Sign in

You're signed outSign in or to get full access.

II

INTELLINETICS, INC. (INLX)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 revenue declined 12.8% year over year to $4.00M; gross margin improved 434 bps to ~64.2% on favorable mix; SaaS revenue rose 14.6% while professional services fell 28.0% .
  • EPS of -$0.08 beat S&P Global consensus of -$0.10*, but revenue missed the $4.315M* consensus; coverage was thin with one estimate for each metric. Bold: EPS beat; revenue miss [functions.GetEstimates]*.
  • Management reiterated 2025 guidance: total revenues below 2024, positive Adjusted EBITDA, Q4 2025 SaaS up y/y, and FY26 SaaS > FY25; backlog/production expected at historical levels well into Q2 2026 .
  • Stock reacted negatively post-print; aftermarket fell ~3.16% to $9.19, with commentary highlighting the mixed print (EPS beat, revenue miss) .

What Went Well and What Went Wrong

What Went Well

  • SaaS momentum: +14.6% y/y; CEO “bullish on accelerating our growth” with K‑12/homebuilder activity improving; 19 orders closed from an Oct 22 K‑12 webinar plus 10 additional Q4 sales; ~4,000 targeted K‑12 prospects .
  • Margin quality improved: Gross margin up 4.45 pts y/y, driven by mix; gross margin rates remained stable in most lines .
  • Balance sheet flexibility: All notes prepaid in June; no interest expense recorded in Q3; quarter-end cash ~$3.2M .

What Went Wrong

  • Topline pressure: Total revenue -12.8% y/y and professional services -28.0% y/y; Adjusted EBITDA fell to $105K (vs $480K y/y) given growth investments and lower PS volumes .
  • 2025 outlook trimmed vs earlier in the year: Management now expects 2025 revenues < 2024; maintains positive Adjusted EBITDA but “reduced by more than half” vs 2024 due to sales/marketing spend .
  • Limited Street coverage and a revenue miss vs consensus hindered investor sentiment; aftermarket down ~3.16% [functions.GetEstimates]* .

Financial Results

Quarterly Performance (oldest → newest)

MetricQ1 2025Q2 2025Q3 2025
Revenue ($USD Millions)$4.247 $4.011 $4.001
Gross Profit ($USD Millions)$2.869 $2.727 $2.568
Gross Margin %67.6% (2.869/4.247) 68.0% (2.727/4.011) 64.2% (2.568/4.001)
Operating Income (Loss) ($USD Millions)$(0.685) $(0.508) $(0.379)
EBIT Margin %-16.1% -12.7% -9.5%
Net Income (Loss) ($USD Millions)$(0.728) $(0.568) $(0.370)
Diluted EPS ($USD)$(0.17) $(0.13) $(0.08)
Adjusted EBITDA ($USD Millions)$0.077 $0.028 $0.105
Cash And Equivalents ($USD Millions, qtr-end)$2.138 $2.071 $3.222

Q3 2025 vs Prior Year and vs Estimates

MetricQ3 2024Q3 2025 ActualYoY %S&P Global Consensus*Surprise
Revenue ($USD Millions)$4.590 $4.001 -12.8% $4.315* [functions.GetEstimates]*-7.3% vs est (miss) [functions.GetEstimates]*
EPS ($USD)$(0.09) $(0.08) n/a$(0.10)* [functions.GetEstimates]*+$0.02 vs est (beat) [functions.GetEstimates]*
Gross Margin %59.9% (2.746/4.590) 64.2% (2.568/4.001) +434 bps n/an/a

Values retrieved from S&P Global.

Segment Revenue Breakdown

Segment ($USD)Q1 2025Q2 2025Q3 2025Q3 2024
Software as a Service$1,542,169 $1,577,104 $1,608,253 $1,403,942
Software Maintenance Services$335,191 $330,459 $310,144 $352,066
Professional Services$2,158,315 $1,899,619 $1,881,975 $2,613,564
Storage & Retrieval Services$211,670 $203,631 $201,073 $220,053
Total Revenues$4,247,345 $4,010,813 $4,001,445 $4,589,625

KPIs and Operating Mix

KPIQ3 2024Q3 2025
Adjusted EBITDA ($USD)$479,537 $104,783
Deferred Revenues ($USD)$3,411,852 (FY-end) $3,635,648
Interest Expense, net ($USD)$(94,639) $9,459 (no interest expense recorded after note prepayment)
Cash ($USD)$2.490M (FY-end) $3.222M

