0001728688-21-000050 | 10-Q | XBRL Viewer

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Cover - shares	6 Months Ended
Cover - shares	Mar. 31, 2021	May 07, 2021
Document Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Mar. 31, 2021
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., 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 Small Business	false
Entity Emerging Growth Company	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	2021
Document Fiscal Period Focus	Q2
Amendment Flag	false
Class A Common Stock
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		21,926,390
Class B Common Stock
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		10,229,142

Condensed Consolidated Balance Sheets - USD ($)	Mar. 31, 2021	Sep. 30, 2020
Current assets
Cash and cash equivalents	$ 2,352,000	$ 15,568,000
Accounts receivable, net	24,599,000	17,538,000
Settlement assets	6,056,000	0
Prepaid expenses and other current assets	9,983,000	4,869,000
Total current assets	42,990,000	37,975,000
Property and equipment, net	5,929,000	5,339,000
Restricted cash	10,090,000	5,033,000
Capitalized software, net	39,163,000	16,989,000
Goodwill	263,365,000	187,005,000
Intangible assets, net	165,145,000	109,233,000
Deferred tax asset	51,277,000	36,755,000
Operating lease right-of-use assets	14,821,000
Other assets	10,039,000	5,197,000
Total assets	602,819,000	403,526,000
Current liabilities
Accounts payable	4,871,000	3,845,000
Accrued expenses and other current liabilities	42,357,000	24,064,000
Settlement obligations	6,056,000	0
Deferred revenue	22,426,000	10,986,000
Current portion of operating lease liabilities	3,056,000
Total current liabilities	78,766,000	38,895,000
Long-term debt, less current portion and debt issuance costs, net	178,442,000	90,758,000
Long-term tax receivable agreement obligations	39,626,000	27,565,000
Operating lease liabilities, less current portion	12,382,000
Other long-term liabilities	12,138,000	6,140,000
Total liabilities	321,354,000	163,358,000
Commitments and contingencies (see Note 10)
Stockholders' equity
Preferred stock, par value $0.0001 per share, 10,000,000 shares authorized; 0 shares issued and outstanding as of March 31, 2021 and September 30, 2020	0	0
Additional paid-in capital	203,803,000	157,598,000
Accumulated (deficit) earnings	(4,155,000)	(2,023,000)
Total stockholders' equity	199,651,000	155,578,000
Non-controlling interest	81,814,000	84,590,000
Total equity	281,465,000	240,168,000
Total liabilities and equity	602,819,000	403,526,000
Class A Common Stock
Stockholders' equity
Common stock	2,000	2,000
Class B Common Stock
Stockholders' equity
Common stock	$ 1,000	$ 1,000

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Mar. 31, 2021	Sep. 30, 2020
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)	21,919,300	18,864,143
Common Stock, outstanding (shares)	21,919,300	18,864,143
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)	10,229,142	11,900,621
Common Stock, outstanding (shares)	10,229,142	11,900,621

Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Mar. 31, 2021	Mar. 31, 2020
Income Statement [Abstract]
Revenue	$ 47,863	$ 39,178	$ 91,176	$ 80,289
Operating expenses
Other costs of services	11,314	11,955	24,980	24,873
Selling, general and administrative	30,511	20,786	55,473	40,073
Depreciation and amortization	5,851	4,538	10,943	9,193
Change in fair value of contingent consideration	322	(142)	2,226	12
Total operating expenses	47,998	37,137	93,622	74,151
(Loss) income from operations	(135)	2,041	(2,446)	6,138
Interest expense, net	2,358	2,184	4,387	4,198
Other income	(2,353)	0	(2,353)	0
Total other expenses	5	2,184	2,034	4,198
(Loss) income before income taxes	(140)	(143)	(4,480)	1,940
Benefit from income taxes	(87)	(2,062)	(306)	(1,913)
Net (loss) income	(53)	1,919	(4,174)	3,853
Less: Net (loss) income attributable to non-controlling interests	(493)	1,182	(2,042)	3,265
Net income (loss) attributable to i3 Verticals, Inc.	$ 440	$ 737	$ (2,132)	$ 588
Net income (loss) per share attributable to Class A common stockholders:
Basic (in USD per share)	$ 0.02	$ 0.05	$ (0.11)	$ 0.04
Diluted (in USD per share)	$ 0.00	$ 0.05	$ (0.12)	$ 0.04
Weighted average shares of Class A common stock outstanding:
Basic (shares)	20,940,725	14,456,970	20,024,936	14,344,768
Diluted (shares)	33,404,983	16,106,757	31,237,675	15,778,077

Condensed Consolidated Statements of Changes in Equity (Unaudited) - USD ($) $ in Thousands	Total	Cumulative Effect, Period of Adoption, Adjustment	Class A	Class B	Common Stock Class A	Common Stock Class B	Additional Paid-In Capital	Retained Earnings (Deficit)	Retained Earnings (Deficit) Cumulative Effect, Period of Adoption, Adjustment	Non-Controlling Interest	Non-Controlling Interest Cumulative Effect, Period of Adoption, Adjustment
Common Stock, Shares, Outstanding, beginning at Sep. 30, 2019					14,444,115	12,921,637
Stockholders' Equity, beginning at Sep. 30, 2019	$ 142,441	$ 1,345			$ 1	$ 1	$ 82,380	$ (2,309)	$ 705	$ 62,368	$ 640
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Equity-based compensation	2,124						2,124
Net (loss) income								(149)
Net (loss) income attributable to non-controlling interests										2,083
Net (loss) income	1,934
Exercise of equity-based awards (shares)					53,662
Exercise of equity-based awards	351						351
Common Stock, Shares, Outstanding, ending at Dec. 31, 2019					14,497,777	12,921,637
Stockholders' Equity, ending at Dec. 31, 2019	148,195				$ 1	$ 1	84,855	(1,753)		65,091
Common Stock, Shares, Outstanding, beginning at Sep. 30, 2019					14,444,115	12,921,637
Stockholders' Equity, beginning at Sep. 30, 2019	142,441	$ 1,345			$ 1	$ 1	82,380	(2,309)	$ 705	62,368	$ 640
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net (loss) income	588		$ 588
Net (loss) income attributable to non-controlling interests	(3,265)		(3,265)
Net (loss) income	3,853		3,853
Exercise of equity-based awards (shares)					31,125
Exercise of equity-based awards	2
Equity component of exchangeable notes, net of issuance costs and deferred taxes	27,569
Purchases of exchangeable note hedges	(28,676)
Issuance of warrants	14,669
Common Stock, Shares, Outstanding, ending at Mar. 31, 2020					15,038,918	12,411,621
Stockholders' Equity, ending at Mar. 31, 2020	166,781				$ 1	$ 1	104,122	(1,016)		63,673
Common Stock, Shares, Outstanding, beginning at Dec. 31, 2019					14,497,777	12,921,637
Stockholders' Equity, beginning at Dec. 31, 2019	148,195				$ 1	$ 1	84,855	(1,753)		65,091
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Equity-based compensation	2,510						2,510
Net (loss) income	737		737					737
Net (loss) income attributable to non-controlling interests	(1,182)		(1,182)							1,182
Net (loss) income	1,919		$ 1,919
Distributions to non-controlling interest holders	(3)									(3)
Redemption of common units in i3 Verticals, LLC (shares)					510,016	(510,016)
Redemption of common units in i3 Verticals, LLC	0						2,597			(2,597)
Establishment of liabilities under a tax receivable agreement and related changes to deferred tax assets associated with increases in tax basis	596						596
Exercise of equity-based awards							2
Equity component of exchangeable notes, net of issuance costs and deferred taxes							27,569
Purchases of exchangeable note hedges							(28,676)
Issuance of warrants							14,669
Common Stock, Shares, Outstanding, ending at Mar. 31, 2020					15,038,918	12,411,621
Stockholders' Equity, ending at Mar. 31, 2020	166,781				$ 1	$ 1	104,122	(1,016)		63,673
Common Stock, Shares, Outstanding, beginning at Sep. 30, 2020			18,864,143	11,900,621	18,864,143	11,900,621
Stockholders' Equity, beginning at Sep. 30, 2020	240,168				$ 2	$ 1	157,598	(2,023)		84,590
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Equity-based compensation	3,441						3,441
Net (loss) income								(2,572)
Net (loss) income attributable to non-controlling interests										(1,549)
Net (loss) income	(4,121)
Redemption of common units in i3 Verticals, LLC (shares)					1,019,609	(1,019,609)
Redemption of common units in i3 Verticals, LLC	0						7,185			(7,185)
Establishment of liabilities under a tax receivable agreement and related changes to deferred tax assets associated with increases in tax basis	1,257						1,257
Exercise of equity-based awards (shares)					121,019
Exercise of equity-based awards	688						688
Allocation of equity to non-controlling interests	0						(1,072)			1,072
Common Stock, Shares, Outstanding, ending at Dec. 31, 2020					20,004,771	10,881,012
Stockholders' Equity, ending at Dec. 31, 2020	241,433				$ 2	$ 1	169,097	(4,595)		76,928
Common Stock, Shares, Outstanding, beginning at Sep. 30, 2020			18,864,143	11,900,621	18,864,143	11,900,621
Stockholders' Equity, beginning at Sep. 30, 2020	240,168				$ 2	$ 1	157,598	(2,023)		84,590
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net (loss) income	(2,132)		$ (2,132)
Net (loss) income attributable to non-controlling interests	2,042		2,042
Net (loss) income	$ (4,174)		$ (4,174)
Redemption of common units in i3 Verticals, LLC (shares)					1,671,479
Exercise of equity-based awards (shares)	360,252
Common Stock, Shares, Outstanding, ending at Mar. 31, 2021			21,919,300	10,229,142	21,919,300	10,229,142
Stockholders' Equity, ending at Mar. 31, 2021	$ 281,465				$ 2	$ 1	203,803	(4,155)		81,814
Common Stock, Shares, Outstanding, beginning at Dec. 31, 2020					20,004,771	10,881,012
Stockholders' Equity, beginning at Dec. 31, 2020	241,433				$ 2	$ 1	169,097	(4,595)		76,928
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Equity-based compensation	4,142						4,142
Net (loss) income	440		$ 440					440
Net (loss) income attributable to non-controlling interests	493		493							(493)
Net (loss) income	(53)		$ (53)
Redemption of common units in i3 Verticals, LLC (shares)					651,870	(651,870)
Redemption of common units in i3 Verticals, LLC	0						4,529			(4,529)
Establishment of liabilities under a tax receivable agreement and related changes to deferred tax assets associated with increases in tax basis	897						897
Exercise of equity-based awards (shares)					59,745
Exercise of equity-based awards	(199)						(199)
Allocation of equity to non-controlling interests	0						(9,908)			9,908
Issuance of Class A common stock under the 2020 Inducement Plan (in shares)					1,202,914
Issuance of Class A common stock under the 2020 Inducement Plan	35,245						35,245
Common Stock, Shares, Outstanding, ending at Mar. 31, 2021			21,919,300	10,229,142	21,919,300	10,229,142
Stockholders' Equity, ending at Mar. 31, 2021	$ 281,465				$ 2	$ 1	$ 203,803	$ (4,155)		$ 81,814

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands		3 Months Ended				6 Months Ended			12 Months Ended
	Oct. 01, 2020	Mar. 31, 2021	Dec. 31, 2020	Mar. 31, 2020	Dec. 31, 2019	Mar. 31, 2021	Sep. 30, 2020	Mar. 31, 2020	Sep. 30, 2020
Cash flows from operating activities:
Net (loss) income		$ (53)	$ (4,121)	$ 1,919	$ 1,934	$ (4,174)		$ 3,853
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization		5,851		4,538		10,943		9,193
Equity-based compensation						7,583		4,634
Provision for doubtful accounts						129		64
Amortization of debt discount and issuance costs						2,684		838
Debt issuance costs write offs						0		141
Amortization of capitalized customer acquisition costs						248		184
Unrealized gain on investment						(2,353)		0
Benefit from deferred income taxes						(306)		(2,668)
Non-cash lease expense						1,518
Increase in non-cash contingent consideration expense from original estimate		322		(142)		2,226		12
Changes in operating assets:
Accounts receivable						1,392		2,087
Prepaid expenses and other current assets	$ 202					(2,027)		(617)
Other assets						(2,475)		(1,308)
Changes in operating liabilities:
Accounts payable						39		(110)
Accrued expenses and other current liabilities	(869)					9,260		(2,464)
Deferred revenue						5,535		(572)
Operating lease liabilities						(1,534)
Other long-term liabilities						(698)		(65)
Contingent consideration paid in excess of original estimates						(4,115)		(4,355)
Net cash provided by operating activities						23,875		8,847
Cash flows from investing activities:
Expenditures for property and equipment						(885)		(923)
Expenditures for capitalized software						(2,861)		(1,238)
Purchases of merchant portfolios and residual buyouts						0		(1,597)
Acquisitions of businesses, net of cash acquired						(112,095)		0
Acquisition of other intangibles						(93)		(123)
Net cash used in investing activities						(115,934)		(3,881)
Cash flows from financing activities:
Proceeds from revolving credit facility						175,444		80,991
Payments on revolving credit facility						(90,444)		(203,135)
Proceeds from borrowings on exchangeable notes						0		138,000
Payments for purchase of exchangeable senior note hedges						0		(28,676)
Proceeds from issuance of warrants						0		14,669
Payments of debt issuance costs						0		(5,071)
Cash paid for contingent consideration						(1,736)		(2,122)
Payments for required distributions to members for tax obligations						0		(3)
Proceeds from stock option exercises						999		474
Payments for employee's tax withholdings from net settled stock option exercises						(363)		(121)
Net cash provided by (used in) financing activities						83,900		(4,994)
Net (decrease) in cash, cash equivalents, and restricted cash						(8,159)		(28)
Cash, cash equivalents and restricted cash at beginning of period	$ 20,601		$ 20,601		$ 3,200	20,601	$ 3,172	3,200	$ 3,200
Cash, cash equivalents and restricted cash at end of period		$ 12,442		$ 3,172		12,442	$ 20,601	3,172	$ 20,601
Supplemental disclosure of cash flow information:
Cash paid for interest						1,768		3,281
Cash paid for income taxes						$ 64		$ 262

Organization and Operations	6 Months Ended
Organization and Operations	Mar. 31, 2021
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 by certain related and unrelated creditors of i3 Verticals, LLC. Following the completion of the IPO and Reorganization Transactions, the Company became a holding company and its principal asset is the Common Units in i3 Verticals, LLC that it owns. i3 Verticals, Inc. operates and controls all of i3 Verticals, LLC's operations and, through i3 Verticals, LLC and its subsidiaries, conducts i3 Verticals, LLC's business. i3 Verticals, Inc. has a majority economic interest in i3 Verticals, LLC. Public Offering On September 15, 2020, the Company completed a public offering (the “September 2020 Public Offering”) of 3,737,500 shares of its Class A common stock, at a public offering price of $23.50 per share, which included a full exercise of the underwriters' option to purchase 487,500 additional shares of Class A Common Stock from the Company. The Company received approximately $83,400 of net proceeds, after deducting underwriting discounts and commissions, but before offering expenses. The Company used the net proceeds to purchase (1) 3,250,000 Common Units directly from i3 Verticals, LLC, and (2) 487,500 Common Units pursuant 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 the Company's Class A common stock in the offering. i3 Verticals, LLC received $72,018 in net proceeds from the sale of Common Units to the Company, which it used to repay outstanding indebtedness. •As of March 31, 2021, i3 Verticals, Inc. owned 68.2% of the economic interest in i3 Verticals, LLC. •As of March 31, 2021, the Continuing Equity Owners owned Common Units in i3 Verticals, LLC representing approximately 31.8% of the economic interest in i3 Verticals, LLC, shares of Class A common stock in the Company representing approximately 0.6% of the economic interest and voting power in the Company, and shares of Class B common stock in i3 Verticals, Inc., representing approximately 31.8% of the voting power in the Company. •The Continuing Equity Owners who own Common Units in i3 Verticals, LLC may redeem at each of their options (subject in certain circumstances to time-based vesting requirements) their Common Units for, at the election of i3 Verticals, LLC, cash or newly-issued shares of the Company's Class A common stock. •Combining the Class A common stock and Class B common stock, the Continuing Equity Owners hold approximately 32.4% 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

6 Months Ended

Mar. 31, 2021

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 March 31, 2021 and for

the three and six months ended March 31, 2021 and 2020. The results of operations for the three and six months ended March 31, 2021 and 2020 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, 2020 and 2019, included in the Company’s Annual Report on Form 10-K for the year ended September 30, 2020.

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.

Settlement Assets and Obligations

Settlement assets and obligations result when funds are temporarily held or owed by the Company on behalf of merchants, consumers, schools, and other institutions. Timing differences, interchange expense, merchant reserves and exceptional items cause differences between the amount received from the card networks and the amount funded to counterparties. These balances arising in the settlement process are reflected as settlement assets and obligations on the accompanying consolidated balance sheets. With the exception of merchant reserves, settlement assets or settlement obligations are generally collected and paid within one to four days. As of March 31, 2021, settlement assets and settlement obligations were both $6,056. As of September 30, 2020, the Company had no settlement assets or settlement obligations.

