Innodata (INOD) AI Stock Analysis

• Market Cap: $1.22B
• Dividend Yield: N/A
• Average Volume (3M): 2.48M
• Price to Earnings (P/E): 30.7
• Beta (1Y): 3.37
• Revenue Growth: 112.54%
• EPS Growth: 1256.46%
• Country: US
• Employees: 6,597
• Sector: Technology
• Sector Strength: 83
• Industry: Information Technology Services
• EPS (TTM): 0.20
• Shares Outstanding: 31,845,621
• 10 Day Avg. Volume: 1,742,565
• 30 Day Avg. Volume: 2,475,190
• PEG Ratio: -0.01
• Price to Book (P/B): 18.16
• Price to Sales (P/S): 6.76
• P/FCF Ratio: 42.26
• Enterprise Value/Market Cap: 1.44
• Enterprise Value/Revenue: 7.68
• Enterprise Value/Gross Profit: 18.53
• Enterprise Value/Ebitda: 37.52
• 1Y Price Target: $66.75
• Price Target Upside: 70.85% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 4

• Rating: 73 Outperform
• Price Target: $44.00 ▲(12.62% Upside)

Innodata's strong financial performance and positive earnings call sentiment are the primary drivers of the stock's score. However, bearish technical indicators and a high P/E ratio temper the overall outlook. The company's strategic focus on growth and innovation in AI and robotics supports a positive long-term view, despite short-term technical challenges.

Positive Factors

Financial Performance

Innodata reported results with revenue and EBITDA topping estimates and consensus, with revenue increasing 79% organically year-over-year.

Market Opportunities

The Digital Data Solutions segment revenue, which supports large tech companies in building LLMs, increased 99% year-over-year, driven by large contract wins and demand for generative AI.

Revenue Growth

Management raised 2025 organic revenue growth guidance to 45% or more, implying revenue of $247.2M or more, and reiterated expectations for increasing adjusted EBITDA.

Negative Factors

Competitive Concerns

There has been investor anxiety from the news reports of Meta Platforms (META) investing in Scale AI and the impact to Innodata (INOD).

Investor Sentiment

INOD only reiterating guidance has drawn ire from speculators while the fundamentals of the business have improved.

Innodata Business Overview & Revenue Model

Company Description

Innodata Inc. operates as a global data engineering company in the United States, the United Kingdom, the Netherlands, Canada, and internationally. The company operates through three segments: Digital Data Solutions (DDS), Synodex, and Agility. The DDS segment offers AI-enabled software platforms and managed services to companies that require data for training AI and machine learning (ML) algorithms, and AI digital transformation solutions to help companies apply AI/ML for problems relating to analyzing and deriving insights from documents. This segment provides a range of data engineering support services, including data annotation, data transformation, data transformation, data curation, data hygiene, data consolidation, data compliance, and master data management. The Synodex segment offers an industry platform that transforms medical records into useable digital data with its proprietary data models or client data models. The Agility segment provides an industry platform that provides marketing communications and public relations professionals to target and distribute content to journalists and social media influencers; and to monitor and analyze global news channels, such as print, web, radio, and TV, as well as social media channels. It serves banking, insurance, financial services, technology, digital retailing, and information/media sectors through its professional staff, senior management, and direct sales personnel. The company was formerly known as Innodata Isogen, Inc. and changed its name to Innodata Inc. in June 2012. Innodata Inc. was incorporated in 1988 and is headquartered in Ridgefield Park, New Jersey.

How the Company Makes Money

Innodata generates revenue through a multi-faceted business model that includes service contracts, project-based engagements, and subscription-based solutions. Key revenue streams consist of fees from consulting services, custom software development, and ongoing support for their data management platforms. The company also benefits from partnerships with technology firms and industry leaders, which enhance its service capabilities and market reach. Additionally, Innodata's focus on AI-driven solutions provides opportunities for recurring revenue through software licensing and maintenance fees, which contribute significantly to its overall earnings.

Innodata Financial Statement Overview

Summary

Innodata has demonstrated strong financial health with impressive revenue and profit growth, effective cost management, and a solid balance sheet. The company's cash flow generation is robust, supporting future growth and investments. Despite some potential risks related to liabilities, the overall financial performance indicates a positive growth trajectory.

