INNODATA INC Q3 FY2024 earnings call

• Third quarter marked record revenue and adjusted EBITDA growth. Cash reserves increased. - Raising 2024 full-year revenue guidance. - Strong business momentum with Big Tech customers, including one contributing $30.6 million in Q3, and seven other Big Techs showing growth potential. - Secured federal government wins leveraging generative AI capabilities. - Agility platform saw growth, with infusion of generative AI leading to increased win rate. - Significant progress in talent acquisition and workplace certifications, including being certified by Great Place To Work and others.

In Q3 2024, Innodata delivered record revenue of $52 million, representing a 136% year-over-year organic growth. Adjusted EBITDA was $13.9 million, or 27% of revenue. Cash reserves increased to $26.4 million. Q3 revenue was $52.2 million, a year-over-year increase of 136% and 83% year-to-date. Sequentially, it was a 60% increase from Q2. Adjusted gross margin for Q3 was 44%, with adjusted EBITDA up from $3.2 million year-over-year. The Agility platform saw 26% year-over-year growth in the quarter.

• Raising 2024 full-year revenue guidance to between $52 million and $55 million in Q4, expecting 88%-92% year-over-year growth for full year 2024. - Confidence in Big Tech customers collectively becoming a significant revenue part next year, with momentum in projects and pilots.

• Forward-looking statements are subject to risks and uncertainties as per SEC filings. Actual results could differ materially from forward-looking statements.

Q: Could you give deltas quarter-over-quarter as you think through the composition of the equivalent revenue growth in Q4?

A: Jack Abuhoff mentioned there are moving pieces, with momentum from Big Tech relationships, trust, expansions, pilots, and new wins continuing in Q4 and expected to be more prominent in 2025.

Q: You talked about recruiting costs coming down. Could you talk a little about direct costs?

A: Jack Abuhoff said recruiting costs will be a function of future growth and internal recruiting capabilities, with Q3 recruiting costs at $0.5 million, expecting to manage them down.

Q: How do recent federal wins contrast with enterprise opportunities and their broader strategy?

A: Jack Abuhoff said federal wins with Agility bring immediate value, and they plan to expand in the federal sector, though not a significant contributor in 2025 yet.

Q: How have you been in conversations with other large tech companies as far as scaling?

A: Jack Abuhoff said all large tech customers have significant spend and ambitions, with momentum in relationships, trust, expansions, and new wins tracking positively, leading to confidence in them being a significant revenue part next year