0001728688-20-000027 | 10-Q | XBRL Viewer

Cover page - shares	3 Months Ended
Cover page - shares	Dec. 31, 2019	Feb. 10, 2020
Document Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Dec. 31, 2019
Document Transition Report	false
Entity File Number	001-38532
Entity Registrant Name	i3 Verticals, Inc.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	82-4052852
Entity Address, Address Line One	40 Burton Hills Blvd.
Entity Address, Address Line Two	Suite 415
Entity Address, City or Town	Nashville
Entity Address, State or Province	TN
Entity Address, Postal Zip Code	37215
City Area Code	615
Local Phone Number	465-4487
Title of 12(b) Security	Class A Common Stock, $0.0001 Par Value
Trading Symbol	IIIV
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Emerging Growth Company	true
Entity Small Business	true
Entity Ex Transition Period	false
Entity Shell Company	false
Entity Central Index Key	0001728688
Current Fiscal Year End Date	--09-30
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q1
Amendment Flag	false
Class A Common Stock
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		14,552,554
Class B Common Stock
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		12,891,637

Condensed Consolidated Balance Sheet (Unaudited) - USD ($) $ in Thousands	Dec. 31, 2019	Sep. 30, 2019
Current assets
Cash and cash equivalents	$ 335	$ 1,119
Accounts receivable, net	14,412	15,335
Prepaid expenses and other current assets	5,003	4,117
Total current assets	19,750	20,571
Property and equipment, net	5,129	5,026
Restricted cash	1,932	2,081
Capitalized software, net	14,779	15,454
Goodwill	166,413	168,284
Intangible assets, net	104,874	107,419
Deferred tax asset	30,137	28,138
Other assets	4,172	2,329
Total assets	347,186	349,302
Current liabilities
Accounts payable	4,530	3,438
Accrued expenses and other current liabilities	21,205	21,560
Deferred revenue	10,376	10,237
Total current liabilities	36,111	35,235
Long-term debt, less current portion and debt issuance costs, net	132,291	139,298
Long-term tax receivable agreement obligations	23,204	23,204
Other long-term liabilities	7,385	9,124
Total liabilities	198,991	206,861
Commitments and contingencies (see Note 9)
Preferred stock, par value $0.0001 per share, 10,000,000 shares authorized; — shares issued and outstanding as of December 31, 2019 and September 30, 2019	0	0
Additional paid-in-capital	84,855	82,380
Accumulated deficit	(1,753)	(2,309)
Total Stockholders' equity	83,104	80,073
Non-controlling interest	65,091	62,368
Total equity	148,195	142,441
Total liabilities and stockholders' equity	347,186	349,302
Class A Common Stock
Current liabilities
Common stock	1	1
Class B Common Stock
Current liabilities
Common stock	$ 1	$ 1

Condensed Consolidated Balance Sheet (Unaudited) Parenthetical - $ / shares	Dec. 31, 2019	Sep. 30, 2019
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)	14,497,777	14,444,115
Common Stock, outstanding (shares)	14,497,777	14,444,115
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	12,921,637
Common Stock, outstanding (shares)	12,921,637	12,921,637

Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Income Statement [Abstract]
Revenue	$ 41,111	$ 84,868
Operating expenses
Interchange and network fees	0	55,829
Other costs of services	12,918	9,790
Selling general and administrative	19,287	12,516
Depreciation and amortization	4,655	3,552
Change in fair value of contingent consideration	154	(349)
Total operating expenses	37,014	81,338
Income from operations	4,097	3,530
Interest expense, net	2,014	914
Income before income taxes	2,083	2,616
Provision for income taxes	149	265
Net income	1,934	2,351
Net income attributable to non-controlling interest	2,083	2,173
Net (loss) income attributable to i3 Verticals, Inc.	$ (149)	$ 178
Net (loss) income per share attributable to Class A common stockholders:
Basic (in USD per share)	$ (0.01)	$ 0.02
Diluted (in USD per share)	$ (0.01)	$ 0.02
Weighted average shares of Class A common stock outstanding:
Basic (shares)	14,233,785	8,812,630
Diluted (shares)	14,233,785	9,903,168

Condensed Consolidated Statement of Changes in Equity (Unaudited) - USD ($) $ in Thousands	Total	Class A	Class B	Common Stock Class A	Common Stock Class B	Additional Paid-in Capital	Accumulated Earnings (Deficit)	Noncontrolling Interest
Common Stock, Shares, Outstanding, beginning at Sep. 30, 2018				9,112,042	17,213,806
Stockholders' Equity, beginning at Sep. 30, 2018	$ 112,198			$ 1	$ 2	$ 38,562	$ 736	$ 72,897
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	$ 178					178
Net loss attributable to non-controlling interests	(2,173)	(2,173)						2,173
Net loss (income)	2,351	$ 2,351
Distributions to non-controlling interest holders	(934)							(934)
Common Stock, Shares, Outstanding, ending 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
Common Stock, Shares, Outstanding, beginning at Sep. 30, 2019		14,444,115	12,921,637	14,444,115	12,921,637
Stockholders' Equity, beginning at Sep. 30, 2019	142,441			$ 1	$ 1	82,380	(2,309)	62,368
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Equity-based compensation	2,124					2,124
Net income (loss) attributable to i3 Verticals, Inc.	(149)	$ (149)					(149)
Net loss attributable to non-controlling interests	(2,083)	(2,083)						2,083
Net loss (income)	$ 1,934	$ 1,934
Exercise of equity-based awards (shares)	103,964			53,662
Exercise of equity-based awards	$ 351					351
Distributions to non-controlling interest holders	0
Common Stock, Shares, Outstanding, ending at Dec. 31, 2019		14,497,777	12,921,637	14,497,777	12,921,637
Stockholders' Equity, ending at Dec. 31, 2019	$ 148,195			$ 1	$ 1	$ 84,855	$ (1,753)	$ 65,091

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Cash flows from operating activities:
Net income	$ 1,934	$ 2,351
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	4,655	3,552
Equity-based compensation	2,124	951
Provision for doubtful accounts	21	15
Amortization of deferred financing costs	100	233
Amortization of capitalized customer acquisition costs	88	0
Loss on disposal of assets	0	8
Increase (decrease) in non-cash contingent consideration expense from original estimate	154	(349)
Changes in operating assets:
Accounts receivable	1,218	2,111
Prepaid expenses and other current assets	(847)	(628)
Other assets	(377)	(123)
Changes in operating liabilities:
Accounts payable	960	(726)
Accrued expenses and other current liabilities	(2,703)	446
Deferred revenue	178	(877)
Other long-term liabilities	(21)	(22)
Contingent consideration paid in excess of original estimates	0	(870)
Net cash provided by operating activities	7,484	6,072
Cash flows from investing activities:
Expenditures for property and equipment	(548)	(107)
Expenditures for capitalized software	(578)	(412)
Purchases of merchant portfolios and residual buyouts	(545)	(474)
Acquisitions of businesses, net of cash acquired	0	(21,000)
Acquisition of other intangibles	(111)	(33)
Net cash used in investing activities	(1,782)	(22,026)
Cash flows from financing activities:
Proceeds from revolving credit facility	31,283	25,000
Payments of revolving credit facility	(38,390)	(6,750)
Payments of notes payable to banks	0	(1,250)
Cash paid for contingent consideration	0	(730)
Proceeds from stock option exercises	472	0
Net cash (used in) provided by financing activities	(6,635)	16,270
Net (decrease) increase in cash, cash equivalents, and restricted cash	(933)	316
Cash, cash equivalents and restricted cash at beginning of period	3,200	1,237
Cash, cash equivalents and restricted cash at end of period	2,267	1,553
Supplemental disclosure of cash flow information:
Cash paid for interest	1,971	730
Cash paid for income taxes	$ 287	$ 105

Organization and Operations	3 Months Ended
Organization and Operations	Dec. 31, 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 minority 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 December 31, 2019, i3 Verticals, Inc. owned 52.9% of the economic interest in i3 Verticals, LLC. •As of December 31, 2019, the Continuing Equity Owners owned Common Units in i3 Verticals, LLC representing approximately 47.1% 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 47.1% 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 Holders hold approximately 47.9% 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.

Summary of Significant Accounting Policies

3 Months Ended

Dec. 31, 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 December 31, 2019 and

for the three months ended December 31, 2019 and 2018. The results of operations for the three months ended December 31, 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, 2019 and 2018, included in the Company’s Annual Report on Form 10-K for the year ended September 30, 2019.

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.

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 $1,574 and $1,294 at December 31, 2019 and September 30, 2019, 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. Where relevant, the fair value of 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.

Acquisitions not meeting the accounting criteria to be accounted for as a business combination are 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. No acquisitions were completed during the three months ended December 31, 2019.

