Customer Acquisition - Innodata added 372 new customers in the nine months ended September 30, 2023, averaging 124 new customers per quarter, a 33% increase compared to 93 new customers per quarter in 2021[135]. - The company emphasizes acquiring customers that align with strategic goals, focusing on potential revenue value rather than sheer numbers[135]. Revenue Performance - Total revenues increased to $22.2 million for the three months ended September 30, 2023, up approximately 20% from $18.4 million in the same period of 2022[149]. - Total revenues for the nine months ended September 30, 2023, were $60.7 million, up from $59.6 million in 2022, reflecting a 2% increase[185]. - DDS segment revenues rose to $16.1 million, a 26% increase from $12.8 million in the prior year, driven by higher volume from existing and new customers[150]. - Synodex segment revenues decreased to $1.7 million, down approximately 6% from $1.8 million, primarily due to lower volume from existing customers[151]. - Agility segment revenues increased to $4.4 million, a 16% rise from $3.8 million, attributed to higher volumes from subscriptions to the Agility AI-enabled platform[152]. - Revenues from the Agility segment increased by approximately 15% to $13.0 million for the nine months ended September 30, 2023, compared to $11.3 million in 2022[188]. Profitability Metrics - Adjusted Gross Profit for the three months ended September 30, 2023, was $9,518,000, compared to $7,088,000 for the same period in 2022, representing a 34% increase[143]. - Adjusted Gross Margin for the three months ended September 30, 2023, was 43%, up from 38% in the same period of 2022[143]. - Gross profit increased to $8.2 million for the three months ended September 30, 2023, compared to $6.1 million in 2022, with a gross margin of 37% versus 33%[160]. - Adjusted gross profit rose to $9.5 million in Q3 2023 from $7.1 million in Q3 2022, with adjusted gross margin increasing to 43% from 38%[176]. - The company incurred a net loss of $2.6 million for the nine months ended September 30, 2023, an improvement of $7.4 million compared to the previous year[207]. - Net income for Q3 2023 was $0.4 million, a turnaround from a net loss of $3.3 million in Q3 2022, driven by higher revenues in DDS and Agility segments[171]. Operating Costs - Direct operating costs rose to $13.9 million, an increase of 12% from $12.4 million, mainly due to higher revenues and new hires[155]. - Direct operating costs for the DDS segment increased to approximately $10.2 million, a 28% rise from $8.0 million, primarily due to higher revenues and labor costs[156]. - Direct operating costs for the Synodex segment decreased to $1.7 million, down 23% from $2.2 million, due to cost optimization efforts[157]. - Direct operating costs for the Agility segment decreased to $2.0 million, a 9% decline from $2.2 million, reflecting cost optimization initiatives[158]. - Direct operating costs for the nine months ended September 30, 2023, were $39.5 million, an increase of $0.7 million or 2% from $38.8 million in 2022[191]. Cash and Liquidity - The company has sufficient cash and cash equivalents to meet financial needs for at least the next 12 months[132]. - As of September 30, 2023, the company had cash and cash equivalents of $14.8 million, an increase from $9.8 million as of December 31, 2022[221]. - Working capital increased to approximately $6.4 million as of September 30, 2023, compared to $2.9 million as of December 31, 2022, reflecting an increase of $3.5 million[222]. - Cash provided by operating activities for the nine months ended September 30, 2023, was $5.8 million, compared to cash used of $1.7 million for the same period in 2022[226][227]. - The company plans to use cash and cash equivalents for capital investments, operational expansion, technology innovation, and potential business acquisitions[222]. Segment Performance - Gross margin for the DDS segment was 36% for the three months ended September 30, 2023, compared to 37% in the prior year[150]. - DDS segment gross profit rose to $5.8 million in Q3 2023 from $4.8 million in Q3 2022, with a gross margin of 36% compared to 37%[161]. - Synodex segment achieved breakeven gross profit in Q3 2023, improving from a loss of $0.4 million in Q3 2022, with a gross margin of 0% versus (24)%[162]. - Agility segment gross profit increased to $2.4 million in Q3 2023 from $1.7 million in Q3 2022, with a gross margin of 55% compared to 43%[163]. - The Agility segment's gross profit increased by $1.3 million, totaling $6.3 million for the nine months ended September 30, 2023, with a gross margin of 48%[199]. - The Synodex segment achieved a gross margin of 9% for the nine months ended September 30, 2023, compared to a loss margin of (16)% in the previous year[198]. Future Outlook - The company expects to manage liquidity through its Revolving Credit Facility and by reducing capital expenditures if there is a significant reduction in revenues[132]. - The company expects to maintain a fixed charge coverage ratio of not less than 1.10 to 1.00 by December 31, 2023, as per the financial covenant in the Credit Agreement[225]. - The company is developing an additional AI-enabled industry platform for financial services institutions[129]. - The proprietary data annotation platform incorporates AI to reduce costs while improving consistency and quality of output[124].

