Intapp Guides Revenue Down From Its Latest Quarter As On-Premise Clients Shorten Contracts, CFO Says
Analysts pressed CFO David Morton on a lower second-quarter revenue guide and a smaller gain in $100,000-plus clients.
Intapp, which makes cloud software for accounting, legal, consulting and investment firms, guided second-quarter total revenue to $158.8 million to $159.8 million, below the $161.3 million it just reported, and analysts pushed CFO David Morton on why during the company's fiscal first-quarter earnings call on Tuesday.
Morton blames the license shift
A JPMorgan analyst asked whether the sequential decline came from license transition, timing or demand. "No, that's exactly it," Morton said, noting that the company guides to subscription revenue, and that clients are moving from on-premise software to the cloud faster to get its agentic AI offerings. "It's really hitting us in FQ2," he added, saying subscription fundamentals remain intact.
License revenue in the quarter was $23 million, down 21% from a year earlier, which Morton tied to on-premise contracts shortened to a year or less as clients prepare to move. He expects that dynamic to continue as the fiscal year progresses.
Subscription revenue rose 29% to $125.5 million, and total revenue rose 16% to $161.3 million. Second-quarter subscription revenue is guided to $129.1 million to $130.1 million.
Questions on large clients and net new ARR
A Truist analyst noted that customers above $100,000 in annual recurring revenue rose by 11 from the prior quarter, less than in recent quarters, and asked whether that reflected seasonality, longer sales cycles or smaller initial deals. Morton said, "nothing abnormal," pointing to rounding, solid net revenue retention and minimal churn. Clients at that level reached 908.
A Barclays analyst said net new ARR was down about 11% from a year earlier and cited seasonally weak renewals. Morton said he did not think he had commented on seasonal renewals; his remarks concerned shortening on-premise durations. He said the big renewal season is the December quarter.
Remaining performance obligations, contracted revenue still to be recognized, were $799.4 million, up 12%, with on-premise obligations holding back growth. Morton said the quarter lacked many of the meaningful subscription renewals expected over the next six months.
Cloud migration math
Cloud ARR grew 28% to $515.3 million and is now 85% of total ARR of $607.1 million, which rose 20%. Asked by a UBS analyst about the economics of migration, Morton said clients still show an uptick of 20% or 30% once deployed.
CEO John Hall said Celeste, the company's AI platform, became generally available July 15 and that its pipeline has grown two to three times since. Morton said demand is running ahead of the company's capacity to deploy, a constraint it is working to fix.
Profit and full-year outlook
Adjusted operating income was $35.4 million, a 22% margin, against $20.9 million a year earlier, and adjusted earnings were $0.44 a share versus $0.24. Free cash flow was $28.1 million, more than double the prior year. The company bought back about 600,000 shares for $25 million and has $50 million left on its authorization.
For fiscal 2027, Intapp guides total revenue to $658.2 million to $662.2 million and adjusted earnings to $1.64 to $1.68 a share.
The December quarter, which Morton called the big renewal season, is the next test of his case that shortened on-premise contracts, not weaker demand, explain the softer metrics.
Sources
- Here's What Key Metrics Tell Us About Intapp (INTA) Q1 Earnings — Yahoo Finance
- Intapp (INTA) Surpasses Q1 Earnings and Revenue Estimates — Yahoo Finance
- Intapp Q1 2027 Earnings Call Transcript — benzinga.com
- Intapp announces first quarter fiscal year 2027 financial results — businesswire.com
