GlobeNewswire Inc | Nov 3, 2020 07:30AM EST

November 03, 2020

NORCROSS, Ga., Nov. 03, 2020 (GLOBE NEWSWIRE) -- 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) 2019 2020License $ 1,600 $ 2,225 Professional services 5,392 4,579 Processing and maintenance 2,950 2,235 Third party 483 362Total $ 10,304 $ 9,522

Incomefrom 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 companys 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 companys 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 companys 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 companys 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 CorporationCONSOLIDATED STATEMENTS OF OPERATIONS(unaudited, in thousands, except share and per share amounts)

Three Months Ended Nine Months Ended September 30, September 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 attributableto 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 8,927,908 8,886,321 8,925,961 8,859,544 shares outstandingDiluted weighted average common 9,022,996 9,013,459 9,021,314 8,977,501 shares outstanding

Intelligent Systems CorporationCONSOLIDATED BALANCE SHEETS(in thousands, except share and per share amounts)

September DecemberAs of 30, 31, 2020 2019ASSETS (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 6,890 2,177 depreciationOther 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 sharesauthorized, 8,929,368 and 8,924,988 issued andoutstanding at September 30, 2020 and December 31, 89 89 2019,respectivelyAdditional paid-in capital 15,780 15,450 Accumulated other comprehensive loss (129 ) (94 )Accumulated income 27,886 21,844 Total Intelligent Systems Corporation stockholders? 43,626 37,289 equityTotal liabilities and stockholders? equity $ 54,553 $ 44,240