Innodata (INOD)

Amy Agress Senior Vice President and General Counsel
Jack Abuhoff Chief Executive Officer
Mark Spelker Chief Financial Officer
Tim Clarkson Van Clemens Capital
Call transcript
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Good morning, and welcome to the Innodata Third 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.

Amy Agress

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

accounting, today Innodata; quarter. of speakers Mark served recently a as Abuhoff, where advisory Innodata CEO Mark Spelker, retired leading LLP, CohnReznick Jack an and from and our he month. business firm, Our last are tax CFO, audit with joined XX who for We the Mark then business, from consulting then a of first, results Jack We'll up our review technical third questions. and years. will your partner the and will for hear provide about take follow perspective

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

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

Jack Abuhoff

on Thank not X% call. to to of all years, of well lines you, position trends our reporting the almost market have joining our sales businesses year-over-year. thank of XXXX that that revenue you and our teams. of level What's as marketing opportunities we're resources us quarter and growth Amy. exciting for Good as size order sequentially for contemplates growth we morning and X% Today, growth a is third based in adding budget plan our gen tripling XX lead team years, our for coming and seen and in XX% across nearly

investment. the operating a we in would and flow As growth revenue outpace leverage of increased business, result growth cash cover to anticipate

is year. grounded confidence the accomplishments this in Our

to through incumbents. addressable expanded service against and we with We market established and offerings have market the product our demonstrated new successfully ability win have new and fit product offerings, these

Let information able We for for by year, quality the market to major ground. seeing to X.X the XX grow on believe that a our in our else, perfect executing we data of AI years we're are companies. order developed give family digital means priced billion and task anything expected and was market XXXX. create above us which customers' you to skills this technology some to In the is bring which this primarily data owned billion and on leading data core X.X on that that me we is color preparation what were focused now solutions to we business, estimated near

deals year. several to of customers our and late have the have our have winning incumbent closed signed data market to XX providers. AI launched XX That's year segment AI pipeline. last we data we're we the approximately By this DDS against new done, or than result, We've business our a so example in date in new our year's in we in preparation XX% another an As last the more execution and offering late-stage it did QX segment. time preparation expect

largest world's of one One companies month this seven across become our five out competitive became XX we're when QX client in long highly five we beat multiple In RFP. in months, preferred vendors social companies projects we've a company's other of running the just media now and languages.

identification placement to that identify product violates to turn includes We'll scope platform, classification trend filtering, based information. the Our identify advertising, terms improve misleading search automate representation trending misinformation auto-identify businesses. for of and stake service, AI content topics sentiment platform now analysis engines experience, content algorithms the to improve our product to classification to on identification toxicity to to search and

today. capitalize Our communications platforms we on ranked PR traction, now and business. on is in this To Agility focusing are this platform two the best-in-class growth to the professionals market significantly initiatives the in for accelerate among

of marketing First, from and our to of XX we to plan lead and by support sales over increase the year's next course the this to end of average the direct year, scaled-up effort. XXXX gen expand headcount to XX sales

to plan we’re year partners. and and we this year. higher grew revenue next a channel XX% We Second, channel expecting our growth expand grow

of We Synodex our platform. are the excited similarly prospects about

data integrating to offer medical allowing healthcare year, platform extract into records. Synodex document complex are records the intelligence Our This our used us traditional engines and from we to is medical AI point. electronic first achieved markets XX% The our a competitive seeing. indicative a much the is in growth months year traction of at solution target price revenue of that growth, we nine the we’re superior this product,

first last in business, savings Lastly, our that in comfortable the continue with that call. to growth a board. turn These combined our are exceed call CFO. month, leverage us to with our the even that in investments growth, make now cost Mark new and I’ll confirm the the we across joined our initiatives I’ll marketing considerable Mark with we so just this flow earnings be should call. revenue Spelker, outlined welcome. be cash we reductions, track will cost Mark, on our operating us over last sales his making

