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Innodata (INOD)

Participants
Amy Agress Senior Vice President & General Counsel
Jack Abuhoff Chairman & Chief Executive Officer
Robert O’Connor Chief Financial Officer
Tim Clarkson Van Clemens
Call transcript
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Operator

Good morning, and welcome to the Innodata Third Quarter 2019 Earnings Call. Today's conference is being recorded.

At this time, I would like to turn the conference over to Amy Agress. Please go ahead, ma’am.

Amy Agress

Thank you, Ian. everyone. morning, Good joining for Thank us you today.

business, today CEO questions. and speakers Jack review who about of Abuhoff, with for will We'll We'll Chairman Innodata; and first then the perspective provide third Jack our of will then Robert a from Robert follow Our hear are and the O’Connor quarter. results CFO. our your take

Harbor pursuant call. the of Safe First, that the are statements Securities qualify Private Reform provisions during forward-looking of These let to being Litigation made me made are statements XXXX. the the Act

statements may results, without or Forward-looking performance include, forecast, future limitations, any that imply predict, statement or achievements. indicate

competitors; external inability factors; dependency without completed, likelihood our limited in in and willingness terminated to continued market clients be services; that clients; the our requirements goodwill replace committed integrating providers that canceled time results factors; on systems, of our our projects; the Data These of the statements undiscovered we projects at-will liabilities support; ability plans, segment a business the Data contracts projected other operations technological acquire; and acquired other our to Digital to or rise amendments new particularly may interruptions acquire; in that risks uncertainties risks difficulty to impairment XX-K, our from our that are of emerging venture deriving third-party clients; market cancel of the of of Commission, by and or clients ability businesses thereto. and and and development on services part; continuing markets in our on expectations, materialize depressed growing business of of changes Solutions synergies are potential from conditions; of content our execute including, for in assumptions clients concentration our which not and indicated companies Digital reports or of or investments; Form with and emergence and the these joint to revenue from management’s most new reduced; number or potential of our may are breaches filings changes of we and time X-K reduce, and largely strategy; the segment; competitive limitation, value volumes subject a information Exchange businesses and acquisitions, clients that with the Agility recent markets and or companies any the estimate Solutions in and in are strategic potential in may other and whole technology number or work based assets to give nature and uncertainties, XX-Q and in, growth current and delay effects including contracts various on Securities prospective of of carrying may primarily intangible and of our

our current We required from obligation undertake forward-looking laws results to expectations. revisions to as any update federal statements except and announce could differ actual securities information or by forward-looking to the no materially

you. turn now to Thank over I will Jack. call the

Jack Abuhoff

still AI and and company in every has The demanding most morning years, largest world's past couple companies. the growth harnessing And inning history, is providing the every data Good of XX-plus exponential first is capabilities. some and Innodata been machine of transforming quality Amy. second and you Thank high that revolution everybody. accelerating or AI/ML learning and years over to expected. his of we've is industry

trend. advantage of in this large expertise Our securely to curating and data of and history positioned amounts us ideally of managing, harnessing has secular processing AI take

to multiple we've Innodata fast be expected of offerings last capability combined work enabled to worth of been our now how new you'll and refresh look an take website us Friday, a are with idea to that years. at in you markets address billions AI wider five we launched within If growing next dollars doing our order core get have the the

a infrastructure been enabled fast these growing order use our offerings. time solutions leader to remove our internal in the of manual last transforming path journey AI-based our of us our the labor own and the become several with a on years, business dollars management For same of success human for of markets. improving here two million to began quality creating costs we've at and in while This us

range take capabilities Our an from success marketplace. enabled we industries way for opportunities now AI them that year are a seeing and us our wider of applications. on with we on with listed of over developing $X publishing example companies And response to of package are the to can has these are solutions we sector. to million with that this outside track website the By services traditional our new close excellent

sector. But we pilot with in alone, conglomerates pilots others months In financial nine media multiple in last as our the companies, discussing outside services that. XXXX, in in from we with have and either pilots brought just publishing We're new only or place and traditional pipeline two well. healthcare a clients put of companies,

its of Our Year-to-date, close segments. order with across to leads marketing marketing warm significantly expanded variety in programs this a our team, really which to we've power we transformation hitting XX,XXX our stride. is year driven

