Intellinetics(INLX) - 2023 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - For the year ended December 31, 2023, the company grew revenue more than 20% and increased SaaS revenue by nearly 28% [10] - Net income for Q4 was $62,000 compared to net income of$201,000 for the same period last year [19] - Full year net income was $519,000 compared to$24,000 in 2022, with earnings per share of $0.13 compared to$0.01 per share last year [41] Business Line Data and Key Metrics Changes - Professional services revenue increased 4.7% to $2.2 million for the quarter from$2.1 million for the same period last year [17] - SaaS maintenance and BPO professional services all grew, with SaaS revenue growing faster than operating expenses, enabling consistent profitability [15] - Total revenue for 2023 increased 20.5% to $16.9 million as compared to$14 million last year, with SaaS revenue increasing 27.8% [32] Market Data and Key Metrics Changes - The K-12 operations now have 591 K-12 districts generating significant SaaS revenue, which more than doubles the presence in this vertical market since the acquisition of Yellow Folder in April 2022 [26] - The company closed 353 contracts in 2023, with an estimated total contract value of $7.7 million [26] Company Strategy and Development Direction - The company plans to invest in its IPAS solution and expand cross-selling efforts in 2024, viewing it as a significant growth catalyst [3][12] - The 2024 budget includes an incremental$400,000 of spend towards accelerating IPAS, focusing on additional sales headcount and enhancing the delivery team [14] - The company aims to double its SaaS revenue over the next four to five years through the IPAS offering [34] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's strong momentum and stable baseline with consistent profitability and cash generation [3] - The company expects to grow revenues and adjusted EBITDA on a year-over-year basis for the fiscal year 2024 [42] - Management highlighted the importance of making early adopters of IPAS happy to set the stage for wholesale adoption in select ERP ecosystems [43] Other Important Information - Consolidated gross margin increased 98 basis points to 64.9% for Q4 this year compared to 63.9% last year, driven by a better revenue mix [17] - Operating expenses increased 17% to $2.5 million for Q4 2023 compared to$2.2 million in 2022, largely due to equity compensation expenses [18] Q&A Session Summary Question: Can you talk about deal size compared to your base offerings? - The average sale size for the K-12 offering is between $3,000 to$8,000, while the IPAS offering deals are north of $35,000 on annual recurring revenue [45] Question: Are you migrating within Constellation into different verticals? - The plan is to pursue both existing Constellation customers and new verticals, with a focus on expanding the customer base [46] Question: Do you still anticipate new districts coming online at a pace of 15 to 20 districts a quarter? - Yes, the company continues to expect that pace [48]