Intellinetics (NYSEAMERICAN:INLX) reported lower second-quarter revenue and a wider net loss as reduced document-services activity offset growth in its software-as-a-service business, while management said it remains focused on achieving double-digit SaaS growth for the full year.
Total revenue for the second quarter of 2026 declined 1.6% year over year to $3.9 million from $4.0 million, according to CFO Joe Spain. SaaS revenue rose 4.2% to $1.6 million, driven primarily by new Payables Automation customers. Professional services revenue, however, fell 5.8% to $1.8 million as scanning project activity declined in the company’s document services segment.
Document Services Weighs on Results
Professional services accounted for 45% of quarterly revenue, compared with 47% a year earlier. Spain said the decline reflected customer project timing and a lower backlog in document scanning and conversion work. He added that the company had subsequently taken orders to replenish that backlog.
Consolidated gross margin declined 162 basis points to 66.4% from 68.0% in the prior-year quarter. The decline was attributed to the mix of professional-services revenue, particularly within document scanning and conversion projects, while software margins in SaaS and maintenance services remained solid.
Software maintenance services revenue declined $39,000, or 11.7%, from the prior year. Spain said this revenue comes from support agreements with long-standing customers using the company’s legacy on-premise solution.
Operating expenses increased 14.7% to $3.7 million. General and administrative expenses rose 24.4%, driven by higher variable compensation, additional engineering and development personnel, and about $229,000 in higher share-based compensation. Those increases were partly offset by a 13.9% reduction in sales and marketing expense and an 8.7% decline in depreciation and amortization.
The company reported a net loss of $1.1 million, or $0.24 per share, compared with a net loss of $600,000, or $0.13 per share, in the same quarter of 2025. Adjusted EBITDA was $331,000, compared with adjusted EBITDA profit of $28,000 a year earlier.
First-Half Results Include Transition Costs
For the first six months of 2026, total revenue fell 4.9% to $7.9 million from $8.3 million in the prior-year period. SaaS revenue increased 2.2% to $3.2 million, while professional services revenue declined 10.3% to $3.6 million.
First-half gross margin was 64.9%, compared with 67.3% a year earlier. Spain said the decline stemmed from professional-services mix, partially offset by stronger storage and retrieval margins.
Operating expenses rose 9.3% to $7.4 million. General and administrative expenses increased 16.4%, including approximately $430,000 in non-recurring CEO transition costs incurred during the first quarter, along with higher variable compensation and expanded engineering development staffing. Sales and marketing expense declined 13.8% during the six-month period.
Intellinetics posted a first-half net loss of $2.2 million, or $0.51 per basic and diluted share, compared with a net loss of $1.3 million, or $0.31 per share, a year earlier. Adjusted EBITDA was a loss of $659,000, compared with positive adjusted EBITDA of $104,000 in the first half of 2025.
Management Targets SaaS Growth and Greater Predictability
Forsythe, who said the second quarter was her first full quarter as CEO, outlined an effort to improve commercial execution, product priorities and operating discipline. She said the company had improved forecasting visibility, sales pipeline management, project oversight and management cadence during the first half of the year.
The company also launched a new website, which Forsythe said provides a clearer market presence and a stronger base for demand generation. Management said software bookings improved in the first half, while pipeline coverage strengthened exiting the second quarter.
“The second half of 2026 is all about execution,” Forsythe said. “First, we are focused on SaaS growth. We continue to expect double-digit SaaS growth for fiscal 2026, and we are focused on converting software opportunities into recurring revenue.”
She said Intellinetics is evaluating where to accelerate investment, modernize technology, partner with others and discontinue investment across its product portfolio. The company intends to direct resources toward opportunities it believes can scale rather than allocating resources evenly across all products.
- Management continues to expect double-digit year-over-year SaaS growth for fiscal 2026.
- The company aims to expand recurring revenue and reduce operating variability over time.
- Leadership sees an opportunity over the next two to four years to build a more focused software-and-services company with improved operating leverage and profitability.
Balance Sheet
As of June 30, Intellinetics had $1.7 million in cash and $700,000 in net accounts receivable. Total assets were $15.6 million, including $8.5 million of intangible assets and goodwill associated with acquisitions completed since 2020.
Total liabilities were $5.8 million, including $2.9 million in deferred revenue associated with signed SaaS and maintenance contracts. Spain said the company had no debt and had not made any borrowings as of June 30.
About Intellinetics (NYSEAMERICAN:INLX)
Intellinetics, Inc is a provider of enterprise content management and digital transformation solutions designed to help organizations streamline document-centric processes and improve operational efficiency. The company’s platform enables clients to capture, store, manage and retrieve both paper and electronic records through a unified system, reducing reliance on manual workflows and minimizing the risks associated with paper-based information handling.
The company offers a range of software products and professional services aimed at automating business processes and ensuring secure, compliant access to critical data.
