SaaS Revenue Increases 244%,
Reflecting Successful Acquisition and Transition to SaaS Model

Intellinetics, Inc. (NYSE American: INLX), a digital transformation solutions provider, announced financial results for the three and nine months ended September 30, 2022.

2022 Third Quarter Financial Highlights

• Total Revenue increased 22% from the same period in 2021.
• Software as a Service Revenue increased 244% from the same period in 2021.
• Net Income of $217,536, compared to Net Income of $296,437 for the same period in 2021.
  • The third quarter of 2022 included $127,437 in incremental interest expense compared to the third quarter 2021.
• Adjusted EBITDA increased 48% to $799,359, compared to $538,488 from the same period in 2021.

2022 Nine Month Financial Highlights

• Total Revenue increased 14% from the same period in 2021.
• Software as a Service Revenue increased 166% from the same period in 2021.
• Net Loss of $176,757, compared to Net Income of $1.3 million for the same period in 2021.
  • Nine-month 2021 included other income of $845,083 for forgiveness of the PPP loan and interest, and $77,211 in charges for change in fair value of earnout.
  • Nine-month 2022 included $144,999 of charges for change in fair value of earnout and $355,281 of transaction costs.
• Adjusted EBITDA increased 29% to $1.7 million, compared to $1.3 million from the same period in 2021.

2022 Other Highlights

• On April 1, 2022 we completed the acquisition of Yellow Folder, LLC. This acquisition more than doubled software as a service (SaaS) revenues, added positive cash flow in the three months ended June 30, 2022, and approximately doubled our customer count in the K-12 education market.
• Simultaneously with the acquisition, we completed $8.7 million in equity and debt financing.
• SAAS revenues continue to be strong for the nine months ended September 30, 2022, growing 166% including the Yellow Folder acquisition and growing 34% organically.

“Our transition to a diversified, SaaS-focused model is accelerating and our Adjusted EBITDA is expanding,” commented James F. DeSocio, President & CEO of Intellinetics. “Year-to-date, we have sold $6.3 million in total contract value across all products and services, which is 9% more than we sold in all of FY21. Total Contract Value represents orders secured by the sales team, generally recognizable in revenue over a period of less than one year. Our Adjusted EBITDA through the first nine months exceeds the total amount generated in all of last year, and our quarterly Adjusted EBITDA reached an all-time high of $799,359 (21% of total revenues) in the third quarter. We have built a sustainable, cash-generating business with a growing base of recurring revenue, creating significant visibility. With more than 500 customers in the K-12 education market alone, and durable, secular catalysts driving demand for our digital transformation capabilities, we are increasingly well-positioned for success.”

“The Yellow Folder acquisition has been a compelling success, giving us broad access to the vibrant K-12 education market and expanding our cross-selling opportunities for document conversion scanning, document storage, and business process outsourcing,” added DeSocio. “Since April, we’ve utilized our internal document scanning operations to process three separate projects that Yellow Folder would have historically outsourced, for a Total Contract Value of approximately $152,000.”

DeSocio continued, “We continue to drive adoption of our core IntelliCloud^TM Payables Automation Solution (IPAS), launched earlier this year, including showcasing this solution as a Platinum Sponsor at the Build Smarter 2022 Conference in Chicago and expanding our collaboration with Constellation HomeBuilder Systems, part of the $5 billion Constellation Software family. As part of this, a new IPAS customer is sharing their success story. IPAS is a new, enterprise-class software payables automation solution for financial platforms with very complex cost-accounting. New software offerings expand our paths to market, and grow our revenue per customer, especially with software partnerships like ours with Constellation HomeBuilder Systems, where we can embed our technology and scale customer acquisition as part of an ongoing process.”

“Based on our current plans and assumptions, we expect to continue to grow revenues and Adjusted EBITDA on a year over year basis,” concluded DeSocio.

Summary – 2022 Third Quarter Results

Revenues for the three months ended September 30, 2022 were $3.9 million, an increase of 22% compared with $3.2 million for the same period in 2021. The increase was largely driven by our acquisition of Yellow Folder in April 2022. In addition to our acquisition growth, our SaaS and software maintenance revenues continued to grow. Professional services decreased, primarily driven by challenges in staffing back up after COVID reductions over the winter, due to the tight labor market. Intellinetics reported net income of $217,536, or $0.05 per diluted share, for the three months ended September 30, 2022 compared to a net income of $296,437, or $0.10 per diluted share, for the same period in 2021. The third quarter of last year included lower interest expense. Adjusted EBITDA increased 48% to $799,359, compared to $538,488 from the same period in 2021.

Summary – 2022 Nine Month Results

Revenues for the nine months ended September 30, 2022 were $10.0 million, up 14% compared to $8.7 million for the same period in 2021. The increase was largely driven by our acquisition of Yellow Folder in April 2022. Intellinetics reported a net loss of $176,757, or $0.05 per diluted share, for the nine months ended September 30, 2022 compared to net income of $1.3 million, or $0.43 per diluted share, for the same period in 2021. The net loss was the result of transaction costs of $355,281 in the nine months ended September 30, 2022 (compared to none in the same period in 2021), incurred in support of our acquisition on April 1, 2022, as well as a $67,788 increase in charges related to change in fair value of earnout, as well as $254,191 in increased interest expense. In addition, the nine-month period last year included a $845,000 gain on extinguishment of debt related to the PPP loan. Adjusted EBITDA increased 29% to $1.7 million, compared to $1.3 million from the same period in 2021.

Balance Sheet

Intellinetics ended the quarter with cash of $3.8 million, compared with $1.8 as of December 31, 2021. Gross working capital at September 30, 2022 was $5.6 million.

Conference Call

Intellinetics is holding a webcast to discuss these results at 4:30 p.m. Eastern Time. Interested parties can access the webcast through the Intellinetics website at https://www.intellinetics.com. Investors can also dial in to the webcast by calling (646) 558-8656 and using webcast ID 860-7364-2157# and passcode 123. To listen to the replay, the call will be archived on the company's website at https://www.intellinetics.com/company-news/.