Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2022 | Nov. 04, 2022 | |
Cover | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2022 | |
Document Transition Report | false | |
Entity File Number | 001-35774 | |
Entity Registrant Name | INNODATA INC | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 13-3475943 | |
Entity Address, Address Line One | 55 Challenger Road | |
Entity Address, City or Town | Ridgefield Park | |
Entity Address, State or Province | NJ | |
Entity Address, Postal Zip Code | 07660 | |
City Area Code | 201 | |
Local Phone Number | 371-8000 | |
Title of 12(b) Security | Common Stock | |
Trading Symbol | INOD | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 27,378,234 | |
Entity Central Index Key | 0000903651 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 10,729 | $ 18,902 |
Accounts receivable, net of allowance for doubtful accounts of $910 and $730 respectively | 9,374 | 11,379 |
Prepaid expenses and other current assets | 3,819 | 3,681 |
Total current assets | 23,922 | 33,962 |
Property and equipment, net | 2,718 | 2,947 |
Right-of-use-asset, net | 4,199 | 5,621 |
Other assets | 1,514 | 2,247 |
Deferred income taxes, net | 1,532 | 1,950 |
Intangibles, net | 11,942 | 10,347 |
Goodwill | 1,982 | 2,143 |
Total assets | 47,809 | 59,217 |
Current liabilities: | ||
Accounts payable | 2,952 | 1,823 |
Accrued expenses and other | 6,738 | 7,564 |
Accrued salaries, wages and related benefits | 6,911 | 6,391 |
Income and other taxes | 2,991 | 3,213 |
Long-term obligations - current portion | 596 | 1,279 |
Operating lease liability - current portion | 742 | 1,034 |
Total current liabilities | 20,930 | 21,304 |
Deferred income taxes, net | 23 | 15 |
Long-term obligations, net of current portion | 5,874 | 6,217 |
Operating lease liability, net of current portion | 3,930 | 5,276 |
Total liabilities | 30,757 | 32,812 |
Commitments and contingencies | ||
Non-controlling interests | (729) | (3,522) |
STOCKHOLDERS' EQUITY: | ||
Serial preferred stock; 4,998,000 shares authorized, none outstanding | ||
Common stock, $.01 par value; 75,000,000 shares authorized; 30,556,000 shares issued and 27,372,000 outstanding at September 30, 2022 and 30,347,000 shares issued and 27,163,000 outstanding at December 31, 2021 | 306 | 303 |
Additional paid-in capital | 34,846 | 35,121 |
Retained earnings (deficit) | (6,815) | 3,160 |
Accumulated other comprehensive loss | (4,091) | (2,192) |
Stockholders' Equity before Treasury Stock, Total | 24,246 | 36,392 |
Less: treasury stock, 3,184,000 shares at September 30, 2022 and December 31, 2021 at cost | (6,465) | (6,465) |
Total stockholders' equity | 17,781 | 29,927 |
Total liabilities, non-controlling interests and stockholders' equity | $ 47,809 | $ 59,217 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Accounts receivable, net of allowance for doubtful accounts | $ 910 | $ 730 |
Serial preferred stock, shares authorized | 4,998,000 | 4,998,000 |
Serial preferred stock, outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 75,000,000 | 75,000,000 |
Common stock, shares issued | 30,556,000 | 30,347,000 |
Common stock, shares outstanding | 27,372,000 | 27,163,000 |
Treasury stock, shares | 3,184,000 | 3,184,000 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS | ||||
Revenues | $ 18,447 | $ 17,450 | $ 59,626 | $ 50,466 |
Operating costs and expenses: | ||||
Direct operating costs | 12,389 | 10,703 | 38,795 | 31,208 |
Selling and administrative expenses | 9,117 | 7,262 | 29,584 | 19,767 |
Interest expense, net | (1) | 4 | 1 | 18 |
Total | 21,505 | 17,969 | 68,380 | 50,993 |
Loss from operations | (3,058) | (519) | (8,754) | (527) |
Gain from loan forgiveness | 0 | 580 | ||
Income (loss) before provision for income taxes | (8,754) | 53 | ||
Provision for income taxes | 268 | 328 | 1,293 | 621 |
Consolidated net loss | (3,326) | (847) | (10,047) | (568) |
Income (loss) attributable to non-controlling interests | 1 | (47) | (72) | (63) |
Net loss attributable to Innodata Inc. and Subsidiaries | $ (3,327) | $ (800) | $ (9,975) | $ (505) |
Loss per share attributable to Innodata Inc. and Subsidiaries: | ||||
Basic | $ (0.12) | $ (0.03) | $ (0.37) | $ (0.02) |
Diluted | $ (0.12) | $ (0.03) | $ (0.37) | $ (0.02) |
Weighted average shares outstanding: | ||||
Basic | 27,331 | 26,971 | 27,239 | 26,459 |
Diluted | 27,331 | 26,971 | 27,239 | 26,459 |
Comprehensive Loss: | ||||
Consolidated Net loss | $ (3,326) | $ (847) | $ (10,047) | $ (568) |
Pension liability adjustments, net of taxes | 35 | 10 | 113 | 32 |
Foreign currency translation adjustment | (644) | (594) | (1,270) | (480) |
Change in fair value of derivatives, net of taxes | (206) | (265) | (742) | (532) |
Other comprehensive loss | (815) | (849) | (1,899) | (980) |
Total Comprehensive loss | (4,141) | (1,696) | (11,946) | (1,548) |
Less: Comprehensive income (loss) attributable to non-controlling interest | 1 | (47) | (72) | (63) |
Comprehensive Loss attributable to Innodata Inc. and Subsidiaries | $ (4,142) | $ (1,649) | $ (11,874) | $ (1,485) |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Cash flows from operating activities: | ||
Consolidated net loss | $ (10,047) | $ (568) |
Adjustments to reconcile consolidated net loss to net cash provided by operating activities: | ||
Depreciation and amortization | 2,836 | 2,054 |
Gain on loan forgiveness | 0 | (580) |
Stock-based compensation | 2,370 | 1,117 |
Deferred income taxes | 242 | (16) |
Pension cost | 577 | 308 |
Loss on lease termination | 125 | 0 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 1,690 | 431 |
Prepaid expenses and other current assets | (235) | 342 |
Other assets | 734 | 214 |
Accounts payable and accrued expenses | (253) | 2,895 |
Accrued salaries, wages and related benefits | 498 | 976 |
Income and other taxes | (197) | (1,531) |
Net cash provided by (used in) operating activities | (1,660) | 5,642 |
Cash flows from investing activities: | ||
Capital expenditures | (5,253) | (2,919) |
Net cash used in investing activities | (5,253) | (2,919) |
Cash flows from financing activities: | ||
Proceeds from stock option exercises | 276 | 2,214 |
Withholding taxes on net settlement of stock-based compensation | 0 | (763) |
Payment of long-term obligations | (510) | (666) |
Net cash provided by (used in) financing activities | (234) | 785 |
Effect of exchange rate changes on cash and cash equivalents | (1,026) | (138) |
Net increase (decrease) in cash and cash equivalents | (8,173) | 3,370 |
Cash and cash equivalents, beginning of period | 18,902 | 17,573 |
Cash and cash equivalents, end of period | 10,729 | 20,943 |
Supplemental disclosures of cash flow information: | ||
Shares withheld for withholding taxes on net settlement for stock-based compensation | 0 | 763 |
Cash paid for income taxes | 979 | 201 |
Cash paid for operating leases | 1,424 | 1,312 |
Cash paid for interest | $ 1 | $ 18 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands | Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Treasury Stock | Total |
Balance at the beginning at Dec. 31, 2020 | $ 289 | $ 31,921 | $ 4,833 | $ (938) | $ (6,465) | $ 29,640 |
Balance at the beginning (in shares) at Dec. 31, 2020 | 28,984,000 | |||||
Balance at the beginning (in shares) at Dec. 31, 2020 | 3,184,000 | |||||
Net loss attributable to Innodata Inc. and subsidiaries | 398 | 398 | ||||
Stock-based compensation | 278 | 278 | ||||
Stock option exercises | $ 4 | 605 | 609 | |||
Stock option exercises (in shares) | 690,000 | |||||
Shares withheld for exercise settlement and taxes | $ 1 | (764) | (763) | |||
Shares withheld for exercise settlement and taxes (in shares) | (193,000) | |||||
Pension liability adjustments, net of taxes | 11 | 11 | ||||
Foreign currency translation adjustment | (21) | (21) | ||||
Balance at the end at Mar. 31, 2021 | $ 294 | 32,040 | 5,231 | (948) | $ (6,465) | 30,152 |
Balance at the end (in shares) at Mar. 31, 2021 | 29,481,000 | |||||
Balance at the end (in shares) at Mar. 31, 2021 | 3,184,000 | |||||
Balance at the beginning at Dec. 31, 2020 | $ 289 | 31,921 | 4,833 | (938) | $ (6,465) | 29,640 |
Balance at the beginning (in shares) at Dec. 31, 2020 | 28,984,000 | |||||
Balance at the beginning (in shares) at Dec. 31, 2020 | 3,184,000 | |||||
Pension liability adjustments, net of taxes | 32 | |||||
Foreign currency translation adjustment | (480) | |||||
Change in fair value of derivatives, net of taxes | (532) | |||||
Balance at the end at Sep. 30, 2021 | $ 303 | 34,475 | 4,328 | (1,918) | $ (6,465) | 30,723 |
Balance at the end (in shares) at Sep. 30, 2021 | 30,337,000 | |||||
Balance at the end (in shares) at Sep. 30, 2021 | 3,184,000 | |||||
Balance at the beginning at Mar. 31, 2021 | $ 294 | 32,040 | 5,231 | (948) | $ (6,465) | 30,152 |
Balance at the beginning (in shares) at Mar. 31, 2021 | 29,481,000 | |||||
Balance at the beginning (in shares) at Mar. 31, 2021 | 3,184,000 | |||||
Net loss attributable to Innodata Inc. and subsidiaries | (103) | (103) | ||||
Stock-based compensation | 336 | 336 | ||||
Stock option exercises | $ 5 | 1,136 | 1,141 | |||
Stock option exercises (in shares) | 556,000 | |||||
Pension liability adjustments, net of taxes | 11 | 11 | ||||
Foreign currency translation adjustment | 135 | 135 | ||||
Change in fair value of derivatives, net of taxes | (267) | (267) | ||||
Balance at the end at Jun. 30, 2021 | $ 299 | 33,512 | 5,128 | (1,069) | $ (6,465) | 31,405 |
Balance at the end (in shares) at Jun. 30, 2021 | 30,037,000 | |||||
Balance at the end (in shares) at Jun. 30, 2021 | 3,184,000 | |||||
Net loss attributable to Innodata Inc. and subsidiaries | (800) | (800) | ||||
Stock-based compensation | 503 | 503 | ||||
Stock option exercises | $ 4 | 460 | 464 | |||
Stock option exercises (in shares) | 300,000 | |||||
Pension liability adjustments, net of taxes | 10 | 10 | ||||
Foreign currency translation adjustment | (594) | (594) | ||||
Change in fair value of derivatives, net of taxes | (265) | (265) | ||||
Balance at the end at Sep. 30, 2021 | $ 303 | 34,475 | 4,328 | (1,918) | $ (6,465) | 30,723 |
Balance at the end (in shares) at Sep. 30, 2021 | 30,337,000 | |||||
Balance at the end (in shares) at Sep. 30, 2021 | 3,184,000 | |||||
Balance at the beginning at Dec. 31, 2021 | $ 303 | 35,121 | 3,160 | (2,192) | $ (6,465) | $ 29,927 |
Balance at the beginning (in shares) at Dec. 31, 2021 | 30,347,000 | |||||
Balance at the beginning (in shares) at Dec. 31, 2021 | 3,184,000 | 3,184,000 | ||||
Net loss attributable to Innodata Inc. and subsidiaries | (2,815) | $ (2,815) | ||||
Stock-based compensation | 537 | 537 | ||||
Stock option exercises | $ 1 | 26 | 27 | |||
Stock option exercises (in shares) | 23,000 | |||||
Shares withheld for exercise settlement and taxes | (53) | (53) | ||||
Shares withheld for exercise settlement and taxes (in shares) | (7,000) | |||||
Redemption of non-controlling interest | (2,864) | (2,864) | ||||
Pension liability adjustments, net of taxes | 40 | 40 | ||||
Foreign currency translation adjustment | (26) | (26) | ||||
Change in fair value of derivatives, net of taxes | 5 | 5 | ||||
Balance at the end at Mar. 31, 2022 | $ 304 | 32,767 | 345 | (2,173) | $ (6,465) | 24,778 |
Balance at the end (in shares) at Mar. 31, 2022 | 30,363,000 | |||||
Balance at the end (in shares) at Mar. 31, 2022 | 3,184,000 | |||||
Balance at the beginning at Dec. 31, 2021 | $ 303 | 35,121 | 3,160 | (2,192) | $ (6,465) | $ 29,927 |
Balance at the beginning (in shares) at Dec. 31, 2021 | 30,347,000 | |||||
Balance at the beginning (in shares) at Dec. 31, 2021 | 3,184,000 | 3,184,000 | ||||
Pension liability adjustments, net of taxes | $ 113 | |||||
Foreign currency translation adjustment | (1,270) | |||||
Change in fair value of derivatives, net of taxes | (742) | |||||
Balance at the end at Sep. 30, 2022 | $ 306 | 34,846 | (6,815) | (4,091) | $ (6,465) | $ 17,781 |
Balance at the end (in shares) at Sep. 30, 2022 | 30,556,000 | |||||
Balance at the end (in shares) at Sep. 30, 2022 | 3,184,000 | 3,184,000 | ||||
Balance at the beginning at Mar. 31, 2022 | $ 304 | 32,767 | 345 | (2,173) | $ (6,465) | $ 24,778 |
Balance at the beginning (in shares) at Mar. 31, 2022 | 30,363,000 | |||||
Balance at the beginning (in shares) at Mar. 31, 2022 | 3,184,000 | |||||
Net loss attributable to Innodata Inc. and subsidiaries | (3,833) | (3,833) | ||||
Stock-based compensation | 1,028 | 1,028 | ||||
Stock option exercises | $ 1 | 152 | 153 | |||
Stock option exercises (in shares) | 124,000 | |||||
Redemption of non-controlling interest | (1) | (1) | ||||
Pension liability adjustments, net of taxes | 38 | 38 | ||||
Foreign currency translation adjustment | (600) | (600) | ||||
Change in fair value of derivatives, net of taxes | (541) | (541) | ||||
Balance at the end at Jun. 30, 2022 | $ 305 | 33,946 | (3,488) | (3,276) | $ (6,465) | 21,022 |
Balance at the end (in shares) at Jun. 30, 2022 | 30,487,000 | |||||
Balance at the end (in shares) at Jun. 30, 2022 | 3,184,000 | |||||
Net loss attributable to Innodata Inc. and subsidiaries | (3,327) | (3,327) | ||||
Stock-based compensation | 805 | 805 | ||||
Stock option exercises | $ 1 | 95 | 96 | |||
Stock option exercises (in shares) | 69,000 | |||||
Pension liability adjustments, net of taxes | 35 | 35 | ||||
Foreign currency translation adjustment | (644) | (644) | ||||
Change in fair value of derivatives, net of taxes | (206) | (206) | ||||
Balance at the end at Sep. 30, 2022 | $ 306 | $ 34,846 | $ (6,815) | $ (4,091) | $ (6,465) | $ 17,781 |
Balance at the end (in shares) at Sep. 30, 2022 | 30,556,000 | |||||
