Core Thesis - Innodata Inc. is positioned favorably within the generative AI boom, achieving a 380% share price increase over the past year, with a significant portion of its revenue derived from its Digital Data Solutions segment [2][5] Company Overview - Innodata is a 35-year-old data engineering company that generates 86.5% of its revenue from providing essential services such as data collection, annotation, structuring, and AI model testing for major tech companies like Google, Microsoft, Meta, and Amazon [2] - The company employs a skilled workforce of 3,000–5,000 experts across various sectors, allowing it to deliver high-quality outputs that are difficult for cheaper competitors to replicate [2] Technical Advantages - Innodata has implemented Human-in-the-Loop workflows since 2016 and internal LLMs for PDF extraction since 2019, showcasing early technical foresight [3] - The company operates on a global scale with over 20 delivery centers and supports 85+ languages, creating a structural moat in the expanding AI training data market, which is projected to grow from $1.64 billion in 2023 to $14.42 billion by 2033 [3] Financial Performance - In Q2 2025, Innodata reported a 79% year-over-year revenue growth, 18% EBITDA margins, and a net income of $7.2 million, alongside a strong cash position of $59.8 million [4] - However, the company faces concentration risk, as one client accounts for 58–59% of its revenue, prompting management to diversify its client base and expand AI service offerings [4] Market Position and Risks - Despite potential near-term execution risks, high valuation, and ongoing legal exposure, Innodata's profitability and proprietary capabilities position it as a compelling small-cap investment opportunity with potential for M&A interest [5] - The company is actively working on diversifying its services into areas such as agentic AI, robotics, and simulation data [4]