Exhibit 99.1

 

 

Intellinetics Grows 2023 Full-Year Revenues 21%

 

Full-Year SaaS Revenue Grows 28%; Initial IPAS Revenue Expanding SaaS Opportunity;

Company to make $500,000 debt prepayment

 

COLUMBUS, OH – March 28, 2024 – Intellinetics, Inc. (NYSE American: INLX), a digital transformation solutions provider, announced financial results for the three and 12 months ended December 31, 2023.

 

2023 Fourth Quarter Financial Highlights

 

  Total Revenue increased 3.8% over the same period in 2022.
    The growth in Q4 was fully organic.
  Software as a Service revenue increased 8.8% over the same period in 2022.
  Commercialized IPAS with two launched customers, and signed seven more.
  Professional services revenue increased 4.7% over the same period in 2022.
  Net Income of $61,638, or $0.02 per basic and $0.01 per fully diluted share, compared to net income of $200,784, or $0.05 per basic and $0.04 per fully diluted share, for the same period in 2022.
  Adjusted EBITDA increased 12.5% to $754,375, compared to $670,321 from the same period in 2022.
  Ended the year with less than $1.8 million dollars in debt, net of cash.

 

2023 Full-Year Financial Highlights

 

  Total Revenue increased 20.5% over the same period in 2022.
  The Company commercially launched the IntelliCloud™ Payables Automation System (IPAS), its newest SaaS offering.
  Software as a Service revenue increased 27.8% over the same period in 2022.
  Professional services revenue increased 24.6% over the same period in 2022.
  Net Income of $519,266, or $0.13 per basic and $0.11 per fully diluted share, compared to net income of $24,027, or $0.01 per basic and fully diluted share, for the same period in 2022.
  Adjusted EBITDA increased 13.7% to $2,744,649, compared to $2,413,901 from the same period in 2022.

 

   For the years ended December 31, 
   2023   2022 
         
Revenues:          
Sale of software  $100,260   $159,084 
Software as a service   5,133,215    4,017,409 
Software maintenance services   1,407,064    1,387,885 
Professional services   9,167,428    7,357,937 
Storage and retrieval services   1,078,414    1,094,613 
Total revenues  $16,886,381   $14,016,928 

 

James F. DeSocio, President & CEO of Intellinetics, stated, “This was a milestone year for Intellinetics, as we expanded our base of recurring SaaS revenue, making our business more predictable and increasingly profitable. Our SaaS revenue continues to grow faster than our consolidated revenue. From this position of strength, we enter 2024 with increasing confidence that our new payables automation offering, IPAS, will become a more meaningful contributor to our results, adding another SaaS revenue stream to our profile.”

 

“For the year, we delivered double-digit increases in revenue, net income, and Adjusted EBITDA, with only a modest contribution from IPAS,” continued Mr. DeSocio. “This progress enabled us to pay down debt, strengthen our balance sheet and invest in sales and marketing initiatives to support IPAS and YellowFolder.”

 

 
 

 

Summary – 2023 Fourth Quarter Results

 

Revenues for the three months ended December 31, 2023 were $4,192,689, an increase of 3.8%, as compared with $4,038,146 for the same period in 2022. This organic increase was driven by an 8.8% increase in SaaS revenue, and a 4.7% increase in professional services fees, partially offset by lower sales of licensed software as the Company continued to shift its focus to recurring revenue.

 

Total operating expenses increased 17.0% to $2,540,565, compared to $2,171,576 driven by increases in stock expense of $194,541 and depreciation and amortization of $66,614 (all non-cash expenses). Income from operations was $181,527 compared to $410,542 in the fourth quarter last year.

 

Intellinetics reported net income of $61,638, down 69% compared to $200,784 for the same period in 2022. Basic and diluted net income per share for the three months ended December 31, 2023 was $0.02 and $0.01, respectively, compared to $0.05 per basic and $0.04 per fully diluted share for the period ended December 31, 2022. Adjusted EBITDA was $754,375 compared to $670,321 in 2022.

 

“Importantly, our first two IPAS customers were both live and successfully running in the fourth quarter,” added Mr. DeSocio. .

