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DATE

Wednesday, Aug. 12, 2026 at 4:30 p.m. ET

CALL PARTICIPANTS

  • President and Chief Executive Officer - Alison Forsythe
  • Chief Financial Officer - Joseph D. Spain

TAKEAWAYS

  • Total Revenue -- $3.9 million, a 1.6% decrease from $4.0 million in the prior-year quarter, primarily reflecting lower scanning project volume in the Document Services segment.
  • SaaS Revenue -- $1.6 million, an increase of 4.2% year over year driven by new payables automation customers.
  • Professional Services Revenue -- $1.8 million, a 5.8% decrease from $1.9 million due to reduced project activity and a lower backlog during the period.
  • Software Maintenance Services Revenue -- $291,767, down 11.7% as customers continued to migrate from legacy premise solutions.
  • Storage and Retrieval Services Revenue -- $221,526, an 8.8% increase compared to the second quarter of 2025.
  • Gross Profit Margin -- 66.4%, a decrease of 162 basis points from 68% in the prior year, attributed to a shift in the project mix within document scanning services.
  • Total Operating Expenses -- $3.7 million, a 14.7% increase year over year driven by higher general and administrative costs.
  • General and Administrative Expenses -- $2.9 million, up 24.4% reflecting higher variable compensation, increased engineering personnel, and share-based compensation.
  • Net Loss -- $1.1 million, compared to a net loss of $0.6 million in the same period last year.
  • Adjusted EBITDA -- A loss of $371,096, compared to a profit of $27,573 in the prior-year quarter, reflecting lower gross profit and higher cash operating expenses.
  • Cash Position -- $1.7 million as of June 30, 2026, with no debt or borrowings reported at the end of the period.
  • Accounts Receivable -- $705,463 net, with an additional $756,337 in unbilled accounts receivable at quarter end.
  • Deferred Revenues -- $2.9 million, representing signed SaaS and maintenance contracts as of June 30, 2026.
  • Fiscal 2026 Outlook -- Management expects double-digit year-over-year SaaS growth for the full fiscal year.
  • Share-Based Compensation -- $657,478 for the quarter, an increase of $228,771 compared to the second quarter of 2025.
  • CEO Transition Costs -- $430,130 in non-recurring costs incurred during the first half of 2026.
  • Sales and Marketing Expense -- $478,802, a 13.9% decrease from $556,063 in the prior-year quarter.
  • Depreciation and Amortization -- $280,756, an 8.7% decrease compared to the second quarter of 2025.
  • Intangible Assets and Goodwill -- $8.5 million as of June 30, 2026, resulting from acquisitions made since 2020.
  • First Half Net Loss -- $2.3 million, or $0.51 per diluted share, compared to $1.3 million, or $0.31 per diluted share, in the same period of 2025.

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RISKS

  • Spain stated, "The decline reflects reduced scanning project activity in our Document Services segment driven by the timing of customer projects and a lower backlog during the period," highlighting the negative impact on professional services revenue.

SUMMARY

Management for Intellinetics, Inc. (INLX +6.91%) reported a slight decrease in total revenue for the second quarter, as growth in recurring SaaS revenue was offset by lower project volume in the Document Services segment and the ongoing migration of customers from legacy maintenance plans. The company is implementing a multiyear strategic transformation focused on expanding its recurring revenue base and improving operating discipline through more rigorous forecasting and pipeline management. Management indicated that investments in engineering personnel and variable compensation led to higher general and administrative expenses during the quarter. Despite the quarterly net loss, the company confirmed its full-year guidance for double-digit SaaS growth, citing improved software bookings and strengthened pipeline coverage exiting the first half of the year.

  • Forsythe noted that the company launched a new website to clarify its market presence and provide a foundation for demand generation.
  • The company is prioritizing product and technology investments by allocating talent and capital to opportunities that can scale.
  • Management established a more consistent management cadence and improved project oversight to ensure initiatives have clearer owners, timelines, and accountability.
  • Forsythe stated, "We are using better operating data to make more disciplined decisions around product technology, sales, and resource allocation."
  • The Document Services segment is being leveraged as a strategic entry point to identify customers with complex processes that could benefit from broader software solutions over time.
  • Management expects the second half of 2026 to focus on execution, specifically converting software opportunities into recurring revenue and reducing operating variability.

INDUSTRY GLOSSARY

  • Adjusted EBITDA: A non-GAAP financial measure that represents earnings before interest, taxes, depreciation, and amortization, often adjusted for one-time or non-cash items such as share-based compensation or transition costs.
  • BPO (Business Process Outsourcing): The practice of contracting specific business tasks, such as document handling or data processing, to a third-party service provider.
  • Document Conversion: The process of digitizing physical records, microfilm, or microfiche into electronic formats for easier storage and access.
  • IntelliCloud: The company's proprietary cloud-based content management platform used for secure document storage, workflow automation, and compliance management.
  • SaaS (Software as a Service): A software delivery model where applications are hosted by a provider and accessed by customers over the internet, typically on a subscription basis.