Inventories

Inventories consist of point-of-sale equipment to be sold to clients and are stated at the lower of net realizable value or cost, determined on either a weighted average or specific basis. Inventories were $1,806 and $1,309 at March 31, 2021 and September 30, 2020, 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. Acquisitions completed during the six months ended March 31, 2021 contributed $13,394 and $1,379 of revenue and net income, respectively, to the Company's condensed consolidated statements of operations for the six months then ended.

Leases

The Company adopted ASU 2016-02, Leases, (“ASC 842”) on October 1, 2020, using the optional modified retrospective method under which the prior period financial statements were not restated for the new guidance. The Company elected the accounting policy practical expedients for all classes of underlying assets to (i) combine associated lease and non-lease components in a lease arrangement as a combined lease component and (ii) exclude recording short-term leases as right-of-use assets on the condensed consolidated balance sheets.

At contract inception the Company determines whether an arrangement is, or contains a lease, and for each identified lease, evaluates the classification as operating or financing. Leased assets and obligations are recognized at the lease commencement date based on the present value of fixed lease payments to be made over the term of the lease. Renewal and termination options are factored into determination of the lease term only if the option is reasonably certain to be exercised. The Company’s leases do not provide a readily determinable implicit interest rate and the Company uses its incremental borrowing rate to measure the lease liability and corresponding right-of-use asset. The incremental borrowing rate is a fully collateralized rate that considers the Company’s credit rating, market conditions and the term of the lease. The Company accounts for all components in a lease arrangement as a single combined lease component.

Operating lease cost is recognized on a straight-line basis over the lease term. Total lease costs include variable lease costs, which are primarily comprised of the consumer price index adjustments and other changes based on rates, such as costs of insurance and property taxes. Variable payments are expensed in the period incurred and not included in the measurement of lease assets and obligations.

Revenue Recognition and Deferred Revenue

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.

The majority of the Company's revenue for the six months ended March 31, 2021 and 2020 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 clients under which the client engages the Company to provide both payment authorization services and transaction settlement services for all of the cardholder transactions of the client, 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 clients 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 client, 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 client 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.

With regards to the Company's discount fees, 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. Revenue from fixed transactions, which principally relate to the sale of equipment, is recognized upon transfer of ownership and delivery to the client, 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 client. 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, client 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 the Company's 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 tables below present a disaggregation of the Company's revenue from contracts with clients by product by segment. Refer to Note 12 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.


	For the Three Months Ended March 31, 2021
	Merchant Services		Proprietary Software and Payments		Other		Total
Payments revenue	$	21,515	$	7,489	$	(668)	$	28,336
Other revenue	4,477		15,060		(10)		19,527
Total revenue	$	25,992	$	22,549	$	(678)	$	47,863


	For the Three Months Ended March 31, 2020(1)
	Merchant Services		Proprietary Software and Payments		Other		Total
Payments revenue	$	21,169	$	5,744	$	(527)	$	26,386
Other revenue	4,560		8,236		(4)		12,792
Total revenue	$	25,729	$	13,980	$	(531)	$	39,178

________

1.Effective July 1, 2020, the Company reassigned a component from the Proprietary Software and Payments segment to the Merchant Services segment to better align the Company's business within its segments. Refer to Note 12 for further discussion. The prior period comparatives have been retroactively adjusted to reflect the Company's current segment presentation.


	For the Six Months Ended March 31, 2021
	Merchant Services		Proprietary Software and Payments		Other		Total
Payments revenue	$	42,056	$	12,986	$	(1,094)	$	53,948
Other revenue	8,906		28,339		(17)		37,228
Total revenue	$	50,962	$	41,325	$	(1,111)	$	91,176


	For the Six Months Ended March 31, 2020(1)
	Merchant Services		Proprietary Software and Payments		Other		Total
Payments revenue	$	43,913	$	11,780	$	(935)	$	54,758
Other revenue	10,055		15,482		(6)		25,531
Total revenue	$	53,968	$	27,262	$	(941)	$	80,289

________

The tables below present a disaggregation of the Company's revenue from contracts with clients 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.


	For the Three Months Ended March 31, 2021
	Merchant Services		Proprietary Software and Payments		Other		Total
Revenue transferred over time	$	19,267	$	15,697	$	(632)	$	34,332
Revenue transferred at a point in time	6,725		6,852		(46)		13,531
Total revenue	$	25,992	$	22,549	$	(678)	$	47,863


	For the Three Months Ended March 31, 2020(1)
	Merchant Services		Proprietary Software and Payments		Other		Total
Revenue transferred over time	$	18,784	$	9,659	$	(526)	$	27,917
Revenue transferred at a point in time	6,945		4,321		(5)		11,261
Total revenue	$	25,729	$	13,980	$	(531)	$	39,178

______


	For the Six Months Ended March 31, 2021
	Merchant Services		Proprietary Software and Payments		Other		Total
Revenue transferred over time	$	37,278	$	29,417	$	(1,020)	$	65,675
Revenue transferred at a point in time	13,684		11,908		(91)		25,501
Total revenue	$	50,962	$	41,325	$	(1,111)	$	91,176


	For the Six Months Ended March 31, 2020(1)
	Merchant Services		Proprietary Software and Payments		Other		Total
Revenue transferred over time	$	38,601	$	19,126	$	(934)	$	56,793
Revenue transferred at a point in time	15,367		8,136		(7)		23,496
Total revenue	$	53,968	$	27,262	$	(941)	$	80,289

______

Contract Liabilities

Deferred revenue represents amounts billed to clients 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 the Company's contracts with a deferred revenue component are one year. Substantially all of the Company's deferred revenue is anticipated to be recognized within the next year.

The following tables present the changes in deferred revenue as of and for the six months ended March 31, 2021 and 2020, respectively:


Balance at September 30, 2020	$	11,054
Deferral of revenue	19,149
Recognition of unearned revenue	(6,234)
Balance at December 31, 2020	23,969
Deferral of revenue	5,699
Recognition of unearned revenue	(7,174)
Balance at March 31, 2021	$	22,494


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
Deferral of revenue	5,004
Recognition of unearned revenue	(5,753)
Balance at March 31, 2020	$	9,666

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 March 31, 2021 and 2020 the Company had $3,572 and $2,830, respectively, 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 of $129 and $248 for the three and six months ended March 31, 2021, respectively, and $96 and $184 for the three and six months ended March 31, 2020, respectively.

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

Other Cost of 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

In February 2016, the FASB issued ASC 842 with amendments in 2018 and 2019. ASC 842 aims to increase transparency and comparability among organizations by requiring recognition of lease assets and lease liabilities on the balance sheet and disclosure of key information about leasing arrangements.

The amendments to ASC 842 are effective for public business entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years, with early adoption permitted. In November 2019, the FASB issued ASU No. 2019-10, which extends the effective date for adoption of ASC 842 for certain entities. In June 2020, the FASB issued ASU No. 2020-05, which further extends the effective date for adoption of ASC 842 for certain entities. As a result of the provisions in ASU No. 2020-05, and as the Company is an emerging growth company and has elected to use the extended transition period of such companies, the Company was not required to adopt ASC 842 until October 1, 2022. The Company elected to early adopt ASC 842 on October 1, 2020, using the optional modified retrospective transition method, under which the prior period financial statements were not restated for the new guidance.

The Company elected to apply the package of practical expedients whereby the Company did not reassess whether expired or existing leases contain a lease, did not reassess the lease classification for any expired or existing leases, and did not reassess initial direct costs for any existing leases. The Company further elected to account for lease and nonlease components in a lease arrangement as a combined lease component for all classes of leased assets. The Company also elected to apply the short-term lease exception practical expedient.

The adoption of ASC 842 resulted in the recognition of the right-of-use assets of $9,093 and the lease liabilities of $9,760 as of October 1, 2020. The adoption of ASC 842 also resulted in a reduction in existing prepaid expenses and other current assets of $202 and in accrued expenses and other current liabilities and other long-term liabilities of $869 as of October 1, 2020. Lease liabilities are measured as the present value of remaining lease payments, utilizing the Company’s incremental borrowing rate based on the remaining lease term as of the adoption date. The right-of-use assets are measured at an amount equal to the lease liabilities adjusted by the amounts of certain assets and liabilities, such as deferred lease obligations and prepaid rent, that were previously recognized on the balance sheet prior to the initial application of ASC 842. Refer to Note 7 for further information.

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 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. 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 ASU 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 May 2021, the FASB issued ASU No. 2021-04, Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity's Own Equity (Subtopic 815-40): Issuer's Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options. The amendments in ASU No. 2021-04 provides guidance to clarify and reduce diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (for example, warrants) that remain equity classified after modification or exchange. The amendments in this ASU No. 2021-04 are effective for all entities for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years, with early adoption permitted, including interim periods within those fiscal years. As a result, the Company will not be required to adopt ASU 2021-04 until October 1, 2022. The Company is currently evaluating the impact of the adoption of this principle on the Company’s condensed consolidated financial statements.

Acquisitions

6 Months Ended

Mar. 31, 2021

Business Combinations [Abstract]

Acquisitions

ACQUISITIONS

During the six months ended March 31, 2021, the Company completed the acquisitions of unrelated businesses, including substantially all of the assets of Business Information Systems, Inc. and ImageSoft, Inc. Certain of the purchase price allocations assigned for these acquisitions are considered preliminary as of March 31, 2021.

Purchase of Business Information Systems, Inc.

On February 1, 2021, the Company completed the acquisition of substantially all of the assets of Business Information Systems, GP, a Tennessee general partnership and Business Information Systems, Inc., a Tennessee corporation (collectively “BIS”) to expand its software offerings, primarily in the public sector vertical. BIS is within the Proprietary Software & Payments segment. Total purchase consideration was $95,955, including $52,500 in cash on hand and proceeds from the Company's revolving credit facility, 1,202,914 shares of the Company's Class A Common Stock (valued at $35,245), and $8,210 in contingent consideration.

The goodwill associated with the acquisition is deductible for tax purposes. The acquired merchant relationships intangible asset has an estimated amortization period of nineteen years. The non-compete agreement and trade name have estimated amortization periods of three and five years, respectively. The weighted-average estimated amortization period of all intangibles acquired is nineteen years. The acquired capitalized software has an estimated amortization period of ten years.

Acquisition-related costs for BIS amounted to approximately $328 and were expensed as incurred.

Certain provisions in the merger agreement provide for additional consideration of up to $16,000 in the aggregate, to be paid based upon achievement of specified financial performance targets, as defined in the purchase agreement, in the 24 months from February 1, 2021 through January 31, 2023. The Company determined the acquisition date fair value of the liability for the contingent consideration based on a probability forecast and discounted cash flow analysis. In each subsequent reporting period, the Company will reassess the

current estimates of performance relative to the targets and adjust the contingent liability to its fair value through earnings. See additional disclosures in Note 8.

Purchase of ImageSoft, Inc.

On November 17, 2020, the Company completed the acquisition of substantially all of the assets of ImageSoft, Inc. to expand its software offerings, primarily in the public sector vertical. ImageSoft, Inc. is within the Proprietary Software & Payments segment. Total purchase consideration was $47,040, including $40,000 in cash consideration, funded by proceeds from the Company's revolving credit facility, and $7,040 in contingent consideration.

The goodwill associated with the acquisition is deductible for tax purposes. The acquired merchant relationships intangible asset has an estimated amortization period of twenty years. The non-compete agreement and trade name have estimated amortization periods of three and five years, respectively. The weighted-average estimated amortization period of all intangibles acquired is nineteen years. The acquired capitalized software has an estimated amortization period of seven years.

Acquisition-related costs for ImageSoft, Inc. amounted to approximately $381 and were expensed as incurred.

Certain provisions in the merger agreement provide for additional consideration of up to $20,000 in the aggregate, to be paid based upon achievement of specified financial performance targets, as defined in the purchase agreement, in the 24 months from May 1, 2021 through April 30, 2023. The Company determined the acquisition date fair value of the liability for the contingent consideration based on a probability forecast and discounted cash flow analysis. In each subsequent reporting period, the Company will reassess the current estimates of performance relative to the targets and adjust the contingent liability to its fair value through earnings. See additional disclosures in Note 8.

Other Business Combinations

On October 1, 2020, the Company completed the acquisitions of three other businesses to expand the Company’s software offerings in the public sector and healthcare vertical markets and to add proprietary technology that will augment the Company’s existing platform across several verticals. Two of these businesses are within the Proprietary Software & Payments segment and one is within the Merchant Services segment. Total purchase consideration was $23,000, including $19,600 in cash consideration, funded by proceeds from the Company's revolving credit facility proceeds, and $3,400 of contingent consideration.

For each of these businesses acquired, the goodwill associated with the acquisition is deductible for tax purposes. The acquired merchant relationships intangible assets have estimated amortization periods of between eleven and twenty-five years. The non-compete agreement and trade names have estimated amortization periods of three years. The weighted-average amortization period for all intangibles acquired is eighteen years. The acquired capitalized software has a weighted-average amortization period of seven years.

Acquisition-related costs for these businesses amounted to approximately $706 and were expensed as incurred.

Certain provisions in the purchase agreements provide for additional consideration of up to $10,200, in the aggregate, to be paid based upon the achievement of specified financial performance targets, as defined in the purchase agreements, through no later than March 2023. The Company determined the acquisition date fair values of the liabilities for the contingent consideration based on probability forecasts and discounted cash flow analyses. In each subsequent reporting period, the Company will reassess its current estimates of performance relative to the targets and adjust the contingent liabilities to their fair values through earnings. See additional disclosures in Note 8.

Summary of Business Combinations during the six months ended March 31, 2021

The fair values assigned to certain assets and liabilities assumed, as of the acquisition dates, were as follows:


	BIS		ImageSoft, Inc.		Other		Total
Accounts receivable	$	1,567	$	4,997	$	923	$	7,487
Settlement assets	6,889		120		—		7,009
Inventories	458		—		116		574
Prepaid expenses and other current assets	10		2,897		84		2,991
Property and equipment	206		433		159		798
Capitalized software	15,100		5,200		1,750		22,050
Acquired merchant relationships	35,200		16,300		8,550		60,050
Non-compete agreements	100		610		172		882
Trade name	700		1,100		200		2,000
Goodwill	43,612		20,900		11,585		76,097
Operating lease right-of-use assets	—		332		—		332
Other assets	—		6		7		13
Total assets acquired	103,842		52,895		23,546		180,283

Accrued expenses and other current liabilities	138		910		1		1,049
Settlement obligations	6,889		120		—		7,009
Deferred revenue, current	860		4,500		545		5,905
Current portion of operating lease liabilities	—		75		—		75
Operating lease liabilities, less current portion	—		250		—		250
Net assets acquired	$	95,955	$	47,040	$	23,000	$	165,995

Pro Forma Results of Operations for Business Combinations during the six months ended March 31, 2021

The following unaudited supplemental pro forma results of operations have been prepared as though each of the acquired businesses in the six months ended March 31, 2021 had occurred on October 1, 2019. Pro forma adjustments were made to reflect the impact of depreciation and amortization, changes to executive compensation and the revised debt load, all in accordance with ASC 805. This supplemental pro forma information does not purport to be indicative of the results of operations that would have been attained had the acquisitions been made on these dates, or of results of operations that may occur in the future.


	Six months ended March 31,
	2021		2020
Revenue	$	101,280	$	108,199
Net (loss) income	$	(3,186)	$	3,716

Business Combinations during the year ended September 30, 2020

During the year ended September 30, 2020, the Company completed the acquisitions of three unrelated businesses. Two expand the Company's geographic reach and software capabilities in the public sector vertical. The other adds text-to-pay capabilities and other software solutions in the Company's non-profit vertical. These businesses are within the Proprietary Software & Payments segment. Total purchase consideration was $32,628, including $27,880 in revolving credit facility proceeds and $4,748 of contingent consideration. Certain of the purchase price allocations assigned for these acquisitions are preliminary.

For some of these business acquired, the goodwill associated with the acquisitions is deductible for tax purposes, and goodwill associated with the acquisitions of others of the businesses is not deductible for tax purposes. The acquired merchant relationships intangible assets have estimated amortization periods of between fifteen and eighteen years. The non-compete agreement and trade names both have weighted-average amortization periods three years. The weighted-average amortization period for all intangibles acquired is sixteen years. The acquired capitalized software has an estimated amortization period of seven years.

Acquisition-related costs for these businesses amounted to approximately $547 and were expensed as incurred.

Certain provisions in the purchase agreements provide for additional consideration of up to $18,600, in the aggregate, to be paid based upon the achievement of specified financial performance targets, as defined in the purchase agreements, through no later than September 2022. The Company determined the acquisition date fair values of the liabilities for the contingent consideration based on probability forecasts and discounted cash flow analyses. In each subsequent reporting period, the Company will reassess its current estimates of performance relative to the targets and adjust the contingent liabilities to their fair values through earnings. See additional disclosures in Note 8.

