i3 Verticals Bundle
What are i3 Verticals' Customer Demographics and Target Market?
Understanding customer demographics and target markets is crucial for sustained business strategy, especially for firms in dynamic tech landscapes. i3 Verticals underwent a significant strategic shift in 2024-2025, redefining its customer base through key divestitures.
The divestiture of its Merchant Services business in September 2024 for $440 million and its Healthcare RCM business in May 2025 for $96 million marked a profound pivot towards becoming a pure-play software solutions provider, primarily for the public sector.
What is the customer demographic and target market of i3 Verticals?
Founded in 2012, i3 Verticals initially aimed to provide integrated payment and software solutions to SMBs across various sectors. However, recent divestitures have sharply contrasted this original market focus. As of mid-2025, the company has streamlined operations, concentrating resources on high-growth, non-discretionary, and counter-cyclical verticals such as the public sector, education, and utilities. This strategic refocusing sets the stage for a deep exploration into i3 Verticals' refined market, including understanding customer needs and acquisition strategies, which can be further explored through an i3 Verticals PESTEL Analysis.
Who Are i3 Verticals’s Main Customers?
The primary customer segments for i3 Verticals are businesses and organizations, with a strong emphasis on small- to medium-sized businesses (SMBs) and governmental entities. Following strategic divestitures, the company has sharpened its focus to become a specialized software solutions provider for the public sector. This strategic realignment positions the company to serve key verticals within government, education, and utilities.
Public Sector Focus
The company's core customer base now overwhelmingly resides within the public sector. This includes government agencies, justice systems, and public administration bodies. This segment accounted for 81% of total revenues from continuing operations in Q4 2024.
Education and Utilities Verticals
Beyond government, the company also targets the education sector and utility providers. These industries represent significant opportunities for specialized software solutions. The company's strategic shift aims to leverage non-discretionary spending in these areas.
Shift from Previous Markets
Previously, the company served healthcare and general merchant services. However, the divestiture of its Healthcare RCM business in May 2025 and its Merchant Services business in September 2024 signifies a decisive move away from these markets. This allows for a more concentrated approach to its ideal customer profile.
Client Base and Revenue Growth
As of 2024, the company serves approximately 33,500 clients with specialized technology platforms. Recurring revenue, particularly SaaS and transaction-based income within its public sector verticals, is showing the fastest growth. SaaS revenue saw a 24% year-over-year increase in Q3 2025.
Key Customer Demographics and Market Position
The i3 Verticals target market is characterized by organizations within the public sector, education, and utilities that require specialized software solutions. The company's customer analysis reveals a strong preference for SaaS offerings, with 80% of revenue in Q1 2025 derived from these public sector SaaS solutions. This focus on recurring revenue streams, such as SaaS and transaction-based models, aligns with the company's strategic direction to capitalize on stable, non-discretionary spending. Understanding the i3 Verticals customer demographics by industry is crucial for appreciating its market segmentation.
- Dominant focus on public sector clients.
- Serving government, justice, and public administration entities.
- Targeting the education and utilities sectors.
- Emphasis on recurring revenue through SaaS and transaction-based models.
- Approximately 33,500 clients served as of 2024.
- Annual Recurring Revenue (ARR) for continuing operations reached $160.8 million in Q3 2025.
i3 Verticals SWOT Analysis
- Complete SWOT Breakdown
- Fully Customizable
- Editable in Excel & Word
- Professional Formatting
- Investor-Ready Format
What Do i3 Verticals’s Customers Want?
The primary needs and preferences of i3 Verticals' customers are rooted in enhancing operational efficiency and streamlining processes within the public sector. These clients, primarily in government, education, and utilities, seek integrated software and payment solutions to simplify transactions and improve service delivery.
Operational Efficiency
Customers prioritize solutions that automate tasks and reduce manual effort. They look for ways to make their day-to-day operations smoother and more effective.
Streamlined Processes
There's a strong demand for integrated systems that connect different functions. This helps in managing complex workflows and data more effectively.
Enhanced Constituent Experience
Improving the experience for citizens and stakeholders is a key driver. Customers want solutions that make interactions with public services easier and more positive.
