INLX Intellinetics Inc

SaaS Revenue more than doubled, Now at 30% of Total Revenue

Intellinetics, Inc. (NYSE American: INLX), a digital transformation solutions provider, announced financial results for the three months ended March 31, 2023.

2023 First Quarter Financial Highlights

• Total Revenue increased 55% over the same period in 2022.
• Software as a Service revenue increased 187% over the same period in 2022.
• SaaS revenue increased to 30% of revenue compared to 16% of revenue for the same period in 2022.
• Net Income was $112,563, or $0.03 per fully diluted share, compared to net loss of $20,126, or $(0.01) per fully diluted share, for the same period in 2022.
• Adjusted EBITDA increased 48% to $629,879, compared to $424,492 from the same period in 2022.

 

 

Three months ended March 31, 2023

 

 

Three months ended March 31, 2022

 

Revenues by revenue source

 

 

 

 

 

 

 

 

Sale of software

 

$

15,293

 

 

$

64,491

 

Software as a service

 

 

1,238,432

 

 

 

431,221

 

Software maintenance services

 

 

349,542

 

 

 

336,602

 

Professional services

 

 

2,299,289

 

 

 

1,587,948

 

Storage and retrieval services

 

 

284,277

 

 

 

283,250

 

Total revenues

 

$

4,186,833

 

 

$

2,703,512

 

James F. DeSocio, President & CEO of Intellinetics, stated, “Intellinetics continues to deliver double-digit revenue increases, both from organic growth and prior acquisitions, with most of the increase tied to higher-margin, recurring SaaS revenue. This growth, combined with rigorous expense management and a strong overall recurring revenue base, enabled us to deliver a 48% increase in Adjusted EBITDA and positive net income. Today, Intellinetics has built a stable, profitable platform for continued robust growth as we capture share in large, and largely underserved, markets.”

“Our profitability comes even after investments in technology and marketing initiatives designed to broaden industry awareness in our solutions and improve sales execution,” continued Mr. DeSocio. “We continue to broaden our portfolio of products with IntelliCloud™ Payables Automation System (IPAS) which automates the entire invoice-to-pay-to-reconciliation AP process. Embedding our technology with ERP platforms enables us to enter new markets and scale customer acquisition. Cross-selling remains a key area of focus, and we are seeing tangible progress in expanding our wallet-share with clients. We expect to continue to grow, adding new customers and expanding relationships with existing customers, throughout 2023.”

Summary – 2023 First Quarter Results

Revenues for the three months ended March 31, 2023 were $4,186,833 as compared with $2,703,512 for the same period in 2022. The 55% increase was largely driven by our acquisition of Yellow Folder in April 2022 combined with strong organic professional services growth in our Document Conversion segment. In addition to our acquisition growth and professional services growth, our SaaS and software maintenance revenues continued to grow. Intellinetics reported net income of $112,563 for the three months ended March 31, 2023 compared to net loss of $20,126 for the same period in 2022, representing an improvement of $132,689. Basic and diluted net income per share for the three months ended March 31, 2023 was $0.03. Basic and diluted net loss per share for the three months ended March 31, 2022 was $0.01. Our adjusted EBITDA improved year over year by $205,387, which was driven by improved operations and demonstrates the value of the 2022 acquisition.

2023 Outlook

Based on management's current plans and assumptions, the Company expects to continue to grow revenues and Adjusted EBITDA on a year-over-year basis for 2023.

Conference Call

Intellinetics is holding a conference call to discuss these results on Monday, May 15, 2023, at 4:30 p.m. Eastern Time. The conference call can be accessed by dialing (888) 437-3179 or (862) 298-0702. If you are unable to participate during the live call, a replay of the conference call will be available approximately three hours after the completion of the call through May 29, 2023. The replay of the call can be accessed via phone by dialing (877) 660-6853 or (201) 612-7415 and using replay access code 13738699.

About Intellinetics, Inc.

