Earnings call transcript Q4 2022

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Operator

Hello and welcome to the Intellinetics Fourth Quarter and Full Year 2022 Earnings Conference Call and Webcast. [Operator Instructions]. A question-and-answer session will follow the formal presentation.

As a reminder, this conference is being recorded.

It’s now my pleasure to turn the call over to the host, Tom Baumann, Investor Relations. Tom. ahead go Please

Tom Baumann

good Intellinetics I call. XXXX and welcome pleased to you fourth afternoon you am everyone. to Thank quarter conference

or we statements made like this would that are forward-looking begin, listeners facts. Intellinetics Before during These such are risk and historical events uncertainties that forward-looking statements are based and to expectations regarding conference actual to current results. differ beliefs of from management could subject by cause remind comments statements on not the may management, to include materially and they that call, I future

any Intellinetics statements. undertakes no duty to update forward-looking

For today. in more please and on to refer XX-K that Intellinetics section “Risk caption the risks today Management's cause statements, differ press in annual the report actual as release issued under and Condition the information results Financial about and Analysis factors of to as earlier Results Factors” forward-looking included materially Discussion Form Operation uncertainties from of well may and filed

call. on management financial non-GAAP total contract are not Also, in EBITDA value in value. with A results measures measures financial note prepared such substitute presented will can Non-GAAP and a EBITDA and GAAP and the today to adjusted total in call today's be be adjusted as measures, financial different be press GAAP will that and isolation and may described from intended considered by companies. found between as other please measures reconciliation non-GAAP release for non-GAAP contract discuss the on or accordance today, issued be

call President over I and like to Intellinetics DeSocio, the is said, turn now call that all would yours. With CEO. Jim, the Jim to

Jim DeSocio

growth Intellinetics delivered has delivered strong demonstrating This end end Tom. evolution milestone improved into consistent year was company as for solid to results. financial SaaS our that Thank profitability a a we and you,

than Our our revenue increased tripled. quarterly XX% while more SaaS revenue

$XXX,XXX. into XXth to success XXXX. This income with us the net consecutive which and XXth optimism exceeding part This due adjusted and head quarter our of our is giving marks EBITDA we doubled, Folder positive increased significant EBITDA closed as tremendous more result, XXXX. than performance we EBITDA the the Yellow acquisition, XXX% a in adjusted consecutive As large quarter April adjusted in with the

the leveraging and services base. across sell are success of We to cross Folder broader working Yellow our our customer

cross investing We which sales enabled and are existing in to well capabilities selling further us our marketing as new bolster to our as markets. penetrate initiatives,

grow. of our result As these continue to and pipeline a bookings investments, our

$X.X XX% with For XXXX, XXX year-over-year of an increase total value closed we in of contracts, TCP contract million, [ph]. an estimated

total less. recognizable contract in Yellow Folder a the of in SaaS total $XXX,XXX these As one reminder, the team orders contracts value Since year over revenue worth or Yellow of Folder, generally acquisition services, and contract of professional new April value. most $XXX,XXX the sold in are

K-XX operations vertical than has more XXX doubles districts Folder. our now Yellow this SaaS K-XX which in we Our acquired over revenue, since generating presence significant

margin to into organizations existing XXX Yellow sales our Of and integrated with services. sciences XXXX. revenue In successful also the graphics these of acquired XXX and business our of have via EBITDA cross highly acquiring were acquisition and them Yellow a districts acquisition we solutions. selling for SaaS This represents telematic each and high offerings as After XXXX our opportunity strategically acquisition additional third our and revenue and Importantly, with base successfully customer our orders Folder. we since target that and more integrated enhanced in Folder marketing have for provides expands customers consolidated time, new imaging, well three as April opportunities. XXXX, CEO is new all efforts.

CEO of imaging of digitized and annual student As in subscription spending annual all K-XX an release converted our revenue $X,XXX Yellow new subscription to old CEO $X,XXX was Michigan also release on the in of their latest a a an for example, product records imaging. school Folder district for We $XX,XXX.

on-premise Solution, City our revenue of the solution. XXXX HR total new added HR upgraded of management of For using a We another Intellinetics Department example, in to our was large a for of city Georgia converted records also Intellinetics. to document an and release city city and as old IntelliCloud $XXX,XXX boxes a Police net the customer

Simultaneously, our products and markets. our portfolio we of broaden to continue addressable

of adoption or As part product. of IPAS automation to we payables continue this, our IntelliCloud drive core

cost As enterprise a payables new automation for with IPAS class software reminder, accounting. complex is solution platforms very a financial

part especially in builder with software market. awareness are constellation builder home family We systems, home to collaborating broaden the of billion X the IPAS, constellation for

Chief this time, talk our Financial At to Officer about our to to to over the Joe Spain turn you call I'd financials. like