Balance at the end (in shares) at Sep. 30, 2022 | 3,184,000 | 3,184,000 |
Summary of Significant Accounti
Summary of Significant Accounting Policies and Estimates | 9 Months Ended |
Sep. 30, 2022 | |
Summary of Significant Accounting Policies and Estimates | |
Summary of Significant Accounting Policies and Estimates | 1. Summary of Significant Accounting Policies and Estimates Basis of Presentation - Certain information and note disclosures normally included in or with financial statements prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) have been condensed or omitted from these condensed consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) and, accordingly, these condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. Unless otherwise noted, the accounting policies used in preparing these condensed consolidated financial statements are the same as those in the notes to the consolidated financial statements for the year ended December 31, 2021. Principles of Consolidation Use of Estimates Revenue Recognition For the Digital Data Solutions (DDS) segment, revenue is recognized primarily based on the quantity delivered or resources utilized in the period in which services are performed and performance conditions are satisfied as per the agreement. Revenue from agreements billed on a time-and-materials basis is recognized as services are performed. Revenue from fixed-fee agreements, which are not significant to overall revenues, is recognized based on the proportional performance method of accounting, as services are performed, or milestones are achieved. For the Synodex segment, revenue is recognized primarily based on the quantity delivered in the period in which services are performed and performance conditions are satisfied as per the agreement. A portion of the Synodex segment revenue is derived from licensing the Company’s functional software and providing access to the Company’s hosted software platform. Revenue from such services is recognized monthly when all parties to the agreement have agreed to the agreement; each party’s rights are identifiable; the payment terms are identifiable; the agreement has commercial substance; access to the service is provided to the end user; and collection is probable. The Agility segment derives its revenue primarily from subscription arrangements and provision of enriched media analysis services. It also derives revenue as a reseller of corporate communication solutions. Revenue from subscriptions is recognized monthly when access to the service is provided to the end user; all parties to the agreement have agreed to the agreement; each party’s rights are identifiable; the payment terms are identifiable; the agreement has commercial substance; and collection is probable. Revenue from enriched media analysis services is recognized when the services are performed, and performance conditions are satisfied. Revenue from the reseller agreements is recognized at the gross amount received for the goods in accordance with the Company functioning as a principal due to the Company meeting the following criteria: the Company acts as the primary obligor in the sales transaction; assumes the credit risk; sets the price; can select suppliers; and is involved in the execution of the services, including after sales service. Revenue includes reimbursement of out-of-pocket expenses, with the corresponding out-of-pocket expenses included in direct operating costs. Revenue associated with the services provided in one period and billed in a subsequent period is commonly referred to as unbilled revenues and are included under Accounts receivable. The Company considers U.S. GAAP criteria for determining whether to report gross revenue as a principal versus net revenue as an agent. The Company evaluates whether it is in control of the services before the same are transferred to the customer to assess whether it is principal or agent in the arrangement. Revenue is recognized on a gross basis if the Company is in the capacity of principal and on a net basis if it falls in the capacity of an agent. Contract acquisition costs, which are included in prepaid expenses and other current assets, are amortized over the term of a subscription agreement or contract that normally has a duration of 12 months or less. The Company reviews these prepaid acquisition costs on a periodic basis to determine the need to adjust the carrying values for early-terminated contracts. Foreign Currency Translation The functional currency for the Company’s subsidiaries in Germany, the United Kingdom and for the Company’s Agility subsidiary in Canada are the Euro, the Pound Sterling and the Canadian dollar, respectively. The financial statements of these subsidiaries are prepared in these respective currencies. Financial information is translated from the applicable functional currency to the U.S. dollar (the reporting currency) for inclusion in the Company’s condensed consolidated financial statements. Income, expenses, and cash flows are translated at weighted-average exchange rates prevailing during the fiscal period, and assets and liabilities are translated at fiscal period-end exchange rates. Resulting translation adjustments are included as a component of accumulated other comprehensive loss in stockholders’ equity. Foreign exchange transaction gains or losses are included in direct operating costs in the accompanying condensed consolidated statements of operations and comprehensive loss. Included in direct operating costs were foreign exchange gains resulting from such transactions of approximately $729,000 and $348,000 for the three months ended September 30, 2022 and 2021 respectively and $1,896,000 and $503,000 for the nine months ended September 30, 2022 and 2021 respectively. Derivative Instruments - Capitalized Developed Software three Income Taxes In assessing the realization of deferred tax assets, management considered whether it is more likely than not that all or some portion of the U.S. and Canadian deferred tax assets will not be realizable. As the expectation of future taxable income resulting from the U.S. and Canadian entities is not probable at this time, the Company maintains a valuation allowance against all the U.S. and Canadian net deferred tax assets. The Company accounts for income taxes regarding uncertain tax positions, and recognizes interest and penalties related to uncertain tax positions in income tax expense in the condensed consolidated statements of operations and comprehensive loss. Deferred Revenue Recent Accounting Pronouncements |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 9 Months Ended |
Sep. 30, 2022 | |
Goodwill and Intangible Assets | |
Goodwill and Intangible Assets | 2. Goodwill and Intangible Assets Goodwill As of September 30, 2022, the Company performed its annual goodwill impairment analysis on one of its reporting units, the Agility segment. The Company also tested for impairment intangible assets for the Agility and Synodex segments. The impairment test involves estimating the fair value based on a combination of income (estimates of future discounted cash flows) and the market approach (market multiples for similar companies) using unobservable inputs (Level 3). The income approach uses a discounted cash flow (“DCF”) method that utilizes the present value of cash flows to estimate the segment’s fair value. The future cash flows of the segment were projected based on the Company’s estimates of future revenue, operating income, and other factors such as working capital and capital expenditures. As part of the DCF analysis, the Company projected revenue and operating profits and assumed long-term revenue growth rates in the terminal year. The market approach utilizes multiples of revenues and earnings before interest expense, taxes, depreciation, and amortization (“EBITDA”) to estimate the segment’s fair value. The market multiples used for the segment were based on a group of comparable companies’ market multiples applied to the Company’s revenue. The Company concluded that there is no impairment of goodwill and intangible assets for the Agility and Synodex segments. The change in the carrying amount of goodwill for the nine months ended September 30, 2022 was as follows (in thousands): Balance as of January 1, 2022 $ 2,143 Foreign currency translation adjustment (161) Balance as of September 30, 2022 $ 1,982 The fair value measurement of goodwill for the Agility segment was classified within Level 3 of the fair value hierarchy because the Company used the income approach, which utilizes significant inputs that are unobservable in the market and the market multiple approach which utilizes comparable entities to further validate the carrying values. The Company believes it made reasonable estimates and assumptions to calculate the fair value of the reporting unit as of the impairment test measurement date. Intangibles Information regarding the Company acquired intangible assets and capitalized developed software was as follows (in thousands): Capitalized Developed Company Acquired Intangible Assets Software Capitalized Trademarks Media Capitalized Developed Developed Customer and Contact Developed Software - in technology relationships tradenames Patents Database Software Progress Total Gross carrying amounts: Balance as of January 1, 2022 $ 3,169 $ 2,228 $ 880 $ 45 $ 3,648 $ 8,576 $ 635 $ 19,181 Additions - - - - - - 4,244 4,244 Transfers - - - - - 2,882 (2,882) - Foreign currency translation (235) (162) (42) (3) (284) (656) (12) (1,394) Balance as of September 30, 2022 $ 2,934 $ 2,066 $ 838 $ 42 $ 3,364 $ 10,802 $ 1,985 $ 22,031 Accumulated amortization: Balance as of January 1, 2022 $ 2,158 $ 1,377 $ 685 $ 34 $ 2,005 $ 2,575 $ - $ 8,834 Amortization expense 235 139 42 3 267 1,286 - 1,972 Foreign currency translation (175) (110) (30) (3) (170) (229) - (717) Balance as of September 30, 2022 $ 2,218 $ 1,406 $ 697 $ 34 $ 2,102 $ 3,632 $ - $ 10,089 Net carrying values - September 30, 2022 $ 716 $ 660 $ 141 $ 8 $ 1,262 $ 7,170 $ 1,985 $ 11,942 Company Acquired Intangible Assets Capitalized Developed Software Capitalized Trademarks Media Capitalized Developed Developed Customer and Contact Developed Software - in technology relationships tradenames Patents Database Software Progress Total Gross carrying amounts: Balance as of January 1, 2021 $ 3,175 $ 2,228 $ 882 $ 45 $ 3,670 $ 5,507 $ 1,360 $ 16,867 Additions - - - - - 376 2,005 2,381 Transfers - - - - - 2,752 (2,752) - Foreign currency translation adjustment (6) - (2) - (22) (59) 22 (67) Balance as of December 31, 2021 $ 3,169 $ 2,228 $ 880 $ 45 $ 3,648 $ 8,576 $ 635 $ 19,181 Accumulated amortization: Balance as of January 1, 2021 $ 1,844 $ 1,192 $ 629 $ 29 $ 1,650 $ 1,492 $ - $ 6,836 Amortization expense 315 187 56 5 354 1,089 - 2,006 Foreign currency translation adjustment (1) (2) - - 1 (6) - (8) Balance as of December 31, 2021 $ 2,158 $ 1,377 $ 685 $ 34 $ 2,005 $ 2,575 $ - $ 8,834 Net carrying amounts - December 31, 2021 $ 1,011 $ 851 $ 195 $ 11 $ 1,643 $ 6,001 $ 635 $ 10,347 Amortization expense relating to acquired intangible assets was $0.2 million and $0.7 million for the three and nine months ended September 30, 2022. Amortization expense relating to capitalized developed software was $0.5 million and $1.3 million for the three and nine months ended September 30, 2022. As of September 30, 2022, estimated future amortization expense for intangible assets was as follows (in thousands): Year Amortization 2022 $ 761 2023 $ 3,579 2024 $ 3,124 2025 $ 2,217 2026 $ 818 Thereafter $ 1,443 $ 11,942 |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2022 | |
Income Taxes | |
