INTELLINETICS, INC. Q2 FY2026 earnings call

• Leadership Transition: This is Alison Forsythe's first full quarter as President and CEO, who highlighted confidence in the company's growth opportunity and is driving urgent operational changes.
• Core Business Assets: The company holds two key complementary assets: embedded software solutions with stable recurring revenue, and a document services business that provides access to customers with complex document-intensive workflows, which can be converted to broader software solutions over time.
• Early Operational Progress (First Half 26): Management has implemented multiple foundational operating improvements: improved forecasting visibility, strengthened sales pipeline management, established a more consistent management cadence, enhanced project oversight with clear owner accountability, timelines and dependency tracking, and adopted data-driven disciplined decision-making for product, technology, sales and resource allocation.
• Commercial Execution Leading Indicators: Software bookings improved in the first half of 26, pipeline coverage strengthened exiting Q2, and a new company website was launched to improve market presence and support demand generation, indicating commercial execution is moving in the right direction.
• Second Half 26 Priorities: Management outlined four core focus areas for the second half of the year: 1) Accelerate SaaS growth and convert pipeline opportunities into recurring revenue; 2) Strengthen commercial execution through clearer product positioning, improved sales discipline, stronger partner engagement and more consistent opportunity management from pipeline to close; 3) Sharpen product and technology prioritization by evaluating opportunities to accelerate, modernize, partner or divest investment, concentrating resources on scalable opportunities rather than spreading capital and talent evenly across all products; 4) Build operating leverage to reduce operational variability and improve long-term profitability as recurring revenue grows.
• Long-Term Strategic Vision: Over the next 2 to 4 years, management aims to transform 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.

1. SaaS Segment: Q2 26 revenue was $1.6 million, a 4.2% year-over-year increase, driven by new payables automation customers. For the first half of fiscal 26, SaaS revenue reached $3.2 million, a 2.2% year-over-year increase. SaaS software margins remained solid, and recurring SaaS revenue represents a growing share of the company's total business mix. 2. Software Maintenance: Q2 26 revenue decreased 11.7% year-over-year as expected, as these are legacy on-premise solution support agreements. Margins for maintenance revenue remained solid. 3. Professional Services (Document Services Segment): Q2 26 revenue decreased 5.8% year-over-year to $1.8 million, accounting for 45% of total Q2 revenue (down from 47% in the year-ago quarter). For the first half of fiscal 26, professional services revenue decreased 10.3% year-over-year to $3.6 million. The decline stems from lower scanning project activity driven by project timing and a reduced backlog during the quarter, which has since been refilled with new orders. Q2 consolidated gross margin decreased 162 basis points to 66.4% year-over-year, driven by product mix shifts in Document Services scanning and conversion projects. Total company Q2 26 revenue was $3.9 million, a 1.6% year-over-year decrease; first half total revenue was $7.9 million, a 4.9% year-over-year decrease.

• Management maintained its prior full-year fiscal 26 guidance, with no upward or downward revisions.
• The company continues to expect double-digit year-over-year SaaS revenue growth for fiscal 26, with management remaining focused on accelerating this growth.

• Forward-looking statements about the company's performance, transformation and growth are subject to inherent risks and uncertainties that could cause actual results to differ materially from expectations, with additional detail on risk factors available in the company's public filings and today's earnings press release.
• The company's Document Services segment has experienced revenue and margin volatility from project timing fluctuations and backlog variability, which negatively impacted Q2 26 results.

There were no participant questions submitted during the Q&A session of the call.