Addressing Outdated Systems
Many clients are looking to replace legacy systems that are no longer efficient or secure. They need modern solutions that can keep up with current demands.
Reliability and Compliance
Given the critical nature of public sector operations, reliability and adherence to compliance standards are paramount. Customers need dependable solutions.
Preference for SaaS Models
Customers are increasingly favoring subscription-based, cloud-hosted software. This is evident in the significant growth of recurring software license sales, which rose from $0.4 million in Q1 2024 to $2.7 million in Q1 2025.
Key Purchasing Drivers and AI Integration
Purchasing decisions are heavily influenced by the need for compliance, reliability, and a strong, long-term partnership. Customers seek stability and predictability in their financial and operational management, often driven by the integration of payment processing directly into specialized software platforms.
- The company leverages artificial intelligence (AI) to address client pain points and boost efficiency.
- Initial AI applications include service agents in transportation and automated indexing in ERP systems.
- This demonstrates how client feedback and market trends directly shape product development, aligning with the Mission, Vision & Core Values of i3 Verticals.
- The company's broad suite of solutions, including court case management, utility billing, and public education payment solutions, is tailored to specific vertical needs.
- This focus on specialized vertical markets defines the i3 Verticals customer demographics and target market.
i3 Verticals PESTLE Analysis
- Covers All 6 PESTLE Categories
- No Research Needed – Save Hours of Work
- Built by Experts, Trusted by Consultants
- Instant Download, Ready to Use
- 100% Editable, Fully Customizable
Where does i3 Verticals operate?
i3 Verticals primarily operates within the United States, with a presence extending to Canada. The company has a significant number of software installations across all 50 U.S. states. Its strategic focus has shifted towards the public sector, where it holds a strong market share and brand recognition.
Primary Geographic Focus
The company's core market is the United States, with thousands of software installations nationwide. This extensive reach supports its deep penetration into various state and local government entities.
Canadian Presence
Beyond its U.S. operations, i3 Verticals also maintains a presence in Canada. This indicates a broader North American market strategy for its specialized software solutions.
Public Sector Dominance
The company has strategically concentrated its efforts and market share within the public sector vertical. This focus reflects a deliberate pivot from broader merchant services and healthcare revenue cycle management businesses.
Market Expansion Strategy
Growth is heavily influenced by states and localities aiming to modernize government services. Recent expansions include entering Ohio and a statewide court system, demonstrating a commitment to geographic diversification within its core verticals.
The company's geographic expansion is driven by opportunities in government modernization. For instance, an acquisition in April 2025 for $9.0 million of a utility billing software company broadened its reach into multiple new states, reinforcing its strategy to deepen penetration in key public sector markets. While specific regional sales data is not publicly disclosed, the company's acquisition strategy targets specialized software companies in areas ripe for digital transformation within government operations.
Targeted State Modernization
Sales and growth are concentrated in states and localities prioritizing the modernization of their government services. This indicates a strong alignment with public sector digital transformation initiatives.
Acquisition-Led Geographic Growth
The acquisition of a utility billing software company for $9.0 million in April 2025 exemplifies the company's strategy to expand its geographic footprint and service offerings through targeted acquisitions.
Localized Solutions
Differences in regional customer demographics and preferences are managed through localized offerings and tailored solutions. Software platforms are designed to meet the specific needs of state and local government agencies.
Public Sector Focus
The company's ideal customer profile is centered on government entities at the state and local levels. This focus shapes its market segmentation and product development efforts.
B2B SaaS Market
As a provider of SaaS solutions, i3 Verticals targets B2B clients within the public sector. Its customer analysis reveals a demand for efficient government service delivery through technology.
Strategic Market Penetration
The company's business profile highlights a strategic approach to expanding where government modernization and digital transformation opportunities are most prevalent, as detailed in the Brief History of i3 Verticals.
i3 Verticals Business Model Canvas
- Complete 9-Block Business Model Canvas
- Effortlessly Communicate Your Business Strategy
- Investor-Ready BMC Format
- 100% Editable and Customizable
- Clear and Structured Layout
How Does i3 Verticals Win & Keep Customers?
i3 Verticals employs a robust strategy to acquire and retain customers, focusing on integrated software and payment solutions within specific vertical markets. Their approach combines direct sales with a network of partners and strategic acquisitions to expand their reach and offerings.