 

Summary – 2023 Full-Year Results

 

Yellow Folder, acquired April 1, 2022, contributed $3,613,764 in revenue in the year ended December 31, 2023, compared to $2,460,474 in revenue for the year ended December 31, 2022. Inclusive of the contribution from Yellow Folder, revenues for the year ended December 31, 2023 were $16,886,381, an increase of 20.5% as compared with $14,016,928 for the same period in 2022. Total operating expenses increased 17.0% to $9,456,486, compared to $8,081,837. Income from operations was $1,107,469, an increase of 33.9% compared to income from operations of $827,321 for last year. Intellinetics reported net income of $519,266, or $0.13 per basic and $0.11 per diluted share, compared to net income of $24,027, or $0.01 per basic and diluted share, for the same period in 2022. Adjusted EBITDA was $2,744,649 compared to $2,413,901.

 

2024 Outlook

 

Based on management’s current plans and assumptions, the Company reiterated expectations that it will grow revenues and EBITDA on a year-over-year basis for the fiscal year 2024.

 

“Our IPAS offering provides customers with an almost instant positive return, and offers our company an organic growth opportunity to more than double our SaaS revenue over the next four to five years,” continued Mr. DeSocio. “We view IPAS as a transformative opportunity for our company, and we plan to make investments to position the product for as rapid an adoption as we can drive. Even with these investments, 2024 Adjusted EBITDA is expected to grow on a year-over-year basis, as we focus on making all the early adopters of IPAS happy, we round out its capabilities and set the stage for wholesale adoption in select ERP ecosystems over the next 4-5 years.”

 

We will be prepaying $500,000 of our long term debt shortly, and expect to have no net debt at the end of 2024.

 

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 April 11, 2024 by dialing (877) 660-6853 (toll-free) or (201) 612-7415 and using replay access code 13744747.

 

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 IntelliCloudcontent 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 revenues, including fourth quarter and full year results; 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 rollout and success of new products, including IPAS; continued growth of SaaS revenue; cross-selling efforts and other synergies associated with our acquisition of Yellow Folder; expansion of relationships with key customers; 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, 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 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.

 

CONTACT:

 

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

 

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 December 31, 
   2023   2022 
Net income - GAAP  $61,638   $200,784 
Interest expense, net   119,889    209,758 
Depreciation and amortization   259,268    198,127 
Stock-based compensation   313,580    118,999 
Change in fair value of earnout liabilities   -    (57,347)
Adjusted EBITDA  $754,375   $670,321 

 

   For the Twelve Months Ended December 31, 
   2023   2022 
Net income - GAAP  $519,266   $24,027 
Interest expense, net   588,203    803,294 
Depreciation and amortization   974,527    722,197 
Stock-based compensation   662,653    421,450 
Change in fair value of earnout liabilities   -    355,281 
Transaction costs   -    87,652 
Adjusted EBITDA  $2,744,649   $2,413,901 

 

 
 

 

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 December 31, 
   2023   2022 
Revenues as reported:          
Sale of software  $11,899   $65,098 
Software as a service   1,323,120    1,216,325 
Software maintenance services   355,373    354,510 
Professional services   2,236,733    2,136,611 
Storage and retrieval   265,564    265,602 
   $4,192,689   $4,038,146 
Revenues - recurring only:          
Sale of software - recurring  $-   $- 
Software as a service - recurring   1,267,202    1,144,832 
Software maintenance services - recurring   355,373    354,510 
Professional services - recurring   798,444    675,026 
Storage and retrieval - recurring   225,561    239,379 
   $2,646,580   $2,413,747 
Revenues - non-recurring only:          
Sale of software - non-recurring  $11,899   $65,098 
Software as a service - non-recurring   55,918    71,493 
Software maintenance services - non-recurring   -    - 
Professional services - non-recurring   1,438,289    1,461,585 
Storage and retrieval - non-recurring   40,003    26,223 
   $1,546,109   $1,624,399 
           
Total recurring and non-recurring revenues  $4,192,689   $4,038,146 

 

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.

