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Innodata (INOD)

Participants
Amy Agress Investor Relations
Jack Abuhoff 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 Second Quarter 2020 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, Anna. everyone. morning, Good joining for Thank us you today.

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

Section forward-looking being XXE during the harbor statements are made First, Exchange to XXXX made provisions the Act let the as call. as Section of are Act of me Securities and amended, amended. statements that of XXXX qualify XXA safe pursuant the Securities the of These of and

in ability other and thereto. other and our including the results statements and business filings technology competitors; the goodwill Commission, and assets information XX-Q on I except our give technological and X-K requirements now governments, Agility effects XX-K, in completed, are volumes without ventures most canceled changes in inability materially undiscovered to to obligation acquire; or imply of on services required segment; new recent for and of revenue indicated from reduce turn particularly may time businesses deriving on will factors risks in potential a the call of joint or business in and Data Solutions integrating Data current that various no projects; liabilities to global or expectations, based by with and to otherwise; market, relying market potential the may projects clients coronavirus, execute Digital the and and cancel of segment and forecast, emergence companies market current limitation, revisions include, growth the our willingness or continued laws, clients COVID-XX, are new concentration and potential interruptions Jack. or or that projected of we statement or emerging as information securities undertake assumptions clients primarily system; growing these update any content population, prospective indicate forward-looking and intangible and statements report you. be synergies that from pandemic Securities the Exchange whether factors; materialize; estimates or Form the continuing and We future pandemic our rise may number a of conditions, solutions at-will depressed to risks in companies are solutions; announce or responses any dependency or the and of breaches downturn of investments; our uncertainties and nature of not work, are or performance of services competitive novel work time Thank the plans could the such carrying of as and and result potential delay continuing a impairments number to our predict, limitation, acquired Solutions on of difficulty clients likelihood of expected COVID-XX contracts; to the that limited our and committed from thereto; statements by of businesses we to on markets expectations. our or amendments Forward-looking results, segment may subject and that actual that and the strategic clients; external a uncertainties management’s the the clients; value strategy; to continued in project-based any our forward-looking support; operations reduced; ability our These our development terminated in that results changes over other contracts without general effects of providers including of and of and company replace acquire; federal to from potential differ Digital of the acquisitions, achievements. and

Jack Abuhoff

Thanks Thank today. our Good morning, everybody. for you call Amy. joining very much,

COVID-XX quarter So full QX operating was our our business first during crisis. the

Now months I despite we this this of that a am positioned the increasingly with confident X.X in year. environment, experience operating are deal accomplish to environment, great

we after succeed dozens platform AI in data Here’s new accomplishing. we what annotation businesses customers of and believe our in market Agility a this QX believe succeed million after this we will at I will to reducing year. started predicted will or million at with year will Synodex grow is at XXXX. which succeed landing I succeed I which just both rapidly. growing I costs $X And the we $X.X market, substantially new believe we and in our we going in and of just operating going are believe

offer Let some context and me take some and these each of proof points.

this let’s and expecting Synodex year. In automations electronic our data systems technology both additional our of health routines records. extract businesses both take the Agility. traditional built have business, unstructured First, to year, into complex grow medical and building records Synodex AI. health are we from these This using and records, that I’m medical we we

a We are customers. engagements bringing several insurance with select existing customers, number industry of and our we expanding of on are new

over quarter increased year, increasing first with XX% last this half XX% Synodex year-over-year. Our revenues revenues

extraction we our revenue of nature. grow The to scale, business. integrating While It plus nearly margins, contributing into and scale will believe enjoys and its process flow. is strong to us and in AI to markets small target our recurring all data path business is still us the the cash is XX% enable free give business expand incremental that

that just business, $X talk even workflow is Agility. tier, platform been ranked billion the a among we’re overall Agility market. in PR top small full platform providing has a right global let’s SaaS PR though now, about player workflow the Now a

a environment. Our few the but target just rate is XX%, points to our continue and quarter of a $XXX,XXX internal retention business combination about given with grow new with XX%, We in a our booked retention of performance of a is business function direct to net the year-to-date retention, our We small staff, shy modestly. enough subscription sales revenue of solid bookings. a our we which our of with economic ended believe,

far, the prove profiles. so we our kept small in we terms of first code hiring cracked sales had team process, that and to because we’ve want Now sales structure

a per we’ve As XXXX we made QX practically refinements QX the sales tripled these of result XXXX, areas, from in bookings to executive.

