INLX - Earnings call transcript Q3 2024

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Operator

Greetings, and welcome to Intellinetics Third Quarter 2024 Financial Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce Joe Spain. Thank you, Joe.

You may begin.

Joseph Spain

afternoon, good and you, everyone. Thank in I am Quarter today, I IR to am Conference welcome Third filling pleased XXXX you so Intellinetics for to Call. the

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

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

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

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

James DeSocio

everybody. you, Good Thank Joe. afternoon,

be believe to solution, our to be the to level. our main automation business story. it We payables next the continues driver IPAS, take Our will

take to right helped team more as moment I how I the am I the build that, stands now. a share that proud of want to business Before get into it

and generates is cash. a years, Over business we've few model created the sustainable that past

fact, totaling paid out since all the significantly prepayments, mostly In earn-outs XXXX, paid we million has since $X.X long-term -- acquisition interest And debt, million. which of our repayment reduced $X.X in we expense. XXXX, December via

Operational as easy has knows. results aren't everyone been through acquisitions enabling this who

and thanks in team go to So leadership every employee my particularly the heartfelt place.

involved I as of and more better been I've excited I pleased I've am a than my with As we've quarters for been been launch I've accomplished, now. well couple team entire our what about the is or for IPAS any with. in as am going and talking this career, software future. launch

month, IPAS one so that This story ROI will with the partner, in only case, ecosystem, Conference, presented with the Build time, why Customer incremental with the a year, presented is to turned live schedule only of itself on add into and very accounts in around sells Software Systems. We're deployment as will of show. into going Homebuilding paid own, pursue opportunities existing we at not us. its which our of this the excited session, Last to on half their functionality Constellation IPAS volume today, solution, the we but partner the Smarter At customers our months. payable revenue of adding IPAS fast Unlimited, in customers at Industry K-XX a this their are functionality same to transaction our end incredibly for the the Constellation and customer and of ecosystem. we high. discussions actively acceptance in additional tracking where release bring orders is using over In of the purchase why customers we for stars we're matter one for strong our ERP Homebuilder PO

K-XX entities. The a homebuilding will secured also an live which but selling beta went smaller already homebuilders, of last will to less time translate generally and volume month, in a the average The first we price to one. beyond larger smaller have have implement customers customer than that of the transactions, order half

is populations. significant though, X We're the inroads priority on Software these resources Unlimited. those constellation on alone, make waiting to first not have focused next in into and Our finding we

niche We competing where have solutions. an and opportunity generic with we ERP can outperform providers out support

us as a earnest help is desk Accordingly, implementations the been as support. in manager new began incremental business. and our in contracted also QX, sales internal and have invest reps efforts in with we hiring communicating resources. to outbound We well now as time our scaling X additional We've expanded for sales

include as temporarily shows modestly, that some expect point reduce presence Our we but a will more will marketing that should bring EBITDA, and opportunities larger well spend campaigns. at as These expanded and we expect our XXXX. trade frequency revenue accretive spend will also the at they and be select exceed investments in

to drop other Once line. spend. IPAS more margins revenue revenue In offset these gross the our incremental the additional than our incremental investments, investment disproportionately words, from will bottom will exceeds

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

Joseph Spain

'XX. review the compared third for Thanks, XX, quarter XXXX September financial period the Jim. results the I September ending of XXXX, period for to will ending XX, our now

$X.X period million Total to quarter last $X.X revenue increased year. the for for as compared million same X% the to

presented revenue operations. Following our statements of the material on of components our are

Professional increased for million X.X% and expected, $X.X $X.X period to for comprised revenue. to revenue SaaS, revenue which from and from $X.XX services the services million subscription same for increased last period history including grew same maintenance year. million last $X.XX of year. the with million This consistent our as First, hosting XX.X% XXXX. and revenue is software flat the was maintenance quarter SaaS to services software, software

quarter, XX.X% revenue, of percentage total a As services year. revenue for the XX.X% professional last was up from

price points decrease over our last to offset XX.X% unfavorable slight driven increases which professional for XX.X% year. The gross and services business, Consolidated decreased document by compared projects XX QX margin year. basis was last to in conversion

vary in will and to deliver projects inconsistent As result professional our cost margins in point in and out quarter-to-quarter. we MD&A, month-to-month can services our

Similarly, tolerance XX.X% remain slightly and in for fluctuation are last within XX.X% SaaS mid-XXs decreased to 'XX. ahead margins a $X.X million low very in to very margins and for normal SaaS year our expenses year-to-date. Operating strong. XX.X% of to our increased The million these solutions remain consistently year. margins is from to QX last the This $X.X compared

X As called $XXX,XXX in resulting planned operating and balance out infrastructure enhancements. GAAP the same an expenses in second, general in scale our increase First, our and and additional the higher to administrative sales business, X expense; including things: program expense IT is in in $XXX,XXX driven share-based third over the third, investments marketing, of SOC earnings by compensation quarter release, from $XXX,XXX 'XX; the in expenses the

compensation the repeat QX expense the restricted options to increase granted in noncash, for is half nearly So share-based stock 'XX. and first part,

Looking next significant in detail. at the most increase more

same $XXX,XXX. XX.X% Our increased to XXXX sales and the the period marketing during or to compared quarter expense for

As and beyond, Jim as these and 'XX we K-XX includes both sales mentioned, increased levels. and in will marketing investment marketing to the increasing and in historical are more to to heavily are revenue be compared and show investing IPAS skewed trade sales which comparatives we acceleration. our important activity prior continue period our This