Revenue Recognition and Deferred Revenue

For the three months ended December 31, 2019, revenue is recognized as each performance obligation is satisfied, in accordance with ASC 606, Revenue from Contracts with Customers (“ASC 606”). The Company accrues for rights of refund, processing errors or penalties, or other related allowances based on historical experience. The Company utilized the portfolio approach practical expedient within ASC 606-10-10-4 Revenue from Contracts with Customers—Objectives and the significant financing component practical expedient within ASC 606-10-32-18 Revenue from Contracts with Customers—The Existence of a Significant Financing Component in the Contract in performing the analysis. The Company adopted ASC 606 on October 1, 2019, using the modified retrospective method and applying the standard to all contracts not completed on the date of adoption. Results for the reporting period beginning October 1, 2019 are presented under ASC 606, while prior period amounts continue to be reported in accordance with the Company's historic accounting practices under previous guidance.

The majority of the Company's revenue for the three months ended December 31, 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 or a specified per transaction amount, depending on the card type. The Company frequently enters into agreements with customers under which the customer engages the Company to provide both payment authorization services and transaction settlement services for all of the cardholder transactions of the customer, regardless of which issuing bank and card network to which the transaction relates. The Company’s core performance obligations are to stand ready to provide continuous access to the Company’s payment authorization services and transaction settlement services in order to be able to process as many transactions as its customers require on a daily basis over the contract term. These services are stand ready obligations, as the timing and quantity of transactions to be processed is not determinable. Under a stand-ready obligation, the Company’s performance obligation is defined by each time increment rather than by the underlying activities satisfied over time based on days elapsed. Because the service of standing ready is substantially the same each day and has the same pattern of transfer to the customer, the Company has determined that its stand-ready performance obligation comprises a series of distinct days of service. Discount fees are recognized each day based on the volume or transaction count at the time the merchants’ transactions are processed.

The Company follows the requirements of ASC 606-10-55 Revenue from Contracts with Customers—Principal versus Agent Considerations, which states that the determination of whether a company should recognize revenue based on the gross amount billed to a customer or the net amount retained is a matter of judgment that depends on the facts and circumstances of the arrangement. The determination of gross versus net recognition of revenue requires judgment that depends on whether the Company controls the good or service before it is transferred to the merchant or whether the Company is acting as an agent of a third party. The assessment is provided separately for each performance obligation identified. Under its agreements, the Company incurs interchange and network pass-through charges from the third-party card issuers and card networks, respectively, related to the provision of payment authorization services. The Company has determined that it is acting as an agent with respect to these payment authorization services, based on the following factors: (1) the Company has no discretion over which card issuing bank will be used to process a transaction and is unable to direct the activity of the merchant to another card issuing bank, and (2) interchange and card network rates are pre-established by the card issuers or card networks, and the Company has no latitude in determining these fees. Therefore, revenue allocated to the payment authorization performance obligation is presented net of interchange and card network fees paid to the card issuing banks and card networks, respectively, for the three months ended December 31, 2019, subsequent to the adoption of ASC 606.

With regards to the Company's transaction settlement services, generally, where 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 equal to the full amount of the discount charged to the merchant, less interchange and network fees. Revenues generated from merchant portfolios where 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 network fees as well as third-party processing costs directly attributable to processing and bank sponsorship costs.

Revenues are also derived from a variety of fixed transaction or service fees, including authorization fees, convenience fees, statement fees, annual fees, gateway fees, which are charged for accessing our payment and software solutions, 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 are recognized when the related performance obligations are satisfied. Sales of software licenses are categorized into one of two categories of intellectual property in accordance with ASC 606, functional or symbolic. The key distinction is whether the license represents a right to use (functional) or a right to access (symbolic) intellectual property. The Company generates sales of one-time software licenses, which is functional intellectual property. Revenue from functional intellectual property is recognized at a point in time, when delivered to the customer. The Company also offers access to its software under software-as-a-service (“SaaS”) arrangements, which represent services arrangements. Revenue from SaaS arrangements is recognized over time, over the term of the agreement.

Arrangements may contain multiple performance obligations, such as payment authorization services, transaction settlement services, hardware, software products, maintenance, and professional installation and training services. Revenues are allocated to each performance obligation based on the standalone selling price of each good or service. The selling price for a deliverable is based on standalone selling price, if available, the adjusted market assessment approach, estimated cost plus margin approach, or residual approach. 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 performance obligations, the Company determines allocation of the transaction price at inception of the arrangement and uses the standalone selling prices for the majority of our revenue recognition.

Revenues from sales of the Company’s combined hardware and software element are recognized when each performance obligation has been satisfied 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 professional services, including training, installation, and repair services are recognized as revenue as these services are performed.

The table below presents a disaggregation of the Company's revenue from contracts with customers by product by segment. Refer to Note 11 for discussion of the Company's segments. The Company's products are defined as follows:

•Payments — Includes discount fees, gateway fees and other related fixed transaction or service fees.

•Other — Includes sales of software, sales of equipment, professional services and other revenues.


	As of and for the Three Months Ended December 31, 2019
	Merchant Services		Proprietary Software and Payments		Other		Total
Payments revenue	$	22,453	$	6,326	$	(408)	$	28,371
Other revenue	5,012		7,730		(2)		12,740
Total revenue	$	27,465	$	14,056	$	(410)	$	41,111


	As of and for the Three Months Ended December 31, 2018
	Merchant Services		Proprietary Software and Payments		Other		Total
Payments revenue	$	72,537	$	5,202	$	—	$	77,739
Other revenue	5,165		1,964		—		7,129
Total revenue	$	77,702	$	7,166	$	—	$	84,868

The table below presents a disaggregation of the Company's revenue from contracts with customers by timing of transfer of goods or services by segment. The Company's revenue included in each category are defined as follows:

•Revenue transferred over time — Includes discount fees, gateway fees, sales of SaaS and ongoing support contract revenue.

•Revenue transferred at a point in time — Includes fixed service fees, software licenses sold as functional intellectual property, professional services and other equipment.


	As of and for the Three Months Ended December 31, 2019
	Merchant Services		Proprietary Software and Payments		Other		Total
Revenue transferred over time	$	18,130	$	9,949	$	(408)	$	27,671
Revenue transferred at a point in time	9,335		4,107		(2)		13,440
Total revenue	$	27,465	$	14,056	$	(410)	$	41,111


	As of and for the Three Months Ended December 31, 2018
	Merchant Services		Proprietary Software and Payments		Other		Total
Revenue transferred over time	$	68,948	$	5,992	$	—	$	74,940
Revenue transferred at a point in time	8,754		1,174		—		9,928
Total revenue	$	77,702	$	7,166	$	—	$	84,868

Contract Liabilities

Deferred revenue represents amounts billed to customers by the Company for services contracts. Payment is typically collected at the start of the contract term. 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. The terms for most of our contracts with a deferred revenue component are between one and three years.

The following table presents the changes in deferred revenue as of and for the three months ended December 31, 2019:


Balance at September 30, 2019	$	10,237
Deferral of revenue	5,389
Recognition of unearned revenue	(5,211)
Balance at December 31, 2019	$	10,415

Costs to Obtain and Fulfill a Contract

The Company capitalizes incremental costs to obtain new contracts and contract renewals and amortizes these costs on a straight-line basis as an expense over the benefit period, which is generally the contract term, unless a commensurate payment is not expected at renewal. As of December 31, 2019, the Company had $2,668, of capitalized contract costs, which relates to commissions paid to obtain new sales, included within "Prepaid expenses and other current assets” and “Other assets" on the condensed consolidated balance sheets. The Company recorded commissions expense related to these costs for the three months ended December 31, 2019 of $88.

The Company expenses sales commissions as incurred for the Company's sales commission plans that are paid on recurring monthly revenues, portfolios of existing customers, or have a substantive stay requirement prior to payment.

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 networks, which are a percentage of the processing volume the Company generates from Visa and Mastercard, as well as fees charged by card-issuing banks. As noted above, after adoption of ASC 606 on October 1, 2019, these fees are presented net in discount fee revenue because the Company is acting as an agent in the provision of payment authorization services.

Other costs of services include third-party processing 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. Other costs of services are recognized at the time the associated revenue is earned.

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, determination of performance obligations for revenue recognition, 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.

Recent Accounting Pronouncements

Recently Adopted Accounting Pronouncements

The FASB issued ASU No. 2018-07, Compensation—Stock Compensation: Improvements to Nonemployee Share-Based Payment Accounting (Topic 718) (“ASU 2018-07”) in June 2018 and ASU No. 2019-08, Compensation—Stock Compensation and Revenue from Contracts with Customers (Topic 606): Codification Improvements—Share-Based Consideration Payable to a Customer (“ASU 2019-08”) in November 2019. 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 ASU 2019-08 require companies to measure and classify on the balance sheet share-based payments to customers by applying the guidance in Topic 718, Compensation—Stock Compensation. The amendments in this ASU No. 2018-07 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 is not required to adopt this ASU No. 2018-07 until October 1, 2020. Early adoption is permitted, but no earlier than a company’s adoption date of ASU No. 2014-09 (defined below). The Company elected to early adopt ASU 2018-07 as of October 1, 2019. There was no impact on the Company’s condensed consolidated financial statements. For entities that have adopted ASU 2018-07, the amendments in this ASU No. 2019-08 are effective for public business entities for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. As a result, the Company is not required to adopt this ASU No. 2018-07 until October 1, 2020. Early adoption is permitted, but no earlier than a company’s adoption date of ASU No. 2018-07. The Company elected to early adopt ASU 2019-08 as of October 1, 2019. There was no impact on the Company’s condensed consolidated financial statements.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”). 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. ASU 2014-09 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, became effective for the Company on October 1, 2019. The amendment allows companies to use either a full retrospective or a modified retrospective approach, through a cumulative adjustment, to adopt this ASU No. 2014-09.

