Q4 2024 Intellinetics Inc Earnings Call
Okay.
Operator: Greetings and welcome to the Intellinetics fourth quarter and full year 2024 earnings call. At this time all participants are in a listen-only mode.
Speaker Change: Greetings and welcome to the telematics fourth quarter and full year 2024 earnings call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance. Please press star zero on your telephone keypad. As a reminder, this conference is being recorded it is now my pleasure to introduce your host.
Operator: A question-and-answer session will follow the formal presentation.
Operator: If anyone should require operating assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded.
Operator: It is now my pleasure to introduce your host, CFO Joe Spain. Thank you. You may begin. Thank you.
CFO Josephine Thank you may begin.
Thank you good afternoon, everyone.
Joseph Spain: Good afternoon, everyone.
Joseph Spain: I'm covering the investor relations intro today. So I am pleased to welcome you to Intellinetics 2024 fourth quarter conference call. Before we begin, I'd like to remind listeners that during this conference call, comments made by management may include forward-looking statements regarding Intellinetics Inc. that are not historical facts. These forward-looking statements are based on the current expectations and beliefs of management and they are subject to risks and uncertainties that could cause such statements to differ materially from actual future events or results.
Speaker Change: I'm covering the Investor relations intro today, so I am pleased to welcome you to until I have X 2024 fourth quarter conference call.
Speaker Change: Before we begin I'd like to remind listeners that during this conference call comments made by management May include forward looking statements regarding an Telanetix, Inc. That are not historical facts.
Speaker Change: These forward looking statements are based on the current expectations and beliefs of management and they are subject to risks and uncertainties that could cause such statements to differ materially from actual future events or results.
Joseph Spain: Inc. undertakes no duty to update any forward-looking statements. For more information about factors that may cause actual results to differ materially from forward-looking statements, please refer to the press release issued today, as well as risks and uncertainties included in the section under the caption, Risk Factors and Management's Discussion and Analysis of Financial Conditions and Results of Operations.
Speaker Change: Until that time, Inc. Undertakes no duty to update any forward looking statements.
Speaker Change: For more information about factors that may cause actual results to differ materially from forward looking statements. Please refer to the press release issued today as well as risks and uncertainties included in the section under the caption.
Speaker Change: Risk factors and management's discussion and analysis of financial condition and results of operations.
Joseph Spain: in our annual report on Form 10-K filed earlier today. Also, please note that on the call today, management will discuss non-GAAP financial measures such as adjusted EBITDA and recurring revenue. Non-GAAP financial measures are not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP and may be different from non-GAAP financial measures presented by other companies. A reconciliation between gap and non-gap measures can be found in the press release issued today.
Speaker Change: In our annual report on Form 10-K filed earlier today.
Speaker Change: Also please note that on the call today management will discuss non-GAAP financial measures such as adjusted EBITDA and recurring revenue.
Speaker Change: non-GAAP financial measures are not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP and may be different from non-GAAP financial measures presented by other companies.
Speaker Change: A reconciliation between GAAP and non-GAAP measures can be found in the press release issued today.
Speaker Change: With all that said.
James DeSocio: With all that said, I would now like to turn the call over to Jim DeSocio, Intellinetics President and CEO. Jim, the call is yours. Thank you, Joe. 2024 was another solid year for us as we continue our mission. We are investing to exploit our opportunity to grow more rapidly as we transform into a predominantly fast-driven company. with a diverse growing suite of solutions for our customers in the digital transformation space. On top of that, we completed 2024 with another extremely strong year of cash flow generation. Our main story continues to be our payables automation solution.
Jim: I would now like to turn the call over to Jim to socio and telling the next president and CEO, Jim the call is yours.
Speaker Change: Yes.
Thank you Chelsey 'twenty 'twenty four was another solid year for us as we continue our mission.
Speaker Change: We are investing to exploit our opportunity to grow more rapidly as we transform into a predominantly SaaS driven company.
Speaker Change: With a diverse growing suite of solutions for our customers and the digital transformation space on.
Speaker Change: On top of that we completed 2024 with another extremely strong year of cash flow generation.
Speaker Change: Our main story continues to be our payables automation solution. We are confident it will be the driver to take our business to the next level.
