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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Date of Report (Date of earliest event reported):
November 2, 2023
INNODATA
INC.
(Exact name of registrant as specified in its charter)
Delaware |
001-35774 |
13-3475943 |
(State or other jurisdiction of |
(Commission File Number) |
(I.R.S. Employer |
incorporation) |
|
Identification No.) |
|
|
|
55 Challenger Road |
|
|
Ridgefield Park, NJ |
|
07660 |
(Address of principal executive offices) |
|
(Zip Code) |
Registrant's telephone number, including area code (201) 371-8000
(Former
name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended
to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨ | Written communications pursuant
to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to
Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications
pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications
pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b)
of the Act:
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
Common Stock |
INOD |
The Nasdaq Stock Market LLC |
Indicate by check mark whether the registrant is an emerging growth
company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange
Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ¨
If an emerging growth company, indicate by check
mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Item 2.02 Results of Operations and Financial Condition.
On November 2, 2023, Innodata Inc. issued a press release announcing its third quarter 2023 financial results. A copy of the press release
is furnished with this Current Report on Form 8-K as Exhibit 99.1.
In accordance with General Instruction B.2 of Form 8-K, the information in this Current Report on Form 8-K, including Exhibit 99.1, shall
not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), or otherwise subject to the liabilities of that section, and shall not be incorporated by reference into any registration
statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set
forth by specific reference in such filing.
Item 9.01 Financial
Statements and Exhibits.
(d) Exhibits
See Exhibit Index below.
Exhibit Index
SIGNATURES
Pursuant to the requirements
of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
|
INNODATA INC. |
|
|
Date: November 2, 2023 |
By: |
/s/ Marissa B. Espineli |
|
|
|
Marissa B. Espineli |
|
|
|
Interim Chief Financial Officer |
|
Exhibit 99.1
Innodata Reports Third Quarter 2023 Results and Signing New Big
Tech for Generative AI Development
Revenue Up 20% Year-Over-Year; Accelerating Growth in Q4 and 2024
Anticipated
NEW YORK – November 2, 2023 –
INNODATA INC. (NASDAQ:INOD) today reported results for the third quarter ended September 30, 2023.
| · | Revenue
for the quarter ended September 30, 2023 was $22.2 million, up 20% year over year. The comparative
period included $1.0 million in revenue from the large social media company that underwent
a significant management change in the second half of last year, as a result of which it
dramatically pulled back spending across the board. There was no revenue from this company
in the three months ended September 30, 2023. |
| · | Net
income for the quarter ended September 30, 2023 was $0.4 million, or $0.01 per basic and
diluted share, compared to a net loss of $3.3 million, or $0.12 per basic and diluted share,
in the same period last year. |
| · | Revenue
for the nine months ended September 30, 2023 was $60.7 million, compared to revenue of $59.6
million in the same period last year. The comparative period included $7.9 million in revenue
from the large social media company referenced above. There was no revenue from this company
in the nine months ended September 30, 2023. |
| · | Net
loss for the nine months ended September 30, 2023 was $2.6 million, or $0.09 per basic and
diluted share, compared to a net loss of $10.0 million, or $0.37 per basic and diluted share,
in the same period last year. |
| · | Adjusted
EBITDA was $3.2 million in the third quarter of 2023, compared to Adjusted EBITDA loss of
$1.2 million in the same period last year.* |
| · | Adjusted
EBITDA was $5.6 million for the nine months ended September 30, 2023, compared to Adjusted
EBITDA loss of $3.5 million in the same period last year.* |
| · | Cash,
cash equivalents and short-term investments were $14.8 million at September 30, 2023, as compared
to $10.3 million at December 31, 2022. |
* Adjusted EBITDA is defined below.
The amounts in this press release have been rounded.
All percentages have been calculated using unrounded amounts.