now the tougher with support productivity, improved the this environment. a force, economics scaling selling sales Now notwithstanding rapidly sales

now. how running resources. data our go can numbers We through models fast the We now to we out about given AI exactly annotation figure are our talk

you’ve annotation those past core years, by they large Agility ill few This that that high-quality markets, train to AI But to build know story markets we from last teams publishers to need billion express our financial in preparation launched market Synodex Now they the medical, is next XXXX. and you and the want which been and is were are publishers, It market. core the legal, following information grow that to data high-quality equipped. e-book if task very because our estimated just creating for data. Data for and made-to-order with $X.X AI expected support. too really just that those years. year, is late for last frustration quantities year market significant its models with small of data billion us sciences several formative a simply is But continued practically whole stages us we growth discovered $X.X is to this a that models in other

and annotating data. well providing. small high-quality precisely segmenting traditionally because we’re things large are we data in the sets. that they them regularly preparation projects not trained we’ve for data provided the world report of market. that on data best these cleaning as fail fact, classifying as In they believe even are And includes collecting, a high-profile normalizing AI AI the But and

much is new, emerging. market a Now larger

leading the our in to seeking high-quality provider Nevertheless, we in to QX and data financial new medical a of are these We Given leading annotation AI becoming companies, date, prep marketing and started of to year. customers. services last information to of and data models closed selling to task a being XX preparation see have other build history and AI areas. we companies clear and that legal of annotation leading only provider data

XX pipeline second late-stage are half. that to expected in We the close have in customers another

We are margins. excuse in $X.X expecting – and year, of this a me, market a this services from billion target these managed bookings total we’re produce majority forecasting at bookings recurring $X.X of our will million that of deals revenue

is quality beat winning and We secure data It out platform, with one of a a customer-facing prominent to the license big annotation we production mentioning our which based version many on capabilities. business recent our years. have refined of platform work, wins annotation identified that tech over this is is that internal have incumbents, worth X we data our also opportunities our company. To our

Our banks, research in hedge companies, AI DDS. about tech as revenue of we well $XXX,XXX companies. current X software a In dip pipeline big and includes drug firms financial online quarter, platforms, the funds, as saw companies, trading sequential companies drone

a can half able the attributable team customer center we to full it’s facility. that only this as we’re We project get to because within project expect of as delivery about situated with back come will equipment provide the back soon our into

The requirements of customers disruption. other COVID-XX half with a to combination due decline is from smaller

that largest our talk We new a in predicting from forecasted durability revenues. improving market more the like over of talked growth. I’d of our bookings. will sequentially bit we’re expansion with little us enable about traditional about just market a nevertheless clients to out Looking one year, that overall the data combination annotation show and to

bookings, of and effectiveness. we signings, indicator as refer an Our important is new indicator of which business a to sales leading growth

first bookings. XX% we our XXXX notwithstanding of environment that booked bookings businesses, XX%, and full that’s the Looking our already we’re year presently on. now we’re working by XXXX, across half XXXX have of the beating just And forecasting in

these storage. us with next a cost savings and Internet the to as cost well several to business as order We our to management. approximately turn we across to encrypted now as now In cloud plan, $XXX,XXX. needed have quarters, continuity processing our over provision COVID members remote and In and significant the desktops to Let’s plan this well response our and cost place drive access team plan QX, in as plans additional reduce laptops enable costs business.

