RCS - Innodata Inc. - Innodata Reports Q3 Results; 136% Revenue Growth
08/11/2024 08:00
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RNS Number : 4408L Innodata Inc. 08 November 2024
Innodata Reports Third Quarter 2024 Results; Record 136% Revenue Growth
Year-Over-Year
NEW YORK, NY / ACCESSWIRE / November 8, 2024 /INNODATA INC.
(Nasdaq:INOD) today reported results for the third quarter ended September
30, 2024.
· Revenue of $52.2 million, 136% revenue growth year-over-year.
· Net income of $17.4 million, or $0.60 per basic share and $0.51
per diluted share, compared to net income of $0.4 million, or $0.01 per basic
and diluted share, in the same period last year. Third quarter net income
included a $5.6 million benefit as a result of recognizing a deferred tax
asset that related to our accumulated net operating losses and other deferred
expenses from prior periods.
· Adjusted EBITDA of $13.9 million, an increase of 337% from $3.2
million in the same period last year.*
· Cash, cash equivalents and short-term investments of $26.4
million at September 30, 2024 and $13.8 million at December 31, 2023.
· Guidance raised to between 88% and 92% year-over-year revenue
growth for full year 2024.
*Adjusted EBITDA is defined below.
Jack Abuhoff, CEO, said "Innodata continued to build on its recent progress,
leading to record third quarter revenue of $52.2 million, an increase of 136%
year-over-year. As a result of strong business momentum, Innodata is raising
2024 full-year revenue guidance to between 88% and 92% year-over-year revenue
growth.
"We are seeing strong business momentum reflected in revenue growth, margin
expansion, broadening customer relationships, and continuing progress on our
strategic roadmap. We believe increasing investments by the world's largest
tech companies in generative AI and large language models (LLMs) will continue
to be a growth catalyst for Innodata."
"The hard work and dedication of our talented team has enabled us to scale and
to meet or exceed the expectations of some of the most demanding, fast-moving
companies in the world. We believe Innodata is well positioned to capture the
generative AI market opportunity and continue to drive value for
shareholders."
Big Tech Customer Roster and New Win
Beyond the Big Tech customer we ramped up considerably this quarter, we have
seven other Big Tech customers that we believe will collectively become a
significant part of our revenue makeup next year. Our confidence is bolstered
by the progress we made this quarter in broadening these relationships,
expanding our engagements and securing new wins.
Our Big Tech customer roster now includes five of the Magnificent Seven, one
of the most prominent AI research and development companies and a prominent
social media company. We are proud to announce that we won this prominent
social media company, our eighth Big Tech customer, in the third quarter.
These companies are all investing significantly in generative AI development
initiatives, for which Innodata is providing data engineering support.
The Company also secured its second federal government agency win. The agency
will be leveraging the new generative AI capabilities built into Innodata's
Agility platform.
Record Revenue and Strong Balance Sheet
Revenue for third quarter 2024 reached $52.2 million, reflecting a
year-over-year increase of 136%. On a sequential basis, the Company observed a
60% increase of $19.7 million from its second quarter 2024 revenue of $32.6
million.
Innodata continues to operate a strong balance sheet, which enables the
Company to invest in growth. As of September 30, 2024, the Company's cash
balances were $26.4 million, up approximately $10 million from the second
quarter 2024.
Amounts in this press release have been rounded. All percentages have been
calculated using unrounded amounts.
Timing of Conference Call with Q&A
Innodata 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:
1-800-343-4136 (Domestic)
+1 203-518-9848 (International)
Participant Access Code INNODATA
888-562-2817 (Domestic Replay)
402-220-7354 (International Replay)
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 www.innodata.com
(https://pr.report/3y00) . Please note that the Webcast feature will be in
listen-only mode.
Call-in replay will be available for 7 days following the conference call, and
Webcast replay will be available for 30 days following the conference call.
About Innodata
Innodata (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 (https://pr.report/3y01) to learn more.