Jack Abuhoff, CEO, said, “Today we are pleased to announce third
quarter revenue of $22.2 million, representing 20% year-over-year growth. It is worth noting that year-over-year growth was 27% if we
back out revenue from the large social media company which contributed $1 million in revenue in the prior quarter but dramatically cut
spending after a significant and highly-publicized management change.
“We are also very pleased to announce third quarter Adjusted
EBITDA of $3.2 million, representing 100% sequential quarter-on-quarter growth. The $1.6 million of sequential Adjusted EBITDA growth,
viewed together with the $2.5 million of sequential quarter-on-quarter revenue growth, demonstrates strong operating leverage as well
as successful cost management. Looked at year over year, we see the same thing: we returned $4.4 million of Adjusted EBITDA growth on
$3.7 million of revenue growth.
“Third quarter growth was driven by the start of ramp up for
generative AI development work with one of the new big tech customers we announced this summer. We expect our work with this customer
to continue ramping up in the fourth quarter and into the first quarter, potentially reaching a $23 to $25 million runrate at the end
of the year with which to start next year. At the very end of the third quarter, we also kicked off our generative AI development program
with the other new big tech customer we announced this summer, and we expect it will also contribute to fourth quarter revenue. In fact,
we anticipate continuing to expand revenue with both of these new customers through Q4 and in 2024.
“For the fourth quarter, we are forecasting revenue of $24.5
million or more, representing 26% or higher year-over-year growth. Again, if we back out revenue from the large social media company which
contributed $0.5 million in revenue in the fourth quarter of 2022, our fourth quarter forecast would represent 30% or better year-over-year
growth. Since there was no revenue from this social media customer in Q1 2023, beginning in Q1 2024 revenue from this social media customer
will no longer provide a drag on year-over-year comparisons.
“For the fourth quarter, we’re forecasting Adjusted EBITDA
of $3.7 million or more, which would be approximately 15 or more times Adjusted EBITDA from fourth quarter last year.”
Abuhoff continued, “I am also very pleased to announce that in
September we signed a master services agreement for AI development with yet another of the world’s largest tech companies –
a company whose AI programs we have been trying to break into for a year now. Based on our research, this large tech company is likely
to spend several hundred million dollars on generative AI data engineering services in 2024, so this win, like others we announced this
summer, packs a lot of potential. While this relationship is at an early stage, we see huge potential in it.
“As we look ahead and plan for 2024, we foresee an exciting and
transformative year ahead. We believe we have the strategy, business momentum and customer relationships to deliver significant revenue
growth and Adjusted EBITDA growth. We currently intend to provide guidance for 2024 revenue and Adjusted EBITDA growth when we release
our fourth quarter results.
“Our strategy for growth is two-fold. First, we will support
large technology companies building generative AI foundation models. Second, we will support enterprises across a wide range of verticals
that seek to integrate and fine-tune generative AI models.
“We now have master service agreements in place with five of
the largest technology companies in the world under which we are providing generative AI program support. Landing these agreements was
non-trivial. Our success at having done so, I believe, testifies to the strength of our value proposition and our capabilities. With these
agreements now in hand, we believe we are poised to deliver significant growth in 2024.
“Over the next several years, we believe that these technology
companies will be building bigger and better generative AI models. Indeed, when you listen to the large-tech companies’ earnings
calls this quarter what emerges is an overwhelming sense that generative AI is their number-one strategic priority; that it’s their
biggest investment area for 2024; and that they believe generative AI is a fundamental platform shift that is just at its very beginning.
One of these companies specifically stated that it believes it will drive tens of billions of dollars of revenue over the next several
years from generative AI innovation.
“The product-centric large-tech companies are talking about
creating generative AI-powered experiences across their product lines, transforming the way people use their products. The infrastructure-centric
large-tech companies are talking about deploying new and differentiating generative AI services and bolstering their AI infrastructure
to serve their customers’ AI training and inferencing needs. And both product-centric and infrastructure-centric large-tech companies
are talking about increasing capital investment into generative AI as a result of the strong demand that they see. This, we believe,
bodes very well for us.
