RCS - Innodata Inc. - Innodata Reports Record First Quarter 2026 Results
08/05/2026 08:15
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RNS Number : 5050D Innodata Inc. 08 May 2026
Innodata Reports Record First Quarter 2026 Results
· Revenue Up 54% Year-Over-Year, Beats Consensus by 18%
· Adjusted EBITDA of $25.0 Million Beats Consensus by 139%;
Adjusted Gross Margin Expands to 47%
· Raises Full-Year 2026 Revenue Growth Guidance to ~40% or More, Up
From ~35% or More
· Announces New Engagements With Big Tech Company Expected to
Generate Approximately $51 Million of Revenue in 2026
NEW YORK, NY / ACCESS Newswire / May 7, 2026 / INNODATA INC.
(Nasdaq:INOD) today reported results for the first quarter ended March 31,
2026.
· Revenue of $90.1 million, representing 54% year-over-year
revenue growth.
· Adjusted Gross Profit of $42.6 million, representing Adjusted
Gross Margin of 47%.*
· Adjusted EBITDA of $25.0 million, or 28% of revenue, an increase
of $12.3 million from $12.7 million in the same period last year.*
· Net income of $14.9 million, or $0.46 per basic share and $0.42
per diluted share, compared to net income of $7.8 million, or $0.25 per basic
share and $0.22 per diluted share, in the same period last year.
· Cash, cash equivalents and short-term investments of $117.4
million as of March 31, 2026, an increase of $35.1 million from $82.2 million
as of December 31, 2025. The Company's Wells Fargo credit facility, which was
renewed and expanded from $30 million to $50 million on a three-year term
during the quarter, remains undrawn, and the Company carries no appreciable
debt.
* Adjusted Gross Profit, Adjusted Gross Margin, and Adjusted EBITDA are
non-GAAP financial measures and are defined below.
Jack Abuhoff, CEO, said, "Q1 was a record-setting quarter for Innodata - and
it was record setting by a wide margin. Revenue grew 54% year-over-year while
Adjusted EBITDA grew approximately 96% - operating leverage by definition. We
delivered a single quarter of revenue that exceeded our annual revenue of just
three years ago. Just as importantly, our results demonstrate that the
strategic position we have been building is translating into scale, margin
expansion, and cash generation.
"With one quarter behind us and progressively increasing visibility into the
year ahead, we are raising our full-year 2026 revenue growth guidance to
approximately 40% or more year-over-year, up from the approximately 35% or
more we guided to ten weeks ago. We continue to view this guidance as prudent.
There are several potentially large programs we have not yet included in our
forecast.
"We are also announcing today a new set of engagements with one of the world's
leading Big Tech companies that we expect could generate approximately $51
million of revenue this year. Twelve months ago, our revenue from this
customer was zero; this year we expect it to become our second-largest
customer, and we see considerable headroom both within the current program and
across additional programs we are actively discussing.
"Importantly, the diversification we planned for is now happening in practice.
For full year 2026, we expect our largest customer to represent a smaller
percentage of total revenue even though we expect our absolute dollar revenue
with that customer to increase. In Q1, revenue from our other Big Tech
customers, in the aggregate, grew 453% year-over-year. We believe this
represents one of the strongest forms of customer diversification a company
can deliver: the largest account continues to grow in absolute dollars, while
the rest of the customer base grows even faster.
"We are also continuing to innovate at a rapid pace. This quarter we launched
our Evaluation and Observability Platform in beta - a control plane for
agentic systems - and shortly after launch closed our first platform
engagement, valued at $1 million in revenue, with a hyperscaler customer.
Fifteen additional companies are actively evaluating the platform, and we are
in discussions with two leading hyperscalers about potential channel
partnerships that we believe could meaningfully expand the platform's reach.
The strength of our research bench was further validated when one of our
researchers had two papers accepted at the 2026 International Conference on
Machine Learning (ICML), one of which received the prestigious 'Spotlight'
designation - placing it among approximately 2% of the nearly 24,000 papers
submitted to ICML this year."
Abuhoff concluded, "We believe Innodata is entering a golden age of
innovation. We are confident that 2026 will be a tremendous year for our
shareholders, and we are excited about the opportunities that lie ahead in
2027 and beyond."
Reporting Note
Effective the first quarter of 2026, the Company is reporting its financial
results as a single operating segment. The Company previously reported three
operating segments: DDS, Agility, and Synodex. The shift to single-segment
reporting reflects the transformation of the Company's business strategy and
operating model, driven by its focus on agentic AI technologies and the
increasingly integrated way in which it manages and delivers its services.
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) 800 715 9871 North America, Toll Free
(+44) 800 358 0970 United Kingdom
(+1) 646 307 1963 International
Participant Access Code 3150581
For Replay:
(+1) 800 770 2030 North America-Toll Free
(+1) 609 800 9909 International
Playback ID 3150581
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/
(https://pr.report/kw5h) . 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/
(https://pr.report/kw5i) .
About Innodata
Innodata (Nasdaq: INOD) is a global data engineering company. We believe that
data and Artificial Intelligence (AI) are inextricably linked. Our mission is
to enable the responsible advancement of artificial intelligence by providing
the data, evaluation frameworks, and human expertise required to build AI
systems that can be trusted at scale. We provide a range of transferable
solutions, platforms, and services for Generative AI / AI builders and
adopters. In every relationship, we honor our 36+ year legacy delivering the
highest quality data and outstanding outcomes for our customers.