$X.X to that million in as the XXXX, and million of in each expect result compared We $X savings XXXX. XXXX be net a approximately will

savings and facilities. reducing data Our operating with costs lease other center associated costs include space large-scale and

strategic just we’re returns resources divergent a said, undertake presently prevailed. meaningful for COVID and We discussed, we that are growth. evaluation continuing opportunities market significant is to clearly so presents slowdown of normalcy our of economic of when allocate uncertainty. and That And best environment. the And level are a all how the in how I’ve we pursuing of about compelling far the and for view macro capital to projected. all the the have and forecasting duration notwithstanding are guessing reasons progress effect but we

continue proceed or We investment areas. on are whether paths we’re now along to all on the waiting to fewer to concentrate

progress take over to you turn over will we you updates you. and evaluation. much. We through back through the will your which provide I’ll very will Robert, to we the I’ll questions. come as call who take after Thank it now Robert, this numbers, turn

Robert O’Connor

million the in Net second was revenue $XX.X in of of to compared and net million per of the basic first in revenue million share quarter decline XXXX. second $X.X XXXX quarter million of per second in a $X.X the a the second XXXX or diluted quarter $X.X or quarter – X% the or Total and in a XXXX. and loss basic in million was million quarter share quarter net of the $X.XX the diluted and XXXX. $X.XX from $X.XX loss of XXXX, Total per share in of first $XX.X diluted basic second loss $XX.X was of

million, months members X operator. X to months was compared equivalents team of $XX.X deployed of or X% other $X.X million basic XX, loss diluted million in from XXXX, the Cash per XXXX. of approximately an data $X.XX revenue XX% first were point, total XX, XXXX. and million One XX% in cash global months or X% remotely. Net first of at Net at June the with you, $XX.X Thank months share December first the XXXX. XXXX, loss per diluted X first XXXX. presently are was $X.XX X and – million working of million $XX.X of was For the $X.X $XX.X in increase share Innodata’s

questions. take We’re ready to

Operator

Van Instructions] [Operator from first you. question Please from Thank And our Clemens. take go Clarkson we ahead. Tim

Tim Clarkson

you would Jack, on reductions? be $X.X year, the $X.X – reduction this of factor it now $X the you when cost expense a is million total announcement, in million are an or it the million additional combination this

Jack Abuhoff

Yes.

structural other savings as million next year, operating words, in In So we’re it that costs would be and million terms $X.X a over of cumulative. measuring XXXX and $X year baseline. this costs

Tim Clarkson

Right.

million a $X It’s $X.X million. million. So $X.X it’s not plus total of

Jack Abuhoff

That’s correct.

Tim Clarkson

Right.

Okay.

Now color? in a better little there growing don’t Why Agility, bit we’re this think of you you give the in terms us why environment? difficult doing suddenly more

Jack Abuhoff

Yes.

you in when things at place. like SaaS a there be couple look think I are business of to that have Agility, the

The a the important product a that X And the we’ve us with companies is the very in dominate done work quarter. the done product place, that the largest of fourth that product release tremendous the done, on the market. release in just first compete of the that result enabling this want. to thing is years. amount need of we’ve you last And work We did people a over couple we’ve

Atlas the It’s In the ranked a that, ranked then numbers. there. as got addition I in, you of your bookings, X We’ve on work look and by X your With retention areas. to top and need as that need at highly to a on lot validated to foundation, going think, out been has product. product you

are numbers where they’ve the been way in retention Our past. over up

call As And net we’re given a for. that result. tremendous I going in today, just that aim shy what’s XX% the market, a we think points this in of couple the said that’s on, we of retention

manage we things On the lot scale magnifies monitor Because result. a experimentation and to a do bookings How it. How or the just How side, team? wanted team? recruit for a bad that’s How have that there. compensate had do measure do the train – things we if a subscale process right There’s team? we amount we we do a tremendous appropriately of out it we figure and Who a broken get scaled you to team? the team? we do we of we before

per So the we’ve We accomplished. tripled worked on over bookings and what which we very year, result. tremendous last our of a course we’re that, happy is with executive account

– the Now measurement. and of that’s take combination and result are a process about recipe demonstrated product, that improving work SaaS training great all when and very large you course now. a a grow. management with take oversight that that very rates, excited very being and market where business, and now, When of we’re in done on capability you high in is, to and we sales we’ve right that retention And

think we’ve is the business environment this they the the any economic were not what to numbers hoping environment are, through that choppy obviously, us Now and it of for. with got waters. power takes But where we those

Tim Clarkson

I Xx worth at this think that’s still Do that companies industry in thought you one about you time, revenues. are know true?

