Intellinetics, Inc. (INLX) shares rallied 14.5% in the last trading session to close at $14.21. This move can be attributable to notable volume with a higher number of shares being traded than in a typical session. This compares to the stock's 5.5% gain over the past four weeks.Intellinetics is benefiting from the strong performance and customer acceptance of its Payables Automation Solution, driving growth in SaaS revenue and expanding its market reach.This company is expected to post quarterly loss of $0. ...

Financial Data and Key Metrics Changes - Total revenue for Q4 2024 increased by 2.1% to $4.3 million compared to $4.2 million in the same period last year [19] - SaaS revenue, including hosting, rose by 11.8% to $1.5 million from $1.3 million year-over-year, driven by early successes in payables automation [20] - Consolidated gross margin increased by 88 basis points to 65.8% for Q4 2024, compared to 64.9% last year [22] - Full year total revenue for 2024 increased by 6.7% to $18 million from $16.9 million in 2023 [25] - Full year net loss was $546,000 compared to net income of $519,000 last year [27] Business Line Data and Key Metrics Changes - Professional services revenue was flat at $2.2 million for Q4 2024, while year-to-date, it delivered 8.9% growth, reaching a record $10 million compared to $9.2 million last year [21][25] - SaaS revenue for the full year increased by 10.8%, contributing to improved margins [25] Market Data and Key Metrics Changes - The K-12 market is expanding quickly, with two additional Iowa school districts engaged after a pilot program [12] - The company is also targeting local governments and municipalities as potential new verticals for its solutions [46] Company Strategy and Development Direction - The company is transitioning to a predominantly SaaS-driven model, focusing on digital transformation solutions [7] - Investments are being made in sales and marketing to accelerate growth, with a focus on hiring more sales representatives and enhancing marketing efforts [17] - The launch of a complementary purchase order solution is expected to expand the customer base and increase transaction volume [11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the payables automation solution as a key growth driver, highlighting high customer acceptance and significant ROI [8][9] - The company anticipates revenue growth for fiscal 2025, although EBITDA is expected to be reduced by more than half due to increased investments [31][32] Other Important Information - Cash flow from operating activities was $3.9 million, allowing the company to prepay $1.6 million of its debt [30] - The company has a strong balance sheet with total assets of $18.6 million and cash of $2.5 million as of December 31, 2024 [29] Q&A Session Summary Question: How many customers are live and what is the expectation for the second half of the year? - Management reported that two customers went live recently, with five more in the implementation process, indicating smooth transitions [36][38] Question: Is there any hesitation from customers regarding budget deployment? - Management noted that while some customers are cautious due to market conditions, the strong ROI from their solutions positions them well for sales [48][49] Question: Will SaaS line margins maintain above 85%? - Management indicated that while margins may fluctuate, they expect to maintain a mid-80s range due to the nature of customer engagements [50][52]

Financial Data and Key Metrics Changes - Total revenue for Q4 2024 increased by 2.1% to $4.3 million compared to $4.2 million in Q4 2023 [19] - SaaS revenue, including hosting, increased by 11.8% to $1.5 million for the quarter, driven by early payables automation successes [20] - Consolidated gross margin increased by 88 basis points to 65.8% for Q4 2024 compared to 64.9% in Q4 2023 [22] - Net loss for Q4 was $54,000, compared to net income of $62,000 for the same period last year [24] - Full year total revenue for 2024 increased by 6.7% to $18 million compared to $16.9 million in 2023 [25] - Full year adjusted EBITDA was $2.5 million, compared to $2.7 million for 2023 [28] Business Line Data and Key Metrics Changes - Professional services revenue was flat at $2.2 million for Q4 2024, accounting for 52% of total revenue, down from 53% last year [21] - SaaS revenue increased by 10.8% for the full year, while professional services revenue increased by 8.9% [25] Market Data and Key Metrics Changes - The K-12 market is growing quickly, with two additional Iowa school districts engaged after a pilot program [12] - The company is focusing on expanding into niche ERP providers and underserved markets, including county and local governments [46] Company Strategy and Development Direction - The company is transforming into a predominantly SaaS-driven business with a focus on digital transformation solutions [7] - Investments are being made in sales and marketing to accelerate growth, with a significant increase in sales and marketing expenses by 37% in Q4 2024 [23] - The company plans to enhance development capabilities and bring features to market more quickly [59] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the Payables Automation Solution as a key growth driver, with high customer acceptance and significant ROI [8][9] - The company expects revenue growth for fiscal 2025, but anticipates EBITDA to be reduced by more than half due to increased investments [31][32] Other Important Information - Cash provided by operating activities was $3.9 million, allowing the company to prepay $1.6 million of its debt [30] - Total assets were $18.6 million, with total liabilities of $7.9 million as of December 31, 2024 [29] Q&A Session Summary Question: How many customers are live and how many are expected to go live in the second half of the year? - Majority of customers are in the process of implementation, with two going live recently and five more in progress [38] Question: Does the live customer count include the large customer mentioned in the last call? - Yes, that customer is included, and they are processing a significant number of invoices with minimal human intervention [40] Question: Are there any hesitations from customers regarding budget deployment? - Customers are cautious due to market conditions, but the company believes it is well-positioned to demonstrate ROI [48][49] Question: Will SaaS line margins maintain above 85%? - Margins are expected to fluctuate but should remain within the mid-80s range [50][52] Question: What verticals is the company looking to expand into? - The company is exploring opportunities in county and local governments, as well as other ERP players [46]