The new standard changed the timing of certain revenue and expenses to be recognized under various arrangement types. More judgment and estimates are required when applying the requirements of the new standard than were required under prior GAAP, such as estimating the amount of variable consideration to include in transaction price and estimating expected periods of benefit for certain costs. Through management's review of individual contracts and historical revenue recognition patterns in comparison to the provisions under ASU 2014-09, the Company determined the timing of revenue to be recognized under ASU 2014-09 for each of the Company’s revenue categories, including discount fees, software licensing subscriptions, ongoing support, and other POS-related solutions, is similar to the timing of revenue recognized under the historical guidance under ASC 605. The Company will evaluate, on an ongoing basis, costs to obtain contracts with customers, as well as certain implementation and set-up costs, and, in some cases, may be required to amortize these costs over longer periods than they were historically amortized. Finally, the new standard required additional disclosures regarding revenues and related capitalized contract costs, if any.

The Company adopted the new revenue standard using a modified retrospective basis on October 1, 2019. The Company has recorded a $705 cumulative increase to accumulated earnings and a $640 cumulative increase to non-controlling interest as a result of the adoption, due to capitalized costs to obtain contracts with customers being amortized over the expected life of the customer rather than the life of the specific contract.

The Company determined that the most significant ongoing impact of adopting the new revenue standard was driven by changes in principal versus agent considerations, with the majority of the change overall in total net revenue attributable to reflecting the Company's payment authorization services net of related interchange and network fees prospectively. The Company's interchange and network fees of $55,829 were classified in “Operating Expenses” on the Condensed Consolidated Statement of Operations for the three months ended December 31, 2018. The Company's interchange and network fees of $69,102 were included as a reduction to revenue on the Condensed Consolidated Statement of Operations for the three months ended December 31, 2019. Under the modified retrospective basis, the Company has not restated its comparative unaudited condensed consolidated financial statements for these effects. The adoption of the new revenue standard did not have a material impact on net income. The following table presents the material impacts of adopting ASC 606 on the Company's unaudited condensed consolidated statement of operations for the three months ended December 31, 2019:


	Three months ended December 31, 2019
	As reported		Adjustment		Presentation without adoption of ASC 606
Revenue	$	41,111	$	69,102	$	110,213
Operating expenses
Interchange and network fees	$	—	$	69,102	$	69,102

The following table presents the impacts of adoption of ASC 606 on the Company's unaudited condensed consolidated balance sheet as of December 31, 2019:


	As of December 31, 2019
	As reported		Adjustment		Presentation without adoption of ASC 606
Assets
Current assets
Prepaid expenses and other current assets	$	5,003	$	157	$	5,160
Deferred tax asset	$	30,137	$	11	$	30,148
Other assets	$	4,172	$	(1,560)	$	2,612
Liabilities and equity
Stockholders' equity
Accumulated deficit	$	(1,753)	$	(731)	$	(2,484)
Non-controlling interest	$	65,091	$	(661)	$	64,430

The adoption of ASC 606 did not have a material impact on the Company’s unaudited condensed consolidated statement of cash flows for the three months ended December 31, 2019. The Company has expanded its unaudited condensed consolidated financial statement disclosures as required by this new standard. See above for additional disclosures provided as a result of the adoption of ASC 606.

Recently Issued Accounting Pronouncements Not Yet Adopted

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 No. 2018-13 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 result, the Company will not be required to adopt this ASU No. 2018-13 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 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 No. 2016-13 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, 2019, 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 No. 2016-13 until October 1, 2023. 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 No. 2016-02 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 No. 2016-02 until October 1, 2021. 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 No. 2016-02 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.

Acquisitions	3 Months Ended
Acquisitions	Dec. 31, 2019
Business Combinations [Abstract]
Acquisitions	ACQUISITIONS During the three months ended December 31, 2019, the Company acquired the following intangible assets: 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 three months ended December 31, 2019, the Company purchased $545 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 an estimated amortization period of eight years.

Goodwill and Intangible Assets

3 Months Ended

Dec. 31, 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, 2019 (net of accumulated impairment losses of $11,458, $0 and $0, respectively)	$	108,472	$	59,812	$	—	$	168,284
Goodwill attributable to acquisition preliminary purchase price adjustments during the three months ended December 31, 2019	(1,574)		(297)		—		(1,871)
Balance at December 31, 2019	$	106,898	$	59,515	$	—	$	166,413

Intangible assets consisted of the following as of December 31, 2019:


	Cost		Accumulated Amortization		Carrying Value		Amortization Life and Method
Finite-lived intangible assets:
Merchant relationships	$	142,671	$	(46,087)	$	96,584	12 to 20 years – accelerated or straight-line
Non-compete agreements	1,720		(669)		1,051		2 to 5 years – straight-line
Website and brand development costs	188		(28)		160		3 to 4 years – straight-line
Trade names	4,292		(1,548)		2,744		3 to 7 years – straight-line
Residual buyouts	5,064		(1,358)		3,706		2 to 8 years – straight-line
Referral and exclusivity agreements	900		(307)		593		5 to 10 years – straight-line
Total finite-lived intangible assets	154,835		(49,997)		104,838

Indefinite-lived intangible assets:
Trademarks	36		—		36
Total identifiable intangible assets	$	154,871	$	(49,997)	$	104,874

Amortization expense for intangible assets amounted to $3,194 and $2,802 during the three months ended December 31, 2019 and 2018, respectively.

Based on net carrying amounts at December 31, 2019, the Company's estimate of future amortization expense for intangible assets are presented in the table below for fiscal years ending September 30:


2020 (nine months remaining)	$	8,973
2021	10,642
2022	9,497
2023	8,451
2024	7,841
Thereafter	59,434
	$	104,838

Long-Term Debt, Net

3 Months Ended

Dec. 31, 2019

Debt Disclosure [Abstract]

Long-Term Debt, Net

LONG-TERM DEBT, NET

A summary of long-term debt, net as of December 31, 2019 and September 30, 2019 is as follows:


		December 31,		September 30,
	Maturity	2019		2019
Revolving lines of credit to banks under the Senior Secured Credit Facility	May 9, 2024	$	134,037	$	141,144
Debt issuance costs, net		(1,746)		(1,846)
Total long-term debt, net of issuance costs		$	132,291	$	139,298

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 “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 Senior Secured Credit Facility consists of a $300,000 revolving credit facility, together with an option to increase the revolving credit facility 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 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% (3.25% as of December 31, 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% (1.25% as of December 31, 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 Senior Secured Credit Facility requires the Company to pay unused commitment fees of 0.15% to 0.30% (0.30% as of December 31, 2019) on any undrawn amounts under the revolving credit facility 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 Senior Secured Credit Facility is May 9, 2024. As of December 31, 2019, there was $165,963 available for borrowing under the revolving credit facility.

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

The provisions of the 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 December 31, 2019. In addition, the 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 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 Senior Secured Credit Facility.

2017 Senior Secured Credit Facility

On October 30, 2017, the Company replaced its then-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 up to 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 were 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 Senior Secured Credit Facility.

Debt issuance costs

The Company incurred no debt issuance costs during the three months ended December 31, 2019 or 2018. The Company's debt issuance costs are being amortized over the related term of the debt using the straight-line method, which is not materially different than the effective interest rate method, and are presented net against long-term debt in the condensed consolidated balance sheets. The amortization of deferred debt issuance costs is included in interest expense and amounted to approximately $100 and $233 during the three months ended December 31, 2019 and 2018, respectively.

Income Taxes	3 Months Ended
Income Taxes	Dec. 31, 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 $149 and $265 for the three months ended December 31, 2019 and 2018, respectively. On December 22, 2017, the Tax Cuts and Jobs Act was enacted into law. The legislation contains several key tax provisions, including the reduction of the federal corporate income tax rate to 21% effective January 1, 2018, as well as a variety of other changes, including limitation of the tax deductibility of interest expense, acceleration of expensing of certain business assets and reductions in the amount of executive pay that could qualify as a tax deduction. The SEC staff issued Staff Accounting Bulletin No. 118, which allowed us to record provisional amounts during a measurement period not to extend beyond one year after the enactment date. As of December 22, 2018, the Company has completed its accounting for all of the enactment-date income tax effects of the Tax Cuts and Jobs Act. The Company made no material adjustments to the provisional amounts recorded. 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 its rights 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. There were no redemptions of common units in Verticals, LLC during the three months ended December 31, 2019. As a result of previous exchanges, the Company recognized deferred tax asset and corresponding Tax Receivable Agreement liability balances to $26,736 and $23,229, respectively, as of December 31, 2019. Payments to the Continuing Equity Owners related to exchanges through December 31, 2019 will range from $0 to $2,103 per year and are expected to be paid over the next 24 years. The amounts recorded as of December 31, 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.