Customer Acquisition Channels
The company utilizes a direct sales force and leverages distribution partners like ISVs, VARs, and ISOs. Referral partners, including financial institutions and trade associations, also play a key role in bringing in new clients.
Mergers and Acquisitions (M&A) Strategy
A significant driver of growth is i3 Verticals' active M&A strategy, particularly in the public sector. Recent acquisitions, such as a permitting and licensing business for $18.0 million in Q3 2024 and a utility billing software company for $9.0 million in April 2025, highlight this focus.
Customer Retention Drivers
Retention is bolstered by deeply integrated, mission-critical enterprise software that becomes essential to client operations. The recurring revenue model, with Annual Recurring Revenue (ARR) reaching $160.8 million in Q3 2025 (a 12% increase year-over-year), provides stability.
Focus on Customer Experience and AI
Investment in AI for enhanced product features and improved efficiencies, such as AI service agents, indicates a data-driven approach to customer experience. This focus aims to boost customer loyalty and lifetime value.
The company's strategic shift towards becoming a pure-play public sector software provider, combined with ongoing investment in integrated solutions and AI, is designed to accelerate revenue growth and margin expansion. This specialization and enhanced service offering are key to solidifying customer relationships and increasing lifetime value, aligning with the Growth Strategy of i3 Verticals.
Direct Sales Force
A dedicated direct sales team is a primary channel for customer acquisition, ensuring focused outreach within target verticals.
Distribution Partners
Independent Software Vendors (ISVs), Value-Added Resellers (VARs), and Independent Sales Organizations (ISOs) extend market reach and provide specialized solutions.
Referral Networks
Partnerships with financial institutions and trade associations generate valuable customer referrals, tapping into established networks.
Strategic Acquisitions
The company actively acquires software businesses, particularly in the public sector, to broaden its service portfolio and market presence.
Integrated Software Solutions
Deeply embedding mission-critical software into client operations fosters long-term partnerships and enhances customer retention.
Recurring Revenue Model
A focus on Annual Recurring Revenue (ARR), which saw a 12% year-over-year increase to $160.8 million in Q3 2025, provides financial stability and predictable cash flow.
i3 Verticals Porter's Five Forces Analysis
- Covers All 5 Competitive Forces in Detail
- Structured for Consultants, Students, and Founders
- 100% Editable in Microsoft Word & Excel
- Instant Digital Download – Use Immediately
- Compatible with Mac & PC – Fully Unlocked
- What is Brief History of i3 Verticals Company?
- What is Competitive Landscape of i3 Verticals Company?
- What is Growth Strategy and Future Prospects of i3 Verticals Company?
- How Does i3 Verticals Company Work?
- What is Sales and Marketing Strategy of i3 Verticals Company?
- What are Mission Vision & Core Values of i3 Verticals Company?
- Who Owns i3 Verticals Company?
Disclaimer
All information, articles, and product details provided on this website are for general informational and educational purposes only. We do not claim any ownership over, nor do we intend to infringe upon, any trademarks, copyrights, logos, brand names, or other intellectual property mentioned or depicted on this site. Such intellectual property remains the property of its respective owners, and any references here are made solely for identification or informational purposes, without implying any affiliation, endorsement, or partnership.
We make no representations or warranties, express or implied, regarding the accuracy, completeness, or suitability of any content or products presented. Nothing on this website should be construed as legal, tax, investment, financial, medical, or other professional advice. In addition, no part of this site—including articles or product references—constitutes a solicitation, recommendation, endorsement, advertisement, or offer to buy or sell any securities, franchises, or other financial instruments, particularly in jurisdictions where such activity would be unlawful.
All content is of a general nature and may not address the specific circumstances of any individual or entity. It is not a substitute for professional advice or services. Any actions you take based on the information provided here are strictly at your own risk. You accept full responsibility for any decisions or outcomes arising from your use of this website and agree to release us from any liability in connection with your use of, or reliance upon, the content or products found herein.