Revenue Performance - Total revenue for 2024 was $18,018,373, representing a 6.7% increase compared to $16,886,381 in 2023[9] - SaaS revenue grew by 11.8% year-over-year, reaching $5,688,936 in 2024[5] - Professional services revenue increased by 0.3% to $9,985,028 in 2024[4] - Total revenues for the twelve months ended December 31, 2024, increased to $18,018,373, up from $16,886,381 in 2023, representing a growth of approximately 6.7%[25] - Software as a Service (SaaS) revenues reached $5,688,936 for the twelve months ended December 31, 2024, compared to $5,133,215 in 2023, reflecting an increase of about 10.8%[25] - Total recurring revenues for the three months ended December 31, 2024, were $2,649,893, slightly up from $2,646,580 in the same period of 2023[21] Net Income and Loss - The company reported a net loss of $546,215, or ($0.13) per share, compared to a net income of $519,266, or $0.13 per share in 2023[9] - The company reported a net loss of $546,215 for the twelve months ended December 31, 2024, compared to a net income of $519,266 in 2023[25] Operating Expenses - Operating expenses increased by 23.7% to $11,698,431, driven by structural investments and share-based compensation[9] - Total operating expenses for Q4 2024 were $2,829,369, an increase of 11.4% compared to $2,540,565 in Q4 2023[7] - Operating expenses for the twelve months ended December 31, 2024, totaled $11,698,431, up from $9,456,486 in 2023, representing an increase of approximately 23.5%[25] Cash and Assets - Cash and cash equivalents at the end of the period increased to $2,489,236 from $1,215,248 in 2023, marking a significant increase of approximately 104.5%[27] - The company’s total assets decreased to $18,574,956 as of December 31, 2024, down from $19,026,260 in 2023, a decline of about 2.4%[23] Liabilities - The company’s total liabilities decreased to $7,943,201 as of December 31, 2024, down from $9,275,539 in 2023, a reduction of approximately 14.4%[23] Future Outlook - Management expects revenue growth for fiscal year 2025, but anticipates EBITDA to be reduced by more than half due to increased sales and marketing investments[10] - The Payables Automation SaaS solutions are expected to be the primary drivers of future SaaS growth, with live reference accounts increasing by 50% in the last quarter[5][11] Debt Management - The company made $1,625,000 in debt prepayments in 2024, leaving just over $1.3 million in debt[4] Share Information - The weighted average number of common shares outstanding for basic calculations was 4,201,401 for the twelve months ended December 31, 2024, compared to 4,074,194 in 2023[25] Deferred Revenues - Deferred revenues rose to $3,411,852 as of December 31, 2024, compared to $2,927,808 in 2023, indicating an increase of about 16.5%[23]

Revenue Recognition and Stability - The company recognizes revenue from subscription agreements ratably over typically one-year terms, leading to potential delays in reflecting downturns in operating results [87]. - A significant portion of the company's revenue is derived from government contracts, which are subject to early termination and audits, posing risks to revenue stability [88]. - The company does not expect to pay any dividends on its common stock for the foreseeable future, as it plans to retain earnings to maintain and expand operations [109]. Compliance and Legal Risks - Compliance with federal securities laws results in higher expenses compared to privately held companies, impacting resource allocation for growth initiatives [90]. - The company may incur substantial expenditures due to indemnification obligations for directors and officers, which could discourage legal actions against them [91]. - The company faces risks from potential litigation related to intellectual property claims, which could increase costs and harm future revenue generation [97]. Market and Stock Performance - The issuance of additional securities may dilute existing shareholders' ownership and affect the market value of common stock [98]. - The market price of the company's common stock may fluctuate significantly, leading to potential losses for shareholders [106]. - FINRA sales practice requirements may limit the ability of shareholders to buy and sell the company's stock, adversely affecting market conditions [107]. - The company must comply with NYSE American listing requirements, and failure to do so could result in delisting and reduced trading activity [102]. Operational Risks - Security breaches could lead to loss of confidential information and significant liabilities, adversely affecting the company's reputation and business [92]. - The company faces risks from potential disruptions at third-party data centers, which could harm business operations and customer satisfaction [112]. - Global economic uncertainty, including inflation and higher interest rates, may adversely impact the company's operating results and financing [110]. - The company’s IntelliCloud Payables Automation Solution is targeted at industries like home-building and construction, which may be negatively affected by new tariffs [110]. Human Resources and Competition - The company relies heavily on attracting and retaining top employees, with competition for skilled personnel being intense [115]. - The company is dependent on its ability to protect proprietary technology, with software piracy posing a persistent threat to revenue [116].