Fair Value Measurements

3 Months Ended

Dec. 31, 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 December 31, 2019 and 2018, because of the relatively short maturity dates on these instruments. The carrying amount of debt approximates fair value as of December 31, 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, 2019	$	18,226
Contingent consideration accrued at time of business combination	—
Change in fair value of contingent consideration included in Operating expenses	154
Contingent consideration paid	—
Balance at December 31, 2019	$	18,380


	Accrued Contingent Consideration
Balance at September 30, 2018	$	5,999
Contingent consideration accrued at time of business combination	4,000
Change in fair value of contingent consideration included in Operating expenses	(349)
Contingent consideration paid	(1,600)
Balance at December 31, 2018	$	8,050

Approximately $12,134 and $10,223 of contingent consideration was recorded in accrued expenses and other current liabilities as of December 31, 2019 and September 30, 2019, respectively. Approximately $6,246 and $8,003 of contingent consideration was recorded in other long-term liabilities as of December 31, 2019 and September 30, 2019, 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

Equity-Based Compensation

3 Months Ended

Dec. 31, 2019

Dec. 31, 2018

Share-based Payment Arrangement [Abstract]

Equity-Based Compensation

EQUITY-BASED COMPENSATION

A summary of equity-based compensation expense recognized during the three months ended December 31, 2019 and 2018 is as follows:


	Three months ended December 31,
	2019		2018
Stock options	$	2,124	$	951

Amounts are included in general and administrative expense on the condensed consolidated statements of operations. Income tax benefits of $148 were recognized during the three months ended December 31, 2019. No income tax benefits were recognized related to equity-based compensation during the three months ended December 31, 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 4.0%. As of December 31, 2019, there were 165,088 equity awards available for 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 three months ended December 31, 2019 and from June 20, 2018 through September 30, 2019 was determined on the grant date using the Black-Scholes valuation model based on the following weighted-average assumptions:


	December 31, 2019		September 30, 2019
Expected volatility⁽¹⁾	25.2	%	26.7	%
Expected dividend yield⁽²⁾	—	%	—	%
Expected term⁽³⁾	6 years		6 years
Risk-free interest rate⁽⁴⁾	1.7	%	2.5	%

_________________

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 three months ended December 31, 2019 is as follows:


	Stock Options	Weighted Average Exercise Price
Outstanding at beginning of period	4,240,695	$	18.33
Granted	159,000	23.92
Exercised	(103,964)	15.17
Forfeited	(30,665)	21.62
Outstanding at end of period	4,265,066	$	18.60

The weighted-average grant date fair value of stock options granted during the three months ended December 31, 2019 was $6.74. As of December 31, 2019, there were 4,265,066 stock options outstanding, of which 758,950 were exercisable. As of December 31, 2019, total unrecognized compensation expense related to unvested stock options, including an estimate for pre-vesting forfeitures, was $16,500, which is expected to be recognized over a weighted-average period of 2.1 years. The Company's policy is to account for forfeitures of stock-based compensation awards as they occur. The total fair value of stock options that vested during the three months ended December 31, 2019 was $1,751.

Commitments and Contingencies

3 Months Ended

Dec. 31, 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 $741 and $493 during the three months ended December 31, 2019 and 2018, respectively.

A summary of approximate future minimum payments under these leases as of December 31, 2019 is as follows:


Years ending September 30:
2020 (nine months remaining)	$	1,912
2021	2,251
2022	1,987
2023	1,829
2024	1,315
Thereafter	1,104
Total	$	10,398

Minimum Processing Commitments

The Company has non-exclusive agreements with several processors to provide it 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 it had submitted the required minimum number of transactions. As of December 31, 2019, such minimum fee commitments were as follows:


Years ending September 30:
2020 (nine months remaining)	$	2,609
2021	1,457
2022	2,046
2023	2,646
2024	243
Thereafter	—
Total	$	9,001

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 where 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 such matters will not have a material impact on the Company's consolidated balance sheet, 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.

Related Party Transactions	3 Months Ended
Related Party Transactions	Dec. 31, 2019
Related Party Transactions [Abstract]
Related Party Transactions	RELATED PARTY TRANSACTIONS 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 606-10-55, 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 $22 and $18 during the three months ended December 31, 2019 and 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 December 31, 2019, the total amount due under the Tax Receivable Agreement was $23,229.

Segments

3 Months Ended

Dec. 31, 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 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 months ended December 31, 2019 and 2018.


	As of and for the Three Months Ended December 31, 2019
	Merchant Services		Proprietary Software and Payments		Other		Total
Revenue	$	27,465	$	14,056	$	(410)	$	41,111

Operating expenses
Other costs of services	12,113		1,215		(410)		12,918
Selling general and administrative	6,322		7,936		5,029		19,287
Depreciation and amortization	2,947		1,539		169		4,655
Change in fair value of contingent consideration	(1,206)		1,360		—		154
Income (loss) from operations	$	7,289	$	2,006	$	(5,198)	$	4,097

Processing margin⁽¹⁾	$	20,896	$	13,009	$	(408)	$	33,497
Total assets	$	202,580	$	110,570	$	34,036	$	347,186
Goodwill	$	106,898	$	59,515	$	—	$	166,413

__________________________

1.Processing margin is equal to revenue less interchange and network fees, less other costs of services. $5,544, $168 and $(408) 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 December 31, 2018
	Merchant Services		Proprietary Software and Payments		Other		Total
Revenue	$	77,702	$	7,166	$	—	$	84,868

Operating expenses
Interchange and network fees	54,364		1,465		—		55,829
Other costs of services	9,396		394		—		9,790
Selling general and administrative	6,091		2,987		3,438		12,516
Depreciation and amortization	2,782		661		109		3,552
Change in fair value of contingent consideration	(319)		(30)		—		(349)
Income (loss) from operations	$	5,388	$	1,689	$	(3,547)	$	3,530

Processing margin⁽¹⁾	$	17,627	$	5,461	$	—	$	23,088
Total assets	$	141,136	$	51,976	$	4,080	$	197,192
Goodwill	$	69,666	$	28,820	$	—	$	98,486

__________________________

1.Processing margin is equal to revenue less interchange and network fees, less other costs of services. $3,685, $154 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.

Non-Controlling Interest	3 Months Ended
Non-Controlling Interest	Dec. 31, 2019
Noncontrolling Interest [Abstract]
Non-Controlling Interests	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 December 31, 2019, i3 Verticals, Inc. owned 14,497,777 of i3 Verticals, LLC's Common Units, representing a 52.9% economic ownership interest in i3 Verticals, LLC.

Earnings Per Share

3 Months Ended

Dec. 31, 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.

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 months ended December 31, 2019:


	Three months ended December 31, 2019		Three months ended December 31, 2018
Basic net income per share:
Numerator
Net income	$	1,934	$	2,351
Less: Net income attributable to non-controlling interests	2,083		2,173
Net (loss) income attributable to Class A common stockholders	$	(149)	$	178
Denominator
Weighted average shares of Class A common stock outstanding⁽¹⁾	14,233,785		8,812,630
Basic net (loss) income per share⁽²⁾	$	(0.01)	$	0.02

Dilutive net income per share⁽²⁾:
Numerator
Net income attributable to Class A common stockholders - diluted⁽³⁾			$	178

Denominator
Weighted average shares of Class A common stock outstanding⁽¹⁾			8,812,630
Weighted average effect of dilutive securities⁽³⁾			1,090,538
Weighted average shares of Class A common stock outstanding - diluted			9,903,168
Diluted net income per share			$	0.02

____________________

1.Excludes 232,828 restricted Class A common stock units.

2.For the three months ended December 31, 2019, all potentially dilutive securities were anti-dilutive, so diluted net loss per share was equivalent to basic net loss per share. 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.12,921,637 shares of weighted average Class B common stock for the three months ended December 31, 2019, along with the reallocation of net income assuming conversion of these shares, were excluded because the effect would have been anti-dilutive,

b.689,500 stock options for the three months ended December 31, 2019, 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.976,594 shares for the three months ended December 31, 2019, resulting from estimated stock option exercises as calculated by the treasury stock method, and 232,828 restricted Class A common units for the three months ended December 31, 2019, were excluded because the effect of including them would have been anti-dilutive.

3.For the three months ended December 31, 2018, 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.17,213,806 shares of weighted average Class B common stock for the three months ended December 31, 2018, along with the reallocation of net income assuming conversion of these shares, were excluded because the effect would have been anti-dilutive, and

b.754,750 stock options for the three months ended December 31, 2019 and 2018, 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.