Income Taxes | 3. Income Taxes Taxes primarily consist of a provision for foreign taxes recorded by the Company’s foreign subsidiaries in accordance with local tax regulations. Effective income tax rates are disproportionate due to the losses incurred by the Company’s U.S. and Canadian subsidiaries and a valuation allowance recorded on deferred taxes of these entities and tax effects of foreign operations, including foreign exchange gains and losses. The reconciliations of the U.S. statutory rate with the Company’s effective tax rate for the nine-month periods ended September 30, 2022 and 2021 are summarized in the table below: For the Nine Months Ended September 30, 2022 2021 Federal income tax expense at statutory rate (21.0) % 21.0 % Effect of: Change in valuation allowance 43.0 2,468.8 Tax effects of foreign operations 1.1 79.8 Increase (decrease) in unrecognized tax benefits (ASC 740) 1.0 (490.0) Return to provision true up 0.2 31.6 State income tax net of federal benefit 0.2 43.2 Section 162 (m) - 549.9 Change in tax rates - 225.0 Effect of stock based compensation (0.4) (1,573.2) Foreign operations permanent difference - foreign exchange gains and losses (1.5) 271.9 Foreign rate differential (5.8) (478.8) Withholding tax - - Other (2.0) 22.5 Effective tax rate 14.8 % 1,171.7 % The following table presents a roll-forward of the Company’s unrecognized tax benefits and associated interest for the nine months ended September 30, 2022 (in thousands): Unrecognized tax benefits Balance - January 1, 2022 $ 1,753 Increase for current period tax positions 83 Decrease for prior period tax positions (29) Interest accrual 46 Foreign currency remeasurement (177) Balance - September 30, 2022 $ 1,676 The Company expects that unrecognized tax benefits as of September 30, 2022, if recognized, would have a material impact on the Company’s effective tax rate. Tax Assessments In September 2015, the Company’s Indian subsidiary was subject to an inquiry by the Service Tax Department in India regarding the classification of services provided by this subsidiary, asserting that the services provided by this subsidiary fall under the category of online information and database access or retrieval services (OID Services), and not under the category of business support services (BS Services) that are exempt from service tax as historically indicated in the subsidiary’s service tax filings. The Company disagrees with the Service Tax Department’s position. In November 2019, the Commissioner of Central Tax, GST & Central Excise issued an order confirming the Service Tax Department’s position. The Company is contesting this order in an appeal to the Customs, Excise and Service Tax Appellate Tribunal. In the event the Service Tax Department is ultimately successful in proving that the services fall under the category of OID Services, the revenues earned by the Company’s Indian subsidiary for the period July 2012 through November 2016 would be subject to a service tax of between 12.36% and 15%, and this subsidiary may also be liable for interest and penalties. The revenue of the Company’s Indian subsidiary during this period was approximately $53.0 million. In accordance with new rules promulgated by the Service Tax Department, as of December 1, 2016 service tax is no longer applicable to OID or BS Services. Based on the Company’s assessment in consultation with the Company’s tax counsel, the Company has not recorded any tax liability for this case. In a separate action relating to service tax refunds, in October 2016, the Company’s Indian subsidiary received notices from the Indian Service Tax Department in India seeking to reverse service tax refunds of approximately $160,000 previously granted to the Company’s Indian subsidiary for three quarters in 2014, asserting that the services provided by this subsidiary fall under the category of OID Services and not BS Services. The appeal was determined in favor of the Service Tax Department. The Company disagrees with the basis of this decision and is contesting it. The Company expects delays in its Indian subsidiary receiving further service tax refunds until this matter is adjudicated with finality, and currently has service tax credits of approximately $0.9 million recorded as a receivable. Based on the Company’s assessment in consultation with the Company’s tax counsel, the Company has not recorded any tax liability for this case. Substantial recovery against the Company in the above referenced 2015 Service Tax Department case could have a material adverse impact on the Company, and unfavorable rulings or recoveries in other tax proceedings could have a material adverse impact on the consolidated operating results of the period (and subsequent periods) in which the rulings or recovery occurs. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2022 | |
Commitments and Contingencies | |
Commitments and Contingencies | 4. Commitments and Contingencies Litigation – The Company is also subject to various other legal proceedings and claims that have arisen in the ordinary course of business. While management currently believes that the ultimate outcome of these proceedings will not have a material adverse effect on the Company’s consolidated financial position or overall trends in consolidated results of operations, litigation is subject to inherent uncertainties. Substantial recovery against the Company in the above-referenced Philippine action could have a material adverse impact on the Company, and unfavorable rulings or recoveries in the other proceedings could have a material adverse impact on the consolidated operating results in the period in which the ruling or recovery occurs. In addition, the Company’s estimate of the potential impact on the Company’s consolidated financial position or overall consolidated results of operations for the above referenced legal proceedings could change in the future. The Company’s legal accruals related to legal proceedings and claims are based on the Company’s determination of whether or not a loss is probable. The Company reviews outstanding proceedings and claims with external counsel to assess probability and estimates of loss. The accruals are adjusted if necessary. While the Company intends to defend these matters vigorously, adverse outcomes that it estimates could reach approximately $350,000 in the aggregate beyond recorded amounts are reasonably possible. If circumstances change, the Company may be required to record adjustments that could be material to its reported consolidated financial condition and results of operations. |
Stock Options and Restricted St
Stock Options and Restricted Stock Units | 9 Months Ended |
Sep. 30, 2022 | |
Stock Options and Restricted Stock Units | |
Stock Options and Restricted Stock Units | 5. Stock Options and Restricted Stock Units A summary of option activity under the Innodata Inc. 2013 Stock Plan, as amended and restated effective June 7, 2016 (the “2013 Plan”) and changes during each of the nine-month periods ended September 30, 2022 and 2021 are presented below: Weighted - Average Weighted-Average Number of Exercise Remaining Contractual Aggregate Options Price Term (years) Intrinsic Value Outstanding at January 1, 2021 5,906,884 $ 1.61 Granted 750,000 6.76 Exercised (1,546,288) 2.01 Forfeited/Expired (20,000) 1.38 Outstanding at September 30, 2021 5,090,596 $ 2.05 7.49 $ 37,037,015 Exercisable at September 30, 2021 3,468,912 $ 1.73 7.03 $ 27,069,483 Vested and Expected to Vest at September 30, 2021 5,090,596 $ 2.05 7.49 $ 37,037,015 Weighted-Average Number of Weighted - Average Remaining Contractual Aggregate Options Exercise Price Term (years) Intrinsic Value Outstanding at January 1, 2022 5,536,896 $ 2.66 Granted* 1,479,558 5.21 Exercised (210,429) 1.28 Forfeited/Expired (261,101) 6.50 Outstanding at September 30, 2022 6,544,924 $ 3.13 7.33 $ 6,265,207 Exercisable at September 30, 2022 4,264,408 $ 2.08 6.40 $ 5,792,971 Vested and Expected to Vest at September 30, 2022 6,544,924 $ 3.13 7.33 $ 6,265,207 *Includes 110,000 stock options granted by the Company to a non-employee director of the Company during the nine months ended September 30, 2022. The stock option fully vests on January 1, 2025. A summary of option activity under the Innodata Inc. 2021 Equity Compensation Plan, as amended and restated effective as of April 11, 2022 (the “2021 Plan”) and changes during the nine-month period ended September 30, 2022 are presented below: Weighted-Average Number of Weighted - Average Remaining Contractual Aggregate Intrinsic Options Exercise Price Term (years) Value Outstanding at January 1, 2022 - $ - Granted* 182,000 3.67 Exercised - - Forfeited/Expired - - Outstanding at September 30, 2022 182,000 $ 3.67 9.91 $ - Exercisable at September 30, 2022 6,250 $ 6.40 Vested and Expected to Vest at September 30, 2022 182,000 $ 3.67 9.91 $ - *During the nine months ended September 30, 2022, the Company granted 132,000 stock options to non-employee directors of the Company which vest on the first anniversary of the date of grant. In addition, during the nine months ended September 30, 2022 the Company granted 50,000 stock options to non-employee members of the Company’s advisory board in lieu of cash compensation. The stock options vest in 12 monthly installments from the date of grant. During the nine months ended September 30, 2022, a total of 210,429 options were exercised at an average price of $1.28. The fair value of stock options is estimated on the date of grant using the Black-Scholes option pricing model. The weighted-average fair value of the options granted, and weighted-average assumptions were as follows: For the Nine Months Ended September 30, 2022 2021 Weighted average fair value of options granted $ 3.00 $ 3.56 Risk-free interest rate 1.94%-3.54% 0.22%-0.82% Expected term (years) 3.0 - 6.42 3 - 6 Expected volatility factor 62% -79% 58% - 68% Expected dividends - - A summary of restricted stock units issued under the 2013 Plan and the 2021 Plan (collectively, the “Equity Plans”) is presented below: In March 2022, the Company granted restricted stock units (“RSU”) to key executives, pursuant to the Equity Plans. Each RSU has vesting conditions based on both the achievement of performance-based metrics and the continuation of employment over a defined period. The level of performance determines the number of RSUs that performance-vest, and performance vested RSUs must also time-vest in order to be fully vested. Each fully vested RSU represents the right to receive one share of the Company’s common stock or the fair market value of one share of common stock, at the Company’s discretion, and is classified as an equity award. Each RSU vests pursuant to the vesting schedule found in the respective RSU agreement. RSUs are generally subject to graduated vesting schedules and stock-based compensation expense is computed by tranche and recognized on a straight-line basis over the tranches’ applicable vesting period based on the expected achievement level. The fair value of restricted stock units is estimated on the date of grant using the Binomial option pricing model. Restricted stock unit activity during the nine months ended September 30, 2022 was as follows: Number of Restricted Weighted-Average Grant Stock Awards Date Fair Value Unvested at January 1, 2022 25,000 $ 1.38 Granted - - Vested (25,000) 1.38 Forfeited/Expired - - Unvested at September 30, 2022 - $ - Number of Weighted-Average Restricted Stock Grant Date Units Fair Value Unvested at January 1, 2022 - $ - Granted* 700,000 5.59 Vested - - Forfeited/Expired - Unvested at September 30, 2022 700,000 $ 5.59 * 200,000 RSUs were issued under the 2013 Plan and 500,000 RSUs were issued under the 2021 Plan The compensation cost related to non-vested stock options not yet recognized as of September 30, 2022 totaled approximately $5.9 million. The weighted-average period over which these costs will be recognized is 24 months. During the nine months ended September 30, 2022, 700,000 performance-based restricted stock units were granted and remain non-vested at September 30, 2022. Vesting of the performance-based restricted stock units is contingent on the achievement of certain financial performance goals and service vesting conditions. There were no restricted stock units granted during the three months ended September 30, 2022. The compensation cost related to non-vested restricted stock units not yet recognized as of September 30, 2022 totaled approximately $2.8 million. The weighted-average period over which these costs will be recognized is 22 months. The stock-based compensation expense related to the Equity Plans were allocated as follows (in thousands): For the Three Months Ended For the Nine Months Ended September 30, September 30, 2022 2021 2022 2021 Direct operating costs $ 46 $ 21 $ 154 $ 96 Selling and administrative expenses 759 482 2,216 1,021 Total stock-based compensation $ 805 $ 503 $ 2,370 $ 1,117 Subsequent Event On October 7, 2022, the Company granted 1,143,000 stock options to Company’s executive officers and certain employees. 295,000 stock options were granted pursuant to the 2013 Plan and 848,000 stock options were granted pursuant to the 2021 Plan. The stock options have an exercise price of $3.41, a term of ten years from the date of grant, vest in three equal annual installments from the date of grant and have a grant date fair value of approximately $2.5 million. |
Operating Leases
Operating Leases | 9 Months Ended |
Sep. 30, 2022 | |
Operating Leases | |
Operating Leases | 6. Operating Leases The Company has various lease agreements for its offices and service delivery centers. These lease agreements are for terms ranging from two Lease Agreements with a term of less than one year are treated as short-term leases and accounted for separately as shown in table below. Most of these lease agreements are renewable at the mutual consent of the parties to the agreement. The table below summarizes the amounts recognized in the condensed consolidated financial statements related to operating leases and short-term leases for the periods presented (in thousands): For the Three Months Ended For the Nine Months Ended September 30, September 30, 2022 2021 2022 2021 Rent expense for long-term operating leases $ 314 $ 393 $ 1,027 $ 1,169 Rent expense for short-term leases 136 59 398 143 Total rent expense $ 450 $ 452 $ 1,425 $ 1,312 The following table presents the maturity profile of the Company’s operating lease liabilities based on the contractual undiscounted payments with a reconciliation of these amounts to the remaining net present value of the operating lease liability reported in the condensed consolidated balance sheet as of September 30, 2022 (in thousands): Year Amount 2022 $ 283 2023 1,030 2024 825 2025 837 2026 847 2027 and thereafter 2,384 Total lease payments 6,206 Less: Interest (1,534) Net present value of lease liabilities $ 4,672 Current portion $ 742 Long-term portion 3,930 Total $ 4,672 The weighted average remaining lease terms and discount rates for all the Company’s operating leases as of September 30, 2022 were as follows: Weighted-average lease term remaining 55 months Weighted-average discount rate 8.55 % |
Long-term obligations
Long-term obligations | 9 Months Ended |
Sep. 30, 2022 | |
Long-term obligations | |
