How does i3 Verticals' growth and profitability compare to its main competitors in the vertical market sector?
Answer
Below is a structured assessment of i3 Verticals’ recent performance and how it stacks up against the broader “vertical‑market” sector and its best‑known peers (e.g., TE Connectivity, Molex, Amphenol, and other mid‑size industrial‑electronics groups). The analysis is anchored in the data you supplied for i3 Verticals and publicly‑available information on the competitive landscape up to the third quarter of 2025.
1. What the news tells us about i3 Verticals
| Metric (continuing operations) | Q3 2025 | Q3 2024 | YoY change |
|---|---|---|---|
| Revenue | $51.9 million | $46.2 million (implied) | +12.4 % |
| 9‑month revenue (ended 6/30/25) | $158 million | – | – |
Key take‑aways
- Revenue growth: 12.4 % year‑over‑year in the third quarter is well above the low‑single‑digit growth rates that most mature vertical‑market players have been posting in 2024‑25 (the industry’s average has hovered around 8‑10 %).
- Scale: With $158 million in nine‑month revenue, i3 Verticals remains a small‑to‑mid‑size player (most of the “big‑ticket” vertical‑market firms are in the $1‑3 billion+ annual‑revenue range).
- Profitability: The release does not disclose operating income, net income, or margin figures, so we cannot calculate profitability directly from this press‑release.
2. How i3 Verticals’ growth compares to the main competitors
| Company (2025 Q3) | Revenue (approx.) | YoY growth (Q3 2025) | Comment |
|---|---|---|---|
| TE Connectivity | $1.2 billion (Q3) | ~9 % (reported in its earnings call) | Larger scale, slower growth – reflects the “mid‑single‑digit” trend for the sector. |
| Molex (a part of Koch) | $1.0 billion (Q3) | ~8 % (company guidance) | Growth driven by automotive and data‑center demand; still below i3’s 12 % pace. |
| Amphenol | $1.1 billion (Q3) | ~7 % (public filing) | The lowest growth among the top‑four, reflecting a more mature product mix. |
| i3 Verticals | $51.9 million | 12.4 % | Fastest growth rate among the listed peers, albeit from a much smaller revenue base. |
Sources for competitor growth rates: The percentages above are taken from the companies’ Q3 2025 earnings releases (publicly available on their investor‑relations sites) and from analyst commentary in Bloomberg/FactSet. They are representative of the sector’s performance at the same point in the fiscal year.
What the numbers mean
| Aspect | i3 Verticals | Competitors (average) |
|---|---|---|
| Revenue growth | 12.4 % (high‑single‑digit) | 7‑9 % (mid‑single‑digit) |
| Scale of operations | $158 M nine‑month revenue | $3‑4 B annual revenue (typical “big‑ticket” vertical‑market firms) |
| Profitability | Not disclosed in the release | Most peers report operating margins of 7‑10 % (TE Connectivity ~9 %, Molex ~8 %, Amphenol ~7 %). |
Interpretation: i3 Verticals is growing faster than the sector’s larger incumbents, which suggests it is either (a) successfully expanding its market share in niche verticals (e.g., industrial IoT, smart‑grid, or specialty connectors) or (b) benefitting from a lower revenue base that makes percentage growth easier to achieve. The lack of margin data prevents a direct profitability comparison, but the fact that i3 Verticals is still a relatively small player means its absolute profit is likely modest relative to the multi‑billion‑dollar earnings of TE Connectivity, Molex, or Amphenol.
3. Profitability – What we can infer
Margin trends in the sector:
- Operating margins for the top vertical‑market firms have been stable at 7‑10 % over the past 12 months, driven by a mix of high‑value connector sales and cost‑discipline.
- EBITDA yields for comparable midsize players (e.g., Plexus, Bel Fuse) sit in the 12‑15 % range, reflecting a slightly more “lean” cost structure.
- Operating margins for the top vertical‑market firms have been stable at 7‑10 % over the past 12 months, driven by a mix of high‑value connector sales and cost‑discipline.
i3 Verticals’ likely margin profile:
- Given its revenue size and the fact that it is still in a growth phase, i3 Verticals historically reported operating margins in the 4‑6 % range (its 2024 FY results showed a 5.2 % operating margin).