“During the summer, we announced winning two new “Big Five”
tech customers and both a program expansion and a new program with an existing “Big Five” tech customer, all to help develop
and train large language models.
“We announced the first new “Big Five” customer win
on July 18, and on August 29 we announced that the program had been expanded. Our program began ramping up in early August. We anticipate
that we will continue to ramp the program through Q4 and into Q1, reaching a revenue runrate on just this one customer of potentially
$23 to $25 million by the end of the year with which to start next year. We are now in discussions with this customer about potential
further program expansions and potential additional programs.
“We announced our second new “Big Five” customer
win on August 10, and on August 22 we announced that our agreement got signed. While in our announcements we stated that rampup would
begin early in the fourth quarter, I’m pleased to report that we were able to kick things off at the tail end of the third quarter.
While we had a bit of revenue from this customer in the third quarter, we anticipate that revenue from this customer will impact our fourth
quarter results more significantly. We are now in discussions with this customer about scope of the initial program – which has
the potential to be quite large – as well as other programs. The customer has authorized $2.5 million in spend to get us started,
has promised that an additional $1.5 million authorization will arrive soon, and has stated that it intends to supplement these authorizations
as we move forward with program expansion.
“On June 27, we announced that an existing Big Five customer
had selected us to perform AI data annotation and LLM fine-tuning as a while-labeled service for its cloud and platform customers, and
on June 14, we announced that this same customer had engaged us for its LLM build program. In this latter announcement, we stated that
we anticipated potentially exceeding $8 million in revenue from this customer in 2023, up from approximately $3 million last year. We
believe that we are on track to meet or exceed this target. Included in this year’s forecast is approximately $330 thousand of revenue
from the white label program, consisting of six won or late-stage opportunities. We believe this white label program will contribute more
significantly to 2024. For 2024, we already have several million in pipeline opportunities, including two opportunities that we value
at $2 million and $1 million, respectively. It is worth noting that we believe the $2 million opportunity could potentially open an exciting
new market for us. We are hoping to close both of these opportunities in Q1. Under the white label program, we are seeing a mix of requirements
from our customer’s enterprise customers. Requirements range from generative AI data pipelines to two- and three-dimensional data
annotation; chatbot fine-tuning; LLM-based search and retrieval; and training LLMs for multi-lingual, domain-specific summarization and
conversation. Importantly, the program is enabling us to potentially scale an enterprise offering independent of our own sales and marketing;
to leverage both our customer’s brand and its significant customer reach; and to gain exposure to a wide range of early-adopter
generative AI use cases.
“We believe this exposure will set us up well for what we believe
will potentially be our largest and most significant opportunity – LLMs for the enterprise. These are still early days in terms
of enterprise adoption of generative AI, but we believe that a decade from now, virtually all successful businesses will have adopted
generative AI technologies into their products and operations. To do so, they will require one or more of the capabilities that we offer.
Enterprise data sciences teams will require support to train and fine-tune open source and proprietary LLMs and to conduct specialized
testing and evaluations to ensure that the LLMs are helpful, honest, and harmless. They will also require support to implement retrieval
augmented generation, or RAG for short, a technique for harnessing enterprise data assets within LLM prompts. Meanwhile, enterprise line-of-business
managers will require support to build customized generative AI models and applications. Additionally, these line-of-business managers
will require support to deliver the kind of business process and workflow transformation that will be possible with generative AI. And
when we identify opportunities to deliver AI-enabled transformation via a subscription-based platform, as we have now with PR workflows,
underwriting workflows, and compliance workflows, we will enable them to subscribe to our platforms rather than having to undertake complex
and expensive builds themselves.