Financial Data and Key Metrics - Total revenue for Q3 2024 increased by 8% to $4.6 million compared to $4.2 million in Q3 2023 [17] - Subscription software revenue increased to $1.76 million, with SaaS growing by 8.5% and software maintenance revenue remaining flat [18] - Professional services revenue increased by 11.5% to $2.6 million, representing 56.7% of total revenue [18] - Consolidated gross margin decreased slightly by 20 basis points to 61.1% due to unfavorable projects in document conversion services [19] - SaaS margins decreased slightly to 83.7% from 84.5% but remain strong [20] - Operating expenses increased by 37.3% to $3.1 million, driven by share-based compensation, sales and marketing investments, and general administrative expenses [21] - Net loss for Q3 was $393,000 compared to net income of $209,000 in Q3 2023 [23] - Adjusted EBITDA for Q3 was $479,000, down from $709,000 in Q3 2023 [23] - Cash position at September 30, 2024, was $2.5 million, with total assets of $19 million and total liabilities of $8.6 million [24] - Debt principal outstanding was $1.3 million after $800,000 in prepayments during the quarter [25] Business Line Performance - Payables Automation Solution (IPAS) is the primary growth driver, with strong customer acceptance and additional functionality around purchase orders expected by year-end [8][12] - IPAS is being deployed in the K12 ecosystem with a beta customer already live and additional orders secured [13] - The company is actively pursuing opportunities with niche ERP providers to outperform generic solutions [14] Market Performance - The company presented at the Build Smarter Homebuilding Industry Conference, where a customer showcased strong ROI from IPAS, leading to significant interest [11] - The K12 market, while having smaller transaction volumes, offers faster implementation times compared to homebuilders [13] Strategic Direction and Industry Competition - The company is investing in scaling its business, including hiring additional sales reps, an implementations manager, and expanding marketing efforts [15] - Investments are expected to temporarily reduce EBITDA but are anticipated to bring revenue opportunities that will exceed the spend by 2025 [15] - The company is focusing on integrating IPAS with new ERP systems and expanding into new verticals [31][33] Management Commentary on Operating Environment and Future Outlook - Management is optimistic about the future, citing strong SaaS assets, a cash-generating business model, and a competitive position in growing markets [38] - The company expects to grow revenues year-over-year for fiscal 2024, with adjusted EBITDA expected to decrease modestly due to increased investments [26] Other Important Information - The company has paid out $2.7 million in acquisition earnouts since 2021 and reduced long-term debt by $3.6 million since December 2022 [9] - The company has a strong deferred revenue position, particularly due to government and K12 contracts running from July to June [24] Q&A Session Summary Question: Total number of live IPAS customers entering 2025 - The company expects to have 11 or 12 customers live by early 2025, with a significant new customer providing $250,000 in annual revenue [27] Question: Pipeline potential from the homebuilders trade show - The company had a strong presence at the trade show, with over 50 attendees at their breakout session and positive feedback from a customer testimonial [28][29] Question: Pace of implementations and functionality - The company anticipates faster implementations as they formalize their release schedule and improve tools and product knowledge [30] Question: Expansion to other ERP systems - The company is actively working on integrating IPAS with other ERP systems, including a co-marketing agreement with Software Unlimited for the K12 market [31][33] Question: SaaS revenue inflection point - The company expects a meaningful inflection point in SaaS revenue in the second half of 2025, as new deals signed in late 2024 will start recognizing revenue in early 2025 [34][35] Question: Activity in Michigan - The company expects activity in Michigan to remain consistent through the end of the year, with low expectations for government-related business until the New Year [36][37]