James DeSocio: We are confident it will be the driver to take our business to the next level. As I've said in prior quarters, I've been in software my entire career, and this launch is going as well or better than any launch I've been involved with. Customer acceptance is high and the ROI story for our customers is amazing. One of our largest customers is processing over 11,000 invoices a month with zero touch. Let me say that one more time, over 11,000 invoices a month with zero human intervention. Those are significant results and we're very proud of our solution.
Speaker Change: As I've said in prior quarters I've been in software my entire career and this launch is going as well or better than any watch I've been involved with I've been involved with.
Speaker Change: Customer acceptance is high and the ROI story for our customers is amazing.
Speaker Change: One of our largest customers is processing over 11000 invoices a month with zero touch.
Speaker Change: Let me say that one more time over 11000 invoices a month with zero human intervention.
Speaker Change: Those are significant results and we're very proud of our solution.
James DeSocio: In last quarter's call, I referenced our presentation at the Builder Smarter Conference, the annual user conference for home builders hosted by our ERP partner, Constellation Home Builder Systems. and the buzz around the customer ROI of our solution. Since that conference in October, we have closed four new payables automation orders for Constellation customers and have launched a pilot program with a leading North American homebuilder and a land developer who is one of Constellation's largest customers. We're on schedule to release our new complimentary purchase order solution at the end of this quarter. Purchase order will expand our opportunity base while also adding TO transaction volume to over half of our existing customers.
Speaker Change: In last quarters call I referenced our presentation at the builder Smarter conference. The annual user conference for Homebuilders hosted by our ERP partner constellation Homebuilder systems, and the buzz around the customer ROI of our solution.
Speaker Change: Since that conference in October we have closed four new payables automation orders for constellation customers and have launched a pilot program with a leading north American homebuilder and a land developer who's one of constellation's largest customers.
Speaker Change: We're on schedule to release, a new complementary purchase water solution at the end of this quarter.
Speaker Change: Purchase order will expand our opportunity base, while also adding T O transaction volume to over half of our existing customers who are using only the accounts payable functionality today.
James DeSocio: who are using only the accounts payable functionality today. This will add incremental revenue to our existing AP customers. We have also recently launched our payables automation solution into the K-12 market in coordination with our partner, Software Unlimited Incorporated. After a pilot program with Clear Creek Community Schools, we have closed two additional Iowa school districts and engaged our K-12 sales force and marketing team in February. Our K-12 pipeline is growing quickly. The K-12 customers can generally implement in less than half the time of the larger homebuilder. As a matter of fact, Independence Community School District went live in January and has already caught the attention of their school board.
Speaker Change: This will add incremental revenue to our existing customers.
Speaker Change: We have also recently launched our payables automation solution into the K 12 market in coordination with our partner software unlimited incorporated.
Speaker Change: After a pilot program with clear Creek community schools, we have closed two additional Iowa school districts and engaged our K 12 sales force and marketing team in February.
Speaker Change: K 12 pipeline is growing quickly.
Speaker Change: K 12 customers can generally implement in western half the time of the larger homebuilder entities as.
Speaker Change: As a matter of fact independent community School District.
Speaker Change: In January and has already caught the attention of their school board.
James DeSocio: According to their finance director, the school board likes the automated aspect of the system not only because it greatly reduces the opportunity for human error and speeds payment processing, but also because it allows them to spend their time on more meaningful tasks. To quote her, even though we are just beginning to take advantages of the features available in the system, we are already more efficient. If we stopped today and didn't implement any of the rest of the features, I would still be happy with what we've accomplished. Throughout the rest of the year, we will be co-presenting with Software Unlimited at numerous K-12 conferences and trade shows to drive deployment of our payables automation solution into an ecosystem of 1,300 school districts.
Speaker Change: According to their finance director the school board likes the automated aspect of the system not only because it greatly reduces the opportunity for human error and speeds payment processing, but also because it allows them to spend their time on more meaningful task.
Speaker Change: To quote per.
Speaker Change: Even though we are just beginning to take advantages of the features available in the system. We are already more efficient if we stopped today and didn't implement any of the rest of the features I would still be happy with what we've accomplished.