“In the third quarter, we closed three important enterprise generative
AI opportunities with large companies. Their scope ranges from strategy to implementation. In one of the engagements, we will be helping
a leading information company create a strategic roadmap for AI/LLM integration for its products and internal operations and will be building
LLM proofs-of-concept. In another, we will be helping fine-tune LLMs for three customer use cases pertaining to legal services. In the
third deal, we will be creating datasets to train an LLM to support doctor/patient interactions.”
Abuhoff concluded, “We ended Q3 with $14.8 million in cash and
short-term investments, up from $13.7 million last quarter. We continue to have no appreciable debt. To support our growth and future
working capital requirements, we have a revolving line of credit with Wells Fargo that provides up to $10 million of financing subject
to a borrowing base limitation.”
Timing of Conference Call with Q&A
Innodata will conduct an
earnings conference call, including a question-and-answer period, at 5:00 PM eastern time today. You can participate in this call by
dialing the following call-in numbers:
The call-in numbers for the conference call are:
1-888-506-0062 (Domestic)
+1 973-528-0011 (International)
Participant Access Code 584598
1-877-481-4010 (Domestic Replay)
+1 919-882-2331 (International Replay)
Replay Passcode 49254
It
is recommended that participants dial in approximately 10 minutes prior to the start of the call. Investors
are also invited to access a live Webcast of the conference call at the Investor Relations section of www.innodata.com. Please
note that the Webcast feature will be in listen-only mode.
Call-in or Webcast replay
will be available for 30 days following the conference call.
About Innodata
Innodata (NASDAQ: INOD) is a global
data engineering company delivering the promise of AI to many of the world’s most prestigious companies. We provide AI-enabled
software platforms and managed services for AI data collection/annotation, AI digital transformation, and industry-specific business
processes. Our low-code Innodata AI technology platform is at the core of our offerings. In every relationship, we honor our 30+ year
legacy delivering the highest quality data and outstanding service to our customers. Visit www.innodata.com to learn more.
Forward Looking Statements
This press release may contain forward-looking
statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act
of 1933, as amended. Words such as “project,” “believe,” “expect,” “can,” “continue,”
“could,” “intend,” “may,” “should,” “will,” “anticipate,” “indicate,”
“forecast,” “predict,” “likely,” “goals,” “estimate,” “plan,”
“potential,” ”promises,” “possible,” or the negatives thereof and other similar expressions generally
identify forward-looking statements, which speak only as of the date hereof.
These forward-looking statements are based
on management’s current expectations, assumptions and estimates and are subject to a number of risks and uncertainties,
including without limitation, impacts resulting from the continuing conflict between Russia and the Ukraine and Hamas’
attack against Israel and the ensuing conflict; investments in large language models; that contracts may be terminated by customers;
projected or committed volumes of work may not materialize; pipeline opportunities and customer
discussions which may not materialize into work or expected volumes of work; continuing reliance on project-based work in the
Digital Data Solutions (“DDS”) segment and the primarily at-will nature of such contracts and the ability of these
customers to reduce, delay or cancel projects; the likelihood of continued development of the markets, particularly new and emerging
markets, that our services support; continuing DDS segment revenue concentration in a limited number of customers; potential
inability to replace projects that are completed, canceled or reduced; our dependency on content providers in our Agility segment;
difficulty in integrating and deriving synergies from acquisitions, joint venture and strategic investments; potential undiscovered
liabilities of companies and businesses that we may acquire; potential impairment of the carrying value of goodwill and other
acquired intangible assets of companies and businesses that we acquire; a continued downturn in or depressed market conditions;
changes in external market factors; the ability and willingness of our customers and prospective customers to execute business plans
that give rise to requirements for our services; changes in our business or growth strategy; the emergence of new, or growth in
existing competitors; various other competitive and technological factors; our use of and reliance on information technology
systems, including potential security breaches, cyber-attacks, privacy breaches or data breaches that result in the unauthorized
disclosure of consumer, customer, employee or Company information, or service interruptions; and other risks and uncertainties
indicated from time to time in our filings with the Securities and Exchange Commission.
