Does Intapp Stock Offer the Best Exposure to Fintech AI?
Table of contents
We don’t need to consult the Gartner Hype Cycle to know that generative AI is now at the peak of popularity and potential, dominating earnings calls from AI chip manufacturers and designers to companies applying the tech to call centers and robotic process automation. After all, the potential payoff is huge: The big-brained MBAs at McKinsey & Co. released a report last year that estimated generative AI could add the equivalent of $2.6 trillion to $4.4 trillion annually to the global economy across more than 60 use cases. To put that number in perspective: California boasts the world’s fifth largest economy with a GDP of nearly $3.9 trillion – and that doesn’t even include the state’s black market for cannabis.
One of the biggest beneficiaries of generative AI, according to McKinsey analysts, will be the banking industry. They project an annual potential of $200 billion to $340 billion – equivalent to 9% to 15% of operating profits – largely from increased employee productivity if all works out as planned. (When does it not?) The analysts expect the technology to touch everything from customer service to regulation and compliance adherence to everyday workflows like generating business emails and presentations across various segments of the financial services sector.
Those sorts of numbers suggest a massive total addressable market (TAM) for companies like Intapp (INTA), which provides AI-powered software to accounting, consulting, investment banking, legal, private capital, and real assets firms. We’ve been tracking the fintech company since its IPO in 2021. Its client list has grown to more than 2,550 customers, including 95 of the Am Law 100 law firms, 15 of the top 20 accounting firms, and more than 1,700 private capital and investment banking firms. Software-as-a–service (SaaS) revenue, which accounted for about 60% of $430.5 million total revenues in 2024, was up 32% from a year ago, helping drive the company’s rapid TAM expansion.
In our last article on Intapp, it compared quite favorably to DocuSign, a legaltech company that has long been on double-secret probation over concerns related to weak revenue growth, falling net retention rate, and the inability to capture more big spenders on its platform. Could Intapp replace DocuSign in our Nanalyze Disruptive Tech Portfolio?
Good Growth in Key Metrics
Intapp certainly checks a lot of boxes for us. Annual recurring revenues (ARR) account for nearly 90% of total revenues, and the company is successfully transitioning from on-premises software subscriptions to cloud-based revenues. (This may provide additional growth based on past examples we’ve given for PTC and Oracle.) About 92% of clients now have some portion of their Intapp business in the cloud.
Other key metrics where Intapp is showing strong growth compared to DocuSign include big-spending clients and net retention rate (NRR). It added more than 250 clients in 2024 (the company follows one of those weird fiscal years), with double-digit growth in client groups representing ARR of at least $100,000 and $1 million, suggesting Intapp is successfully moving upmarket and capturing larger enterprise deals. Meanwhile, NRR was 116%, which tracks within the company’s historic range of 113% to 117%. Cloud NRR hit 121% in the fourth quarter. And total remaining performance obligations were up 40% to $566.5 million year-over-year, suggesting plenty of business is in the paid pipeline.
A couple of little red flags came up in management’s guidance for 2025. There appears to be a slight deceleration in SaaS revenue growth (26%-28% year-over-year) compared to 31% in fiscal year 2024. Total revenue growth is also expected to slow, from 23% in 2024 to about 15% at the mid-range of guidance ($495 million) in 2025.
Will Generative AI Generate Alpha?
So, what’s the plan to keep the money rolling in? More AI! Of course.
Before we jump into the details, it is worth noting how much the language has adapted to the current generative AI hype. For instance, this is how Intapp described its business back in 2021 in its first 10K filing as a public company:
“Intapp is a leading provider of industry-specific, cloud-based software solutions for the professional and financial services industry globally.” It’s not until the second paragraph that the company mentions how its platform “leverages proprietary AI to help nurture relationships and originate new business.”
Check that against the first paragraph in the company’s most recent 10K filing just three years later: “Intapp is a leading global provider of AI-powered solutions for professionals at advisory, capital markets, and legal firms. … Using the power of Applied AI, our purpose-built vertical [SaaS] solutions accelerate the flow of information …”
In their most recent earnings call, Intapp management highlighted new AI abilities including Intapp Assist and Intapp Walls for Copilot. The former uses generative AI to generate deal, company, and meeting summaries, creating personalized and targeted relationship outreach. It can also monitor industries and clients, sending alerts on semantic queries from public sources. The latter is designed to centralize confidentiality control, allowing firms to secure and manage access to sensitive information across Microsoft 365 and other systems.
These and other vertical SaaS AI offerings contributed about 4% of new annual contract value in Q4-2024, so it’s certainly too early to measure the long-term impact of these latest generative AI-based tools. Hopefully, management will provide more granularity to its AI revenues moving forward, if that’s core to the future growth of the business.
Market Expansion, Acquisitions, and Partnerships for Growth
The growth strategy does not hinge entirely on cool AI features. Intapp is trying to grow the business outside of the United States, which accounted for nearly 70% of total revenues in 2024. The only other significant market is the UK, which represented about 15% of total revenues last year. Management claims to be making inroads, recently adding clients in India and Africa. Since many of Intapp’s clients are in highly regulated markets like banking, so we expect this penetration to be slow given the added diligence required.
Intapp is also continuing its steady merger and acquisition activity to move the growth needle. In the last year, it acquired two new companies – delphai and TDI – to bring the total to 11 over the last decade. The former is a Berlin-based big data analytics company that applies AI across public data to collect, structure, and analyze firmographic data (like demographic data but for companies). Basically, the AI scrapes tens of millions of company websites, news sources, financial statements, and more to help Intapp clients wheel and deal their way to even more lucrative relationships. The latter acquisition is expected to strengthen the company’s Microsoft integrations and lay the groundwork for AI tools like Copilot, especially among the Dutch company’s core clientele, including law, accounting, and advisory firms.
Finally, Intapp leverages a network of 130 partners in data, technology, and services to support its platform and grow the business. For instance, Intapp recently inked a deal with Bite Investments, a SaaS provider for the private markets and alternative investments industry. Through this partnership, Intapp DealCloud clients using Bite Investments’ fundraising and investor management software, Bite Stream, can now directly access an investor portal within DealCloud. This integration will, among other things, provide Intapp clients with advanced analytics and enhanced visualization of investor activity. These sorts of partnerships also demonstrate Intapp’s willingness to spend (or lose) a little bit of money to build customer satisfaction: The company’s professional services revenue, for example, dropped 9% in Q4-2024, as it connected clients to partner KPMG, one of the big four accounting firms, in order to scale the overall business and attract bigger contracts.
Conclusion
One hesitation we’ve had about Intapp stock is that the company’s platform is somewhat specialized to serve the financial and legal services markets. However, it seems that the TAM is potentially much larger than we first believed, especially if we can trust the analysts at McKinsey (that’s debatable, of course). Despite a great deal of volatility since their IPO debut, Intapp stock still sports a very reasonable simple valuation ratio ($3.4 billion market cap/$456 million in annualized revenues) of about 7.5 against our catalog average of 6. Intapp is an intriguing company with a solid strategy. If we decide to drop DocuSign and/or invest in Intapp stock, Nanalyze Premium subscribers will be the first to know.
Share