Summary of Business Combinations during the year ended September 30, 2020

The fair values assigned to certain assets and liabilities assumed, as of the acquisition dates, during the year ended September 30, 2020 were as follows:


Cash and cash equivalents	$	313
Accounts receivable	846
Prepaid expenses and other current assets	54
Property and equipment	122
Capitalized software	1,970
Acquired merchant relationships	11,900
Non-compete agreements	90
Trade name	300
Goodwill	20,213
Other assets	17
Total assets acquired	$	35,825

Accounts payable	168
Accrued expenses and other current liabilities	635
Deferred revenue, current	200
Other long-term liabilities	2,194
Net assets acquired	$	32,628

Goodwill and Intangible Assets

6 Months Ended

Mar. 31, 2021

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, 2020 (net of accumulated impairment losses of $11,458, $0 and $0, respectively)	$	115,982	$	71,023	$	—	$	187,005
Goodwill attributable to preliminary purchase price adjustments and acquisition during the six months ended March 31, 2021	2,892		73,468		—		76,360
Balance at March 31, 2021	$	118,874	$	144,491	$	—	$	263,365

Intangible assets consisted of the following as of March 31, 2021:


	Cost		Accumulated Amortization		Carrying Value		Amortization Life and Method
Finite-lived intangible assets:
Merchant relationships	$	214,621	$	(59,158)	$	155,463	12 to 20 years – accelerated or straight-line
Non-compete agreements	2,650		(1,218)		1,432		2 to 5 years – straight-line
Website and brand development costs	239		(98)		141		3 to 4 years – straight-line
Trade names	5,880		(2,113)		3,767		2 to 7 years – straight-line
Residual buyouts	4,899		(1,022)		3,877		2 to 8 years – straight-line
Referral and exclusivity agreements	900		(477)		423		5 to 10 years – straight-line
Total finite-lived intangible assets	229,189		(64,086)		165,103

Indefinite-lived intangible assets:
Trademarks	42		—		42
Total identifiable intangible assets	$	229,231	$	(64,086)	$	165,145

Amortization expense for intangible assets amounted to $3,752 and $7,112 during the three and six months ended March 31, 2021, respectively, and $3,088 and $6,282 during the three and six months ended March 31, 2020, respectively.

Based on net carrying amounts at March 31, 2021, the Company's estimate of future amortization expense for intangible assets are presented in the table below for fiscal years ending September 30:


2021 (six months remaining)	$	7,670
2022	14,424
2023	13,352
2024	12,303
2025	12,054
Thereafter	105,300
	$	165,103

Long-Term Debt, Net

6 Months Ended

Mar. 31, 2021

Debt Disclosure [Abstract]

Long-Term Debt, Net

LONG-TERM DEBT, NET

A summary of long-term debt, net as of March 31, 2021 and September 30, 2020 is as follows:


		March 31,		September 30,
	Maturity	2021		2020
Revolving lines of credit to banks under the Senior Secured Credit Facility	May 9, 2024	$	85,000	$	—
1% Exchangeable Senior Notes due 2025	February 15, 2025	97,534		95,325
Debt issuance costs, net		(4,092)		(4,567)
Total long-term debt, net of issuance costs		$	178,442	$	90,758

2020 Exchangeable Notes Offering

On February 18, 2020, i3 Verticals, LLC issued $138,000 aggregate principal amount of 1.0% Exchangeable Senior Notes due 2025 (the “Exchangeable Notes”) in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”). The Company received approximately $132,762 in net proceeds from the sale of the Exchangeable Notes, as determined by deducting estimated offering expenses paid to third-parties from the aggregate principal amount.

The Exchangeable Notes are senior secured notes and are guaranteed solely by the Company. The Exchangeable Notes bear interest at a fixed rate of 1.00% per year, payable semiannually in arrears on February 15 and August 15 of each year, beginning on August 15, 2020. The Exchangeable Notes will mature on February 15, 2025, unless converted or repurchased at an earlier date.

i3 Verticals, LLC issued the Exchangeable Notes pursuant to an Indenture, dated as of February 18, 2020 (the “Indenture”), among i3 Verticals, LLC, the Company and U.S. Bank National Association, as trustee.

Prior to August 15, 2024, the Exchangeable Notes are exchangeable only upon satisfaction of certain conditions and during certain periods described in the Indenture, and thereafter, the Exchangeable Notes are exchangeable at any time until the close of business on the second scheduled trading day immediately preceding the maturity date. The Exchangeable Notes are exchangeable on the terms set forth in the Indenture into cash, shares of Class A common stock, or a combination thereof, at i3 Verticals, LLC’s election. The exchange rate is initially 24.4666 shares of Class A common stock per $1,000 principal amount of Exchangeable Notes (equivalent to an initial exchange price of approximately $40.87 per share of Class A common stock). The exchange rate is subject to adjustment in certain circumstances. In addition, following certain corporate events that occur prior to the maturity date or i3 Verticals, LLC’s delivery of a notice of redemption, i3 Verticals, LLC will increase, in certain circumstances, the exchange rate for a holder who elects to exchange its Exchangeable Notes in connection with such a corporate event or notice of redemption, as the case may be.

If the Company or i3 Verticals, LLC undergoes a fundamental change, holders may require i3 Verticals, LLC to repurchase all or part of their Exchangeable Notes at a repurchase price equal to 100% of the principal amount of the Exchangeable Notes to be repurchased, plus accrued and unpaid interest to, but not including, the fundamental change repurchase date. As of March 31, 2021, none of the conditions permitting the holders of the Exchangeable Notes to early convert have been met.

i3 Verticals, LLC may not redeem the Exchangeable Notes prior to February 20, 2023. On or after February 20, 2023, and prior to the 47th scheduled trading day immediately preceding the maturity date, if the last reported sale price per share of Class A common stock has been at least 130% of the exchange price for the Exchangeable Notes for at least 20 trading days (whether or not consecutive), i3 Verticals, LLC may redeem all or any portion of the Exchangeable Notes at a cash redemption price equal to 100% of the principal amount of the Exchangeable Notes to be redeemed plus accrued and unpaid interest on such note to, but not including, the redemption date.

The Exchangeable Notes are general senior unsecured obligations of i3 Verticals, LLC. The guarantee is the Company’s senior unsecured obligation and rank senior in right of payment to all of i3 Verticals, LLC’s and the Company’s future indebtedness that is expressly subordinated in right of payment to the Exchangeable Notes or the guarantee, as applicable. The Exchangeable Notes and the guarantee rank equally in right of payment with all of i3 Verticals, LLC’s and the Company’s existing and future unsecured indebtedness that is not so expressly subordinated in the right of payment to the Exchangeable Notes or the guarantee, as applicable. The Exchangeable Notes and the guarantee are effectively subordinated to any of the Companies’ existing and future secured indebtedness to the extent of the value of the assets securing such indebtedness (including obligations under the credit agreement governing the Senior Secured Credit Facility, defined below). The Exchangeable Notes and the guarantee will be structurally subordinated to all indebtedness and other liabilities and obligations (including the debt and trade payables) of the Company’s subsidiaries, other than i3 Verticals, LLC.

In accounting for the issuance of the Exchangeable Notes, the Company separated the Exchangeable Notes into liability and equity components. The carrying amount of the liability component before the allocation of any transaction costs was calculated by measuring the fair value of a similar liability that does not have an associated exchangeable feature. The carrying amount of the equity component (before the allocation of any transaction costs), representing the conversion option, which does not require separate accounting as a derivative as it meets a scope exception for certain contracts involving an entity's own equity, was determined by deducting the fair value of the liability component from the par value of the Exchangeable Notes. The difference between the principal amount of the Exchangeable Notes and the liability component represents the debt discount, which is recorded as a direct deduction from the related debt liability in the consolidated balance sheet and accreted over the period from the date of issuance to the contractual maturity date, resulting in the recognition of non-cash interest expense. The equity component of the Exchangeable Notes of approximately $28,662 is included in additional paid-in capital in the consolidated balance sheet and is not remeasured as longs as it continues to meet the conditions for equity classification. Transaction costs were allocated to the liability and equity components in the same proportion as the allocation of the proceeds. Transaction costs attributable to the liability component were recorded as debt issuance costs in the consolidated balance sheet and are amortized to interest expense using the effective interest method over the term of the Exchangeable Notes, and transaction costs attributable to the equity component were netted with the equity component in stockholders' equity.

The Company incurred third-party issuance costs totaling $5,238, in connection with the issuance of the Exchangeable Notes. The Company capitalized $4,150 of debt issuance costs in connection with the Exchangeable Notes and allocated $1,088 of the third-party issuance costs to equity. Non-cash interest expense, including amortization of debt issuance costs, related to the Exchangeable Notes for the three and six months ended March 31, 2021 was $145 and $285, respectively, and $70 for both the three and six months ended March 31, 2020. The Company also wrote off a portion of the debt issuance costs in connection with the repurchase transactions in April and September 2020, as described below. Total unamortized debt issuance costs related to the Exchangeable Notes were $2,908 as of March 31, 2021.

The estimated fair value of the Exchangeable Notes was $119,071 as of March 31, 2021. The estimated fair value of the Exchangeable Notes was determined through consideration of quoted market prices for similar instruments. The fair value is classified as Level 2, as defined in Note 8.

The Company can choose to purchase its Exchangeable Notes on the open market. In April and September 2020, the Company paid $17,414 in aggregate to repurchase $21,000 in aggregate principal amount of the Exchangeable Notes and to repay approximately $24 in accrued interest on the repurchased portion of the Exchangeable Notes. The Company recorded a loss on retirement of debt of $2,297 due to the carrying value exceeding the fair value of the repurchased portion of the Exchangeable Notes at the dates of repurchases. The Company wrote off $592 of debt issuance costs in connection with the repurchase transactions.

Exchangeable Note Hedge Transactions

Verticals, LLC entered into exchangeable note hedge transactions with respect to Class A common stock (the “Note Hedge Transactions”) with certain financial institutions (collectively, the “Counterparties”). The Note Hedge Transactions cover, subject to anti-dilution adjustments substantially similar to those applicable to the Exchangeable Notes, the same number of shares of Class A common stock that initially underlie the Exchangeable Notes in the aggregate and are exercisable upon exchange of the Exchangeable Notes. The Note Hedge Transactions are intended to reduce potential dilution to the Class A common stock upon any exchange of the Exchangeable Notes. The Note Hedge Transactions will expire upon the maturity of the Exchangeable Notes, if not earlier exercised. The Note Hedge Transactions are separate transactions, entered into by i3 Verticals, LLC with the Counterparties, and are not part of the terms of the Exchangeable Notes. Holders of the Exchangeable Notes will not have any rights with respect to the Note Hedge Transactions. i3 Verticals, LLC used approximately $28,676 of the net proceeds from the offering of the Exchangeable Notes (net of the premiums received for the warrant transactions described below) to pay the cost of the Note Hedge Transactions.

The Note Hedge Transactions do not require separate accounting as a derivative as they meet a scope exception for certain contracts involving an entity's own equity. The premiums paid for the Note Hedge Transactions have been included as a net reduction to additional paid-in capital within stockholders' equity.

Warrant Transactions

On February 12, 2020, concurrently with the pricing of the Exchangeable Notes, and on February 13, 2020, concurrently with the exercise by the initial purchasers of their right to purchase additional Exchangeable Notes, the Company entered into warrant transactions to sell to the Counterparties warrants (the “Warrants”) to acquire, subject to customary adjustments, up to initially 3,376,391 shares of Class A common stock in the aggregate at an initial exercise price of $62.88 per share. The Company offered and sold the Warrants in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act. The Warrants will expire over a period beginning on May 15, 2025.

The Warrants are separate transactions, entered into by the Company with the Counterparties, and are not part of the terms of the Exchangeable Notes. Holders of the Exchangeable Notes will not have any rights with respect to the Warrants. The Company received approximately $14,669 from the offering and sale of the Warrants. The Warrants do not require separate accounting as a derivative as they meet a scope exception for certain contracts involving an entity's own equity. The premiums paid for the Warrants have been included as a net increase to additional paid-in capital within stockholders' equity.

Senior Secured Credit Facility

On May 9, 2019, the Company replaced its existing senior secured credit facility with a new credit agreement (the "Senior Secured Credit Facility"). On February 18, 2020, the Company entered into the second amendment to the Senior Secured Credit Facility in connection with the offering of the Company's Exchangeable Notes. The second amendment reduced the Company's borrowing capacity under the Senior Secured Credit Facility. During the year ended September 30, 2020, the Company wrote off $141 of unamortized debt issuance costs, which was recorded in interest expense in the condensed consolidated statements of operations, due to the decrease in borrowing capacity. The Senior Secured Credit Facility consists of a $275,000 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 March 31, 2021), 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 March 31, 2021), 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 March 31, 2021) 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. The Senior Secured Credit Facility requires maintenance of certain financial ratios on a quarterly basis as follows: (i) a minimum consolidated interest coverage ratio of 3.00 to 1.00, (ii) a maximum total leverage ratio of 5.00 to 1.00, provided, that for each of the four fiscal quarters immediately following a qualified acquisition (each a “Leverage Increase Period”), the required ratio set forth above may be increased by up to 0.25, subject to certain limitations and (iii) a maximum consolidated senior secured leverage ratio of 3.25 to 1.00, provided, that for each Leverage Increase Period, the consolidated senior leverage ratio may be increased by up to 0.25, subject to certain limitations. As of March 31, 2021, the Company was in compliance with these covenants, and there was $190.0 million available for borrowing under the revolving credit facility, subject to the financial covenants.

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 March 31, 2021. 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.

Debt Issuance Costs

The Company incurred no debt issuance costs during the three and six months ended March 31, 2021. During the three and six months ended March 31, 2020, the Company capitalized debt issuance costs totaling $4,245, in connection with the issuance of the Exchangeable Notes, the Note Hedge Transactions and the Warrants and in connection with entering into the second amendment to the Senior Secured Credit Facility. 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 $240 and $475 during the three and six months ended March 31, 2021, respectively, and $172 and $272 during the three and six months ended March 31, 2020, respectively.

Income Taxes	6 Months Ended
Income Taxes	Mar. 31, 2021
Income Tax Disclosure [Abstract]
Income Taxes	INCOME TAXESi3 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. When the estimate of the annual effective tax rate is unreliable, the Company records its income tax expense or benefit based up on a period to date effective tax rate. Each quarter, the Company updates its estimate of the annual effective tax rate, and if the Company’s estimated tax rate changes, it makes a cumulative adjustment in that period. The Company’s provision for income taxes was a benefit of $87 and $306 for the three and six months ended March 31, 2021, respectively, and a benefit of $2,062 and $1,913 for the three and six months ended March 31, 2020, respectively. Tax Receivable Agreement On June 25, 2018, the Company entered into a Tax Receivable Agreement with i3 Verticals, LLC and each of the Continuing Equity Owners (the “Tax Receivable Agreement”) that provides for the payment by the Company to the Continuing Equity Owners of 85% of the amount of certain tax benefits, if any, that it actually realizes, or in some circumstances, is deemed to realize in its tax reporting, as a result of (i) future redemptions funded by the Company or exchanges, or deemed exchanges in certain circumstances, of Common Units of i3 Verticals, LLC for Class A common stock of i3 Verticals, Inc. or cash, and (ii) certain additional tax benefits attributable to payments made under the Tax Receivable Agreement. These tax benefit payments are not conditioned upon one or more of the Continuing Equity Owners maintaining a continued ownership interest in i3 Verticals, LLC. If a Continuing Equity Owner transfers Common Units but does not assign to the transferee of such units 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. During the six months ended March 31, 2021, the Company acquired an aggregate of 1,671,479 Common Units in Verticals, LLC in connection with the redemption of Common Units from the Continuing Equity Owners, which resulted in an increase in the tax basis of our investment in i3 Verticals, LLC subject to the provisions of the Tax Receivable Agreement. As a result of these exchanges, during the six months ended March 31, 2021, the Company recognized an increase to its net deferred tax assets in the amount of $14,177, and corresponding Tax Receivable Agreement liabilities of $12,051, representing 85% of the tax benefits due to the Continuing Equity Owners. The deferred tax asset and corresponding Tax Receivable Agreement liability balances were $43,530 and $39,626, respectively, as of March 31, 2021. Payments to the Continuing Equity Owners related to exchanges through March 31, 2021 will range from $0 to $3,229 per year and are expected to be paid over the next 25 years. The amounts recorded as of March 31, 2021, 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.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References + Details

Leases

6 Months Ended

Mar. 31, 2021

Leases [Abstract]

Leases

LEASES

As discussed in Note 2, the Company adopted ASC 842 effective October 1, 2020, using the modified retrospective transition method, under which the prior period financial statements were not restated for the new guidance.

