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Innodata (INOD)
NASDAQ:INOD
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Innodata
(NASDAQ:INOD)
Rating:73Outperform
Price Target:
$41.00
▲( 12.39% Upside)
Positive Factors
Customer Expansion
Management is expanding with new and existing customers and broadening solutions, which should add recurring revenue.
Revenue Growth
Innodata reported 1Q25 results with revenue of $58.3M, up 120% year-over-year, topping estimates and consensus.
Negative Factors
Guidance Concerns
INOD only reiterating guidance has drawn ire from speculators while the fundamentals of the business have improved.
Revenue Concentration
INOD's revenue growth has been predominantly from one customer. This should begin to change in 2025 as more companies ramp their development of A.I.
Innodata (INOD) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$1.16B
Dividend YieldN/A
Average Volume (3M)1.74M
Price to Earnings (P/E)35.1
Beta (1Y)3.36
Revenue Growth114.21%
EPS Growth1471.86%
CountryUS
Employees6,597
SectorTechnology
Sector Strength78
IndustryInformation Technology Services
Share Statistics
EPS (TTM)0.22
Shares Outstanding31,745,310
10 Day Avg. Volume1,840,569
30 Day Avg. Volume1,741,750
Financial Highlights & Ratios
PEG Ratio0.89
Price to Book (P/B)16.38
Price to Sales (P/S)0.00
P/FCF Ratio40.30
Enterprise Value/Market Cap0.91
Enterprise Value/Revenue2.07
Enterprise Value/Gross Profit-3.28
Enterprise Value/Ebitda-0.96
Forecast
1Y Price Target
$69.00Price Target Upside89.14% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering4
Innodata Business Overview & Revenue Model
Company DescriptionInnodata Inc. (INOD) is a global digital services and solutions provider, specializing in data engineering, data analytics, and digital transformation services. The company operates across various sectors including publishing, financial services, legal, and healthcare, offering innovative solutions that enable businesses to harness the power of their data for improved decision-making and operational efficiency. Innodata's core services include data annotation, content enrichment, machine learning, and artificial intelligence model training.
How the Company Makes MoneyInnodata makes money primarily through offering its specialized data services and digital transformation solutions to businesses across multiple industries. The company generates revenue by providing data engineering services, including data annotation and content enrichment, which are crucial for businesses looking to leverage machine learning and AI technologies. Additionally, Innodata offers subscription-based services and project-based engagements, catering to specific client needs in sectors such as publishing and healthcare. Key revenue streams include recurring contracts with clients for ongoing data management and analytics services, as well as partnerships with technology firms that integrate Innodata's solutions into broader digital transformation projects. The company's success is significantly bolstered by its ability to customize its offerings to meet the unique requirements of each client, thereby establishing long-term relationships and recurring revenue opportunities.
Innodata Key Performance Indicators (KPIs)
Any
Adjusted EBITDA by Segment
Reflects the earnings from each segment after adjusting for non-operating expenses, offering a clearer view of operational performance and cash flow potential.
Reflects the earnings from each segment after adjusting for non-operating expenses, offering a clearer view of operational performance and cash flow potential.
Data provided by:
Main Street Data
Main Street DataInnodata Financial Statement Overview
Summary
Innodata demonstrates strong financial performance, with significant growth in revenue and profit margins. The cash flow has improved considerably, indicating robust cash generation. However, a lack of 2024 balance sheet data limits the analysis, and there is a need for continued focus on strengthening the balance sheet.Income Statement
Innodata has shown a strong revenue growth trajectory with a significant increase in total revenue from $86.78M in 2023 to $141.10M in 2024, marking a growth of approximately 62.6%. The gross profit margin improved, reflecting a strong control over cost of goods sold, and the net profit margin turned positive, indicating profitability. The EBIT and EBITDA margins have also improved significantly, showcasing operational efficiency.82
Very Positive
Balance Sheet
The balance sheet metrics cannot be fully analyzed for 2024 due to missing data. However, in 2023, the debt-to-equity ratio was relatively low at 0.21, indicating conservative leverage. The return on equity was negative in 2023 due to a net loss, but the equity ratio was stable at 43.3%, indicating a reasonable financial structure.50
Neutral
Cash Flow
Innodata's cash flow has improved significantly, with operating cash flow increasing sharply to $35.02M in 2024. Free cash flow has grown substantially, reflecting strong cash generation capabilities. The operating cash flow to net income ratio indicates robust cash conversion, although free cash flow growth rate is not calculable without prior period data.75
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 141.10M | 86.78M | 79.00M | 69.75M | 58.24M | Gross Profit |
| 52.91M | 31.29M | 27.47M | 25.73M | 19.89M | EBIT |
| 21.23M | 0.00 | -10.47M | -2.18M | 1.28M | EBITDA |
| 21.23M | 5.03M | -6.59M | 1.22M | 3.54M | Net Income Common Stockholders |
| 21.38M | -908.00K | -12.01M | -1.80M | 617.00K |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 46.90M | 13.82M | 10.30M | 18.90M | 17.57M | Total Assets |
| 113.45M | 59.43M | 48.04M | 59.22M | 57.25M | Total Debt |
| 4.66M | 5.48M | 4.73M | 6.31M | 7.32M | Net Debt |
| -42.23M | -8.32M | -5.06M | -12.59M | -10.25M | Total Liabilities |
| 50.06M | 34.44M | 30.00M | 32.81M | 31.00M | Stockholders Equity |
| 63.47M | 25.70M | 18.77M | 29.93M | 29.64M |
| Cash Flow | Free Cash Flow | |||
| 27.27M | 339.00K | -7.74M | 783.00K | 4.25M | Operating Cash Flow |
| 35.02M | 5.90M | -1.22M | 5.15M | 5.66M | Investing Cash Flow |
| -7.74M | -5.07M | -7.03M | -4.37M | -1.38M | Financing Cash Flow |
| 6.06M | 2.87M | -307.00K | 773.00K | 2.31M |
Innodata Technical Analysis
Negative
36.48
Price Trends
37.52
Negative
40.85
Negative
33.21
Positive
Market Momentum
-0.38
Negative
48.91
Neutral
48.97
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For INOD, the sentiment is Negative. The current price of 36.48 is below the 20-day moving average (MA) of 37.23, below the 50-day MA of 37.52, and above the 200-day MA of 33.21, indicating a neutral trend. The MACD of -0.38 indicates Negative momentum. The RSI at 48.91 is Neutral, neither overbought nor oversold. The STOCH value of 48.97 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for INOD.