Joe Spain

for year. our components I contributed XX, The financial of Folder revenue to the increased the Jim. XXX% quarter hosting increased for $X.X review of results the the will for Total last period the year. Thanks, SaaS, are ended December $XXX,XXX XXXX quarter fourth same the now period to quarter revenue. same following million last XXXX. Yellow $XXX,XXX for our for to $X million including the million compared of $X.X revenue from as increase. XX%

XX%. Without Folder, SaaS was quite Yellow growth still at strong

the shifts in solution services maintenance QX. amount year-over-year Yellow expansion, solution, certain XX% to combined X% maintenance to small attrition on-premise without and offsetting software cloud migration migrating revenue was revenue also of from our customers a maintenance with case higher our which grew Software and resulted Every SaaS year overall revenue and increases for Folder growth The from SaaS. revenues. this price

began the to XX% driven same by Professional last the is the million that increase for and The a year from million early $X.X recovery Omicron last COVID strong into surge Services increased year. period revenue quarter for lingered $X.X from XXXX.

revenue, of Folder last quarter, added acquisition percentage of XX% the revenue XX% as of As to SaaS is revenue expected, for revenue. the Yellow given total year. a for the services primarily same to total decreased compared revenue total professional period This

fourth $XXX,XXX for to compared Storage and quarter quarter the for retrieval of XXXX to fourth services $XXX,XXX revenue increased XXXX. the X%

Software period is revenue for increased to revenue, from comprised the $XXXX perpetual last which year. of license $XX,XXX same

be our focus of software a be to small on-premise fast sales total continue the of expect our a as period lumpy. part of on period continue will to a We and to we changes revenue very

$XXX,XXX, total increased Cost or million of period XX% to for $X.X in compared for of same a million the revenue the $X.X XXXX. quarter to

this QX XX% Gross XX% the XX% As last a margin with faster driven increasing compared up. revenues growth. was result importance last year, SaaS a XX% SaaS of profit to to year. mix this total was The year, compared at shift our than SaaS in increasing XX% percent professional year, of solutions, revenues to underscoring cost gross QX and for Profit higher was pace increase services. growing a toward by delivered margin profitable XX% of

Folder. reflects Operating the million largely $X.X Yellow addition is increased the team earlier. of expenses increase due XX of and other expenses for QX quarter compared Yellow for to to The compared to marketing to and investments XXXX. increased sales marketing Folder This million the $X.X QX Sales for and which and XX% the same addition XXXX. mentioned during the increase period Jim

diluted per diluted compared was last net share year, for $XXX,XXX period per last share per income income year. Earnings increase to were same the $X.XX QX XXX%. of for an $XX,XXX $X.XX for the share quarter to compared Net

basic Our and for EBITDA adjusted basic XXXX. compared $X.XX per share, adjusted $X.XX to of per or an or diluted EBITDA per same period for the for $X.XX diluted quarter $XXX,XXX in the was and $X.XX $XXX,XXX share

by outstanding placement As our shares quick offering we total a one our of increased private shares which X.X number April added XX%. reminder, in million outstanding

Turning up subscription SaaS briefly to the million for XX%. full revenue $XX increased XXX% combined the is for compared million, XX% to $XX.X overall revenue year creased December revenue period the that XXXX. software ended same year based year, were and the results, in XXXX for XX, maintenance SaaS

Operating towards Gross XX% same the XX, Net software per for margin $X.X or XX% for $X.X expenses period months $X.XX $X.XX reflecting was basic based the December or million. shift net million of our XX basic was to year share increased $X.X year, compared approximately XX% for income XXXX. $XX,XXX, income subscription last in revenue. per share and to or $X.XX million, diluted per XXXX diluted and ended versus the

$XXX,XXX as X. April to loan in of an costs PPP compared included none were gain extinguishment on on the debt XXXX, XXXX to items incurred as in transaction $XXX,XXX These costs related acquisition impact XXXX. transaction in well our Major in of of support

increased significantly amortization compensation and also stock in We XXXX. based

to You $X.X same can EBITDA million of these bridge compared adjusted the net release. to all earnings to income see items from from our EBITDA XXXX. in million, $X.X XX% in period increased our Adjusted in

Next, company XX, December review and At net of of cash to balance receivable of sheet. $X.X I'll had turn million $X.X million. Intellinetics accounts the

part as $X.X of assets, $XX.X acquisition. in including intangible Our goodwill Folder of million total increase were and million, the assets million $X.X in Yellow an

private million. of Total total the deferred in software reflecting Also, capital December million debt million, with $X debt year and $X revenues leaving $X contracts. $X.X where April at maintenance million XXXX, we December we $X.X of prior million including on million raise part $X as debt, in as XX, In in us of in XXXX. prepaid Liabilities XXXX in our million signed end. In our principal were SaaS we offering XXXX, added due $XX.X were principal closed

revenues we in and I assumptions, this we current outlook. our on expect and and basis. up described and brief financial our wrap to adjusted EBITDA want continue and risks on to year-over-year to plans to subject with call, grow a Based uncertainties a filings

that, thank the to at With you like time, we Q&A. to we'd open call listening. And up all this for