Speaker Change: Throughout the rest of the year, we will be co presenting with software and a woman at numerous K 12 conferences and trade shows to drive deployment of our payables automation solution and sort of ecosystem of 1300 school districts.
James DeSocio: Our first priority is to make significant inroads in these two populations. We're not waiting on those alone, though, and we have resources focused on finding the next partners, like Constellation and Software Unlimited. We have an opportunity with niche ERP providers where we can outperform and out-support competing generic solutions. Further, unlike with many of the larger software solution providers who offer similar solutions as we do, we are not competitors with regard to our partners' core ERP systems. Accordingly, as we have been communicating, now is the time for us to invest in scaling our business. We began in earnest in the latter part of 2024, hiring more sales reps, implementation management, and additional help desk support.
Speaker Change: Our first priority is to make significant inroads in these two populations, we're not waiting on those alone, though and we have resources focused on finding the next partners like constellation and software and limited we have an opportunity with niche ERP providers, where we can outperform and out support competing <unk>.
Speaker Change: Eric solutions.
Speaker Change: Further unlike with many of the largest software solution providers, who offer similar solutions as we do we are not competitors with regard to our partners' core ERP systems.
Speaker Change: Accordingly.
Speaker Change: As we have been communicating now is the time for us to invest in scaling our business. We began in earnest in the latter part of 2020 for hiring more sales reps implementation management and additional help desk support we've continued investing in 2025 with bring one cell sales engineering resources.
James DeSocio: We've continued investing in 2025 with bringing on sales engineering resources and a VP of sales to strengthen and institutionalize our sales tools and processes as we grow. We've also expanded our outbound sales efforts with internal and contracted resources. Our marketing spend will include more frequency and a larger presence at select trade shows, as well as expanded campaigns. These investments will modestly, and we expect temporarily, reduce our EBITDA, but we also expect that they will bring revenue opportunities that should exceed the spend and be accretive at the same point in later 2025 and in 2026. I'm greatly excited to be part of this mission.
Speaker Change: And a VP of sales to strengthen and institutionalize, our sales tools and processes as we grow.
Speaker Change: We've also expanded our outbound sales efforts with internal and contracted resources. Our marketing spend will include more frequency and a larger presence at select trade shows as well as expand your campaigns. These investments will modestly and.
Speaker Change: And we expect temporarily reduce our EBITDA, but we also expect that they will bring revenue opportunities that should exceed the spend and be accretive at the same point in later 2025 and in 2026.
Speaker Change: I'm greatly excited to be part of this mission.
Joseph Spain: At this time, I'd like to turn the call over to our Chief Financial Officer, Joe Spain, to talk to you about our financial... Thanks, Jim. I will now review our financial results for the fourth quarter of 2024. Total revenue for the quarter ended December 31, 24, increased 2.1% to 4.3 million, as compared to 4.2 million for the same period last year. The following are the components of our revenue presented on our Statements of Operation. SAS, including hosting revenue, increased 11.8% to 1.5 million for the quarter from 1.3 million for the same period last year, primarily driven by early payables automation successes.
Speaker Change: At this time I'd like to turn the call over to our Chief Financial Officer, Joe, Spain to talk to you about our financials.
Speaker Change: Okay.
Joe: Thanks, Jim.
Speaker Change: I will now review our financial results for the fourth quarter of 2024.
Speaker Change: Total revenue for the quarter ended December 31, 2004, it increased two 1% to $4 3 million as compared to $4 2 million for the same period last year.
Speaker Change: The following are the components of our revenue presented on our statements of operations SaaS.
Speaker Change: SaaS, including hosting revenue increased 11, 8% to $1 5 million for the quarter from $1 3 million for the same period last year, primarily driven by early payables automation successes.
Joseph Spain: Software maintenance services were down 2.5% from 2023 as expected, reporting $0.3 million in both periods. As a reminder, these revenues are from support agreements with customers continuing on our premise solution. Professional services revenue was flat at $2.2 million for the quarter each year. The fourth quarter, 2024, produced the lowest growth of the year due to timing of large scanning projects earlier in the year. As a percentage of total revenue, professional services revenue was 52% of the total for the quarter, down from 53% last year. Year-to-date, this revenue line has been strong, delivering 8.9% growth and a record revenue year for us for this line item at $10 million compared to $9.2 million last year.
