Intellinetics, Inc. (NYSE:INLX)

We received another article contribution from Robert Mulcahy, this time on Intellinetics Inc (OTC:INLX). The company is a document service and solutions software company serving both the small-to-medium business and governmental sectors. Robert notes that “INLX has two catalysts in play right now. In the next few quarters, INLX should start to screen much better as they continue their positive momentum in sales and EPS growth. The second is the full time marketing director who can now focus on sales and early results indicate their efforts are paying off to further transform the business.”

In his valuation analysis, Robert points out that “The majority of revenues come from 50% gross margin document conversion, although the long-term goal is to have the document conversion customers operating on Intellicloud. Because of that, I’m choosing to use a heavily discounted SaaS valuation for a business that will eventually be predominantly a SaaS model. Even with this discount, INLX trades at 1.4 P/S and 1.8 EV/S versus revenue multiples of 6-12X for SaaS businesses “

See the various valuation scenarios Robert lays out at different levels of sales and price to sales ratios.