RCS - Innodata Inc. - Innodata Reports Third Quarter 2025 Results
07/11/2025 08:15
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RNS Number : 5840G Innodata Inc. 06 November 2025
Innodata Reports Third Quarter 2025 Results
· Revenue up 20% Year-Over-Year
· Reiterates Prior Guidance of 45% or More YoY Growth in 2025
· Anticipates Transformative Growth in 2026 Based on New Wins and
Strong Momentum
NEW YORK CITY, NY / ACCESS Newswire (https://www.accessnewswire.com/) /
November 6, 2025 / INNODATA INC. (Nasdaq:INOD) today reported results for the
third quarter ended September 30, 2025.
· Revenue of $62.6 million for the three months ended September 30,
2025, representing 20% year-over-year organic revenue growth.
· Revenue of $179.3 million for the nine months ended September 30,
2025, representing 61% year-over-year organic revenue growth.
· Adjusted EBITDA of $16.2 million for the three months ended
September 30, 2025, an increase of $2.3 million, or 17%, from $13.9 million in
the same period last year.*
· Adjusted EBITDA of $42.2 million for the nine months ended
September 30, 2025, an increase of $21.8 million, or 106%, from $20.4 million
in the same period last year.*
· Net income of $8.3 million, or $0.26 per basic share and $0.24
per diluted share, for the three months ended September 30, 2025, compared to
net income of $17.4 million, or $0.60 per basic share and $0.51 diluted share,
in the same period last year. The prior-year period's earnings per share
benefited by approximately $0.34 basic and $0.27 diluted from a tax benefit
related to the utilization of net operating loss carryforwards (NOLCOs).
· Net income of $23.3 million, or $0.74 per basic share and $0.67
per diluted share, for the nine months ended September 30, 2025, compared to
net income of $18.4 million, or $0.64 per basic share and $0.55 per diluted
share, in the same period last year. The prior-year period's earnings per
share benefited by approximately $0.18 basic and $0.16 diluted from a tax
benefit related to the utilization of NOLCOs.
· Cash, cash equivalents and short-term investments were $73.9
million as of September 30, 2025 and $46.9 million as of December 31, 2024.
* Adjusted EBITDA is defined below.
Jack Abuhoff, CEO, said, "Our third quarter marked another record-setting
performance for Innodata, with revenue, profitability, and cash all at
all-time highs. Looking ahead, in 2026, we anticipate a continuation of our
transformative growth, fueled by (1) deepening relationships with the world's
leading Big Tech and AI innovation labs, as evidenced by verbal confirmation
of an expansion with our largest customer that could potentially result in
substantial revenue, verbal confirmation of a deal with another Big Tech which
could potentially result in $6.5 million of annualized revenue runrate, and
five new Big Tech customers we have either landed or expect to finalize
shortly, two of which are global leaders in commerce, cloud and AI; and (2)
strong early returns from seven major investment areas, several of which we
are announcing today, including:
· Pre-Training Data: Earlier this year we recognized that model
quality is increasingly tied to the quality of pre-training data. Acting
early, we invested in new pre-training data capabilities, and that bet is
already paying off. We've since signed contracts we believe could result in
approximately $42 million of revenue, and we expect to soon sign contracts we
believe could result in approximately $26 million of additional revenue. So
that's $68 million of potential revenue from these programs that are either
signed or likely to be signed soon. These programs are ramping now.
· Federal Practice: As announced today, we have launched Innodata
Federal, led by AI veterans with deep defense and intelligence experience. The
business unit has engaged a new, high-profile customer. We believe the initial
project with this customer will result in approximately $25 million of
revenue, mostly in 2026. We have additional projects under discussion with
this customer. We see this new relationship as a potential major catalyst for
growth and visibility as the U.S. government accelerates AI adoption across
agencies.
As we announced today, General (Retired) Richard D. Clarke, a retired
four-star Army general and former Commander of U.S. Special Operations
Command, has joined the Innodata board. We are excited about his expertise and
relationships in helping guide the trajectory of Innodata Federal.
· Sovereign AI: Around the world, governments are moving to build
sovereign AI capability - controlling the full technology stack from silicon
to data. Innodata is in active discussions with several sovereign AI programs
and expects to announce one or more strategic partnerships in 2026. We view
this as one of the most significant structural shifts in the global AI
ecosystem and an enormous medium-term opportunity for us.
· Enterprise AI: Our Enterprise AI Practice helps companies embed
generative AI into products and operations. We're working with major platforms
to automate workflows, integrate real-time analytics into data-center
operations, and re-engineer business processes using GenAI. We're pleased with
the rapid acceleration in business we are experiencing in this market.
· Agentic AI: We believe Agentic AI will unlock the next wave of
enterprise productivity. We're working with leading companies to develop and
benchmark autonomous agents across real-world use cases - measuring
consistency, reliability, and efficiency.