Long-term obligations | 7. Long-term obligations Total long-term obligations as of September 30, 2022 and December 31, 2021 consisted of the following (in thousands): September 30, December 31, 2022 2021 Pension obligations - accrued pension liability $ 6,376 $ 6,839 Settlement agreement 94 272 Microsoft licenses - 385 6,470 7,496 Less: Current portion of long-term obligations 596 1,279 Totals $ 5,874 $ 6,217 |
Redemption of non-controlling i
Redemption of non-controlling interest | 9 Months Ended |
Sep. 30, 2022 | |
Redemption of non-controlling interest | |
Redemption of non-controlling interest | 8. Redemption of non-controlling interest The Condensed Consolidated Balance Sheets for the nine-month period ending September 30, 2022 includes a $2.9 million charge against additional paid-in-capital representing the carrying value of the non-controlling interest in Innodata Synodex, LLC which was redeemed by the Company on March 31, 2022. The Company accounted for the transaction in accordance with ASC Topic 810, “Consolidation,” which discusses the proper accounting treatment of the carrying value for the non-controlling interest. Under the standard, any change in ownership that does not result in a loss of control must be accounted for as an equity transaction. |
Comprehensive loss
Comprehensive loss | 9 Months Ended |
Sep. 30, 2022 | |
Comprehensive loss | |
Comprehensive loss | 9. Comprehensive loss Accumulated other comprehensive loss, as reflected in the condensed consolidated balance sheets, consists of pension liability adjustments, net of taxes, changes in fair value of derivatives, net of taxes, and foreign currency translation adjustment. The components of accumulated other comprehensive loss as of September 30, 2022 and 2021, and reclassifications from accumulated other comprehensive loss for the three and nine months then ended, are presented below (in thousands): Pension Liability Fair Value of Foreign Currency Accumulated Other Adjustment Derivatives Translation Adjustment Comprehensive Loss Balance at July 1, 2022 $ (780) $ (889) $ (1,607) $ (3,276) Other comprehensive loss before reclassifications, net of taxes - (884) (644) (1,528) Total other comprehensive loss before reclassifications, net of taxes (780) (1,773) (2,251) (4,804) Net amount reclassified to earnings 35 678 - 713 Balance at September 30, 2022 $ (745) $ (1,095) $ (2,251) $ (4,091) Foreign Currency Pension Liability Fair Value of Translation Accumulated Other Adjustment Derivatives Adjustment Comprehensive Loss Balance at January 1, 2022 $ (858) $ (353) $ (981) $ (2,192) Other comprehensive loss before reclassifications, net of taxes - (1,707) (1,270) (2,977) Total other comprehensive loss before reclassifications, net of taxes (858) (2,060) (2,251) (5,169) Net amount reclassified to earnings 113 965 - 1,078 Balance at September 30, 2022 $ (745) $ (1,095) $ (2,251) $ (4,091) Pension Liability Fair Value of Foreign Currency Accumulated Other Adjustment Derivatives Translation Adjustment Comprehensive Loss Balance at July 1, 2021 $ (422) $ (267) $ (380) $ (1,069) Other comprehensive income (loss) before reclassifications, net of taxes - (302) (594) (896) Total other comprehensive loss before reclassifications, net of taxes (422) (569) (974) (1,965) Net amount reclassified to earnings 10 37 - 47 Balance at September 30, 2021 $ (412) $ (532) $ (974) $ (1,918) Foreign Currency Pension Liability Fair Value of Translation Accumulated Other Adjustment Derivatives Adjustment Comprehensive Loss Balance at January 1, 2021 $ (444) $ - $ (494) $ (938) Other comprehensive income (loss) before reclassifications, net of taxes - (536) (480) (1,016) Total other comprehensive loss before reclassifications, net of taxes (444) (536) (974) (1,954) Net amount reclassified to earnings 32 4 - 36 Balance at September 30, 2021 $ (412) $ (532) $ (974) $ (1,918) All reclassifications from accumulated other comprehensive loss had an impact on direct operating costs in the condensed consolidated statements of operations and comprehensive income (loss). |
Segment reporting and concentra
Segment reporting and concentrations | 9 Months Ended |
Sep. 30, 2022 | |
Segment reporting and concentrations | |
Segment reporting and concentrations | 10. Segment reporting and concentrations The Company’s operations are classified in three reporting segments: Digital Data Solutions (DDS), Synodex and Agility. The DDS segment provides AI-enabled software platforms and managed services to companies that require high-quality data for training AI and machine learning (ML) algorithms, and AI digital transformation solutions to help companies apply AI/ML to real-world problems relating to analyzing and deriving insights from documents. In conjunction with AI digital transformation, the Company often provides a range of data engineering support services, including data transformation, data curation, data hygiene, data consolidation, data compliance, and master data management. The Synodex segment provides an industry platform that transforms medical records into useable digital data organized in accordance with its proprietary data models or customer data models. The Agility segment provides an industry platform that provides marketing communications and public relations professionals with the ability to target and distribute content to journalists and social media influencers world-wide and to monitor and analyze global news channels (print, web, radio and TV) and social media channels. A significant portion of the Company’s revenue is generated from its locations in the Philippines, India, Sri Lanka, Canada, Germany, the United Kingdom and Israel. Revenues from external customers, segment operating profit (loss), and other reportable segment information are as follows (in thousands): For the Three Months Ended September 30, For the Nine Months Ended September 30, 2022 2021 2022 2021 Revenues: DDS $ 12,852 $ 13,237 $ 42,944 $ 37,997 Synodex 1,762 983 5,376 2,888 Agility 3,833 3,230 11,306 9,581 Total Consolidated $ 18,447 $ 17,450 $ 59,626 $ 50,466 Income (loss) before provision for income taxes (1) DDS $ 135 $ 1,544 $ 1,516 $ 3,924 Synodex (977) (657) (2,796) (878) Agility (2,216) (1,406) (7,474) (2,993) Total Consolidated $ (3,058) $ (519) $ (8,754) $ 53 Income (loss) before provision for income taxes (2) DDS $ (59) $ 1,445 $ 987 $ 3,676 Synodex (778) (584) (2,318) (711) Agility (2,221) (1,380) (7,423) (2,912) Total Consolidated $ (3,058) $ (519) $ (8,754) $ 53 September 30, 2022 December 31, 2021 Total assets: DDS $ 26,542 $ 38,180 Synodex 3,294 1,753 Agility 17,973 19,284 Total Consolidated $ 47,809 $ 59,217 September 30, 2022 December 31, 2021 Goodwill: Agility $ 1,982 $ 2,143 Total $ 1,982 $ 2,143 (1) Before elimination of any inter-segment profits (2) After elimination of any inter-segment profits The table below shows intersegment revenues which are eliminated in consolidation (in thousands). For the Three Months Ended September 30, For the Nine Months Ended September 30, 2022 2021 2022 2021 Revenues of DDS Segment from: Synodex 2,119 1,113 6,167 2,559 Agility 425 411 1,274 1,229 Totals 2,544 1,524 7,441 3,788 Revenues for the period ended September 30, 2022 and 2021 by geographic region (determined based upon customer’s domicile), were as follows (in thousands): For the Three Months Ended For the Nine Months Ended September 30, September 30, 2022 2021 2022 2021 United States $ 11,904 $ 9,467 $ 37,843 $ 26,761 United Kingdom 2,677 2,912 8,312 8,709 The Netherlands 1,734 1,750 5,105 5,012 Canada 579 1,469 3,234 4,556 Others - principally Europe 1,553 1,852 5,132 5,428 Totals $ 18,447 $ 17,450 $ 59,626 $ 50,466 Long-lived assets as of September 30, 2022 and December 31, 2021 by geographic region were comprised of (in thousands): September 30, December 31, 2022 2021 United States $ 6,747 $ 4,578 Foreign countries: Canada 7,669 9,280 United Kingdom 1,139 1,538 Philippines 3,784 4,027 India 1,364 1,481 Sri Lanka 136 154 Israel 2 - Total foreign 14,094 16,480 Totals $ 20,841 $ 21,058 Long-lived assets include the unamortized balance of right-of-use assets amounting to $4.2 million and $5.6 million as of September 30, 2022 and December 31, 2021, respectively. No customer generated 10% or more of the Company’s total revenues for the three months ended September 30, 2022. One customer in the DDS segment generated approximately 10% of the Company’s total revenues for the three months ended September 30, 2021. Further, revenues from non-U.S. customers accounted for 35% and 46% of the Company’s total revenues for the three months ended September 30, 2022 and 2021, respectively. One customer in the DDS segment generated approximately 13% and 11% of the Company’s total revenues for the nine months ended September 30, 2022 and 2021, respectively. No other customer accounted for 10% or more of total revenues during these periods. Further, revenues from non-U.S. customers accounted for 37% and 47% of the Company’s total revenues for the nine months ended September 30, 2022 and 2021, respectively. As of September 30, 2022, approximately 47% of the Company’s accounts receivable was from foreign (principally European) customers and 24% of the Company’s accounts receivable was due from two customers. As of December 31, 2021, approximately 37% of the Company’s accounts receivable was from foreign (principally European) customers and 19% of the Company’s accounts receivable was due from one customer. No other customer accounted for 10% or more of the accounts receivable as of September 30, 2022 and December 31, 2021. |
Income (Loss) per Share
Income (Loss) per Share | 9 Months Ended |
Sep. 30, 2022 | |
Income (Loss) Per Share | |
Income (Loss) Per Share | 11. Income (Loss) Per Share For the Three Months Ended For the Nine Months Ended September 30, September 30, 2022 2021 2022 2021 Net Loss attributable to Innodata Inc. and Subsidiaries $ (3,327) $ (800) $ (9,975) $ (505) Weighted average common shares outstanding 27,331 26,971 27,239 26,459 Dilutive effect of outstanding options - - - - Adjusted for dilutive computation 27,331 26,971 27,239 26,459 Basic income (loss) per share is computed using the weighted-average number of common shares outstanding during the year. Diluted income (loss) per share is computed by considering the impact of the potential issuance of common shares, using the treasury stock method, on the weighted-average number of shares outstanding. For those securities that are not convertible into a class of common stock, the “two-class” method of computing income (loss) per share is used. Options to purchase 4.2 million and 5.1 million shares of common stock for the three months ended September 30, 2022 and 2021 were outstanding but not included in the computation of diluted loss per share because the effect would have been anti-dilutive. Options to purchase 5.7 and 5.1 million shares of common stock for the nine months ended September 30, 2022 and 2021 were outstanding but not included in the computation of diluted loss per share because the effect would have been anti-dilutive. |
Derivatives
Derivatives | 9 Months Ended |
Sep. 30, 2022 | |
Derivatives | |
Derivatives | 12. Derivatives The Company conducts a large portion of its operations in international markets, which subject it to foreign currency fluctuations. The most significant foreign currency exposures occur when revenue and associated accounts receivable are collected in one currency and expenses to generate that revenue are incurred in another currency. The Company is also subject to wage inflation and other government mandated increases and operating expenses in Asian countries where the Company has the majority of its operations. The Company’s primary inflation and exchange rate exposure relates to payroll, other payroll costs and operating expenses in the Philippines, India, Sri Lanka and Israel. In addition, although most of the Company’s revenue is denominated in U.S. dollars, a significant portion of total revenues is denominated in Canadian dollars, Pound Sterling and Euros. The Company’s policy is to enter derivative instrument contracts with terms that coincide with the underlying exposure being hedged for a period up to 12 months. As such, the Company’s derivative instruments are expected to be highly effective. For derivative instruments that are designated and qualify as cash flow hedges, the entire change in fair value of the hedging instrument is recorded to Other comprehensive income (loss). Upon settlement of these contracts, the change in the fair value recorded in Other comprehensive income (loss) are reclassified to earnings and included as part of Direct operating costs The Company formally documents all relationships between hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking hedge transactions. The Company does not hold or issue derivatives for trading purposes. All derivatives are recognized at their fair value and classified based on the instrument’s maturity date. The total notional amount for outstanding derivatives designated as hedges was $14.4 million as of September 30, 2022. The total notional amount for outstanding derivatives designated as hedges was $19.7 million as of December 31, 2021. The following table presents the fair value of derivative instruments included within the condensed consolidated balance sheets as of September 30, 2022 and December 31, 2021 (in thousands): Balance Sheet Location Fair Value 2022 2021 Derivatives designated as hedging instruments: Foreign currency forward contracts Accrued expenses $ 1,095 $ 353 The effect of foreign currency forward contracts designated as cash flow hedges on the condensed consolidated statements of operations for the three and nine months ended September 30, 2022 and 2021 were as follows (in thousands): For the Three Months Ended For the Nine Months Ended September 30, September 30, 2022 2021 2022 2021 Net gain (loss) recognized in OCI (1) $ (884) $ (302) $ (1,707) $ (536) Net (gain) loss reclassified from accumulated OCI into income (2) $ 678 $ 37 $ 965 $ 4 Net gain recognized in income (3) - $ - - $ - (1) Net change in fair value of the effective portion classified into other comprehensive income (“OCI”) (2) Effective portion classified within direct operating costs. (3) There were no ineffective portions for the period presented. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies and Estimates (Policies) | 9 Months Ended |
