral and exclusivity agreements	900		(221)		679		5 to 10 years – straight-line
Total finite-lived intangible assets	151,011		(44,578)		106,433

Indefinite-lived intangible assets:
Trademarks	35		—		35
Total identifiable intangible assets	$	151,046	$	(44,578)	$	106,468

Amortization expense for intangible assets amounted to $3,233 and $9,054 during the three and nine months ended June 30, 2019, respectively, and $2,376 and $7,007 during the three and nine months ended June 30, 2018, respectively.

Based on net carrying amounts at June 30, 2019, the Company's estimate of future amortization expense for intangible assets are presented in the table below for fiscal years ending September 30:


2019 (three months remaining)	$	3,299
2020	11,734
2021	10,181
2022	9,042
2023	8,090
Thereafter	64,087
	$	106,433

Acquisitions - Pro Forma Information (Details) - USD ($) $ in Thousands	9 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
Business Combinations [Abstract]
Revenue	$ 299,832	$ 284,443
Net income (loss)	$ (4,772)	$ (16,113)

Segments (Tables)

9 Months Ended

Jun. 30, 2019

Segment Reporting [Abstract]

Summary of Reportable Segment Performance


	As of and for the Three Months Ended June 30, 2019
	Merchant Services		Proprietary Software and Payments		Other		Total
Revenue	$	87,264	$	10,219	$	—	$	97,483

Operating expenses
Interchange and network fees	61,744		1,519		—		63,263
Other costs of services	10,527		904		—		11,431
Selling general and administrative	6,244		6,066		5,277		17,587
Depreciation and amortization	2,972		1,308		145		4,425
Change in fair value of contingent consideration	155		(572)		—		(417)
Income (loss) from operations	$	5,622	$	994	$	(5,422)	$	1,194

Processing margin⁽¹⁾	$	19,442	$	7,946	$	—	$	27,388
Total assets	$	212,315	$	97,043	$	33,887	$	343,245
Goodwill	$	114,655	$	51,210	$	—	$	165,865

__________________________


	For the Nine Months Ended June 30, 2019
	Merchant Services		Proprietary Software and Payments		Other		Total
Revenue	$	241,841	$	25,904	$	—	$	267,745

Operating expenses
Interchange and network fees	169,229		4,548		—		173,777
Other costs of services	29,648		1,766		—		31,414
Selling general and administrative	18,561		12,728		13,133		44,422
Depreciation and amortization	8,671		2,811		393		11,875
Change in fair value of contingent consideration	(554)		2,290		—		1,736
Income (loss) from operations	$	16,286	$	1,761	$	(13,526)	$	4,521

Processing margin⁽¹⁾	$	54,653	$	20,082	$	—	$	74,735
Total assets	$	212,315	$	97,043	$	33,887	$	343,245
Goodwill	$	114,655	$	51,210	$	—	$	165,865

__________________________


	As of and for the Three Months Ended June 30, 2018
	Merchant Services		Proprietary Software and Payments		Other		Total
Revenue	$	79,766	$	4,770	$	—	$	84,536

Operating expenses
Interchange and network fees	54,673		1,032		—		55,705
Other costs of services	10,693		368		—		11,061
Selling general and administrative	6,126		1,908		2,662		10,696
Depreciation and amortization	2,424		517		59		3,000
Change in fair value of contingent consideration	88		1,063		—		1,151
Income (loss) from operations	$	5,762	$	(118)	$	(2,721)	$	2,923

Processing margin⁽¹⁾	$	18,130	$	3,489	$	—	$	21,619
Total assets	$	142,866	$	18,941	$	4,873	$	166,680
Goodwill	$	69,541	$	10,625	$	—	$	80,166

__________________________


	For the Nine Months Ended June 30, 2018
	Merchant Services		Proprietary Software and Payments		Other		Total
Revenue	$	224,671	$	14,788	$	(4)	$	239,455

Operating expenses
Interchange and network fees	155,012		3,565		—		158,577
Other costs (benefits) of services	28,949		1,171		(1)		30,119
Selling general and administrative	17,127		5,546		7,064		29,737
Depreciation and amortization	7,140		1,615		121		8,876
Change in fair value of contingent consideration	1,535		1,745		—		3,280
Income (loss) from operations	$	14,908	$	1,146	$	(7,188)	$	8,866

Processing margin⁽¹⁾	$	50,923	$	10,486	$	(3)	$	61,406
Total assets	$	142,866	$	18,941	$	4,873	$	166,680
Goodwill	$	69,541	$	10,625	$	—	$	80,166

