Intellinetics Grows 2024 Revenues 8.0% for Third Quarter of 2024

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 [phone] (toll-free) or [phone]. A replay of the call can also be accessed via phone through December 13, 2024 by dialing [phone] (toll-free) or [phone] 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 [e-mail]

Joe Spain, CFO Intellinetics, Inc. 614.921.8170 [e-mail]