Forward-Looking Statements
This 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,"
"believe," "expect," "can," "continue," "could," "intend," "may," "should,"
"will," "anticipate," "indicate," "predict," "likely," "estimate," "plan,"
"potential," "possible," 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 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; the Company's 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. 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 March 4, 2024, 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 Contact
Jelena Sutovic
Innodata Inc.
Jsutovic@innodata.com (mailto:Mnovero@innodata.com)
(201) 371-8024
Non-GAAP Financial Measures
In 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 EBITDA
We 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 SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per-share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
2024 2023 2024 2023
Revenues $ 52,224 $ 22,169 $ 111,281 $ 60,663
Direct operating costs 30,893 13,945 70,964 39,534
Selling and administrative expenses 9,910 7,401 27,235 22,772
Interest (income) expense, net (26 ) 66 (55 ) 122
40,777 21,412 98,144 62,428
Income (loss) before provision for income taxes 11,447 757 13,137 (1,765 )
Provision for (benefit from) income taxes (5,944 ) 374 (5,235 ) 780
Consolidated net income (loss) 17,391 383 18,372 (2,545 )
Income attributable to non-controlling interests 2 12 8 15
Net Income (loss) attributable to Innodata Inc. and Subsidiaries $ 17,389 $ 371 $ 18,364 $ (2,560 )
Income (loss) per share attributable to Innodata Inc. and Subsidiaries:
Basic $ 0.60 $ 0.01 $ 0.64 $ (0.09 )
Diluted $ 0.51 $ 0.01 $ 0.55 $ (0.09 )
Weighted average shares outstanding:
Basic 28,994 28,459 28,873 27,930
Diluted 34,007 32,463 33,297 27,930
Tax provision for the three months and nine months ended September 30, 2024
includes a net tax benefit of $5.6 million resulting from the recognition of
deferred tax asset of the company's accumulated net loss carry forward (NOLCO)
and other deferred expenses.
INNODATA INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
September 30, December 31,
2024
2023
ASSETS
Current assets:
Cash and cash equivalents $ 26,364 $ 13,806
Short term investments - other 14 14
Accounts receivable, net 23,186 14,288
Prepaid expenses and other current assets 5,221 3,969
Total current assets 54,785 32,077
Property and equipment, net 3,325 2,281
Right-of-use-asset, net 4,435 5,054
Other assets 1,771 2,445
Deferred income taxes, net 7,890 1,741
Intangibles, net 13,880 13,758
Goodwill 2,084 2,075
Total assets $ 88,170 $ 59,431
LIABILITIES, NON-CONTROLLING INTERESTS AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 7,692 $ 5,722
Accrued salaries, wages and related benefits 9,619 7,799
Deferred revenues 6,500 3,523
Income and other taxes 3,961 3,848
Long-term obligations - current portion 1,166 1,261
Operating lease liability - current portion 855 782
Total current liabilities 29,793 22,935
Deferred income taxes, net 30 22
Long-term obligations, net of current portion 7,311 6,778
Operating lease liability, net of current portion 4,027 4,701
Total liabilities 41,161 34,436
Non-controlling interests (700 ) (708 )
STOCKHOLDERS' EQUITY: 47,709 25,703
Total liabilities, non-controlling interests and stockholders' equity $ 88,170 $ 59,431
The company's Deferred Tax Assets as of September 30, 2024 includes deferred
tax assets related to the company's accumulated net loss carry forward (NOLCO)
and other deferred expenses previously with a full valuation allowance.