The Company’s leases consist primarily of real estate leases throughout the markets in which the Company operates. At contract inception, the Company determines whether an arrangement is or contains a lease, and for each identified lease, evaluates the classification as operating or financing. The Company had no finance leases as of March 31, 2021. Leased assets and obligations are recognized at the lease commencement date based on the present value of fixed lease payments to be made over the term of the lease. Renewal and termination options are factored into determination of the lease term only if the option is reasonably certain to be exercised. The weighted-average remaining lease term at March 31, 2021 was six years. The Company had no significant short-term leases during the three and six months ended March 31, 2021.

The Company’s leases do not provide a readily determinable implicit interest rate and the Company uses its incremental borrowing rate to measure the lease liability and corresponding right-of-use asset. The incremental borrowing rates were determined based on a portfolio approach considering the Company’s current secured borrowing rate adjusted for market conditions and the length of the lease term. The weighted-average discount rate used in the measurement of our lease liabilities was 7.0% as of March 31, 2021.

Operating lease cost is recognized on a straight-line basis over the lease term. Operating lease costs for the three and six months ended March 31, 2021 were $1,046 and $1,900, respectively, which are included in selling, general and administrative expenses in the condensed consolidated statements of operations.

Total operating lease costs for the three and six months ended March 31, 2021 include variable lease costs of approximately $3 and $4, respectively, which are primarily comprised of costs of maintenance and utilities and changes in rates, and are determined based on the actual costs incurred during the period. Variable payments are expensed in the period incurred and not included in the measurement of lease assets and liabilities.

Short-term rent expense for the three and six months ended March 31, 2021 was $72 and $130, respectively, and are included in selling, general and administrative expenses in the condensed consolidated statements of operations.

As of March 31, 2021, maturities of lease liabilities are as follows:


Years ending September 30:
2021 (six months remaining)	$	1,983
2022	3,590
2023	3,202
2024	2,630
2025	2,266
Thereafter	4,704
Total future minimum lease payments (undiscounted)	18,375
Less: present value discount	(2,937)
Present value of lease liability	$	15,438

__________________________

1.Total future minimum lease payments excludes payments of $47 for leases designated as short-term leases, which are excluded from the Company's right-of-use assets. These payments will be made within the next twelve months.

A summary of approximate future minimum payments for leases under ASC 840 as of September 30, 2020, was as follows:


Years ending September 30:
2021	$	2,726
2022	2,397
2023	2,096
2024	1,469
2025	968
Thereafter	1,221
Total	$	10,877

Fair Value Measurements

6 Months Ended

Mar. 31, 2021

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 March 31, 2021 and 2020, because of the relatively short maturity dates on these instruments. The carrying amount of debt approximates fair value as of March 31, 2021 and 2020, because interest rates on these instruments approximate market interest rates.

The Company has no Level 1 or Level 2 financial instruments measured at fair value 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, 2020	$	13,034
Contingent consideration accrued at time of business combination	18,650
Change in fair value of contingent consideration included in Operating expenses	2,226
Contingent consideration paid	(5,851)
Balance at March 31, 2021	$	28,059


	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	12
Contingent consideration paid	(6,477)
Balance at March 31, 2020	$	11,761

The fair value of contingent consideration obligations includes inputs not observable in the market and thus represents a Level 3 measurement. The amount to be paid under these obligations is contingent upon the achievement of certain growth metrics related to the financial performance of the entities subsequent to acquisition. The fair value of material contingent consideration included in an acquisition is calculated using a Monte Carlo simulation. The contingent consideration is revalued each period until it is settled. Management reviews the historical and projected performance of each acquisition with contingent consideration and uses an income probability method to revalue the contingent consideration. The revaluation requires management to make certain assumptions and represent management's best estimate at the valuation date. The probabilities are determined based on a management review of the expected likelihood of triggering events that would cause a change in the contingent consideration paid. The Company develops the projected future financial results based on an analysis of historical results, market conditions, and the expected impact of anticipated changes in the Company's overall business and/or product strategies.

Approximately $18,786 and $10,062 of contingent consideration was recorded in accrued expenses and other current liabilities as of March 31, 2021 and September 30, 2020, respectively. Approximately $9,273 and $2,972 of contingent consideration was recorded in other long-term liabilities as of March 31, 2021 and September 30, 2020, respectively.

Disclosure of Fair Values

The Company's financial instruments that are not remeasured at fair value include the Exchangeable Notes (see Note 5). The Company estimates the fair value of the Exchangeable Notes through consideration of quoted market prices of similar instruments, classified as Level 2 as described above. The estimated fair value of the Exchangeable Notes was $119,071 as of March 31, 2021.

In March 2021, the Company became aware of an observable price change in the AxiaMed equity investment, due to a planned third party acquisition of AxiaMed. This resulted in an increase of $2,353 to the fair value of the AxiaMed investment at March 31, 2021, which the Company recognized in other income.

- 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

6 Months Ended

Mar. 31, 2021

Share-based Payment Arrangement [Abstract]

Equity-Based Compensation

EQUITY-BASED COMPENSATION

A summary of equity-based compensation expense recognized during the three and six months ended March 31, 2021 and 2020 is as follows:


	Three months ended March 31,				Six months ended March 31,
	2021		2020		2021		2020
Stock options	$	4,142	$	2,510	$	7,583	$	4,634

Amounts are included in general and administrative expense on the condensed consolidated statements of operations. Income tax benefits of $277 and $482 were recognized during the three and six months ended March 31, 2021, respectively. Income tax benefits of $193 and $341 were recognized during the three and six months ended March 31, 2020, respectively.

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 March 31, 2021, there were 626,684 equity awards available for grant under the 2018 Plan.

In September 2020, the Company adopted the 2020 Acquisition Equity Incentive Plan (the “2020 Inducement Plan”) under which the Company may grant up to 1,500,000 stock options and other equity-based awards to individuals that were not previously employees of the Company or its subsidiaries in connection with acquisitions, as a material inducement to the individual's entry into employment with the Company or its subsidiaries within the meaning of Rule 5635(c)(4) of the Nasdaq Listing Rules. As of March 31, 2021, there were 410,000 equity awards available for grant under the 2020 Inducement Plan.

The fair value of the stock option awards during the six months ended March 31, 2021 and during the year ended September 30, 2020 was determined on the grant date using the Black-Scholes valuation model based on the following weighted-average assumptions:


	March 31, 2021		September 30, 2020
Expected volatility(1)	38.2	%	28.5	%
Expected dividend yield(2)	—	%	—	%
Expected term(3)	6 years		6 years
Risk-free interest rate(4)	0.6	%	1.2	%

_________________

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 six months ended March 31, 2021 is as follows:


	Stock Options	Weighted Average Exercise Price
Outstanding at beginning of period	5,210,566	$	21.73
Granted	2,216,500	29.65
Exercised	(360,252)	18.15
Forfeited	(137,479)	25.75
Outstanding at end of period	6,929,335	$	24.41

The weighted-average grant date fair value of stock options granted during the six months ended March 31, was $10.99. As of March 31, 2021, there were 6,929,335 stock options outstanding, of which 2,135,714 were exercisable. As of March 31, 2021, total unrecognized compensation expense related to unvested stock options, including an estimate for pre-vesting forfeitures, was $32,404, which is expected to be recognized over a weighted-average period of two 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 and six months ended March 31, 2021 was $4,231 and $6,216, respectively.

Commitments and Contingencies

6 Months Ended

Mar. 31, 2021

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 $1,118 and $2,030 during the three and six months ended March 31, 2021, respectively, and $675 and $1,416 during the three and six months ended March 31, 2020, respectively. Refer to Note 7 for further discussion and a table of the future minimum payments under these leases.

Minimum Processing Commitments

The Company has non-exclusive agreements with several processors to provide the Company 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 the processor would have received if the Company had submitted the required minimum number of transactions. As of March 31, 2021, such minimum fee commitments were as follows:


Years ending September 30:
2021 (six months remaining)	$	1,540
2022	2,818
2023	2,645
2024	450
2025	—
Thereafter	—
Total	$	7,453

Loan to Third Party Sales Organization

The Company has entered into an agreement as of March 2020, as amended in October 2020, to provide a secured loan to a third party sales organization of up to $1,500 in the future, dependent on their achievement of certain financial metrics. Additionally, the Company has conditionally committed to a future buyout of the third party's business at the earlier of (a) the 60th day following the date upon which the founder of the third party sales organization dies or becomes disabled or (b) the 60th day following July 1, 2023. The buyout amount is dependent on certain financial metrics but is capped at $29,000, which would be net of repayment of the secured loans. The buyout also contains certain provisions to provide additional consideration of up to $9,000, in the aggregate, to be paid based on the achievement of specified financial performance targets, following the buyout. As the eventual financial metrics are not known, the amount of the buyout transaction as well as the additional consideration are not able to be estimated at this time.

As of March 31, 2021, such knowable loan commitments, dependent on the third party sales organization's achievement of certain financial metrics, were $1,500 for fiscal year 2021.

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	6 Months Ended
Related Party Transactions	Mar. 31, 2021
Related Party Transactions [Abstract]
Related Party Transactions	RELATED PARTY TRANSACTIONSIn 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 “AxiaMed Agreement”) with Axia Technologies, LLC (which has since been incorporated as Axia Technologies, Inc., doing business as AxiaMed (“AxiaMed”)), an entity controlled by the previous owner of Axia, LLC. Under the AxiaMed Agreement, the Company agreed to provide processing services for certain merchants as designated by AxiaMed 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 AxiaMed Agreement of $27 and $52 during the three and six months ended March 31, 2021, respectively, and $22 and $44 during the three and six months ended March 31, 2020, respectively. Greg Daily, the Company’s CEO; Clay Whitson, the Company’s CFO; and the Company own 2.0%, 9.4% and 0.4%, respectively, of the outstanding equity of AxiaMed. In March 2021, the Company became aware of an observable price change in the AxiaMed equity investment, due to a planned third party acquisition of AxiaMed. This resulted in an increase of $2,353 to the fair value of the AxiaMed investment at March 31, 2021, which the Company recognized in other income. 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 March 31, 2021, the total amount due under the Tax Receivable Agreement was $39,626.

Segments

6 Months Ended

Mar. 31, 2021

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 merchant of record payment services across the Company's strategic vertical markets.

The Proprietary Software and Payments segment delivers solutions, including embedded payments, to the Company's clients through proprietary software. Payments are delivered through both the payment facilitator model and the traditional merchant processing model.

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

Effective July 1, 2020 the Company reassigned a component from the Proprietary Software and Payments segment to the Merchant Services segment to better align the Company's segments with its business operations.

The prior period comparatives reflected in the tables below have been retroactively adjusted to reflect the Company's current segment presentation.

The Company primarily uses processing margin to measure operating performance. Processing margin is equal to revenue less other cost of services plus residuals expense, which are a component of other cost of

services. The following is a summary of reportable segment operating performance for the three and six months ended March 31, 2021 and 2020.


	As of and for the Three Months Ended March 31, 2021
	Merchant Services		Proprietary Software and Payments		Other		Total
Revenue	$	25,992	$	22,549	$	(678)	$	47,863
Other costs of services	(11,782)		(210)		678		(11,314)
Residuals	6,901		287		(667)		6,521
Processing margin	$	21,111	$	22,626	$	(667)	$	43,070

Residuals							(6,521)
Selling general and administrative							(30,511)
Depreciation and amortization							(5,851)
Change in fair value of contingent consideration							(322)
Loss from operations							$	(135)

Total assets	$	210,720	$	327,446	$	64,653	$	602,819
Goodwill	$	118,874	$	144,491	$	—	$	263,365


	As of and for the Six Months Ended March 31, 2021
	Merchant Services		Proprietary Software and Payments		Other		Total
Revenue	$	50,962	$	41,325	$	(1,111)	$	91,176
Other costs of services	(22,623)		(3,467)		1,110		(24,980)
Residuals	12,845		544		(1,093)		12,296
Processing margin	$	41,184	$	38,402	$	(1,094)	$	78,492

Residuals							(12,296)
Selling general and administrative							(55,473)
Depreciation and amortization							(10,943)
Change in fair value of contingent consideration							(2,226)
Loss from operations							$	(2,446)

Total assets	$	210,720	$	327,446	$	64,653	$	602,819
Goodwill	$	118,874	$	144,491	$	—	$	263,365


	As of and for the Three Months Ended March 31, 2020
	Merchant Services		Proprietary Software and Payments		Other		Total
Revenue	$	25,729	$	13,980	$	(531)	$	39,178
Other costs of services	(11,356)		(1,129)		530		(11,955)
Residuals	5,540		156		(526)		5,170
Processing margin	$	19,913	$	13,007	$	(527)	$	32,393

Residuals							(5,170)
Selling general and administrative							(20,786)
Depreciation and amortization							(4,538)
Change in fair value of contingent consideration							142
Income from operations							$	2,041

Total assets	$	212,899	$	96,949	$	41,334	$	351,182
Goodwill	$	116,401	$	50,653	$	—	$	167,054


	As of and for the Six Months Ended March 31, 2020
	Merchant Services		Proprietary Software and Payments		Other		Total
Revenue	$	53,968	$	27,262	$	(941)	$	80,289
Other costs of services	(23,530)		(2,283)		940		(24,873)
Residuals	11,098		310		(934)		10,474
Processing margin	$	41,536	$	25,289	$	(935)	$	65,890

Residuals							(10,474)
Selling general and administrative							(40,073)
Depreciation and amortization							(9,193)
Change in fair value of contingent consideration							(12)
Income from operations							$	6,138

Total assets	$	212,899	$	96,949	$	41,334	$	351,182
Goodwill	$	116,401	$	50,653	$	—	$	167,054

The Company has not disclosed expenditures on long-lived assets as such expenditures are not reviewed by or provided to the chief operating decision maker.

- Definition

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 31
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Reference 2: http://www.xbrl.org/2003/role/disclosureRef
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Reference 3: http://www.xbrl.org/2003/role/disclosureRef
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Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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Reference 6: http://www.xbrl.org/2003/role/disclosureRef
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Reference 7: http://www.xbrl.org/2003/role/disclosureRef
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Reference 8: http://www.xbrl.org/2003/role/disclosureRef
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Reference 9: http://www.xbrl.org/2003/role/disclosureRef
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Reference 12: http://www.xbrl.org/2003/role/disclosureRef
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Reference 13: http://www.xbrl.org/2003/role/disclosureRef
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Reference 14: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

Non-Controlling Interest

6 Months Ended

Mar. 31, 2021

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 March 31, 2021, i3 Verticals, Inc. owned 21,919,300 of i3 Verticals, LLC's Common Units, representing a 68.2% economic ownership interest in i3 Verticals, LLC.

The following table summarizes the impact on equity due to changes in the Company's ownership interest in i3 Verticals, LLC:


	Six months ended March 31,
	2021		2020
Net (loss) income attributable to non-controlling interest	$	(2,042)	$	3,265
Transfers to (from) non-controlling interests:
Distributions to non-controlling interest holders	—		(3)
Redemption of common units in i3 Verticals, LLC	(11,714)		(2,597)
Cumulative effect of adoption of new accounting standard	—		640
Allocation of equity to non-controlling interests	10,980		—
Net transfers to (from) non-controlling interests	(734)		(1,960)
Change from net (loss) income attributable to non-controlling interests and transfers to (from) non-controlling interests	$	(2,776)	$	1,305

Earnings Per Share

6 Months Ended

Mar. 31, 2021

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 and six months ended March 31, 2021 and 2020:


	Three months ended March 31,				Six months ended March 31,
	2021		2020		2021		2020
Basic net income (loss) per share:
Numerator
Net (loss) income	$	(53)	$	1,919	$	(4,174)	$	3,853
Less: Net (loss) income attributable to non-controlling interests	(493)		1,182		(2,042)		3,265
Net income (loss) attributable to Class A common stockholders	$	440	$	737	$	(2,132)	$	588
Denominator
Weighted average shares of Class A common stock outstanding(1)	20,940,725		14,456,970		20,024,936		14,344,768
Basic net (loss) income per share	$	0.02	$	0.05	$	(0.11)	$	0.04

Dilutive net income per share:
Numerator
Net income (loss) attributable to Class A common stockholders	$	440	$	737	$	(2,132)	$	588
Reallocation of net (loss) income assuming conversion of common units(3)(4)	(371)		—		(1,538)		—
Net income (loss) attributable to Class A common stockholders - diluted	$	69	$	737	$	(3,670)	$	588
Denominator
Weighted average shares of Class A common stock outstanding(1)	20,940,725		14,456,970		20,024,936		14,344,768
Weighted average effect of dilutive securities(2)(3)	12,464,258		1,649,787		11,212,739		1,433,309
Weighted average shares of Class A common stock outstanding - diluted	33,404,983		16,106,757		31,237,675		15,778,077
Diluted net income (loss) per share	$	0.00	$	0.05	$	(0.12)	$	0.04

____________________

1.Excludes 4,925 and 11,974 restricted Class A common stock units for the three and six months ended March 31, 2021, respectively, and 215,564 and 228,872 restricted Class A common stock units for both the three and six months ended March 31, 2020, respectively.

