Intellinetics grows Revenues 10% in Q3 2023; 27% Year-to-Date

Initial IPAS Commercial Successes Expected to Significantly Accelerate SaaS Revenues

Intellinetics, Inc. (NYSE American: INLX), a digital transformation solutions provider, announced financial results for the three and nine months ended September 30, 2023.

2023 Third Quarter Financial Highlights

• Total Revenue increased 10.0% over the same period in 2022.
  • The growth in Q3 was fully organic.
• Software as a Service revenue increased 6.8% over the same period in 2022.
• Professional services revenue increased 16.2% over the same period in 2022.
• Total operating expenses increased 10.3% over the same period in 2022.
• Net Income of $209,331, or $0.05 per fully diluted share, compared to net income of $217,536, or $0.05 per fully diluted share, for the same period in 2022.
• Adjusted EBITDA decreased 12.7% to $708,749, compared to $811,345 from the same period in 2022.

James F. DeSocio, President & CEO of Intellinetics, stated, “We delivered another quarter of double-digit revenue growth, bolstered by continued expansion of our SaaS revenue and high customer retention, leading to continued profitability. While third quarter year-over-year net income and adjusted EBITDA results declined from a record-setting Q3 in 2022, for the 9-month period year-to-date, we generated meaningful improvements in operating income, net income, and Adjusted EBITDA. I am further pleased that our cash flow generation has continued to be strong: in the third quarter we paid off $700,000 in debt principal, fully repaying a debt financing round and bringing our year-to-date debt and earnout payments to $1.7 million. We look forward to continued growth of our business, and expect recently enacted price increases to contribute to our overall results. We continue to see strong demand. Intellinetics has built a stable, profitable platform for continued top- and bottom-line growth, and we are investing in marketing to help us capture share in the large, growing markets that we serve.”

“Our recently announced IPAS product has generated signed contracts which will yield in excess of $475,000 in annualized SaaS recurring revenue, all of which should be up and running before the end of March, 2024,” added Mr. DeSocio. ”IPAS is an excellent solution for managing payables for large and complex enterprises, providing an instant net cost savings for the customer. We look for IPAS to be a meaningful driver of accelerated growth in our SaaS revenues. IPAS is and will continue to be sold through channels where it is filling an unmet need, or direct to our existing customer base. We are excited by our early success to date, especially as it comes on top of the continued progress we are having with our other product offerings.”

“Cross-selling continues to be an area of focus,” continued Mr. DeSocio. “The number of customers using more than one of our services continues to grow. Simultaneously, we are expanding our relationship with key clients. We anticipate continued organic growth for the foreseeable future.”

Summary – 2023 Third Quarter Results

Revenues for the three months ended September 30, 2023 were $4,248,429, an increase of 10.0%, organically, as compared with $3,859,627 for the same period in 2022. The increase was driven by a 6.8% increase in SaaS revenue, and a 16.2% increase in professional services fees, partially offset by lower sales of licensed software. The increase in professional services was enabled by our ability to hire and retain people in our document conversion segment.

Total operating expenses increased 10.3% to $2,260,036, compared to $2,048,182 due to increases in depreciation and amortization (a non-cash expense) of $191,189 and general and administrative costs associated with higher revenue. Income from operations was $345,555 compared to $458,003 in the third quarter last year.

Intellinetics reported net income of $209,331, up 54% sequentially compared to the second quarter and down slightly compared to $217,536 for the same period in 2022. Basic and diluted net income per share for the three months ended September 30, 2023 and the period ended September 30, 2022 was $0.05. Adjusted EBITDA was $708,749 compared to $811,345 in the year-ago period.

Summary – 2023 Year-to-Date Results

Yellow Folder, acquired April 1, 2022, contributed $2,707,764 in revenue in the nine months ended September 30, 2023, compared to $1,620,224 in revenue in the nine months ended September 30, 2022. Inclusive of the contribution from Yellow Folder, revenues for the nine months ended September 30, 2023 were $12,639,692, an increase of 27.2% as compared with $9,978,782 for the same period in 2022. Total operating expenses increased 17.0% to $6,915,921, compared to $5,910,261. Income from operations was $925,942, an increase of 122.2% compared to income from operations of $416,779 for the first nine months last year. Intellinetics reported net income of $457,628, or $0.11 per basic and $0.10 per diluted share, compared to net loss of $176,757, or $(0.05) per basic and diluted share, for the same period in 2022. Adjusted EBITDA was $1,990,274 compared to $1,743,580.

2023 Outlook

Based on management’s current plans and assumptions, the Company reiterated expectations that it will grow revenues and Adjusted EBITDA on a year-over-year basis for the fiscal year 2023.

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 (888) 437-3179 (toll-free) or (862) 298-0702. A replay of the call can also be accessed via phone through November 28, 2023 by dialing (877) 660-6853 (toll-free) or (201) 612-7415 and using replay access code 13742495.

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