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Innodata (INOD)
NASDAQ:INOD

Innodata (INOD) AI Stock Analysis

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Innodata

(NASDAQ:INOD)

Rating:77Outperform
Price Target:
$51.00
▲(11.74%Upside)
Innodata's stock is supported by strong financial performance and strategic progress in AI solutions, which are major growth drivers. The technical outlook is positive but suggests caution due to overbought signals. The valuation is high, reflecting growth expectations, but could limit upside potential. Confidence in continued growth is bolstered by positive earnings guidance.
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)

Innodata Business Overview & Revenue Model

Company DescriptionInnodata Inc. (INOD) is a data engineering company that specializes in providing AI-driven digital transformation solutions and services. The company operates across various sectors, including information technology, digital content, and data analytics. Its core offerings include data annotation, data enrichment, and knowledge process outsourcing, catering to businesses looking to enhance their data management and analytics capabilities.
How the Company Makes MoneyInnodata generates revenue primarily through its comprehensive suite of data solutions and services. The company's key revenue streams include contracts for data annotation and enrichment services, which are often utilized by enterprises seeking to improve their AI and machine learning models. Additionally, Innodata earns from knowledge process outsourcing where clients outsource complex data management tasks to Innodata's skilled workforce. Significant partnerships with technology firms and enterprises in need of robust data solutions also contribute to its earnings by providing recurring and project-based revenue opportunities.

Innodata Key Performance Indicators (KPIs)

Any
Any
Adjusted EBITDA by Segment
Adjusted EBITDA by Segment
Provides a view of operating performance by segment, excluding non-cash items and one-time charges, to assess underlying profitability and cash flow potential.
Chart InsightsInnodata's DDS segment has shown a remarkable turnaround, with a dramatic increase in adjusted EBITDA, driven by strategic growth in AI solutions and new customer wins. The Synodex segment, while improving, remains volatile. Agility has shifted from losses to consistent gains. The recent earnings call highlights a 236% year-over-year EBITDA increase, underpinned by AI-driven initiatives. However, potential revenue volatility and margin impacts from strategic investments could pose short-term challenges. The company's confidence in achieving robust revenue growth through innovation and market expansion remains strong.
Data provided by:Main Street Data

Innodata Earnings Call Summary

Earnings Call Date:May 08, 2025
(Q1-2025)
|
% Change Since: 11.02%|
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.

Innodata Financial Statement Overview

Summary
Innodata demonstrates strong financial health with impressive revenue growth, effective cost management, and efficient cash generation. The robust balance sheet with low leverage and high ROE supports financial stability and future growth prospects.
Income Statement
85
Very Positive
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
78
Positive
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
80
Positive
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
TTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income StatementTotal Revenue
202.30M170.46M86.78M79.00M69.75M58.24M
Gross Profit
80.69M67.07M31.29M27.47M25.73M19.89M
EBIT
31.28M24.34M0.00-10.47M-2.18M1.28M
EBITDA
37.37M30.13M5.03M-6.59M1.22M3.54M
Net Income Common Stockholders
35.46M28.66M-908.00K-12.01M-1.80M617.00K
Balance SheetCash, Cash Equivalents and Short-Term Investments
46.90M46.90M13.82M10.30M18.90M17.57M
Total Assets
113.45M113.45M59.43M48.04M59.22M57.25M
Total Debt
4.66M4.66M5.48M4.73M6.31M7.32M
Net Debt
-42.23M-42.23M-8.32M-5.06M-12.59M-10.25M
Total Liabilities
50.06M50.06M34.44M30.00M32.81M31.00M
Stockholders Equity
63.47M63.47M25.70M18.77M29.93M29.64M
Cash FlowFree Cash Flow
30.36M27.27M339.00K-7.74M783.00K4.25M
Operating Cash Flow
39.12M35.02M5.90M-1.22M5.15M5.66M
Investing Cash Flow
-8.75M-7.74M-5.07M-7.03M-4.37M-1.38M
Financing Cash Flow
7.21M6.06M2.87M-307.00K773.00K2.31M

Innodata Technical Analysis

Technical Analysis Sentiment
Positive
Last Price45.64
Price Trends
50DMA
37.14
Positive
100DMA
40.99
Positive
200DMA
34.20
Positive
Market Momentum
MACD
1.80
Negative
RSI
65.15
Neutral
STOCH
84.48
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For INOD, the sentiment is Positive. The current price of 45.64 is above the 20-day moving average (MA) of 38.68, above the 50-day MA of 37.14, and above the 200-day MA of 34.20, indicating a bullish trend. The MACD of 1.80 indicates Negative momentum. The RSI at 65.15 is Neutral, neither overbought nor oversold. The STOCH value of 84.48 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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 (62)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
80
Outperform
$1.48B28.0111.35%14.05%17.90%
77
Outperform
$1.41B43.2468.82%114.21%1471.86%
69
Neutral
$1.22B360.990.63%20.97%
66
Neutral
$1.03B93.962.42%18.72%347.70%
62
Neutral
$11.75B10.58-7.10%2.91%7.47%-7.95%
VYVYX
54
Neutral
$1.49B-19.49%-50.48%-15.75%
48
Neutral
$1.10B-126.64%9.40%13.55%
* Technology Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
INOD
Innodata
45.64
30.48
201.06%
VYX
NCR Voyix
11.06
-1.77
-13.80%
GDYN
Grid Dynamics Holdings
11.95
2.39
25.00%
BBAI
BigBearai Holdings
3.77
2.41
177.21%
FLYW
Flywire
10.18
-7.19
-41.39%
TASK
TaskUs
16.71
2.08
14.22%
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.