RCS - Innodata Inc. - Innodata Reports Third Quarter 2022 Results
11/11/2022 08:15
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RNS Number : 0660G Innodata Inc. 10 November 2022
Innodata Reports Third Quarter 2022 Results
Third Quarter Revenue Up 6% Year-Over-Year
Strong Near-Term Earnings Improvements Anticipated
NEW YORK, NY / ACCESSWIRE / November 10, 2022 / INNODATA INC.
(NASDAQ:INOD) today reported results for the third quarter ended September
30, 2022.
· Revenue for the quarter ended September 30, 2022 was $18.4
million, up 6% year-over-year.
· Net loss for the quarter ended September 30, 2022 was $3.3
million, or $0.12 per basic and diluted share, compared to a net loss of $0.8
million, or $0.03 per basic and diluted share, in the same period last year.
· Revenue for the nine months ended September 30, 2022 was $59.6
million, up 18% year-over-year.
· Net loss for the nine months ended September 30, 2022 was $10.0
million, or $0.37 per basic and diluted share, compared to a net loss of $0.5
million, or $0.02 per basic and diluted share, in the same period last year.
· Adjusted EBITDA loss was $1.2 million in the third quarter of
2022, compared to Adjusted EBITDA of $0.7 million in the same period last
year.**
· Adjusted EBITDA loss was $3.5 million for the nine months ended
September 30, 2022, compared to Adjusted EBITDA of $2.7 million in the same
period last year.**
· Cash and cash equivalents were $10.7 million at September 30,
2022 and $18.9 million at December 31, 2021.
** Adjusted EBITDA is defined below.
Amounts in this press release have been rounded. All percentages have been
calculated using unrounded amounts.
Jack Abuhoff, CEO, said, "Our Q3 revenue was $18.4 million, exceeding the
guidance we provided in our last earnings announcement. We expect that Q4
revenue will show sequential improvement from Q3. Due to our rigorous focus on
costs, we expect to be Adjusted EBITDA positive in Q4, and our business plan
calls for us to achieve greater than $10 million in Adjusted EBITDA next year.
"Many of the large tech companies have launched major layoffs and cost-cutting
measures. Our large social media customer recently significantly reduced its
workforce, and as a consequence, we are seeing interruptions in the work we do
for them. We believe our work is critical to their ongoing operational goals
and anticipate that our work will likely pick up again as responsibilities of
the laid-off workers are assigned to other employees. That said, our business
plan conservatively is not dependent on this occurring."
Abuhoff continued, "Despite these relatively significant disruptions, we
managed to show 6% year-over-year growth, which, while not reflective of our
ambitions, supports our belief that our business growth engines remain intact.
Although the general economic outlook has resulted in longer sales cycles and
more levels of customer-side sign-off, we believe that our products and
services are critical to helping our clients stay competitive and achieve
their cost and efficiency goals and that increased spending on such
initiatives is a secular trend.
"Outside of these transitory issues, we believe our business continues to
build momentum. We now have 10 large customers for our AI/ML lifecycle
services which we believe will increase their spend with us in 2023, some
significantly, based on our current line-of-sight. Many of these companies
have revenues in multiple billions of dollars. In the third quarter, we
brought on four of these customers. The use cases we're landing include facial
recognition, retail anomaly detection, automation, chatbots, security
monitoring, and voice-to-text. Indeed, we're hoping to be in a position to
announce several additional important wins and expansions with these and other
customers by year-end.
"Our Synodex business - which enjoys a net retention over 150% - is also
rapidly onboarding new customers. Just yesterday, we announced two new
customer wins for our Synodex platform that we believe will together yield
approximately $1.1 million of annualized revenue. We also expanded the value
of a Synodex engagement from an estimated $1.8 to $2.3 million of anticipated
annual recurring revenue as we began ramping up the engagement this month.
"On the Agility front, we've seen a 107% year-over-year increase in our
year-to-date bookings, and we expect this trend to continue through the
remainder of the year as a result of a strong pipeline. We've also increased
our midmarket average selling price (ASP) from a year ago by 49% with large
increases in the number of deals significantly exceeding the average. And now
that we've launched our new social media listening product, which we announced
in September, we're seeing that midmarket deals incorporating this new product
are increasing ASP by 200%. To date, we have 20 customers using our new social
listening product, and we have 65 prospective customers in our pipeline.
Another significant accomplishment is that this year we've continued to expand
a new Agility customer that is now our largest-ever Agility customer. We now
value them at $628,000 of annual recurring subscription revenue. Moreover, we
are expecting this annual recurring revenue value to increase further based on
additional expansions. For this customer, we developed a new critical
awareness capability that we believe could have broad application in the
market."