2.For the three and six months ended March 31, 2021, the following securities were excluded from the weighted average effect of dilutive securities in the computation of diluted net loss per share of Class A common stock:

a.1,760,997 and 2,506,997 stock options for the three and six months ended 2021, respectively, were excluded because the exercise price of these stock options exceeded the average market price of our Class A common stock during the period (“out-of-the-money”) and the effect of including them would have been anti-dilutive, and

b.1,449,216 shares for the six months ended March 31, 2021 resulting from estimated stock option exercises as calculated by the treasury stock method, and 11,974 restricted Class A common units for the six months ended March 31, 2021, were excluded because the effect of including them would have been anti-dilutive.

3.For the three and six months ended March 31, 2020, the following securities were excluded from the weighted average effect of dilutive securities in the computation of diluted net loss per share of Class A common stock:

a.12,769,568 and 12,846,018 shares of weighted average Class B common stock for the three and six months ended March 31, 2020, respectively, along with the reallocation of net income assuming conversion of these shares, were excluded because the effect would have been anti-dilutive, and

b.959,000 and 1,054,000 stock options for the three and six months ended March 31, 2020, 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.

4.The reallocation of net income assuming conversion of common units represents the tax effected net income attributable to non-controlling interest using the effective income tax rates described in Note 6 above and assuming all common units of i3 Verticals, LLC

were exchanged for Class A common stock at the beginning of the period. The common units of i3 Verticals, LLC held by the Continuing Equity Owners are potentially dilutive securities, and the computations of pro forma diluted net income per share assume that all common units of i3 Verticals, LLC were exchanged for shares of Class A common stock at the beginning of the period.

Since the Company expects to settle the principal amount of its outstanding Exchangeable Notes in cash and any excess in cash or shares of the Company's Class A common stock, the Company uses the treasury stock method for calculating any potential dilutive effect of the conversion spread on diluted net income per share, if applicable. The conversion spread will have a dilutive impact on diluted net income per share of common stock when the average market price of the Company's Class A common stock for a given period exceeds the exchange price of $40.87 per share for the Exchangeable Notes.

The Warrants sold in connection with the issuance of the Exchangeable Notes are considered to be dilutive when the average price of the Company's Class A common stock during the period exceeds the Warrants' stock price of $62.88 per share. The effect of the additional shares that may be issued upon exercise of the Warrants will be included in the weighted average shares of Class A common stock outstanding—diluted using the treasury stock method. The Note Hedge Transactions purchased in connection with the issuance of the Exchangeable Notes are considered to be anti-dilutive and therefore do not impact our calculation of diluted net income per share. Refer to Note 5 for further discussion regarding the Exchangeable Notes.

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

6 Months Ended

Mar. 31, 2021

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

Significant Non-cash Transactions

SIGNIFICANT NON-CASH TRANSACTIONSThe Company engaged in the following significant non-cash investing and financing activities during the six months ended March 31, 2021 and 2020:


	Six months ended March 31,
	2021		2020
Class A common stock issued as part of acquisition's purchase consideration (Note 3)	$	35,245	$	—
Acquisition date fair value of contingent consideration in connection with business combinations	$	18,650	$	—
Issuance of Exchangeable Notes and related Note Hedge Transactions and Warrants	$	—	$	270
Right-of-use assets obtained in exchange for operating lease obligations	$	16,295	$	—

Subsequent Events	6 Months Ended
Subsequent Events	Mar. 31, 2021
Subsequent Events [Abstract]
Subsequent Events	SUBSEQUENT EVENTS Recent Acquisitions Subsequent to March 31, 2021, the Company completed the acquisition of three businesses. Two of these businesses further strengthen the Company's focus in its healthcare vertical. The third business expands the Company's software capabilities in the utilities market within the public sector vertical. Total purchase consideration included $37,400 in cash consideration, funded by proceeds from the Company's revolving line of credit, and an amount of contingent consideration, which is still being valued. Certain provisions in the purchase agreements provide for additional consideration of up to $40,000, in the aggregate, to be paid based upon the achievement of specified financial performance targets, as defined in the purchase agreements, through no later than June 2023. The Company is in process of determining the acquisition date fair values of the liabilities for the contingent consideration based on discounted cash flow analyses. In each subsequent reporting period, the Company will reassess its current estimates of performance relative to the targets and adjust the contingent liabilities to their fair values through earnings. The effect of two of these acquisitions will be included in the consolidated statements of operations beginning April 1, 2021, and the third of these acquisitions will be included in the consolidated statements of operations beginning May 1, 2021. The Company is still evaluating the allocations of the preliminary purchase consideration and pro forma results of operations. 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. On April 30, 2021, the Company purchased $900 in a residual buyouts using a combination of cash on hand and borrowings on the Company's revolving credit facility. 2020 Inducement Plan Amendment In May 2021, the Company amended the 2020 Inducement Plan to increase the number of shares of the Company's Class A common stock available for issuance under the 2020 Inducement Plan from 1,500,000 to 3,000,000 shares. The 2020 Inducement Plan is used exclusively for grants of awards to individuals that were not previously employees of the Company or its subsidiaries in connection with acquisitions, as a material inducement to the individual's entry into employment with the Company or its subsidiaries within the meaning of Rule 5635(c)(4) of the Nasdaq Listing Rules. AxiaMed Sale On April 1, 2021, AxiaMed was sold to a third party and the Company received $2,453 for its investment in AxiaMed. Greg Daily, the Company’s CEO; Clay Whitson, the Company’s CFO; and the Company no longer have ownership interest in AxiaMed following the sale.

Summary of Significant Accounting Policies (Policies)

6 Months Ended

Mar. 31, 2021

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.

Settlement Assets and Obligations

Settlement Assets and ObligationsSettlement assets and obligations result when funds are temporarily held or owed by the Company on behalf of merchants, consumers, schools, and other institutions. Timing differences, interchange expense, merchant reserves and exceptional items cause differences between the amount received from the card networks and the amount funded to counterparties. These balances arising in the settlement process are reflected as settlement assets and obligations on the accompanying consolidated balance sheets. With the exception of merchant reserves, settlement assets or settlement obligations are generally collected and paid within one to four days.

Inventories

Inventories Inventories consist of point-of-sale equipment to be sold to clients and are stated at the lower of net realizable value or cost, determined on either a weighted average or specific basis.

Acquisitions

The operating results of an acquisition are included in the Company’s condensed consolidated statements of operations from the date of such acquisition.

Leases

Revenue Recognition and Deferred Revenue

software-as-a-service (“SaaS”) arrangements, which represent services arrangements. Revenue from SaaS arrangements is recognized over time, over the term of the agreement.

•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.


	For the Three Months Ended March 31, 2021
	Merchant Services		Proprietary Software and Payments		Other		Total
Payments revenue	$	21,515	$	7,489	$	(668)	$	28,336
Other revenue	4,477		15,060		(10)		19,527
Total revenue	$	25,992	$	22,549	$	(678)	$	47,863


	For the Three Months Ended March 31, 2020(1)
	Merchant Services		Proprietary Software and Payments		Other		Total
Payments revenue	$	21,169	$	5,744	$	(527)	$	26,386
Other revenue	4,560		8,236		(4)		12,792
Total revenue	$	25,729	$	13,980	$	(531)	$	39,178

________


	For the Six Months Ended March 31, 2021
	Merchant Services		Proprietary Software and Payments		Other		Total
Payments revenue	$	42,056	$	12,986	$	(1,094)	$	53,948
Other revenue	8,906		28,339		(17)		37,228
Total revenue	$	50,962	$	41,325	$	(1,111)	$	91,176


	For the Six Months Ended March 31, 2020(1)
	Merchant Services		Proprietary Software and Payments		Other		Total
Payments revenue	$	43,913	$	11,780	$	(935)	$	54,758
Other revenue	10,055		15,482		(6)		25,531
Total revenue	$	53,968	$	27,262	$	(941)	$	80,289

________

•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.


	For the Three Months Ended March 31, 2021
	Merchant Services		Proprietary Software and Payments		Other		Total
Revenue transferred over time	$	19,267	$	15,697	$	(632)	$	34,332
Revenue transferred at a point in time	6,725		6,852		(46)		13,531
Total revenue	$	25,992	$	22,549	$	(678)	$	47,863


	For the Three Months Ended March 31, 2020(1)
	Merchant Services		Proprietary Software and Payments		Other		Total
Revenue transferred over time	$	18,784	$	9,659	$	(526)	$	27,917
Revenue transferred at a point in time	6,945		4,321		(5)		11,261
Total revenue	$	25,729	$	13,980	$	(531)	$	39,178

______


	For the Six Months Ended March 31, 2021
	Merchant Services		Proprietary Software and Payments		Other		Total
Revenue transferred over time	$	37,278	$	29,417	$	(1,020)	$	65,675
Revenue transferred at a point in time	13,684		11,908		(91)		25,501
Total revenue	$	50,962	$	41,325	$	(1,111)	$	91,176


	For the Six Months Ended March 31, 2020(1)
	Merchant Services		Proprietary Software and Payments		Other		Total
Revenue transferred over time	$	38,601	$	19,126	$	(934)	$	56,793
Revenue transferred at a point in time	15,367		8,136		(7)		23,496
Total revenue	$	53,968	$	27,262	$	(941)	$	80,289

______

Contract Liabilities

The following tables present the changes in deferred revenue as of and for the six months ended March 31, 2021 and 2020, respectively:


Balance at September 30, 2020	$	11,054
Deferral of revenue	19,149
Recognition of unearned revenue	(6,234)
Balance at December 31, 2020	23,969
Deferral of revenue	5,699
Recognition of unearned revenue	(7,174)
Balance at March 31, 2021	$	22,494


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
Deferral of revenue	5,004
Recognition of unearned revenue	(5,753)
Balance at March 31, 2020	$	9,666

Costs to Obtain and Fulfill a Contract

Other Cost of Services

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

Use of Estimates

Use of Estimates The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Such estimates include, but are not limited to, the value of purchase consideration paid and identifiable assets acquired and assumed in acquisitions, goodwill and intangible asset impairment review, 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 Adopted Accounting Pronouncements and Recently Issued Accounting Pronouncements

Recent Accounting Pronouncements

Recently Adopted Accounting Pronouncements

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)

6 Months Ended

Mar. 31, 2021

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.


	For the Three Months Ended March 31, 2021
	Merchant Services		Proprietary Software and Payments		Other		Total
Payments revenue	$	21,515	$	7,489	$	(668)	$	28,336
Other revenue	4,477		15,060		(10)		19,527
Total revenue	$	25,992	$	22,549	$	(678)	$	47,863


	For the Three Months Ended March 31, 2020(1)
	Merchant Services		Proprietary Software and Payments		Other		Total
Payments revenue	$	21,169	$	5,744	$	(527)	$	26,386
Other revenue	4,560		8,236		(4)		12,792
Total revenue	$	25,729	$	13,980	$	(531)	$	39,178

________


	For the Six Months Ended March 31, 2021
	Merchant Services		Proprietary Software and Payments		Other		Total
Payments revenue	$	42,056	$	12,986	$	(1,094)	$	53,948
Other revenue	8,906		28,339		(17)		37,228
Total revenue	$	50,962	$	41,325	$	(1,111)	$	91,176


	For the Six Months Ended March 31, 2020(1)
	Merchant Services		Proprietary Software and Payments		Other		Total
Payments revenue	$	43,913	$	11,780	$	(935)	$	54,758
Other revenue	10,055		15,482		(6)		25,531
Total revenue	$	53,968	$	27,262	$	(941)	$	80,289

________

•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.


	For the Three Months Ended March 31, 2021
	Merchant Services		Proprietary Software and Payments		Other		Total
Revenue transferred over time	$	19,267	$	15,697	$	(632)	$	34,332
Revenue transferred at a point in time	6,725		6,852		(46)		13,531
Total revenue	$	25,992	$	22,549	$	(678)	$	47,863


	For the Three Months Ended March 31, 2020(1)
	Merchant Services		Proprietary Software and Payments		Other		Total
Revenue transferred over time	$	18,784	$	9,659	$	(526)	$	27,917
Revenue transferred at a point in time	6,945		4,321		(5)		11,261
Total revenue	$	25,729	$	13,980	$	(531)	$	39,178

______


	For the Six Months Ended March 31, 2021
	Merchant Services		Proprietary Software and Payments		Other		Total
Revenue transferred over time	$	37,278	$	29,417	$	(1,020)	$	65,675
Revenue transferred at a point in time	13,684		11,908		(91)		25,501
Total revenue	$	50,962	$	41,325	$	(1,111)	$	91,176


	For the Six Months Ended March 31, 2020(1)
	Merchant Services		Proprietary Software and Payments		Other		Total
Revenue transferred over time	$	38,601	$	19,126	$	(934)	$	56,793
Revenue transferred at a point in time	15,367		8,136		(7)		23,496
Total revenue	$	53,968	$	27,262	$	(941)	$	80,289

______

Changes in Deferred Revenue

The following tables present the changes in deferred revenue as of and for the six months ended March 31, 2021 and 2020, respectively:


Balance at September 30, 2020	$	11,054
Deferral of revenue	19,149
Recognition of unearned revenue	(6,234)
Balance at December 31, 2020	23,969
Deferral of revenue	5,699
Recognition of unearned revenue	(7,174)
Balance at March 31, 2021	$	22,494


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
Deferral of revenue	5,004
Recognition of unearned revenue	(5,753)
Balance at March 31, 2020	$	9,666

Acquisitions (Tables)

6 Months Ended

Mar. 31, 2021

Business Combinations [Abstract]

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

The fair values assigned to certain assets and liabilities assumed, as of the acquisition dates, were as follows:


	BIS		ImageSoft, Inc.		Other		Total
Accounts receivable	$	1,567	$	4,997	$	923	$	7,487
Settlement assets	6,889		120		—		7,009
Inventories	458		—		116		574
Prepaid expenses and other current assets	10		2,897		84		2,991
Property and equipment	206		433		159		798
Capitalized software	15,100		5,200		1,750		22,050
Acquired merchant relationships	35,200		16,300		8,550		60,050
Non-compete agreements	100		610		172		882
Trade name	700		1,100		200		2,000
Goodwill	43,612		20,900		11,585		76,097
Operating lease right-of-use assets	—		332		—		332
Other assets	—		6		7		13
Total assets acquired	103,842		52,895		23,546		180,283

Accrued expenses and other current liabilities	138		910		1		1,049
Settlement obligations	6,889		120		—		7,009
Deferred revenue, current	860		4,500		545		5,905
Current portion of operating lease liabilities	—		75		—		75
Operating lease liabilities, less current portion	—		250		—		250
Net assets acquired	$	95,955	$	47,040	$	23,000	$	165,995

The fair values assigned to certain assets and liabilities assumed, as of the acquisition dates, during the year ended September 30, 2020 were as follows:


Cash and cash equivalents	$	313
Accounts receivable	846
Prepaid expenses and other current assets	54
Property and equipment	122
Capitalized software	1,970
Acquired merchant relationships	11,900
Non-compete agreements	90
Trade name	300
Goodwill	20,213
Other assets	17
Total assets acquired	$	35,825

Accounts payable	168
Accrued expenses and other current liabilities	635
Deferred revenue, current	200
Other long-term liabilities	2,194
Net assets acquired	$	32,628

Pro Forma Information

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


	Six months ended March 31,
	2021		2020
Revenue	$	101,280	$	108,199
Net (loss) income	$	(3,186)	$	3,716

Goodwill and Intangible Assets (Tables)

6 Months Ended

Mar. 31, 2021

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, 2020 (net of accumulated impairment losses of $11,458, $0 and $0, respectively)	$	115,982	$	71,023	$	—	$	187,005
Goodwill attributable to preliminary purchase price adjustments and acquisition during the six months ended March 31, 2021	2,892		73,468		—		76,360
Balance at March 31, 2021	$	118,874	$	144,491	$	—	$	263,365

Schedule of Finite-Lived Intangible Assets

Intangible assets consisted of the following as of March 31, 2021:


	Cost		Accumulated Amortization		Carrying Value		Amortization Life and Method
Finite-lived intangible assets:
Merchant relationships	$	214,621	$	(59,158)	$	155,463	12 to 20 years – accelerated or straight-line
Non-compete agreements	2,650		(1,218)		1,432		2 to 5 years – straight-line
Website and brand development costs	239		(98)		141		3 to 4 years – straight-line
Trade names	5,880		(2,113)		3,767		2 to 7 years – straight-line
Residual buyouts	4,899		(1,022)		3,877		2 to 8 years – straight-line
Referral and exclusivity agreements	900		(477)		423		5 to 10 years – straight-line
Total finite-lived intangible assets	229,189		(64,086)		165,103

Indefinite-lived intangible assets:
Trademarks	42		—		42
Total identifiable intangible assets	$	229,231	$	(64,086)	$	165,145