Financial Data and Key Metrics - Q2 2023 revenue was $19.7 million, a 4% increase from Q1 2023 [57] - Adjusted EBITDA for Q2 2023 was $1.6 million, a 100% increase from Q1 2023 [57] - Cash and short-term investments at the end of Q2 2023 were $13.7 million, up from $10.8 million at the end of Q1 2023 [59] - Net loss for Q2 2023 was $0.8 million, compared to a net loss of $3.8 million in the same period last year [74] - Revenue growth excluding the large social media company would have been 13% year-over-year [34] Business Line Data and Key Metrics - Agility segment saw 13% year-over-year growth and returned to positive adjusted EBITDA in Q2 2023 [91] - Synodex segment improved gross margin for the second consecutive quarter and is developing new automated products [93] - Digital Data Solutions (DDS) segment is expected to see accelerated revenue and adjusted EBITDA growth as new deals ramp up [34] Market Data and Key Metrics - The company has secured deals with four out of the top five global tech companies, positioning itself to support AI and large language model (LLM) development [42] - The generative AI market is projected to grow from $83 million in 2022 to $85.9 billion by 2032, representing a 100% CAGR [114] - The company is involved in white-label programs, which allow it to scale services under the brand of large customers, potentially reaching tens of thousands of end customers [28][51] Company Strategy and Industry Competition - The company is focusing on generative AI and LLM development, leveraging its expertise in high-quality data and AI model building [14][15] - White-label programs are seen as a strategic opportunity to scale services without relying on the company's own sales and marketing efforts [28][51] - The company is building competencies in AI, model building, and data training, with a focus on enterprise LLM integration [15][54] - The company is well-positioned to benefit from the generative AI revolution, with a blue-chip client base and strong competitive advantages [110][113] Management Commentary on Operating Environment and Future Outlook - Management is optimistic about the transformative potential of the new deals, particularly in the generative AI space [110][113] - The company expects revenue and adjusted EBITDA growth to accelerate as new deals ramp up, though forecasting is challenging due to the dynamic nature of the contracts [34][82] - Management highlighted the early stages of the generative AI market and the company's readiness to capitalize on this opportunity [12][25] - The company is focused on executing its strategy and scaling its operations to meet the growing demand for AI and LLM services [77][83] Other Important Information - The company has secured a $10 million revolving line of credit with Wells Fargo to support growth and working capital requirements [59] - The company is in discussions with three other companies about its AI-powered regulatory workflow product [55] - The company is exploring additional white-label opportunities with other large tech companies [51] Q&A Session Summary Question: Execution risks of new contracts - The company is confident in its ability to execute the new contracts, citing its historical strength in execution and the alignment of the contracts with its competencies [63][77] Question: White-label program details - The white-label program involves providing data engineering services under the brand of a large customer, leveraging their salesforce and customer reach [88][89] - Pricing negotiations are handled by the customer, with the company providing upfront pricing [66] Question: Guidance and Wall Street coverage - The company provided guidance on expected revenue and adjusted EBITDA growth but noted uncertainty in the timing of ramp-ups [68][82] - The company is in discussions with analysts for potential Wall Street coverage [96] Question: Capacity and resource allocation - The company has the necessary engineering and performance management capabilities and can add human resources as needed to scale operations [94] Question: Pre-tax margin expectations - The company expects adjusted gross margins to be between 40% and 45% as it scales, with manageable SG&A expenses [100] Question: Insider stock sales - The CEO has not sold any shares, reflecting confidence in the company's future prospects [106]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 001-35774 INNODATA INC. (Exact name of registrant as specified in its charter) Delaware 13-3475943 Indicate by check mark whe ...

Innodata, Inc. (NASDAQ:INOD) Q1 2023 Earnings Conference Call May 11, 2023 5:00 PM ET Company Participants Amy Agress - Senior Vice President and General Counsel Marissa Espineli - Interim Chief Financial Officer Jack Abuhoff - President and Chief Executive Officer Conference Call Participants Tim Clarkson - Van Clemens Dana Buska - Feltl Operator Greetings. Welcome to Innodata's First Quarter 2023 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will fo ...

