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Innodata Reports First Quarter 2025 Results with Revenue up 120% Year-Over-Year and Reaffirms Growth Guidance of 40% or more for 2025

1. Innodata reports $58.3 million revenue, 120% growth YOY. 2. Net income increased to $7.8 million, $0.25 per basic share. 3. Significant expansion in customer relationships noted, bolstering future growth. 4. Plans for reinvestment in technology and talent to sustain momentum. 5. Strong balance sheet with $56.6 million in cash; $30 million credit facility remains undrawn.

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FAQ

Why Very Bullish?

Innodata's revenue and net income have shown substantial growth. This could attract more investors, akin to similar previous market dynamics seen with tech firms post-earnings beats.

How important is it?

The significant revenue growth and cash position indicate strong operational health, likely impacting investor sentiment positively.

Why Short Term?

Immediate market reaction to earnings reports is often strong. Historical trends indicate that such significant growth will likely boost stock performance quickly.

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INNODATA INC. (Nasdaq:INOD) today reported results for the first quarter ended March 31, 2025.Revenue of $58.3 million, representing 120% revenue growth year-over-year.Adjusted EBITDA of $12.7 million, an increase of $8.9 million from $3.8 million in the same period last year.*Net income of $7.8 million, or $0.25 per basic share and $0.22 per diluted share, compared to a net income of $1.0 million, or $0.03 per basic and diluted share, in the same period last year.Cash, cash equivalents and short-term investments were $56.6 million as of March 31, 2025 and $46.9 million as of December 31, 2024.* Adjusted EBITDA is defined below.Jack Abuhoff, CEO, said, "We had a strong start to the year. We're being onboarded by potential major new customers, expanding existing relationships, and building a pipeline that's deeper and more advanced than at any point in our history. We are bringing ideas and innovation to our customers that are being well received. We believe the breadth of activity across our business illustrates strong momentum that positions us for continued strong performance.Specifically, we draw investors' attention to several important factors that we believe demonstrate the accelerating growth in our business:Expanding Relationships with Existing Customers. Today we signed a second master statement of work with our largest customer enabling them to utilize our capabilities in a distinct budget category within their organization - separate from the budget that supports our existing engagements. We believe this new budget is materially larger. In addition, four of our other Big Tech customers have awarded us engagements that we value at approximately $8 million, and we are in discussions with five of our other Big Tech customers that we believe are likely to result in more than $30 million of awards in the near term.New Customer Acquisition. We are in the process of being onboarded by a number of potentially significant customers. This includes one of the world's largest and most respected enterprise technology providers; one of the world's leading cloud software companies; a technology conglomerate that operates one of the world's largest digital commerce ecosystems; and a global healthcare technology company.Strategic Alignment. We believe we are aligned strategically to support our customers on their generative AI journeys. We continue to innovate and expand our capabilities around collecting and creating generative AI training data; agentic AI; enterprise AI; and large language model trust & safety.Investment. In 2025, we plan to re-invest a portion of our cash from operations back into the business. We are planning targeted investments in technology to support both current and prospective customers in their AI journeys, as well as increased strategic hiring in sales and solutioning to drive long-term growth. We believe we can make these investments and still guide to growing our Adjusted EBITDA in 2025 over 2024.Strong Balance Sheet. We strengthened our balance sheet, finishing the quarter with $56.6 million in cash, up from with $46.9 million in cash at year end. Our $30 million credit facility remains undrawn.2025 Guidance. We reiterate our guidance of 40% or more revenue growth in 2025.Macro Environment. We do not believe that short term business cycles or trade policies have much of an impact on our business prospects. We believe we are positioned to benefit from strong AI-driven capex spending among the Magnificent Seven companies, for whom AI advancements are considered high priorities.Abuhoff concluded, "The momentum in our business has never been stronger. My executive team and I are enthusiastic about our opportunity to harness the moment to build Innodata into one of the leading AI solutions companies of our