Schedule of Indefinite-Lived Intangible Assets

Intangible assets consisted of the following as of March 31, 2021:


	Cost		Accumulated Amortization		Carrying Value		Amortization Life and Method
Finite-lived intangible assets:
Merchant relationships	$	214,621	$	(59,158)	$	155,463	12 to 20 years – accelerated or straight-line
Non-compete agreements	2,650		(1,218)		1,432		2 to 5 years – straight-line
Website and brand development costs	239		(98)		141		3 to 4 years – straight-line
Trade names	5,880		(2,113)		3,767		2 to 7 years – straight-line
Residual buyouts	4,899		(1,022)		3,877		2 to 8 years – straight-line
Referral and exclusivity agreements	900		(477)		423		5 to 10 years – straight-line
Total finite-lived intangible assets	229,189		(64,086)		165,103

Indefinite-lived intangible assets:
Trademarks	42		—		42
Total identifiable intangible assets	$	229,231	$	(64,086)	$	165,145

Schedule of Future Amortization Expense of Finite-lived Intangible Assets

Based on net carrying amounts at March 31, 2021, the Company's estimate of future amortization expense for intangible assets are presented in the table below for fiscal years ending September 30:


2021 (six months remaining)	$	7,670
2022	14,424
2023	13,352
2024	12,303
2025	12,054
Thereafter	105,300
	$	165,103

Long-Term Debt, Net (Tables)

6 Months Ended

Mar. 31, 2021

Debt Disclosure [Abstract]

Summary of Long-term Debt

A summary of long-term debt, net as of March 31, 2021 and September 30, 2020 is as follows:


		March 31,		September 30,
	Maturity	2021		2020
Revolving lines of credit to banks under the Senior Secured Credit Facility	May 9, 2024	$	85,000	$	—
1% Exchangeable Senior Notes due 2025	February 15, 2025	97,534		95,325
Debt issuance costs, net		(4,092)		(4,567)
Total long-term debt, net of issuance costs		$	178,442	$	90,758

- 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=120391452&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=119993939&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))
-URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690

Reference 5: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 835
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-Section 45
-Paragraph 2
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Reference 6: http://fasb.org/us-gaap/role/ref/legacyRef
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Reference 7: http://fasb.org/us-gaap/role/ref/legacyRef
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-Name Accounting Standards Codification
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Reference 8: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
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-URI http://asc.fasb.org/extlink&oid=75038535&loc=d3e64711-112823

Reference 9: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 835
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-URI http://asc.fasb.org/extlink&oid=114775985&loc=d3e28878-108400

Reference 10: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=109259400&loc=d3e21475-112644

+ Details

Leases (Tables)

6 Months Ended

Mar. 31, 2021

Leases [Abstract]

Schedule of Maturities of Lease Liabilities

As of March 31, 2021, maturities of lease liabilities are as follows:


Years ending September 30:
2021 (six months remaining)	$	1,983
2022	3,590
2023	3,202
2024	2,630
2025	2,266
Thereafter	4,704
Total future minimum lease payments (undiscounted)	18,375
Less: present value discount	(2,937)
Present value of lease liability	$	15,438

__________________________1.Total future minimum lease payments excludes payments of $47 for leases designated as short-term leases, which are excluded from the Company's right-of-use assets. These payments will be made within the next twelve months.

Schedule of Approximate Future Minimum Rental Payments for Operating Leases

A summary of approximate future minimum payments for leases under ASC 840 as of September 30, 2020, was as follows:


Years ending September 30:
2021	$	2,726
2022	2,397
2023	2,096
2024	1,469
2025	968
Thereafter	1,221
Total	$	10,877

Fair Value Measurements (Tables)

6 Months Ended

Mar. 31, 2021

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, 2020	$	13,034
Contingent consideration accrued at time of business combination	18,650
Change in fair value of contingent consideration included in Operating expenses	2,226
Contingent consideration paid	(5,851)
Balance at March 31, 2021	$	28,059


	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	12
Contingent consideration paid	(6,477)
Balance at March 31, 2020	$	11,761

Equity-Based Compensation (Tables)

6 Months Ended

Mar. 31, 2021

Share-based Payment Arrangement [Abstract]

Summary of Equity-Based Compensation Expense

A summary of equity-based compensation expense recognized during the three and six months ended March 31, 2021 and 2020 is as follows:


	Three months ended March 31,				Six months ended March 31,
	2021		2020		2021		2020
Stock options	$	4,142	$	2,510	$	7,583	$	4,634

Fair Value of Stock Option Awards


	March 31, 2021		September 30, 2020
Expected volatility(1)	38.2	%	28.5	%
Expected dividend yield(2)	—	%	—	%
Expected term(3)	6 years		6 years
Risk-free interest rate(4)	0.6	%	1.2	%

_________________

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 six months ended March 31, 2021 is as follows:


	Stock Options	Weighted Average Exercise Price
Outstanding at beginning of period	5,210,566	$	21.73
Granted	2,216,500	29.65
Exercised	(360,252)	18.15
Forfeited	(137,479)	25.75
Outstanding at end of period	6,929,335	$	24.41

Commitments and Contingencies (Tables)

6 Months Ended

Mar. 31, 2021

Commitments and Contingencies Disclosure [Abstract]

Minimum Fee Commitments

As of March 31, 2021, such minimum fee commitments were as follows:


Years ending September 30:
2021 (six months remaining)	$	1,540
2022	2,818
2023	2,645
2024	450
2025	—
Thereafter	—
Total	$	7,453

Segments (Tables)

6 Months Ended

Mar. 31, 2021

Segment Reporting [Abstract]

Summary of Reportable Segment Performance

The following is a summary of reportable segment operating performance for the three and six months ended March 31, 2021 and 2020.


	As of and for the Three Months Ended March 31, 2021
	Merchant Services		Proprietary Software and Payments		Other		Total
Revenue	$	25,992	$	22,549	$	(678)	$	47,863
Other costs of services	(11,782)		(210)		678		(11,314)
Residuals	6,901		287		(667)		6,521
Processing margin	$	21,111	$	22,626	$	(667)	$	43,070

Residuals							(6,521)
Selling general and administrative							(30,511)
Depreciation and amortization							(5,851)
Change in fair value of contingent consideration							(322)
Loss from operations							$	(135)

Total assets	$	210,720	$	327,446	$	64,653	$	602,819
Goodwill	$	118,874	$	144,491	$	—	$	263,365


	As of and for the Six Months Ended March 31, 2021
	Merchant Services		Proprietary Software and Payments		Other		Total
Revenue	$	50,962	$	41,325	$	(1,111)	$	91,176
Other costs of services	(22,623)		(3,467)		1,110		(24,980)
Residuals	12,845		544		(1,093)		12,296
Processing margin	$	41,184	$	38,402	$	(1,094)	$	78,492

Residuals							(12,296)
Selling general and administrative							(55,473)
Depreciation and amortization							(10,943)
Change in fair value of contingent consideration							(2,226)
Loss from operations							$	(2,446)

Total assets	$	210,720	$	327,446	$	64,653	$	602,819
Goodwill	$	118,874	$	144,491	$	—	$	263,365


	As of and for the Three Months Ended March 31, 2020
	Merchant Services		Proprietary Software and Payments		Other		Total
Revenue	$	25,729	$	13,980	$	(531)	$	39,178
Other costs of services	(11,356)		(1,129)		530		(11,955)
Residuals	5,540		156		(526)		5,170
Processing margin	$	19,913	$	13,007	$	(527)	$	32,393

Residuals							(5,170)
Selling general and administrative							(20,786)
Depreciation and amortization							(4,538)
Change in fair value of contingent consideration							142
Income from operations							$	2,041

Total assets	$	212,899	$	96,949	$	41,334	$	351,182
Goodwill	$	116,401	$	50,653	$	—	$	167,054


	As of and for the Six Months Ended March 31, 2020
	Merchant Services		Proprietary Software and Payments		Other		Total
Revenue	$	53,968	$	27,262	$	(941)	$	80,289
Other costs of services	(23,530)		(2,283)		940		(24,873)
Residuals	11,098		310		(934)		10,474
Processing margin	$	41,536	$	25,289	$	(935)	$	65,890

Residuals							(10,474)
Selling general and administrative							(40,073)
Depreciation and amortization							(9,193)
Change in fair value of contingent consideration							(12)
Income from operations							$	6,138

Total assets	$	212,899	$	96,949	$	41,334	$	351,182
Goodwill	$	116,401	$	50,653	$	—	$	167,054

Non-Controlling Interest (Tables)

6 Months Ended

Mar. 31, 2021

Noncontrolling Interest [Abstract]

Summary of Ownership Interest

The following table summarizes the impact on equity due to changes in the Company's ownership interest in i3 Verticals, LLC:


	Six months ended March 31,
	2021		2020
Net (loss) income attributable to non-controlling interest	$	(2,042)	$	3,265
Transfers to (from) non-controlling interests:
Distributions to non-controlling interest holders	—		(3)
Redemption of common units in i3 Verticals, LLC	(11,714)		(2,597)
Cumulative effect of adoption of new accounting standard	—		640
Allocation of equity to non-controlling interests	10,980		—
Net transfers to (from) non-controlling interests	(734)		(1,960)
Change from net (loss) income attributable to non-controlling interests and transfers to (from) non-controlling interests	$	(2,776)	$	1,305

Earnings Per Share (Tables)

6 Months Ended

Mar. 31, 2021

Earnings Per Share [Abstract]

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


	Three months ended March 31,				Six months ended March 31,
	2021		2020		2021		2020
Basic net income (loss) per share:
Numerator
Net (loss) income	$	(53)	$	1,919	$	(4,174)	$	3,853
Less: Net (loss) income attributable to non-controlling interests	(493)		1,182		(2,042)		3,265
Net income (loss) attributable to Class A common stockholders	$	440	$	737	$	(2,132)	$	588
Denominator
Weighted average shares of Class A common stock outstanding(1)	20,940,725		14,456,970		20,024,936		14,344,768
Basic net (loss) income per share	$	0.02	$	0.05	$	(0.11)	$	0.04

Dilutive net income per share:
Numerator
Net income (loss) attributable to Class A common stockholders	$	440	$	737	$	(2,132)	$	588
Reallocation of net (loss) income assuming conversion of common units(3)(4)	(371)		—		(1,538)		—
Net income (loss) attributable to Class A common stockholders - diluted	$	69	$	737	$	(3,670)	$	588
Denominator
Weighted average shares of Class A common stock outstanding(1)	20,940,725		14,456,970		20,024,936		14,344,768
Weighted average effect of dilutive securities(2)(3)	12,464,258		1,649,787		11,212,739		1,433,309
Weighted average shares of Class A common stock outstanding - diluted	33,404,983		16,106,757		31,237,675		15,778,077
Diluted net income (loss) per share	$	0.00	$	0.05	$	(0.12)	$	0.04

____________________

Significant Non-cash Transactions (Tables)

6 Months Ended

Mar. 31, 2021

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 six months ended March 31, 2021 and 2020:


	Six months ended March 31,
	2021		2020
Class A common stock issued as part of acquisition's purchase consideration (Note 3)	$	35,245	$	—
Acquisition date fair value of contingent consideration in connection with business combinations	$	18,650	$	—
Issuance of Exchangeable Notes and related Note Hedge Transactions and Warrants	$	—	$	270
Right-of-use assets obtained in exchange for operating lease obligations	$	16,295	$	—

Organization and Operations (Details) - USD ($) $ / shares in Units, $ in Thousands	Sep. 15, 2020	Jun. 25, 2018	Mar. 31, 2021
i3Verticals, LLC
Subsidiary, Sale of Stock [Line Items]
Non-controlling interest, ownership interest (percent)			68.20%
Continuing Equity Owner
Subsidiary, Sale of Stock [Line Items]
Shareholders ownership interest (percent)			32.40%
Class A Common Stock \| Continuing Equity Owner
Subsidiary, Sale of Stock [Line Items]
Shareholders ownership interest (percent)			0.60%
Class B Common Stock \| Continuing Equity Owner
Subsidiary, Sale of Stock [Line Items]
Shareholders ownership interest (percent)			31.80%
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
Primary Public Offering \| i3Verticals, LLC
Subsidiary, Sale of Stock [Line Items]
Net proceeds from public offering	$ 72,018
Common units, purchased (in units)	3,250,000
Primary Public Offering \| Continuing Equity Owner
Subsidiary, Sale of Stock [Line Items]
Common units, purchased (in units)	487,500
Primary Public Offering \| Class A Common Stock
Subsidiary, Sale of Stock [Line Items]
Shares issued (shares)	3,737,500
Public offering price (in USD per share)	$ 23.50
Net proceeds from public offering	$ 83,400
Underwriters exercised option to purchase additional shares (shares)	487,500

Summary of Significant Accounting Policies (Details) - USD ($)		3 Months Ended		6 Months Ended
	Oct. 01, 2020	Mar. 31, 2021	Mar. 31, 2020	Mar. 31, 2021	Mar. 31, 2020	Sep. 30, 2020
Accounting Policies [Abstract]
Settlement assets		$ 6,056,000		$ 6,056,000		$ 0
Settlement obligations		6,056,000		6,056,000		0
Inventories		1,806,000		1,806,000		$ 1,309,000
Revenue from acquisitions				13,394,000
Net income from acquisitions				1,379,000
Capitalized contract costs		3,572,000	$ 2,830,000	3,572,000	$ 2,830,000
Commissions related to capitalized contract costs		129,000	$ 96,000	248,000	184,000
Operating lease right-of-use assets	$ 9,093,000	14,821,000		14,821,000
Operating lease liability	9,760,000	$ 15,438,000		15,438,000
Prepaid expenses and other current assets	202,000			(2,027,000)	(617,000)
Accrued expenses and other current liabilities	$ 869,000			$ (9,260,000)	$ 2,464,000

Summary of Significant Accounting Policies - Disaggregated Revenue (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Mar. 31, 2021	Mar. 31, 2020
Concentration Risk [Line Items]
Total revenue	$ 47,863	$ 39,178	$ 91,176	$ 80,289
Revenue transferred over time
Concentration Risk [Line Items]
Total revenue	34,332	27,917	65,675	56,793
Revenue transferred at a point in time
Concentration Risk [Line Items]
Total revenue	13,531	11,261	25,501	23,496
Merchant Services
Concentration Risk [Line Items]
Total revenue	25,992	25,729	50,962	53,968
Merchant Services \| Revenue transferred over time
Concentration Risk [Line Items]
Total revenue	19,267	18,784	37,278	38,601
Merchant Services \| Revenue transferred at a point in time
Concentration Risk [Line Items]
Total revenue	6,725	6,945	13,684	15,367
Proprietary Software and Payments
Concentration Risk [Line Items]
Total revenue	22,549	13,980	41,325	27,262
Proprietary Software and Payments \| Revenue transferred over time
Concentration Risk [Line Items]
Total revenue	15,697	9,659	29,417	19,126
Proprietary Software and Payments \| Revenue transferred at a point in time
Concentration Risk [Line Items]
Total revenue	6,852	4,321	11,908	8,136
Other
Concentration Risk [Line Items]
Total revenue	(678)	(531)	(1,111)	(941)
Other \| Revenue transferred over time
Concentration Risk [Line Items]
Total revenue	(632)	(526)	(1,020)	(934)
Other \| Revenue transferred at a point in time
Concentration Risk [Line Items]
Total revenue	(46)	(5)	(91)	(7)
Payments revenue
Concentration Risk [Line Items]
Total revenue	28,336	26,386	53,948	54,758
Payments revenue \| Merchant Services
Concentration Risk [Line Items]
Total revenue	21,515	21,169	42,056	43,913
Payments revenue \| Proprietary Software and Payments
Concentration Risk [Line Items]
Total revenue	7,489	5,744	12,986	11,780
Payments revenue \| Other
Concentration Risk [Line Items]
Total revenue	(668)	(527)	(1,094)	(935)
Other revenue
Concentration Risk [Line Items]
Total revenue	19,527	12,792	37,228	25,531
Other revenue \| Merchant Services
Concentration Risk [Line Items]
Total revenue	4,477	4,560	8,906	10,055
Other revenue \| Proprietary Software and Payments
Concentration Risk [Line Items]
Total revenue	15,060	8,236	28,339	15,482
Other revenue \| Other
Concentration Risk [Line Items]
Total revenue	$ (10)	$ (4)	$ (17)	$ (6)

- Definition

Amount, excluding tax collected from customer, of revenue from satisfaction of performance obligation by transferring promised good or service to customer. Tax collected from customer is tax assessed by governmental authority that is both imposed on and concurrent with specific revenue-producing transaction, including, but not limited to, sales, use, value added and excise.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 30
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8906-108599

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 40
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e9031-108599

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 41
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e9038-108599

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 32
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8933-108599

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 32
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8933-108599

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 4
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130543-203045

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 22
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8736-108599

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 22
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8736-108599