Intellinetics, Inc. (NYSE American: INLX) is enabling the digital transformation. Intellinetics empowers organizations to manage, store and protect their important documents and data. The Company’s flagship solution, the IntelliCloud™ content management platform, delivers advanced security, compliance, workflow and collaboration features critical for highly regulated, risk-intensive markets. IntelliCloud connects documents to users and the processes they support anytime, anywhere to accelerate innovation and empower organizations to think and work in new ways. In addition, Intellinetics offers business process outsourcing (BPO), document and micrographics scanning services, and records storage. From highly regulated industries like Healthcare/Human Service Providers, K-12, Public Safety, and State and Local Governments, to businesses looking to move away from paper-based processes, Intellinetics is the all-in-one, compliant, document management solution. Intellinetics is headquartered in Columbus, Ohio. For additional information, please visit www.intellinetics.com.

Cautionary Statement

Statements in this press release which are not purely historical, including statements regarding future business and growth, future profitability, future market share, future revenues, including 2023 revenues and Adjusted EBITDA, outlook, and future expansion with new and existing customers, cross-selling efforts and other synergies associated with our acquisition of Yellow Folder and the success of our integration efforts; market penetration; execution of Intellinetics’ business plan, strategy, direction and focus; and other intentions, beliefs, expectations, representations, projections, plans or strategies regarding future growth, financial results, and other future events are forward-looking statements. The forward-looking statements involve risks and uncertainties including, but not limited to, the risks associated with the effect of changing economic conditions including inflationary pressures, economic downturn, Intellinetics’ ability to execute on its business plan and strategy, customary risks attendant to acquisitions, trends in the products markets, variations in Intellinetics’ cash flow or adequacy of capital resources, market acceptance risks, the success of Intellinetics’ solutions providers, including human services, health care, and education, technical development risks, and other risks, uncertainties and other factors discussed from time to time in its reports filed with or furnished to the Securities and Exchange Commission, including in Intellinetics’ most recent annual report on Form 10-K as well as subsequently filed reports on Form 8-K. Intellinetics cautions investors not to place undue reliance on the forward-looking statements contained in this press release. Intellinetics disclaims any obligation and does not undertake to update or revise any forward-looking statements in this press release. Expanded and historical information is made available to the public by Intellinetics on its website at www.intellinetics.com or at www.sec.gov.

Non-GAAP Financial Measures

Intellinetics uses non-GAAP Adjusted EBITDA as supplemental measures of our performance that are not required by, or presented in accordance with, accounting principles generally accepted in the United States (GAAP). A non-GAAP financial measure is a numerical measure of a company's financial performance that excludes or includes amounts so as to be different from the most directly comparable measure calculated and presented in accordance with GAAP in the statement of income, balance sheet or statement of cash flows of a company.

Adjusted EBITDA: Adjusted EBITDA is not a measurement of financial performance under GAAP and should not be considered as an alternative to net income, operating income, or any other performance measure derived in accordance with GAAP, or as an alternative to cash flow from operating activities or a measure of our liquidity. Intellinetics urges investors to review the reconciliation of non-GAAP Adjusted EBITDA to the comparable GAAP Net Loss, which is included in this press release, and not to rely on any single financial measure to evaluate Intellinetics’ financial performance.

We believe that Adjusted EBITDA is a useful performance measure and is used by us to facilitate a comparison of our operating performance on a consistent basis from period-to-period and to provide for a more complete understanding of factors and trends affecting our business than measures under GAAP can provide alone. We define “Adjusted EBITDA” as earnings before interest expense, any income taxes, depreciation and amortization expense, stock-based compensation, note conversion and note or equity offer warrant or stock expense, gain or loss on debt extinguishment, change in fair value of contingent consideration, and transaction costs.