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.

Significant Non-cash Transactions

3 Months Ended

Dec. 31, 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 three months ended December 31, 2019 and 2018:


	Three months ended December 31,
	2019		2018
Acquisition date fair value of contingent consideration in connection with business combinations	$	—	$	4,000
Required distributions to non-controlling interest holders for tax obligations	$	—	$	934

Summary of Significant Accounting Policies (Policies)

3 Months Ended

Dec. 31, 2019

Accounting Policies [Abstract]

Basis of Presentation

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

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

•Payments — Includes discount fees, gateway fees and other related fixed transaction or service fees.

•Other — Includes sales of software, sales of equipment, professional services and other revenues.


	As of and for the Three Months Ended December 31, 2019
	Merchant Services		Proprietary Software and Payments		Other		Total
Payments revenue	$	22,453	$	6,326	$	(408)	$	28,371
Other revenue	5,012		7,730		(2)		12,740
Total revenue	$	27,465	$	14,056	$	(410)	$	41,111


	As of and for the Three Months Ended December 31, 2018
	Merchant Services		Proprietary Software and Payments		Other		Total
Payments revenue	$	72,537	$	5,202	$	—	$	77,739
Other revenue	5,165		1,964		—		7,129
Total revenue	$	77,702	$	7,166	$	—	$	84,868

•Revenue transferred over time — Includes discount fees, gateway fees, sales of SaaS and ongoing support contract revenue.

•Revenue transferred at a point in time — Includes fixed service fees, software licenses sold as functional intellectual property, professional services and other equipment.


	As of and for the Three Months Ended December 31, 2019
	Merchant Services		Proprietary Software and Payments		Other		Total
Revenue transferred over time	$	18,130	$	9,949	$	(408)	$	27,671
Revenue transferred at a point in time	9,335		4,107		(2)		13,440
Total revenue	$	27,465	$	14,056	$	(410)	$	41,111


	As of and for the Three Months Ended December 31, 2018
	Merchant Services		Proprietary Software and Payments		Other		Total
Revenue transferred over time	$	68,948	$	5,992	$	—	$	74,940
Revenue transferred at a point in time	8,754		1,174		—		9,928
Total revenue	$	77,702	$	7,166	$	—	$	84,868

Contract Liabilities

The following table presents the changes in deferred revenue as of and for the three months ended December 31, 2019:


Balance at September 30, 2019	$	10,237
Deferral of revenue	5,389
Recognition of unearned revenue	(5,211)
Balance at December 31, 2019	$	10,415

Costs to Obtain and Fulfill a Contract

Interchange and Network Fees and Other Cost of Services

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, determination of performance obligations for revenue recognition, 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.

Recently Issued Accounting Pronouncements

Recent Accounting Pronouncements

Recently Adopted Accounting Pronouncements


	Three months ended December 31, 2019
	As reported		Adjustment		Presentation without adoption of ASC 606
Revenue	$	41,111	$	69,102	$	110,213
Operating expenses
Interchange and network fees	$	—	$	69,102	$	69,102

The following table presents the impacts of adoption of ASC 606 on the Company's unaudited condensed consolidated balance sheet as of December 31, 2019:


	As of December 31, 2019
	As reported		Adjustment		Presentation without adoption of ASC 606
Assets
Current assets
Prepaid expenses and other current assets	$	5,003	$	157	$	5,160
Deferred tax asset	$	30,137	$	11	$	30,148
Other assets	$	4,172	$	(1,560)	$	2,612
Liabilities and equity
Stockholders' equity
Accumulated deficit	$	(1,753)	$	(731)	$	(2,484)
Non-controlling interest	$	65,091	$	(661)	$	64,430

Recently Issued Accounting Pronouncements Not Yet Adopted

Fair Value Measurement

Level 1 — Quoted prices for identical instruments 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.

Summary of Significant Accounting Policies (Tables)

3 Months Ended

Dec. 31, 2019

Accounting Policies [Abstract]

Disaggregation of Revenue

•Payments — Includes discount fees, gateway fees and other related fixed transaction or service fees.

•Other — Includes sales of software, sales of equipment, professional services and other revenues.


	As of and for the Three Months Ended December 31, 2019
	Merchant Services		Proprietary Software and Payments		Other		Total
Payments revenue	$	22,453	$	6,326	$	(408)	$	28,371
Other revenue	5,012		7,730		(2)		12,740
Total revenue	$	27,465	$	14,056	$	(410)	$	41,111


	As of and for the Three Months Ended December 31, 2018
	Merchant Services		Proprietary Software and Payments		Other		Total
Payments revenue	$	72,537	$	5,202	$	—	$	77,739
Other revenue	5,165		1,964		—		7,129
Total revenue	$	77,702	$	7,166	$	—	$	84,868

•Revenue transferred over time — Includes discount fees, gateway fees, sales of SaaS and ongoing support contract revenue.

•Revenue transferred at a point in time — Includes fixed service fees, software licenses sold as functional intellectual property, professional services and other equipment.


	As of and for the Three Months Ended December 31, 2019
	Merchant Services		Proprietary Software and Payments		Other		Total
Revenue transferred over time	$	18,130	$	9,949	$	(408)	$	27,671
Revenue transferred at a point in time	9,335		4,107		(2)		13,440
Total revenue	$	27,465	$	14,056	$	(410)	$	41,111


	As of and for the Three Months Ended December 31, 2018
	Merchant Services		Proprietary Software and Payments		Other		Total
Revenue transferred over time	$	68,948	$	5,992	$	—	$	74,940
Revenue transferred at a point in time	8,754		1,174		—		9,928
Total revenue	$	77,702	$	7,166	$	—	$	84,868

Changes in Deferred Revenue

The following table presents the changes in deferred revenue as of and for the three months ended December 31, 2019:


Balance at September 30, 2019	$	10,237
Deferral of revenue	5,389
Recognition of unearned revenue	(5,211)
Balance at December 31, 2019	$	10,415

Impact from Adopting ASC 606

The following table presents the material impacts of adopting ASC 606 on the Company's unaudited condensed consolidated statement of operations for the three months ended December 31, 2019:


	Three months ended December 31, 2019
	As reported		Adjustment		Presentation without adoption of ASC 606
Revenue	$	41,111	$	69,102	$	110,213
Operating expenses
Interchange and network fees	$	—	$	69,102	$	69,102

The following table presents the impacts of adoption of ASC 606 on the Company's unaudited condensed consolidated balance sheet as of December 31, 2019:


	As of December 31, 2019
	As reported		Adjustment		Presentation without adoption of ASC 606
Assets
Current assets
Prepaid expenses and other current assets	$	5,003	$	157	$	5,160
Deferred tax asset	$	30,137	$	11	$	30,148
Other assets	$	4,172	$	(1,560)	$	2,612
Liabilities and equity
Stockholders' equity
Accumulated deficit	$	(1,753)	$	(731)	$	(2,484)
Non-controlling interest	$	65,091	$	(661)	$	64,430

Goodwill and Intangible Assets (Tables)

3 Months Ended

Dec. 31, 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, 2019 (net of accumulated impairment losses of $11,458, $0 and $0, respectively)	$	108,472	$	59,812	$	—	$	168,284
Goodwill attributable to acquisition preliminary purchase price adjustments during the three months ended December 31, 2019	(1,574)		(297)		—		(1,871)
Balance at December 31, 2019	$	106,898	$	59,515	$	—	$	166,413

Schedule of Finite-Lived Intangible Assets

Intangible assets consisted of the following as of December 31, 2019:


	Cost		Accumulated Amortization		Carrying Value		Amortization Life and Method
Finite-lived intangible assets:
Merchant relationships	$	142,671	$	(46,087)	$	96,584	12 to 20 years – accelerated or straight-line
Non-compete agreements	1,720		(669)		1,051		2 to 5 years – straight-line
Website and brand development costs	188		(28)		160		3 to 4 years – straight-line
Trade names	4,292		(1,548)		2,744		3 to 7 years – straight-line
Residual buyouts	5,064		(1,358)		3,706		2 to 8 years – straight-line
Referral and exclusivity agreements	900		(307)		593		5 to 10 years – straight-line
Total finite-lived intangible assets	154,835		(49,997)		104,838

Indefinite-lived intangible assets:
Trademarks	36		—		36
Total identifiable intangible assets	$	154,871	$	(49,997)	$	104,874

Schedule of Indefinite-Lived Intangible Assets

Intangible assets consisted of the following as of December 31, 2019:


	Cost		Accumulated Amortization		Carrying Value		Amortization Life and Method
Finite-lived intangible assets:
Merchant relationships	$	142,671	$	(46,087)	$	96,584	12 to 20 years – accelerated or straight-line
Non-compete agreements	1,720		(669)		1,051		2 to 5 years – straight-line
Website and brand development costs	188		(28)		160		3 to 4 years – straight-line
Trade names	4,292		(1,548)		2,744		3 to 7 years – straight-line
Residual buyouts	5,064		(1,358)		3,706		2 to 8 years – straight-line
Referral and exclusivity agreements	900		(307)		593		5 to 10 years – straight-line
Total finite-lived intangible assets	154,835		(49,997)		104,838