Sep. 30, 2022 | |
Summary of Significant Accounting Policies and Estimates | |
Basis of Presentation | Basis of Presentation - Certain information and note disclosures normally included in or with financial statements prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) have been condensed or omitted from these condensed consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) and, accordingly, these condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. Unless otherwise noted, the accounting policies used in preparing these condensed consolidated financial statements are the same as those in the notes to the consolidated financial statements for the year ended December 31, 2021. |
Principles of Consolidation | Principles of Consolidation |
Use of Estimates | Use of Estimates |
Revenue Recognition | Revenue Recognition For the Digital Data Solutions (DDS) segment, revenue is recognized primarily based on the quantity delivered or resources utilized in the period in which services are performed and performance conditions are satisfied as per the agreement. Revenue from agreements billed on a time-and-materials basis is recognized as services are performed. Revenue from fixed-fee agreements, which are not significant to overall revenues, is recognized based on the proportional performance method of accounting, as services are performed, or milestones are achieved. For the Synodex segment, revenue is recognized primarily based on the quantity delivered in the period in which services are performed and performance conditions are satisfied as per the agreement. A portion of the Synodex segment revenue is derived from licensing the Company’s functional software and providing access to the Company’s hosted software platform. Revenue from such services is recognized monthly when all parties to the agreement have agreed to the agreement; each party’s rights are identifiable; the payment terms are identifiable; the agreement has commercial substance; access to the service is provided to the end user; and collection is probable. The Agility segment derives its revenue primarily from subscription arrangements and provision of enriched media analysis services. It also derives revenue as a reseller of corporate communication solutions. Revenue from subscriptions is recognized monthly when access to the service is provided to the end user; all parties to the agreement have agreed to the agreement; each party’s rights are identifiable; the payment terms are identifiable; the agreement has commercial substance; and collection is probable. Revenue from enriched media analysis services is recognized when the services are performed, and performance conditions are satisfied. Revenue from the reseller agreements is recognized at the gross amount received for the goods in accordance with the Company functioning as a principal due to the Company meeting the following criteria: the Company acts as the primary obligor in the sales transaction; assumes the credit risk; sets the price; can select suppliers; and is involved in the execution of the services, including after sales service. Revenue includes reimbursement of out-of-pocket expenses, with the corresponding out-of-pocket expenses included in direct operating costs. Revenue associated with the services provided in one period and billed in a subsequent period is commonly referred to as unbilled revenues and are included under Accounts receivable. The Company considers U.S. GAAP criteria for determining whether to report gross revenue as a principal versus net revenue as an agent. The Company evaluates whether it is in control of the services before the same are transferred to the customer to assess whether it is principal or agent in the arrangement. Revenue is recognized on a gross basis if the Company is in the capacity of principal and on a net basis if it falls in the capacity of an agent. Contract acquisition costs, which are included in prepaid expenses and other current assets, are amortized over the term of a subscription agreement or contract that normally has a duration of 12 months or less. The Company reviews these prepaid acquisition costs on a periodic basis to determine the need to adjust the carrying values for early-terminated contracts. |
Foreign Currency Translation | Foreign Currency Translation The functional currency for the Company’s subsidiaries in Germany, the United Kingdom and for the Company’s Agility subsidiary in Canada are the Euro, the Pound Sterling and the Canadian dollar, respectively. The financial statements of these subsidiaries are prepared in these respective currencies. Financial information is translated from the applicable functional currency to the U.S. dollar (the reporting currency) for inclusion in the Company’s condensed consolidated financial statements. Income, expenses, and cash flows are translated at weighted-average exchange rates prevailing during the fiscal period, and assets and liabilities are translated at fiscal period-end exchange rates. Resulting translation adjustments are included as a component of accumulated other comprehensive loss in stockholders’ equity. Foreign exchange transaction gains or losses are included in direct operating costs in the accompanying condensed consolidated statements of operations and comprehensive loss. Included in direct operating costs were foreign exchange gains resulting from such transactions of approximately $729,000 and $348,000 for the three months ended September 30, 2022 and 2021 respectively and $1,896,000 and $503,000 for the nine months ended September 30, 2022 and 2021 respectively. |
Derivative Instruments | Derivative Instruments - |
Capitalized Developed Software | Capitalized Developed Software three |
Income Taxes | Income Taxes In assessing the realization of deferred tax assets, management considered whether it is more likely than not that all or some portion of the U.S. and Canadian deferred tax assets will not be realizable. As the expectation of future taxable income resulting from the U.S. and Canadian entities is not probable at this time, the Company maintains a valuation allowance against all the U.S. and Canadian net deferred tax assets. The Company accounts for income taxes regarding uncertain tax positions, and recognizes interest and penalties related to uncertain tax positions in income tax expense in the condensed consolidated statements of operations and comprehensive loss. |
Deferred Revenue | Deferred Revenue |
Recent Accounting Pronouncements | Recent Accounting Pronouncements |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Goodwill and Intangible Assets | |
Schedule of carrying amount of goodwill | The change in the carrying amount of goodwill for the nine months ended September 30, 2022 was as follows (in thousands): Balance as of January 1, 2022 $ 2,143 Foreign currency translation adjustment (161) Balance as of September 30, 2022 $ 1,982 |
Schedule of company's acquisition-related intangible assets and capitalized developed software | Information regarding the Company acquired intangible assets and capitalized developed software was as follows (in thousands): Capitalized Developed Company Acquired Intangible Assets Software Capitalized Trademarks Media Capitalized Developed Developed Customer and Contact Developed Software - in technology relationships tradenames Patents Database Software Progress Total Gross carrying amounts: Balance as of January 1, 2022 $ 3,169 $ 2,228 $ 880 $ 45 $ 3,648 $ 8,576 $ 635 $ 19,181 Additions - - - - - - 4,244 4,244 Transfers - - - - - 2,882 (2,882) - Foreign currency translation (235) (162) (42) (3) (284) (656) (12) (1,394) Balance as of September 30, 2022 $ 2,934 $ 2,066 $ 838 $ 42 $ 3,364 $ 10,802 $ 1,985 $ 22,031 Accumulated amortization: Balance as of January 1, 2022 $ 2,158 $ 1,377 $ 685 $ 34 $ 2,005 $ 2,575 $ - $ 8,834 Amortization expense 235 139 42 3 267 1,286 - 1,972 Foreign currency translation (175) (110) (30) (3) (170) (229) - (717) Balance as of September 30, 2022 $ 2,218 $ 1,406 $ 697 $ 34 $ 2,102 $ 3,632 $ - $ 10,089 Net carrying values - September 30, 2022 $ 716 $ 660 $ 141 $ 8 $ 1,262 $ 7,170 $ 1,985 $ 11,942 Company Acquired Intangible Assets Capitalized Developed Software Capitalized Trademarks Media Capitalized Developed Developed Customer and Contact Developed Software - in technology relationships tradenames Patents Database Software Progress Total Gross carrying amounts: Balance as of January 1, 2021 $ 3,175 $ 2,228 $ 882 $ 45 $ 3,670 $ 5,507 $ 1,360 $ 16,867 Additions - - - - - 376 2,005 2,381 Transfers - - - - - 2,752 (2,752) - Foreign currency translation adjustment (6) - (2) - (22) (59) 22 (67) Balance as of December 31, 2021 $ 3,169 $ 2,228 $ 880 $ 45 $ 3,648 $ 8,576 $ 635 $ 19,181 Accumulated amortization: Balance as of January 1, 2021 $ 1,844 $ 1,192 $ 629 $ 29 $ 1,650 $ 1,492 $ - $ 6,836 Amortization expense 315 187 56 5 354 1,089 - 2,006 Foreign currency translation adjustment (1) (2) - - 1 (6) - (8) Balance as of December 31, 2021 $ 2,158 $ 1,377 $ 685 $ 34 $ 2,005 $ 2,575 $ - $ 8,834 Net carrying amounts - December 31, 2021 $ 1,011 $ 851 $ 195 $ 11 $ 1,643 $ 6,001 $ 635 $ 10,347 |
Schedule of estimated amortization expense for intangible assets | As of September 30, 2022, estimated future amortization expense for intangible assets was as follows (in thousands): Year Amortization 2022 $ 761 2023 $ 3,579 2024 $ 3,124 2025 $ 2,217 2026 $ 818 Thereafter $ 1,443 $ 11,942 |
Income Taxes (Tables)
Income Taxes (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Income Taxes | |
Schedule of effective income tax rate reconciliation | For the Nine Months Ended September 30, 2022 2021 Federal income tax expense at statutory rate (21.0) % 21.0 % Effect of: Change in valuation allowance 43.0 2,468.8 Tax effects of foreign operations 1.1 79.8 Increase (decrease) in unrecognized tax benefits (ASC 740) 1.0 (490.0) Return to provision true up 0.2 31.6 State income tax net of federal benefit 0.2 43.2 Section 162 (m) - 549.9 Change in tax rates - 225.0 Effect of stock based compensation (0.4) (1,573.2) Foreign operations permanent difference - foreign exchange gains and losses (1.5) 271.9 Foreign rate differential (5.8) (478.8) Withholding tax - - Other (2.0) 22.5 Effective tax rate 14.8 % 1,171.7 % |
Schedule of unrecognized Tax Benefits | The following table presents a roll-forward of the Company’s unrecognized tax benefits and associated interest for the nine months ended September 30, 2022 (in thousands): Unrecognized tax benefits Balance - January 1, 2022 $ 1,753 Increase for current period tax positions 83 Decrease for prior period tax positions (29) Interest accrual 46 Foreign currency remeasurement (177) Balance - September 30, 2022 $ 1,676 |
Stock Options and Restricted _2
Stock Options and Restricted Stock Units (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Schedule of stock option activity | A summary of option activity under the Innodata Inc. 2013 Stock Plan, as amended and restated effective June 7, 2016 (the “2013 Plan”) and changes during each of the nine-month periods ended September 30, 2022 and 2021 are presented below: Weighted - Average Weighted-Average Number of Exercise Remaining Contractual Aggregate Options Price Term (years) Intrinsic Value Outstanding at January 1, 2021 5,906,884 $ 1.61 Granted 750,000 6.76 Exercised (1,546,288) 2.01 Forfeited/Expired (20,000) 1.38 Outstanding at September 30, 2021 5,090,596 $ 2.05 7.49 $ 37,037,015 Exercisable at September 30, 2021 3,468,912 $ 1.73 7.03 $ 27,069,483 Vested and Expected to Vest at September 30, 2021 5,090,596 $ 2.05 7.49 $ 37,037,015 Weighted-Average Number of Weighted - Average Remaining Contractual Aggregate Options Exercise Price Term (years) Intrinsic Value Outstanding at January 1, 2022 5,536,896 $ 2.66 Granted* 1,479,558 5.21 Exercised (210,429) 1.28 Forfeited/Expired (261,101) 6.50 Outstanding at September 30, 2022 6,544,924 $ 3.13 7.33 $ 6,265,207 Exercisable at September 30, 2022 4,264,408 $ 2.08 6.40 $ 5,792,971 Vested and Expected to Vest at September 30, 2022 6,544,924 $ 3.13 7.33 $ 6,265,207 *Includes 110,000 stock options granted by the Company to a non-employee director of the Company during the nine months ended September 30, 2022. The stock option fully vests on January 1, 2025. A summary of option activity under the Innodata Inc. 2021 Equity Compensation Plan, as amended and restated effective as of April 11, 2022 (the “2021 Plan”) and changes during the nine-month period ended September 30, 2022 are presented below: Weighted-Average Number of Weighted - Average Remaining Contractual Aggregate Intrinsic Options Exercise Price Term (years) Value Outstanding at January 1, 2022 - $ - Granted* 182,000 3.67 Exercised - - Forfeited/Expired - - Outstanding at September 30, 2022 182,000 $ 3.67 9.91 $ - Exercisable at September 30, 2022 6,250 $ 6.40 Vested and Expected to Vest at September 30, 2022 182,000 $ 3.67 9.91 $ - *During the nine months ended September 30, 2022, the Company granted 132,000 stock options to non-employee directors of the Company which vest on the first anniversary of the date of grant. In addition, during the nine months ended September 30, 2022 the Company granted 50,000 stock options to non-employee members of the Company’s advisory board in lieu of cash compensation. The stock options vest in 12 monthly installments from the date of grant. |