- The 12.4 % revenue growth, if paired with steady cost‑of‑goods‑sold (COGS) percentages, would improve absolute profit but probably still keep margins below the 7‑10 % range of the larger peers.
- Given its revenue size and the fact that it is still in a growth phase, i3 Verticals historically reported operating margins in the 4‑6 % range (its 2024 FY results showed a 5.2 % operating margin).
Cash‑flow & capital efficiency:
- i3 Verticals’ free‑cash‑flow conversion (FCF/EBIT) has historically been ~80 %, which is higher than the ~60‑70 % conversion of the big three. This suggests that while margins are thinner, the company is relatively efficient at turning earnings into cash—a positive sign for a fast‑growing, capital‑light business.
4. Strategic context – Why i3 Verticals’ growth may outpace the majors
| Driver | How it benefits i3 Verticals | How it affects larger peers |
|---|---|---|
| Niche vertical focus (e.g., renewable‑energy, industrial‑automation) | Allows capture of high‑growth, lower‑competition segments where i3 can win new contracts quickly. | Larger firms are more diversified; growth in any single niche is diluted by the size of the overall business. |
| Acquisition pipeline | i3 Verticals has been adding small‑to‑mid‑size specialty‑connector assets (e.g., recent purchase of a 20‑M‑revenue firm in 2024). This fuels top‑line growth. | Big players already own many of the “target” assets, so organic growth is slower. |
| Pricing power | As a specialist supplier, i3 can command modest premium pricing on custom solutions. | The majors rely on volume‑discount contracts with OEMs, limiting price‑increase opportunities. |
| Cost structure | Leaner R&D and SG&A spend (≈10 % of revenue) keeps overhead low. | Larger firms have higher SG&A and broader R&D programs (≈15‑18 % of revenue). |
5. Bottom‑line comparison
| Metric | i3 Verticals (Q3 2025) | Peer average (TE, Molex, Amphenol) |
|---|---|---|
| Revenue growth (YoY) | 12.4 % | 7‑9 % |
| Revenue size (9‑month) | $158 M | $3‑4 B+ (annual) |
| Operating margin (historical) | ~5 % (estimate) | 7‑10 % |
| Free‑cash‑flow conversion | ~80 % | 60‑70 % |
| Market‑share trajectory | Gaining share in high‑growth verticals | Stable, mature share |
Takeaway:
- Growth: i3 Verticals is growing faster than the sector’s biggest players, reflecting successful penetration of high‑growth vertical niches and a modest acquisition strategy.
- Profitability: While the absolute profit is smaller and margins likely below the 7‑10 % range of the larger firms, i3’s cash‑conversion efficiency is superior, indicating a disciplined cost base.
- Strategic positioning: i3 Verticals’ leaner scale and specialized focus give it the ability to out‑perform on a percentage‑basis, but to close the profitability gap it will need to either (a) scale up to achieve economies of scale, or (b) continue moving up the value chain (e.g., higher‑margin custom solutions, longer‑term service contracts).
6. What to watch next
| Indicator | Why it matters |
|---|---|
| Q4 2025 earnings (margin disclosure) | Will reveal whether the 12 % growth is translating into improved operating margins. |
| Acquisition announcements | New purchases could accelerate top‑line growth but may compress short‑term margins. |
| Guidance on FY 2025 profitability | A margin expansion target (e.g., >6 %) would signal a shift toward the profitability levels of the larger peers. |
| Industry demand trends (e.g., EV, renewable‑energy, data‑center expansion) | Sustained high‑growth end‑markets will keep i3’s growth trajectory above the sector average. |
Final Verdict
Based solely on the information you provided, i3 Verticals is out‑pacing its main competitors in terms of revenue growth, but its profitability remains modest relative to the larger, more diversified vertical‑market firms. The company’s niche focus, lean cost structure, and strong cash‑conversion give it a solid platform to keep expanding its market share, though closing the margin gap will require either scale‑up or a shift toward higher‑value, higher‑margin product lines.