era."Amounts in this press release have been rounded. All percentages have been calculated using unrounded amounts.Timing of Conference Call with Q&AInnodata will conduct an earnings conference call, including a question-and-answer period, at 5:00 PM eastern time today. You can participate in this call by dialing the following call-in numbers:The call-in numbers for the conference call are:(+1) 800 549 8228 North America(+1) 289 819 1520 InternationalParticipant Access Code: 75884(+1) 888 660 6264 (Domestic Replay)(+1) 289 819 1325 (International Replay)Replay Passcode: 75884#It is recommended that participants dial in approximately 10 minutes prior to the start of the call. Investors are also invited to access a live Webcast of the conference call at the Investor Relations section of Innodata's website at https://investor.innodata.com/events-and-presentations/. Please note that the Webcast feature will be in listen-only mode.Call-in replay will be available for seven days following the conference call, and Webcast replay will be available for 30 days following the conference call, at the Investor Relations section of Innodata's website at https://investor.innodata.com/events-and-presentations/.About InnodataInnodata (Nasdaq:INOD) is a global data engineering company. We believe that data and Artificial Intelligence (AI) are inextricably linked. That's why we're on a mission to help the world's leading technology companies and enterprises drive Generative AI / AI innovation. We provide a range of transferable solutions, platforms, and services for Generative AI / AI builders and adopters. In every relationship, we honor our 35+ year legacy delivering the highest quality data and outstanding outcomes for our customers.Visit www.innodata.com to learn more.Forward-Looking StatementsThis press release may contain certain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended. These forward-looking statements include, without limitation, statements concerning our operations, economic performance, financial condition, developmental program expansion and position in the generative AI services market. Words such as "project," "forecast," "believe," "expect," "can," "continue," "could," "intend," "may," "should," "will," "anticipate," "indicate," "guide," "predict," "likely," "estimate," "plan," "potential," "possible," "promises," or the negatives thereof, and other similar expressions generally identify forward-looking statements.These forward-looking statements are based on management's current expectations, assumptions and estimates and are subject to a number of risks and uncertainties, including, without limitation, impacts resulting from ongoing geopolitical conflicts, including between India and Pakistan, Russia and Ukraine, Hamas' attack against Israel and the ensuing conflict and increased hostilities between Hezbollah and Israel and Iran and Israel; investments in large language models; that contracts may be terminated by customers; projected or committed volumes of work may not materialize; pipeline opportunities and customer discussions which may not materialize into work or expected volumes of work; the likelihood of continued development of the markets, particularly new and emerging markets, that our services support; the ability and willingness of our customers and prospective customers to execute business plans that give rise to requirements for our services; continuing reliance on project-based work in the Digital Data Solutions ("DDS") segment and the primarily at-will nature of such contracts and the ability of these customers to reduce, delay or cancel projects; potential inability to replace projects that are completed, canceled or reduced; our DDS segment's revenue concentration in a limited number of customers; our dependency on content providers in our Agility segment; our ability to achieve revenue and growth targets; difficulty in integrating and deriving synergies from acquisitions, joint ventures and strategic investments; potential undiscovered liabilities of companies and businesses that we may acquire; potential impairment of the carrying value of goodwill and other acquired intangible assets of companies and businesses that we acquire; a continued downturn in or depressed market conditions; changes in external market factors; the potential effects of U.S. global trading and monetary policy, including the interest rate policies of the Federal Reserve; changes in our business or growth strategy; the emergence of new, or growth in existing competitors; various other competitive and technological factors; our use of and reliance on information technology systems, including potential security breaches, cyber-attacks, privacy breaches or data breaches that result in the unauthorized disclosure of consumer, customer, employee or Company information, or service interruptions; and other risks and uncertainties indicated from time to time in our filings with the Securities and Exchange Commission.Our actual