Innodata(US:INOD)2025-11-06 22:21Financial Performance - Innodata's Adjusted Gross Profit for Q3 2025 was $27.68 million, up from $22.89 million in Q3 2024, representing a 21.5% increase[144]. - The company's Adjusted Gross Margin remained stable at 44% for both Q3 2025 and Q3 2024, indicating consistent operational efficiency[144]. - For the nine months ended September 30, 2025, Adjusted Gross Profit reached $77.95 million, compared to $44.66 million for the same period in 2024, reflecting a 74.5% year-over-year growth[144]. - The revenue attributable to Innodata Inc. and its subsidiaries for Q3 2025 was $62.5 million, compared to $51.9 million in Q3 2024, marking a 20.5% increase[144]. - The company reported a Gross Profit of $25.50 million for Q3 2025, up from $21.33 million in Q3 2024, which is a 19.5% increase[144]. - Total revenues increased to $62.6 million for the three months ended September 30, 2025, up from $52.2 million in 2024, representing a growth of approximately 20%[150]. - Adjusted EBITDA for the consolidated entity was $16.2 million for Q3 2025, compared to $13.9 million in Q3 2024, reflecting a significant increase in operational performance[148]. - Net income decreased by $9.1 million to $8.3 million, attributed to higher income tax provision and increased operating costs[175]. - Total revenues increased by $68.0 million or approximately 61% to $179.3 million for the nine months ended September 30, 2025, compared to 2024[191]. - Net income increased by $4.9 million to $23.3 million for the nine months ended September 30, 2025, attributed to higher revenues in the DDS and Agility segments[214]. Revenue Segments - DDS segment revenues rose to $54.8 million in Q3 2025, compared to $44.7 million in Q3 2024, marking an increase of about 23% driven by higher volume from existing customers[151]. - Synodex segment revenues decreased to $1.7 million in Q3 2025 from $1.9 million in Q3 2024, a decline of 11% due to the termination of a contract with one customer[152]. - Agility segment revenues grew to $6.1 million in Q3 2025, up from $5.6 million in Q3 2024, reflecting a 9% increase attributed to higher subscription volumes[153]. - Revenues from the DDS segment rose by $66.4 million or approximately 74% to $156.2 million, primarily due to higher volume from existing customers[191]. - Revenues from the Agility segment increased by $1.7 million or approximately 11% to $17.4 million, driven by higher subscription volumes[194]. Operating Costs and Expenses - Direct operating costs increased to $37.0 million in Q3 2025 from $30.9 million in Q3 2024, an increase of 20% primarily due to higher headcount[156]. - Selling and administrative expenses increased by $3.8 million or 38% to $13.7 million, with expenses as a percentage of total revenues rising from 19% to 22%[167]. - Direct operating costs increased by $36.5 million or 51% to $107.5 million, with costs as a percentage of total revenues decreasing from 64% to 60%[197]. - Selling and administrative expenses rose by $15.6 million or 57% to $42.8 million for the nine months ended September 30, 2025, driven by higher payroll and related expenses[207]. Profitability Metrics - The DDS segment's adjusted EBITDA reached $15.2 million in Q3 2025, up from $12.1 million in Q3 2024, indicating strong segment performance[148]. - The Agility segment reported an adjusted EBITDA of $854,000 for Q3 2025, compared to $1.2 million in Q3 2024, showing a decrease in profitability[148]. - Gross profit for the three months ended September 30, 2025, was $25.5 million, up from $21.3 million in 2024, with a gross margin of 41% for both periods[162]. - Gross profit for the Synodex segment decreased by $0.4 million to $0.1 million, with a gross margin decline from 25% to 7% for the three months ended September 30, 2025, compared to 2024[164]. - Gross profit for the Agility segment remained stable at $3.2 million, but gross margin decreased from 58% to 53% due to higher direct operating costs[165]. Cash Flow and Liquidity - Cash and cash equivalents increased to $73.9 million as of September 30, 2025, from $46.9 million as of December 31, 2024[229]. - Working capital rose to approximately $75.3 million as of September 30, 2025, compared to $41.5 million as of December 31, 2024, due to increased collections from higher revenues[230]. - Net cash provided by operating activities increased to $33.9 million for the nine months ended September 30, 2025, up from $17.7 million in the prior-year period[234]. - Cash used in investing activities was $8.3 million for the nine months ended September 30, 2025, compared to $5.5 million in 2024, primarily for technology equipment purchases[237]. - Cash provided by financing activities was $1.1 million for the nine months ended September 30, 2025, primarily from stock option exercises[239]. - The company maintains a revolving line of credit facility to support its liquidity needs[232]. - The company believes existing cash and internally generated funds will satisfy financial needs for at least the next 12 months[231]. Future Outlook - The company anticipates continued demand for its services, supported by existing cash and cash equivalents for at least the next 12 months[135]. - Anticipated capital expenditures for the next 12 months are approximately $11.0 million, focusing on software development and technology upgrades[238]. - No material commitments for capital expenditures were reported as of September 30, 2025[231].