Abuhoff concluded, "Consequently, we believe that the secular growth trends
underlying our business remain robust. Over the past year, we believe that we
have proven that we are well-positioned to serve the growing AI market -
helping companies that are already deep into AI with large-scale data
collection and annotation; helping companies that are now getting into AI with
model development and deployment; and building AI-enabled applications and
platforms that are blueprints for how to strike the right balance between
humans and machines. We believe that in the world ahead of us AI will co-pilot
even the most domain-specific tasks."
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 uses 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 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.
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:
Participant Dial-in Numbers
1-844-602-0380 (Domestic)
+1 862-298-0970 (International)
1-877-481-4010 (Domestic Replay)
+1 919-882-2331 (International Replay)
Passcode for replay: 47040
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/pJeEm1gO) . Please note that the Webcast feature will be in
listen-only mode.
Call-in or Webcast replay will be available for 30 days following the
conference call.
About Innodata
Innodata (NASDAQ:INOD) is a global data engineering company delivering the
promise of AI to many of the world's most prestigious companies. We provide
AI-enabled software platforms and managed services for AI data
collection/annotation, AI digital transformation, and industry-specific
business processes. Our low-code Innodata AI technology platform is at the
core of our offerings. In every relationship, we honor our 30+ year legacy
delivering the highest quality data and outstanding service to our customers.
Visit www.innodata.com (https://pr.report/VtAUCqvs) to learn more.
Forward Looking Statements
This press release may contain 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. Words such as "project,"
"believe," "expect," "can," "continue," "could," "intend," "may," "should,"
"will," "anticipate," "indicate," "forecast," "predict," "likely," "goals,"
"estimate," "plan," "potential," "promises," "supports," or the negatives
thereof and other similar expressions generally identify forward-looking
statements, which speak only as of the date hereof.
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, the expected or potential
effects of the novel coronavirus ("COVID-19") pandemic and the responses of
governments, the general global population, our customers, and the Company
thereto; impacts resulting from the rapidly evolving conflict between Russia
and the Ukraine; that contracts may be terminated by customers; projected or
committed volumes of work may not materialize; 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; the likelihood of continued development
of the markets, particularly new and emerging markets, that our services
support; continuing DDS segment revenue concentration in a limited number of
customers; potential inability to replace projects that are completed,
canceled or reduced; our dependency on content providers in our Agility
segment; difficulty in integrating and deriving synergies from acquisitions,
joint venture 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, whether as a result of the COVID-19 pandemic or otherwise; changes
in external market factors; the ability and willingness of our customers and
prospective customers to execute business plans that give rise to requirements
for our services; changes in our business or growth strategy; the emergence of
new, or growth in existing competitors; various other competitive and
technological factors; the Company's 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
forward-looking statements. Factors that could cause or contribute to such
differences include, but are not limited to, uncertainty around the COVID-19
pandemic and the effects of the global response thereto and 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 24, 2022, 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 Federal securities
laws.
Company Contact
Marcia Novero
Innodata Inc.
Mnovero@innodata.com (mailto:Mnovero@innodata.com)
(201) 371-8015
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
2022 2021 2022 2021
Revenues $ 18,447 $ 17,450 $ 59,626 $ 50,466
Operating costs and expenses:
Direct operating costs 12,389 10,703 38,795 31,208
Selling and administrative expenses 9,117 7,262 29,584 19,767
Interest expense, net (1 ) 4 1 18
21,505 17,969 68,380 50,993
Loss from operations $ (3,058 ) $ (519 ) $ (8,754 ) $ (527 )
Gain from loan forgiveness - - - 580
Income (Loss) before provision for income taxes (3,058 ) (519 ) (8,754 ) 53
Provision for income taxes 268 328 1,293 621
Consolidated net loss (3,326 ) (847 ) (10,047 ) (568 )
Income (loss) attributable to non-controlling interests 1 (47 ) (72 ) (63 )
Net Loss attributable to Innodata Inc. and Subsidiaries $ (3,327 ) $ (800 ) $ (9,975 ) $ (505 )
Loss per share attributable to Innodata Inc. and Subsidiaries:
Basic and Diluted $ (0.12 ) $ (0.03 ) $ (0.37 ) $ (0.02 )
