INLX - Earnings call transcript Q2 2024

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Operator

Greetings, and welcome to the Intellinetics Second Quarter 2024 Earnings Call. [Operator Instructions]

As a reminder, this call is being recorded. I would now like to turn the call over to Tom Baumann, Investor Relations. Thank you, Tom.

begin. may You

Thomas Baumann

good you and I pleased am Thank Intellinetics afternoon, XXXX welcome to Call. Second to you, everyone. Quarter Conference

begin, regarding statements Intellinetics are to like are not conference by I on These that that may we forward-looking facts. management statements this made call, the remind forward-looking include based historical during comments no Before listeners current risks differ could Undertakes that statements to to and materially or expectations actual duty cause and events beliefs of forward-looking management, and any uncertainties they are subject future from statements. to update such results. would

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

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

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

James DeSocio

to results. continues Intellinetics financial Tom. you, solid Thank generate

line recurring we growth steps line our revenue, to in enable SaaS strategy. bottom growth the in future, overall these delivered stated While in with and accelerated top taking and

marketing continued generated we to sales profitability broader in initiative. significantly and support also a SaaS even begin to We invest as

deployments accelerating. response been Folder ], System Payables with new offering highly or Solution has IPAS, and to grow, IntelliCloud our Yellow (sic) encouraging, continues to the Automation [

to progress We generated offering, in pay our even This come. as for to The significant started has IPAS, for our to SaaS continued contributing pieces down cash debt. comes and continue results. are years just place success newest

As to response been the I very IPAS strong. said, has

is Our offerings. each with improving solutions growing. month. And is quantity terms for quality and IPAS Yellow of Demand opportunities pipeline in passing all overall, across well is Folder SaaS our of for also positioned Intellinetics

As of including SaaS marketing, to have have planning in been our Yellow to offerings, and investment accelerate investments we been communicating, and our investing offerings. SaaS scale IPAS. Folder our business, are we our all support These we will now

will revenue our XX%. In to make as services our consolidated as This the the profitability. record quarter, SaaS recurring reduce revenue our a SaaS professional as volatility, contribution with very a total our with benefit from majority of our again, to revenue easy goal at Once much possible. business percentage business. contracted of through is model consistent and earnings make revenue revenue even shareholders remained

having businesses in investing as and opportunity. the We already related to capabilities to the XXXX XXXX, fully we to acquisition. are Graphic we are quite launched invested XXXX maximize acquisition, historically down paying IPAS in in from down Folder this acquire SaaS the are debt debt paid We the profitable. Science's Yellow

and of expanded we we our significantly means this increased The to marketing the and into investments capable Historically, have events. salespeople, number IPAS at presence our our we of market. relatively to similar potential add portfolio, our sales have skilled has trade addressable need customers expand with But meaningfully shows been inclusion and modest. need been and --

of before January. we to more want X have one third added right more board regarding specifics end in the X to on more this and For we the grant now sales quarter, personnel, March,

our revenue they be reduce IPAS, These XXXX. And spend Once will opportunities investments in at line. should forward revenue accretive will revenue pull and the to bottom disproportionately point but EBITDA. modestly from that the some expect these temporarily exceeds and to drop exceed will incremental we investments

Additionally, durable, will so us systemically profitable are size this that appropriately platform fixed costs scalable profitable creating sustainable, to we growth. enable model for a

I solution has our given As said, us IPAS momentum. significant

the live doubled quarter. have all We to reference number accounts accounts, smoothly. the X from during are These second of X running

or is quarter, We the continues and X go have additional expected in this pretty third to sales grow. and modest our marketing with to an pipeline live a X function. Again,

move IPAS we revenue. a anticipate XXXX, to contributor As consolidated we through larger our becoming larger and

than generating K-XX significant of districts K-XX Folder more presence operations in Yellow acquired have now market in XXXX. before which our we revenue, SaaS doubles Our XXX vertical this April

is target these a including additional Importantly, each for IPAS. services, Intellinetics districts of

launching business positive K-XX of contribution IPAS we are pilot We Meanwhile, generate margin. this and continues speak, digital portion outsourcing, business, to including process as this opportunity. conversion transformation retrieval, the document storage address a and to week our document business

reduce future time revenue The largest location our is of no quarter, with our services has transition could way reminder, conversion certain that our uncertain, amount a annual revenue reduction performed customer office delayed one in the still professional to to last a the location plans disclosed another frame. that transition As of from tasks we document clear by customer document segment. by been and business conversion the

revenue customer the the We of to reduction. impact with this future negotiate are to continuing mitigate

