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Taking Stock of Intellinetics’ Risk Factors

Shares of cloud-based document solutions provider Intellinetics, Inc. (INLX) are up 80% over the past 12 months. The company caters to a diverse range of markets, including healthcare, K-12, public safety, public sector, risk management, and financial services.

In its recent Q2 performance, Intellinetics outperformed analysts’ estimates. Let’s take a look at its latest Q2 financials, as well as what has changed in its key risk factors that investors should be aware of.

Intellinetics’ Q2 revenue jumped 58% year-over-year to $2.9 million, outperforming consensus by $214,600.

No significant transaction costs helped the company achieve net earnings per share of $0.06, as compared to a net loss per share of $0.10 a year ago. This swing in the bottom line also helped Intellinetics beat analysts’ expectations by $0.07. (See Intellinetics stock charts on TipRanks)

President and CEO of Intellinetics, James F. DeSocio, remarked, “Our Software as a Service revenues continue to grow. In order to continue our momentum, we have hired a new marketing director to continue to expand our efforts with SEO and direct marketing lead generation, and we are investing in increasing our sales team this year.

“We continue to expect, for this fiscal year, to build on the positive Adjusted EBITDA of 2020 and to drive revenue growth.”

Now, let’s have a look at what’s changed in the company’s key risk factors profile.

According to the new TipRanks Risk Factors tool, Intellinetics’ main risk category is Finance & Corporate, accounting for 36% of the total 42 risks identified. Since June, the company has added one key risk factor, under the Production risk category.

Intellinetics noted that a rise in the minimum wage, and general labor costs could negatively impact its financial condition.

In April, U.S. President Joe Biden issued an executive order that requires certain federal contractors to pay a $15 minimum wage to workers working on federal contracts, and further adjust this rate annually as per the consumer price index. This order will come into effect on January 30, 2022.

While Intellinetics is not affected by this change at present, the executive order may affect it in the future. If Intellinetics fails to pay such higher wages, then it could suffer from higher employee turnover as well.

The sector average Finance & Corporate risk factor is 49%.

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