Intellinetics, Inc.

Greetings and welcome to the Intellinetics first quarter 2024 earnings call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, 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, Tom Bauman with FNK Investor Relations. Thank you, sir. You may begin.

Thank you, and good afternoon, everyone. I am pleased to welcome you to IntelliMedics' 2024 First Quarter Conference Call. Before we begin, I would like to remind listeners that during this conference call, comments made by management may include forward-looking statements regarding IntelliMedics, 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. Intellinetics, 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 Discussion and Analysis a financial condition, and results of operations in IntelliMedics' annual report on Form 10-K or the quarterly report on Form 10-Q filed 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 GAAP and non-GAAP measures can be found in the press release issued today. With all that said, I would now like to turn the call over to Jim DiSocio, Intellinetics President and CEO. Jim, the call is yours.

Thank you, Tom. The transition of Intellinetics to a SaaS-centric company continues. Our recurring revenue continues to grow faster than our consolidated revenue, and the SaaS portion of our recurring revenue is an increasingly important part of our business. This progress comes even as our newest SaaS offering, IntelliCloud Payable Automation Solution, or IPaaS, has just started contributing to our results. Response for IPaaS has been very strong, and our pipeline of opportunities for IPaaS is growing rapidly. Demand for the Yellow Folder K-12 SaaS solution is also growing. And overall, Intellinetics is well positioned across all our SaaS offerings. Accordingly, we are accelerating our investment in marketing our SaaS offerings, not just to support iPaaS, but to support all of our SaaS solutions. SaaS revenue, as a percentage of our consolidated revenue, increased to 31% in the first quarter, up from approximately 29% in the first quarter last year. Our goal is to make recurring revenue the majority of our total revenue with as much contracted cash revenue as possible. This will make our business very easy to model, reduce earnings volatility, and benefit shareholders. It will also enable us to appropriately size fixed costs so that we are systematically profitable, creating a durable, sustainable, scalable platform for profitable growth. Our non-recurring software revenue continues to become less and less relevant to our story. Meanwhile, the document conversion portion of our digital transformation business, including business process outsourcing and document storage and retrieval, continues to generate positive contribution margin. As you may recall, we significantly expanded this business with the acquisition of Graphic Sciences in 2020. And since then, this business provided additional cash flow to create and acquire SAS offerings. However, over time, the organic growth opportunities in this business will become less consistent. Additionally, the non-recurring nature of this business makes budgeting and modeling more difficult. We have no plans to divest this business as it continues to generate cash. However, we plan to maximize our promotional activities around SAS, offerings rather than non-recurring revenue streams with the goal of accelerating our sas growth this strategy the non-revision is not a revision of our prior strategy those who have followed intellinetics recognize that we have been increasingly emphasizing our sas business lines over the past few years even more so since the yellow folder acquisition this is an acceleration of that strategy based on the success we have had over the past two years and the early response to IPaaS. We see a path to evolving into a nearly total SaaS company, a transformation which we strongly believe will benefit shareholders. As I said, our IPaaS solution has given us significant momentum. The lower end of our pipeline has increased by 50% over the past six months. We have signed nine customers and eight of the nine have already paid in full, which is uncommon for SaaS deployments where customers typically delay payment until deployment is fully complete. This data point reinforces our optimism regarding this solution, validating the customer support for IPaaS and demonstrating the tangible value IPaaS provides to users. In the aggregate, these nine customers represent an estimated combined annual revenue of $500,000. And we expect to more than double the customer count in this business over the next few quarters. As we move through 2024, we anticipate I-PASS becoming a larger and larger contributor to our consolidated revenue. As I previously said, our 2024 budget includes an incremental $400,000 of spend towards accelerating I-PASS. This includes sales and marketing dollars, as well as growing our development staff. Simultaneously, our K-12 operations now have 597 K-12 districts generating significant SAS revenue, which more than doubles our presence in this vertical market since before we acquired Yellow Folder in April of 2022. Importantly, each of these districts is a target for additional and telemedic services, including IPAS. We anticipate launching a K-12 I-PASS pilot this summer to address this opportunity. 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. Thanks, Jim.