Innodata Risk Analysis
Innodata disclosed 14 risk factors in its most recent earnings report. Innodata reported the most risks in the “Legal & Regulatory” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 3 New Risks
1.
If customer confidential information is inappropriately disclosed due to a breach of our computer systems, system failures or otherwise, or if any person, including any of our employees, negligently disregards or intentionally breaches controls or procedures with which we are responsible for complying with respect to such data or otherwise mismanages or misappropriates that data, we may have substantial liabilities to our customers. Q4, 2024
2.
Risks Related to Litigation and Regulatory Matters Q4, 2024
3.
Q4, 2024
Innodata Peers Comparison
Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
73 Outperform | $1.16B | 35.08 | 68.82% | ― | 114.21% | 1471.86% | |
69 Neutral | $1.34B | 391.13 | 0.63% | ― | 20.97% | ― | |
67 Neutral | $1.49B | 28.12 | 11.35% | ― | 14.05% | 17.90% | |
66 Neutral | $1.09B | 98.17 | 2.42% | ― | 18.72% | 347.70% | |
61 Neutral | $11.28B | 10.16 | -6.88% | 2.97% | 7.41% | -8.93% | |
54 Neutral | $1.49B | ― | -19.49% | ― | -50.48% | -15.75% | |
44 Neutral | $1.06B | ― | -126.64% | ― | 9.40% | 13.55% |
* Technology Sector Average
Performance Comparison
INOD
Innodata
36.48
23.60
183.23%
VYX
NCR Voyix
10.82
-2.49
-18.71%
GDYN
Grid Dynamics Holdings
12.84
2.64
25.88%
BBAI
BigBearai Holdings
3.64
2.04
127.50%
FLYW
Flywire
11.03
-7.17
-39.40%
TASK
TaskUs
16.75
2.39
16.64%
Innodata Earnings Call Summary
Earnings Call Date:May 08, 2025
(Q1-2025)
| % Change Since: -11.26%|
Next Earnings Date:Aug 07, 2025
Earnings Call Sentiment Positive
The earnings call highlights significant revenue growth and strategic progress, particularly in AI-driven solutions, coupled with strong financial management. However, there are concerns about potential quarter-to-quarter revenue volatility and short-term margin impacts due to strategic investments.Q1-2025 Updates
Positive Updates
Record Revenue Growth
Q1 2025 revenue reached $58.3 million, a year-over-year increase of 120%, and adjusted EBITDA for the quarter was $12.7 million, a 236% year-over-year increase.
Strategic Growth Initiatives
Innodata has made significant progress in strategic growth initiatives, including new customer wins and account expansions across four dynamic solutions areas, particularly in generative AI training data and agentic AI solutions.
Strong Cash Position
Innodata ended Q1 2025 with $66.6 million in cash, up from $46.9 million in the previous quarter, reflecting strong profitability and disciplined cash management.
Expansion in Generative AI Trust and Safety
Won expanded engagements to provide trust and safety evaluations for existing big tech customers, valued at approximately $4.5 million in annual recurring revenue.
Negative Updates
Quarter-to-Quarter Volatility
The Company anticipates potential volatility in revenue due to the dynamic demand signals from their largest customer, with expectations of a 5% decrease in Q2 from Q1 levels.
Investment Impact on Margins
Innodata plans to invest approximately $2 billion in Q2 to support a new statement of work, which is expected to temporarily impact margins before associated revenue is realized.
Company Guidance
Innodata provided a robust guidance during their Q1 2025 results call, forecasting a full-year revenue growth of at least 40%. The company reported a 120% year-over-year increase in revenue for the quarter, reaching $58.3 million, with an adjusted EBITDA of $12.7 million, representing 22% of revenue and a 236% increase compared to the previous year. They also highlighted cash reserves of $66.6 million, up significantly from both the previous quarter and year. Innodata's strategic growth initiatives, particularly in generative AI training data and AI agent development, have driven this performance, alongside new significant customer wins and expansions in existing accounts. Despite expecting some quarterly volatility due to customer demand dynamics, the company reaffirmed its confidence in achieving its guidance through continued investment in product innovation and market expansion.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.