QX, conversion I to For congratulate a team the for record quarter. want revenue document delivering entire

there, revenue. our are on work improve efficiencies particular, to SaaS to on and recurring marketing and sales growing focused initiatives investments in but continue in our revenue, margins subscription new We our

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

Joseph Spain

prior quarter June 'XX. XX, XXXX, will review second compared year XXXX, to results for our financial the the Jim. the of period I now ending Thanks,

period the million Total revenue quarter year. our for the components $X.X of The to following million revenue. to are $X.X last X% increased same as material for the compared

SaaS the XXXX. $X.XX consistent and from and million more with which X.X% software, revenue year. same and services SaaS, our quarter over for grew software maintenance for comprised increased $X.XX as services X.X% software million subscription history is growing are revenue, the slowly First, of hosting expected, including period last at maintenance to

million Revenue XX.X% from increased $X.XX the last for same period to services. million professional Secondly, year. $X.X

As points revenue increased of a for total year. revenue from XX.X% last gross up margin to basis last to XX% was XXX services the quarter, professional revenue, XX% for total Consolidated percentage XX.X% year. compared of QX

increased largely to employees The scale. A positive subset better increase compensation in in revenue Operating restricted in services operating investments to revenue subscription projects and price quarter both higher-margin increases. as by impact is expenses The million million and slightly in QX was driven compared professional due million weighted towards $X.X to expenses mix, for $X.X the expenses, $X.X increase expense period also XXXX. the structure as plus noncash XX.X% X.X% the from stock-based compared well same and of increased to marketing awards sales stock to for 'XX.

continue K-XX levels. in As comparatives our trade compared plus revenue and sales marketing as in which and 'XX, marketing includes This the rep prior Jim to is sales, sales continue to we editions will to and acceleration. shift to mentioned, our both show and these important activity increasing invest Jim IPAS about, investment the historical period we increase talked

year. per last year. to of net Net last share was income to $X.XX per period earnings per was of the share $X.XX $XX,XXX QX compared compared income Earnings $XXX,XXX same for for share

adjusted period EBITDA of EBITDA Our for to compared the XXXX. in the $XXX,XXX was adjusted an for $XXX,XXX same quarter

of 'XX, sheet. cash accounts overview net million brief had a million. of we of At Next, balance and the June receivable $X.X $X.X XX,

since reflecting acquisitions and deferred total made and as as intangible revenues, in maintenance Our XXXX. million Total including million, debt million, SaaS in $X.X signed of assets including $XX.X part contracts goodwill $X.X were $X.X assets in of $X.X and liabilities were XX. million principal June million

of long-term end we debt, of including months the prepaid second have of In the $XXX,XXX the our first $XXX,XXX quarter. X 'XX, at

our less down at call, a to to no with expect described including debt, and our and continue current on XXXX. net meaning month want grow expect have our and We the of this basis assumptions to uncertainties to outlook. financial are and reiterating expectation plans risks debt, wrap debt to fiscal and I year-over-year pay another $XXX,XXX end up year our Based the cash this our revenues XXXX. to we subject we for in filings on

our Jim us EBITDA margins. we'll to expect sales support To and a on several salespeople be continue modest to our short-term we over debt in impact enabling down continue our to our the EBITDA, our be will marketing, sheet. investment clear, to positive SaaS balance next pay adjusted including and increasing adding X bolster offerings As quarters. have mentioned, These investments to generate

earnings our revising in we expect decrease noted modestly we release, adjusted to as our as guidance our are year-over-year. EBITDA However,

expect accelerated As begin to these growth line bear sales bottom beyond. investments marketing in and XXXX top fruit, and we and

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

Operator

from is Brothers. Howard question with first Our Halpern Taglich Instructions] [Operator

Howard Halpern

terms how now? many In IPAS, of right are live customers actually

James DeSocio

and we're actively sometime live, Four we -- live August X to go this and -- in another probably are yes, X quarter go expecting have ahead. another

Howard Halpern

expect for entering recurring revenue implementations? general, What -- do the what you annualized in with when And be potential though, revenue rate we're live could customers? XXXX, these run IPAS

