Intellinetics Inc (INLX) Q4 2024 Earnings Call Highlights: Revenue Growth Amid Rising Expenses

• Total Revenue (Q4 2024): $4.3 million, up 2.1% from $4.2 million in Q4 2023.
• SaaS Revenue (Q4 2024): $1.5 million, up 11.8% from $1.3 million in Q4 2023.
• Professional Services Revenue (Q4 2024): $2.2 million, flat compared to Q4 2023.
• Consolidated Gross Margin (Q4 2024): 65.8%, up from 64.9% in Q4 2023.
• Operating Expenses (Q4 2024): $2.8 million, up 11% from $2.5 million in Q4 2023.
• Net Loss (Q4 2024): $54,000 compared to net income of $62,000 in Q4 2023.
• Net Loss Per Share (Q4 2024): $0.01 per share, compared to net income of $0.02 per basic share in Q4 2023.
• Adjusted EBITDA (Q4 2024): $601,000, down from $754,000 in Q4 2023.
• Total Revenue (Full Year 2024): $18 million, up 6.7% from $16.9 million in 2023.
• Consolidated Gross Margin (Full Year 2024): 64%, up from 62.6% in 2023.
• Operating Expenses (Full Year 2024): $11.7 million, up 23.7% from $9.5 million in 2023.
• Net Loss (Full Year 2024): $546,000 compared to net income of $519,000 in 2023.
• Net Loss Per Share (Full Year 2024): $0.13 per share, compared to net income of $0.13 per basic share in 2023.
• Adjusted EBITDA (Full Year 2024): $2.5 million, down from $2.7 million in 2023.
• Cash Flow from Operating Activities (2024): $3.9 million.
• Cash (End of 2024): $2.5 million.
• Total Assets (End of 2024): $18.6 million.
• Total Liabilities (End of 2024): $7.9 million.

• Warning! GuruFocus has detected 4 Warning Signs with INLX.

Release Date: March 24, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Intellinetics Inc (INLX) reported a 6.7% increase in total revenue for 2024, reaching $18 million compared to $16.9 million in the previous year.
• SaaS revenue saw a significant increase of 10.8%, driven by early successes in their Payables Automation solution.
• The company achieved a consolidated gross margin improvement to 64% from 62.6% last year, indicating better revenue mix and price increases.
• Intellinetics Inc (INLX) has successfully launched its Payables Automation solution into the K-12 market, with a growing pipeline and quick implementation times.
• The company is investing in scaling its business by hiring more sales reps and expanding marketing efforts, which is expected to drive future revenue growth.

Negative Points

• Operating expenses increased by 23.7% to $11.7 million in 2024, primarily due to higher sales and marketing expenses and share-based compensation.
• The company reported a net loss of $546,000 for the full year, compared to a net income of $519,000 in the previous year.
• Adjusted EBITDA for the year decreased to $2.5 million from $2.7 million in 2023, reflecting the impact of increased sales and marketing investments.
• Net loss per share was $0.13, compared to net income per share of $0.13 (basic) and $0.11 (diluted) last year.
• The company's 2025 EBITDA is expected to be reduced by more than half compared to 2024 due to continued investment in sales and marketing.

Q & A Highlights

Q: In terms of the number of customers, how many are actually live? And how many would you expect or should we model for the go-live in the second half of the year? A: We had two customers go live recently, and five are in the process of implementation. The more customers we get up and running, the more references we'll have, which will help spread the word throughout our pipeline.

Q: Does the number of live customers include the large customer you anticipated getting live in the fourth quarter? A: Yes, it includes one of the larger Constellation customers. They are processing 11,000 invoices monthly with zero human intervention, and we aim to increase this to 85-90% throughput without human intervention, which is industry standard.

Q: Do you expect the same type of throughput on the K-12 side as with the enterprise side? A: While the volume is not the same, early K-12 customers are extremely happy. The system significantly reduces manual touch, which is crucial as school districts need to invest their money wisely. We plan to integrate more tightly with Software Unlimited to provide additional value.

Q: As part of expanding beyond current partners, what type of verticals might you enter? Could this expansion into school districts lead to interest from county or local governments? A: We are in discussions with other ERP providers, including those serving counties and municipalities. This is a significant area for us, as it's underserved and offers cost-effective sales opportunities.

Q: In Q4, the SaaS line margin exceeded 85%. Was this driven by new SaaS customers, and can we expect it to maintain at that level? A: Yes, the margin was influenced by new customers going live. While it may fluctuate slightly, it should remain within the mid-80% range. Our partnership with Software Unlimited, which handles sales and implementation, helps maintain high margins.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.