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Innodata Inc. INOD posted solid first-quarter 2025 results last week, with revenues rising 120% year over year to $58.3 million and EPS of 22 cents, beating expectations on both top and bottom lines. The company reaffirmed its full-year guidance for 40%+ revenue growth and demonstrated substantial progress in expanding AI-driven services across multiple verticals.
Specializing in data engineering for generative AI and LLMs, Innodata has become a key infrastructure partner to major tech leaders. Strong financials, proprietary platforms and leadership in AI safety position it for substantial future growth.
However, despite beating earnings, INOD shares dropped following the earnings release, and this decline followed a pre-earnings surge, highlighting volatility and investor uncertainty over the company’s long-term growth prospects despite broader market strength. Still, over the past one month, INOD shares have rallied 7.1%, outperforming the 6.3% gain recorded by the Zacks Computer - Services market.
One-Month Performance of INOD
Image Source: Zacks Investment Research
Before making any hasty decision to add this stock to your portfolio or sell, it would be prudent to delve deeper and understand the company, its latest earnings and the concerns to better analyze how to play the stock after its first-quarter earnings release.
INOD: Key Takeaways From Q1 Earnings
Benefiting from expanding relationships and strong business momentum, Innodata’s revenues grew 120% year over year to $58.3 million in the first quarter of 2025. Adjusted EBITDA increased 236% to $12.7 million, or 22% of revenues — highlighting scalable operating leverage. The company’s adjusted gross margin of 43% also exceeded its long-term target of 40% — demonstrating scalable and profitable execution as it ramps up delivery to both new and existing customers.
INOD is expanding relationships with key customers, including a second master statement of work with its largest client, tapping a separate, significantly larger budget. The company also secured approximately $8 million in new engagements from four of its other Big Tech customers. Furthermore, INOD is in active discussions with five of its other Big Tech clients, potentially resulting in more than $30 million in near-term awards. Formerly small accounts (such as approximately $200k-$400k in 2024) are showing material expansion opportunities into multi-million-dollar bookings.
INOD is onboarding several major clients, including top global firms in enterprise tech, cloud software, digital commerce and healthcare technology — each with significant growth potential. New customer acquisitions are expected to provide meaningful upside to both the top and bottom lines.
With $56.6 million in cash, no debt drawn from its $30 million credit facility and a clean balance sheet with no external debt borrowings, Innodata is well-positioned to reinvest in AI platform development, strategic hiring and customer onboarding. This financial flexibility supports its aggressive go-to-market strategy while maintaining healthy margins.
Innodata reiterated its full-year revenue growth target of 40% or more. INOD plans to reinvest operational cash in 2025 toward technology and strategic hires in sales and solutioning to support AI growth. Despite these investments, the company still expects to grow adjusted EBITDA compared to 2024.