Innodata's Q3 Earnings & Revenues Top, Gross Margin Flat Y/Y

Core Insights - Innodata Inc. (INOD) reported better-than-expected third-quarter 2025 results, with adjusted earnings per share (EPS) and revenues exceeding the Zacks Consensus Estimate [2][4] - The company's revenue growth was driven by increased demand in the DDS and Agility segments, although the Synodex segment underperformed [2][3] - Despite higher revenues, the bottom line was negatively impacted by elevated selling and administrative expenses and high direct operating costs [3] Financial Performance - Adjusted EPS was reported at 24 cents, surpassing the Zacks Consensus Estimate of 14 cents by 71.4%, but down from 51 cents in the same quarter last year [4] - Revenues reached $62.6 million, exceeding the consensus mark of $60 million by 4.6% and reflecting a year-over-year growth of 19.8% [4][8] - Adjusted gross profit increased by 20.9% year over year to $27.7 million, with the adjusted gross margin remaining flat at 44% [4] Segment Performance - DDS Segment: Revenues increased to $54.8 million from $44.7 million year-over-year, driven by higher volume from existing customers; adjusted gross profit rose by 27.8% to $23.4 million, with a gross margin expansion of 200 basis points to 43% [5] - Synodex Segment: Revenues declined to $1.7 million from $1.9 million year-over-year due to the termination of a contract with a customer; adjusted gross profit fell by 61.2% to $0.2 million, with a gross margin contraction of 1,700 basis points to 14% [5][6] - Agility Segment: Revenues increased to $6.1 million from $5.6 million year-over-year, attributed to higher subscription volumes; adjusted gross profit rose by 1.7% to $4.1 million, with a gross margin decline of 500 basis points to 66% [6] Balance Sheet & Cash Flow - As of the third quarter, cash and cash equivalents stood at $73.9 million, up from $46.9 million at the end of 2024; long-term debt increased to $7.6 million from $6.7 million [9] - Net cash provided by operating activities was $33.9 million for the first nine months of 2025, compared to $17.7 million in the same period last year [9] Future Outlook - The company anticipates organic revenue growth of 45% or more year-over-year for 2025, with expectations for continued transformative growth in 2026 due to new award wins and strong market momentum [10]