Intellinetics — Third Quarter 2026 Earnings Summary

Financial Performance:

• Total revenue for the three months ended September 30, 2026, increased 0.7% year-over-year to $4.0 million ($4,027,687), driven by 5.0% growth in SaaS revenue to $1.7 million and 6.2% growth in storage and retrieval revenue, offset by a 2.5% decline in professional services revenue.
• Gross profit increased 5.3% year-over-year to $2.7 million, with gross margin expanding 295 basis points to 67.1%; professional services gross margin improved to 48.1% from 40.5%.
• Operating loss decreased 35.3% year-over-year to $245,484, as operating expenses remained essentially flat (up 0.1%) at $2.9 million.
• GAAP net loss narrowed to $0.2 million ($239,163), or $0.05 per share, compared to $0.4 million ($369,765), or $0.08 per share, in the same period in 2025.
• Adjusted EBITDA turned positive at $144,821 in Q3 2026, an improvement of $515,917 sequentially from a $371,096 loss in Q2 2026 and an increase from $102,642 in Q3 2025.
• For the nine months ended September 30, 2026, total revenue decreased 3.1% year-over-year to $11.9 million ($11,883,346), driven by a 7.8% decline in professional services revenue.
• Nine-month GAAP net loss widened to $2.5 million ($2,503,154), or $0.56 per share, compared to $1.7 million ($1,664,920), or $0.39 per share, in 2025.
• Nine-month Adjusted EBITDA was a loss of $513,925, compared to a profit of $206,804 in the same period in 2025.
• Cash at September 30, 2026, was approximately $2.85 million, an increase of $1.14 million from June 30, 2026.
• Deferred revenue increased to $4.1 million at September 30, 2026, from $3.4 million at December 31, 2025.

Guidance and Future Outlook:

• Management expects single-digit year-over-year SaaS revenue growth for fiscal 2026, revised down from a previous expectation of double-digit growth due to timing of customer deployments and booking-to-revenue conversion pace.
• The company enters the fourth quarter with a lower cost structure resulting from organizational actions taken during the third quarter.
• Management reports seeing improving deal pipelines across both Software and Document Services businesses.
• Future focus remains on converting opportunities into revenue, improving customer deployment execution, and directing investments toward software and services capabilities for consistent, profitable growth.

Business Segments and Product Lines:

• SaaS revenue grew 5.0% year-over-year in Q3 2026 to $1.7 million and 3.2% year-over-year for the nine months to $4.9 million.
• Professional services revenue decreased 2.5% year-over-year in Q3 2026 and 7.8% for the nine months, primarily reflecting project volume challenges in the Document Services segment in the first half of 2026.
• Storage and retrieval revenue grew 6.2% in Q3 2026 and 6.1% for the nine months.
• Software maintenance services revenue decreased 6.6% in Q3 2026 and 10.1% for the nine months.
• The company advanced organizational restructuring and made recent executive appointments in technology and professional services to strengthen the leadership team.

Market and Competitive Landscape:

• The company serves regulated and resource-constrained organizations with secure, AI-powered technologies for document management and automation.
• Management notes that deployment and project timing will continue to influence quarterly results.

Risks and Challenges:

• Nine-month operating expenses included approximately $430,000 in non-recurring CEO transition costs incurred in the first quarter of 2026.
• Forward-looking statements cite risks including changing economic conditions, inflationary pressures, challenges with hiring and maintaining a stable workforce, and the ability to execute the transition to a SaaS-based company.
• Risks also include market acceptance, success of solutions providers in human services, health care, and education, and technical development risks.

Management Commentary and Tone:

• President and CEO Alison Forsythe described the third quarter as an "encouraging step forward" in the company's transformation, highlighting narrowed GAAP net loss, positive Adjusted EBITDA, and expanded gross margins.
• Forsythe expressed increased confidence in opportunities ahead compared to when she joined, while acknowledging important work remains.
• Management stated they are sharpening focus on operating discipline, strengthening accountability, and aligning investments with highest-priority opportunities.
• Accelerating SaaS growth remains a central priority, with management acknowledging the current growth rate is below ambitions and committing to sharpening commercial execution.

Other Key Points:

• Share-based compensation expense decreased $60,517 year-over-year in Q3 2026 to $105,903.
• Sales and marketing expenses decreased 11.8% in Q3 2026 and 13.2% for the nine months.
• General and administrative expenses increased 4.0% in Q3 2026 and 14.1% for the nine months.
• Net cash provided by operating activities for the nine months ended September 30, 2026, was $1.1 million.
• Net cash used in investing activities for the nine months was $489,576, primarily due to capitalization of internal use software ($350,483) and purchases of property and equipment ($139,093).
• Net cash used in financing activities for the nine months was $290,799, driven by payments to taxing authorities for shares withheld from employees ($238,402) and principal payments on financing lease liabilities ($52,397).
• No dividends, buybacks, or M&A deals were mentioned in the release.