Innodata Reports Third Quarter 2024 Results; Record 136% Revenue Growth Year-Over-Year

NEW YORK, NY / ACCESSWIRE / November 7, 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. 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 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.
[email protected]
(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)

INNODATA INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)

INNODATA INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)

INNODATA INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(Unaudited)
(In thousands)

** 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)

SOURCE: Innodata Inc.