Speaker Change: Software maintenance services were down two 5% from 2023 as expected reporting zero point $3 million in both periods. As a reminder, these revenues are from support agreements with customers continuing on our premise solution.
Speaker Change: Professional services revenue was flat at $2 2 million for the quarter each year. The fourth quarter 2024 produced the lowest growth of the year due to the timing of large scanning projects earlier in the year.
Speaker Change: As a percentage of total revenue professional services revenue was 52% of the total for the quarter down from 53% last year.
Speaker Change: Year to date. This revenue line has been strong delivering eight 9% growth and a record revenue year for us for this line item at $10 million compared to $9 2 million last year.
Speaker Change: Consolidated gross margin increased 88 basis points to $65 eight for Q4, this year compared to $64 nine last year.
Joseph Spain: Consolidated gross margin increased 88 basis points to 65.8 for Q4 this year compared to 64.9 last year. The increase was driven by both better revenue mix, meaning from more growth weighted towards SAS revenue, and positive impacts from price. operating expenses increased 11% to $2.8 million for Q4'24 compared to $2.5 million in Q4'23. The increase was driven primarily by our investment in sales and marketing as part of our strategy to accelerate sales. The sales and marketing expenses for the quarter increased 37% compared to the same period during 2023, which reflects all the investments in marketing and sales that Jim just noted.
Speaker Change: The increase was driven by both better revenue mix, meaning from more growth weighted towards SaaS revenue and positive impact from price increases.
Speaker Change: Operating expenses increased 11% to $2 8 million for Q4 dollars 24, compared to $2 5 million in Q4 'twenty three the.
Speaker Change: The increase was driven primarily by our investments in sales and marketing as part of our strategy to accelerate sale.
Speaker Change: These sales and marketing expenses for the quarter increased 37% compared to the same period during 2023, which reflects all of the investments in marketing and sales that Jim just noted.
Speaker Change: General and admin expense increased four 2% quarter over quarter.
Joseph Spain: general and admin expense increased 4.2%, quarter over quarter. Net loss for Q4 was $54,000 compared to net income of $62,000 for the same period last year, as our revenue and margin improvements were offset by increased sales and marketing expenses and an incremental $146,000 in share-based compensation expense for the quarter over the prior quarter, which is a non-cash expense. That loss per share was $0.01 per share for basic and diluted shares compared to net income of $0.02 per basic share and $0.01 per diluted share last year. Our adjusted EBITDA for the quarter was $601,000 compared to an adjusted EBITDA of $754,000 for the same period in 2023, which reflects, again, our sales and marketing initiatives.
Speaker Change: Net loss for Q4 was $54000 compared to net income of $62000 for the same period last year as our revenue and margin improvements were offset by increased sales and marketing expenses and an incremental 146000 and share based compensation expense for the <unk>.
Speaker Change: Order over the prior quarter, which is a non cash expense.
Speaker Change: Net loss per share was one cent per share for basic and diluted shares compared to net income of two cents per basic share and <unk> per diluted share last year.
Speaker Change: Our adjusted EBITDA for the quarter was 601000 compared to an adjusted EBITDA of 754000 for the same period in 23.
Which reflects again, our sales and marketing initiatives.
Speaker Change: Turning to the full year results.
Joseph Spain: Turning to the full year results. Total revenue for 2024 increased 6.7% to $18 million as compared to $16.9 million last year. SAS revenue increased 10.8%, and professional services revenue increased 8.9%. consolidated gross margin was 64% compared to 62.6% last year. We're very pleased to be able to improve these already strong margins.
Speaker Change: Total revenue for 2024 increased six 7% to $18 million as compared to $16 9 million last year.
Speaker Change: <unk> revenue increased 10, 8% and professional services revenue increased eight 9%.
Speaker Change: Consolidated gross margin was 64% compared to 62, 6% last year, we're very pleased to be able to improve these already strong margins.
Speaker Change: Operating expenses increased 23, 7% to $11 7 million for 2024 compared to $9 5 million and 23.