Visit www.innodata.com (https://pr.report/kw5j) 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 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; anticipated and actual use cases and outcomes,
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 AI 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 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; revenue concentration among a limited number
of customers; our dependency on third-party providers and partners; 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 trade 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 ("SEC").
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 SEC on February 26, 2026, and
in our other filings that we may make with the SEC. In light of these risks
and uncertainties, there can be no assurance that the results referred to in
any 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
Aneesh Pendharkar
investor@innodata.com (mailto:investor@innodata.com)
(201) 371-8000
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 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 Margin
We define Adjusted Gross Profit as revenues less direct operating costs
attributable to Innodata Inc. and its subsidiaries in accordance with GAAP,
plus depreciation and amortization of intangible assets, stock-based
compensation, and other one-time costs included within direct operating cost.
We define Adjusted Gross Margin by dividing Adjusted Gross Profit over total
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 EBITDA
We define Adjusted EBITDA as net income (loss) attributable to Innodata Inc.
and its subsidiaries in accordance with 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 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
March 31,
2026 2025
Revenues $ 90,096 $ 58,344
Operating costs and expenses:
Direct operating costs 50,304 35,092
Selling and administrative expenses 22,892 14,980
Interest income, net (442 ) (127 )
72,754 49,945
Income before provision for income taxes 17,342 8,399
Provision for income taxes 2,444 612
Consolidated net income 14,898 7,787
Income attributable to non-controlling interests - -
Net income attributable to Innodata Inc. and Subsidiaries $ 14,898 $ 7,787
Income per share attributable to Innodata Inc. and Subsidiaries:
Basic $ 0.46 $ 0.25
Diluted $ 0.42 $ 0.22
Weighted average shares outstanding:
Basic 32,625 31,434
Diluted 35,572 34,951
INNODATA INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
March 31, 2026 December 31, 2025
ASSETS
Current assets:
Cash and cash equivalents $ 117,366 $ 82,230
Accounts receivable, net 45,937 46,510
Prepaid expenses and other current assets 10,487 6,654
Total current assets 173,790 135,394
Property and equipment, net 8,014 7,966
Right-of-use asset, net 3,817 4,094
Other assets 3,356 1,648
Deferred income taxes, net 5,286 3,429
Intangibles, net 14,090 13,983
Goodwill 2,053 2,079
Total assets $ 210,406 $ 168,593
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable, accrued expenses and other $ 38,517 $ 26,720
Accrued salaries, wages and related benefits 21,400 16,480
Income and other taxes 6,319 4,471
Long-term obligations - current portion 2,304 1,659
Operating lease liability - current portion 1,233 1,202
Total current liabilities 69,773 50,532
Deferred income taxes, net 46 146
Long-term obligations, net of current portion 9,546 7,625
Operating lease liability, net of current portion 2,866 3,228
Total liabilities 82,231 61,531
STOCKHOLDERS' EQUITY 128,175 107,062
Total liabilities and stockholders' equity $ 210,406 $ 168,593
INNODATA INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
Three Months Ended
March 31,
2026 2025
Cash flows from operating activities:
Consolidated net income $ 14,898 $ 7,787
Adjustments to reconcile consolidated net income to net cash
provided by operating activities:
Stock-based compensation 5,908 2,881
Depreciation and amortization 2,176 1,563
Deferred income taxes (1,922 ) 149
Pension cost 414 342
Changes in operating assets and liabilities:
Accounts receivable 360 (1,353 )
Prepaid expenses and other current assets (3,035 ) (47 )
Other assets 105 (16 )
Accounts payable, accrued expenses and other liabilities 11,600 679
Accrued salaries, wages and related benefits 4,932 (249 )
Income and other taxes 1,881 (869 )
Pension benefit payments (58 ) (78 )
Net cash provided by operating activities 37,259 10,789
Cash flows from investing activities:
Capital expenditures (2,421 ) (2,350 )
Net cash used in investing activities (2,421 ) (2,350 )
Cash flows from financing activities:
Proceeds from exercise of stock options 957 963
Withholding taxes on net settlement of restricted stock units (50 ) -
Payment of long-term obligations (6 ) (25 )
Net cash provided by financing activities 901 938
Effect of exchange rate changes on cash and cash equivalents (603 ) 282
Net increase in cash and cash equivalents 35,136 9,659
Cash and cash equivalents, beginning of period 82,230 46,897
Cash and cash equivalents, end of period $ 117,366 $ 56,556
INNODATA INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(Unaudited)
(In thousands)
Adjusted Gross Profit and Adjusted Gross Margin
Three Months Ended March 31,
2026 2025
Gross Profit attributable to Innodata Inc. and Subsidiaries $ 39,792 $ 23,252
Depreciation and amortization 2,119 1,544
Stock-based compensation 664 427
Adjusted Gross Profit $ 42,575 $ 25,223
Gross Margin 44 % 40
Adjusted Gross Margin 47 % 43
Adjusted EBITDA
Three Months Ended March 31,
2026 2025
Net income attributable to Innodata Inc. and Subsidiaries $ 14,898 $ 7,787
Provision for income taxes 2,444 612
Interest (income), net (442 ) (127
Depreciation and amortization 2,176 1,563
Stock-based compensation 5,908 2,881
Adjusted EBITDA $ 24,984 $ 12,716
SOURCE: Innodata Inc.
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