[Part I – Financial Information](index=2&type=section&id=Part%20I%20%E2%80%93%20Financial%20Information) [Financial Statements](index=2&type=section&id=Item%201.%20Financial%20Statements) The unaudited condensed consolidated financial statements for the quarter ended March 31, 2023, show a decrease in total revenues and a reduced net loss compared to the same period in 2022, with a positive turn in cash flow from operations [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets slightly increased to $49.1 million as of March 31, 2023, while total stockholders' equity saw a minor decrease to $18.4 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Balance Sheet Item | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $10,330 | $9,792 | | Total current assets | $23,493 | $23,685 | | Total assets | $49,135 | $48,042 | | **Liabilities & Equity** | | | | Total current liabilities | $21,170 | $20,816 | | Total liabilities | $31,441 | $29,996 | | Total stockholders' equity | $18,418 | $18,773 | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) For Q1 2023, revenues decreased to $18.8 million, but the net loss improved to $2.1 million, driven by a significant reduction in selling and administrative expenses Q1 2023 vs. Q1 2022 Statement of Operations (in thousands, except per share data) | Metric | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Revenues | $18,839 | $21,192 | | Direct operating costs | $12,874 | $13,414 | | Selling and administrative expenses | $7,797 | $10,190 | | Loss before income taxes | ($1,895) | ($2,415) | | Net loss attributable to Innodata | ($2,116) | ($2,815) | | Basic and Diluted EPS | ($0.08) | ($0.10) | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities was a positive $1.8 million in Q1 2023, a significant improvement from a $1.5 million use of cash in the prior-year period Q1 2023 vs. Q1 2022 Cash Flows (in thousands) | Cash Flow Activity | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $1,784 | ($1,496) | | Net cash used in investing activities | ($1,707) | ($1,939) | | Net cash provided by (used in) financing activities | $251 | ($12) | | Net increase (decrease) in cash | $538 | ($3,475) | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail accounting policies, segment performance, a tax contingency in India, a legal contingency in the Philippines, and a new $10.0 million credit facility - The company's operations are classified into three reporting segments: **Digital Data Solutions (DDS), Synodex, and Agility**[80](index=80&type=chunk) - The company is contesting a tax assessment in India that could subject approximately **$57.0 million in revenue** from July 2012 to November 2016 to service tax, for which no liability has been recorded[53](index=53&type=chunk) - On April 4, 2023, the company entered into a new Credit Agreement with Wells Fargo for a secured revolving line of credit of up to **$10.0 million**, maturing in April 2026[99](index=99&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses an 11% year-over-year revenue decrease to $18.8 million, an improved net loss of $2.1 million due to cost controls, and sufficient liquidity for the next 12 months [Business Overview](index=26&type=section&id=Business%20Overview) Innodata is a data engineering company focused on high-performing AI, with offerings in AI data preparation, model deployment, and AI-enabled industry platforms - The company's mission is to help companies deliver on the promise of ethical, high-performing AI[108](index=108&type=chunk) - Core offerings include AI Data Preparation, AI Model Deployment and Integration, and AI-Enabled Industry Platforms[113](index=113&type=chunk) - The company added **129 new customers in Q1 2023**, a **3% increase** over the quarterly average in 2022[125](index=125&type=chunk) [Results of Operations](index=31&type=section&id=Results%20of%20Operations) Q1 2023 revenues fell 11% to $18.8 million, driven by a 20% decline in the DDS segment, but a 24% reduction in S&A expenses improved net loss and Adjusted EBITDA Revenue by Segment - Q1 2023 vs Q1 2022 (in millions) | Segment | Q1 2023 | Q1 2022 | % Change | | :--- | :--- | :--- | :--- | | DDS | $12.7 | $15.9 | -20% | | Synodex | $1.9 | $1.7 | +12% | | Agility | $4.2 | $3.6 | +17% | | **Total** | **$18.8** | **$21.2** | **-11%** | - Selling and administrative expenses **decreased by $2.4 million (24%)** YoY, primarily due to cost optimization efforts, including lower recruitment, professional fees, and marketing expenses[154](index=154&type=chunk) Adjusted EBITDA Reconciliation (in thousands) | Metric | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Net loss attributable to Innodata | ($2,116) | ($2,815) | | Adjustments (Taxes, Interest, D&A, etc.) | $2,917 | $1,813 | | **Adjusted EBITDA** | **$801** | **($1,002)** | [Liquidity and Capital Resources](index=35&type=section&id=Liquidity%20and%20Capital%20Resources) With $10.3 million in cash and a new $10.0 million credit facility, management believes liquidity is sufficient for the next 12 months, with $6.5 million in planned capital expenditures Liquidity Measures (in thousands) | Metric | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Cash and cash equivalents | $10,330 | $9,792 | | Working capital | $2,323 | $2,869 | - A new secured revolving credit facility of up to **$10.0 million** was established with Wells Fargo on April 4, 2023, enhancing liquidity[178](index=178&type=chunk) - The company anticipates capital expenditures of approximately **$6.5 million** over the next 12 months, primarily for software development and technology upgrades[182](index=182&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=37&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section is not applicable as the company qualifies as a smaller reporting company - Disclosure is not applicable for smaller reporting companies[187](index=187&type=chunk) [Controls and Procedures](index=37&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of March 31, 2023, with no material changes to internal controls during the quarter - The principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were **effective as of March 31, 2023**[189](index=189&type=chunk) - **No changes** in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[190](index=190&type=chunk) [Part II – Other Information](index=38&type=section&id=Part%20II%20%E2%80%93%20Other%20Information) [Legal Proceedings](index=38&type=section&id=Item%201.%20Legal%20Proceedings) The company is contesting a significant judgment in the Philippines against a former subsidiary with a potential payment of approximately $5.9 million plus interest - Information regarding legal proceedings is incorporated by reference from Note 8, Commitments and Contingencies[192](index=192&type=chunk) [Risk Factors](index=38&type=section&id=Item%201A.%20Risk%20Factors) New risks related to the company's Revolving Credit Facility have been added, including variable interest rate exposure and the impact of restrictive covenants - A new risk factor was added concerning the variable interest rate (based on **SOFR**) of the new **Revolving Credit Facility**, which could increase borrowing costs[193](index=193&type=chunk) - The **Revolving Credit Facility** contains restrictive covenants, including a fixed charge coverage ratio, which may limit management's discretion and the company's ability to conduct its business[194](index=194&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=38&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No sales of unregistered equity securities or repurchases of equity securities occurred during the first quarter of 2023 - **No unregistered sales** of equity securities or share repurchases occurred in Q1 2023[195](index=195&type=chunk) [Exhibits](index=39&type=section&id=Item%206.%20Exhibits) This section lists filed exhibits, including agreements for the new Wells Fargo credit facility and required CEO and CFO certifications - Filed exhibits include the Credit Agreement, Security Agreement, and Guaranty related to the new Wells Fargo credit facility, as well as Sarbanes-Oxley certifications[200](index=200&type=chunk)

Innodata Inc. (NASDAQ:INOD) Q4 2022 Earnings Conference Call February 23, 2023 5:00 PM ET Company Participants Amy Agress - Investor Relations Jack Abuhoff - Chief Executive Officer Marissa Espineli - Interim Chief Financial Officer Conference Call Participants Tim Clarkson - Van Clemens Dana Buska - Feltl and Company Marco Petroni - MG Capital Management Craig Samuels - Samuels Capital Management Operator Greetings. Welcome to Innodata’s Fourth Quarter and Fiscal Year 2022 Earnings Call. [Operator Instruct ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K (Mark One) ☑ ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2022 ☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 001-35774 INNODATA INC. (Exact name of registrant as specified in its charter) Delaware 13-3475943 (State or other jurisdiction of (I.R.S. Employer Identification No.) ...

Innodata Inc. (NASDAQ:INOD) Q3 2022 Earnings Conference Call November 10, 2022 5:00 PM ET Company Participants Amy Agress - SVP, General Counsel & Corporate Secretary Jack Abuhoff - President, CEO Marissa Espineli - Interim-CFO Conference Call Participants PJ Solit - Potomac Capital Management Dana Buska - Feltl Advisors Operator Good day everyone. And welcome to today's Innodata's Third Quarter 2022 Earnings Call. [Operator Instructions]. It is now my pleasure to turn the conference over to Amy Agress. Ple ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________________ to ________________ Commission file number: 001-35774 INNODATA INC. (Exact name of registrant as specified in its charter) Delawar ...

Innodata, Inc. (NASDAQ:INOD) Q2 2022 Earnings Conference Call August 11, 2022 5:00 PM ET Company Participants Amy Agress - SVP, General Counsel & Corporate Secretary Jack Abuhoff - President, CEO & Director Marissa Espineli - Interim CFO, VP, Finance & Corporate Controller Conference Call Participants George Sutton - Craig-Hallum Timothy Clarkson - Van Clemens & Co. Dana Buska - Feltl Advisors Operator Good afternoon, ladies and gentlemen, and welcome to Innodata's Second Quarter 2022 Earnings Call. [Operat ...