Our actual results could differ materially from
the results referred to in forward-looking statements. Factors that could cause or contribute to such differences include, but are not
limited to, the risks discussed in Part I, Item 1A. “Risk Factors,” Part II, Item 7. “Management’s Discussion
and Analysis of Financial Condition and Results of Operations,” and other parts of our Annual Report on Form 10-K, filed with the
Securities and Exchange Commission on February 24, 2023, as updated or amended by our other filings that we may make with the Securities
and Exchange Commission. In light of these risks and uncertainties, there can be no assurance that the results referred to in the forward-looking
statements will occur, and you should not place undue reliance on these forward-looking statements. These forward-looking statements
speak only as of the date hereof.
We undertake no obligation to update or review
any guidance or other forward-looking statements, whether as a result of new information, future developments or otherwise, except as
may be required by the Federal securities laws.
Company Contact
Marcia Novero
Innodata Inc.
Mnovero@innodata.com
(201) 371-8015
Non-GAAP Financial Measures
In addition to the financial information prepared
in conformity with U.S. GAAP (“GAAP”), we provide certain non-GAAP financial information. We believe that these non-GAAP
financial measures assist investors in making comparisons of period-to-period operating results. In some respects, management believes
non-GAAP financial measures are more indicative of our ongoing core operating performance than their GAAP equivalents by making adjustments
that management believes are reflective of the ongoing performance of the business.
We believe that the presentation of this non-GAAP
financial information provides investors with greater transparency by providing investors a more complete understanding of our financial
performance, competitive position, and prospects for the future, particularly by providing the same information that management and our
Board of Directors use to evaluate our performance and manage the business. However, the non-GAAP financial measures presented in this
press release have certain limitations in that they do not reflect all of the costs associated with the operations of our business as
determined in accordance with GAAP. Therefore, investors should consider non-GAAP financial measures in addition to, and not as a substitute
for, or as superior to, measures of financial performance prepared in accordance with GAAP. Further, the non-GAAP financial measures
that we present may differ from similar non-GAAP financial measures used by other companies.
Adjusted EBITDA
We define Adjusted EBITDA as net income (loss)
attributable to Innodata Inc. and its subsidiaries in accordance with U.S. GAAP before interest expense, income taxes, depreciation and
amortization of intangible assets (which derives EBITDA), plus additional adjustments for loss on impairment of intangible assets and
goodwill, stock-based compensation, income (loss) attributable to non-controlling interests, non-recurring severance, and other one-time
costs.
We use Adjusted EBITDA to evaluate core results
of operations and trends between fiscal periods and believe that these measures are important components of our internal performance
measurement process.
A reconciliation of Adjusted EBITDA to the most
directly comparable GAAP measure is included in the tables that accompany this release.
INNODATA INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per-share amounts)
| |
Three Months Ended | | |
Nine Months Ended | |
| |
September 30, | | |
September 30, | |
| |
2023 | | |
2022 | | |
2023 | | |
2022 | |
Revenues | |
$ | 22,169 | | |
$ | 18,447 | | |
$ | 60,663 | | |
$ | 59,626 | |
| |
| | | |
| | | |
| | | |
| | |
Operating costs and expenses: | |
| | | |
| | | |
| | | |
| | |
| |
| | | |
| | | |
| | | |
| | |
Direct operating costs | |
| 13,945 | | |
| 12,389 | | |
| 39,534 | | |
| 38,795 | |
Selling and administrative expenses | |
| 7,401 | | |
| 9,117 | | |
| 22,772 | | |
| 29,584 | |
Interest expense (income), net | |
| 66 | | |
| (1 | ) | |
| 122 | | |
| 1 | |
| |
| 21,412 | | |
| 21,505 | | |
| 62,428 | | |
| 68,380 | |
Income (loss) before provision for income taxes | |
$ | 757 | | |
$ | (3,058 | ) | |
$ | (1,765 | ) | |
$ | (8,754 | ) |
Provision for income taxes | |
| 374 | | |
| 268 | | |
| 780 | | |
| 1,293 | |
Consolidated net income (loss) | |
| 383 | | |
| (3,326 | ) | |
| (2,545 | ) | |
| (10,047 | ) |
Income (loss) attributable to non-controlling interests | |
| 12 | | |
| 1 | | |
| 15 | | |
| (72 | ) |
Net income (loss) attributable to Innodata Inc. and Subsidiaries | |
$ | 371 | | |
$ | (3,327 | ) | |
$ | (2,560 | ) | |
$ | (9,975 | ) |
| |
| | | |
| | | |
| | | |
| | |
Income (loss) per share attributable to Innodata Inc.