 

Total Contract Value: Estimated total future revenues from contracts signed during the period. This refers to contracts or projects that have been awarded by our customers, and it presumes the provision of all software, subscription services, and/or professional services, with no termination of any awarded contracts. There can be no guarantee that all work will be completed during any fiscal period, or that the contracts will not be terminated before all the estimated future revenues are earned, received, and/or recognized. Total Contract Value is a performance measure that the Company believes provides useful information to its management and investors as it allows the Company to better track the Company’s current sales performance, without any adjustment to exclude revenues that will not be earned, received, or recognized until future periods. Total Contract Value includes new sales in all our revenue categories, including SaaS, perpetual software licenses, maintenance, storage and retrieval, and professional services, to new or existing customers. It excludes renewals (and price increases on renewals if any). Total Contract Value is not a substitute for total revenue. There is no GAAP measure that is comparable to Total Contract Value, so the Company has not reconciled the Total Contract Value to any GAAP measure.

 

 
 

 

INTELLINETICS, INC. and SUBSIDIARIES

Consolidated Balance Sheets

 

   December 31,   December 31, 
   2023   2022 
ASSETS          
Current assets:          
Cash  $1,215,248   $2,696,481 
Accounts receivable, net   1,850,375    1,121,083 
Accounts receivable, unbilled   1,320,837    596,410 
Parts and supplies, net   110,272    73,221 
Contract assets   140,165    80,378 
Prepaid expenses and other current assets   367,478    325,466 
Total current assets   5,004,375    4,893,039 
           
Property and equipment, net   924,257    1,068,706 
Right of use assets, operating   2,532,928    3,200,191 
Right of use assets, finance   219,777    154,282 
Intangible assets, net   3,909,338    4,419,646 
Goodwill   5,789,821    5,789,821 
Other assets   645,764    417,457 
Total assets  $19,026,260   $19,943,142 
           
LIABILITIES AND STOCKHOLDERS’ EQUITY          
           
Current liabilities:          
Accounts payable  $194,454   $370,300 
Accrued compensation   337,884    411,683 
Accrued expenses   164,103    114,902 
Lease liabilities, operating - current   712,607    692,074 
Lease liabilities, finance - current   49,926    22,493 
Deferred revenues   2,927,808    2,754,064 
Earnout liabilities - current   -    700,000 
Notes payable - current   -    936,966 
Total current liabilities   4,386,782    6,002,482 
           
Long-term liabilities:          
Notes payable - net of current portion   2,209,242    2,085,035 
Notes payable - related party   560,602    529,084 
Lease liabilities, operating - net of current portion   1,942,970    2,624,608 
Lease liabilities, finance - net of current portion   175,943    133,131 
Total long-term liabilities   4,888,757    5,371,858 
Total liabilities   9,275,539    11,374,340 
           
Stockholders’ equity:          
Common stock, $0.001 par value, 25,000,000 shares authorized; 4,113,621 and 4,073,757 shares issued and outstanding at December 31, 2023 and 2022, respectively   4,114    4,074 
Additional paid-in capital   30,841,630    30,179,017 
Accumulated deficit   (21,095,023)   (21,614,289)
Total stockholders’ equity   9,750,721    8,568,802 
Total liabilities and stockholders’ equity  $19,026,260   $19,943,142 

 

 
 

 

INTELLINETICS, INC. and SUBSIDIARIES

Consolidated Statements of Income

 

  

For the Twelve Months Ended December 31,

 
   2023   2022 
         
Revenues:          
Sale of software  $100,260   $159,084 
Software as a service   5,133,215    4,017,409 
Software maintenance services   1,407,064    1,387,885 
Professional services   9,167,428    7,357,937 
Storage and retrieval services   1,078,414    1,094,613 
Total revenues   16,886,381    14,016,928 
           
Cost of revenues:          
Sale of software   25,736    64,577 
Software as a service   889,135    701,433 
Software maintenance services   59,373    79,738 
Professional services   4,992,826    3,908,205 
Storage and retrieval services   355,356    353,817 
Total cost of revenues   6,322,426    5,107,770 
           
