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II

INTELLINETICS, INC. (INLX)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 revenue was $4.25M, down 5.8% year over year, with SaaS growing 9.8% while professional services fell 13.2%; diluted EPS was $(0.17) and Adjusted EBITDA was $0.08M, reflecting deliberate investments in sales, marketing, and IT infrastructure .
  • Consolidated gross margin expanded to 67.6% from 64.3% YoY, driven by mix and stronger SaaS margins (86.1% vs. 84.6%), despite lower professional services volume .
  • Management maintained FY25 guidance: year-over-year revenue growth driven by SaaS and positive Adjusted EBITDA, while 2025 Adjusted EBITDA is expected to be “reduced by more than half” versus FY24 due to growth investments ; this matched guidance communicated in March .
  • Commercial momentum in Payables Automation continued: live reference accounts +50% in Q1; initial Purchase Order feature launched; Capture-as-a-Service add-on introduced; backlog strengthened with the largest order-intake week in years and an $880K project commencing in Q2 .
  • Near-term stock narrative hinges on SaaS adoption scaling vs. temporary weakness in project-based professional services and elevated OpEx; catalysts include reference account growth, K-12 and HomeBuilder partnerships, and backlog conversion over the next 2–3 quarters .

What Went Well and What Went Wrong

What Went Well

  • SaaS revenue growth and margin strength: SaaS grew 9.8% YoY to $1.54M and SaaS gross margin rose 142 bps to 86.1% (company consolidated GM to 67.6%) . Management: “Payables Automation… provides an extremely quick return on investment… we plan to continue to make investments… to rapidly grow our SaaS revenue” .
  • Product innovation and ecosystem expansion: launched initial Purchase Order module and Capture-as-a-Service; partnerships expanded across niche ERPs (HomeBuilder, K-12), with reference accounts up another 50% in Q1 .
  • Backlog and order intake recovery underway: “biggest single order-intake week in years” (> $2.4M TCV) and authorization to begin an $880K multi-month scanning project—expected to drive revenue recognition over 6–7 months .

What Went Wrong

  • Professional services volume headwind: revenue fell 13.2% YoY (to $2.16M), pulling total revenue down 5.8%; timing issues around project starts and renewals were cited .
  • Operating expense uplift compressed profitability: total OpEx rose 21.1% to $3.55M on sales/marketing and G&A (SOC 2, controls), reducing Adjusted EBITDA to $0.08M vs. $0.67M last year and widening net loss to $(0.73)M .
  • Macro sensitivity in key verticals: management cited tariff uncertainty (U.S.–Canada) and high interest rates pressuring the building industry’s pace, extending some customer implementation timelines .

Financial Results

Headline P&L and Cash Metrics

MetricQ3 2024Q4 2024Q1 2025
Total Revenues ($USD)$4,589,625 $4,280,071 $4,247,345
Net (Loss) Income ($USD)$(392,850) $(53,701) $(727,565)
Diluted EPS ($USD)$(0.09) $(0.01) $(0.17)
Adjusted EBITDA ($USD)$479,537 $600,766 $76,589
Cash and Equivalents ($USD)$2,501,729 $2,489,236 $2,138,243

Margins

Margin MetricQ1 2024Q1 2025
Consolidated Gross Margin %64.3% 67.6%
SaaS Gross Margin %84.6% 86.1%

Segment Revenue Breakdown

Revenue Segment ($USD)Q3 2024Q4 2024Q1 2025
Sale of Software$13,334 $(1,100) n/a
Software as a Service$1,403,942 $1,479,250 $1,542,169
Software Maintenance Services$352,066 $346,372 $335,191
Professional Services$2,600,230 $2,242,762 $2,158,315
Storage & Retrieval Services$220,053 $212,787 $211,670
Total Revenues$4,589,625 $4,280,071 $4,247,345

KPIs

KPIQ3 2024Q4 2024Q1 2025
Payables Automation live reference accounts+50% QoQ increase +50% QoQ increase +50% QoQ increase
PA customers (in implementation/using)n/an/a~22–23 customers using PA
Order Intake / Backlog (Professional Services)n/aCertain projects pushed to 2025 Biggest single order-intake week in years; >$2.4M TCV; plus $880K project authorized to begin

Actuals vs. Wall Street Consensus (S&P Global)

MetricQ1 2025 ConsensusQ1 2025 Actual
Revenue ($USD)$4,455,000*$4,247,345
Primary EPS ($USD)$(0.09)*$(0.17)
# of Estimates (Revenue / EPS)1 / 1*—

Values retrieved from S&P Global.*

Guidance Changes

MetricPeriodPrevious Guidance (Mar 24, 2025)Current Guidance (May 13, 2025)Change
Total RevenuesFY 2025Grow YoY vs FY 2024 Grow YoY vs FY 2024 Maintained
SaaS RevenuesFY 2025Grow YoY Grow YoY Maintained
Adjusted EBITDAFY 2025Positive; more than half lower vs FY 2024 Positive; more than half lower vs FY 2024 Maintained