James DeSocio

forward-looking. Yes that's -- yes. Well, well,

Joseph Spain

our box it's to mean we in in don't because bit yes, too be bound specific. I a That's want time -- think, we're have little to say it's a us get I Howard, mean, I then that bounds going be say. what qualitatively, the of relative But to supposed to be path, very significant. we're within to significant crazy able can to we certainly

Howard Halpern

Okay.

be it's IPAS so to and new implementing once then or fourth to give salespeople what X new cadence coming should I in to be hope And online, color -- could achieve the is a online -- your but and should not quarter, customers what you what little the but you, cadence to cadence know be? customers, entering only you do as for relatively those signing you with customers the the sign, hope pipeline, what you expected relative and

James DeSocio

Well, we -- our XX to year. closed XX budget, about talk on this sold customers -- we're to planning I XX XX. already We've can

year live, substantially And we coming So or X with this on that. grow we're next plan to we're year, them X counting. another then after

Howard Halpern

all X still homebuilding just that's that the vertical? And Okay. from vertical,

James DeSocio

X the from all vertical. That's

So with site, we're beta in beta there. And things on got K-XX, working some also and we've new we our are a product. good

All were AP, just these automation. were customers payables sold

in well. coming as future out with are PO the We

Joseph Spain

is even XXXX. to old definitely, answer accelerate, flywheel, a here. This early some to to I of had hasn't started got your adopters, say And mean, would momentum few yet. we've brand-new end released the Howard, spinning the but just -- there's mean, right? product And buzzword a in I going question, ago, it be Obviously, years I it's the right?

So we definitely expect acceleration.

James DeSocio

said have X up paid were to the said in we I paid, live. past up already -- going I the they're Joe, as customers in what X too, coming XX Howard, I And as think,

well, going software a is they're are people implementations my business experience that are paying is us, and and that in which people So right, the metric, the in believe product, the -- paying. is phenomenal

Howard Halpern

will of the be results. indicator and satisfaction revenue future hopefully the the So leading deferred a

Okay.

James DeSocio

yes. Exactly,

Howard Halpern

talked about there document You drove What the K-XX of increase just this? Was in conversion. it some Michigan? conversions Or customers? were the actually

James DeSocio

have working Columbus, the we as upped well. closed different business. facility scanning doing microfiche Well, actually which basic -- number revenue in the business microfilm, they're on and of a we're line a than canning actually Ohio, deals, is We've

do the came better quarter. know and We've few together owned systems. the the years when XX a business, gotten much years. to the was business better this We We've old, XX at infrastructure now. business. really in effectively invested efficiently everything how running years old. more we So for we've And it last bought And

together, everything years X.X has Howard, yes. over the or so, come last So

Howard Halpern

seem from out there customers that pent-up it for and existing customers? there's a demand a or does like And service pipeline new

James DeSocio

of mind we're lot in a that keep Well, K-XX getting Yes. business.

it's mind So records to doing needs job have rid buildings. all someone good They're cetera. a building, trying for into keep K-XX our generated their districts of And keep years. you're cross-selling And XX of get documents consolidating that in new paper school to we're a by business. student et

all to by drive digitize my back records So my there's things lot that let people and me say, a back records. back all of

now the -- sales and years, would of a in of we're management get a vision better old doing Recently, number the we've your into we've been business my files actually for also team. much the integrating "How do successful job was original Well, been document system?" of I say, people

me management sell we'll time. at a project well the same as they sell as scanning So system,

Operator

to There Jim this time. to the any at closing would over call like I are questions for no back further hand Spain comments.

James DeSocio

Thank Jim the you Jim Spain us. Intellinetics. -- all I optimistic for am future joining DeSocio. about in very

cash. is We have assets to project-oriented exciting to generate continue by business SaaS supported that expected

and sales function investing marketing We debt drive down are in growth. paying and our our to future

have solutions opportunities. growing of a in cross-selling strong position with a ample We and set competitive markets diverse

model of longtime look I business shareholders. continued speaking very conference joining forward We Thank call. appreciate appreciate the for everybody Thank recurring on is revenue to joining. working. you we next today, and our structured you support Our and around us our again much. coming

Operator

conference today's concludes call. This

now disconnect participation. may your your You you lines. Thank for

Intellinetics (INLX) 13 Aug 242024 Q2 Earnings call transcript