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 42
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e9054-108599

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 5
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130545-203045

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 924
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SAB Topic 11.L)
-URI http://asc.fasb.org/extlink&oid=6472922&loc=d3e499488-122856

+ Details

Summary of Significant Accounting Policies - Changes in Deferred Revenue (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Dec. 31, 2020	Mar. 31, 2020	Dec. 31, 2019
Contract with customer, Liability [Roll Forward]
Deferred revenue, beginning	$ 23,969	$ 11,054	$ 10,415	$ 10,237
Deferral of revenue	5,699	19,149	5,004	5,389
Recognition of unearned revenues	(7,174)	(6,234)	(5,753)	(5,211)
Deferred revenue, ending	$ 22,494	$ 23,969	$ 9,666	$ 10,415

Acquisitions - Schedule of Preliminary Purchase Consideration of the Acquired Assets and Assumed Liabilities (Details) $ in Thousands				6 Months Ended		12 Months Ended
	Feb. 01, 2021 USD ($) shares	Nov. 17, 2020 USD ($)	Oct. 01, 2020 USD ($) business	Mar. 31, 2021 USD ($)	Mar. 31, 2020 USD ($)	Sep. 30, 2020 USD ($) business
Business Acquisition [Line Items]
Value of stock issued				$ 35,245	$ 0
Goodwill				263,365	167,054	$ 187,005
Proprietary Software and Payments
Business Acquisition [Line Items]
Goodwill				144,491	$ 50,653	71,023
Business Information Systems, Inc
Business Acquisition [Line Items]
Business combination, consideration transferred	$ 95,955
Proceeds from issuance of long-term debt used to fund the acquisition	52,500
Contingent consideration	$ 8,210
Estimated amortization period	19 years
Acquisition-related costs	$ 328
Potential additional consideration	$ 16,000
Accounts receivable				1,567
Settlement assets				6,889
Inventories				458
Prepaid expenses and other current assets				10
Property and equipment				206
Goodwill				43,612
Operating lease right-of-use assets				0
Other assets				0
Total assets acquired				103,842
Accrued expenses and other current liabilities				138
Settlement obligations				6,889
Deferred revenue, current				860
Current portion of operating lease liabilities				0
Operating lease liabilities, less current portion				0
Net assets acquired				95,955
Business Information Systems, Inc \| Class A Common Stock
Business Acquisition [Line Items]
Equity interest issued or issuable, number of shares (in shares) \| shares	1,202,914
Value of stock issued	$ 35,245
Business Information Systems, Inc \| Capitalized software
Business Acquisition [Line Items]
Estimated amortization period	10 years
Intangible assets				15,100
Business Information Systems, Inc \| Acquired merchant relationships
Business Acquisition [Line Items]
Estimated amortization period	19 years
Intangible assets				35,200
Business Information Systems, Inc \| Non-compete agreements
Business Acquisition [Line Items]
Estimated amortization period	3 years
Intangible assets				100
Business Information Systems, Inc \| Trade name
Business Acquisition [Line Items]
Estimated amortization period	5 years
Intangible assets				700
ImageSoft Inc
Business Acquisition [Line Items]
Business combination, consideration transferred		$ 47,040
Proceeds from issuance of long-term debt used to fund the acquisition		40,000
Contingent consideration		$ 7,040
Estimated amortization period		19 years
Acquisition-related costs		$ 381
Potential additional consideration		$ 20,000
Accounts receivable				4,997
Settlement assets				120
Inventories				0
Prepaid expenses and other current assets				2,897
Property and equipment				433
Goodwill				20,900
Operating lease right-of-use assets				332
Other assets				6
Total assets acquired				52,895
Accrued expenses and other current liabilities				910
Settlement obligations				120
Deferred revenue, current				4,500
Current portion of operating lease liabilities				75
Operating lease liabilities, less current portion				250
Net assets acquired				47,040
ImageSoft Inc \| Capitalized software
Business Acquisition [Line Items]
Estimated amortization period		7 years
Intangible assets				5,200
ImageSoft Inc \| Acquired merchant relationships
Business Acquisition [Line Items]
Estimated amortization period		20 years
Intangible assets				16,300
ImageSoft Inc \| Non-compete agreements
Business Acquisition [Line Items]
Estimated amortization period		3 years
Intangible assets				610
ImageSoft Inc \| Trade name
Business Acquisition [Line Items]
Estimated amortization period		5 years
Intangible assets				1,100
Other Business Combinations
Business Acquisition [Line Items]
Business combination, consideration transferred			$ 23,000
Proceeds from issuance of long-term debt used to fund the acquisition			19,600
Contingent consideration			$ 3,400
Estimated amortization period			18 years
Acquisition-related costs			$ 706
Potential additional consideration			$ 10,200
Number of businesses acquired \| business			3
Accounts receivable				923
Settlement assets				0
Inventories				116
Prepaid expenses and other current assets				84
Property and equipment				159
Goodwill				11,585
Operating lease right-of-use assets				0
Other assets				7
Total assets acquired				23,546
Accrued expenses and other current liabilities				1
Settlement obligations				0
Deferred revenue, current				545
Current portion of operating lease liabilities				0
Operating lease liabilities, less current portion				0
Net assets acquired				23,000
Other Business Combinations \| Proprietary Software and Payments
Business Acquisition [Line Items]
Number of businesses acquired \| business			2
Other Business Combinations \| Merchant Services Segment
Business Acquisition [Line Items]
Number of businesses acquired \| business			1
Other Business Combinations \| Capitalized software
Business Acquisition [Line Items]
Estimated amortization period			7 years
Intangible assets				1,750
Other Business Combinations \| Acquired merchant relationships
Business Acquisition [Line Items]
Intangible assets				8,550
Other Business Combinations \| Non-compete agreements
Business Acquisition [Line Items]
Estimated amortization period			3 years
Intangible assets				172
Other Business Combinations \| Trade name
Business Acquisition [Line Items]
Estimated amortization period			3 years
Intangible assets				200
Other Business Combinations \| Minimum \| Acquired merchant relationships
Business Acquisition [Line Items]
Estimated amortization period			11 years
Other Business Combinations \| Maximum \| Acquired merchant relationships
Business Acquisition [Line Items]
Estimated amortization period			25 years
2020 Business Combinations
Business Acquisition [Line Items]
Business combination, consideration transferred						32,628
Proceeds from issuance of long-term debt used to fund the acquisition						27,880
Contingent consideration						$ 4,748
Estimated amortization period						16 years
Acquisition-related costs						$ 547
Potential additional consideration						$ 18,600
Number of businesses acquired \| business						3
Cash and cash equivalents						$ 313
Accounts receivable						846
Prepaid expenses and other current assets						54
Property and equipment						122
Goodwill						20,213
Other assets						17
Total assets acquired						35,825
Accounts payable						168
Accrued expenses and other current liabilities						635
Deferred revenue, current						200
Other long-term liabilities						2,194
Net assets acquired						$ 32,628
2020 Business Combinations \| Capitalized software
Business Acquisition [Line Items]
Estimated amortization period						7 years
Intangible assets						$ 1,970
2020 Business Combinations \| Acquired merchant relationships
Business Acquisition [Line Items]
Intangible assets						$ 11,900
2020 Business Combinations \| Non-compete agreements
Business Acquisition [Line Items]
Estimated amortization period						3 years
Intangible assets						$ 90
2020 Business Combinations \| Trade name
Business Acquisition [Line Items]
Estimated amortization period						3 years
Intangible assets						$ 300
2020 Business Combinations \| Minimum \| Acquired merchant relationships
Business Acquisition [Line Items]
Estimated amortization period						15 years
2020 Business Combinations \| Maximum \| Acquired merchant relationships
Business Acquisition [Line Items]
Estimated amortization period						18 years
2021 Business Combinations
Business Acquisition [Line Items]
Accounts receivable				7,487
Settlement assets				7,009
Inventories				574
Prepaid expenses and other current assets				2,991
Property and equipment				798
Goodwill				76,097
Operating lease right-of-use assets				332
Other assets				13
Total assets acquired				180,283
Accrued expenses and other current liabilities				1,049
Settlement obligations				7,009
Deferred revenue, current				5,905
Current portion of operating lease liabilities				75
Operating lease liabilities, less current portion				250
Net assets acquired				165,995
2021 Business Combinations \| Capitalized software
Business Acquisition [Line Items]
Intangible assets				22,050
2021 Business Combinations \| Acquired merchant relationships
Business Acquisition [Line Items]
Intangible assets				60,050
2021 Business Combinations \| Non-compete agreements
Business Acquisition [Line Items]
Intangible assets				882
2021 Business Combinations \| Trade name
Business Acquisition [Line Items]
Intangible assets				$ 2,000

Acquisitions - Pro Forma Information (Details) - USD ($) $ in Thousands	6 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Business Combinations [Abstract]
Revenue	$ 101,280	$ 108,199
Net (loss) income	$ (3,186)	$ 3,716

Goodwill and Intangible Assets - Changes in Goodwill (Details) - USD ($) $ in Thousands	6 Months Ended
	Mar. 31, 2021	Sep. 30, 2020
Goodwill [Roll Forward]
Goodwill, beginning	$ 187,005
Goodwill attributable to preliminary purchase price adjustments and acquisition during the six months ended March 31, 2021	76,360
Goodwill, ending	263,365
Merchant Services
Goodwill [Roll Forward]
Goodwill, beginning	115,982
Goodwill attributable to preliminary purchase price adjustments and acquisition during the six months ended March 31, 2021	2,892
Goodwill, ending	118,874
Accumulated impairment losses		$ 11,458
Proprietary Software and Payments
Goodwill [Roll Forward]
Goodwill, beginning	71,023
Goodwill attributable to preliminary purchase price adjustments and acquisition during the six months ended March 31, 2021	73,468
Goodwill, ending	144,491
Accumulated impairment losses		0
Other
Goodwill [Roll Forward]
Goodwill, beginning	0
Goodwill attributable to preliminary purchase price adjustments and acquisition during the six months ended March 31, 2021	0
Goodwill, ending	$ 0
Accumulated impairment losses		$ 0

Goodwill and Intangible Assets - Intangible Assets (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Mar. 31, 2021	Mar. 31, 2020	Sep. 30, 2020
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, cost	$ 229,189		$ 229,189
Finite-lived intangible assets, accumulated amortization	(64,086)		(64,086)
Finite-lived intangible assets, carrying value	165,103		165,103
Total identifiable intangible assets, cost	229,231		229,231
Total identifiable intangible assets, carrying value	165,145		165,145		$ 109,233
Amortization expense of intangible assets	3,752	$ 3,088	7,112	$ 6,282
Trademarks
Finite-Lived Intangible Assets [Line Items]
Indefinite-lived intangible assets	42		42
Merchant relationships
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, cost	214,621		214,621
Finite-lived intangible assets, accumulated amortization	(59,158)		(59,158)
Finite-lived intangible assets, carrying value	155,463		$ 155,463
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	2,650		$ 2,650
Finite-lived intangible assets, accumulated amortization	(1,218)		(1,218)
Finite-lived intangible assets, carrying value	1,432		$ 1,432
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 costs
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, cost	239		$ 239
Finite-lived intangible assets, accumulated amortization	(98)		(98)
Finite-lived intangible assets, carrying value	141		$ 141
Website and brand development costs \| Minimum
Finite-Lived Intangible Assets [Line Items]
Amortization life			3 years
Website and brand development costs \| Maximum
Finite-Lived Intangible Assets [Line Items]
Amortization life			4 years
Trade names
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, cost	5,880		$ 5,880
Finite-lived intangible assets, accumulated amortization	(2,113)		(2,113)
Finite-lived intangible assets, carrying value	3,767		$ 3,767
Trade names \| Minimum
Finite-Lived Intangible Assets [Line Items]
Amortization life			2 years
Trade names \| Maximum
Finite-Lived Intangible Assets [Line Items]
Amortization life			7 years
Residual buyouts
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, cost	4,899		$ 4,899
Finite-lived intangible assets, accumulated amortization	(1,022)		(1,022)
Finite-lived intangible assets, carrying value	3,877		$ 3,877
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 agreements
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, cost	900		$ 900
Finite-lived intangible assets, accumulated amortization	(477)		(477)
Finite-lived intangible assets, carrying value	$ 423		$ 423
Referral and exclusivity agreements \| Minimum
Finite-Lived Intangible Assets [Line Items]
Amortization life			5 years
Referral and exclusivity agreements \| Maximum
Finite-Lived Intangible Assets [Line Items]
Amortization life			10 years

Goodwill and Intangible Assets - Future Amortization Expense (Details) $ in Thousands	Mar. 31, 2021 USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]
2021 (six months remaining)	$ 7,670
2022	14,424
2023	13,352
2024	12,303
2025	12,054
Thereafter	105,300
Finite-lived intangible assets, carrying value	$ 165,103

Long-Term Debt, Net - Summary of Long-term Debt (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Sep. 30, 2020	Feb. 18, 2020
Debt Instrument [Line Items]
Debt issuance costs, net	$ (4,092)	$ (4,567)
Total long-term debt, net of issuance costs	178,442	90,758
Line of Credit \| Revolving lines of credit to banks under the Senior Secured Credit Facility
Debt Instrument [Line Items]
Long-term debt	85,000	0
Exchangeable Notes \| 1.0% Exchangeable Senior Notes due 2025
Debt Instrument [Line Items]
Long-term debt	97,534	$ 95,325
Debt issuance costs, net	$ (2,908)
Stated interest rate (percent)			1.00%

Long-Term Debt, Net - Additional Information (Details)			3 Months Ended		6 Months Ended			12 Months Ended
Long-Term Debt, Net - Additional Information (Details)	Feb. 18, 2020 USD ($) day $ / shares	Feb. 13, 2020 USD ($) $ / shares shares	Mar. 31, 2021 USD ($)	Mar. 31, 2020 USD ($)	Mar. 31, 2021 USD ($)	Sep. 30, 2020 USD ($)	Mar. 31, 2020 USD ($)	Sep. 30, 2020 USD ($)
Debt Instrument [Line Items]
Proceeds from borrowings on exchangeable notes					$ 0		$ 138,000,000
Adjustments to additional paid in capital, equity component of convertible debt							27,569,000
Debt issuance costs incurred			$ 0		0
Debt issuance costs				$ 4,245,000			4,245,000
Amortization of deferred debt issuance costs			240,000	172,000	475,000		272,000
Debt issuance costs, net			4,092,000		4,092,000	$ 4,567,000		$ 4,567,000
Exchangeable notes, fair value			119,071,000		119,071,000
Payments for note hedge transactions	$ 28,676,000				0		28,676,000
Proceeds from issuance of warrants					0		14,669,000
Debt issuance costs write offs					0		141,000
Additional Paid-In Capital
Debt Instrument [Line Items]
Adjustments to additional paid in capital, equity component of convertible debt	$ 28,662,000			27,569,000
Class A Common Stock
Debt Instrument [Line Items]
Exchangeable notes, exchange price per share (in USD per share) \| $ / shares	$ 40.87
Warrants outstanding (shares) \| shares		3,376,391
Warrants sold in connection with the issuance of the Exchangeable notes (in USD per share) \| $ / shares		$ 62.88
Proceeds from issuance of warrants		$ 14,669,000
1.0% Exchangeable Senior Notes due 2025
Debt Instrument [Line Items]
Repayments of convertible debt						17,414,000
1.0% Exchangeable Senior Notes due 2025 \| Exchangeable Notes
Debt Instrument [Line Items]
Original principal amount	$ 138,000,000
Stated interest rate (percent)	1.00%
Proceeds from borrowings on exchangeable notes	$ 132,762,000
Debt issuance costs incurred	5,238,000
Debt issuance costs	4,150,000
Amortization of deferred debt issuance costs			145,000	$ 70,000	285,000		$ 70,000
Debt issuance costs, net			$ 2,908,000		$ 2,908,000
Debt aggregate repurchase amount						21,000,000		21,000,000
Debt interest repurchase amount						24,000		24,000
Loss on retirement of debt						2,297,000
Debt issuance costs write offs						$ 592,000
1.0% Exchangeable Senior Notes due 2025 \| Exchangeable Notes \| Additional Paid-In Capital
Debt Instrument [Line Items]
Debt issuance costs	$ 1,088,000
1.0% Exchangeable Senior Notes due 2025 \| Exchangeable Notes \| In Event of Fundamental Change
Debt Instrument [Line Items]
Repurchase price as percent of face value of notes (percent)	100.00%
1.0% Exchangeable Senior Notes due 2025 \| Exchangeable Notes \| February 20, 2023 to 47th Scheduled Trading Day Immediately Preceding the Maturity Date
Debt Instrument [Line Items]
Repurchase price as percent of face value of notes (percent)	100.00%
1.0% Exchangeable Senior Notes due 2025 \| Exchangeable Notes \| Class A Common Stock
Debt Instrument [Line Items]
Exchangeable notes, exchange rate, shares per $1000	0.0244666
1.0% Exchangeable Senior Notes due 2025 \| Exchangeable Notes \| Class A Common Stock \| February 20, 2023 to 47th Scheduled Trading Day Immediately Preceding the Maturity Date
Debt Instrument [Line Items]
Threshold exchange price as percent of closing price per share to allow redemption (percent)	130.00%
Threshold trading days closing price for stock must exceed exchange price \| day	20
2020 Senior Secured Credit Facility \| Line of Credit
Debt Instrument [Line Items]
Debt issuance costs write offs								$ 141,000
Revolving line of credit borrowing capacity	$ 275,000,000
Optional addition to borrowing capacity	50,000,000
Unused commitment fee (percent)					0.30%
Debt covenant, minimum consolidated interest coverage ratio			3.00		3.00
Debt covenant, maximum total leverage ratio			5.00		5.00
Debt covenant, maximum consolidated senior secured leverage ratio			3.25		3.25
Debt covenant, increase to maximum consolidated senior secured leverage ratio during leverage increase period			0.25		0.25
Remaining borrowing capacity			$ 190,000,000.0		$ 190,000,000.0
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%
2020 Senior Secured Credit Facility \| Line of Credit \| Minimum
Debt Instrument [Line Items]
Unused commitment fee (percent)	0.15%
2020 Senior Secured Credit Facility \| Line of Credit \| Maximum
Debt Instrument [Line Items]
Unused commitment fee (percent)	0.30%
2020 Senior Secured Credit Facility \| Line of Credit \| Maximum \| Letter of Credit
Debt Instrument [Line Items]
Unused commitment fee (percent)	3.25%
2020 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%
2020 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%
2020 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%
2020 Senior Secured Credit Facility \| Line of Credit \| Federal Funds Rate
Debt Instrument [Line Items]
Basis spread on variable rate (percent)	0.50%
2020 Senior Secured Credit Facility \| Line of Credit \| LIBOR plus 1%
Debt Instrument [Line Items]
Basis spread on variable rate (percent)	1.00%				1.25%
2020 Senior Secured Credit Facility \| Line of Credit \| LIBOR plus 1% \| Minimum
Debt Instrument [Line Items]
Basis spread on variable rate (percent)	0.25%
2020 Senior Secured Credit Facility \| Line of Credit \| LIBOR plus 1% \| Maximum
Debt Instrument [Line Items]
Basis spread on variable rate (percent)	1.25%

Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended			6 Months Ended
Income Taxes (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020	Mar. 31, 2020	Mar. 31, 2021	Mar. 31, 2020	Jun. 25, 2018
Class of Stock [Line Items]
(Benefit from) Provision for income taxes	$ (87)		$ (2,062)	$ (306)	$ (1,913)
Percent of tax benefits payable to continuing equity owners	85.00%			85.00%		85.00%
Tax benefits retained (percent)						15.00%
Increase in net deferred tax assets				$ 14,177
Increase tax receivable agreement liability				$ 12,051
Period of payment to continuing equity owners				25 years
Minimum
Class of Stock [Line Items]
Expected payments for repurchase of redeemable noncontrolling interest	$ 0			$ 0
Maximum
Class of Stock [Line Items]
Expected payments for repurchase of redeemable noncontrolling interest	3,229			3,229
Class B Common Stock \| Continuing Equity Owner
Class of Stock [Line Items]
Deferred tax asset recognized	43,530			43,530
Tax benefits due to continuing equity owners	$ 39,626			$ 39,626
Common Stock \| Class A Common Stock
Class of Stock [Line Items]
Redemption of common units in i3 Verticals, LLC (shares)	651,870	1,019,609	510,016	1,671,479
Common Stock \| Class B Common Stock
Class of Stock [Line Items]
Redemption of common units in i3 Verticals, LLC (shares)	(651,870)	(1,019,609)	(510,016)

Leases - Additional Information (Details) $ in Thousands	3 Months Ended	6 Months Ended
Leases - Additional Information (Details) $ in Thousands	Mar. 31, 2021 USD ($)	Mar. 31, 2021 USD ($)
Leases [Abstract]
Weighted-average remaining lease term	6 years	6 years
Weighted-average discount rate of operating leases	7.00%	7.00%
Operating lease costs	$ 1,046	$ 1,900
Variable lease costs	3	4
Short-term rent expense	$ 72	$ 130

Leases - Schedule of Maturities of Lease Liabilities (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Oct. 01, 2020
Leases [Abstract]
2021 (six months remaining)	$ 1,983
2022	3,590
2023	3,202
2024	2,630
2025	2,266
Thereafter	4,704
Total future minimum lease payments (undiscounted)	18,375
Less: present value discount	(2,937)
Operating lease liability	15,438	$ 9,760
Short-term leases	47
Operating Leases, Future Minimum Payments Due, Rolling Maturity [Abstract]
2021	2,726
2022	2,397
2023	2,096
2024	1,469
2025	968
Thereafter	1,221
Total	$ 10,877

Fair Value Measurements (Details) - USD ($) $ in Thousands	6 Months Ended
Fair Value Measurements (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Mar. 31, 2020	Sep. 30, 2020
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Exchangeable notes, fair value	$ 119,071
Accrued Contingent Consideration
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance, beginning	13,034	$ 18,226
Contingent consideration accrued at time of business combination	18,650	0
Change in the fair value of warrant liabilities, included in Other expenses	2,226	12
Contingent consideration paid	(5,851)	(6,477)
Balance, ending	28,059	$ 11,761
Accrued Expenses and Other Current Liabilities
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Contingent consideration	18,786		$ 10,062
Other Long-term Liabilities
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Contingent consideration	$ 9,273		$ 2,972

Equity-Based Compensation (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Mar. 31, 2021	Mar. 31, 2020
Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Equity-based compensation expense	$ 4,142	$ 2,510	$ 7,583	$ 4,634

Equity-Based Compensation - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Mar. 31, 2021	Mar. 31, 2020	Sep. 30, 2020	May 31, 2018
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Income tax benefits related to equity-based compensation	$ 277	$ 193	$ 482	$ 341
2018 Equity Incentive Award Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares available for grant under the plan (shares)	626,684		626,684			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%
2020 Equity Incentive Award Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares available for grant under the plan (shares)	410,000		410,000		1,500,000

Equity-Based Compensation - Fair Value of Stock Option Awards (Details) - Stock Options	6 Months Ended	12 Months Ended
	Mar. 31, 2021	Sep. 30, 2020
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected volatility (percent)	38.20%	28.50%
Expected dividend yield (percent)	0.00%	0.00%
Expected term	6 years	6 years
Risk-free interest rate (percent)	0.60%	1.20%

Equity-Based Compensation - Stock Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended	6 Months Ended
	Mar. 31, 2021	Mar. 31, 2021	Sep. 30, 2020
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Outstanding at beginning of period (shares)		5,210,566
Granted (shares)		2,216,500
Exercised (shares)		(360,252)
Forfeited (shares)		(137,479)
Outstanding at end of period (shares)	6,929,335	6,929,335
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)	$ 24.41	$ 24.41	$ 21.73
Granted, weighted average exercise price (in USD per share)		29.65
Exercised, weighted average exercise price (in USD per share)		18.15
Forfeited, weighted average exercise price (in USD per share)		25.75
Outstanding at end of period, weighted average exercise price (in USD per share)	$ 24.41	24.41	$ 21.73
Granted, weighted average grant date fair value (in USD per share)		$ 10.99
Options exercisable at end of period (shares)	2,135,714	2,135,714
Unrecognized compensation expense related to unvested options at end of period	$ 32,404	$ 32,404
Period for recognition of unrecognized compensation cost		2 years
Fair value of stock options that vested	$ 4,231	$ 6,216

Commitments and Contingencies -Operating Leases (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Mar. 31, 2021	Mar. 31, 2021
Commitments and Contingencies Disclosure [Abstract]
Operating lease costs	$ 1,118	$ 2,030

Commitments and Contingencies - Minimum Fee Commitments (Details) $ in Thousands	Mar. 31, 2021 USD ($)
Commitments and Contingencies Disclosure [Abstract]
2021 (six months remaining)	$ 1,540
2022	2,818
2023	2,645
2024	450
2025	0
Thereafter	0
Total	$ 7,453

Commitments and Contingencies - Loan Commitment (Details) - Third Party Sales Organization - USD ($) $ in Thousands	Mar. 31, 2021	Oct. 31, 2020
Loan Commitment
Other Commitments [Line Items]
Commitments to third party sales organization		$ 1,500
Loan commitment for remainder of fiscal year 2021	$ 1,500
Buyout Commitment
Other Commitments [Line Items]
Commitments to third party sales organization		29,000
Additional Buyout Consideration
Other Commitments [Line Items]
Commitments to third party sales organization		$ 9,000

Related Party Transactions (Details) - USD ($) $ in Thousands	1 Months Ended	3 Months Ended		6 Months Ended
	Mar. 31, 2021	Mar. 31, 2021	Mar. 31, 2020	Mar. 31, 2021	Mar. 31, 2020	Jun. 25, 2018
Related Party Transaction [Line Items]
Percent of tax benefits payable to continuing equity owners	85.00%	85.00%		85.00%		85.00%
Axia Tech
Related Party Transaction [Line Items]
Increase in fair value	$ 2,353
Continuing Equity Owner \| Class B Common Stock
Related Party Transaction [Line Items]
Tax benefits due to continuing equity owners	$ 39,626	$ 39,626		$ 39,626
Affiliated Entity
Related Party Transaction [Line Items]
Ownership interest in Axia Tech (percent)	0.40%	0.40%		0.40%
Affiliated Entity \| Chief Executive Officer
Related Party Transaction [Line Items]
Ownership interest in Axia Tech (percent)	2.00%	2.00%		2.00%
Affiliated Entity \| Chief Financial Officer
Related Party Transaction [Line Items]
Ownership interest in Axia Tech (percent)	9.40%	9.40%		9.40%
Affiliated Entity \| Axia Tech
Related Party Transaction [Line Items]
Net revenue from related party		$ 27	$ 22	$ 52	$ 44

Segments (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
Segments (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Mar. 31, 2020	Mar. 31, 2021	Mar. 31, 2020	Sep. 30, 2020
Segment Reporting Information [Line Items]
Revenue	$ 47,863	$ 39,178	$ 91,176	$ 80,289
Operating expenses
Other costs of services	(11,314)	(11,955)	(24,980)	(24,873)
Residuals	(6,521)	(5,170)	(12,296)	(10,474)
Processing margin	43,070	32,393	78,492	65,890
Selling, general and administrative	(30,511)	(20,786)	(55,473)	(40,073)
Depreciation and amortization	(5,851)	(4,538)	(10,943)	(9,193)
Change in fair value of contingent consideration	(322)	142	(2,226)	(12)
(Loss) income from operations	(135)	2,041	(2,446)	6,138
Assets	602,819	351,182	602,819	351,182	$ 403,526
Goodwill	263,365	167,054	263,365	167,054	187,005
Merchant Services
Segment Reporting Information [Line Items]
Revenue	25,992	25,729	50,962	53,968
Operating expenses
Other costs of services	(11,782)	(11,356)	(22,623)	(23,530)
Residuals	(6,901)	(5,540)	(12,845)	(11,098)
Processing margin	21,111	19,913	41,184	41,536
Assets	210,720	212,899	210,720	212,899
Goodwill	118,874	116,401	118,874	116,401	115,982
Proprietary Software and Payments
Segment Reporting Information [Line Items]
Revenue	22,549	13,980	41,325	27,262
Operating expenses
Other costs of services	(210)	(1,129)	(3,467)	(2,283)
Residuals	(287)	(156)	(544)	(310)
Processing margin	22,626	13,007	38,402	25,289
Assets	327,446	96,949	327,446	96,949
Goodwill	144,491	50,653	144,491	50,653	71,023
Other
Segment Reporting Information [Line Items]
Revenue	(678)	(531)	(1,111)	(941)
Operating expenses
Other costs of services	678	530	1,110	940
Residuals	667	526	1,093	934
Processing margin	(667)	(527)	(1,094)	(935)
Assets	64,653	41,334	64,653	41,334
Goodwill	$ 0	$ 0	$ 0	$ 0	$ 0

Non-Controlling Interest - Narrative (Details) - i3Verticals, LLC	Mar. 31, 2021 shares
Noncontrolling Interest [Line Items]
Non-controlling interest, common units (shares)	21,919,300
Non-controlling interest, ownership interest (percent)	68.20%

Non-Controlling Interest - Impact on Equity (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Mar. 31, 2021	Mar. 31, 2020
Noncontrolling Interest [Abstract]
Net (loss) income attributable to non-controlling interest	$ (493)	$ 1,182	$ (2,042)	$ 3,265
Redemption of common units in i3 Verticals, LLC			(11,714)	(2,597)
Cumulative effect of adoption of new accounting standard			0	640
Allocation of equity to non-controlling interests			10,980	0
Net transfers to (from) non-controlling interests			(734)	(1,960)
Change from net (loss) income attributable to non-controlling interests and transfers to (from) non-controlling interests			$ (2,776)	$ 1,305

Earnings Per Share, Basic (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended				6 Months Ended
	Mar. 31, 2021	Dec. 31, 2020	Mar. 31, 2020	Dec. 31, 2019	Mar. 31, 2021	Mar. 31, 2020
Numerator
Net (loss) income	$ (53)	$ (4,121)	$ 1,919	$ 1,934	$ (4,174)	$ 3,853
Less: Net (loss) income attributable to non-controlling interests	(493)		1,182		(2,042)	3,265
Net income (loss) attributable to i3 Verticals, Inc.	$ 440		$ 737		$ (2,132)	$ 588
Denominator
Basic net (loss) income per share (in USD per Share)	$ 0.02		$ 0.05		$ (0.11)	$ 0.04
Dilutive net income per share:
Weighted average shares of Class A common stock outstanding - diluted (shares)	33,404,983		16,106,757		31,237,675	15,778,077
Diluted net income per share (in USD per share)	$ 0.00		$ 0.05		$ (0.12)	$ 0.04
Class A Common Stock
Numerator
Net (loss) income	$ (53)		$ 1,919		$ (4,174)	$ 3,853
Less: Net (loss) income attributable to non-controlling interests	(493)		1,182		(2,042)	3,265
Net income (loss) attributable to i3 Verticals, Inc.	$ 440		$ 737		$ (2,132)	$ 588
Denominator
Weighted average shares of Class A common stock outstanding (shares)	20,940,725		14,456,970		20,024,936	14,344,768
Dilutive net income per share:
Reallocation of net (loss) income assuming conversion of common units	$ (371)				$ (1,538)
Net income attributable to Class A common stockholders - diluted	$ 69		$ 737		$ (3,670)	$ 588
Weighted average effect of dilutive securities (shares)	12,464,258		1,649,787		11,212,739	1,433,309
Weighted average shares of Class A common stock outstanding - diluted (shares)	33,404,983		16,106,757		31,237,675	15,778,077

Earnings Per Share - Antidilutive Securities (Details) - $ / shares	3 Months Ended		6 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Mar. 31, 2021	Mar. 31, 2020	Feb. 18, 2020	Feb. 13, 2020
Class A Common Stock
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Exchangeable notes, exchange price per share (in USD per share)					$ 40.87
Warrants sold in connection with the issuance of the Exchangeable notes (in USD per share)						$ 62.88
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)	4,925	215,564	11,974	228,872
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)		12,769,568		12,846,018
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)	1,760,997	959,000	2,506,997	1,054,000
Stock Options
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share (shares)			1,449,216

Significant Non-cash Transactions (Details) - USD ($) $ in Thousands	6 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Cash Flow, Noncash Investing and Financing Activities Disclosure [Abstract]
Class A common stock issued as part of acquisition's purchase consideration (Note 3)	$ 35,245	$ 0
Acquisition date fair value of contingent consideration in connection with business combinations	18,650	0
Issuance of Exchangeable Notes and related Note Hedge Transactions and Warrants	0	270
Right-of-use assets obtained in exchange for operating lease obligations	$ 16,295	$ 0

Subsequent Events (Details) $ in Thousands			1 Months Ended
Subsequent Events (Details) $ in Thousands	Apr. 30, 2021 USD ($)	Apr. 01, 2021 USD ($)	May 10, 2021 USD ($) business shares	Mar. 31, 2021 shares	Sep. 30, 2020 shares
2020 Equity Incentive Award Plan
Subsequent Event [Line Items]
Additional stock options and other equity-based awards (shares) \| shares				410,000	1,500,000
Subsequent Event
Subsequent Event [Line Items]
Number of businesses acquired \| business			3
Consideration in cash			$ 37,400
Potential additional consideration			$ 40,000
Investment received		$ 2,453
Subsequent Event \| 2020 Equity Incentive Award Plan
Subsequent Event [Line Items]
Additional stock options and other equity-based awards (shares) \| shares			3,000,000
Subsequent Event \| Residual buyouts
Subsequent Event [Line Items]
Purchased residual buyouts	$ 900