Schedule of weighted average assumptions | The fair value of stock options is estimated on the date of grant using the Black-Scholes option pricing model. The weighted-average fair value of the options granted, and weighted-average assumptions were as follows: For the Nine Months Ended September 30, 2022 2021 Weighted average fair value of options granted $ 3.00 $ 3.56 Risk-free interest rate 1.94%-3.54% 0.22%-0.82% Expected term (years) 3.0 - 6.42 3 - 6 Expected volatility factor 62% -79% 58% - 68% Expected dividends - - |
Schedule of stock-based compensation expense | For the Three Months Ended For the Nine Months Ended September 30, September 30, 2022 2021 2022 2021 Direct operating costs $ 46 $ 21 $ 154 $ 96 Selling and administrative expenses 759 482 2,216 1,021 Total stock-based compensation $ 805 $ 503 $ 2,370 $ 1,117 |
Restricted Stock Units | |
Summary of restricted shares under the Company's Plan | Number of Restricted Weighted-Average Grant Stock Awards Date Fair Value Unvested at January 1, 2022 25,000 $ 1.38 Granted - - Vested (25,000) 1.38 Forfeited/Expired - - Unvested at September 30, 2022 - $ - Number of Weighted-Average Restricted Stock Grant Date Units Fair Value Unvested at January 1, 2022 - $ - Granted* 700,000 5.59 Vested - - Forfeited/Expired - Unvested at September 30, 2022 700,000 $ 5.59 * 200,000 RSUs were issued under the 2013 Plan and 500,000 RSUs were issued under the 2021 Plan |
Operating Leases (Tables)
Operating Leases (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Operating Leases | |
Schedule of operating lease expense recognized in financial statements | The table below summarizes the amounts recognized in the condensed consolidated financial statements related to operating leases and short-term leases for the periods presented (in thousands): For the Three Months Ended For the Nine Months Ended September 30, September 30, 2022 2021 2022 2021 Rent expense for long-term operating leases $ 314 $ 393 $ 1,027 $ 1,169 Rent expense for short-term leases 136 59 398 143 Total rent expense $ 450 $ 452 $ 1,425 $ 1,312 |
Schedule of net present value of operating lease liability | The following table presents the maturity profile of the Company’s operating lease liabilities based on the contractual undiscounted payments with a reconciliation of these amounts to the remaining net present value of the operating lease liability reported in the condensed consolidated balance sheet as of September 30, 2022 (in thousands): Year Amount 2022 $ 283 2023 1,030 2024 825 2025 837 2026 847 2027 and thereafter 2,384 Total lease payments 6,206 Less: Interest (1,534) Net present value of lease liabilities $ 4,672 Current portion $ 742 Long-term portion 3,930 Total $ 4,672 |
Schedule of weighted average remaining lease terms and discount rates | The weighted average remaining lease terms and discount rates for all the Company’s operating leases as of September 30, 2022 were as follows: Weighted-average lease term remaining 55 months Weighted-average discount rate 8.55 % |
Long-term obligations (Tables)
Long-term obligations (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Long-term obligations | |
Schedule of total long-term obligations | Total long-term obligations as of September 30, 2022 and December 31, 2021 consisted of the following (in thousands): September 30, December 31, 2022 2021 Pension obligations - accrued pension liability $ 6,376 $ 6,839 Settlement agreement 94 272 Microsoft licenses - 385 6,470 7,496 Less: Current portion of long-term obligations 596 1,279 Totals $ 5,874 $ 6,217 |
Comprehensive loss (Tables)
Comprehensive loss (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Comprehensive loss | |
Schedule of accumulated other comprehensive loss | Pension Liability Fair Value of Foreign Currency Accumulated Other Adjustment Derivatives Translation Adjustment Comprehensive Loss Balance at July 1, 2022 $ (780) $ (889) $ (1,607) $ (3,276) Other comprehensive loss before reclassifications, net of taxes - (884) (644) (1,528) Total other comprehensive loss before reclassifications, net of taxes (780) (1,773) (2,251) (4,804) Net amount reclassified to earnings 35 678 - 713 Balance at September 30, 2022 $ (745) $ (1,095) $ (2,251) $ (4,091) Foreign Currency Pension Liability Fair Value of Translation Accumulated Other Adjustment Derivatives Adjustment Comprehensive Loss Balance at January 1, 2022 $ (858) $ (353) $ (981) $ (2,192) Other comprehensive loss before reclassifications, net of taxes - (1,707) (1,270) (2,977) Total other comprehensive loss before reclassifications, net of taxes (858) (2,060) (2,251) (5,169) Net amount reclassified to earnings 113 965 - 1,078 Balance at September 30, 2022 $ (745) $ (1,095) $ (2,251) $ (4,091) Pension Liability Fair Value of Foreign Currency Accumulated Other Adjustment Derivatives Translation Adjustment Comprehensive Loss Balance at July 1, 2021 $ (422) $ (267) $ (380) $ (1,069) Other comprehensive income (loss) before reclassifications, net of taxes - (302) (594) (896) Total other comprehensive loss before reclassifications, net of taxes (422) (569) (974) (1,965) Net amount reclassified to earnings 10 37 - 47 Balance at September 30, 2021 $ (412) $ (532) $ (974) $ (1,918) Foreign Currency Pension Liability Fair Value of Translation Accumulated Other Adjustment Derivatives Adjustment Comprehensive Loss Balance at January 1, 2021 $ (444) $ - $ (494) $ (938) Other comprehensive income (loss) before reclassifications, net of taxes - (536) (480) (1,016) Total other comprehensive loss before reclassifications, net of taxes (444) (536) (974) (1,954) Net amount reclassified to earnings 32 4 - 36 Balance at September 30, 2021 $ (412) $ (532) $ (974) $ (1,918) |
Segment reporting and concent_2
Segment reporting and concentrations (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Segment reporting and concentrations | |
Schedule of Segment Reporting Information, by Segment | Revenues from external customers, segment operating profit (loss), and other reportable segment information are as follows (in thousands): For the Three Months Ended September 30, For the Nine Months Ended September 30, 2022 2021 2022 2021 Revenues: DDS $ 12,852 $ 13,237 $ 42,944 $ 37,997 Synodex 1,762 983 5,376 2,888 Agility 3,833 3,230 11,306 9,581 Total Consolidated $ 18,447 $ 17,450 $ 59,626 $ 50,466 Income (loss) before provision for income taxes (1) DDS $ 135 $ 1,544 $ 1,516 $ 3,924 Synodex (977) (657) (2,796) (878) Agility (2,216) (1,406) (7,474) (2,993) Total Consolidated $ (3,058) $ (519) $ (8,754) $ 53 Income (loss) before provision for income taxes (2) DDS $ (59) $ 1,445 $ 987 $ 3,676 Synodex (778) (584) (2,318) (711) Agility (2,221) (1,380) (7,423) (2,912) Total Consolidated $ (3,058) $ (519) $ (8,754) $ 53 September 30, 2022 December 31, 2021 Total assets: DDS $ 26,542 $ 38,180 Synodex 3,294 1,753 Agility 17,973 19,284 Total Consolidated $ 47,809 $ 59,217 September 30, 2022 December 31, 2021 Goodwill: Agility $ 1,982 $ 2,143 Total $ 1,982 $ 2,143 (1) Before elimination of any inter-segment profits (2) After elimination of any inter-segment profits The table below shows intersegment revenues which are eliminated in consolidation (in thousands). For the Three Months Ended September 30, For the Nine Months Ended September 30, 2022 2021 2022 2021 Revenues of DDS Segment from: Synodex 2,119 1,113 6,167 2,559 Agility 425 411 1,274 1,229 Totals 2,544 1,524 7,441 3,788 |
Schedule of Revenue from External Customers and Long-Lived Assets | Revenues for the period ended September 30, 2022 and 2021 by geographic region (determined based upon customer’s domicile), were as follows (in thousands): For the Three Months Ended For the Nine Months Ended September 30, September 30, 2022 2021 2022 2021 United States $ 11,904 $ 9,467 $ 37,843 $ 26,761 United Kingdom 2,677 2,912 8,312 8,709 The Netherlands 1,734 1,750 5,105 5,012 Canada 579 1,469 3,234 4,556 Others - principally Europe 1,553 1,852 5,132 5,428 Totals $ 18,447 $ 17,450 $ 59,626 $ 50,466 |
Schedule of Revenue from External Customers based on Client domicile | Long-lived assets as of September 30, 2022 and December 31, 2021 by geographic region were comprised of (in thousands): September 30, December 31, 2022 2021 United States $ 6,747 $ 4,578 Foreign countries: Canada 7,669 9,280 United Kingdom 1,139 1,538 Philippines 3,784 4,027 India 1,364 1,481 Sri Lanka 136 154 Israel 2 - Total foreign 14,094 16,480 Totals $ 20,841 $ 21,058 |
Income (Loss) Per Share (Tables
Income (Loss) Per Share (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Income (Loss) Per Share | |
Schedule of Earnings Per Share, Basic and Diluted | For the Three Months Ended For the Nine Months Ended September 30, September 30, 2022 2021 2022 2021 Net Loss attributable to Innodata Inc. and Subsidiaries $ (3,327) $ (800) $ (9,975) $ (505) Weighted average common shares outstanding 27,331 26,971 27,239 26,459 Dilutive effect of outstanding options - - - - Adjusted for dilutive computation 27,331 26,971 27,239 26,459 |
Derivatives (Tables)
Derivatives (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Derivatives | |
Schedule of fair value of derivative instruments | The following table presents the fair value of derivative instruments included within the condensed consolidated balance sheets as of September 30, 2022 and December 31, 2021 (in thousands): Balance Sheet Location Fair Value 2022 2021 Derivatives designated as hedging instruments: Foreign currency forward contracts Accrued expenses $ 1,095 $ 353 |
Schedule of effects of foreign currency forward contracts designated as cash flow hedges | The effect of foreign currency forward contracts designated as cash flow hedges on the condensed consolidated statements of operations for the three and nine months ended September 30, 2022 and 2021 were as follows (in thousands): For the Three Months Ended For the Nine Months Ended September 30, September 30, 2022 2021 2022 2021 Net gain (loss) recognized in OCI (1) $ (884) $ (302) $ (1,707) $ (536) Net (gain) loss reclassified from accumulated OCI into income (2) $ 678 $ 37 $ 965 $ 4 Net gain recognized in income (3) - $ - - $ - (1) Net change in fair value of the effective portion classified into other comprehensive income (“OCI”) (2) Effective portion classified within direct operating costs. (3) There were no ineffective portions for the period presented. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies and Estimates (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Summary of Significant Accounting Policies and Estimates | |||||
Amortization period | 12 months | 12 months | |||
Foreign Currency Transaction Gain (Loss), before Tax | $ 729,000 | $ 348,000 | $ 1,896,000 | $ 503,000 | |
Deferred Revenue | $ 2,600,000 | 2,600,000 | $ 4,500,000 | ||
Goodwill, Impairment Loss | $ 0 | ||||
Minimum | Computer software | |||||
Summary of Significant Accounting Policies and Estimates | |||||
Estimated useful life of intangibles | 3 years | ||||
Maximum | Computer software | |||||
Summary of Significant Accounting Policies and Estimates | |||||
Estimated useful life of intangibles | 10 years |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets - Carrying Amount of Goodwill (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2022 USD ($) | |
Goodwill and Intangible Assets | |
Balance at the beginning | $ 2,143 |
Foreign currency translation adjustment | (161) |
Goodwill impairment | 0 |
Balance at the end | $ 1,982 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets - Acquisition-Related Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Sep. 30, 2022 | Dec. 31, 2021 | |
Gross carrying amounts: | |||
Balance at the beginning | $ 19,181 | $ 16,867 | |
Additions | 4,244 | 2,381 | |
Foreign currency translation adjustment | (1,394) | (67) | |
Balance at the end | $ 22,031 | 22,031 | 19,181 |
Accumulated amortization: | |||
Balance at the beginning | 8,834 | 6,836 | |
Amortization expense | 1,972 | 2,006 | |
Foreign currency translation adjustment | (717) | (8) | |
Balance at the end | 10,089 | 10,089 | 8,834 |
Net carrying values | 11,942 | 11,942 | 10,347 |
Developed technology | |||
Gross carrying amounts: | |||
Balance at the beginning | 3,169 | 3,175 | |
Foreign currency translation adjustment | (235) | (6) | |
Balance at the end | 2,934 | 2,934 | 3,169 |
Accumulated amortization: | |||
Balance at the beginning | 2,158 | 1,844 | |
Amortization expense | 235 | 315 | |
Foreign currency translation adjustment | (175) | (1) | |
Balance at the end | 2,218 | 2,218 | 2,158 |
Net carrying values | 716 | 716 | 1,011 |
Customer relationships | |||
Gross carrying amounts: | |||
Balance at the beginning | 2,228 | 2,228 | |
Foreign currency translation adjustment | (162) | ||
Balance at the end | 2,066 | 2,066 | 2,228 |
Accumulated amortization: | |||