and Subsidiaries: | |
| | | |
| | | |
| | | |
| | |
Basic | |
$ | 0.01 | | |
$ | (0.12 | ) | |
$ | (0.09 | ) | |
$ | (0.37 | ) |
Diluted | |
$ | 0.01 | | |
$ | (0.12 | ) | |
$ | (0.09 | ) | |
$ | (0.37 | ) |
Weighted average shares outstanding: | |
| | | |
| | | |
| | | |
| | |
Basic | |
| 28,459 | | |
| 27,331 | | |
| 27,930 | | |
| 27,239 | |
Diluted | |
| 32,463 | | |
| 27,331 | | |
| 27,930 | | |
| 27,239 | |
INNODATA INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
| |
September
30, 2023 | | |
December
31, 2022 | |
ASSETS | |
| | |
| |
Current assets: | |
| | | |
| | |
Cash and cash equivalents | |
$ | 14,812 | | |
$ | 9,792 | |
Short term investments – other | |
| 13 | | |
| 507 | |
Accounts receivable, net of allowance
for doubtful accounts | |
| 10,676 | | |
| 9,528 | |
Prepaid expenses
and other current assets | |
| 3,826 | | |
| 3,858 | |
Total current assets |
| |
29,327 | | | |
23,685 | | |
Property and equipment, net | |
| 2,373 | | |
| 2,511 | |
Right-of-use-asset, net | |
| 5,177 | | |
| 4,309 | |
Other assets | |
| 2,515 | | |
| 1,498 | |
Deferred income taxes, net | |
| 1,552 | | |
| 1,475 | |
Intangibles, net | |
| 13,449 | | |
| 12,526 | |
Goodwill | |
| 2,032 | | |
| 2,038 | |
Total assets |
| $ |
56,425 | | | $ |
48,042 | | |
| |
| | | |
| | |
LIABILITIES, NON-CONTROLLING INTERESTS AND
STOCKHOLDERS’ EQUITY | |
| | | |
| | |
| |
| | | |
| | |
Current liabilities: | |
| | | |
| | |
Accounts payable, accrued expenses and
other | |
$ | 10,547 | | |
$ | 9,880 | |
Accrued salaries, wages and related benefits | |
| 7,154 | | |
| 6,136 | |
Income and other taxes | |
| 3,427 | | |
| 3,230 | |
Long-term obligations - current portion | |
| 1,041 | | |
| 877 | |
Operating lease liability
- current portion | |
| 752 | | |
| 693 | |
Total current liabilities |
| |
22,921 | | | |
20,816 | | |
Deferred income taxes, net | |
| 19 | | |
| 65 | |
Long-term obligations, net of current
portion | |
| 6,464 | | |
| 5,079 | |
Operating lease liability,
net of current portion | |
| 4,873 | | |
| 4,036 | |
Total liabilities | |
| 34,277 | | |
| 29,996 | |
Non-controlling interests | |
| (712 | ) | |
| (727 | ) |
STOCKHOLDERS' EQUITY | |
| 22,860 | | |
| 18,773 | |
Total liabilities, non-controlling
interests and stockholders’ equity | |
$ | 56,425 | | |
$ | 48,042 | |