Joseph Spain: Operating expenses increased 23.7% to $11.7 million for 2024 compared to $9.5 million in 2023. This increase is driven by two primary factors. First, our share-based compensation increased $830,000 year over year to $1.5 million from $700,000. Our MD&A in the 10-K provides a table for more granularity to compare year over year. The main takeaway for me to convey here today is that all but $70,000 of this increase is non-CAT. Without the share-based compensation, operating expenses increased 14.9%, primarily driven by the annual sales and marketing expense increase of 18.6%.
Speaker Change: Increase is driven by two primary factors.
Speaker Change: First our share based compensation increased $830000 year over year to $1 5 million from 700000, our MD&A in the 10-K provides a table for more granularity to compare year over year. The main takeaway for me to convey here today is that all 70000 of this increase.
Speaker Change: Is non cash.
Speaker Change: Without the share based compensation operating expenses increased 14, 9%, primarily driven by the end by the annual sales and marketing expense increase of 18, 6%.
Speaker Change: Full year net loss was 546000 compared to net income of 519000 last year net loss per share was <unk> 13 cents per share compared to net income per basic share of <unk> 13 and per diluted share of 11.
Joseph Spain: Four-year net loss was $546,000 compared to net income of $519,000 last year. Net loss per share was $0.13 per share compared to net income per basic share of $0.13 and per diluted share of $0.11 last year. Full-year adjusted EBITDA, which takes into account the share-based compensation, was $2.5 million compared to adjusted EBITDA of $2.7 million for 2023. Here, our sales and marketing investments had a modest impact on the year-end results.
Speaker Change: Last year.
Speaker Change: Full year, adjusted EBITDA, which takes into account the share based compensation was $2 5 million compared to adjusted EBITDA of $2 7 million for 2023.
Speaker Change: Our sales and marketing investments had a modest impact on the year end results.
Speaker Change: Next.
Joseph Spain: turn to a brief review of Intellinetics Balanced. At December 31, 24, we had cash of $2.5 million and accounts receivable net of $1.1 million. Our total assets were $18.6 million, including $9.2 million in intangible assets and goodwill as part of acquisitions made since 2020. Total liabilities were $7.9 million, including $1.3 million in debt principal as of December 31, 2024, which is due December 31, 2025. Deferred revenues were $3.4 million, reflecting signed SAS and maintenance contracts.
Speaker Change: I'll turn to a brief review of <unk> balance sheet.
Speaker Change: Remember 31, 24, we had cash of $2 5 million and accounts receivable net of $1 1 million total assets were $18 6 million, including $9 2 million in intangible assets and goodwill as part of acquisitions made since 2020.
Speaker Change: Total liabilities were $7 9 million, including $1 3 million in debt principal as of December 31, 24, which is due December 31 25 differed.
Speaker Change: Deferred revenues were $3 4 million, reflecting signed SaaS and maintenance contracts.
Speaker Change: Regarding cash flow Jim mentioned, it we had a tremendous year.
Joseph Spain: Regarding cash flow, Jim mentioned it. We had a tremendous year. Our cash flow statement shows cash provided by operating activities was $3.9 million. From this, we prepaid $1.6 million of our debt and are able to fund our sales and marketing investments out of cash flow.
Speaker Change: Our cash flow statement shows cash provided by operating activities was $3 9 million.
Speaker Change: This we prepaid $1 $6 million of our debt and are able to fund our sales and marketing investments out of cash flow.
Speaker Change: I want to wrap up with a brief financial outlook.
Joseph Spain: I want to wrap up with a brief financial outline. Based on our current plans and assumptions, and subject to risks and uncertainties we described in our filings and this call, we expect that we will grow revenues on a year-over-year basis for fiscal 2025. We also expect our 2025 EBITDA to be reduced by more than half compared to fiscal 2024 due to increased investment in sales and marketing intended to provide returns on those investments in late 2025 and beyond.
Speaker Change: Based on our current plans and assumptions and subject to risks and uncertainties are described in our filings and this call. We expect that we will grow revenues on a year over year basis for fiscal 2025.
Speaker Change: We also expect our 2025 EBITDA to be reduced by more than half compared to fiscal 2024.
Speaker Change: Due to increased investment in sales and marketing intended to provide returns on those investments in late 2025 and beyond.
Speaker Change: With that we.