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

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

Next, September receivable of a we our $X.X 'XX, brief XX, had million balance accounts of $X.X of review sheet. million. At and cash net

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

reminder, deferred to in XX so September further is million repayments the in in revenue many of June a principal prepayments $XXX,XXX in quarter. a That our making quarter. XXXX. highest total principal have as government and $X.XX debt run K-XX to As of We a we had in July subscription the our debt always million first outstanding X annual period, of QX us contracts $X.X of after months prepaid brings

from in quarter. up outlook, on subject risks filings I want current we financial is our and and Based our plans unchanged to last uncertainties and our wrap described to assumptions reiterating increased in EBITDA to year which to investments, XXXX. expectation decrease our due call, adjusted our grow year-over-year. modestly for expect we to year-over-year we the a And on fiscal are basis with revenues this our

have positive on to a results our impact investments our forward. expect financial going We

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

Operator

Instructions]. [Operator

first Our Howard Taglich Halpern with from comes Brothers. question

Howard Halpern

going mentioned live of number we you What guess, release, fourth customers be the will the I In live in XXXX? enter quarter. as IPAS X the customers total press

James DeSocio

revenue as the very going to We live large live should to past, have the live. majority to them of but to to first job XXXX, $XXX,XXX our They And of is we and are provide which running middle XX annual a in enter in XX signed great I in showing of hope won't that the we just the probably with have point. great implementing customers quarter, and that's that at you're or the customer reiterated a go As we majority us. metrics first live. us those have about year, of is for one customers of doing full a up software their trusting get the paid they metric good

Howard Halpern

what you to what you showed have feeling, talked Okay. of homebuilders, about guess, all show And there? be they on were show? do some trade were pipeline the attendees And many you? could you How that I out that coming that the at -- the gravitating

James DeSocio

Intellinetics. do we actually had how our Constellation extremely who attend of the heading of There breakout many is was of attendees, attendees, X people exactly the Homebuilders himself introduce session, all not is XXX over about at people had then And in were been business founder we there. that our CEO gave I XXX I'm IPAS a Intellinetics. in that meeting know then Constellation running The unit in session. up -- off sure front has and companies Matt unique minutes Intellinetics. XX Chretien, session there. and XXX Matt the to kicked Well, supportive

actually our the how in a their running And up us CW customers, talking and ROI was for and return investment and one presentation live. of quick their and getting that about Group was ran on testimony payback

session, momentum the a came about excited very, show. of very it's good that very we So out

Howard Halpern

Okay.

desk people. some software And Okay. the hiring with help and people implementation of

you a coming implementations do year, next quarters full about? talk anticipate the into faster go you with of pace functionality we that As

James DeSocio

Yes.

releases As the first in release, longer. couple any new of take

are for learning, additional asking features. customers You're

running improved actually with release our We've and forward. tools we've schedule deliver we formalized to up help that live. Now, products going get people the the

getting our to product better questions are people better and customers know and what ask. are going Our more the

certainly a do So yes. going lot forward, expect we quicker implementations

Howard Halpern

to getting into or at other least at you point on year? anticipate verticals X X systems different would some And next ERP

James DeSocio

Software SUI signed X- XXX package. or X,XXX customers And They been has to is thing have they management share have just Unlimited the with We document own IPAS a our Yes. probably of exciting of And right Intellinetics. the agreement X,XXX us now with on co-marketing X-year their partner a product. customers.

extremely As and went into of we signed I if said, their larger that with well, quarter the base. beta K-XX on really districts, in certainly another out school rolling first out, one been the going the not fourth customer selling one that we've quarter, of plan aggressively and

Let thought. my finish to me Howard

had, One we of of hire salespeople. did we couple hires the new a new

couple, been brand-new to of can business at integrate that excited off the a responsibility ERP product. IPAS a part point, what that with we're that our turned is and about and partner we We opportunity we've pretty only find X partner partners and months And our he's and this also in it manager's manager. also. identified doing hired new he's And identify

Howard Halpern

on probably second see the SaaS would perspective in inferring of quarterly sort be year? half next anticipate revenue Okay. -- modeling a beginning, And meaningful point IPAS, from revenue in comments of the we'll from inflection you you your a would the in

James DeSocio

That is the plan.

know, start really sign of IPAS you you new you As towards when seeing the 'XX, the year. end that don't deal to revenue

won't time an now frame start until sell revenue March as anything example. So probably recognizing we

yes. So

Howard Halpern

the make this one point? since -- into in same we at And already we're activity just that the November. Michigan the assumption will remain last one Can

James DeSocio

certainly the Yes, of through end year. the

Joseph Spain

Yes, is have that I with anything about low would new we've talked the the the is, and we one getting that especially from releases, holiday and our heading the that say expectation into we year. in government prior expectation very until BPO unchanged, months of them business referenced

Operator

the turn further And remarks. you. like to DeSocio for no Thank Jim with questions, to I'd floor closing back

James DeSocio

you Thank all future about probably Julian. you, am of us. very answers. our joining for Thank as Intellinetics, hear from you the I could optimistic

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

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

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

around appreciate Thank structured to business joining our while today. of long-term on growing SaaS Our forward next continued flow shareholders. look We Thank model working. you. support delivering the call. is We our speaking for again cash us you conference

Operator

This your for does conclude you. participation. today's Thank We you teleconference. thank

You time. may at this disconnect lines your

Intellinetics (INLX) 13 Nov 242024 Q3 Earnings call transcript