· Model Safety: As models and agents gain autonomy, ensuring
safety, reliability, and ethical integrity becomes mission critical. We're
engaged with leading companies to stress-test their multimodal AI products
against risks like data exfiltration, instruction manipulation, and privilege
escalation. Our work in this area is informed by insights we have gathered and
technologies we have developed working with frontier model builders.
Based on updated forecasts, we reiterate guidance we provided last quarter of
45% or more year-over-year organic revenue growth in 2025, and we anticipate
continued transformative growth in 2026 based on new wins and strong
momentum."
Abuhoff concluded, "Taken together, we believe the developments we are
announcing today mark a company entering its next phase of transformative
growth - profitable, increasingly diversified, and positioned squarely at the
center of the AI revolution."
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) 800 549 8228 North America
(+44) 800 279 7040 United Kingdom
(+1) 289 819 1520 International
Participant Access Code 42719 #
Replay dial-In
(+1) 888 660 6264 North America
(+1) 289 819 1325 International:
Replay Passcode 42719 #
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/fw5h) . 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/fw5i) .
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/fw5j) 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,"
"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; 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 ("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 24, 2025, 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
(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 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 Margin
We 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 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,
2025 2024 2025 2024
Revenues $ 62,550 $ 52,224 $ 179,287 $ 111,281
Operating costs and expenses:
Direct operating costs 37,046 30,893 107,508 70,964
Selling and administrative expenses 13,745 9,910 42,837 27,235
Interest income, net (420) (26) (1,124) (55 )
50,371 40,777 149,221 98,144
Income before provision for income taxes 12,179 11,447 30,066 13,137
Provision for income taxes 3,837 (5,944 ) 6,718 (5,235 )
Consolidated net income 8,342 17,391 23,348 18,372
Income attributable to non-controlling interests - 2 - 8
Net income attributable to Innodata Inc. and Subsidiaries $ 8,342 $ 17,389 $ 23,348 $ 18,364
Income per share attributable to Innodata Inc. and Subsidiaries:
Basic $ 0.26 $ 0.60 $ 0.74 $ 0.64
Diluted $ 0.24 $ 0.51 $ 0.67 $ 0.55
Weighted average shares outstanding:
Basic 31,848 28,994 31,690 28,873
Diluted 35,266 34,007 34,996 33,297
INNODATA INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
September 30, 2025 December 31, 2024
ASSETS
Current assets:
Cash and cash equivalents $ 73,859 $ 46,897
Accounts receivable, net 39,440 28,013
Prepaid expenses and other current assets 6,478 6,090
Total current assets 119,777 81,000
Property and equipment, net 7,143 4,101
Right-of-use asset, net 4,332 4,238
Other assets 1,524 1,267
Deferred income taxes, net 4,188 7,492
Intangibles, net 13,885 13,353
Goodwill 2,067 1,998
Total assets $ 152,916 $ 113,449
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable, accrued expenses and other $ 23,711 $ 17,455
Accrued salaries, wages and related benefits 15,262 13,836
Income and other taxes 3,205 5,695
Long-term obligations - current portion 1,221 1,643
Operating lease liability - current portion 1,122 877
Total current liabilities 44,521 39,506
Deferred income taxes, net 40 32
Long-term obligations, net of current portion 7,560 6,744
Operating lease liability, net of current portion 3,555 3,778
Total liabilities 55,676 50,060
STOCKHOLDERS' EQUITY 97,240 63,389
Total liabilities and stockholders' equity $ 152,916 $ 113,449
INNODATA INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Nine Months Ended
September 30,
2025 2024
Cash flows from operating activities:
Consolidated net income $ 23,348 $ 18,372
Adjustments to reconcile consolidated net income to net cash
provided by operating activities:
Stock-based compensation 8,309 2,881
Depreciation and amortization 4,913 4,219
Deferred income taxes 3,201 (6,153 )
Pension cost 984 948
Loss on lease termination
Changes in operating assets and liabilities:
Accounts receivable (11,167) (8,834 )
Prepaid expenses and other current assets (299) (1,222 )
Other assets (248) 673
Accounts payable and accrued expenses 5,963 4,869
Accrued salaries, wages and related benefits 1,397 1,822