Income Statement

Innodata has demonstrated strong revenue growth, with a TTM revenue increase to $202.3M, marking a significant jump from the previous year. Gross Profit Margin stands at 39.9%, and the Net Profit Margin is 17.5%, indicating effective cost management and profitability. The company has also improved its EBIT and EBITDA Margins to 15.5% and 18.5%, respectively, showcasing operational efficiency. These metrics highlight a positive trajectory in profitability and growth.

Balance Sheet

The balance sheet reflects a solid financial position with a Debt-to-Equity Ratio of 0.17, suggesting low leverage and financial risk. The Return on Equity (ROE) is 47.0%, indicating strong profitability relative to shareholder investment. The Equity Ratio is 60.2%, showcasing a strong asset base funded by equity. The financial stability is robust, though the company should continue monitoring its liabilities and asset management.

Cash Flow

Innodata's cash flow performance is commendable, with a Free Cash Flow Growth Rate of 11.3% in the TTM period, reflecting efficient cash generation. The Operating Cash Flow to Net Income Ratio is 1.10, indicating strong cash conversion. The Free Cash Flow to Net Income Ratio is 0.86, showing a healthy cash flow profile. These figures demonstrate the company's ability to generate and manage cash effectively, supporting future growth and investments.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	228.14M	170.46M	86.78M	79.00M	69.75M	58.24M
Gross Profit	94.58M	67.07M	31.29M	27.47M	25.73M	19.89M
EBITDA	46.71M	30.13M	5.03M	-6.59M	1.22M	3.54M
Net Income	42.69M	28.66M	-908.00K	-12.01M	-1.80M	617.00K
Balance Sheet
Total Assets	132.62M	113.45M	59.43M	48.04M	59.22M	57.25M
Cash, Cash Equivalents and Short-Term Investments	59.79M	46.90M	13.82M	10.30M	18.90M	17.57M
Total Debt	4.22M	4.66M	5.48M	4.73M	6.31M	7.32M
Total Liabilities	45.98M	50.06M	34.44M	30.00M	32.81M	31.00M
Stockholders Equity	86.72M	63.47M	25.70M	18.77M	29.93M	29.64M
Cash Flow
Free Cash Flow	36.07M	27.27M	339.00K	-7.74M	783.00K	4.25M
Operating Cash Flow	43.80M	35.02M	5.90M	-1.22M	5.15M	5.66M
Investing Cash Flow	-7.73M	-7.74M	-5.07M	-7.03M	-4.37M	-1.38M
Financing Cash Flow	6.91M	6.06M	2.87M	-307.00K	773.00K	2.31M

Innodata Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 39.07
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: 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 39.07 is below the 20-day moving average (MA) of 41.69, below the 50-day MA of 45.97, and below the 200-day MA of 42.34, indicating a bearish trend. The MACD of -2.32 indicates Positive momentum. The RSI at 40.96 is Neutral, neither overbought nor oversold. The STOCH value of 37.91 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for INOD.

Innodata Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
INOD	73 Outperform	$1.22B	30.73	73.80%	―	112.54%	1256.46%
FLYW	72 Outperform	$1.59B	317.27	0.86%	―	22.20%	―
TASK	70 Outperform	$1.58B	26.13	12.49%	―	19.04%	24.49%
GDYN	66 Neutral	$677.36M	39.51	3.69%	―	22.27%	―
Sector *	61 Neutral	$35.62B	7.50	-10.94%	1.87%	8.86%	-10.27%
VYX	49 Neutral	$1.87B	―	-8.85%	―	-43.28%	15.29%
BBAI	42 Neutral	$1.98B	―	-222.48%	―	3.46%	-74.21%

Innodata Corporate Events

Innodata Cleared by DOJ and SEC in Probes

Innodata Inc. announced that both the U.S. Department of Justice and the Securities and Exchange Commission have closed their investigations into the company without recommending any enforcement actions. These investigations were related to a class action lawsuit concerning Innodata’s previous public statements about its artificial intelligence capabilities. The company sees this as a favorable outcome and plans to continue defending itself in the ongoing Securities Class Action lawsuit, for which a motion to dismiss was filed on March 7, 2025.

Innodata Holds Annual Meeting, Elects Directors

On June 5, 2025, Innodata Inc. held its Annual Meeting of Stockholders where key decisions were made. The stockholders elected all four nominees for director, approved BDO India LLP as the independent auditors for the fiscal year ending December 31, 2025, and approved the compensation of the company’s named executive officers on a non-binding, advisory basis.