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DISCONTINUED OPERATIONS | 6 Months Ended
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Mar. 31, 2025
Discontinued Operations and Disposal Groups [Abstract] |
DISCONTINUED OPERATIONS | DISCONTINUED OPERATIONS During the year ended September 30, 2024, the Company made the strategic decision to discontinue a significant segment of its operations constituting its Merchant Services Business (as defined below). In this regard, on September 20, 2024, i3 Verticals, LLC, and i3 Holdings Sub, Inc., a wholly-owned subsidiary of i3 Verticals, LLC (“Corporation Seller,” and collectively with i3 Verticals, LLC, the “Sellers”) completed the transactions (such closing, the “Closing”) contemplated by that certain Securities Purchase Agreement dated as of June 26, 2024 (the “Merchant Services Purchase Agreement”), by and among i3 Verticals, LLC, Corporation Seller, the Company (solely for the purpose of providing a guaranty of the obligations of Sellers as set forth in the Merchant Services Purchase Agreement), Payroc Buyer, LLC (“Merchant Services Buyer”), and Payroc WorldAccess, LLC (solely for the purpose of providing a guaranty of the obligations of Merchant Services Buyer as set forth in the Merchant Services Purchase Agreement). Pursuant to the terms of the Merchant Services Purchase Agreement, the Sellers sold to Merchant Services Buyer the equity interests of certain direct and indirect wholly-owned subsidiaries of Sellers (the “Merchant Services Acquired Entities”) primarily comprising the Company’s merchant services business, including its associated proprietary technology (the “Merchant Services Business”), after giving effect to the contribution of certain assets and the assignment of certain liabilities associated with the Merchant Services Business from i3 Verticals, LLC and certain affiliates to the Merchant Services Acquired Entities pursuant to a contribution agreement which was entered into immediately prior to the Closing (collectively, the "Merchant Services Transactions"). Pursuant to the terms of the Merchant Services Purchase Agreement, Merchant Services Buyer paid to Sellers an aggregate purchase price of approximately $437,343 (after giving effect to post-closing net working capital, indebtedness and cash adjustments), payable in cash at the Closing, subject to post-closing purchase price adjustments. The Merchant Services Business comprised the Company's entire former Merchant Services segment and a small portion of the Company's former Software and Services segment. In connection with the closing of the Merchant Services Transactions, the Company entered into a Transition Services Agreement, pursuant to which, among other things, the Company or affiliates thereof will provide certain information technology and operational transition services to Payroc for a period of time after the closing, and a Processing Services Agreement with Payroc, pursuant to which the parties provide certain payment processing services to customers of each party following the closing in accordance with the terms thereof. Aggregate costs incurred related to the Merchant Services Transactions during the year ended September 30, 2024 that were not considered incremental direct costs to transact the sale, were approximately $2,626 and were expensed as incurred. These costs were primarily incurred during the second and third fiscal quarters of the year ended September 30, 2024 and include fees for third-party advisory, consulting, legal and professional services, as well as other items associated with the Merchant Services Transactions. The expenses are reflected within selling, general and administrative expenses within the Company's condensed consolidated statements of operations. The financial results of the Merchant Services Business are presented as income from discontinued operations, net of income taxes on the Company’s consolidated statements of operations. The following table presents financial results of Merchant Services Business for the three and six months ended March 31, 2025 and 2024:
| Three months ended March 31, | Six months ended March 31,
| 2025 |  | 2024 | 2025 |  | 2024
Revenue | $ | — |  |  | $ | 36,574 |  | $ | — |  |  | $ | 73,510 |
Operating expenses |  |  |  |  |  |
Other costs of services | — |  |  | 16,477 |  | — |  |  | 32,786 |
Selling, general and administrative | — |  |  | 10,286 |  | — |  |  | 21,180 |
Depreciation and amortization | — |  |  | 2,876 |  | — |  |  | 5,561 |
Total operating expenses | — |  |  | 29,639 |  | — |  |  | 59,527 |
Income from operations | — |  |  | 6,935 |  | — |  |  | 13,983 |
Other expenses |  |  |  |  |  |
Interest expense, net | — |  |  | 36 |  | — |  |  | 56 |
Other expense | 404 |  |  | — |  | 657 |  |  | — |
Total other expenses | 404 |  |  | 36 |  | 657 |  |  | 56 |
(Loss) income before income taxes from discontinued operations | (404) |  |  | 6,899 |  | (657) |  |  | 13,927 |
(Benefit from) provision for income taxes | (78) |  |  | 1,249 |  | (117) |  |  | 2,526 |
Net (loss) income from discontinued operations | (326) |  |  | 5,650 |  | (540) |  |  | 11,401 |
Net (loss) income from discontinued operations attributed to non-controlling interest | (99) |  |  | 2,063 |  | (175) |  |  | 3,831 |
Net (loss) income from discontinued operations attributable to i3 Verticals, Inc. | $ | (227) |  |  | $ | 3,587 |  | $ | (365) |  |  | $ | 7,570 |
The Company has elected to not separately disclose discontinued operations on its condensed consolidated statement of cash flows. The Company had no significant cash flow activity pertaining to discontinued operations in the three and six months ended March 31, 2025. The following table presents cash flows from discontinued operations for major captions on the condensed consolidated financial statements:
| Six months ended March 31,
| 2025 |  | 2024
Depreciation and amortization | $ | — |  |  | $ | 5,561 |
Equity-based compensation | $ | — |  |  | $ | 1,905 |
Amortization of capitalized customer acquisition costs | $ | — |  |  | $ | 430 |
Adjustments to loss (gain) on sale of Merchant Services Business | $ | 657 |  |  | $ | — |
Non-cash lease expense | $ | — |  |  | $ | 536 |
Expenditures for property and equipment | $ | — |  |  | $ | (386) |
Expenditures for capitalized software | $ | — |  |  | $ | (414) |
Purchases of merchant portfolios and residual buyouts | $ | — |  |  | $ | (4,214) |
The following table presents significant non-cash investing and financing activities for major captions on the consolidated financial statements:
| Six months ended March 31, 2024
Consideration accrued for December 2023 residual buyout | $ | 252 |
Right-of-use assets obtained in exchange for operating lease obligations | $ | 742 |

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- Definition The entire disclosure related to a disposal group. Includes, but is not limited to, a discontinued operation, disposal classified as held-for-sale or disposed of by means other than sale or disposal of an individually significant component. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 205 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/205-20/tableOfContent Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 360 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/360/tableOfContent + Details
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