IIIV Q4 2025: Recurring Revenue Rises 9% as Public Sector SaaS Shift Deepens

November 18, 2025 | By EarningsIQ Research

IIIV’s transformation into a pure-play public sector software provider is showing results, with recurring revenue growth outpacing total top-line expansion and SaaS now the growth engine. Management’s emphasis on recurring contracts, disciplined M&A, and justice and utility market investments sets up a transition year, with near-term headwinds in non-recurring revenue but a clear path to long-term durability. Guidance signals a steady SaaS-driven outlook, but investors should monitor margin pressure and the cadence of professional services as the business pivots away from legacy models.

Summary

• Recurring Revenue Momentum: SaaS and recurring streams now drive the majority of growth, reinforcing long-term visibility.
• Strategic Capital Deployment: Cash-rich balance sheet enables disciplined M&A and opportunistic buybacks, with no debt burden.
• Transition Year Dynamics: Shift from non-recurring to recurring revenue brings near-term softness in professional services, but positions IIIV for higher-quality growth.

Performance Analysis

IIIV’s Q4 marked a pivotal quarter in its public sector software pivot, with total revenue increasing 7% year-over-year to $54.9 million, even as legacy non-recurring streams declined. Organic revenue growth for the year landed at 8.4%, with inorganic contributions from targeted acquisitions in permitting, licensing, and utility billing. The company’s strategic focus on recurring revenue is evident: recurring sources accounted for 75% of Q4 revenue, rising 9% year-over-year, while SaaS revenue surged 25% and maintenance continued to decline, reflecting the migration away from perpetual licenses.

Adjusted EBITDA margin compressed to 26.2% in Q4 from 28.5% a year ago, primarily due to lower-margin professional services and stepped-up investment in justice products, even as annual margin improved to 27%. The balance sheet is robust, with $67 million in cash and no debt, supporting both M&A flexibility and a refreshed $50 million buyback authorization. Net dollar retention, a key SaaS metric, was 104% for the year, now inclusive of payments revenue, indicating stable customer expansion and modest pricing tailwinds.

• Recurring Revenue Dominance: 75% of Q4 revenue was recurring, with SaaS up 25% and net dollar retention at 104%.
• Margin Pressure from Mix Shift: EBITDA margin fell 230 basis points in Q4 due to lower high-margin license sales and increased investment in justice tech.
• Cash Position Strength: $67 million cash, no debt, and $400 million borrowing capacity enable capital allocation flexibility.

The transition to SaaS and recurring models is diluting short-term margins and non-recurring revenue, but positions IIIV for more predictable, higher-quality growth in future periods.

Executive Commentary

Strategic Positioning

1. Pure-Play Public Sector Focus

Following the divestiture of merchant services and healthcare RCM businesses, IIIV is now a pure-play public sector software provider, operating in a single segment. The business is organized around five core markets—Justice, Utilities, Transportation, Education, and Public Administration—each representing roughly 20-25% of revenue, with Justice as the largest at 25%. This focus enables deeper domain expertise and solution bundling tailored for government modernization needs.

2. Recurring Revenue and SaaS Orientation

IIIV’s SaaS-first strategy is accelerating, with recurring revenue now three-quarters of total revenue and SaaS up 25% in Q4. The company is intentionally favoring SaaS and recurring models in contract negotiations, even at the expense of near-term professional services revenue, to drive higher long-term visibility and customer retention. The shift is also reflected in customer pricing, with management guiding for incremental annual price increases in the 1.5% to 3% range going forward.

3. Investment in Justice and Utilities Platforms

Strategic investments in justice and utility solutions remain a priority, with increased headcount and development spend to accelerate product rollout and implementation. The West Virginia Supreme Court win is a showcase for the company’s ability to scale from single agency to statewide deployments, bundling ancillary services and payments to deepen customer engagement and reduce modernization costs for clients.

4. Disciplined M&A and Capital Allocation

IIIV’s balance sheet strength supports both disciplined M&A and opportunistic buybacks. The pipeline is described as “constantly churning,” with a focus on tuck-in acquisitions in the $2 to $5 million EBITDA range at disciplined multiples. The company refreshed its $50 million buyback authorization, but remains opportunistic, prioritizing returns over activity for its capital deployment.

Key Considerations

This quarter cements IIIV’s transition to a recurring revenue, SaaS-driven public sector software provider, but introduces new dynamics for investors to monitor:

Key Considerations:

• Non-Recurring Revenue Decline: Professional services and license sales are expected to drop in 2026, as SaaS and recurring models take precedence and project timing shifts.
• Margin Volatility: The mix shift toward lower-margin professional services and ongoing justice tech investment will pressure margins in the near term.
• Visibility on Pipeline Timing: Revenue recognition for large projects in utilities and transportation is lumpy, with some deals expected to slip into 2027.
• M&A as a Growth Lever: Ample cash and borrowing capacity position IIIV to pursue strategic, accretive acquisitions, but management remains disciplined on valuation and integration fit.
• Platform Modernization Tailwind: Government demand for modernization and consolidated platforms is rising, creating a favorable market for IIIV’s bundled SaaS solutions.

Risks

Near-term revenue and margin pressure is likely as IIIV executes its SaaS transition, with non-recurring revenue and professional services expected to decline in 2026 due to project timing. The business remains exposed to government budgeting cycles, competitive RFP processes, and the risk that large project implementations slip beyond forecast periods. Investors should monitor the pace of SaaS adoption and the sustainability of margin recovery as investments in justice and utilities continue.

Forward Outlook

For FY 2026, IIIV guided to:

• Revenue: $217 million to $232 million
• Adjusted EBITDA: $58.5 million to $65 million
• Adjusted diluted EPS: $1.06 to $1.16

Recurring revenue is expected to grow 8% to 10%, mirroring FY25, while non-recurring revenue—especially professional services—will decline, reflecting project cadence in utilities and transportation. Management expects a rebound in these markets in fiscal 2027 and beyond, with long-term organic growth targeted at high single digits.

Takeaways

IIIV’s Q4 demonstrates the company’s commitment to a SaaS-first, recurring revenue model, even as it trades off near-term non-recurring revenue and margin. Investors should focus on the durability of recurring growth, the discipline in capital allocation, and the timing of large project wins as the business matures.

• Quality of Revenue Improves: Recurring and SaaS revenue growth now drive the business, supporting higher visibility and retention, even as non-recurring revenue falls.
• Margin and Revenue Cadence in Focus: Ongoing investments and project timing create volatility, but position IIIV for future margin expansion as SaaS scales.
• Watch Pipeline Conversion and M&A: The pace of large project conversion and disciplined use of cash for M&A will determine the next leg of growth.

Conclusion

IIIV’s transformation into a focused public sector SaaS provider is well underway, with recurring revenue now the growth engine and a strong balance sheet to fund future expansion. While 2026 will be a transition year with margin and revenue crosscurrents, the company’s strategy positions it for more predictable, higher-quality growth as government modernization accelerates.

Industry Read-Through

IIIV’s results reinforce the accelerating shift toward SaaS and platform-based solutions in the public sector, as governments seek modernization, transparency, and cost savings. The company’s experience highlights the challenges of migrating from legacy license and professional services models to recurring revenue, a pattern likely to play out across other government tech vendors. Margin compression and lumpy project timing are near-term realities for the sector, but the long-term trend favors those with scalable, bundled SaaS offerings and disciplined capital deployment. Investors should expect similar transition dynamics among public sector software peers and monitor the pace of modernization RFPs as a leading indicator.

IIIV Technology Public Sector Software SaaS Recurring Revenue M&A Justice Tech Government Modernization