SaaS Revenue Increases 8.5% and Professional
Services Revenue Increases 11.5% with Strong Cash Flow
Intellinetics, Inc. (NYSE American: INLX), a digital
transformation solutions provider, announced financial results for
the three and nine months ended September 30, 2024.
2024 Third Quarter Financial Highlights
- Total Revenue increased 8.0% over the same period in 2023; the
growth in the third quarter was fully organic.
- Software as a Service revenue increased 8.5% over the same
period in 2023.
- “IPAS” (IntelliCloud Payables Automation System) continued its
commercialization; live reference accounts increased by 50% in the
quarter and they are running smoothly. An additional three are
scheduled to go live in Q4 2024.
- Management believes IPAS will be the primary driver of our SAAS
growth going forward.
- Professional services revenue increased 11.5% over the same
period in 2023.
- Net loss was $392,850, or $(0.09) net loss per basic and fully
diluted share, compared to net income of $209,331, or $0.05 per
basic and fully diluted share, for the same period in 2023.
- Q3 2024 included $381,042 in new share-based compensation
expense.
- Q3 2024 includes $702,500 in sales and marketing expense which
is $206,211 higher than Q3 2023 due to our new focus on enhancing
our sales and marketing approach.
- Adjusted EBITDA was $479,537, compared to $708,749 for the same
period in 2023.
- Quarter ended with $1,339,500 in debt principal, down from
$2,964,500 at December 31, 2023 after prepaying $800,000 of the
debt principal in the quarter. Year-to-date, Intellinetics has made
$1,625,000 in debt pre-payments.
For the Quarter ended September
30,
2024
2023
Revenues:
Sale of software
$
13,334
$
9,422
Software as a service
1,403,942
1,293,745
Software maintenance services
352,066
353,010
Professional services
2,600,230
2,333,090
Storage and retrieval services
220,053
259,162
Total revenues
$
4,589,625
$
4,248,429
James F. DeSocio, President & CEO of Intellinetics, stated,
“We had tremendous positive feedback and customer support at the
October Build SmarterTM homebuilding industry conference where we
showcased our IPAS payables automation solution. At the conference,
we had a new IPAS customer present their high ROI in going live
with our solution, which, when properly implemented, can pay for
itself in months. We are working to deliver that experience with
each new customer. That’s why it sells, and that’s why we are so
excited about offering this solution. I am convinced more than ever
that the time is now to invest in sales and marketing to get the
word out with the goal of growing our revenues more aggressively.
Our marketing spend is expanding for trade shows and targeted
campaigns for IPAS, as well as our K-12 prospects and other select
solutions where we excel, such as micrographics.”
“IPAS continues to be the biggest opportunity for us to
transform our business. IPAS solutions average a higher SAAS annual
revenue per customer by a factor of 5 to 10 over our more
traditional document management solutions. As a result, sales of
the IPAS solutions to each new customer can lead to faster growth
than in the past. At the same time, I want to stress that while we
are investing to grow more aggressively than in the past, we are
mindful of our base business and our cash flow. We are
strengthening all aspects of our infrastructure, from more
leveraging of our transition to NetSuite, which will be complete by
the end of this year, to enhancing our SOC2 process and our
employee training program. Further, we increased our software
development staff this year, which has already driven more rapid
deployment of new features to our products.”
Summary – 2024 Third Quarter Results
Revenues for the three months ended September 30, 2024 were
$4,589,625, an increase of 8.0%, as compared with $4,248,429 for
the same period in 2023. This organic increase was driven by an
8.5% increase in SaaS revenue, and an 11.5% increase in
professional services fees, partially offset by lower sales of
storage and retrieval and flat revenues, as expected, in software
maintenance services. Recurring revenue grew 2.6% and represented
58.6% of total revenue.
Total operating expenses increased 37.3% to $3,104,065, compared
to $2,260,036 in the third quarter 2023, driven by $381,042 in
share-based compensation expense, planned investments in sales and
marketing that resulted in an additional $206,211 expense over the
same expense in the third quarter 2023, plus higher non-cash
depreciation and amortization expenses, and higher general and
administrative expenses to support the growing size of our
business. Loss from operations was $298,211 compared to income from
operations of $345,555 in the third quarter 2023.
Intellinetics reported net loss of $392,850 for the quarter
compared to net income of $209,331 for the same period in 2023.
Basic and diluted net loss per share for the quarter was $(0.09),
compared to net income per share of $0.05 per basic and fully
diluted share for the third quarter 2023. Adjusted EBITDA for the
quarter was $479,537 compared to $708,749 in the third quarter
2023.
Summary – 2024 Year-to-Date Results
Revenues for the nine months ended September 30, 2024 were
$13,738,302, an increase of 8.2% compared to $12,693,692 for the
same period in 2023. Total operating expenses increased 28.2% to
$8,869,062, compared to $6,915,921 the same period in 2023. In
addition to structural investments for growth and scale, the
primary driver of the expense increase was $914,960 related to
share-based compensation, including our granting of stock options
to employees and directors and our issuance of restricted stock
awards to employees, a non-cash expense except for $69,525 relating
to shares canceled for payment of payroll taxes as part of a
cashless grant. Loss from operations was $160,585, compared to
income from operations of $925,942 in the same period last year.