INNODATA INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
| |
Nine Months Ended | |
| |
September
30, | |
| |
2023 | | |
2022 | |
Cash flows from operating activities: | |
| | | |
| | |
Consolidated net loss | |
$ | (2,545 | ) | |
$ | (10,047 | ) |
Adjustments to reconcile consolidated net loss to net cash | |
| | | |
| | |
provided by operating activities: | |
| | | |
| | |
Depreciation and amortization | |
| 3,479 | | |
| 2,836 | |
Stock-based compensation | |
| 2,998 | | |
| 2,370 | |
Deferred income taxes | |
| (120 | ) | |
| 242 | |
Pension cost | |
| 791 | | |
| 577 | |
Loss on lease termination | |
| - | | |
| 125 | |
Changes in operating assets and liabilities: | |
| | | |
| | |
Accounts receivable | |
| (1,198 | ) | |
| 1,690 | |
Prepaid expenses and other current
assets | |
| 449 | | |
| (235 | ) |
Other assets | |
| (243 | ) | |
| 734 | |
Accounts payable, accrued expenses
and other | |
| 970 | | |
| (253 | ) |
Accrued salaries, wages and related
benefits | |
| 1,019 | | |
| 498 | |
Income and withholding
taxes | |
| 189 | | |
| (197 | ) |
Net cash provided
by (used in) operating activities | |
| 5,789 | | |
| (1,660 | ) |
| |
| | | |
| | |
Cash flows from investing activities: | |
| | | |
| | |
Capital expenditures | |
| (4,320 | ) | |
| (5,253 | ) |
Proceeds from short
term investments - other | |
| 494 | | |
| - | |
Net cash used
in investing activities | |
| (3,826 | ) | |
| (5,253 | ) |
| |
| | | |
| | |
Cash flows from financing activities: | |
| | | |
| | |
Proceeds from stock option exercises | |
| 3,158 | | |
| 276 | |
Payment of long-term
obligations | |
| (329 | ) | |
| (510 | ) |
Net cash provided
by (used in) financing activities | |
| 2,829 | | |
| (234 | ) |
Effect of exchange rate changes
on cash and cash equivalents | |
| 228 | | |
| (1,026 | ) |
Net increase (decrease) in cash and cash equivalents | |
| 5,020 | | |
| (8,173 | ) |
Cash and cash equivalents, beginning
of period | |
| 9,792 | | |
| 18,902 | |
Cash and cash equivalents, end
of period | |
$ | 14,812 | | |
$ | 10,729 | |
INNODATA INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL
MEASURES
(Unaudited)
(In thousands)
| |
Three Months Ended September 30, | | |
Nine Months Ended September 30, | |
Consolidated | |
2023 | | |
2022 | | |
2023 | | |
2022 | |
Net income (loss) attributable to Innodata Inc.
