Intelligent Systems Corporation: One-Time Penny Stock Now a Fintech Industry Leader

Intelligent Systems Corporation
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Intelligent Systems Corporation Remains Bullish

Intelligent Systems Corporation (NYSEAMERICAN:INS) is a great example of what can happen with well-run penny-stock companies; their share price can explode.

Over the last year, Intelligent Systems stock has been on a tear, up more than 160% since the start of 2019 and up more than 630% over the last year.

The company has a recent history of reporting strong revenue growth, and it posted strong fourth-quarter profitability. While the INS stock price will no doubt face periods of volatility in 2019, management expects that the company’s revenue and operating profits will be up compared to in 2018.

Intelligent Systems Corporation Overview

Through its subsidiary, CoreCard Software, Inc., Intelligent Systems Corporation provides technology solutions and processing services to the financial technology and services market, referred to as the fintech industry, in the U.S. and Europe. (Source: “Overview,” Intelligent Systems Corporation, last accessed April 4, 2019.)

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CoreCard designs, develops, and markets software aimed at accounts receivable businesses, processors, retailers, and financial institutions. It manages their debit and credit cards, prepaid cards, private label cards, loyalty programs, fleet cards, and accounts receivable and small loan transactions.

CoreCard also provides end-to-end processing services for companies that outsource this service rather than license CoreCard’s software for in-house operations.

Intelligent Systems Stock Information
Market Cap $300.9 million
Beta 2.52
52-Week Change 615.8%
52-Week High $37.48
52-Week Low $4.69
Shares Outstanding 8.9 million
Float 5.5 million
50-Day Moving Average $24.79
200-Day Moving Average $16.70

(Source: “Intelligent Systems Corporation (INS),” Yahoo! Finance, last accessed April 4, 2019.)

Intelligent Systems stock had a great year in 2018. In fact, it shrugged off the fourth-quarter sell-off and has since gone on to chalk up a number of new record highs.

In 2018, INS stock advanced 172% while the New York Stock Exchange (NYSE) fell 11.6%, the tech-heavy Nasdaq fell 4.3%, and the S&P 500 fell 6.5%.

While the major indices have enjoyed (mostly unjustly) the extended benefits of the January effect in 2019, Intelligent Systems stock is currently up 161% year-to-date. The stock has been bullish because the company has actually been reporting strong financial results.

Chart courtesy of StockCharts.com

Intelligent Systems Corporation Reports Strong Q4 and 2018 Results

On March 13, Intelligent Systems Corporation announced its financial results for the fourth quarter and full year ended December 31, 2018.

Fourth-quarter revenue came in at $6.1 million, a 138% increase over the $2.5 million in the same prior-year period. (Source: “Intelligent Systems Reports Fourth Quarter 2018 Results,” Intelligent Systems Corporation, March 13, 2019.)

Income from operations during the fourth quarter was $2.3 million, compared to a loss from operations of $704,000 in the fourth quarter of 2017.

The company posted a fourth-quarter profit of $2.4 million ($0.27 per diluted share), compared to a loss of $650,000 ($0.07 per diluted share) in the same period in the prior year.

CEO Leland Strange commented:

We are reporting good results from licensing and professional services activity for the fourth quarter, continuing the progress shown in the three previous quarters of the 2018 year…There may very well be quarters in 2019 where we don’t compare favorably, but we expect our 2019 full year to be nicely up from 2018 in both revenues and operating profit.

(Source: Ibid.)

The company reported full-year 2018 revenue of $20.1 million, a 119% increase from the $9.2 million recorded in 2017. Income from operations was $6.1 million, compared to a loss from operations of $1.5 million in 2017.

Intelligent Systems Corporation reported 2018 net income of $6.2 million ($0.70 per diluted share), compared to net income of $374,000 ($0.04 per diluted share) in 2017.

2018 Quarterly Results

  • Q1: Revenue up 139%, swung to profitability of $893,000 ($0.10 per share)
  • Q2: Revenue up 48%, net income up significantly at $1.0 million ($0.12 per share)
  • Q3: Revenue up 193%, net income up 36% at $1.9 million ($0.21 per share)
  • Q4: Revenue up 138%, swung to profitability of $2.4 million ($0.27 per share)

(Source: “Press Releases,” Intelligent Systems Corporation, last accessed April 4, 2019.)

Analyst Take

Intelligent Systems Corporation has been on a great run over the last year. And for good reason; it has been reporting strong revenue growth, it recently swung to profitability, and it has been expanding its international footprint.

The company’s revenue growth can be attributed to its payment processing software. In addition to having a strong foothold in under-served, fast-growing economies like Romania and India, the company recently made inroads in a number of new international areas like China.

Despite the strong gains made over the last year, Intelligent Systems’ encouraging outlook points to additional gains in 2019.