Intellinetics reported a net loss of $492,514, or $(0.12) per basic
and diluted share (inclusive of a charges related to share-based
compensation), compared to net income of $457,628, or $0.11 per
basic and $0.10 per diluted share, for the same period in 2023.
Adjusted EBITDA was $1,851,116 compared to $1,990,274 in the same
period 2023.
2024 Outlook
Based on management's current plans and assumptions,
Intellinetics reiterated expectations that it will grow revenues on
a year-over-year basis for the fiscal year 2024, and reiterated its
guidance provided last quarter that it expects its investments in
sales and marketing will cause Adjusted EBITDA to decline compared
to 2023 levels.”
Conference Call
Intellinetics is holding a conference call to discuss these
results on a live webcast at 4:30 p.m. ET today. Interested parties
can access the webcast through the Intellinetics website at
https://ir.intellinetics.com/. Investors can also dial in to the
webcast by calling (877) 407-8133 (toll-free) or (201) 689-8040. A
replay of the call can also be accessed via phone through December
13, 2024 by dialing (877) 660-6853 (toll-free) or (201) 612-7415
and using replay access code 13750112.
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.
Intellinetics’ 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, increased sales and marketing efforts, future revenues,
including t the “2024 Outlook” for revenues and Adjusted EBITDA;
organic revenue growth from both new and existing customers; market
share, growth of our markets, and better results due to price
increases; sustainable profitability; the success, revenues and
customer ROI of new products and solutions, including IPAS;
continued growth of SaaS revenue; expansion of relationships with
key customers; the timing and ongoing negotiations relating to
potential revenue reductions with our largest professional services
customer; 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
and uncertainties related to a potential revenue reduction from our
largest professional services customer; the risks associated with
the effect of changing economic conditions including inflationary
pressures, challenges with hiring and maintaining a stable
workforce, 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
10-Q and 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 Income, 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
September 30,
2024
2023
Net (loss) income - GAAP
$
(392,850
)
$
209,331
Interest expense, net
94,639
136,224
Depreciation and amortization
287,723
247,738
Stock-based compensation
490,025
115,456
Adjusted EBITDA
$
479,537
$
708,749
For the Nine Months Ended
September 30,
2024
2023
Net (loss) income - GAAP
$
(492,514
)
$
457,628
Interest expense, net
331,929
468,314
Depreciation and amortization
826,371
715,259
Stock-based compensation
1,185,330
349,073
Adjusted EBITDA
$
1,851,116
$
1,990,274
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
September 30,
2024
2023
Revenues as reported:
Sale of software
$
13,334
$
9,422
Software as a service
1,403,942
1,293,745
Software maintenance services
352,066
353,010
Professional services
2,600,230
2,333,090
Storage and retrieval
220,053
259,162
$
4,589,625
$
4,248,429
Revenues - recurring only:
Sale of software - recurring
$
-
$
-
Software as a service - recurring
1,347,638
1,222,903
Software maintenance services -
recurring
352,066
353,010
Professional services - recurring
726,142
732,576
Storage and retrieval - recurring
175,925
227,050
$
2,601,771
$
2,535,539
Revenues - non-recurring only:
Sale of software - non-recurring
$
13,334
$
9,422
Software as a service - non-recurring
56,304
70,842
Software maintenance services -
non-recurring
-
-
Professional services - non-recurring
1,874,088
1,600,514
Storage and retrieval - non-recurring
44,128
32,112
$
1,987,854
$
1,712,890
Total recurring and non-recurring
revenues
$
4,589,625
$
4,248,429
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
Statements of Operations
(unaudited)
For the Three Months
Ended
September 30,
For the Nine Months
Ended
September 30,
2024
2023
2024
2023
Revenues:
Sale of software
$
13,334
$
9,422
$
34,046
$
88,361
Software as a service
1,403,942
1,293,745
4,209,686
3,810,095
Software maintenance services
352,066
353,010
1,064,015
1,051,691
Professional services
2,600,230
2,333,090
7,742,266
6,930,695
Storage and retrieval services
220,053
259,162
688,289
812,850
Total revenues
4,589,625
4,248,429
13,738,302
12,693,692
Cost of revenues:
Sale of software
1,137
5,889
7,327
21,414
Software as a service
228,923
200,104
662,501
679,126
Software maintenance services
13,743
13,165
42,817
44,998
Professional services
1,431,241
1,338,526
4,059,845
3,832,983
Storage and retrieval services
108,727
85,154
257,335
273,308
Total cost of revenues
1,783,771
1,642,838
5,029,825
4,851,829
Gross profit
2,805,854
2,605,591
8,708,477
7,841,863
Operating expenses:
General and administrative
2,113,842
1,516,009
6,268,131
4,632,559
Sales and marketing
702,500
496,289
1,774,560
1,568,103
Depreciation and amortization
287,723
247,738
826,371
715,259
Total operating expenses
3,104,065
2,260,036
8,869,062
6,915,921
(Loss) income from operations
(298,211
)
345,555
(160,585
)
925,942
Interest expense, net
(94,639
)
(136,224
)
(331,929
)
(468,314
)
Net (loss) income
$
(392,850
)
$
209,331
$
(492,514
)
$
457,628
Basic net (loss) income per share:
$
(0.09
)
$
0.05
$
(0.12
)
$
0.11
Diluted (loss) net income per share:
$
(0.09
)
$
0.05
$
(0.12
)
$
0.10
Weighted average number of common shares
outstanding - basic
4,230,806
4,073,757
4,191,459
4,073,757
Weighted average number of common shares
outstanding - diluted
4,230,806
4,387,515
4,191,459
4,389,145
INTELLINETICS, INC. and
SUBSIDIARIES
Condensed Consolidated Balance
Sheets
(unaudited)
September 30,
December 31,
2024
2023
ASSETS
Current assets:
Cash
$
2,501,729
$
1,215,248
Accounts receivable, net
1,259,491
1,850,375
Accounts receivable, unbilled
1,149,237
1,320,837
Parts and supplies, net
89,029
110,272
Contract assets
135,053
140,165
Prepaid expenses and other current
assets
380,086
367,478
Total current assets
5,514,625
5,004,375
Property and equipment, net
1,122,488
924,257
Right of use assets, operating
2,126,213
2,532,928
Right of use assets, finance
255,926
219,777
Intangible assets, net
3,526,606
3,909,338
Goodwill
5,789,821
5,789,821
Other assets
698,706
645,764
Total assets
$
19,034,385
$
19,026,260
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable
$
432,300
$
194,454
Accrued compensation
760,075
337,884
Accrued expenses
132,751
164,103
Lease liabilities, operating - current
829,265
712,607
Lease liabilities, finance - current
67,610
49,926
Deferred revenues
3,468,109
2,927,808
Total current liabilities
5,690,110
4,386,782
Long-term liabilities:
Notes payable
775,587
2,209,242
Notes payable - related party
511,348
560,602
Lease liabilities, operating - net of
current portion
1,411,832
1,942,970
Lease liabilities, finance - net of
current portion
201,971
175,943
Total long-term liabilities
2,900,738
4,888,757
Total liabilities
8,590,848
9,275,539
Stockholders’ equity:
Common stock, $0.001 par value, 25,000,000
shares authorized; 4,230,806 and 4,113,621 shares issued and
outstanding at September 30, 2024 and December 31, 2023,
respectively
4,231
4,114
Additional paid-in capital
32,026,843
30,841,630
Accumulated deficit
(21,587,537
)
(21,095,023
)
Total stockholders’ equity
10,443,537
9,750,721
Total liabilities and stockholders’
equity
$
19,034,385
$
19,026,260
INTELLINETICS, INC. and
SUBSIDIARIES
Condensed Consolidated
Statements of Cash Flows
(unaudited)
For the Nine Months
Ended
September 30,
2024
2023
Cash flows from operating activities:
Net (loss) income
$
(492,514
)
$
457,628
Adjustments to reconcile net (loss) income
to net cash provided by operating activities:
Depreciation and amortization
826,371
715,259
Bad debt (recovery) expense
(3,780
)
59,485
Loss on disposal of fixed assets
547
-
Amortization of deferred financing
costs
142,091
138,234
Amortization of debt discount
-
22,044
Amortization of right of use assets,
financing
53,140
28,181
Share based compensation
1,185,330
349,073
Changes in operating assets and
liabilities:
Accounts receivable
594,664
(262,627
)
Accounts receivable, unbilled
171,600
(681,390
)
Parts and supplies
21,243
(21,949
)
Prepaid expenses and other current
assets
(7,496
)
(71,609
)
Accounts payable and accrued expenses
628,685
13,251
Operating lease assets and liabilities,
net
(7,765
)
4,673
Deferred revenues
540,301
378,061
Total adjustments
4,144,931
670,686
Net cash provided by operating
activities
3,652,417
1,128,314
Cash flows from investing activities:
Capitalization of internal use
software
(302,396
)
(348,051
)
Purchases of property and equipment
(392,963
)
(84,002
)
Net cash used in investing activities
(695,359
)
(432,053
)
Cash flows from financing activities:
Payment of earnout liabilities
-
(700,000
)
Principal payments on financing lease
liability
(45,577
)
(23,167
)
Repayment of notes payable
(1,307,169
)
(980,450
)
Repayment of notes payable - related
parties
(317,831
)
-
Net cash used in financing activities
(1,670,577
)
(1,703,617
)
Net increase (decrease) in cash
1,286,481
(1,007,356
)
Cash - beginning of period
1,215,248
2,696,481
Cash - end of period
$
2,501,729
$
1,689,125
Supplemental disclosure of cash flow
information:
Cash paid during the period for
interest
$
218,461
$
329,855
Cash paid during the period for income
taxes
19,077
8,344
Supplemental disclosure of non-cash
financing activities:
Right-of-use asset obtained in exchange
for finance lease liability
$
89,289
$
107,610
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241113970887/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
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