Jack Abuhoff

a of important You year space. know saw this couple acquisitions place what? take We last in

valued But market check a on SaaS based it – that was valuation. are which to as want the was cash forecasted ability result typically back penetrate to mean, of a come their Xx they’re and say of flows to grow, look you. to have One I’ll their to I revenue, ability at yes, businesses, you that. and that when I their

done we’re that well the think results I we’re the positioned given extraordinarily work and seeing. now right that we’ve

Tim Clarkson

Okay.

Let’s move Synodex. to

So it move. changed seemed insurance to contracts? they’re get trying was it to these companies some forever finally sign like that to starting life What’s

Jack Abuhoff

Yes.

– changed. think things have a I I think few

more becoming and more is what the are one we we things First, of at do. big efficient

takes for to We’re us cutting cycle time out that it data. produce

operationally the expanding in we’re where We’ve those And progressively they’ve relationships. We’re leading reliant with many great clients – companies, insurance and become have upon before. that by haven’t who us. we or got place succeeding are of at nature. conservative automating partnerships we are companies automated But more

that and area. industry One AI additional open availability those that, will do. outside those is working more then see we’re insurance, the insurance, products make work that to in It in cycle our we’re more additional within do of and bring on essentially we that. very I integrating for. That technology all into that our as terms is of by use this and market It And also for will things both reduce excited up the think will cases us. are efficient but looking of time, we’re to we us going

So well. that excited very about as

Tim Clarkson

the Right, lot than Innodata It data you major at a the Innodata of with really one you right. a explain exactly in competing I competition? in on were you they about quality some seminars point, the the website, coming you gave. difference listening in astounded firm, of the the Innodata of brokerage know quality work better why was data. I to did talked has up was at the Can for is one information. and and you advantage mentioned terms of

Jack Abuhoff

Sure, happy to.

So data. legacy, legacy Thomson Bloomberg, satisfying companies for Reuters our about and their and extraordinarily was if you in demanding our and Apple think requirements Amazon like taking quality high

we’ve data high-quality cost-effective extraordinarily producing So built our company very at means. around a

– doing. problem that was give refined market customers and you is companies we’re handfuls we it. launching at an And our then of and AI and to what what our now need small make data to publishers. verticals companies project seeing and AI, that financial, grow a can data of an who what’s Fast end, our of But forward back today, of market. come us we’re all a every are that as you’re great data denominator big in handfuls enough going couple legal And that on fast lots successful or constraining projects. to in and common to exactly a see project, is high-quality of who It’s with sorts a project forward highly AI of didn’t Now but a for handfuls there space are then result, couple into. for were to a factor few medical sets,

from intelligence. handfuls know, market a a went we that moving a to company all any much just out to market as a every looking So sudden, pretty from we company couple of of all artificial includes of that’s is companies that there. And of embrace newspapers, the virtually

in that And positioned fuel. fuel absolutely provision going data we’re see high-quality feed ideally that growth to AI So think order in to expecting just that’s is place. the explosive we’re we the all to take

Tim Clarkson

Right. Right.

deals million, Now away? this years close? these X that total in $X.X turning million maybe that are close million, doing million Is we $X into a some about $XXX,XXX, $X Or AI you how is seeing of of at $X year. mean $XXX,XXX I about deals. talked $X million, $XXX,XXX, pretty

Jack Abuhoff

Yes.

So when I of contests, some the been space that, at about in the think than we that who look now we’re I companies incidentally, in longer have have, beating. competitive

at the and I So companies is they’ve most broken done of has – they tech. things see among them, look are into big that how – to them they’ve And one but successful. the successful

outside You year can companies, high-quality or and are – think that, X of are high-quality on of the of of per millions annotation. big tech engineering data then that And there’s data XX for these are companies X tens another almost equally important. that AI, dollars the spending

the that and So And and from understanding your that, and you tremendous traction to develop kind once things got of amount you as that’s is can is then you a there. into break get my a another one, ticket reputation, accomplish and of we we companies one break do to of need to key into we that market. one know a these to need you

our deal hard in. when were incumbent, good I’m market, remarks, going We’ve you, X telling this first And truly to said as providers. to in we an the up the not prove in closed incumbent it’s competing in slow. But I QX is break we’re against start we so you’re to So deal, prepared got my news ourselves. that

the the were you’re fighting [a right road X off works], when – were that who was were selected, was doing get So we something we our incumbents doing business, you it’s told right. And for what quality charts.

