Intellinetics, Inc.

Greetings and welcome to Intellinetics third quarter 2024 financial results conference 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 Joe Smein. Thank you, Joe. You may begin.

Thank you, and good afternoon, everyone. I am filling in for IR today, so I am pleased to welcome you to the Intellinetics 2024 third 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 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. Intellinex 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 condition and results of operations, an intelligence and 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 a non-GAAP financial measure adjusted EBITDA. 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, Joe. Good afternoon, everybody. Our payables automation solution, iPass, continues to be our main story. We believe it will be the driver to take our business to the next level. Before I get more into that, I want to take a moment to share how proud I am of the team that helped build the business as it stands right now. Over the past few years, we've created a business model that is sustainable and generates cash. In fact, since 2021, we've paid out all the acquisition earnouts, totaling $2.7 million. And since December of 2022, we've paid $3.6 million in long-term debt. mostly via prepayments, which has significantly reduced our interest expense. Operational results enabling this aren't easy, as everyone who has been through acquisitions knows. So my heartfelt thanks go to every employee and particularly the leadership team in place. As pleased as I am with the team and what we've accomplished, I am more excited for our future. I've been talking about iPass for a couple of quarters now. 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 very high. Last month, we presented at the Build Smarter Homebuilding Industry Conference, where we turned into one of the stars of the show. In one session, a customer presented their incredibly strong ROI story in going live with our solution, which paid for itself in a matter of months. This is why I-PASS sells and why we're so excited for our customers and for our ERP partner in this case, Constellation Home Builder Systems. We're on schedule to release additional functionality around purchase orders at the end of this year. That will not only bring in customers on its own, but will add PO transaction volume to over half of the existing customers using only the accounts payable functionality today, adding incremental revenue to us. At the same time, as we actively pursue the IPaaS opportunities in the Constellation ecosystem, we are fast-tracking discussions with our K-12 partner, Software Unlimited, for deployment of IPaaS into their ecosystem. The beta customer went live last month, and we have already secured an order beyond that first one. The K-12 customers have a smaller volume of transactions, which will translate to a smaller average selling price than home builders, but will also generally implement in less than half the time of the larger home building entities. Our first priority is to make significant inroads into these two populations. We're not waiting on those alone though, and we have resources focused on finding the next constellation in software unlimited. We have an opportunity with niche ERP providers where we can outperform and out support competing generic solutions. Accordingly, As we have been communicating, now is the time for us to invest in scaling our business. We began in earnest in Q3, hiring two incremental sales reps, as well as a new implementations manager and additional help desk support. We 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 the accretive at some point in 2025. Once the additional revenue from IPAS exceeds these investments, incremental revenue will disproportionately drop to the bottom line. In other words, our incremental gross margins will more than offset our investment spend. 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.