response and sales be sales further by our with to by resulted insights alone a creativity registrants ran past market confidence the and our getting in prospects. customer this and our leads. are The warm quarter last breadth in our XXXX segments. and has DDS experts across increases budget headcount marketing internal we including the given XX illustrate sharing in X,XXX quarter the headcount summit us This To XXX% we virtual to external XXX increase XX-session function of delivered core

announced $X program. million a In the quarter share authorized third we buyback

have of average our buying price shares at we of stock $XXX,XXX our far So $X.XX. authorization spent XXX,XXX an of

quarter's we will intend continue to numbers then buyback questions. value see initiative. and your Rob exceptional we'll take the and continue you to our an We through stock the as walk

highlight increase quarter. to further in adjusted quarter from and by a fourth increased our As XXX% a quarter we second see the third the EBITDA sequentially to expect Rob?

Robert O’Connor

you Jack. Good everyone. Thank morning

said, been Jack with we progress. be detail transformation about sharing next we'll growth in you the we're metrics some As around that our driving how and and look use track driving more forward to call we've excited to we'll the

improvements. now XX% third For $XXXXXX. continued quarter-to-quarter quarter approximately from result some margins of share as XX% Revenue just I'll improved increased by efficiency highlights. to Gross a

our Our to in third adjusted After the deducting second quarter $XXX,XXX was EBITDA third of in loss the to compared minority in net of the quarter. loss quarter quarter in expenses and $XXX,XXX $XXX,XXX was net the interest, compared a XXXX. $XXX,XXX second tax

Our the were the approximately $X third and million $XX.X balances cash investment than quarter. million higher second in quarter,

XX in QX second days from essentially no outstanding quarter. Our change the days sales was

was CapEx quarter. $XXX,XXX Our this

you Thank We're operator. to ready questions take now

Operator

go from Thank you. Clemens. Tim with Please begin ahead. [Operator Clarkson Van Instructions] We'll now

Tim Clarkson

clients a wanted about artificial they're Hi, Innodata my are they ask, company little players would and other guys, artificial curious, about intelligence have IBM skeptical, to they and hear intelligence. just any they're in like how hear in companies expertise

in make that skill makes can So you what believe we the sets Innodata has area? this money that some that are

Robert O’Connor

for Tim, that. great Thank you question.

a things of couple So there.

with There many things. of First working we are the because partnership opportunities about we do channel large artificial are talking we to have, of them. players intelligence in all, different

people several our starting is we models. their helping website things with see look what a at If new intelligence artificial with you do AI build take you'll

to people that. data there're need AI So train And do infrastructure a what human building which combination that need who models. they We the AI, they models, in of secure those to a are and is all to bring expertise table.

that, that, models the of our are and oftentimes when that looking data that of companies We're and and In with at turn engineered, manage But we're data working we've top trained at with built works curation built data, AI combination we we've curation. experts core the data the data that's by addition people, that to AI CRM master into the maintain documents that and the and for read that, using to data now frameworks data can robust again we're read. that trained success that people companies. curate we've large computers that of helping transformation models. our the some like very transformation we're of on produced data performing And models we

ecosystem there lots of and seeing So within be and my expected people ecosystem. prepared remarks, produce AI a ecosystem. showing this as that we by absolutely how We're it's is maps play opportunity, are XXXX fast-growing There is emerging. most products us. a just and and is within there for that is the pipeline said large ecosystem think $XXX services and billion for us to play I a certainly in

Tim Clarkson

Okay.

those are these Now, insurance you some specifically How I know with life got contracts going? contract companies.

Jack Abuhoff

there into in beginning What well. largest of see them three co-development in and business a life that have Apart And have that as in the with could three very – two two life the we're well. working the related and segment begin third their and companies fourth the with there that we in services related with developments we're insurers largest quarter quarter insurers another our plan largest we largest – that, benefit us of with is from of few to into the third ramp-up quarter. the the increased been us, late Going segment of now. also exploring two working from to their in

there. progress excellent So,

Tim Clarkson

annotation data your you on right customers website know three we and of that that with working different you're I in doing are business had How had that area? you work in that types some many different showed. you now

Jack Abuhoff

in lot are we're video, models. in we're and an good companies but work is companies of provide working they're that across number data what build done order image of we've audio Increasingly, opportunity with the a not in as for the data of text, using a seeing as data are using the data to well. their that part data to is services We're category, historically annotation So working to annotation. product, – that work though and that fact to

Tim Clarkson

When start the we'll do actual to you in quarterly that increases revenue results? seeing actual see expect

Jack Abuhoff

that first for looking should be we towards I Yeah. quarter think that.

