i3 Verticals, Inc. (IIIV) Cash Flow Statement

The persistent gap between near-zero net income and $10-14M of quarterly operating cash flow appears driven by roughly $7M of quarterly depreciation and amortization plus $4-5M of stock-based compensation, which together routinely exceed operating income as noted in the prior income statement review. This means the cash generation story is real at the operating line, but it is additive to, not corroborated by, GAAP earnings; investors should treat the OCF/NI ratio of 2.52x in 2026Q3 as reflecting a depressed denominator rather than exceptional conversion.

The apparent margin resilience looks more like denominator effect than operating improvement: with revenue falling toward $53.1M, a roughly flat $13M of free cash flow mechanically produces a higher margin. The single outlier remains 2025Q2's -$29.4M of negative FCF driven by a -$43.8M working capital swing, so the recent stability may be genuine normalization rather than a durable upward trend.

The sustained gap between roughly $7M of quarterly D&A and sub-$2M of recent capex suggests the company is under-reinvesting relative to the consumption of its existing asset base, which may be a deliberate choice following the 2024 acquisition program or may reflect a shift toward lighter-asset software delivery. Either way, the low capital intensity flatters free cash flow in the near term, and the depreciation runway implies future replacement spending may not stay this modest.

The 2025Q2 -$43.8M working capital outflow appears to have been a one-off distortion that reversed in subsequent quarters, but its magnitude relative to roughly $60M of quarterly revenue signals that receivable and settlement timing can swamp underlying cash generation. With recent quarters showing smaller, more stable swings, the collection cycle looks to have normalized, though the historical amplitude warrants monitoring as a proxy for customer payment behavior in the payments vertical.

Capital deployment has been aggressive relative to internally generated cash, implying the company funded buybacks and the recent acquisition partly from balance sheet cash or financing activity rather than free cash flow alone, which the absence of any dividend payments does not offset. This pattern is consistent with the roll-up strategy flagged in the income statement review, but it raises the bar for acquisition-generated returns: with operating margin stuck below 6.5%, the deployed capital has yet to show up in reported profitability.