Innodata(INOD) - 2025 Q1 - Quarterly Report

Revenue Growth - Innodata's revenue for the three months ended March 31, 2025, was $25,223,000, compared to$10,959,000 for the same period in 2024, reflecting a significant increase [137]. - Total revenues increased to $58.3 million for Q1 2025, up 120$26.5 million in Q1 2024 [145]. - DDS segment revenues rose to $50.8 million, a 158$19.7 million in the prior year [145]. Profitability and Margins - The Adjusted Gross Margin for the same period improved to 43% in 2025 from 41% in 2024, indicating enhanced operational efficiency [137]. - Gross profit was $23.2 million for Q1 2025, an increase of$13.6 million from $9.6 million in Q1 2024, with a gross margin of 40$25.2 million for the three months ended March 31, 2025, from $11.0 million in 2024, marking a$14.2 million increase driven by higher revenues across all segments [170]. Segment Performance - The Digital Data Solutions (DDS) segment reported a Gross Profit of $19,729,000 for Q1 2025, up from$6,558,000 in Q1 2024, showcasing strong growth in this segment [139]. - The Synodex segment achieved an Adjusted Gross Profit of $639,000 in Q1 2025, compared to$536,000 in Q1 2024, with an improved Gross Margin of 32% [139]. - The Agility segment's Gross Profit increased to $2,971,000 in Q1 2025 from$2,678,000 in Q1 2024, maintaining a high Gross Margin of 55% [139]. Net Income - Net income for Q1 2025 was $7.8 million, compared to$1.0 million in Q1 2024, marking a $6.8 million increase [166]. - Net income for the DDS segment increased to$7.7 million for the three months ended March 31, 2025, compared to $0.4 million in the same period of 2024, reflecting a$7.3 million increase primarily due to higher revenues [167]. - The Agility segment reported a net loss of $0.2 million for the three months ended March 31, 2025, down from a net income of$0.3 million in 2024, indicating a $0.5 million decline attributed to higher operating costs [168]. Expenses and Costs - Direct operating costs increased to$35.1 million in Q1 2025, up 108% from $16.9 million in Q1 2024, primarily due to increased headcount [150]. - Selling and administrative expenses rose to$15.0 million in Q1 2025, an increase of 81% from $8.3 million in Q1 2024 [160]. Cash and Liquidity - The company has sufficient cash and cash equivalents to meet its financial needs for at least the next 12 months, indicating strong liquidity [128]. - Cash and cash equivalents as of March 31, 2025, were$56.6 million, up from $46.9 million as of December 31, 2024, indicating improved liquidity [180]. - Working capital increased to approximately$53.2 million as of March 31, 2025, compared to $41.5 million as of December 31, 2024, due to higher revenue collections [181]. - Cash provided by operating activities for the three months ended March 31, 2025, was$10.9 million, up from $6.8 million in 2024, resulting from higher net income and adjustments for non-cash expenses [186]. Investments and Future Outlook - Innodata is focused on developing AI-enabled industry platforms, including Synodex for medical records and Agility PR Solutions for public relations, to expand its market presence [125]. - The company is actively investing in research and development to enhance its capabilities in AI and machine learning, which are critical for future growth [115]. - Anticipated capital expenditures for the next 12 months are expected to approximate$11.0 million, focusing on technology and infrastructure upgrades [189]. Seasonal Trends - Seasonal fluctuations in revenue are expected, particularly in the Synodex segment, which typically sees lower revenue in Q3 and higher in Q4 due to life insurance application cycles [130]. Non-GAAP Measures - The company emphasizes the importance of non-GAAP financial measures, such as Adjusted Gross Profit and Adjusted Gross Margin, to provide a clearer picture of its operational performance [132].