Core Insights - Intellinetics, Inc. reported a quarterly loss of $0.09 per share, significantly missing the Zacks Consensus Estimate of $0.01, and compared to earnings of $0.05 per share a year ago, resulting in an earnings surprise of -1,000% [1] - The company posted revenues of $4.59 million for the quarter ended September 2024, missing the Zacks Consensus Estimate by 2.13%, but showing an increase from $4.25 million year-over-year [2] - Intellinetics shares have increased approximately 185.2% since the beginning of the year, outperforming the S&P 500's gain of 25.5% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is -$0.06 on revenues of $4.26 million, and for the current fiscal year, it is -$0.07 on revenues of $18.09 million [7] - The estimate revisions trend for Intellinetics is mixed, leading to a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6] Industry Context - The Internet - Content industry, to which Intellinetics belongs, is currently in the top 31% of over 250 Zacks industries, suggesting a favorable outlook compared to the bottom 50% [8]

Revenue Performance - Total revenue for Q3 2024 was $4,589,625, an increase of 8.0% compared to $4,248,429 in Q3 2023[6] - SaaS revenue increased by 8.5% year-over-year, contributing significantly to the overall revenue growth[2] - Professional services revenue rose by 11.5% compared to the same period in 2023, reflecting strong demand[4] - Year-to-date revenue for 2024 reached $13,738,302, an increase of 8.2% compared to $12,693,692 for the same period in 2023[9] - Total revenues for the three months ended September 30, 2024, were $4,589,625, an increase of 8.0% compared to $4,248,429 for the same period in 2023[20] - Software as a service revenue for the three months ended September 30, 2024, was $1,403,942, up 8.5% from $1,293,745 in 2023[20] - Professional services revenue increased to $2,600,230 for the three months ended September 30, 2024, compared to $2,333,090 in 2023, reflecting an increase of 11.5%[20] - Recurring revenue grew by 2.6%, representing 58.6% of total revenue, highlighting the stability of income streams[6] Profitability and Loss - Net loss for Q3 2024 was $392,850, or $(0.09) per share, compared to a net income of $209,331, or $0.05 per share in Q3 2023[8] - Adjusted EBITDA for Q3 2024 was $479,537, down from $708,749 in Q3 2023, indicating a decline in operational profitability[8] - Net loss for the nine months ended September 30, 2024, was $492,514 compared to a net income of $457,628 in 2023[24] Operating Expenses - Total operating expenses increased by 37.3% to $3,104,065, driven by higher share-based compensation and increased sales and marketing investments[7] - Share-based compensation rose significantly to $1,185,330 from $349,073 in 2023, indicating increased employee compensation costs[24] Cash Flow and Assets - Net cash provided by operating activities increased to $3,652,417 from $1,128,314 in the previous year, representing a growth of approximately 224%[24] - Cash at the end of the period increased to $2,501,729 from $1,689,125 in 2023, showing a positive cash flow trend[24] - Total current assets increased to $5,514,625 as of September 30, 2024, from $5,004,375 as of December 31, 2023[21] - Cash balance increased to $2,501,729 as of September 30, 2024, compared to $1,215,248 as of December 31, 2023[21] Liabilities and Equity - Total liabilities decreased to $8,590,848 as of September 30, 2024, from $9,275,539 as of December 31, 2023[22] - Total stockholders' equity increased to $10,443,537 as of September 30, 2024, from $9,750,721 as of December 31, 2023[23] Future Outlook - Management expects revenue growth to continue year-over-year for the fiscal year 2024, despite anticipated declines in Adjusted EBITDA due to increased investments[10] - The company plans to continue investing in sales and marketing to drive future growth, particularly through the IPAS solution[3] Deferred Revenues - Deferred revenues increased to $3,468,109 as of September 30, 2024, compared to $2,927,808 as of December 31, 2023, indicating growth in future revenue recognition[22] - Deferred revenues increased to $540,301 from $378,061 in 2023, suggesting growth in future revenue recognition[24]