INNODATA INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
Nine Months Ended
September 30,
2024 2023
Cash flows from operating activities:
Consolidated net income (loss) $ 18,372 $ (2,545 )
Adjustments to reconcile consolidated net income (loss) to net cash
provided by operating activities:
Depreciation and amortization 4,219 3,479
Stock-based compensation 2,881 2,998
Deferred income taxes (6,153 ) (120 )
Pension cost 948 791
Changes in operating assets and liabilities:
Accounts receivable (8,834 ) (1,198 )
Prepaid expenses and other current assets (1,222 ) 449
Other assets 673 (243 )
Accounts payable and accrued expenses 1,892 268
Deferred revenues 2,977 702
Accrued salaries, wages and related benefits 1,822 1,019
Income and other taxes 109 189
Net cash provided by operating activities 17,684 5,789
Cash flows from investing activities:
Capital expenditures (5,522 ) (4,320 )
Proceeds from sale of short term investments - others - 494
Net cash used in investing activities (5,522 ) (3,826 )
Cash flows from financing activities:
Proceeds from exercise of stock options 810 3,158
Withholding taxes on net settlement of restricted stock units (97 ) -
Payment of long-term obligations (516 ) (329 )
Net cash provided by financing activities 197 2,829
Effect of exchange rate changes on cash and cash equivalents 199 228
Net increase in cash and cash equivalents 12,558 5,020
Cash and cash equivalents, beginning of period 13,806 9,792
Cash and cash equivalents, end of period $ 26,364 $ 14,812
INNODATA INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(Unaudited)
(In thousands)
Three Months Ended September 30, Nine Months Ended September 30,
Consolidated 2024 2023 2024 2023
Net income (loss) attributable to Innodata Inc. and Subsidiaries $ 17,389 $ 371 $ 18,364 $ (2,560 )
Provision for (benefit from) income taxes (5,944 ) 374 (5,235 ) 780
Interest expense 21 163 190 295
Depreciation and amortization 1,535 1,237 4,219 3,479
Severance** - - - 580
Stock-based compensation 855 1,017 2,881 2,998
Non-controlling interests 2 12 8 15
Adjusted EBITDA - Consolidated $ 13,858 $ 3,174 $ 20,427 $ 5,587
Three Months Ended September 30, Nine Months Ended September 30,
DDS Segment 2024 2023 2024 2023
Net income (loss) attributable to DDS Segment $ 16,526 $ 444 $ 16,492 $ (751 )
Provision for (benefit from) income taxes (5,887 ) 371 (5,183 ) 772
Interest expense 20 162 187 291
Depreciation and amortization 670 328 1,513 811
Severance** - - - 33
Stock-based compensation 760 854 2,523 2,524
Non-controlling interests 2 12 8 15
Adjusted EBITDA - DDS Segment $ 12,091 $ 2,171 $ 15,540 $ 3,695
Three Months Ended September 30, Nine Months Ended September 30,
Synodex Segment 2024 2023 2024 2023
Net income (loss) attributable to Synodex Segment $ 381 $ (154 ) $ 973 $ (19 )
Depreciation and amortization 112 155 406 479
Severance** - - - 6
Stock-based compensation 38 60 136 177
Adjusted EBITDA - Synodex Segment $ 531 $ 61 $ 1,515 $ 643
Three Months Ended September 30, Nine Months Ended September 30,
Agility Segment 2024 2023 2024 2023
Net income (loss) attributable to Agility Segment $ 482 $ 81 $ 899 $ (1,790 )
Provision for (benefit from) income taxes (57 ) 3 (52 ) 8
Interest expense 1 1 3 4
Depreciation and amortization 753 754 2,300 2,189
Severance** - - - 541
Stock-based compensation 57 103 222 297
Adjusted EBITDA - Agility Segment $ 1,236 $ 942 $ 3,372 $ 1,249
** Represents non-recurring severance incurred for a reduction in headcount
in connection with the re-alignment of the Company's cost structure.
INNODATA INC. AND SUBSIDIARIES
CONSOLIDATED REVENUE BY SEGMENT
(Unaudited)
(In thousands)
For the Three Months Ended September 30, For the Nine Months Ended September 30,
2024 2023 2024 2023
Revenues:
DDS $ 44,694 $ 16,003 $ 89,810 $ 41,929
Synodex 1,935 1,728 5,792 5,705
Agility 5,595 4,438 15,679 13,029
Total Consolidated $ 52,224 $ 22,169 $ 111,281 $ 60,663
SOURCE: Innodata Inc.
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