Weighted average shares outstanding:
Basic and Diluted 27,331 26,971 27,239 26,459
INNODATA INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
September 30, 2022 December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents $ 10,729 $ 18,902
Accounts receivable, net 9,374 11,379
Prepaid expenses and other current assets 3,819 3,681
Total current assets 23,922 33,962
Property and equipment, net 2,718 2,947
Right-of-use asset, net 4,199 5,621
Other assets 1,514 2,247
Deferred income taxes, net 1,532 1,950
Intangibles, net 11,942 10,347
Goodwill 1,982 2,143
Total assets $ 47,809 $ 59,217
LIABILITIES, NON-CONTROLLING INTERESTS AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable, accrued expenses and other $ 9,690 $ 9,387
Accrued salaries, wages and related benefits 6,911 6,391
Income and other taxes 2,991 3,213
Long-term obligations - current portion 596 1,279
Operating lease liability - current portion 742 1,034
Total current liabilities 20,930 21,304
Deferred income taxes 23 15
Long-term obligations, net of current portion 5,874 6,217
Operating lease liability, net of current portion 3,930 5,276
Total liabilities 30,757 32,812
Non-controlling interests (729 ) (3,522 )
STOCKHOLDERS' EQUITY 17,781 29,927
Total liabilities, non-controlling interests and stockholders' equity $ 47,809 $ 59,217
INNODATA INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
Nine Months Ended
September 30,
2022 2021
Cash flows from operating activities:
Consolidated net loss $ (10,047 ) $ (568 )
Adjustments to reconcile consolidated net loss to net cash
provided by operating activities:
Depreciation and amortization 2,836 2,054
Gain on loan forgiveness - (580 )
Stock-based compensation 2,370 1,117
Deferred income taxes 242 (16 )
Pension cost 577 308
Loss on lease termination 125 -
Changes in operating assets and liabilities:
Accounts receivable 1,690 431
Prepaid expenses and other current assets (235 ) 342
Other assets 734 214
Accounts payable and accrued expenses (253 ) 2,895
Accrued salaries, wages and related benefits 498 976
Income and other taxes (197 ) (1,531 )
Net cash provided by (used in) operating activities (1,660 ) 5,642
Cash flows from investing activities:
Capital expenditures (5,253 ) (2,919 )
Net cash used in investing activities (5,253 ) (2,919 )
Cash flows from financing activities:
Proceeds from stock option exercises 276 2,214
Withholding taxes on net settlement of stock-based compensation - (763 )
Payment of long-term obligations (510 ) (666 )
Net cash provided by (used in) financing activities (234 ) 785
Effect of exchange rate changes on cash and cash equivalents (1,026 ) (138 )
Net increase (decrease) in cash and cash equivalents (8,173 ) 3,370
Cash and cash equivalents, beginning of period 18,902 17,573
Cash and cash equivalents, end of period $ 10,729 $ 20,943
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 2022 2021 2022 2021
Net loss attributable to Innodata Inc. and Subsidiaries $ (3,327 ) $ (800 ) $ (9,975 ) $ (505 )
Provision for income taxes 268 328 1,293 621
Interest expense, net (1 ) 4 1 18
Gain on loan forgiveness - - - (580 )
Depreciation and amortization 1,011 684 2,836 2,054
Stock-based compensation 805 503 2,370 1,117
Non-controlling interests 1 (47 ) (72 ) (63 )
Adjusted EBITDA / (loss) - Consolidated $ (1,243 ) $ 672 $ (3,547 ) $ 2,662
Three Months Ended September 30, Nine Months Ended September 30,
DDS Segment 2022 2021 2022 2021
Net income (loss) attributable to DDS Segment $ (324 ) $ 1,092 $ (211 ) $ 3,078
Provision for income taxes 265 353 1,196 599
Interest expense, net (1 ) 4 1 17
Gain on loan forgiveness - - - (580 )
Depreciation and amortization 201 139 483 459
Stock-based compensation 761 404 1,929 863
Non-controlling interests 1 1 2 (2 )
Adjusted EBITDA - DDS Segment $ 903 $ 1,993 $ 3,400 $ 4,434
Three Months Ended September 30, Nine Months Ended September 30,
Synodex Segment 2022 2021 2022 2021
Net loss attributable to Synodex Segment $ (779 ) $ (537 ) $ (2,244 ) $ (650 )
Depreciation and amortization $ 171 19 $ 483 $ 21
Stock-based compensation 30 24 129 38
Non-controlling interests - (48 ) (74 ) (61 )
Adjusted EBITDA (loss) - Synodex Segment $ (578 ) $ (542 ) $ (1,706 ) $ (652 )
Three Months Ended September 30, Nine Months Ended September 30,
Agility Segment 2022 2021 2022 2021
Net loss attributable to Agility Segment $ (2,224 ) $ (1,355 ) $ (7,520 ) $ (2,933 )
Provision for income taxes 3 (25 ) 97 22
Interest expense, net - - - 1
Depreciation and amortization 639 526 1,870 1,574
Stock-based compensation 14 75 312 216
Adjusted EBITDA (loss) - Agility Segment $ (1,568 ) $ (779 ) $ (5,241 ) $ (1,120 )
INNODATA INC. AND SUBSIDIARIES
CONSOLIDATED REVENUE BY SEGMENT
(Unaudited)
(In thousands)
Revenue by segment
For the Three Months Ended September 30, For the Nine Months Ended September 30,
2022 2021 2022 2021
Revenues:
DDS $ 12,852 $ 13,237 $ 42,944 $ 37,997
Synodex 1,762 983 5,376 2,888
Agility 3,833 3,230 11,306 9,581
Total Consolidated $ 18,447 $ 17,450 $ 59,626 $ 50,466
SOURCE: Innodata Inc.
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