Revenue Performance - Revenues for Q3 2024 were $4,589,625, representing an 8.0% increase year over year, while revenues for the nine-month period 2024 were $13,738,302, reflecting an 8.2% growth compared to the same period in 2023[97][101]. - The Document Management segment generated revenues of $1,913,116 in Q3 2024, up from $1,871,395 in Q3 2023, and $5,592,624 for the nine-month period 2024, compared to $5,549,194 in the same period last year[111]. - The Document Conversion segment reported revenues of $2,676,509 in Q3 2024, an increase from $2,377,034 in Q3 2023, and $8,145,678 for the nine-month period 2024, compared to $7,144,498 in the prior year[111]. - Revenues for Q3 2024 increased by $341,196, or 8.0%, and for the nine-month period by $1,044,610, or 8.2%, primarily driven by software as a service and professional services in the Document Conversion segment[113]. - Software as a Service revenues rose by $110,197, or 8.5%, in Q3 2024 and by $399,591, or 10.5%, in the nine-month period compared to the same periods in 2023, mainly due to new cloud-based solution sales[114]. - Professional services revenues increased by $267,140, or 11.5%, in Q3 2024 and by $811,571, or 11.7%, in the nine-month period, driven by a significant project in Document Conversion[115]. Operating Expenses - Operating expenses (excluding cost of revenues) for the nine-month period 2024 increased by 28.2% to $8,869,062, driven primarily by share-based compensation and investments in sales and marketing[102]. - Total operating expenses for Q3 2024 were $3,104,065, up from $2,260,036 in Q3 2023, marking an increase of 38.4%[127]. - General and administrative expenses increased by $597,833, or 39.4%, in Q3 2024 compared to Q3 2023, primarily due to new share-based compensation expenses[127]. - Sales and marketing expenses rose by $206,211, or 41.6%, in Q3 2024 over Q3 2023, driven by the expansion of the sales team[129]. Profitability - The net loss for Q3 2024 was $392,850, with a basic and diluted net loss per share of $0.09, compared to a net income of $209,331 and earnings per share of $0.05 in Q3 2023[100]. - Gross profit for Q3 2024 was $2,805,854, compared to $2,605,591 in Q3 2023, with a gross profit percentage of 61.1%[121]. - Overall gross profit decreased to 61.1% in Q3 2024 from 61.3% in Q3 2023, but increased to 63.4% for the nine-month period 2024 from 61.8% in 2023[123]. - The gross profit percentage for professional services improved to 45.0% in Q3 2024 from 42.6% in Q3 2023[121]. Cash Flow - Operating cash provided was $1,933,562 in Q3 2024, compared to $1,427,945 in Q3 2023, indicating improved cash flow from operations[100]. - Net cash provided by operating activities during the nine-month period 2024 was $3,652,417, compared to $1,128,314 in the same period of 2023[139]. - Net cash used in investing activities in the nine-month period 2024 was $695,359, including $302,396 in capitalized software[140]. - As of September 30, 2024, the company had $2.5 million in cash and cash equivalents and a working capital deficit of $0.2 million[134]. Workforce and Growth - The company had 199 employees as of September 30, 2024, an increase from 165 employees a year earlier, reflecting growth in workforce to support business expansion[105]. - The company anticipates continued growth driven by the demand for software as a service (SaaS) solutions, particularly in light of the increasing adoption of remote workforce policies[92][93]. - The company is focusing on expanding its cloud-based solutions and data storage offerings to drive future growth[114]. Challenges and Risks - The company anticipates a significant adverse impact on future professional services revenues due to potential pricing renegotiations with its largest Document Conversion customer[115]. - The company experienced a higher than normal churn rate in K-12 customers affecting the growth of the YellowFolder product[114]. - Cost of Software as a Service (SaaS) increased by $28,819, or 14.4%, in Q3 2024 compared to Q3 2023, while gross margin decreased to 83.7% from 84.5%[124]. - Cost of Professional Services rose by $92,715, or 6.9%, in Q3 2024 over Q3 2023, with gross margins increasing to 45.0% from 42.6%[125]. Customer Contracts - The company secured a renewal contract with its largest customer, with an estimated net rate increase of approximately 21% effective October 1, 2023[133].

Company Performance - Intellinetics, Inc. reported quarterly earnings of $0.02 per share, missing the Zacks Consensus Estimate of $0.04 per share, and down from $0.03 per share a year ago, representing an earnings surprise of -50% [1] - The company posted revenues of $4.64 million for the quarter ended June 2024, surpassing the Zacks Consensus Estimate by 0.69%, and up from $4.26 million year-over-year [2] - Over the last four quarters, Intellinetics has surpassed consensus revenue estimates three times, but has only exceeded EPS estimates once [2] Stock Performance - Intellinetics shares have increased approximately 78.7% since the beginning of the year, significantly outperforming the S&P 500's gain of 12.1% [3] - The current Zacks Rank for Intellinetics is 3 (Hold), indicating that the shares are expected to perform in line with the market in the near future [6] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $0.06 on revenues of $4.82 million, and for the current fiscal year, it is $0.08 on revenues of $18.48 million [7] - The outlook for the Internet - Content industry, to which Intellinetics belongs, is currently in the bottom 42% of Zacks industries, which may impact the stock's performance [8]