Note: Guidance was later revised in August (Q2) to FY25 revenues below FY24 while keeping SaaS growth and positive Adjusted EBITDA; not applicable to Q1 recap but relevant for trajectory context .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 = Q3 2024)Previous Mentions (Q-1 = Q4 2024)Current Period (Q1 2025)Trend
Payables Automation (PA) adoptionIPAS commercialization with +50% reference accounts; higher ARR per customer (5–10x vs traditional) Reference accounts +50%; continued commercialization More reference accounts than ever; 7 new customers closed across HomeBuilder and K-12; PO module launched; Capture-as-a-Service launched Accelerating adoption and ecosystem expansion
AI/Technology initiativesIPAS ROI, feature velocity; NetSuite transition; development staff expansion Continued SaaS focus; sales/marketing ramp AI-powered capture and PO matching; SOC 2 investments; infrastructure upgrades Expanding capabilities and certifications
Professional Services demandGrowth (+11.5% YoY) Some projects pushed into 2025 Weak quarter; backlog recovery with $2.4M TCV and $880K project starting; expected return to historical levels over next 6–7 months Temporary dip with visible recovery path
Macro/tariffs/interest ratesn/an/aHeadwinds from tariffs (U.S.–Canada) and high rates impacting building industry demand/implementations Mixed macro; monitoring
K-12/ERP partnershipsHomeBuilder focus; conference presence K-12 growth opportunity reiterated Expanded K-12 partnerships (Skyward, Software Unlimited), testimonials; PA to be represented by partners Broader channel leverage
Regulatory/complianceSOC 2 process enhancements Structural investments noted SOC 2 certification efforts; IT controls Continuing investment

Management Commentary

  • “Our Payables Automation solution provides an extremely quick return on investment for our customers and offers our company a clear organic growth opportunity to rapidly grow our SaaS revenue over the next four to five years…” .
  • “We launched the initial Purchase Order feature set for our Payables Automation dashboard, and also launched our Capture as a Service add-on solution…” .
  • “Earlier this quarter, we achieved our biggest single order-intake week in years… over $2.4 million of total contract value… with revenue expected to be recognized over the next six to seven months… authorization to begin work on an $880,000 deal…” .
  • “Operating expenses increased… driven by our initiatives in sales and marketing… and… IT and control environment as part of SOC2…” .
  • “We expect… to grow revenues on a year-over-year basis for fiscal year 2025… and maintaining positive Adjusted EBITDA… 2025 Adjusted EBITDA to be reduced by more than half compared to fiscal year 2024…” .

Q&A Highlights

  • Implementation pipeline and installed base: Management expects ~22–23 customers using PA, with implementations proceeding across HomeBuilder and K-12 ecosystems .
  • Purchase Order module reception: First release shipped end of April; strong external validation on look/feel/functionality; roadmap for iterative enhancements .
  • Macro headwinds: Customer hesitancy tied to tariffs and higher rates in building markets; not product-related .
  • Professional services margin and backlog: >$3M of queued work (including $2.4M intake and $880K project) expected to restore activity to historical levels; margins characterized as stable opportunities .
  • K-12 distribution expansion: Renewed partner agreement with Software Unlimited to sell PA; testimonials from districts support adoption .

Estimates Context

  • Q1 2025 missed consensus on both revenue and EPS: revenue $4.25M vs. $4.46M*, EPS $(0.17) vs. $(0.09); coverage limited with only one estimate on each metric . Values retrieved from S&P Global.
  • Likely estimate adjustments: Given lower-than-expected pro services volume and increased SG&A, near-term EPS estimates may drift lower; however, backlog conversion and recurring SaaS growth could support revenue estimate stability into H2. Management reiterated positive Adjusted EBITDA and SaaS growth for FY25 at Q1 .

Key Takeaways for Investors

  • The quarter reflects intentional investment to scale SaaS—near-term profitability compression but strengthening unit economics via higher SaaS margins and ecosystem expansion .
  • Backlog recovery and project starts establish a clearer path to normalizing professional services revenues over the next 1–2 quarters, reducing revenue volatility .
  • PA adoption is the central growth engine, reinforced by product launches (PO module, Capture-as-a-Service) and expanded K-12/HomeBuilder partnerships; reference account momentum should shorten sales cycles .
  • Guidance was maintained at Q1 for FY25 (YoY revenue growth, positive Adjusted EBITDA, lower EBITDA vs FY24 due to investments); monitor for any revisions as seen post-Q2 .
  • Estimate coverage remains thin; single-analyst forecasts increase dispersion risk—set expectations around backlog conversion cadence and SaaS ARR build [GetEstimates Q1 2025]*.
  • Near-term trading: Watch for contract renewals, backlog execution updates, and partner-driven sales funnels; medium-term thesis hinges on scaling PA across ERPs and K-12 to tilt mix toward high-margin recurring revenue .

Values retrieved from S&P Global.*