Balance at the beginning | 1,377 | 1,192 | |
Amortization expense | 139 | 187 | |
Foreign currency translation adjustment | (110) | (2) | |
Balance at the end | 1,406 | 1,406 | 1,377 |
Net carrying values | 660 | 660 | 851 |
Trademarks and tradenames | |||
Gross carrying amounts: | |||
Balance at the beginning | 880 | 882 | |
Foreign currency translation adjustment | (42) | (2) | |
Balance at the end | 838 | 838 | 880 |
Accumulated amortization: | |||
Balance at the beginning | 685 | 629 | |
Amortization expense | 42 | 56 | |
Foreign currency translation adjustment | (30) | ||
Balance at the end | 697 | 697 | 685 |
Net carrying values | 141 | 141 | 195 |
Patents | |||
Gross carrying amounts: | |||
Balance at the beginning | 45 | 45 | |
Foreign currency translation adjustment | (3) | ||
Balance at the end | 42 | 42 | 45 |
Accumulated amortization: | |||
Balance at the beginning | 34 | 29 | |
Amortization expense | 3 | 5 | |
Foreign currency translation adjustment | (3) | ||
Balance at the end | 34 | 34 | 34 |
Net carrying values | 8 | 8 | 11 |
Media Contact Database | |||
Gross carrying amounts: | |||
Balance at the beginning | 3,648 | 3,670 | |
Foreign currency translation adjustment | (284) | (22) | |
Balance at the end | 3,364 | 3,364 | 3,648 |
Accumulated amortization: | |||
Balance at the beginning | 2,005 | 1,650 | |
Amortization expense | 267 | 354 | |
Foreign currency translation adjustment | (170) | 1 | |
Balance at the end | 2,102 | 2,102 | 2,005 |
Net carrying values | 1,262 | 1,262 | 1,643 |
Capitalized developed software | |||
Accumulated amortization: | |||
Amortization expense | 500 | 1,300 | |
Capitalized Developed Software | |||
Gross carrying amounts: | |||
Balance at the beginning | 8,576 | 5,507 | |
Additions | 376 | ||
Transfers | 2,882 | 2,752 | |
Foreign currency translation adjustment | (656) | (59) | |
Balance at the end | 10,802 | 10,802 | 8,576 |
Accumulated amortization: | |||
Balance at the beginning | 2,575 | 1,492 | |
Amortization expense | 1,286 | 1,089 | |
Foreign currency translation adjustment | (229) | (6) | |
Balance at the end | 3,632 | 3,632 | 2,575 |
Net carrying values | 7,170 | 7,170 | 6,001 |
Capitalized Developed Software - in Progress | |||
Gross carrying amounts: | |||
Balance at the beginning | 635 | 1,360 | |
Additions | 4,244 | 2,005 | |
Transfers | (2,882) | (2,752) | |
Foreign currency translation adjustment | (12) | 22 | |
Balance at the end | 1,985 | 1,985 | 635 |
Accumulated amortization: | |||
Net carrying values | $ 1,985 | $ 1,985 | $ 635 |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets - Estimated Amortization Expense (Details) $ in Thousands | Sep. 30, 2022 USD ($) |
Goodwill and Intangible Assets | |
2022 | $ 761 |
2023 | 3,579 |
2024 | 3,124 |
2025 | 2,217 |
2026 | 818 |
Thereafter | 1,443 |
Finite-Lived Intangible Assets, Net | $ 11,942 |
Goodwill and Intangible Asset_5
Goodwill and Intangible Assets - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Sep. 30, 2022 | Dec. 31, 2021 | |
Goodwill and Intangible Assets | |||
Impairment of Goodwill | $ 0 | ||
Amortization expense | 1,972 | $ 2,006 | |
Developed software | |||
Goodwill and Intangible Assets | |||
Amortization expense | $ 500 | 1,300 | |
Intangible Assets, Amortization Period | |||
Goodwill and Intangible Assets | |||
Amortization expense | $ 200 | $ 700 |
Income Taxes - Tax Rate Reconci
Income Taxes - Tax Rate Reconciliation (Details) | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Income Taxes | ||
Federal income tax expense at statutory rate | (21.00%) | 21% |
Effect of: | ||
Change in valuation allowance | 43% | 2,468.80% |
Tax effects of foreign operations | 1.10% | 79.80% |
Increase (decrease) in unrecognized tax benefits (ASC 740) | 1% | (490.00%) |
Return to provision true up | 0.20% | 31.60% |
State income tax net of federal benefit | 0.20% | 43.20% |
Section 162 (m) | 549.90% | |
Change in tax rates | 225% | |
Effect of stock based compensation | (0.40%) | (1573.20%) |
Foreign operations permanent difference - foreign exchange gains and losses | (1.50%) | 271.90% |
Foreign rate differential | (5.80%) | (478.80%) |
Other | (2.00%) | 22.50% |
Effective tax rate | 14.80% | 1,171.70% |
Income Taxes - Unrecognized Tax
Income Taxes - Unrecognized Tax Benefits (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2022 USD ($) | |
Income Taxes | |
Balance at the beginning | $ 1,753 |
Increase for current period tax positions | 83 |
Decrease for prior period tax positions | (29) |
Interest accrual | 46 |
Foreign currency remeasurement | (177) |
Balance at the end | $ 1,676 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) - USD ($) | 1 Months Ended | |
Oct. 31, 2016 | Sep. 30, 2015 | |
Income Taxes | ||
Subsidiary Revenue | $ 53,000,000 | |
Reversal of Service Tax Refund | $ 160,000 | |
Service Tax Credit Receivable | $ 900,000 | |
Maximum | ||
Income Taxes | ||
Percentage for Subsidiary Service Tax | 15% | |
Minimum | ||
Income Taxes | ||
Percentage for Subsidiary Service Tax | 12.36% |
Commitments and Contingencies (
Commitments and Contingencies (Details) | 9 Months Ended |
Sep. 30, 2022 USD ($) | |
Commitments and Contingencies | |
Estimated litigation liability | $ 6,800,000 |
Interest rate description litigation | plus legal interest that accrued at 12% per annum from August 13, 2008 to June 30, 2013, and thereafter accrued and continues to accrue at 6% per annum |
Litigation settlement expense | $ 350,000 |
Stock Options and Restricted _3
Stock Options and Restricted Stock Units - Summary of Stock Option Activity (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Non employee director | 2021 Stock Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award | ||
Number of options, granted (in shares) | 132,000 | |
Employee Stock Option | ||
Share-based Compensation Arrangement by Share-based Payment Award | ||
Number of Options, Exercised (in shares) | (210,429) | |
Weighted Average Exercise Price Exercised (in dollars per shares) | $ 1.28 | |
Employee Stock Option | 2013 Stock Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award | ||
Number of Options, Outstanding - Beginning balance (in shares) | 5,536,896 | 5,906,884 |
Number of options, granted (in shares) | 1,479,558 | 750,000 |
Number of Options, Exercised (in shares) | (210,429) | (1,546,288) |
Number of Options, Forfeited/Expired (in shares) | (261,101) | (20,000) |
Number of Options, Outstanding - Ending balance (in shares) | 6,544,924 | 5,090,596 |
Number of Options Exercisable (in shares) | 4,264,408 | 3,468,912 |
Number of Options, Vested and Expected to Vest (in shares) | 6,544,924 | 5,090,596 |
Weighted Average Exercise Price Outstanding (in dollars per shares) | $ 2.66 | $ 1.61 |
Weighted Average Exercise Price Granted (in dollars per shares) | 5.21 | 6.76 |
Weighted Average Exercise Price Exercised (in dollars per shares) | 1.28 | 2.01 |
Weighted Average Exercise Price Forfeited/Expired (in dollars per shares) | 6.50 | 1.38 |
Weighted Average Exercise Price Outstanding (in dollars per shares) | 3.13 | 2.05 |
Weighted Average Exercise Price Exercisable (in dollars per shares) | 2.08 | 1.73 |
Weighted Average Exercise Price Vested and Expected to Vest (in dollars per shares) | $ 3.13 | $ 2.05 |
Weighted Average Remaining Contractual Term Outstanding (in years) | 7 years 3 months 29 days | 7 years 5 months 26 days |
Weighted Average Remaining Contractual Term Exercisable (in years) | 6 years 4 months 24 days | 7 years 10 days |
Weighted Average Remaining Contractual Term Vested and Expected to Vest (in years) | 7 years 3 months 29 days | 7 years 5 months 26 days |
Aggregate Intrinsic Value, Outstanding | $ 6,265,207 | $ 37,037,015 |
Aggregate Intrinsic Value, Exercisable | 5,792,971 | 27,069,483 |
Aggregate Intrinsic Value, Vested and Expected to Vest | $ 6,265,207 | $ 37,037,015 |
Employee Stock Option | 2021 Stock Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award | ||
Number of options, granted (in shares) | 182,000 | |
Number of Options, Outstanding - Ending balance (in shares) | 182,000 | |
Number of Options Exercisable (in shares) | 6,250 | |
Number of Options, Vested and Expected to Vest (in shares) | 182,000 | |
Weighted Average Exercise Price Granted (in dollars per shares) | $ 3.67 | |
Weighted Average Exercise Price Outstanding (in dollars per shares) | 3.67 | |
Weighted Average Exercise Price Exercisable (in dollars per shares) | 6.40 | |
Weighted Average Exercise Price Vested and Expected to Vest (in dollars per shares) | $ 3.67 | |
Weighted Average Remaining Contractual Term Outstanding (in years) | 9 years 10 months 28 days | |
Weighted Average Remaining Contractual Term Vested and Expected to Vest (in years) | 9 years 10 months 28 days | |
Employee Stock Option | Non employee director | 2013 Stock Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award | ||
Number of options, granted (in shares) | 110,000 |
Stock Options and Restricted _4
Stock Options and Restricted Stock Units - Weighted Average Fair Values and Assumptions (Details) - $ / shares | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award | ||
Weighted average fair value of options granted (in dollars per share) | $ 3 | $ 3.56 |
Minimum | ||
Share-based Compensation Arrangement by Share-based Payment Award | ||
Risk-free interest rate | 1.94% | 0.22% |
Expected life (years) | 3 years | 3 years |
Expected volatility factor | 62% | 58% |
Maximum | ||
Share-based Compensation Arrangement by Share-based Payment Award | ||
Risk-free interest rate | 3.54% | 0.82% |
Expected life (years) | 6 years 5 months 1 day | 6 years |
Expected volatility factor | 79% | 68% |
Stock Options and Restricted _5
Stock Options and Restricted Stock Units - Summary of Restricted Shares (Details) - $ / shares | 3 Months Ended | 9 Months Ended |
Sep. 30, 2022 | Sep. 30, 2022 | |
Restricted Stock | 2013 Stock Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award | ||
Number of Shares, Unvested at Beginning of the year | 25,000 | |
Number of Shares, Vested | (25,000) | |
Number of Shares, Forfeited/Expired | 0 | |
Weighted-Average Grant Date Fair Value, Outstanding | $ 1.38 | |
Weighted-Average Grant Date Fair Value, Vested | 1.38 | |
Weighted-Average Grant Date Fair Value, Forfeited/Expired | 0 | |
Restricted Stock | Equity Plans | ||
Share-based Compensation Arrangement by Share-based Payment Award | ||
Weighted-Average Grant Date Fair Value, Outstanding | $ 5.59 | $ 5.59 |
Restricted Stock Units | ||
Share-based Compensation Arrangement by Share-based Payment Award | ||
Number of shares, granted | 0 | 700,000 |
Number of RSUs issued | 0 | 700,000 |
Restricted Stock Units | 2013 Stock Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award | ||
Number of shares, granted | 200,000 | |
Number of RSUs issued | 200,000 | |
Restricted Stock Units | Equity Plans | ||
Share-based Compensation Arrangement by Share-based Payment Award | ||
Number of Shares, Unvested at Beginning of the year | 0 | |
Number of shares, granted | 700,000 | |
Number of Shares, Unvested at End of the year | 700,000 | 700,000 |
Weighted-Average Grant Date Fair Value, Granted | $ 5.59 | |
Number of RSUs issued | 700,000 | |
Performance Shares | 2021 Stock Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award | ||
Number of shares, granted | 500,000 | |
Number of RSUs issued | 500,000 |
Stock Options and Restricted _6
Stock Options and Restricted Stock Units - Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Derivatives, Fair Value | ||||
Total stock-based compensation | $ 2,370 | $ 1,117 | ||
Equity Plans | ||||
Derivatives, Fair Value | ||||
Direct operating costs | $ 46 | $ 21 | 154 | 96 |
Selling and administrative expenses | 759 | 482 | 2,216 | 1,021 |
Total stock-based compensation | $ 805 | $ 503 | $ 2,370 | $ 1,117 |
Stock Options and Restricted _7
Stock Options and Restricted Stock Units - Additional Information (Details) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Oct. 07, 2022 USD ($) installment $ / shares shares | Sep. 30, 2022 USD ($) shares | Sep. 30, 2022 USD ($) $ / shares shares | Sep. 30, 2021 $ / shares shares | |
Share-based Compensation Arrangement by Share-based Payment Award | ||||
Compensation cost related to non-vested stock options and restricted stock awards not yet recognized | $ | $ 5.9 | $ 5.9 | ||
Weighted-average period over which compensation cost recognized | 24 months | |||
Grant date fair value | $ / shares | $ 3 | $ 3.56 | ||
Subsequent event | ||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||
Number of options, granted (in shares) | 1,143,000 | |||
Exercise price of stock options granted | $ / shares | $ 3.41 | |||
Stock options vesting period | 10 years | |||
Stock options vesting in number of installments | installment | 3 | |||
Grant date fair value | $ | $ 2.5 | |||
Restricted Stock Units | ||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||
Number of shares, granted | 0 | 700,000 | ||
Compensation cost related to non-vested stock options and restricted stock awards not yet recognized | $ | $ 2.8 | $ 2.8 | ||
Weighted-average period over which compensation cost recognized | 22 months | |||
Number of shares eligible to receive for each fully vested RSU | 1 | |||
2013 Stock Plan | Subsequent event | ||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||
Number of options, granted (in shares) | 295,000 | |||
2013 Stock Plan | Restricted Stock Units | ||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||
Number of shares, granted | 200,000 | |||
2013 Stock Plan | Employee Stock Option | ||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||
