Intelligent Systems Corporation [NYSE American: INS], the leading
provider of innovative credit technology solutions and processing
services to the financial technology and services market, announced
today its financial results for the quarter ended September 30,
2020.
“Third-quarter results were a little better than
we expected, specifically for license revenue, and demonstrated the
continued resilience of our business, our strong financial
position, and our unique product offering,” said Leland Strange,
CEO of Intelligent Systems. “We recorded revenues of $10.3 million,
representing an 8% increase over the prior-year period. While
professional services and processing and maintenance primarily
drove the year-over-year revenue increase, we also received
additional license revenue in the quarter due to customers
achieving a new tier.
“During the quarter we substantially completed
the anticipated investments in our infrastructure needed to ensure
CoreCard exceeds current and future customer needs. These
investments will place near-term pressure on margins but are needed
to achieve our long-term strategic vision. As we stated earlier in
the year, we anticipate these investments will translate to
incremental revenue opportunities and drive growth for fiscal 2021
and beyond.”
Mr. Strange continued, “The momentum we built
upon in the third quarter reaffirms our optimism for growth in
2021. Given the third quarter 2020 license revenue, we are not
anticipating any additional license revenue for the remainder of
2020. As we look into next year, we now expect to receive license
revenues in both the first and the second half of the next fiscal
year. As we have commented before, it is difficult to project
quarter by quarter license revenues. We do believe that the second
half license revenue will be much larger than what we report in the
first 6 months. I am confident that our unique position, strong
management team, and solid financial position will enable us to
continue with growth in fiscal 2021 despite the challenges of the
COVID-19 pandemic.”
Financial Highlights for the
three months
ended September
30,
2020
Total
revenues – Total revenue in the
three-month period ended September 30, 2020 was $10,304,000, which
represents an increase of 8 percent compared to the comparable
period in 2019.
In the following table, revenue is disaggregated by type of
revenue for the three months ended September 30, 2020:
Three months ended September
30, (in
thousands) |
2020 |
|
2019 |
|
License |
$ |
1,600 |
|
$ |
2,225 |
|
Professional services |
5,392 |
|
|
4,579 |
|
Processing and maintenance |
2,950 |
|
|
2,235 |
|
Third party |
362 |
|
|
483 |
|
Total |
$ |
10,304 |
|
$ |
9,522 |
|
Income from
operations was $3,481,000 for the third quarter compared
to income from operations of $4,200,000 in the comparable prior
year quarter.
Net income was $2,795,000 for
the third quarter compared to net income of $3,092,000 in the
comparable prior year quarter.
Earnings per diluted share was
$0.31 for the third quarter compared to $0.34 in the comparable
prior year quarter.
Liquidity and Capital
ResourcesCash balance as of September 30, 2020 was
$34,391,000 compared to $26,415,000 at December 31, 2019. For the
nine months ended September 30, 2020, cash provided by operations
was $15,184,000 compared to cash provided by operations of
$7,679,000 for the comparable prior year period.
Investor Conference Call
Today
The company is holding an investor conference
call today, November 3, 2020, at 11 A.M. Eastern Standard Time.
Interested investors are invited to attend the conference call by
dialing (855) 766-6518 and entering conference ID 6013159. As part
of the conference call Intelligent Systems will be conducting a
question and answer session where participants are invited to email
their questions to fax@intelsys.com prior to the call. A transcript
of the call will be posted on the company’s website at
www.intelsys.com as soon as available after the call.
The company will file its Form 10-Q for the
period ended September 30, 2020 with the Securities and Exchange
Commission today. For additional information about reported
results, investors will be able to access the Form 10-Q on the
company’s website at www.intelsys.com or on the SEC website,
www.sec.gov.
About Intelligent Systems
CorporationFor over thirty-five years, Intelligent Systems
Corporation [NYSE American: INS] has identified, created, operated
and grown technology companies. The company’s principal operations
are CoreCard Software, Inc. (www.corecard.com) and its affiliate
companies. CoreCard provides prepaid and credit card processing
services using its proprietary software solutions that it also
licenses to others. CoreCard has designed and developed a
comprehensive suite of software solutions that corporations,
financial institutions, retailers and processors use to manage
credit and debit cards, prepaid cards, private label cards, fleet
cards, loyalty programs, and accounts receivable and small loan
transactions. CoreCard's flexible and proven processing platform is
being utilized in many countries in addition to the United States
including Australia, Canada, China, the United Arab Emirates,
France, Italy, Mexico, New Zealand, Singapore, South Africa and the
United Kingdom. Further information is available on the company’s
website at www.intelsys.com or by calling the company at
770-381-2900.
In addition to historical information, this news
release may contain forward-looking statements relating to
Intelligent Systems Corporation and its subsidiary and affiliated
companies. These statements include all statements that are not
statements of historical fact regarding the intent, belief or
expectations of Intelligent Systems Corporation and its management
with respect to, among other things, results of operations, product
plans, and financial condition. The words "may," "will,"
"anticipate," "believe," "intend," "expect," "estimate," "plan,"
"strategy" and similar expressions are intended to identify
forward-looking statements. Prospective investors are cautioned
that any such forward-looking statements are not guarantees of
future performance and involve risks and uncertainties and that
actual results may differ materially from those contemplated by
such forward-looking statements. The company does not undertake to
update or revise any forward-looking statements whether as a result
of new developments or otherwise, except as required by law. Among
the factors that could cause actual results to differ materially
from those indicated by such forward-looking statements are
instability in the financial markets, delays in product
development, undetected software errors, competitive pressures,
changes in customers’ requirements or financial condition, market
acceptance of products and services, the impact of new or changes
in current laws, regulations or other industry standards, risks
relating to unauthorized access to confidential information due to
criminal conduct, attacks by hackers, employee or insider
malfeasance and/or human error and declines in general economic and
financial market conditions, particularly those that cause
businesses to delay or cancel purchase decisions.