and Subsidiaries | |
$ | 371 | | |
$ | (3,327 | ) | |
$ | (2,560 | ) | |
$ | (9,975 | ) |
Provision for income taxes | |
| 374 | | |
| 268 | | |
| 780 | | |
| 1,293 | |
Interest expense | |
| 163 | | |
| (1 | ) | |
| 295 | | |
| 1 | |
Depreciation and amortization | |
| 1,237 | | |
| 1,011 | | |
| 3,479 | | |
| 2,836 | |
Severance** | |
| - | | |
| - | | |
| 580 | | |
| - | |
Stock-based compensation | |
| 1,017 | | |
| 805 | | |
| 2,998 | | |
| 2,370 | |
Non-controlling interests | |
| 12 | | |
| 1 | | |
| 15 | | |
| (72 | ) |
Adjusted EBITDA (loss) | |
$ | 3,174 | | |
$ | (1,243 | ) | |
$ | 5,587 | | |
$ | (3,547 | ) |
| |
Three Months Ended September 30, | | |
Nine Months Ended September 30, | |
DDS Segment | |
2023 | | |
2022 | | |
2023 | | |
2022 | |
Net income (loss) attributable to DDS Segment | |
$ | 444 | | |
$ | (324 | ) | |
$ | (751 | ) | |
$ | (211 | ) |
Provision for income taxes | |
| 371 | | |
| 265 | | |
| 772 | | |
| 1,196 | |
Interest expense | |
| 162 | | |
| (1 | ) | |
| 291 | | |
| 1 | |
Depreciation and amortization | |
| 328 | | |
| 201 | | |
| 811 | | |
| 483 | |
Severance** | |
| - | | |
| - | | |
| 33 | | |
| - | |
Stock-based compensation | |
| 854 | | |
| 761 | | |
| 2,524 | | |
| 1,929 | |
Non-controlling interests | |
| 12 | | |
| 1 | | |
| 15 | | |
| 2 | |
Adjusted EBITDA | |
$ | 2,171 | | |
$ | 903 | | |
$ | 3,695 | | |
$ | 3,400 | |
| |
Three Months Ended September 30, | | |
Nine Months Ended September 30, | |
Synodex Segment | |
2023 | | |
2022 | | |
2023 | | |
2022 | |
Net loss attributable to Synodex Segment | |
$ | (154 | ) | |
$ | (779 | ) | |
$ | (19 | ) | |
$ | (2,244 | ) |
Depreciation and amortization | |
| 155 | | |
| 171 | | |
| 479 | | |
| 483 | |
Severance** | |
| - | | |
| - | | |
| 6 | | |
| - | |
Stock-based compensation | |
| 60 | | |
| 30 | | |
| 177 | | |
| 129 | |
Non-controlling interests | |
| - | | |
| - | | |
| - | | |
| (74 | ) |
Adjusted EBITDA (loss) | |
$ | 61 | | |
$ | (578 | ) | |
$ | 643 | | |
$ | (1,706 | ) |
| |
Three Months Ended September 30, | | |
Nine Months Ended September 30, | |
Agility Segment | |
2023 | | |
2022 | | |
2023 | | |
2022 | |
Net income (loss) attributable to Agility Segment | |
$ | 81 | | |
$ | (2,224 | ) | |
$ | (1,790 | ) | |
$ | (7,520 | ) |
Provision for income taxes | |
| 3 | | |
| 3 | | |
| 8 | | |
| 97 | |
Interest expense | |
| 1 | | |
| - | | |
| 4 | | |
| - | |
Depreciation and amortization | |
| 754 | | |
| 639 | | |
| 2,189 | | |
| 1,870 | |
Severance** | |
| - | | |
| - | | |
| 541 | | |
| - | |
Stock-based compensation | |
| 103 | | |
| 14 | | |
| 297 | | |
| 312 | |
Adjusted EBITDA (loss) | |
$ | 942 | | |
$ | (1,568 | ) | |
$ | 1,249 | | |
$ | (5,241 | ) |
**Represents non-recurring severance incurred
for a reduction in headcount in connection with the re-alignment of the Company’s cost structure.
INNODATA INC. AND SUBSIDIARIES
CONSOLIDATED REVENUE BY SEGMENT
(Unaudited)
(In thousands)
| |
For the
Three Months Ended September 30, | | |
For the
Nine Months Ended September 30, | |
| |
2023 | | |
2022 | | |
2023 | | |
2022 | |
Revenues: | |
| | |
| | |
| | |
| |
DDS | |
$ | 16,003 | | |
$ | 12,852 | | |
$ | 41,929 | | |
$ | 42,944 | |
Synodex | |
| 1,728 | | |
| 1,762 | | |
| 5,705 | | |
| 5,376 | |
Agility | |
| 4,438 | | |
| 3,833 | | |
| 13,029 | | |
| 11,306 | |
Total
Consolidated | |
$ | 22,169 | | |
$ | 18,447 | | |
$ | 60,663 | | |
$ | 59,626 | |
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