Reconciliation of Net Income to Adjusted EBITDA

 

 

 

For the Three Months Ended March 31,

 

 

 

2023

 

 

2022

 

Net income (loss) - GAAP

 

$

112,563

 

$

(20,126

)

Interest expense, net

 

 

171,436

 

 

 

112,601

 

Depreciation and amortization

 

 

227,718

 

 

 

117,302

 

Stock-based compensation

 

 

118,162

 

 

 

80,460

 

Change in fair value of earnout liabilities

 

 

-

 

 

 

64,204

 

Transaction costs

 

 

-

 

 

 

70,051

 

Adjusted EBITDA

 

$

629,879

 

$

424,492

Recurring Revenue: Recognized revenue for any applicable period that we characterize as being recurring in nature, without regard to contract start or end dates or renewal rates. It includes the following revenue types: SaaS subscription agreements, maintenance contracts related to perpetual software licenses, storage and retrieval services, and professional services revenues in the nature of business process outsourcing. It excludes revenues of a type that are not expected to recur, primarily perpetual licenses, most document conversion services, and other professional services that are project based. Recurring revenue is not determined by reference to deferred revenue, unbilled revenue, or any other GAAP financial measure over any period, so the Company has not reconciled the Recurring Revenues to any GAAP measure. Recurring revenue should not be extrapolated into a precise prediction of future revenues, because it does not take into account our contract start and end dates and our renewal rates. Management believes that reviewing this metric, in addition to GAAP results, helps investors and financial analysts understand the value of Intellinetics’ recurring revenue streams versus prior periods.

Reconciliation of revenues to recurring revenues:

 

 

 

For the three months ended March 31,

 

 

 

2023

 

 

2022

 

 

 

 

 

 

 

 

Revenues as reported:

 

 

 

 

 

 

 

 

Sale of software

 

$

15,293

 

 

$

64,491

 

Software as a service

 

 

1,238,432

 

 

 

431,221

 

Software maintenance services

 

 

349,542

 

 

 

336,602

 

Professional services

 

 

2,299,289

 

 

 

1,587,948

 

Storage and retrieval services

 

 

284,277

 

 

 

283,250

 

Total revenues

 

$

4,186,833

 

 

$

2,703,512

 

Revenues – recurring only:

 

 

 

 

 

 

 

 

Sale of software – recurring

 

$

-

 

 

$

-

 

Software as a service – recurring

 

 

1,177,333

 

 

 

366,262

 

Software maintenance services – recurring

 

 

349,542

 

 

 

336,602

 

Professional services – recurring

 

 

669,685

 

 

 

663,905

 

Storage and retrieval services – recurring

 

 

235,001

 

 

 

202,221

 

Total recurring revenues

 

$

2,431,561

 

 

$

1,568,990

 

 

 

 

 

 

 

 

Revenues – non-recurring only:

 

 

 

 

 

 

 

 

Sale of software – non-recurring only

 

$

15,293

 

 

$

64,491

 

Software as a service – non-recurring only1

 

 

61,099

 

 

 

64,959

 

Software maintenance services – non-recurring only

 

 

-

 

 

 

-

 

Professional services – non-recurring only

 

 

1,629,604

 

 

 

924,043

 

Storage and retrieval services – non-recurring only

 

 

49,276

 

 

 

81,029

 

Total non-recurring revenues

 

$

1,755,272

 

 

$

1,134,522

 

 

 

 

 

 

 

 

Total recurring and non-recurring revenues

 

$

4,186,833

 

 

$

2,703,512

 

 

Note 1 – Software as a service non-recurring revenue is comprised of professional services setup fees which are recognized ratably over the initial contract period. They do not renew, and are therefore non-recurring. Under ASC 606, they are deemed essential to the functionality of the subscription Software as a service, and are therefore recognized together with the subscription Software as a service revenue.