Gross profit   10,563,955    8,909,158 
           
Operating expenses:          
General and administrative   6,455,088    4,945,214 
Change in fair value of earnout liabilities   -    87,652 
Transaction costs   -    355,281 
Sales and marketing   2,026,871    1,971,493 
Depreciation and amortization   974,527    722,197 
           
Total operating expenses   9,456,486    8,081,837 
           
Income from operations   1,107,469    827,321 
           
Other (expense) income          
Interest expense, net   (588,203)   (803,294)
           
Total other (expense) income, net   (588,203)   (803,294)
           
Net income  $519,266   $24,027 
           
Basic net income per share:  $0.13   $0.01 
Diluted net income per share:  $0.11   $0.01 
           
Weighted average number of common shares outstanding - basic   4,074,194    3,767,299 
Weighted average number of common shares outstanding - diluted   4,652,058    4,295,817 

 

 
 

 

INTELLINETICS, INC. and SUBSIDIARIES

Consolidated Statements of Cash Flows

 

  

For the Twelve Months Ended December 31,

 
   2023   2022 
         
Cash flows from operating activities:          
Net income  $519,266   $24,027 
Adjustments to reconcile net income to net cash provided by operating activities:          
Depreciation and amortization   974,527    722,197 
Bad debt expense   77,211    42,129 
Loss on disposal of fixed assets   -    24,473 
Amortization of deferred financing costs   177,164    216,381 
Amortization of debt discount   22,045    102,400 
Amortization of right of use assets, financing   42,115    6,708 
Stock issued for services   198,124    57,500 
Stock option compensation   464,529    363,950 
Change in fair value of earnout liabilities   -    87,652 
Changes in operating assets and liabilities:          
Accounts receivable   (806,503)   81,227 
Accounts receivable, unbilled   (724,427)   (151,628)
Parts and supplies   (37,051)   3,470 
Prepaid expenses and other current assets   (101,799)   (176,596)
Accounts payable and accrued expenses   (200,444)   173,480 
Operating lease assets and liabilities, net   6,158    25,351 
Deferred compensation   -    (100,828)
Deferred revenues   173,744    486,885 
Total adjustments   265,393    1,964,751 
Net cash provided by operating activities   784,659    1,988,778 
           
Cash flows from investing activities:          
Cash paid to acquire business, net   -    (6,383,269)
Capitalization of internal use software   (436,837)   (376,345)
Purchases of property and equipment   (111,240)   (200,980)
Net cash used in investing activities   (548,077)   (6,960,594)
           
Cash flows from financing activities:          
Payment of earnout liabilities   (700,000)   (1,018,333)
Proceeds from issuance of common stock   -    5,740,758 
Offering costs paid on issuance of common stock and notes   -    (746,342)
Proceeds from notes payable   -    2,364,500 
Proceeds from notes payable - related parties   -    600,000 
Other net changes in finance lease assets and liabilities   (2,411)   - 
Principal payments on financing lease liability   (34,954)   (5,366)
Repayment of notes payable   (980,450)   (1,019,550)
Net cash (used in) provided by financing activities   (1,717,815)   5,915,667 
           
Net (decrease) increase in cash   (1,481,233)   943,851 
Cash - beginning of period   2,696,481    1,752,630 
Cash - end of period  $1,215,248   $2,696,481 
           
Supplemental disclosure of cash flow information:          
Cash paid during the period for interest  $418,790   $496,805 
Cash paid during the period for income taxes  $21,667   $12,888 
           
Supplemental disclosure of non-cash financing activities:          
Discount on notes payable for warrants  $-   $169,900 
Discount on notes payable - related parties for warrants   -    43,113 
Right-of-use asset obtained in exchange for finance lease liability   107,610    160,990 
           
Supplemental disclosure of non-cash investing activities relating to business acquisitions:          
Accounts receivable  $-   $68,380 
Prepaid expenses   -    38,913 
Property and equipment   -    30,018 
Intangible assets   -    3,888,000 
Goodwill   -    3,466,934 
Accounts payable   -    (36,446)
Deferred revenues   -    (1,072,530)
Net assets acquired in acquisition   -    6,383,269 
Cash used in business acquisition  $-   $6,383,269