Indefinite-lived intangible assets:
Trademarks	36		—		36
Total identifiable intangible assets	$	154,871	$	(49,997)	$	104,874

Schedule of Future Amortization Expense of Finite-lived Intangible Assets

Based on net carrying amounts at December 31, 2019, the Company's estimate of future amortization expense for intangible assets are presented in the table below for fiscal years ending September 30:


2020 (nine months remaining)	$	8,973
2021	10,642
2022	9,497
2023	8,451
2024	7,841
Thereafter	59,434
	$	104,838

Long-Term Debt, Net (Tables)

3 Months Ended

Dec. 31, 2019

Debt Disclosure [Abstract]

Summary of Long-term Debt

A summary of long-term debt, net as of December 31, 2019 and September 30, 2019 is as follows:


		December 31,		September 30,
	Maturity	2019		2019
Revolving lines of credit to banks under the Senior Secured Credit Facility	May 9, 2024	$	134,037	$	141,144
Debt issuance costs, net		(1,746)		(1,846)
Total long-term debt, net of issuance costs		$	132,291	$	139,298

- 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

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 210
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02.22)
-URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682

Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 835
-SubTopic 30
-Section 45
-Paragraph 1A
-URI http://asc.fasb.org/extlink&oid=114775744&loc=d3e28541-108399

Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 6
-URI http://asc.fasb.org/extlink&oid=109259400&loc=d3e21506-112644

Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08.(e),(f))
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+ Details

Fair Value Measurements (Tables)

3 Months Ended

Dec. 31, 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, 2019	$	18,226
Contingent consideration accrued at time of business combination	—
Change in fair value of contingent consideration included in Operating expenses	154
Contingent consideration paid	—
Balance at December 31, 2019	$	18,380


	Accrued Contingent Consideration
Balance at September 30, 2018	$	5,999
Contingent consideration accrued at time of business combination	4,000
Change in fair value of contingent consideration included in Operating expenses	(349)
Contingent consideration paid	(1,600)
Balance at December 31, 2018	$	8,050

Equity-Based Compensation (Tables)

3 Months Ended

Dec. 31, 2019

Share-based Payment Arrangement [Abstract]

Summary of Equity-Based Compensation Expense

A summary of equity-based compensation expense recognized during the three months ended December 31, 2019 and 2018 is as follows:


	Three months ended December 31,
	2019		2018
Stock options	$	2,124	$	951

Fair Value of Stock Option Awards


	December 31, 2019		September 30, 2019
Expected volatility⁽¹⁾	25.2	%	26.7	%
Expected dividend yield⁽²⁾	—	%	—	%
Expected term⁽³⁾	6 years		6 years
Risk-free interest rate⁽⁴⁾	1.7	%	2.5	%

_________________

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 three months ended December 31, 2019 is as follows:


	Stock Options	Weighted Average Exercise Price
Outstanding at beginning of period	4,240,695	$	18.33
Granted	159,000	23.92
Exercised	(103,964)	15.17
Forfeited	(30,665)	21.62
Outstanding at end of period	4,265,066	$	18.60

Commitments and Contingencies (Tables)

3 Months Ended

Dec. 31, 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 December 31, 2019 is as follows:


Years ending September 30:
2020 (nine months remaining)	$	1,912
2021	2,251
2022	1,987
2023	1,829
2024	1,315
Thereafter	1,104
Total	$	10,398

Minimum Fee Commitments

As of December 31, 2019, such minimum fee commitments were as follows:


Years ending September 30:
2020 (nine months remaining)	$	2,609
2021	1,457
2022	2,046
2023	2,646
2024	243
Thereafter	—
Total	$	9,001

Segments (Tables)

3 Months Ended

Dec. 31, 2019

Segment Reporting [Abstract]

Summary of Reportable Segment Performance


	As of and for the Three Months Ended December 31, 2019
	Merchant Services		Proprietary Software and Payments		Other		Total
Revenue	$	27,465	$	14,056	$	(410)	$	41,111

Operating expenses
Other costs of services	12,113		1,215		(410)		12,918
Selling general and administrative	6,322		7,936		5,029		19,287
Depreciation and amortization	2,947		1,539		169		4,655
Change in fair value of contingent consideration	(1,206)		1,360		—		154
Income (loss) from operations	$	7,289	$	2,006	$	(5,198)	$	4,097

Processing margin⁽¹⁾	$	20,896	$	13,009	$	(408)	$	33,497
Total assets	$	202,580	$	110,570	$	34,036	$	347,186
Goodwill	$	106,898	$	59,515	$	—	$	166,413

__________________________


	As of and for the Three Months Ended December 31, 2018
	Merchant Services		Proprietary Software and Payments		Other		Total
Revenue	$	77,702	$	7,166	$	—	$	84,868

Operating expenses
Interchange and network fees	54,364		1,465		—		55,829
Other costs of services	9,396		394		—		9,790
Selling general and administrative	6,091		2,987		3,438		12,516
Depreciation and amortization	2,782		661		109		3,552
Change in fair value of contingent consideration	(319)		(30)		—		(349)
Income (loss) from operations	$	5,388	$	1,689	$	(3,547)	$	3,530

Processing margin⁽¹⁾	$	17,627	$	5,461	$	—	$	23,088
Total assets	$	141,136	$	51,976	$	4,080	$	197,192
Goodwill	$	69,666	$	28,820	$	—	$	98,486

__________________________

Earnings Per Share (Tables)

3 Months Ended

Dec. 31, 2019

Earnings Per Share [Abstract]

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


	Three months ended December 31, 2019		Three months ended December 31, 2018
Basic net income per share:
Numerator
Net income	$	1,934	$	2,351
Less: Net income attributable to non-controlling interests	2,083		2,173
Net (loss) income attributable to Class A common stockholders	$	(149)	$	178
Denominator
Weighted average shares of Class A common stock outstanding⁽¹⁾	14,233,785		8,812,630
Basic net (loss) income per share⁽²⁾	$	(0.01)	$	0.02

Dilutive net income per share⁽²⁾:
Numerator
Net income attributable to Class A common stockholders - diluted⁽³⁾			$	178

Denominator
Weighted average shares of Class A common stock outstanding⁽¹⁾			8,812,630
Weighted average effect of dilutive securities⁽³⁾			1,090,538
Weighted average shares of Class A common stock outstanding - diluted			9,903,168
Diluted net income per share			$	0.02

____________________

1.Excludes 232,828 restricted Class A common stock units.

Significant Non-cash Transactions (Tables)

3 Months Ended

Dec. 31, 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 three months ended December 31, 2019 and 2018:


	Three months ended December 31,
	2019		2018
Acquisition date fair value of contingent consideration in connection with business combinations	$	—	$	4,000
Required distributions to non-controlling interest holders for tax obligations	$	—	$	934

Organization and Operations (Details) - USD ($) $ / shares in Units, $ in Thousands	Jun. 10, 2019	Jun. 25, 2018	Dec. 31, 2019
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)			52.90%
i3Verticals, LLC
Subsidiary, Sale of Stock [Line Items]
Net proceeds from public offering	$ 20,870
Common units, purchased (in units)	1,000,000
Continuing Equity Owner
Subsidiary, Sale of Stock [Line Items]
Common units, purchased (in units)	4,165,527
Class B Common Stock \| Continuing Equity Owner
Subsidiary, Sale of Stock [Line Items]
Shareholders ownership interest (percent)			47.10%
Class A Common Stock
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%
Class A Common and Class B Common Stock \| Continuing Equity Owner
Subsidiary, Sale of Stock [Line Items]
Shareholders ownership interest (percent)			47.90%