Operator: With that, we thank you all for listening, and at this time, we'd like to open up the call to Q&A. Thank you. We will now be conducting a question and answer.
Speaker Change: Thank you all for listening and at this time, we'd like to open up the call to Q&A.
Speaker Change: Thank you.
Speaker Change: We would now be conducting a question and answer session.
Operator: If you would like to ask a question, please press star 1 on your telephone. A confirmation call will indicate your line is in the question. you may press star two to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star key.
If you would like to ask a question. Please press star one on your telephone keypad.
Speaker Change: A confirmation tone will indicate your line is in the question queue.
Speaker Change: You May press star to remove yourself from the queue for participants using speaker equipment, it may be necessary to pick up the handset before pressing restocking.
Operator: One moment, please, while we poll for questions.
Speaker Change: One moment, please while we poll for questions.
Speaker Change: Yeah.
Speaker Change: Our first question will come from the line of Howard Halpern with <unk> Brothers. Please proceed with your question.
Howard Halpern: Our first question comes from the line of Howard Halpern with Tagged Brothers. Please proceed with your question. Congratulations, guys, on the year and the smooth transition that you're making. In terms of the number of customers, How many are actually live and how many would you expect or should we model for to go live in the second half of the year? That's a good question, Howard, and the majority of the customers, we had two customers go live last week or in the last two weeks, and we have five in the process of implementation right now. And as I said, a number of times, they're going very smoothly.
Howard Halpern: Congratulations guys on the year and the smooth transition that you're making.
Speaker Change: Okay.
Speaker Change: In terms of.
Speaker Change: The number of customers.
Speaker Change: How many are actually lie in.
Speaker Change: How many would you expect or should we model for the go live in the second half of the year.
Speaker Change: That is true.
Speaker Change: Yeah, that's a good question Howard and.
Speaker Change: The majority of the customers. We had two customers go lives last week or in the last two weeks and we have.
Speaker Change: In the process of implementation right now and as I said, a number of times, if theyre going very smoothly.
Speaker Change: And.
James DeSocio: And the more that we get up and running, the more references we're going to have, and the faster the word is going to spread throughout the prospect and our pipeline. Okay, does that in... The ones that are live, does that include, last call you talked about a large customer that you were anticipating getting live in the first quarter. Does that include that customer live? Yes, that was one of the larger Constellation customers, and I referenced it in my discussion around how many invoices that they see as throughput. And just a note, you know, they're still coming up live, and as you're doing capture and it's educating itself, the more invoices you do every month, it just continues to educate.
Speaker Change: You know the more that we get up and running the more references we are going to have and the faster the word is going to spread throughout the.
Speaker Change: Prospect in our pipeline.
Speaker Change: Okay does that mean.
The ones that are alive does that include a wet and cool last call you talked about a large customer that you are anticipating getting live in.
Speaker Change: First quarter does that include that customer wise, yes that was one of the larger constellation customers and I referenced it in my discussion around how many invoices.
Speaker Change: That they see as throughput and just I'd note.
Speaker Change: Still coming up live in as Youre doing capture and educating itself. The more invoices you do every month. It just continues to educate.
James DeSocio: The system educates itself, and that's only 75%, 11,000 of the total invoices they're doing. So as the system continues to be used week after week, month after month, they'll get, you know, we hope to get up to 70, you know, 80, 90% of throughput without any human intervention. And that is probably industry standard 85, 90%, which is great. Okay. And, uh, and that. and that's the enterprise side. You expect the same type of throughput on the K-12 side? Well, they're not doing the same amount of volume, but as we've learned from our early beta sites and our first couple of customers, extremely happy.
Speaker Change: Educates itself and that's the only 75% 11000 of the total invoices theyre doing so as the system continues to be use week. After week month after month, they'll get we hope to get up to 70 80, 90% of throughput without any human intervention and that is probably industry standard.
Speaker Change: Oh, 85%, 90%, which is great.
Speaker Change: Okay.
Speaker Change: And and that's.
Speaker Change: And that's the enterprise side, you expect the same type of throughput on the.
Speaker Change: The K 12 side.
Speaker Change: They're not doing the same amount of volume, but as we've learned from our early beta sites in our first couple of customers I'm extremely happy and as you saw from the independent School District, where the VP of finance is just a static with how she's able to take.