Income and other taxes (2,530) 109
Net cash provided by operating activities 33,871 17,684
Cash flows from investing activities:
Capital expenditures (8,286) (5,522 )
Net cash used in investing activities (8,286) (5,522 )
Cash flows from financing activities:
Proceeds from exercise of stock options 1,548 810
Withholding taxes on net settlement of restricted stock units (37) (97 )
Payment of long-term obligations (369) (516 )
Net cash provided by financing activities 1,142 197
Effect of exchange rate changes on cash and cash equivalents 235 199
Net increase in cash and cash equivalents 26,962 12,558
Cash and cash equivalents, beginning of period 46,897 13,806
Cash and cash equivalents, end of period $ 73,859 $ 26,364
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 September 30, Nine Months Ended September 30,
Consolidated 2025 2024 2025 2024
Gross Profit attributable to Innodata Inc. and Subsidiaries $ 25,504 $ 21,331 $ 71,779 $ 40,317
Depreciation and amortization 1,729 1,513 4,855 4,147
Stock-based compensation 444 43 1,312 200
Adjusted Gross Profit $ 27,677 $ 22,887 $ 77,946 $ 44,664
Gross Margin 41 % 41 % 40 % 36 %
Adjusted Gross Margin 44 % 44 % 43 % 40 %
Three Months Ended September 30, Nine Months Ended September 30,
DDS Segment 2025 2024 2025 2024
Gross Profit attributable to DDS Segment $ 22,152 $ 17,610 $ 61,281 $ 30,247
Depreciation and amortization 800 648 2,224 1,441
Stock-based compensation 433 38 1,278 176
Adjusted Gross Profit $ 23,385 $ 18,296 $ 64,783 $ 31,864
Gross Margin 40 % 39 % 39 % 34 %
Adjusted Gross Margin 43 % 41 % 41 % 35 %
Three Months Ended September 30, Nine Months Ended September 30,
Synodex Segment 2025 2024 2025 2024
Gross Profit attributable to Synodex Segment $ 117 $ 483 $ 1,116 $ 1,338
Depreciation and amortization 114 112 289 406
Stock-based compensation - 1 1 1
Adjusted Gross Profit $ 231 $ 596 $ 1,406 $ 1,745
Gross Margin 7 % 25 % 19 % 23 %
Adjusted Gross Margin 14 % 31 % 25 % 30 %
Three Months Ended September 30, Nine Months Ended September 30,
Agility Segment 2025 2024 2025 2024
Gross Profit attributable to Agility Segment $ 3,235 $ 3,238 $ 9,382 $ 8,732
Depreciation and amortization 815 753 2,342 2,300
Stock-based compensation 11 4 33 23
Adjusted Gross Profit $ 4,061 $ 3,995 $ 11,757 $ 11,055
Gross Margin 53 % 58 % 54 % 56 %
Adjusted Gross Margin 66 % 71 % 68 % 71 %
INNODATA INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(Unaudited)
(In thousands)
Adjusted EBITDA
Three Months Ended September 30, Nine Months Ended September 30,
Consolidated 2025 2024 2025 2024
Net income attributable to Innodata Inc. and Subsidiaries $ 8,342 $ 17,389 $ 23,348 $ 18,364
Provision for income taxes 3,837 (5,944 ) 6,718 (5,235 )
Interest (income) expense, net (420) 21 (1,124) 190
Depreciation and amortization 1,748 1,535 4,913 4,219
Stock-based compensation 2,707 855 8,309 2,881
Non-controlling interests - 2 - 8
Adjusted EBITDA - Consolidated $ 16,214 $ 13,858 $ 42,164 $ 20,427
Three Months Ended September 30, Nine Months Ended September 30,
DDS Segment 2025 2024 2025 2024
Net income attributable to DDS Segment $ 8,458 $ 16,526 $ 23,464 $ 16,492
Provision for income taxes 3,868 (5,887 ) 6,667 (5,183 )
Interest (income) expense, net (420) 20 (1,125) 187
Depreciation and amortization 819 670 2,282 1,513
Stock-based compensation 2,500 760 7,694 2,523
Non-controlling interests - 2 - 8
Adjusted EBITDA - DDS Segment $ 15,225 $ 12,091 $ 38,982 $ 15,540
Three Months Ended September 30, Nine Months Ended September 30,
Synodex Segment 2025 2024 2025 2024
Net income (loss) attributable to Synodex Segment $ (44) $ 381 $ 529 $ 973
Depreciation and amortization 114 112 289 406
Stock-based compensation 65 38 194 136
Adjusted EBITDA - Synodex Segment $ 135 $ 531 $ 1,012 $ 1,515
Three Months Ended September 30, Nine Months Ended September 30,
Agility Segment 2025 2024 2025 2024
Net income (loss) attributable to Agility Segment $ (72) $ 482 $ (645) $ 899
Provision for income taxes (31) (57 ) 51 (52 )
Interest expense - 1 1 3
Depreciation and amortization 815 753 2,342 2,300
Stock-based compensation 142 57 421 222
Adjusted EBITDA - Agility Segment $ 854 $ 1,236 $ 2,170 $ 3,372
INNODATA INC. AND SUBSIDIARIES
CONSOLIDATED REVENUE BY SEGMENT
(Unaudited)
(In thousands)
Three Months Ended September 30, Nine Months Ended September 30,
2025 2024 2025 2024
Revenues:
DDS $ 54,779 $ 44,694 $ 156,186 $ 89,810
Synodex 1,653 1,935 5,731 5,792
Agility 6,118 5,595 17,370 15,679
Total Consolidated $ 62,550 $ 52,224 $ 179,287 $ 111,281
SOURCE: Innodata Inc.
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