Full Conference Call Transcript

Operator: Greetings. Welcome to Intellinetics Second Quarter 26 Earnings Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. Thank you.

Joseph D. Spain: Good afternoon, everyone. I am pleased to welcome you to the Intellinetics 26 Second Quarter Conference Call. Before we begin, I would-- Forward-looking statements regarding Intellinetics Inc. That are not historical facts.

These forward looking statements are based on the current expectations and beliefs of management and they are subject to risks and uncertainties that could cause such statements to differ For more information about factors that may cause actual results, to differ materially from forward-looking statements, please refer to the press release issued today as well as risks and uncertainties included in the section under the caption Risk Factors and Management's Discussion and Analysis of Financial Condition and Results of Operation in Today, management will discuss the non GAAP financial measure adjusted EBITDA.

Non GAAP financial measures are not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP and may differ from non GAAP financial measures presented by other companies. A reconciliation between GAAP and non GAAP measures can be found in the press release issued today. With all that said, I would now like to turn the call over to Alison Forsythe, Intellinetics' President and CEO. Alison, the call is yours.

Alison Forsythe: Thank you, Joe. Good afternoon, everyone, and thank you for joining us. Q2 was my first full quarter as President and CEO of Intellinetics and I want to start with this. I am confident in the opportunity ahead, and we are moving forward with urgency. Intellinetics has valuable assets. We have software solutions embedded in customer workflows, recurring revenue, Access matter. We also have a document services business that gives us access to customers with complex document intensive processes customers that can often benefit from broader software solutions over time. Our Q2 results reflect both the current state of the business and the opportunity in front of us.

Our SaaS revenue grew 4.2% year over year and software margins remained solid. Total revenue was impacted by lower professional services volume and project timing, in document services. We understand those dynamics we are taking action to improve predictability, sharpen execution, and shift the business over time toward a higher quality recurring revenue mix. We are also seeing encouraging leading indicators. Software bookings improved in the first half of the year Pipeline coverage strengthened exiting Q2. And we launched our new website giving us a clearer market presence and a stronger foundation for demand generation. These are important signs that our commercial execution is moving in the right direction.

Taken together, these indicators give us confidence that the first half of We put several critical operating building blocks in place. We improved our forecasting visibility We strengthened sales pipeline management, we established a more consistent management cadence, we improved project oversight so key initiatives now have clearer owners, timelines, dependencies, and accountability. And we are using better operating data to make more disciplined decisions around product technology, sales, and resource allocation. Compared to where we were at the beginning of the year, we now have better visibility into the software pipeline, a more disciplined management cadence, clearer ownership of key initiatives, a new digital presence in market, and an active product and technology prioritization process underway.

These are early changes, but they are meaningful because they give us a stronger operating foundation for the second half of 26 and for the larger transformation ahead. The second half of 26 is all about execution. First, we are focused on SaaS growth. We continue to expect double digit SaaS growth for fiscal 26 and we are focused on converting software opportunities into recurring revenue. Second, we are strengthening our commercial execution. That means clearer product positioning, stronger sales discipline, better partner motions, and more consistent management of opportunities from pipeline to close. Third, we are sharpening product and technology priorities. We are evaluating where to accelerate where to modernize, where to partner, and where to stop investing.

We are not going to spread resources evenly across every product. We are going to allocate talent and capital to the opportunities that can scale. Fourth, we are focused on operating leverage. As we grow recurring revenue and improve execution discipline, we expect to reduce operating variability and improve profitability over time. This is not a 1 quarter transformation, but the path is clear. Over the next 2 to 4 years, we see an opportunity to build Intellinetics into a more focused, scalable software and services company with a larger recurring revenue base stronger execution discipline and a more predictable financial model. With that, I will turn it over to Joe to walk through the financials in more detail.

Joseph D. Spain: Thanks, Alison. I will now review our financial results for the second quarter 26. Total revenue for the quarter decreased 1.6% to $3.9 million as compared to $4 million for the same period last year. In more detail, the following are the material components of our revenue presented on our statements of operations. SaaS revenue increased 4.2% year over year to $1.6 million driven primarily by new payables automation customers. Recurring software revenue continued to represent a growing component of our overall business mix. Software maintenance services were down as expected decreasing 39%, 11.7% from 2025. As a reminder, these maintenance revenues are from support agreements with longtime customers continuing on our legacy premise solution.