Tim Clarkson

Yeah.

level before that anything. mean, expectation guarantee $XX some early it's Now hit? $XX sort about to and money to that to million show growth. Obviously, we start too talk is really I to you make of reasonable where some million a

Jack Abuhoff

segments. is years AI product the been of past a working internally. go all And our large in XXXX the across now, So over turning now using that, facing – those but much a primarily part market the capabilities building are and that externally offerings be we're we've service our of offerings be couple addressable we we're that and have to into next by targeting virtue of going deployed think budgets larger that growth we're year year And fact to to growth we

And market. very to addressable factor we've the in play this this market that to what had is function inhibiting a circumscribed very do The perform always a much broaden us demand. to very, And that's is enables transformation really that what fairly within pivot significantly.

Tim Clarkson

the quarter that Now I mean, that Agility noticed to sales had expect in continue? you growth. nice do I

Jack Abuhoff

going real we're growth business in We that do. in the year. We're to principally. is doing through quarter Agility by forecast fourth next things And growth is two growth being forecasting well. fed continually the

First lead retention, turning lead is flow On our want improvements significant leads was than traffic exactly to web past this two seeing very we're It bookings follow year, terms year that, improvements times which everything top we this where improve. it net quarter to overall over this of leads, – which where be. from and retention which in that was is approve want that. of sales-qualified last was – from into marketing-qualified continues flow year in XX% we it to

position in plumbing what to at have we're growth start all to the looking in accelerating place that is year. through a really So next and being

Tim Clarkson

competing say Now, guys what to that bigger you compete you characteristics differentiating that you're with of with? is would allows the business you're that

Jack Abuhoff

targeting to what leader I what opinions considered media market's number us. I to platform we're influencer considered and about We're is on – to analysts one ratings. the that is the this have I momentum and look use now talking but easiest telling to what the look the based Well, but customer – growth, be also the not we're be only on in to and satisfaction ranked world

that got this opportunity of but small things to order some share but that, a market we've maybe capture So in telling market. us large we are achieve do that's that an very now, there to we

Tim Clarkson

I quarters. No. shaping always know quarter seasonally mean, one better time? I way same has been fourth this your up it is of the

Jack Abuhoff

Yeah.

periods we're expansion. There's going and I to of for with we're time. to of a fourth we're here we're to to this But think be of $XXX,XXX much going growth for the each over have longer find good transformation is we're substantial seeing less opportunities going satisfaction and – lot quarter. growth do a going driving what more there businesses looking in to in growth and of

Tim Clarkson

Right.

of Now, historic are AI bigger you're legacy seeing the the are market? that in they than size deals your

Jack Abuhoff

of depends. large It legacy by characterized been and one coming small The along. very market deals lots occasionally has a always

we're we're don't to we are think – than to whether we've three I deals spot. the $XXX,XXX can a collect be in for be that comparable maybe over remains as two know see I seen. looking But the If larger we're decade. had to $XXX,XXX that going those or shape. great deals. lot I'm going we're to sweet last now That small at a looking deals going to our larger deals which our that are to of

Tim Clarkson

percentage last now? question. think versus project repeatable you business is mean one of of kind do And right what business I

Jack Abuhoff

of or now as we forward? the terms business look right In

Tim Clarkson

both No guess. I well Yes.

Jack Abuhoff

Rob, -- that for recurring now. Rob do you you number revenue number have while right any I'll gets I'll...