results could differ materially from the results referred to in any forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, the risks discussed in Part I, Item 1A. "Risk Factors," Part II, Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations," and other parts of our Annual Report on Form 10-K, filed with the Securities and Exchange Commission on February 24, 2025, as updated or amended by our other filings that we may make with the Securities and Exchange Commission. In light of these risks and uncertainties, there can be no assurance that the results referred to in the forward-looking statements will occur, and you should not place undue reliance on these forward-looking statements. These forward-looking statements speak only as of the date hereof.We undertake no obligation to update or review any guidance or other forward-looking statements, whether as a result of new information, future developments or otherwise, except as may be required by the U.S. federal securities laws.Company ContactJelena SutovicInnodata Inc.[email protected](201) 371-8024Non-GAAP Financial MeasuresIn addition to the financial information prepared in conformity with U.S. GAAP ("GAAP"), we provide certain non-GAAP financial information. We believe that these non-GAAP financial measures assist investors in making comparisons of period-to-period operating results. In some respects, management believes non-GAAP financial measures are more indicative of our ongoing core operating performance than their GAAP equivalents by making adjustments that management believes are reflective of the ongoing performance of the business.We believe that the presentation of this non-GAAP financial information provides investors with greater transparency by providing investors a more complete understanding of our financial performance, competitive position, and prospects for the future, particularly by providing the same information that management and our Board of Directors use to evaluate our performance and manage the business. However, the non-GAAP financial measures presented in this press release have certain limitations in that they do not reflect all of the costs associated with the operations of our business as determined in accordance with GAAP. Therefore, investors should consider non-GAAP financial measures in addition to, and not as a substitute for, or as superior to, measures of financial performance prepared in accordance with GAAP. Further, the non-GAAP financial measures that we present may differ from similar non-GAAP financial measures used by other companies.Adjusted Gross Profit and Adjusted Gross MarginWe define Adjusted Gross Profit as revenues less direct operating costs attributable to Innodata Inc. and its subsidiaries in accordance with U.S. GAAP, plus depreciation and amortization of intangible assets, stock-based compensation, non-recurring severance and other one-time costs included within direct operating cost.We define Adjusted Gross Margin by dividing Adjusted Gross Profit over total U.S. GAAP revenues.We use Adjusted Gross Profit and Adjusted Gross Margin to evaluate results of operations and trends between fiscal periods and believe that these measures are important components of our internal performance measurement process.A reconciliation of Adjusted Gross Profit and Adjusted Gross Margin to the most directly comparable GAAP measure is included in the tables that accompany this release.Adjusted EBITDAWe define Adjusted EBITDA as net income (loss) attributable to Innodata Inc. and its subsidiaries in accordance with U.S. GAAP before interest expense, income taxes, depreciation and amortization of intangible assets (which derives EBITDA), plus additional adjustments for loss on impairment of intangible assets and goodwill, stock-based compensation, income (loss) attributable to non-controlling interests, non-recurring severance, and other one-time costs.We use Adjusted EBITDA to evaluate core results of operations and trends between fiscal periods and believe that these measures are important components of our internal performance measurement process.A reconciliation of Adjusted EBITDA to the most directly comparable GAAP measure is included in the tables that accompany this release.INNODATA INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited)(In thousands, except per-share amounts)Three Months EndedMarch 3120252024Revenues$58,344$26,504Operating costs and expenses:Direct operating costs35,09216,869Selling and administrative expenses14,9808,305Interest income, net(127)(84)49,94525,090Income before provision for income taxes8,3991,414Provision for income taxes612424Consolidated net income7,787990Income attributable to non-controlling interests-1Net income attributable to Innodata Inc. and Subsidiaries$7,787$989Income per share attributable to Innodata Inc. and Subsidiaries:Basic$0.25$0.03Diluted$0.22$0.03Weighted average shares outstanding:Basic31,43428,753Diluted34,95132,239INNODATA INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETS(Unaudited)(In thousands)March 31, 2025December 31, 2024ASSETSCurrent assets:Cash and cash equivalents$56,556$46,897Accounts receivable, net29,57728,013Prepaid expenses and other current assets6,2166,090Total current assets92,34981,000Property and equipment, net4,6794,101Right-of-use asset, net4,0364,238Other assets1,2761,267Deferred income taxes, net7,2827,492Intangibles, net13,57013,353Goodwill2,0181,998Total assets$125,210$113,449LIABILITIES AND STOCKHOLDERS' EQUITYCurrent liabilities:Accounts payable, accrued expenses and other$18,257$17,455Accrued salaries, wages and related benefits13,60813,836Income and other taxes4,8615,695Long-term obligations - current portion1,5051,643Operating lease liability - current portion904877Total current liabilities39,13539,506Deferred income taxes, net3532Long-term obligations, net of current portion7,0966,744Operating lease liability, net of current portion3,5423,778Total liabilities49,80850,060STOCKHOLDERS' EQUITY75,40263,389Total liabilities and stockholders' equity$125,210$113,449INNODATA INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited)(In thousands)Three Months EndedMarch 31,20252024Cash flows from operating activities:Consolidated net income$7,787$990Adjustments to reconcile consolidated net income to net cashprovided by operating activities:Depreciation and amortization1,5631,266Stock-based compensation2,8811,034Deferred income taxes149(54)Pension cost342309Loss on lease terminationChanges in operating assets and liabilities:Accounts receivable(1,353)137Prepaid expenses and other current assets(47)86Other assets(16)426Accounts payable, accrued expenses and other6792,838Accrued salaries, wages and related benefits(249)(490)Income and other taxes(869)225Net cash provided by operating activities10,8676,767Cash flows from investing activities:Capital expenditures(2,350)(1,339)Net cash used in investing activities(2,350)(1,339)Cash flows from financing activities:Proceeds from exercise of stock options963-Payment of long-term obligations(103)(291)Net cash provided by (used in) financing activities860(291)Effect of exchange rate changes on cash and cash equivalents28232Net increase in cash and cash equivalents9,6595,169Cash and cash equivalents, beginning of period46,89713,806Cash and cash equivalents, end of period$56,556$18,975INNODATA INC. AND SUBSIDIARIESRECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES(Unaudited)(In thousands)Adjusted Gross Profit and Adjusted Gross MarginThree Months Ended March 31,Consolidated20252024Gross Profit attributable to Innodata Inc. and Subsidiaries$23,252$9,635Depreciation and amortization1,5441,240Stock-based compensation42784Adjusted Gross Profit$25,223$10,959Gross Margin40%36%Adjusted Gross Margin43%41%Three Months Ended March 31,DDS Segment20252024Gross Profit attributable to DDS Segment$19,729$6,558Depreciation and amortization714338Stock-based compensation41674Adjusted Gross Profit$20,859$6,970Gross Margin39%33%Adjusted Gross Margin41%35%Three Months Ended March 31,Synodex Segment20252024Gross Profit attributable to Synodex Segment$552$399Depreciation and amortization87137Stock-based compensation--Adjusted Gross Profit$639$536Gross Margin27%21%Adjusted Gross Margin32%29%Three Months Ended March 31,Agility Segment20252024Gross Profit attributable to Agility Segment$2,971$2,678Depreciation and amortization743765Stock-based compensation1110Adjusted Gross Profit$3,725$3,453Gross Margin55%54%Adjusted Gross Margin68%70%INNODATA INC. AND SUBSIDIARIESRECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES(Unaudited)(In thousands)Adjusted EBITDAThree Months Ended March 31,Consolidated20252024Net income attributable to Innodata Inc. and Subsidiaries$7,787$989Provision for income taxes612424Interest (income) expense, net(127)68Depreciation and amortization1,5631,266Stock-based compensation2,8811,034Non-controlling interests-1Adjusted EBITDA - Consolidated$12,716$3,782Three Months Ended March 31,DDS Segment20252024Net income attributable to DDS Segment$7,675$426Provision for income taxes587421Interest (income) expense, net(127)67Depreciation and amortization733364Stock-based compensation2,676895Non-controlling interests-1Adjusted EBITDA - DDS Segment$11,544$2,174Three Months Ended March 31,Synodex Segment20252024Net income attributable to Synodex Segment$266$276Depreciation and amortization87137Stock-based compensation6549Adjusted EBITDA - Synodex Segment$418$462Three Months Ended March 31,Agility Segment20252024Net income (loss) attributable to Agility Segment$(154)$287Provision for income taxes253Interest expense-1Depreciation and amortization743765Stock-based compensation*14090Adjusted EBITDA - Agility Segment$754$1,146INNODATA INC. AND SUBSIDIARIESCONSOLIDATED REVENUE BY SEGMENT(Unaudited)(In thousands)Three Months Ended March 31,20252024Revenues:DDS$50,831$19,705Synodex2,0131,871Agility5,5004,928Total Consolidated$58,344$26,504SOURCE: Innodata Inc.

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