James DeSocio: And as you saw from the Independent School District, where the VP of Finance is just ecstatic with how she's able to take, I don't want to say it's one full headcount or two full headcounts, but it's certainly reduced the amount of human touch substantially. And with school districts, you know, the COVID money's dried up in school districts. They all have to start finding better ways to invest their money. And this is, bodes very, very well for us. And we're continuously working with Software Unlimited. In the future, we plan to integrate into their system, you know, tightly integrate into their system as well, which will provide more value to their customer base also.
Speaker Change: I don't want to say its one for head count or two full head counts, but its certainly reduce the amount of touch human touch substantially.
Speaker Change: And with school districts.
Speaker Change: The COVID-19 monies dried up in school districts. They all have to start finding better ways to.
Speaker Change: Invest their money and this is bodes very very well for us and we're continuously working with software and limited.
Speaker Change: In the future we plan to integrate into their system tightly integrate tier system, as well, which will provide more value to their customer base also.
James DeSocio: Now, as part of expanding beyond, I know you still have a long runway with Constellation and the software Unlimited, but you know, what type of verticals maybe you can get into and does getting into the school districts, could that bleed over to like county or local governments running your system? Yeah, as a matter of fact, we're talking to a number of different ERP players, another rather large school ERP who have about 2,300 customers. We're also talking, we had a press release a couple of months ago with someone who provides ERP systems to counties and municipalities, so that is a big area for us.
Speaker Change: Now as part of expanding beyond I know you still have a long runway with constellation and and the software unlimited but.
Speaker Change: You know what type of verticals, maybe you could get into them and does getting into the school districts.
Speaker Change: Bleed over to like a county or local governments.
Speaker Change: Your system.
Speaker Change: Yeah. It was a matter of fact, we're talking to a number of different ERP players another rather large.
Speaker Change: School ERP ERP, who has about 220 300 customers. We're also talking we had a press release.
Speaker Change: A couple of months ago with someone who provides ERP systems too.
Speaker Change: Counties and municipalities. So that is a big area for us and it's an underserved area for the marketplace as well because of.
James DeSocio: And it's an underserved area for the marketplace as well, because of, you know, being able to cost effectively sell into those marketplaces. And are you in the Constellation universe? Are you seeing any kind of hesitation from the customers in terms of how they want to deploy their budgets, or is this just? and easy to yourself to get it up and running because of the ROI. Well we found that there's a tremendous ROI. A lot of the customers are waiting for a release of purchase order which is imminent. But obviously the housing market with interest rates up and you know some of the other challenges they've had are being cautious.
Speaker Change: Being able to cost effectively sell into those marketplaces.
Speaker Change: And I used in the constellation our universe are you seeing any kind of hesitation from the customers in terms of how they wanted to deploy their budgets or is this just.
Speaker Change: And even though he yourselves at.
Speaker Change: Get it up and running requested the ROI.
Speaker Change: Well, we found that there is a tremendous ROI a lot of the customers are waiting for a release of purchase order which is imminent.
Speaker Change: But obviously the housing market with interest rates up in some of the other challenges they've had.
Speaker Change: We're being cautious but.
James DeSocio: But my experience in selling business software is when companies are doing really really well they don't give they don't really focus on the on the spend side but when it gets tight they go oh we need to save money so this is there'd be a good opportunity for us to come in and show a great ROI on this on the spend side of their budgets. So we're we think we're well positioned for that. Yep.
Speaker Change: My experience in selling finance business software is when companies are doing really really well they don't give us they don't really focus on the on the expense side, but when it gets tight they go Oh, we need to save money. So this is there'd be a good opportunity for us to come in and show a great ROI.
Speaker Change: On this on the spend side of their budgets. So we.
Speaker Change: We think we're well positioned for that.
Speaker Change: And one final one because in Q4 the.
James DeSocio: And one final one, because in Q4, the SAS line margin actually got up. above that 85% level. Was that driven by these new SAS customers? And should we see it maintained probably at that 85-plus level? So you want to handle that one? I would say it is because a lot of the customers coming up live. Yes. Yeah, and some of it, I mean, there could be some timing, I think it's not an unreasonable range, you know, that that mid 80s, you know, it's not, it's not going to be static, it's going to move, depending on the nature of the customer, and, you know, level of effort, some are, some are easier than others.