 

INTELLINETICS, INC. and SUBSIDIARIES

Condensed Consolidated Balance Sheets

 

 

 

(unaudited)

 

 

 

 

 

 

March 31,

 

 

December 31,

 

 

 

2023

 

 

2022

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash

 

$

1,419,138

 

 

$

2,696,481

 

Accounts receivable, net

 

 

1,182,523

 

 

 

1,121,083

 

Accounts receivable, unbilled

 

 

887,742

 

 

 

596,410

 

Parts and supplies, net

 

 

81,455

 

 

 

73,221

 

Contract assets

 

 

80,577

 

 

 

80,378

 

Prepaid expenses and other current assets

 

 

327,198

 

 

 

325,466

 

Total current assets

 

 

3,978,633

 

 

 

4,893,039

 

 

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

1,029,127

 

 

 

1,068,706

 

Right of use assets, operating

 

 

3,070,782

 

 

 

3,200,191

 

Right of use asset, finance

 

 

147,574

 

 

 

154,282

 

Intangible assets, net

 

 

4,292,069

 

 

 

4,419,646

 

Goodwill

 

 

5,789,821

 

 

 

5,789,821

 

Other assets

 

 

491,464

 

 

 

417,457

 

Total assets

 

$

18,799,470

 

 

$

19,943,142

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

368,797

 

 

$

370,300

 

Accrued compensation

 

 

604,260

 

 

 

411,683

 

Accrued expenses

 

 

153,677

 

 

 

114,902

 

Lease liabilities, operating - current

 

 

708,573

 

 

 

692,074

 

Lease liability, finance - current

 

 

22,918

 

 

 

22,493

 

Deferred revenues

 

 

2,182,276

 

 

 

2,754,064

 

Earnout liabilities - current

 

 

-

 

 

 

700,000

 

Notes payable - current

 

 

696,459

 

 

 

936,966

 

Total current liabilities

 

 

4,736,960

 

 

 

6,002,482

 

 

 

 

 

 

 

 

 

 

Long-term liabilities:

 

 

 

 

 

 

 

 

Notes payable - net of current portion

 

 

2,116,087

 

 

 

2,085,035

 

Notes payable - related party

 

 

536,964

 

 

 

529,084

 

Lease liabilities, operating - net of current portion

 

 

2,482,692

 

 

 

2,624,608

 

Lease liability, finance - net of current portion

 

 

127,240

 

 

 

133,131

 

Total long-term liabilities

 

 

5,262,983

 

 

 

5,371,858

 

Total liabilities

 

 

9,999,943

 

 

 

11,374,340

 

 

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Common stock, $0.001 par value, 25,000,000 shares authorized; 4,073,757 shares issued and outstanding at March 31, 2023 and December 31, 2022

 

 

4,074

 

 

 

4,074

 

Additional paid-in capital

 

 

30,297,179

 

 

 

30,179,017

 

Accumulated deficit

 

 

(21,501,726

)

 

 

(21,614,289

)

Total stockholders’ equity

 

 

8,799,527

 

 

 

8,568,802

 

Total liabilities and stockholders’ equity

 

$

18,799,470

 

 

$

19,943,142

 

 

INTELLINETICS, INC. and SUBSIDIARIES

Condensed Consolidated Statements of Operations

(unaudited)

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended March 31,

 

 

 

2023

 

 

2022

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

Sale of software

 

$

15,293

 

 

$

64,491

 

Software as a service

 

 

1,238,432

 

 

 

431,221

 

Software maintenance services

 

 

349,542

 

 

 

336,602

 

Professional services

 

 

2,299,289

 

 

 

1,587,948

 

Storage and retrieval services

 

 

284,277

 

 

 

283,250

 

Total revenues

 

 

4,186,833

 

 

 

2,703,512

 

 

 

 

 

 

 

 

 

 

Cost of revenues:

 

 

 

 

 

 

 

 

Sale of software

 

 

8,181

 

 

 

26,193

 

Software as a service

 

 

220,640

 

 

 

91,249

 

Software maintenance services

 

 

16,716

 

 

 

18,300

 

Professional services

 

 

1,187,116

 

 

 

848,167

 

Storage and retrieval services

 

 

108,341

 

 

 

87,766

 

Total cost of revenues

 

 

1,540,994

 

 

 

1,071,675

 

 

 

 

 

 

 

 

 

 

Gross profit

 

 

2,645,839

 

 

 

1,631,837

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

General and administrative

 

 

1,554,611

 

 

 

935,691

 