Summary of Significant Accounting Policies - Disaggregated Revenue (Details) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Disaggregation of Revenue [Line Items]
Total revenue	$ 41,111	$ 84,868
Revenue Transferred over Time
Disaggregation of Revenue [Line Items]
Total revenue	27,671	74,940
Revenue Transferred at a Point in Time
Disaggregation of Revenue [Line Items]
Total revenue	13,440	9,928
Payments Revenue
Disaggregation of Revenue [Line Items]
Total revenue	28,371	77,739
Other Revenue
Disaggregation of Revenue [Line Items]
Total revenue	12,740	7,129
Merchant Services
Disaggregation of Revenue [Line Items]
Total revenue	27,465	77,702
Merchant Services \| Revenue Transferred over Time
Disaggregation of Revenue [Line Items]
Total revenue	18,130	68,948
Merchant Services \| Revenue Transferred at a Point in Time
Disaggregation of Revenue [Line Items]
Total revenue	9,335	8,754
Merchant Services \| Payments Revenue
Disaggregation of Revenue [Line Items]
Total revenue	22,453	72,537
Merchant Services \| Other Revenue
Disaggregation of Revenue [Line Items]
Total revenue	5,012	5,165
Proprietary Software and Payments
Disaggregation of Revenue [Line Items]
Total revenue	14,056	7,166
Proprietary Software and Payments \| Revenue Transferred over Time
Disaggregation of Revenue [Line Items]
Total revenue	9,949	5,992
Proprietary Software and Payments \| Revenue Transferred at a Point in Time
Disaggregation of Revenue [Line Items]
Total revenue	4,107	1,174
Proprietary Software and Payments \| Payments Revenue
Disaggregation of Revenue [Line Items]
Total revenue	6,326	5,202
Proprietary Software and Payments \| Other Revenue
Disaggregation of Revenue [Line Items]
Total revenue	7,730	1,964
Other
Disaggregation of Revenue [Line Items]
Total revenue	(410)	0
Other \| Revenue Transferred over Time
Disaggregation of Revenue [Line Items]
Total revenue	(408)	0
Other \| Revenue Transferred at a Point in Time
Disaggregation of Revenue [Line Items]
Total revenue	(2)	0
Other \| Payments Revenue
Disaggregation of Revenue [Line Items]
Total revenue	(408)	0
Other \| Other Revenue
Disaggregation of Revenue [Line Items]
Total revenue	$ (2)	$ 0

Summary of Significant Accounting Policies - Changes in Deferred Revenue (Details) $ in Thousands	3 Months Ended
	Dec. 31, 2019 USD ($)
Accounting Policies [Abstract]
Deferred revenue, beginning	$ 10,237
Deferral of revenue	5,389
Recognition of unearned revenue	(5,211)
Deferred revenue, ending	$ 10,415

Summary of Significant Accounting Policies - Additonal Information (Details) $ in Thousands	3 Months Ended
	Dec. 31, 2019 USD ($) business	Dec. 31, 2018 USD ($)
Accounting Policies [Abstract]
Number of businesses acquired \| business	0
Capitalized contract costs	$ 2,668
Commissions related to capitalized contract costs	88
Inventories	$ 1,574	$ 1,294

Summary of Significant Accounting Policies - Impact of Adoption of ASC 606 (Details) - USD ($) $ in Thousands		3 Months Ended
	Oct. 01, 2019	Dec. 31, 2019	Dec. 31, 2018	Sep. 30, 2019
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Interchange and network fees		$ 0	$ 55,829
Revenues		41,111	$ 84,868
Prepaid expenses and other current assets		5,003
Deferred tax asset		30,137		$ 28,138
Other assets		4,172		2,329
Accumulated deficit		(1,753)		(2,309)
Non-controlling interest		65,091		$ 62,368
Presentation Without Adoption of ASC 606
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Interchange and network fees		69,102
Revenues		110,213
Prepaid expenses and other current assets		5,160
Deferred tax asset		30,148
Other assets		2,612
Accumulated deficit		(2,484)
Non-controlling interest		64,430
ASU 2014-09
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Cumulative effect on retained earnings	$ 705
ASU 2014-09 \| Adjustment
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Interchange and network fees		69,102
Revenues		69,102
Prepaid expenses and other current assets		157
Deferred tax asset		11
Other assets		(1,560)
Accumulated deficit		(731)
Non-controlling interest		$ (661)

Acquisitions - Additional Information (Details) - Residual buyouts $ in Thousands	3 Months Ended
	Dec. 31, 2019 USD ($)
Finite-Lived Intangible Assets [Line Items]
Intangible assets acquired	$ 545
Estimated amortization period	8 years

Goodwill and Intangible Assets - Changes in Goodwill (Details) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2019	Sep. 30, 2019
Goodwill [Roll Forward]
Goodwill, beginning	$ 168,284
Goodwill attributable to acquisition preliminary purchase price adjustments during the three months ended December 31, 2019	(1,871)
Goodwill, ending	166,413
Merchant Services
Goodwill [Roll Forward]
Goodwill, beginning	108,472
Goodwill attributable to acquisition preliminary purchase price adjustments during the three months ended December 31, 2019	(1,574)
Goodwill, ending	106,898
Accumulated impairment losses		$ 11,458
Proprietary Software and Payments
Goodwill [Roll Forward]
Goodwill, beginning	59,812
Goodwill attributable to acquisition preliminary purchase price adjustments during the three months ended December 31, 2019	(297)
Goodwill, ending	59,515
Accumulated impairment losses		0
Other
Goodwill [Roll Forward]
Goodwill, beginning	0
Goodwill attributable to acquisition preliminary purchase price adjustments during the three months ended December 31, 2019	0
Goodwill, ending	$ 0
Accumulated impairment losses		$ 0

Goodwill and Intangible Assets - Intangible Assets (Details) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Sep. 30, 2019
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, cost	$ 154,835
Finite-lived intangible assets, accumulated amortization	(49,997)
Finite-lived intangible assets, carrying value	104,838
Total identifiable intangible assets, cost	154,871
Total identifiable intangible assets, carrying value	104,874		$ 107,419
Amortization expense of intangible assets	3,194	$ 2,802
Trademarks
Finite-Lived Intangible Assets [Line Items]
Indefinite-lived Intangible Assets	36
Merchant relationships
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, cost	142,671
Finite-lived intangible assets, accumulated amortization	(46,087)
Finite-lived intangible assets, carrying value	$ 96,584
Merchant relationships \| Minimum
Finite-Lived Intangible Assets [Line Items]
Amortization life	12 years
Merchant relationships \| Maximum
Finite-Lived Intangible Assets [Line Items]
Amortization life	20 years
Non-compete agreements
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, cost	$ 1,720
Finite-lived intangible assets, accumulated amortization	(669)
Finite-lived intangible assets, carrying value	$ 1,051
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 and brand development
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, cost	$ 188
Finite-lived intangible assets, accumulated amortization	(28)
Finite-lived intangible assets, carrying value	$ 160
Website and brand development \| Minimum
Finite-Lived Intangible Assets [Line Items]
Amortization life	3 years
Website and brand development \| Maximum
Finite-Lived Intangible Assets [Line Items]
Amortization life	4 years
Trade names
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, cost	$ 4,292
Finite-lived intangible assets, accumulated amortization	(1,548)
Finite-lived intangible assets, carrying value	$ 2,744
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	$ 5,064
Finite-lived intangible assets, accumulated amortization	(1,358)
Finite-lived intangible assets, carrying value	$ 3,706
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
Finite-lived intangible assets, accumulated amortization	(307)
Finite-lived intangible assets, carrying value	$ 593
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

Goodwill and Intangible Assets - Future Amortization Expense (Details) $ in Thousands	Dec. 31, 2019 USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]
2020 (nine months remaining)	$ 8,973
2021	10,642
2022	9,497
2023	8,451
2024	7,841
Thereafter	59,434
Finite-lived intangible assets, carrying value	$ 104,838

Long-Term Debt, Net - Summary of Long-term Debt (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Sep. 30, 2019
Debt Instrument [Line Items]
Debt issuance costs, net	$ (1,746)	$ (1,846)
Total long-term debt, net of issuance costs	132,291	139,298
Line of Credit \| Revolving lines of credit to banks under the Senior Secured Credit Facility
Debt Instrument [Line Items]
Long-term debt	$ 134,037	$ 141,144

Long-Term Debt, Net - Additional Information (Details) - USD ($)		3 Months Ended
	May 09, 2019	Dec. 31, 2019	Dec. 31, 2018	Oct. 30, 2017
Debt Instrument [Line Items]
Debt extinguishment costs	$ 152,000
Debt issuance costs		$ 0
Amortization of deferred debt issuance costs		100,000	$ 233,000
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 \| 30-day LIBOR \| Minimum
Debt Instrument [Line Items]
Basis spread on variable rate (percent)		2.75%
Senior Secured Credit Facility \| Line of Credit \| 30-day LIBOR \| Maximum
Debt Instrument [Line Items]
Basis spread on variable rate (percent)		4.00%
2019 Senior Secured Credit Facility \| Line of Credit
Debt Instrument [Line Items]
Revolving line of credit borrowing capacity	300,000,000
Optional addition to borrowing capacity	50,000,000
Unused commitment fee (percent)		0.30%
Remaining borrowing capacity		$ 165,963,000
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 \| One, Two, Three or Six-month LIBOR
Debt Instrument [Line Items]
Basis spread on variable rate (percent)		3.25%
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)	1.00%	1.25%
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%
2019 Senior Secured Credit Facility \| Line of Credit \| Letter of Credit \| Maximum
Debt Instrument [Line Items]
Unused commitment fee (percent)	3.25%

Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended
Income Taxes (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018	Jun. 25, 2018
Class of Stock [Line Items]
Provision for income taxes	$ 149	$ 265
Percent of tax benefits payable to continuing equity owners			85.00%
Tax benefits retained (percent)			15.00%
Common units of i3 Verticals, LLC redeemed during the period	0
Period of payment to Continuing Equity Owners	24 years
Minimum
Class of Stock [Line Items]
Expected payments to Continuing Equity Owners related to exchange of common units	$ 0
Maximum
Class of Stock [Line Items]
Expected payments to Continuing Equity Owners related to exchange of common units	2,103
Continuing Equity Owner \| Class B Common Stock
Class of Stock [Line Items]
Deferred tax asset recognized	26,736
Tax benefits due to Continuing Equity Owners	$ 23,229

Fair Value Measurements (Details) - USD ($) $ in Thousands	3 Months Ended
Fair Value Measurements (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018	Sep. 30, 2019
Accrued Contingent Consideration
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance, beginning	$ 18,226	$ 5,999
Contingent consideration accrued at time of business combination	0	4,000
Change in the fair value of warrant liabilities, included in Other expenses	154	(349)
Contingent consideration paid	0	(1,600)
Balance, ending	18,380	$ 8,050
Accrued Expenses and Other Current Liabilities
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Contingent consideration	12,134		$ 10,223
Other Long-term Liabilities
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Contingent consideration	$ 6,246		$ 8,003

Equity-Based Compensation (Details) - USD ($)	3 Months Ended
Equity-Based Compensation (Details) - USD ($)	Dec. 31, 2019	Dec. 31, 2018
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Income tax benefits related to equity-based compensation		$ 148
Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Equity-based compensation expense	$ 2,124,000	$ 951,000

Equity-Based Compensation - Additional Information (Details) - $ / shares		3 Months Ended
	Jun. 25, 2018	Dec. 31, 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)		159,000
Options granted, exercise price (in USD per share)		$ 23.92
2018 Equity Incentive Award Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares available for grant under the plan (shares)		165,088		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%
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

Equity-Based Compensation - Fair Value of Stock Option Awards (Details) - Stock Options	3 Months Ended	15 Months Ended
	Dec. 31, 2019	Sep. 30, 2019
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected volatility (percent)	25.20%	26.70%
Expected dividend yield (percent)	0.00%	0.00%
Expected term	6 years	6 years
Risk-free interest rate (percent)	1.70%	2.50%

Equity-Based Compensation - Stock Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Dec. 31, 2019	Sep. 30, 2019
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Outstanding at beginning of period (shares)	4,240,695
Granted (shares)	159,000
Exercised (shares)	(103,964)
Forfeitures (shares)	(30,665)
Outstanding at end of period (shares)	4,265,066
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Abstract]
Outstanding at beginning of period, weighted average exercise price (in USD per share)	$ 18.60	$ 18.33
Granted, weighted average exercise price (in USD per share)	23.92
Exercised, weighted average exercise price (in USD per share)	15.17
Forfeited, weighted average exercise price (in USD per share)	21.62
Outstanding at end of period, weighted average exercise price (in USD per share)	18.60	$ 18.33
Granted, weighted average grant date fair value (in USD per share)	$ 6.74
Options exercisable at end of period (shares)	758,950
Unrecognized compensation expense related to unvested options at end of period	$ 16,500
Period for recognition of unrecognized compensation cost	2 years 1 month 6 days
Fair value of stock options vested during the period	$ 1,751

Commitments and Contingencies -Operating Leases (Details) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Commitments and Contingencies Disclosure [Abstract]
Rent expense	$ 741
Operating leases for office space and equipment		$ 493
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract]
2020 (nine months remaining)	1,912
2021	2,251
2022	1,987
2023	1,829
2024	1,315
Thereafter	1,104
Total	$ 10,398

Commitments and Contingencies - Minimum Fee Commitments (Details) $ in Thousands	Dec. 31, 2019 USD ($)
Commitments and Contingencies Disclosure [Abstract]
2020 (nine months remaining)	$ 2,609
2021	1,457
2022	2,046
2023	2,646
2024	243
Thereafter	0
Total	$ 9,001

Related Party Transactions (Details) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Jun. 25, 2018
Related Party Transaction [Line Items]
Percent of tax benefits payable to continuing equity owners			85.00%
Continuing Equity Owner \| Class B Common Stock
Related Party Transaction [Line Items]
Tax benefits due to Continuing Equity Owners	$ 23,229
Axia Tech \| Affiliated Entity
Related Party Transaction [Line Items]
Net revenue from related party	$ 22	$ 18
i3Verticals, LLC \| Affiliated Entity
Related Party Transaction [Line Items]
Ownership interest in Axia Tech (percent)	2.00%
Chief Executive Officer \| Affiliated Entity
Related Party Transaction [Line Items]
Ownership interest in Axia Tech (percent)	10.50%
Chief Financial Officer \| Affiliated Entity
Related Party Transaction [Line Items]
Ownership interest in Axia Tech (percent)	0.40%

Segments (Details) - USD ($) $ in Thousands	3 Months Ended
Segments (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018	Sep. 30, 2019
Segment Reporting Information [Line Items]
Revenue	$ 41,111	$ 84,868
Operating expenses
Interchange and network fees	0	55,829
Other costs of services	12,918	9,790
Selling general and administrative	19,287	12,516
Depreciation and amortization	4,655	3,552
Change in fair value of contingent consideration	154	(349)
Income from operations	4,097	3,530
Processing margin	33,497	23,088
Assets	347,186	197,192	$ 349,302
Goodwill	166,413	98,486	168,284
Merchant Services
Segment Reporting Information [Line Items]
Revenue	27,465	77,702
Operating expenses
Interchange and network fees		54,364
Other costs of services	12,113	9,396
Selling general and administrative	6,322	6,091
Depreciation and amortization	2,947	2,782
Change in fair value of contingent consideration	(1,206)	(319)
Income from operations	7,289	5,388
Processing margin	20,896	17,627
Assets	202,580	141,136
Goodwill	106,898	69,666	108,472
Residual expense	5,544	3,685
Proprietary Software and Payments
Segment Reporting Information [Line Items]
Revenue	14,056	7,166
Operating expenses
Interchange and network fees		1,465
Other costs of services	1,215	394
Selling general and administrative	7,936	2,987
Depreciation and amortization	1,539	661
Change in fair value of contingent consideration	1,360	(30)
Income from operations	2,006	1,689
Processing margin	13,009	5,461
Assets	110,570	51,976
Goodwill	59,515	28,820	59,812
Residual expense	168	154
Other
Segment Reporting Information [Line Items]
Revenue	(410)	0
Operating expenses
Interchange and network fees		0
Other costs of services	(410)	0
Selling general and administrative	5,029	3,438
Depreciation and amortization	169	109
Change in fair value of contingent consideration	0	0
Income from operations	(5,198)	(3,547)
Processing margin	(408)	0
Assets	34,036	4,080
Goodwill	0	0	$ 0
Residual expense	$ (408)	$ 0

Non-Controlling Interest (Details) - i3Verticals, LLC	Dec. 31, 2019 shares
Noncontrolling Interest [Line Items]
Non-controlling interest, common units (shares)	14,497,777
Non-controlling interest, ownership interest (percent)	52.90%

Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Numerator
Net income	$ 1,934	$ 2,351
Less: Net income attributable to non-controlling interests	2,083	2,173
Net (loss) income attributable to i3 Verticals, Inc.	$ (149)	$ 178
Denominator
Basic (shares)	14,233,785	8,812,630
Basic (in USD per share)	$ (0.01)	$ 0.02
Dilutive net income per share:
Weighted average shares of Class A coomon stock outstanding (shares)		8,812,630
Weighted average effect of dilutive securities (shares)		1,090,538
Weighted average shares of Class A common stock outstanding - diluted (shares)	14,233,785	9,903,168
Diluted (in USD per share)	$ (0.01)	$ 0.02
Class A Common Stock
Numerator
Net income	$ 1,934	$ 2,351
Less: Net income attributable to non-controlling interests	2,083	2,173
Net (loss) income attributable to i3 Verticals, Inc.	$ (149)	$ 178
Denominator
Basic (shares)	14,233,785	8,812,630
Basic (in USD per share)	$ (0.01)	$ 0.02
Dilutive net income per share:
Net income (loss) attributable to Class A common stockholders - diluted		$ 178

Earnings Per Share - Antidilutive Securities (Details) - shares	3 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
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)	232,828
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)	12,921,637	17,213,806
Out-of-the-money Options
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share (shares)	689,500	754,750
Stock Options
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share (shares)	976,594

Significant Non-cash Transactions (Details) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Cash Flow, Noncash Investing and Financing Activities Disclosure [Abstract]
Acquisition date fair value of contingent consideration in connection with business combinations	$ 0	$ 4,000
Required Distributions to Members for Tax Obligations	$ 0	$ 934

Label	Element	Value
Cumulative Effect of New Accounting Principle in Period of Adoption	us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption	$ 1,345,000
Retained Earnings [Member]
Cumulative Effect of New Accounting Principle in Period of Adoption	us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption	705,000
Noncontrolling Interest [Member]
Cumulative Effect of New Accounting Principle in Period of Adoption	us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption	$ 640,000