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total RevenuesFY 2025Grow y/y (Q1 guide) Less than FY 2024 (Q2 revision, maintained Q3) Lowered
Adjusted EBITDAFY 2025Positive; >50% reduction vs FY 2024 Positive; >50% reduction vs FY 2024 maintained Maintained
SaaS RevenuesQ4 2025n/aQ4 2025 SaaS > Q4 2024 New/Introduced
SaaS TrajectoryFY 2026n/aFY 2026 SaaS > FY 2025 New/Introduced

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2 2025)Current Period (Q3 2025)Trend
SaaS Payables Automation adoptionLaunched PO feature; live reference accounts up 50%; added sales hires CEO bullish; 67-attendee K‑12 webinar drove 19 orders; +10 in Q4; ~4,000 prospects Accelerating
Professional Services/backlogContract renewal timing caused PS dip; recovery underway; backlog picked up Recovery “underway”; orders to keep production at historical levels well into Q2 2026 Improving
Gross margins/mixMargins stable across lines; mix benefits noted GM +434 bps y/y to ~64.2% on mix; line rates broadly stable Improving y/y
Debt & interestNotes prepaid in June No interest expense in Q3; improved flexibility Balance sheet cleaner
AI-enabled product featuresAI-enabled utility invoice coding module announced (homebuilder use case) AI-enabled onboarding efficiency reiterated; consultative model to scale penetration Expanding capability
Compliance/InfrastructureSOC2 prep; IT/control enhancements; increased SG&A Continued investments; Opex down y/y in Q3 via lower variable/share-based comp Investing for scale

Management Commentary

  • “The recovery in professional services…is underway…we have orders in hand that will keep production at historical levels well into Q2 2026.” — James F. DeSocio, President & CEO .
  • “On the SaaS side, I’m bullish on accelerating our growth…we held a webinar…on October 22…reception exceeded expectations with 67 attendees…we’ve closed 19 orders originating from this webinar…plus 10 sales orders already in Q4.” — DeSocio .
  • “We’re expanding our storage business to include a climate-controlled storage vault for microfilm and microfiche, which adds another strong margin revenue stream.” — DeSocio .
  • “All outstanding notes payable were prepaid in June; therefore no interest expense was recorded in the third quarter 2025.” — Company press release .

Q&A Highlights

  • K‑12 ARR potential: Management indicated K‑12 deals could drive over ~$100K in annual ARR, with partner access to 1,300 customers and aspirations for 40–50 deals by year-end and >100 longer term .
  • Rapid implementations: Payables automation implementations can be completed “in a couple of weeks,” with early sold deals already queued for installation/training .
  • Expansion interest: Homebuilder customers are interested in expanding into risk management and legal document modules beyond payables automation .
  • Call participation: Conference participants included Taglich Brothers’ Howard Halpern; operator logistics per transcript sources .

Estimates Context

  • Q3 2025 actual EPS of -$0.08 vs S&P Global consensus -$0.10* (beat); revenue $4.001M vs $4.315M* (miss); both had one estimate, indicating thin coverage [functions.GetEstimates]*.
  • Post-quarter, consensus may need to reflect mix shift (higher SaaS, lower PS), improved gross margins, and reiterated FY25/FY26 SaaS trajectory, with total FY25 revenue below FY24 per guidance .
    Values retrieved from S&P Global.

Key Takeaways for Investors

  • Mix quality improved despite topline pressure; gross margin ~64.2% (+434 bps y/y) supports better incremental profitability as SaaS scales .
  • EPS beat vs consensus amid revenue shortfall shows cost/mix discipline; expect Street to rebase revenue models toward management’s FY25 guide while acknowledging SaaS strength [functions.GetEstimates]* .
  • Execution signals: 19 K‑12 webinar-driven orders plus 10 additional Q4 sales and a ~4,000‑prospect pipeline highlight near-term SaaS catalysts .
  • Professional services recovery in flight with orders to sustain historical production into Q2 2026, de-risking services contribution and cash generation .
  • Balance sheet cleaner after note prepayment; no Q3 interest expense and cash of ~$3.22M provide flexibility to fund GTM and product initiatives .
  • AI-enabled modules (utility invoice coding) and consultative onboarding differentiate the payables automation value proposition for homebuilders/K‑12, supporting multi-module expansion .
  • Trading lens: The mixed print drove a ~3% aftermarket drop; watch for Q4 SaaS growth delivery and PS throughput normalization as near-term stock catalysts .