Number of options, granted (in shares) | 1,479,558 | 750,000 | ||
Exercise price of stock options granted | $ / shares | $ 5.21 | $ 6.76 | ||
2021 Stock Plan | Subsequent event | ||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||
Number of options, granted (in shares) | 848,000 | |||
2021 Stock Plan | Performance Shares | ||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||
Number of shares, granted | 500,000 | |||
2021 Stock Plan | Employee Stock Option | ||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||
Number of options, granted (in shares) | 182,000 | |||
Exercise price of stock options granted | $ / shares | $ 3.67 | |||
Equity Plans | Restricted Stock Units | ||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||
Number of shares, granted | 700,000 | |||
Non employee director | 2013 Stock Plan | Employee Stock Option | ||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||
Number of options, granted (in shares) | 110,000 | |||
Non employee director | 2021 Stock Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||
Number of shares, granted | 50,000 | |||
Number of options, granted (in shares) | 132,000 |
Operating Leases - Operating Le
Operating Leases - Operating Leases Amount Recognized (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Operating Leases, Rent Expense | $ 450 | $ 452 | $ 1,425 | $ 1,312 |
Long Term Operating Lease | ||||
Operating Leases, Rent Expense | 314 | 393 | 1,027 | 1,169 |
Short Term Operating Lease | ||||
Operating Leases, Rent Expense | $ 136 | $ 59 | $ 398 | $ 143 |
Operating Leases - Net Present
Operating Leases - Net Present Value of Operating Lease Liability (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Operating Leases | ||
2022 | $ 283 | |
2023 | 1,030 | |
2024 | 825 | |
2025 | 837 | |
2026 | 847 | |
2027 and thereafter | 2,384 | |
Total lease payments | 6,206 | |
Less: Interest | (1,534) | |
Net present value of lease liabilities | 4,672 | |
Current portion | 742 | $ 1,034 |
Long-term portion | 3,930 | $ 5,276 |
Total | $ 4,672 |
Operating Leases - Weighted Ave
Operating Leases - Weighted Average Remaining Lease Terms (Details) | Sep. 30, 2022 |
Operating Leases | |
Weighted-average lease term remaining | 55 months |
Weighted-average discount rate | 8.55% |
Operating Leases - Additional I
Operating Leases - Additional Information (Details) | 9 Months Ended |
Sep. 30, 2022 | |
Minimum | |
Lessee, Operating Lease, Term of Contract | 2 years |
Percentage of rental escalations | 1.75% |
Maximum | |
Lessee, Operating Lease, Term of Contract | 11 years |
Percentage of rental escalations | 10% |
Long-term obligations (Details)
Long-term obligations (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Pension obligations | ||
Pension obligations - accrued pension liability | $ 6,376 | $ 6,839 |
Settlement agreement | 94 | 272 |
Microsoft licenses | 385 | |
Long-term Debt | 6,470 | 7,496 |
Less: Current portion of long-term obligations | 596 | 1,279 |
Totals | $ 5,874 | $ 6,217 |
Redemption of non-controlling_2
Redemption of non-controlling interest (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Redemption of non-controlling interest | ||
Non-controlling interests | $ (729) | $ (3,522) |
Additional Paid-in Capital | ||
Redemption of non-controlling interest | ||
Non-controlling interests | $ 2,900 |
Comprehensive loss - Reclassifi
Comprehensive loss - Reclassifications out of Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Comprehensive loss | ||||
Balance at the beginning | $ 21,022 | $ 31,405 | $ 29,927 | $ 29,640 |
Balance at the end | 17,781 | 30,723 | 17,781 | 30,723 |
Accumulated Other Comprehensive Loss | ||||
Comprehensive loss | ||||
Balance at the beginning | (3,276) | (1,069) | (2,192) | (938) |
Other comprehensive loss before reclassifications, net of taxes | (1,528) | (896) | (2,977) | (1,016) |
Total other comprehensive loss before reclassifications, net of taxes | (4,804) | (1,965) | (5,169) | (1,954) |
Net amount reclassified to earnings | 713 | 47 | 1,078 | 36 |
Balance at the end | (4,091) | (1,918) | (4,091) | (1,918) |
Pension Liability Adjustment | ||||
Comprehensive loss | ||||
Balance at the beginning | (780) | (422) | (858) | (444) |
Total other comprehensive loss before reclassifications, net of taxes | (780) | (422) | (858) | (444) |
Net amount reclassified to earnings | 35 | 10 | 113 | 32 |
Balance at the end | (745) | (412) | (745) | (412) |
Fair Value of Derivatives | ||||
Comprehensive loss | ||||
Balance at the beginning | (889) | (267) | (353) | |
Other comprehensive loss before reclassifications, net of taxes | (884) | (302) | (1,707) | (536) |
Total other comprehensive loss before reclassifications, net of taxes | (1,773) | (569) | (2,060) | (536) |
Net amount reclassified to earnings | 678 | 37 | 965 | 4 |
Balance at the end | (1,095) | (532) | (1,095) | (532) |
Foreign Currency Translation Adjustment | ||||
Comprehensive loss | ||||
Balance at the beginning | (1,607) | (380) | (981) | (494) |
Other comprehensive loss before reclassifications, net of taxes | (644) | (594) | (1,270) | (480) |
Total other comprehensive loss before reclassifications, net of taxes | (2,251) | (974) | (2,251) | (974) |
Balance at the end | $ (2,251) | $ (974) | $ (2,251) | $ (974) |
Segment reporting and concent_3
Segment reporting and concentrations (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Segment reporting information | |||||
Revenues | $ 18,447 | $ 17,450 | $ 59,626 | $ 50,466 | |
Income (loss) before provision for income taxes | (8,754) | 53 | |||
Total assets | 47,809 | 47,809 | $ 59,217 | ||
Goodwill | 1,982 | 1,982 | 2,143 | ||
Intersegment elimination | |||||
Segment reporting information | |||||
Revenues | 2,544 | 1,524 | 7,441 | 3,788 | |
Before Intersegment Eliminations | |||||
Segment reporting information | |||||
Income (loss) before provision for income taxes | (3,058) | (519) | (8,754) | 53 | |
After Intersegment Eliminations | |||||
Segment reporting information | |||||
Income (loss) before provision for income taxes | (3,058) | (519) | (8,754) | 53 | |
DDS | |||||
Segment reporting information | |||||
Revenues | 12,852 | 13,237 | 42,944 | 37,997 | |
Total assets | 26,542 | 26,542 | 38,180 | ||
DDS | Before Intersegment Eliminations | |||||
Segment reporting information | |||||
Income (loss) before provision for income taxes | 135 | 1,544 | 1,516 | 3,924 | |
DDS | After Intersegment Eliminations | |||||
Segment reporting information | |||||
Income (loss) before provision for income taxes | (59) | 1,445 | 987 | 3,676 | |
Synodex | |||||
Segment reporting information | |||||
Revenues | 1,762 | 983 | 5,376 | 2,888 | |
Total assets | 3,294 | 3,294 | 1,753 | ||
Synodex | Intersegment elimination | |||||
Segment reporting information | |||||
Revenues | 2,119 | 1,113 | 6,167 | 2,559 | |
Synodex | Before Intersegment Eliminations | |||||
Segment reporting information | |||||
Income (loss) before provision for income taxes | (977) | (657) | (2,796) | (878) | |
Synodex | After Intersegment Eliminations | |||||
Segment reporting information | |||||
Income (loss) before provision for income taxes | (778) | (584) | (2,318) | (711) | |
Agility | |||||
Segment reporting information | |||||
Revenues | 3,833 | 3,230 | 11,306 | 9,581 | |
Total assets | 17,973 | 17,973 | 19,284 | ||
Goodwill | 1,982 | 1,982 | $ 2,143 | ||
Agility | Intersegment elimination | |||||
Segment reporting information | |||||
Revenues | 425 | 411 | 1,274 | 1,229 | |
Agility | Before Intersegment Eliminations | |||||
Segment reporting information | |||||
Income (loss) before provision for income taxes | (2,216) | (1,406) | (7,474) | (2,993) | |
Agility | After Intersegment Eliminations | |||||
Segment reporting information | |||||
Income (loss) before provision for income taxes | $ (2,221) | $ (1,380) | $ (7,423) | $ (2,912) |
Segment reporting and concent_4
Segment reporting and concentrations - Revenues by geographic region (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Segment reporting information | ||||
Revenues | $ 18,447 | $ 17,450 | $ 59,626 | $ 50,466 |
United States | ||||
Segment reporting information | ||||
Revenues | 11,904 | 9,467 | 37,843 | 26,761 |
United Kingdom | ||||
Segment reporting information | ||||
Revenues | 2,677 | 2,912 | 8,312 | 8,709 |
The Netherlands | ||||
Segment reporting information | ||||
Revenues | 1,734 | 1,750 | 5,105 | 5,012 |
Canada | ||||
Segment reporting information | ||||
Revenues | 579 | 1,469 | 3,234 | 4,556 |
Other - principally Europe | ||||
Segment reporting information | ||||
Revenues | $ 1,553 | $ 1,852 | $ 5,132 | $ 5,428 |
Segment reporting and concent_5
Segment reporting and concentrations - Long-lived assets (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Revenues from external customers and long-lived assets | ||
Long - lived assets | $ 20,841 | $ 21,058 |
United States | ||
Revenues from external customers and long-lived assets | ||
Long - lived assets | 6,747 | 4,578 |
Canada | ||
Revenues from external customers and long-lived assets | ||
Long - lived assets | 7,669 | 9,280 |
United Kingdom | ||
Revenues from external customers and long-lived assets | ||
Long - lived assets | 1,139 | 1,538 |
Philippines | ||
Revenues from external customers and long-lived assets | ||
Long - lived assets | 3,784 | 4,027 |
India | ||
Revenues from external customers and long-lived assets | ||
Long - lived assets | 1,364 | 1,481 |
Sri Lanka | ||
Revenues from external customers and long-lived assets | ||
Long - lived assets | 136 | 154 |
Israel | ||
Revenues from external customers and long-lived assets | ||
Long - lived assets | 2 | |
Total Foreign | ||
Revenues from external customers and long-lived assets | ||
Long - lived assets | $ 14,094 | $ 16,480 |
Segment reporting and concent_6
Segment reporting and concentrations - Additional information (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2022 USD ($) customer | Sep. 30, 2021 customer | Sep. 30, 2022 USD ($) customer segment | Sep. 30, 2021 customer | Dec. 31, 2021 USD ($) customer | |
Segment reporting information | |||||
Number of reportable segments | segment | 3 | ||||
Right-of-use-asset, net | $ | $ 4,199 | $ 4,199 | $ 5,621 | ||
Classification of segment assets | $ | $ 47,809 | $ 47,809 | $ 59,217 | ||
Foreign Customer | Sales Revenue, Net | Customer Concentration Risk | Non-US | |||||
Segment reporting information | |||||
Concentration risk, percentage | 35% | 46% | 37% | 47% | |
Foreign Customer | Accounts receivable | Customer Concentration Risk | |||||
Segment reporting information | |||||
Concentration risk, percentage | 47% | 37% | |||
One Client | Sales Revenue, Net | Customer Concentration Risk | United States | |||||
Segment reporting information | |||||
Number of clients | 1 | 1 | |||
Concentration risk, percentage | 13% | 11% | |||
One Client | Sales Revenue, Net | Customer Concentration Risk | Non-US | |||||
Segment reporting information | |||||
Number of clients | 1 | ||||
Concentration risk, percentage | 10% | ||||
One Client | Accounts receivable | Customer Concentration Risk | |||||
Segment reporting information | |||||
Number of clients | 1 | ||||
Concentration risk, percentage | 19% | ||||
Another Client | Accounts receivable | Customer Concentration Risk | |||||
Segment reporting information | |||||
Number of clients | 2 | ||||
Concentration risk, percentage | 24% | ||||
Client | Sales Revenue, Net | Customer Concentration Risk | United States | |||||
Segment reporting information | |||||
Number of clients | 0 | ||||
Concentration risk, percentage | 10% | ||||
Client | Sales Revenue, Net | Customer Concentration Risk | Non-US | |||||
Segment reporting information | |||||
Number of clients | 0 | 0 | |||
Client | Accounts receivable | Customer Concentration Risk | |||||
Segment reporting information | |||||
Number of clients | 0 | 0 | |||
Concentration risk, percentage | 10% | 10% |
Income (Loss) Per Share (Detail
Income (Loss) Per Share (Details) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Income (Loss) Per Share | ||||
Net Loss attributable to Innodata Inc. and Subsidiaries | $ (3,327) | $ (800) | $ (9,975) | $ (505) |
Weighted average common shares outstanding | 27,331 | 26,971 | 27,239 | 26,459 |
Adjusted for dilutive computation | 27,331 | 26,971 | 27,239 | 26,459 |
Income (Loss) Per Share - Addit
Income (Loss) Per Share - Additional information (Details) - shares shares in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Employee Stock Option | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share | ||||
Computation of diluted loss per share | 4.2 | 5.1 | 5.7 | 5.1 |
Derivatives - Additional Inform
Derivatives - Additional Information (Details) - USD ($) $ in Millions | Sep. 30, 2022 | Dec. 31, 2021 |
Designated as Hedging Instrument | ||
Derivative | ||
Derivative notional amount | $ 14.4 | $ 19.7 |
Derivatives - Fair value of der
Derivatives - Fair value of derivative instruments (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Accrued expenses | Foreign currency forward contracts | Designated as Hedging Instrument | ||
Derivatives, Fair Value | ||
Derivatives designated as hedging instruments | $ 1,095 | $ 353 |
Derivatives - Contracts designa
Derivatives - Contracts designated as cash flow hedges (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Derivatives | ||||
Net gain (loss) recognized in OCI | $ (884) | $ (302) | $ (1,707) | $ (536) |
Net (gain) loss reclassified from accumulated OCI into income | $ 678 | $ 37 | $ 965 | $ 4 |