Change in fair value of earnout liabilities

 

 

-

 

 

 

64,204

 

Transaction costs

 

 

-

 

 

 

70,051

 

Sales and marketing

 

 

579,511

 

 

 

352,114

 

Depreciation and amortization

 

 

227,718

 

 

 

117,302

 

Total operating expenses

 

 

2,361,840

 

 

 

1,539,362

 

 

 

 

 

 

 

 

 

 

Income from operations

 

 

283,999

 

 

 

92,475

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(171,436

)

 

 

(112,601

)

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

112,563

 

 

$

(20,126

)

 

 

 

 

 

 

 

 

 

Basic net income (loss) per share:

 

$

0.03

 

 

$

(0.01

)

Diluted net income per (loss) share:

 

$

0.03

 

 

$

(0.01

)

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding - basic

 

 

4,073,757

 

 

 

2,830,899

 

Weighted average number of common shares outstanding - diluted

 

 

4,695,106

 

 

 

2,830,899

 

 

INTELLINETICS, INC. and SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(unaudited)

 

 

 

 

 

 

 

 

 

For the Three Months Ended March 31,

 

 

 

2023

 

 

2022

 

 

 

 

 

 

 

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net income (loss)

 

$

112,563

 

 

$

(20,126

)

Adjustments to reconcile net income (loss) to net cash used in / provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

227,718

 

 

 

117,302

 

Bad debt expense (recovery)

 

 

20,102

 

 

 

(2,097

)

Amortization of deferred financing costs

 

 

49,997

 

 

 

25,935

 

Amortization of debt discount

 

 

11,378

 

 

 

26,666

 

Amortization of right of use asset, financing

 

 

6,709

 

 

 

-

 

Stock issued for services

 

 

-

 

 

 

57,500

 

Stock option compensation

 

 

118,162

 

 

 

22,960

 

Change in fair value of earnout liabilities

 

 

-

 

 

 

64,204

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(81,542

)

 

 

279,757

 

Accounts receivable, unbilled

 

 

(291,332

)

 

 

(29,204

)

Parts and supplies

 

 

(8,234

)

 

 

10,978

 

Prepaid expenses and other current assets

 

 

(1,931

)

 

 

(63,583

)

Accounts payable and accrued expenses

 

 

229,849

 

 

 

85,739

 

Operating lease assets and liabilities, net

 

 

3,992

 

 

 

8,286

 

Deferred compensation

 

 

-

 

 

 

(20,166

)

Deferred revenues

 

 

(571,788

)

 

 

(58,583

)

Total adjustments

 

 

(286,920

)

 

 

525,694

 

Net cash used in / provided by operating activities

 

 

(174,357

)

 

 

505,568

 

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Capitalization of internal use software

 

 

(112,208

)

 

 

(29,397

)

Purchases of property and equipment

 

 

(22,361

)

 

 

(56,043

)

Net cash used in investing activities

 

 

(134,569

)

 

 

(85,440

)

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Payment of earnout liabilities

 

 

(700,000

)

 

 

-

 

Principal payments on financing lease liability

 

 

(5,467

)

 

 

-

 

Repayment of notes payable

 

 

(262,950

)

 

 

-

 

Net cash used in financing activities

 

 

(968,417

)

 

 

-

 

 

 

 

 

 

 

 

 

 

Net (decrease) increase in cash

 

 

(1,277,343

)

 

 

420,128

 

Cash - beginning of period

 

 

2,696,481

 

 

 

1,752,630

 

Cash - end of period

 

$

1,419,138

 

 

$

2,172,758

 

 

 

 

 

 

 

$

2,172,758

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

Cash paid during the period for interest

 

$

116,110

 

 

$

60,000

 

Cash paid during the period for income taxes

 

$

2,499

 

 

$

1,303

 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20230515005282/en/

FNK IR Tom Baumann / Rob Fink 646.349.6641 / 646.809.4048 INLX@fnkir.com Joe Spain, CFO Intellinetics, Inc. 614.921.8170 investors@intellinetics.com