Professional services revenue decreased 5.8% to $1.8 million from $1.9 million for the same period last year. As a percentage of total revenue, professional services revenue was 45% of total revenue for the quarter compared to 47% last year. The decline reflects reduced scanning project activity in our Document Services segment driven by the timing of customer projects and a lower backlog during the period. We have since taken orders to refill that backlog. Consolidated gross margin percent decreased 162 basis points to 66.4% for Q2 this year compared to 68% last year. The decrease was driven by professional services, reflecting a product mix shift in document scanning and conversion projects.

Importantly, our software margins in both SaaS and maintenance remained solid. Operating expenses increased 14.7% to $3.7 million for Q2 compared to $3.2 million for Q2 2025. The increase was primarily driven by a 24.4% increase in general and administrative expenses from higher variable compensation expense and increased engineering development personnel as well as shared based compensation expense that increased approximately $229 thousand year over year. These increases were partially offset by a 13.9% decrease in sales and marketing expense and an 8.7% decrease in depreciation and amortization. Net loss for Q2 was $1.1 million compared to net loss of $600 thousand for the same period last year.

The primary drivers were lower gross profit on reduced professional services revenue from our Document Services segment together with higher G&A expenses, including the share based compensation. Loss per share was $0.24 per share compared to loss per share of $0.13 last year. Our adjusted EBITDA for the quarter was $331 thousand compared to adjusted EBITDA profit of $28 thousand in the same period last year, reflecting approximately $108 thousand of lower gross profit again driven by Document Services segment together with higher cash operating expenses. Quickly turning to 6-month results. Total revenue for the first 6 months decreased 4.9% to $7.9 million as compared to $8.3 million last year.

SaaS revenue increased 2.2% to $3.2 million led by new payables automation customers. Professional services revenues decreased 10.3% ending at $3.6 million compared to $4.1 million last year, on lower scanning project volume. In our Document Services segment. Consolidated gross margin was 64.9% compared to 67.3% last year. Same as Q2, the decline was driven by the professional services mix partially offset by stronger storage and retrieval margins. As noted earlier, our software margins by revenue line remained solid. Operating expenses increased 9.3% to $7.4 million for the first 6 months of 2026 compared to $6.7 million in 2025. This increase is driven by 2 primary factors.

First, general and administrative expenses increased 16.4% including approximately $430 thousand of non-recurring CEO transition costs incurred in the first quarter, as well as higher variable compensation expense and expanded engineering development personnel through the first 6 months. Second, partially offsetting that increase sales and marketing expense decreased 13.8% and depreciation and amortization decreased 5.1%. 6-month net loss was $2.2 million compared to net loss of $1.3 million last year. Net loss per basic and diluted share was $0.51 compared to net loss per basic and diluted share of $0.31 in 2025. 6 months adjusted EBITDA was a loss of $659 thousand compared to positive adjusted EBITDA of $104 thousand for the same period in 2025.

The decline reflects approximately $453 thousand of lower gross profit on reduced professional services volume and margin together with higher cash operating expenses. Next, a brief overview of the balance sheet. June 30, 2026, we had cash of $1.7 million and accounts receivable net of $700 thousand. Our total assets were $15.6 million including $8.5 million in intangible assets and goodwill as part of acquisitions made since 2020. Total liabilities were $5.8 million including $2.9 million in deferred revenues reflecting signed SaaS and maintenance contracts. We had no debt, as of June 30, 2026, nor any borrowings to date. I would like to wrap up with a brief financial outlook which is unchanged from our prior guidance.

Based on our current plans and assumptions and subject to risks and uncertainties we described in our filings and this call, management remains focused on accelerating SaaS growth and currently expects double digit year over year SaaS growth for fiscal 26. And now back to Alison for some final remarks.

Alison Forsythe: Thanks, Joe. Before we close, I want to leave investors with a key message. We are actively reshaping Intellinetics around the future opportunity we see in the business. In the first half of the year, we built a stronger operating foundation: better visibility, stronger pipeline discipline, improved project oversight, a new website, and a more consistent management cadence. In the second half, the focus is execution, converting software opportunities strengthening commercial performance, making sharper product and technology decisions, and building a more scalable operating model. The opportunity over the next 2 to 4 years is meaningful.

We believe Intellinetics can become a more focused software and service company with a larger recurring revenue base better operating leverage and a clearer path to improved profitability. 6 months in, I am encouraged by the progress we are making, We have better visibility, stronger operating discipline, clearer execution priorities, and a more focused view of where we need to invest. We still have work to do. We are moving with urgency and building momentum. I look forward to updating you on our continued progress. Sheri, we will now turn the call back to you.

Operator: Thank you. We will now have a question and answer session. There are no questions at this time. So I will conclude today's conference. You may disconnect your lines at this time and thank you for your participation.