where dollars relationship is that a and that companies care other are said, AI, intention expand – of and our and share there’s grow of of into people data lot this these get people X relationship, we on referrals. the talk a utmost activity what think which we relationships pivot to market, can and for as that incestuous with of a of progressively use to I that, spending cultivate they’re to in So lot doing, millions tens year that

Tim Clarkson

last One Right. question.

able If for business AI. Let of me kind was needs have or How what the it has in you of into trying start-up be be to annotation difficult experience I any that do be to ask this. break would somebody done? data to doesn’t the to

Jack Abuhoff

a quality It’s are you’re it. for stack. simple We a that technology a We’ve to you’re go think XX% looks funny our do be many, absolutely to should market you that data, try of years. data able to the It’s talking about of it is been technologies we about do until couple refine And bring critical. like to table things many building being One it. not when many, talking thing. high

You’re making talking about perhaps to where to do out being error X possibilities. the it point you’re of able XX,XXX

to So that be to the is we’ve able technologies critical. quality And built there. That’s right up that. handle standard

the or that thing problem know got domain is that data expertise we’ve building we The AI. legal second what’s medical of by in third got into we’ve data, in to the can sets we training implicated deep for we’ve very expertise areas AI domain now AI a data, for the world. there. the how got that data that lot And of on table bring training going integrate to are deep Financial data, the thing is

build we’re not problem would efficiency of to. So be able to to a able level lot of that bring – the companies

Tim Clarkson

Sure, margins exciting. would question. the sure. be very one What on Well, AI last this incremental it’s some of business? And

Jack Abuhoff

it’s safe think XX% it think similar XX% just DDS, do. other that to not incremental. business as we In It’s to to about I

Tim Clarkson

right. Right,

start revenues? a money more higher lot at you making slightly So

Jack Abuhoff

Correct.

Tim Clarkson

Right.

XXx of context. I Microsoft one in quarter, Okay. valuation pays but anymore, in know thing. Good attention And last about to I especially XX% I’m sales, for nobody at done. I a trades data sales. appreciate the mean it. trades

of that valuation tech differential and of gone up. way the high there’s already these way, between Innodata have stocks So big a some

So I’ll pass. with that,

Jack Abuhoff

Tim. Thanks,

Operator

gentlemen, our any will and you. [Operator Ladies for Instructions] Thank remarks. turn the call back host additional I to

Jack Abuhoff

about. operator. just that of in progress Notwithstanding I’ll Yes, we’re very forecasting that and environment talked things COVID-XX the you, Thank XXXX. we’ve we’re recap in, couple a meaningful

Synodex the business, both platform growth growing In validated validated We in ability DDS with sales. in predicting and companies. AI serve investment initial We’ve labeling core customer marketing Agility the months data are the and just one new we readiness market with our that Agility’s our scale to businesses. best-known services additional for XX prep in and includes of these the X services, wins new rapidly of tech global big

against our another I XX remotely. We identified in balance cost joining additional we $X.X the the net all of with savings we and we to our at Again, way was which million cash you you in expenses for continued health end until Thank wish success in in $X.X new and close have you. sheet year. well. that cost the are we the be of pipeline of we’ve reducing an compared cost second we expenses to over which a us today. stack expecting continuing $XXX,XXX We QX, million half. in QX. we’re savings, increase roll the for XXXX approximately that have late-stage as thank million be a reduction $X into BCP-related in continue When identified the XXXX And work million and our and quarter, anticipate working very XXXX. strong of $XX.X and And net early we’re companies BCP-related actually optimize we to looking half as next to tech had we’ll second

Operator

September X Eastern. you. Thank Eastern available p.m. is Today’s – for on at XXXX from conference p.m. today replay X, X

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