Intellinetics(INLX) - 2021 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total revenue for Q3 2021 increased by 26% to $3.2 million compared to$ 2.5 million in Q3 2020 [18] - Adjusted EBITDA for Q3 2021 was $538,000, marking the sixth consecutive positive quarter and exceeding$ 300,000 for the fifth consecutive quarter [12][30] - Net income for Q3 2021 was $296,000, up from$ 156,000 in the same period last year [30] Business Line Data and Key Metrics Changes - Software revenue increased by 9% to $59,000 in Q3 2021 from$ 54,000 in Q3 2020 [20] - Recurring revenue, which includes SaaS and software maintenance, grew by 11% to $689,000 from$ 622,000 year-over-year, with SaaS growing at 25% [21][22] - Professional services revenue surged by 34% to $2.2 million, accounting for 68% of total revenue, up from 64% in the same period last year [24] Market Data and Key Metrics Changes - Storage and retrieval services revenue increased by 17% to$ 259,000 in Q3 2021 compared to $220,000 in Q3 2020 [26] - The company noted a shift in customer preferences from on-premise solutions to cloud solutions, impacting software maintenance revenue negatively by 1% [22] Company Strategy and Development Direction - The company has transitioned to a new warehouse facility in Michigan, increasing capacity while maintaining operating costs [8] - Plans to expand the sales team and enhance marketing initiatives to support growth in key markets and verticals [10] - The business process outsourcing (BPO) service is expected to provide a recurring revenue stream and is a focus for future growth [9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's trajectory, highlighting a strong pipeline and the ability to meet sales goals for six consecutive quarters [17] - The management team is focused on filling backlogs and ensuring continuous revenue flow from existing and new projects [39] - The company maintains its prior guidance for 2021, expecting to build on positive adjusted EBITDA while driving revenue growth [32] Other Important Information - The company has successfully integrated acquisitions made in early 2020, contributing to revenue stability and growth [12] - Operating expenses increased by 24% to$ 1.5 million, reflecting higher revenue and expanded sales and marketing efforts [28] Q&A Session Summary Question: Were there any one-time projects that boosted professional services revenue? - Management indicated that while there are always one-time projects, the majority of professional services revenue comes from ongoing contracts, particularly in document conversion [35][36] Question: What are the hiring plans for the sales team? - The company is actively hiring, with plans to add more sales representatives in the coming months to support growth and cross-selling initiatives [40][41] Question: What impact has the new Director of Marketing had on operations? - The Director has successfully integrated the company's websites and is ramping up marketing campaigns, leading to increased website traffic and service inquiries [43][44] Question: What is the pipeline for SaaS in school districts? - The company has a strong partnership with Software Unlimited, which continues to deliver new customers, contributing significantly to revenue [45][46] Question: How much revenue is anticipated from existing customers through cross-selling? - Management expects a meaningful amount of revenue from existing customers, although specific quantifiable numbers were not provided [49]