Robert O’Connor

I for it's. only have Agility

Jack Abuhoff

I'll about going talk forward.

in need. is a not It's text think annotation build a I analytics model, maintaining to important one-time -- model is critically seeing a there's a driving terms what whether a model, terms it the data a model that's chat in video that is model. of that's there continuing autonomous of is event we're there training then that whatever but bots maintenance high-performing initial as

that offering processable as our seeing that's recurring functionality is revenue process Where enable us and So see text that play. API-driven there. data revenue will machine embedded we We recurring we're are an turn to continually a into absolutely opportunities transformation positioning data.

So that very that recognize is recurring we on how is the product think services drive focused further. to to we're We revenue. critical architecture that enable new going and us

Tim Clarkson

last then I done. question I'm and One promise

And obviously me give the it give be name an how the with don't where save money? a how So working You that would you would save of but can you'd example customer? the money?

Jack Abuhoff

Sure.

at you to looking intelligent are our transformation, look if people do reinvent So terms is of in well data as as offerings processes. the automation knowledge-intensive what

what to able augment the is do do not humans learned you that customers, things which of you replace So there use really with to integrating with work couple able people we're to does we've how people, our past the is over AI how to share hybridize years how we're do AI and AI, machines but them?

from awful learned an customer built to our present And capability and successes that we've from we're our platform learned learned and into that we've mistakes base. as lot. to we and We our a now able

Tim Clarkson

I able -- explain Right. Why the deal don't Agility the know -- the remember about in President talked we and quality. conversation in I the you about that cost Agility? you you I'm do -- when at but were with with just savings don't sure what if improvement should you talked and we to

Jack Abuhoff

Sure.

Agility got with. assets business the working few So in we've that a we're

are are the finding amplify return be be and people traditional may message wire return what or the and of someone addressable, that a And and the that database generic that tremendously that of of to as that is higher particular amplify on sending tremendously both is has that they're high to journalists. that in is to a interested them that investment One quality a message looking meaning out media. the is we've assets that the that people to And most initiative, isolate read. discreetly not enables most may influencers marketing the global if in into world message social that effort, media our very than and much database likely of likely database the a curated on fact

Tim Clarkson

also cut know able actually mentioned they to I their in simply fast you the improve workforce real too. -- how that queries and to are they half respond Sure. could

Jack Abuhoff

Well, that's right.

workflows slow and still to as process on being many close in So those true a -- that are processes to impediments in are to people there're had businesses. expertise able read data. across are really who that been time possible. going move and have few to impediments to things you as respond And had of One and the been looking -- the is into People and to real is arduous you that? labor-intensive, this looking that what take that need to they're take and our textual

the the that A geared in work own now then work and in data data doing a entertaining lot we're intelligent transformation of and other automation quick of extension deliver them people's to also lot of to their conditions. customers digital, market models, in is by for time response businesses enabling lower very and costs additional very, making transformation, to time changing also operational very which but response to promise quick includes

Tim Clarkson

right. All

am I Thanks. done. Okay.

Jack Abuhoff

Tim Thanks,

Operator

you. further have Instructions] questions at [Operator no It Thank appears time. we this

Jack Abuhoff

a we I'll track quarter will of you our share and operator. to concluding then. fourth our progress. goals will with quickly just Thanks, for couple we our thoughts XXXX call In add metrics use the

leverage our bottom to incremental know, you or in to us As business growth translate XX% of more the line. our allows operating

sales markets our accelerating continue intend we target goal our stewards The in drive ability fast-growing showing business efficiency essential capital. to well now growth of our as revenue and prudent of And increase to our be next and growth, year. our force large in we to will in to driving addition operating to is

EBITDA you with quarter. our sequential positive members of seeing to and Agility and initiatives. likely opportunities And management result our inflected fourth Thank new and -- are in about forward time. everybody. quarter our team an in to the and contributing Board, be new Look next we're being EBITDA and our a at our exciting are as time tremendously what prospects to we're enthusiastic the in Synodex our With have the businesses expected increase another be is to fourth the

Operator

today Eastern. available p.m. X, is p.m. XXXX November X for at conference Eastern X replay Today's to from

recording X-XXX-XXX-XXXX, dialing the XXX-XXX-XXXX access passcode may concludes XXX-XXX-XXXX Again conference. This the XXXXXXX. numbers passcode X-XXX-XXX-XXXX, are by XXXXXXX. You using or or today’s

disconnect. now You may