Speaker Change: The SaaS line margin actually got up above that 85% level was that driven by these new SaaS customer.
Speaker Change: Customers and should we see it maintained probably at that 85 plus level.
Joe Spain: Joe you want to handle that one I would say it is one of the <unk>.
Speaker Change: Customers coming up live yes yep.
Speaker Change: And some of it I mean, there could be some timing I think it's not an unreasonable range you know that that mid eighties.
Speaker Change: It's not it's not gonna be static, it's going to move depending on the nature of the customer and the level of vibrant summer some are easier than others. So it is going to.
Howard Halpern: So it is gonna, it's going to move a little bit, it's going to move within that narrow mid 80s range. If you remember, because of, yeah, Software Unlimited does all their selling and implementation and our margins on the document management side is about 90% selling with Software Unlimited. So that should maintain itself on that, you know, selling it to their customer base. Yeah. Okay. That sounds great. Keep up the good work, guys. Thank you. Thank you, Howard.
Speaker Change: It's going to move a little but it's going to move within that narrow mid <unk> range.
Speaker Change: Okay. Okay. Thank you remember because of yeah software unlimited does all of their selling and implementation and our margins on the document management side.
Speaker Change: About 90% selling with software unlimited so that should be maintained itself on that.
Speaker Change: Selling it to their customer base.
Speaker Change: Okay.
Speaker Change: Sounds great.
Speaker Change: Keep up the good work guys.
Speaker Change: Thank you. Thank you. Thank you Howard.
Speaker Change: Okay.
James DeSocio: Okay, I think we'll wrap it up. So let me just do my closing statements. Intellinetics is well-positioned for continued success. We have significant momentum, a strong competitive position in the growing market, and a diverse set of solutions with ample cross-selling opportunities. Our business model structured around recurring revenue and aggressively growing our SaaS revenue is working. Our payables automation solutions provide an extremely quick return on investment for our customers and offers our company a clear, organic growth opportunity to rapidly grow our SaaS revenue over the next four to five years, just with continuing a successful rollout with existing partners.
Speaker Change: Think we'll wrap it up.
Speaker Change: So let me just.
I'll do my closing statements.
Speaker Change: And telematics is well positioned for continued success, we have significant momentum and strong competitive positioning in a growing market and a diverse set of solutions with ample cross selling opportunities are.
Speaker Change: Our business model is structured.
Speaker Change: Around recurring revenue and aggressively growing our SaaS revenue is working.
Speaker Change: Our payables automation solutions provide an extremely quick return on investment for our customers and offers our company a clear organic growth opportunity to rapidly grow our SaaS revenue over the next four to five years, just with continuing a successful rollout with existing partners.
James DeSocio: We view payables automation as a transformative opportunity for our company. And we plan to continue to make investments to position the product for as rapid an adoption as we can drive. In addition to sales and marketing initiatives, we plan to enhance our development capabilities, to bring features to market more quickly, and to bring our solutions to new ERP partnerships, which become additional ecosystems for happy customers. We appreciate the continuous support of our long-time shareholders and aim to attract new investors as well by delivering strong and consistent financial results.
Speaker Change: We view cable's automation as a transformative opportunity for our company and we plan to continue to make investments to position the product for its rapid adoption as we can drive in addition to sales and marketing initiatives, we plan to enhance our development capabilities to bring features to market more quickly and to bring our solutions to new ERP partners.
Speaker Change: <unk>, which become additional ecosystem for happy customers.
Speaker Change: Appreciate the continued support of our longtime shareholders and aim to attract new investors as well by delivering strong and consistent financial resort results.
James DeSocio: Thank you all for joining our call, and we look forward to a great 2025. Thank you.
Speaker Change: Thank you all for joining our call and we look forward to a great 2025. Thank you.
Speaker Change: Thank you and ladies and gentlemen. This concludes today's conference you may disconnect. Your lines at this time. Thank you for your participation.
Operator: Thank you, and ladies and gentlemen, this concludes today's conference. You may disconnect your lines. Thank you for your participation.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: [music].