Operator

Thank you.

coming be Instructions] We from is [Operator question conducting today session. question-and-answer will Brothers. from Our a Howard Halpern now Taglich first

live. now is line Your

Howard Halpern

great year. great guys, year, and great finish the Congratulations quarter to

sales how forming? SaaS either should drive First growth support underneath? to at look to going question is or the -- top need is professionals the sales that How to increase going to you're further forward you staff How your are is And that we in growth? the seeing. that regards team

Jim DeSocio

Thanks, Howard. fairly we And to we opportunity fairly lean excelling the years. in have for in salespeople. but budgeted lean. great year a hire were over This we sales That us. over were sales, We actually were were we new few last three is

ability actually contract business quarters add the grow last been continue And have to value. So execute that to a we good strong of going The very will few backlog sales. forward. total pretty to in creating our

our we've hired marketing really full now first and time just So person.

our our job we have sales a the marketing pretty forward we was invest workup, half in So people people at budget reps full doing marketing really have some as we marketing to two had before have this going and but person now good marketing point, only and two we in well.

are of a finally a strong position forward. of getting sales after position a in and going we marketing years number So

Howard Halpern

that capacity do of into in type to and the do professional of stuff the Okay, what services, it's and you you terms now into, feel the Michigan on have track Michigan, back Office? funnel

Jim DeSocio

Yes.

XXXX, back middle do of end the the shut hit, had production went so went, still first so long the had second a then of but little sales but started up. we'll quarter, us, year, and that the everybody quarter businesses state of second for Michigan the creating the we people took building just were And time, our backlog, at we we Since ago, that slow Omnicom grew side we slowdown believe. shift. that from of to good, start first in and we slow of the of So, was stream, again, we there, in and to the that just they still But forgets. revenue grow, getting into lot now last the the that quarter, slowly a a down continued in into XXXX, second I Michigan,

XX production second which shift, have as well. obviously more for now our We on people allows

strong work good of grow, a in continue in to help to we're have going pretty that House and backlog our we revenue position So where a forward. we'll do

Howard Halpern

located? the Okay, now Folder you geographic SaaS your I expansion constant turning the too. are of guess, back, to seeing, in where Are Yellow customers

Jim DeSocio

in out each I'm believe, Yes, historically break and mistaken. the were thing handful states, hardest not is they in do XX,XX a but, market And Midwest, especially a different state. the the but eight Texas in, K-XX state, Midwest. to actually, nine-state if Yellow of new in we Folder into I area to of state were had was customers they and

start integrate customer we only So that's probably time a whole in And idea success. bought now. and have a It's Intellinetics Solutions by had base, we of have and do got, now really a into few foothold quite that And to the dozen them that us states why half we expanding. allow April, selling been, we the in customers everything. we great additional

quite Yellow got months only into we the are a customer Folder, about District here, Michigan, the Wharton we've few So doing School mentioned been numbers, then we've selling and really transformation. year. base. at in And these we with last customers look also for digital gotten couple three net of selling solid $XX,XXX that A that

to K-XX So into cross very we're very, the on sell continuing bullish space.

Howard Halpern

about Okay, engagements does pipeline and IPAS. one are last there currently? How your And the customer one many look what IPAS, like?

Jim DeSocio

We've implementing a implementing. point. got we're now is got the And demo for them. environment at that We've forum this right that customer engagements six we're strong two very pipeline

Howard Halpern

Okay, well keep up the guys. good work,

Jim DeSocio

been great year. Howard. been It's a you, It's exciting. Thank last

Operator

Thank you.

Jim DeSocio

any Doesn’t looks other like there's question?

Operator

Oh, yes.

Let's say for we any of turn the over back to the I'll end question-and-answer session. our you comments. further reached closing floor

Jim DeSocio

shift what Yes, all Kevin. the together, we've very we're in more years on cross enabling SaaS That's effectively have few area, to and especially strategically anticipated, a for solid addressable SaaS focused predictable have strong broadening looking been summary, We're has markets. us model. we you, our The us last over for. for selling profitability. when in this assembled Thank pieces come sustainable enabling us the as year and growth,

and about and to consistent are future as our by continued longtime excited of financial Intellinetics at be now. is strong shareholders, attract joining. our for aim support We opportunities. you, where investors appreciate results. new great the Thank and delivering We Intellinetics well everybody, right It's to

If you future. in you again. Thank follow up with have please us questions, the

Operator

teleconference Thank today's you. does webcast. and That conclude

your participation a line have disconnect for may this You you We time wonderful thank at and day. today. your

Jim DeSocio

you. Thank

Intellinetics (INLX) 27 Mar 232022 Q4 Earnings call transcript