For further information, callMatt White, 770-564-5504 or email
to matt@intelsys.com
Intelligent Systems Corporation |
CONSOLIDATED STATEMENTS OF OPERATIONS |
(unaudited, in thousands, except share and per share amounts) |
|
|
Three Months Ended September
30, |
Nine Months
EndedSeptember
30, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
Revenue |
|
|
|
|
Services |
$ |
8,704 |
|
$ |
7,297 |
|
$ |
24,650 |
|
$ |
20,275 |
|
Products |
1,600 |
|
2,225 |
|
1,600 |
|
3,725 |
|
Total net revenue |
10,304 |
|
9,522 |
|
26,250 |
|
24,000 |
|
Cost of revenue |
|
|
|
|
Services |
4,217 |
|
3,012 |
|
11,418 |
|
8,445 |
|
Products |
− |
|
− |
|
− |
|
− |
|
Total cost of revenue |
4,217 |
|
3,012 |
|
11,418 |
|
8,445 |
|
Expenses |
|
|
|
|
Marketing |
31 |
|
35 |
|
94 |
|
124 |
|
General and administrative |
936 |
|
700 |
|
2,698 |
|
2,394 |
|
Research and development |
1,639 |
|
1,575 |
|
3,477 |
|
3,634 |
|
Income from operations |
3,481 |
|
4,200 |
|
8,563 |
|
9,403 |
|
Investment (loss) income |
(92 |
) |
(109 |
) |
(1,237 |
) |
(105 |
) |
Other income (loss) |
59 |
|
104 |
|
312 |
|
353 |
|
Income before Income taxes |
3,448 |
|
4,195 |
|
7,638 |
|
9,651 |
|
Income taxes |
653 |
|
1,103 |
|
1,596 |
|
2,379 |
|
Net income |
$ |
2,795 |
|
$ |
3,092 |
|
$ |
6,042 |
|
$ |
7,272 |
|
Earnings per share attributable to Intelligent Systems
Corporation: |
|
|
|
|
|
Basic |
$ |
0.31 |
|
$ |
0.35 |
|
$ |
0.68 |
|
$ |
0.82 |
|
Diluted |
$ |
0.31 |
|
$ |
0.34 |
|
$ |
0.67 |
|
$ |
0.81 |
|
Basic weighted average common shares outstanding |
8,927,908 |
|
8,886,321 |
|
8,925,961 |
|
8,859,544 |
|
Diluted weighted average common shares outstanding |
9,022,996 |
|
9,013,459 |
|
9,021,314 |
|
8,977,501 |
|
Intelligent Systems Corporation |
CONSOLIDATED BALANCE SHEETS |
(in thousands, except share and per share amounts) |
|
As of |
September 30, 2020 |
|
December 31, 2019 |
|
ASSETS |
(unaudited) |
|
(audited) |
|
Current assets: |
|
|
Cash |
$ |
34,391 |
|
$ |
26,415 |
|
Accounts receivable, net |
4,045 |
|
8,759 |
|
Other current assets |
1,217 |
|
905 |
|
Total current assets |
|
39,653 |
|
36,079 |
|
Investments |
2,063 |
|
3,081 |
|
Notes and interest receivable |
2,643 |
|
1,795 |
|
Property and equipment, at cost less accumulated depreciation |
6,890 |
|
2,177 |
|
Other long-term assets |
3,304 |
|
1,108 |
|
Total assets |
$ |
54,553 |
|
$ |
44,240 |
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
Current liabilities: |
|
|
Accounts payable |
$ |
465 |
|
$ |
403 |
|
Deferred revenue, current portion |
3,475 |
|
689 |
|
Accrued payroll |
2,016 |
|
2,503 |
|
Accrued expenses |
107 |
|
153 |
|
Income tax payable |
792 |
|
1,100 |
|
Other current liabilities |
1,582 |
|
1,345 |
|
Total current liabilities |
8,437 |
|
6,193 |
|
Noncurrent liabilities: |
|
|
Deferred revenue, net of current portion |
3 |
|
23 |
|
Deferred tax liability |
279 |
|
275 |
|
Long-term lease obligation |
2,208 |
|
460 |
|
Total noncurrent
liabilities |
2,490 |
|
758 |
|
Intelligent Systems Corporation stockholders’ equity: |
|
|
Common stock, $0.01 par value, 20,000,000 shares authorized,
8,929,368 and 8,924,988 issued and outstanding at September 30,
2020 and December 31, 2019, respectively |
89 |
|
89 |
|
Additional paid-in capital |
15,780 |
|
15,450 |
|
Accumulated other comprehensive loss |
(129 |
) |
(94 |
) |
Accumulated income |
27,886 |
|
21,844 |
|
Total Intelligent Systems Corporation stockholders’ equity |
43,626 |
|
37,289 |
|
Total liabilities and stockholders’ equity |
$ |
54,553 |
|
$ |
44,240 |
|
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