__________________________

Income Taxes	9 Months Ended
Income Taxes	Jun. 30, 2019
Income Tax Disclosure [Abstract]
Income Taxes	INCOME TAXES i3 Verticals, Inc. is taxed as a corporation and pays corporate federal, state and local taxes on income allocated to it from i3 Verticals, LLC based on i3 Verticals, Inc.’s economic interest in i3 Verticals, LLC. i3 Verticals, LLC's members, including the Company, are liable for federal, state and local income taxes based on their share of i3 Verticals, LLC's pass-through taxable income. i3 Verticals, LLC is not a taxable entity for federal income tax purposes but is subject to and reports entity level tax in both Tennessee and Texas. In addition, certain subsidiaries of i3 Verticals, LLC are corporations that are subject to state and federal income taxes. The Company’s tax provision for interim periods is determined using an estimate of its annual effective tax rate, adjusted for discrete items, if any, that are taken into account in the relevant period. Each quarter, the Company updates its estimate of the annual effective tax rate, and if the Company’s estimated tax rate changes, it makes a cumulative adjustment in that period. The Company’s provision for income taxes was a benefit of $131 and $2 for the three and nine months ended June 30, 2019, respectively, and an expense of $692 and $553 for the three and nine months ended June 30, 2018, respectively. Tax Receivable Agreement On June 25, 2018, the Company entered into a Tax Receivable Agreement with i3 Verticals, LLC and each of the Continuing Equity Owners (the “Tax Receivable Agreement”) that provides for the payment by the Company to the Continuing Equity Owners of 85% of the amount of certain tax benefits, if any, that it actually realizes, or in some circumstances, is deemed to realize in its tax reporting, as a result of (i) future redemptions funded by the Company or exchanges, or deemed exchanges in certain circumstances, of Common Units of i3 Verticals, LLC for Class A common stock of i3 Verticals, Inc. or cash, and (ii) certain additional tax benefits attributable to payments made under the Tax Receivable Agreement. These tax benefit payments are not conditioned upon one or more of the Continuing Equity Owners maintaining a continued ownership interest in i3 Verticals, LLC. If a Continuing Equity Owner transfers Common Units but does not assign to the transferee of such units the rights of the Continuing Equity Owner under the Tax Receivable Agreement, such Continuing Equity Owner generally will continue to be entitled to receive payments under the Tax Receivable Agreement arising in respect of a subsequent exchange of such Common Units. In general, the Continuing Equity Owners’ rights under the Tax Receivable Agreement may not be assigned, sold, pledged or otherwise alienated to any person, other than certain permitted transferees, without (a) the Company's prior written consent, which should not be unreasonably withheld, conditioned or delayed, and (b) such persons becoming a party to the Tax Receivable Agreement and agreeing to succeed to the applicable Continuing Equity Owner’s interest therein. The Company expects to benefit from the remaining 15% of the tax benefits, if any, that the Company may realize. During the nine months ended June 30, 2019, the Company acquired an aggregate of 4,292,169 common units of i3 Verticals, LLC in connection with the redemption of common units, which resulted in an increase in the tax basis of our investment in i3 Verticals, LLC subject to the provisions of the Tax Receivable Agreement. As a result of these exchanges, during the nine months ended June 30, 2019, the Company recognized an increase to its net deferred tax assets in the amount of $27,192, and corresponding Tax Receivable Agreement liabilities of $23,113, representing 85% of the tax benefits due to the Continuing Equity Owners. The results of these transactions brought the deferred tax asset and corresponding Tax Receivable Agreement liability balances to $28,151 and $23,929, respectively, as of June 30, 2019. Payments to the Continuing Equity Owners related to exchanges through June 30, 2019 will range from $0 to $2,181 per year and are expected to be paid over the next 24 years. The amounts recorded as of June 30, 2019, approximate the current estimate of expected tax savings and are subject to change after the filing of the Company’s U.S. federal and state income tax returns. Future payments under the Tax Receivable Agreement with respect to subsequent exchanges would be in addition to these amounts.

Income Taxes (Details) - USD ($) $ in Thousands		3 Months Ended			9 Months Ended
Income Taxes (Details) - USD ($) $ in Thousands	Jun. 10, 2019	Jun. 30, 2019	Mar. 31, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Jun. 25, 2018
Class of Stock [Line Items]
(Benefit from) Provision for income taxes		$ (131)		$ 692	$ (2)	$ 553
Percent of tax benefits payable to continuing equity owners							85.00%
Tax benefits retained (percent)							15.00%
Increase in net deferred tax assets					27,192
Increase Tax Receivable Agreement liability					$ 23,113
Expected Period of Payout to Conitinuing Equity Owners					24 years
Minimum
Class of Stock [Line Items]
Expected Payments to Continuing Equity Owners under the Tax Receivable Agreement		0			$ 0
Maximum
Class of Stock [Line Items]
Expected Payments to Continuing Equity Owners under the Tax Receivable Agreement		2,181			$ 2,181
i3Verticals, LLC
Class of Stock [Line Items]
Common units, purchased (in units)	1,000,000				4,292,169
Continuing Equity Owner
Class of Stock [Line Items]
Common units, purchased (in units)	4,165,527
Class B Common Stock \| Continuing Equity Owner
Class of Stock [Line Items]
Deferred tax asset recognized		28,151			$ 28,151
Tax benefits due to Continuing Equity Owners		$ 23,929			$ 23,929
Class B Common Stock \| Common Stock
Class of Stock [Line Items]
Redemption of common units in i3 Verticals, LLC (shares)		(4,190,527)	(101,642)
Class A Common Stock \| Common Stock
Class of Stock [Line Items]
Redemption of common units in i3 Verticals, LLC (shares)		(4,190,527)	101,642