Intellinetics, Inc. Earnings Call: SaaS Growth Amid Challenges

Intellinetics, Inc. ((INLX)) has held its Q3 earnings call. Read on for the main highlights of the call.

Intellinetics, Inc. Navigates Challenges with Promising SaaS Growth

The recent earnings call for Intellinetics, Inc. presented a mixed sentiment, reflecting a challenging period marked by a notable decline in revenue and reduced adjusted EBITDA, primarily due to weaknesses in professional services. However, the company also highlighted promising growth in its SaaS segment, a robust pipeline, and strategic expansions, creating a balanced outlook with both positive developments and ongoing challenges.

SaaS Revenue Growth

Intellinetics reported a 14.6% increase in SaaS revenue, reaching $1.6 million for the quarter compared to $1.4 million in the same period last year. This growth was largely driven by early successes in payables automation, showcasing the company’s strategic focus on expanding its SaaS offerings.

Strong Pipeline and Expansion

The company has successfully rebuilt its backlog with orders in hand, which is expected to support digital transformation efforts beyond fiscal 2026. Additionally, Intellinetics is expanding into microfilm and microfiche storage, signaling a strategic move to diversify its service offerings.

Successful K-12 Market Penetration

Intellinetics closed 31 new SaaS deals in the K-12 market within a few weeks, tapping into a significant potential market of 4,000 targeted prospects. This rapid penetration underscores the company’s effective market strategies and the appeal of its solutions in the education sector.

Gross Margin Improvement

The company achieved a consolidated gross margin increase of 434 basis points, reaching 64.2% for Q3 2025 compared to 59.8% last year. This improvement was driven by increased SaaS volume, highlighting the profitability of the company’s strategic shift towards SaaS.

Debt-Free Balance Sheet

As of September 30, 2025, Intellinetics reported a debt-free balance sheet, having paid off the last of its debt in June. This financial milestone provides the company with greater flexibility to invest in growth initiatives.

Decrease in Total Revenue

Total revenue for the quarter decreased by 12.8% to $4.0 million compared to $4.6 million for the same period last year. This decline was mainly attributed to a 28% decrease in professional services revenue, reflecting challenges in this segment.

Reduced Adjusted EBITDA

Adjusted EBITDA for the quarter fell to $105,000 from $480,000 in the same period in 2024. This reduction was influenced by the decline in professional services revenue and increased investments in selling, general, and administrative expenses.

Net Loss Persistence

The company reported a net loss of $370,000 for Q3, slightly improved from a net loss of $393,000 in the same period last year. This persistent net loss indicates ongoing financial challenges that the company needs to address.

Professional Services Revenue Weakness

Professional services revenue decreased to $1.9 million from $2.6 million last year, with margins also declining from 42.9% to 40.5%. This weakness underscores the need for strategic adjustments in this segment.

Forward-Looking Guidance

Looking ahead, Intellinetics is focused on strategic growth, particularly in its SaaS segment. Despite a 12.8% decrease in total revenue due to a temporary slowdown in professional services, the company anticipates significant growth in SaaS revenues, projecting that fourth-quarter 2025 SaaS revenues will surpass those of the previous year. With a strong pipeline and a focus on sales and marketing investments, Intellinetics aims to expand its revenue streams, particularly in storage and retrieval services and SaaS offerings. The company also expects positive adjusted EBITDA for the fiscal year, driven by the success of its K-12 payables automation solution.

In summary, Intellinetics, Inc.’s earnings call highlighted a period of both challenges and opportunities. While the company faces revenue declines and reduced adjusted EBITDA, its strategic focus on SaaS growth, market expansion, and a debt-free balance sheet provide a promising outlook. Investors and stakeholders will be keenly watching how Intellinetics navigates these dynamics in the coming quarters.