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Innodata (INOD)
NASDAQ:INOD
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Innodata
(NASDAQ:INOD)
71Outperform
Positive Factors
Customer Expansion
Revenue from the largest customer grew 8% sequentially while revenues from seven other big tech customers increased 159% sequentially.
Financial Performance
Innodata reported 4Q24 results with revenue up 127% year over year, all organic, topping estimates and guidance.
Market Demand
Innodata should benefit from multi-year demand for supplying quality data engineering to LLM model building and maintenance.
Negative Factors
Customer Concentration Risk
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.
Project Risks
There are risks of project delays, which could impact business growth.
Innodata (INOD) vs. S&P 500 (SPY)
Market Cap
$1.31B
Dividend YieldN/A
Average Volume (3M)2.72M
Price to Earnings (P/E)49.3
Beta (1Y)3.71
Revenue Growth96.44%
EPS GrowthN/A
CountryUS
Employees6,597
SectorTechnology
Sector Strength51
IndustryInformation Technology Services
Share Statistics
EPS (TTM)0.85
Shares Outstanding31,299,728
10 Day Avg. Volume1,675,827
30 Day Avg. Volume2,723,018
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)7.68
Price to Cash Flow (P/CF)18.90
P/FCF Ratio18.90
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$74.67Price Target Upside61.90% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering4
Innodata Business Overview & Revenue Model
Company DescriptionInnodata 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 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 Financial Statement Overview
Summary
Innodata demonstrates strong financial performance with significant revenue and profit growth, improved cash flow, and stable financial leverage. The income statement shows a 62.6% revenue growth, positive net profit margin, and improved EBIT and EBITDA margins. However, the balance sheet score is limited by missing 2024 data, although 2023 data indicates conservative leverage. Cash flow has improved significantly with strong cash generation capabilities.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
Positive
46.12
Price Trends
44.68
Positive
41.27
Positive
28.91
Positive
Market Momentum
-1.15
Positive
49.72
Neutral
36.47
Neutral
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 46.12 is below the 20-day moving average (MA) of 48.00, above the 50-day MA of 44.68, and above the 200-day MA of 28.91, indicating a neutral trend. The MACD of -1.15 indicates Positive momentum. The RSI at 49.72 is Neutral, neither overbought nor oversold. The STOCH value of 36.47 is Neutral, 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 0 New Risks
Innodata Peers Comparison
Overall Rating
UnderperformOutperform
Sector (58)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
71 Outperform | $1.31B | 49.33 | 64.28% | ― | 96.44% | ― | |
69 Neutral | $9.97B | 22.35 | 12.80% | ― | 0.80% | 10.05% | |
68 Neutral | $5.76B | 34.21 | 8.97% | ― | 15.26% | 2.66% | |
62 Neutral | $2.28B | ― | -2.21% | ― | 14.44% | 84.58% | |
58 Neutral | $22.11B | 10.47 | -17.86% | 2.40% | 4.75% | -24.81% | |
54 Neutral | $3.00B | ― | -32.07% | ― | 23.79% | 4.10% | |
47 Neutral | $79.18B | ― | -11.44% | ― | -6.61% | -254.90% |
* Technology Sector Average
Performance Comparison
INOD
Innodata
46.12
40.08
663.58%
EPAM
Epam Systems
178.31
-89.03
-33.30%
MSTR
Strategy
335.72
150.12
80.88%
FIVN
Five9
30.87
-31.37
-50.40%
GLOB
Globant SA
129.65
-68.25
-34.49%
AI
C3ai
23.49
-4.14
-14.98%
Innodata Earnings Call Summary
Earnings Call Date: Feb 20, 2025 | % Change Since: -15.47% | Next Earnings Date: May 8, 2025
Earnings Call Sentiment Positive
The earnings call reflects a strong financial performance with record-breaking revenue growth and improved margins. The company is well-positioned in the AI market, anticipating further growth driven by investments from big tech companies. However, there are concerns about maintaining margins and the reliance on external big tech investments.Highlights
Record-Breaking Revenue Growth
Q4 '24 revenue totaled $59.2 million, a 127% year-over-year increase, exceeding the projected guidance. Full-year 2024 revenue was $170.5 million, up 96% over 2023.
Significant EBITDA Improvement
Adjusted EBITDA for Q4 was $14.1 million, or 23.9% of revenue, a 231% year-over-year increase. Full-year adjusted EBITDA was $34.6 million, a 250% year-over-year increase.
Strong Cash Position
Ended the year with $46.9 million in cash, up from $13.8 million at the end of 2023, with a $30 million credit facility remaining undrawn.
Growth in Big Tech Customer Base
Secured $24 million in new awards from the largest customer, expanding annualized run rate revenue to approximately $135 million. Seven other big tech customers' revenues grew by 159% sequentially.
Positive Market Trends
Big tech companies are expected to significantly increase their CapEx and investments in AI in 2025, with Amazon, Meta, Microsoft, and Google planning major expenditures.
Lowlights
Potential Margin Challenges
While gross margins improved, concerns about maintaining these levels were expressed, with future margins potentially being affected by specific customer projects.
Dependence on Big Tech Investment
Innodata's growth heavily relies on continued investment by big tech companies in AI, which could be subject to changes in their strategic priorities.
Company Guidance
The guidance provided during the Innodata conference call indicated a strong performance and optimistic outlook for 2025. For the fourth quarter of 2024, Innodata reported a revenue of $59.2 million, marking a 127% year-over-year increase, and an adjusted EBITDA of $14.1 million, representing 23.9% of revenue, a 231% increase from the previous year. For the full fiscal year 2024, revenue reached $170.5 million, up 96% from 2023, with an adjusted EBITDA of $34.6 million, or 20.3% of revenue, reflecting a 250% year-over-year rise. The company ended the year with $46.9 million in cash, significantly up from $13.8 million at the end of 2023, and maintained an undrawn $30 million credit facility. Looking ahead, Innodata forecasts a revenue growth of 40% or more for 2025, following a strategy of updating guidance as new business is secured. The company also highlighted anticipated opportunities in AI, particularly in data engineering for generative AI models, with new contracts expected to expand annualized run rate revenue significantly.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.