Mark Spelker

today and you of quarter per or million a in basic $X.XX morning, quarter income of was revenue Thank Total third quarter third XXXX, $X.XX basic $XX.X share quarter of $XX.X per or to financial or in third everyone. XXXX, share, XXXX. review quarter Thank third the million diluted third net performance million of compared for share, $XX.X million a second diluted in million basic revenue the our for in diluted Net the XXXX was $X.X and was increase Good of of second million of from X% and the quarter joining $X.X Total the us in a and $X.XX to $X.X of the Jack. of in a XXXX. XXXX. you, XXXX. loss the net quarter loss

for an loss and or million $X.XX nine the basic in revenue share of million total XXXX. diluted XXXX, of months X% months of nine of first from per million diluted the was increase was and million, of the the nine share $XX.X months Net in $X.X $XX.X XXXX. basic or XXXX. $X.X $X.XX For months first loss nine first was first per Net

were equivalents at you. XX, XX, $XX.X to September at XXXX. million cash December and compared cash million Our XXXX, Thank $XX.X


first [Operator question Van at Clemens Capital. Instructions] The from comes Tim Clarkson

Tim Clarkson

Hi, Hi, Jack. guys.

of couple a here. Just questions

to have months, looks do Agility he $XXX,XXX that money. something. banker I when just Anyhow, still finally he to they and money? bottom is through about wondering the at client line I expect lost always start just a division that six noticed all, and guess of he First we losing or the making was

Jack Abuhoff

Great question. Tim. for Thank Hi, you that.

a mean the as late free you seen it also, up year to in to believe and see see come we've this going next think and relative position generation, that that we've especially operating we're we've I you'll look business, next and So, we're costs flow where lean quarter well. and Agility quarter we cash if – gotten it

in The it’s important the SaaS leverage that huge, a business is, of thing course, is the operating business. Agility

so revenue seeing line. You're XX% the or hit bottom of

market. We've tremendous lead key growth. product. real achieved there ranked a And the start is to as amount expand expand sales leader in to The addressable the generation. our force is with significantly and product So intention its the it's a

return we seeing in getting revenue are it's think on Next time growth. sense. – year, that sales we to even that environment, we're And this economic dial-up makes we're the

Tim Clarkson

the Can if comment on you potential comparables? Sure. based on of Agility was it value full

Jack Abuhoff


that market XX the been the in or seen have So a few deals we've over there XX months. last

Xx was of was saw about that revenue I – Xx comps and the think one we revenue. comp the median the high highs

Tim Clarkson

could you Xx or you unrealistic? Do you that is can I mean, Agility, think value theoretically, a put – that realistically on

Jack Abuhoff

we when we plans, think with going are look forward-looking that more think be hitting growth margins. compounded revenue I – we're We looking rate. our So growth – target forward-looking to at at our or annual XX%

very, moving rule to quickly. be So we're going into very XX of territory

reason no of the kind that those to seeing seeing there's in well. market we're the shouldn't business we're apply think are valuations as this what of kinds that us I – and for

Tim Clarkson



I XX, Was your Can bigger from accurate the you it's the give about the on picture sales On guess, some radically I it here, in XX logic to force? all color data. expanding you it said guess, release? was as press between just

Jack Abuhoff


our of that that a of any data now know do, of requirement key AI. of So that really numbers summer requirement sales into how almost deep the company with handfuls of only we justify businesses be this and the near-perfect in dive And of companies what is each our information and is The used we're a strategy strategy they taking in expanding embracing exactly the to high did businesses, creation force business. we the all to for of in our a quality just good. core of the look couple

QX huge We a now. time have for winning winning. been people, just market entered on we're customers from us. in for and exclusively who that We're it's that opportunity market some So focused

right also to billion you in years. that going billion clearly time is who dial couple by in market. And just our it's be by that we're $X.X So – expanding recent is of to were the there market that a now market saying $X.X comps. up. talking seeing to about going also that it's confirmed that confirmed now It's comps confidence are market is And analysts, market from

AI competitors, for revenue. week our just I its was sold of $XXX data last it believe prep Lionbridge, million One business Xx

what So, it sophisticated people I are lot this mean, looking market clearly opportunity at there and it for a is. of understanding

Tim Clarkson

accuracy you've demonstrate able happening? I offline to you’ve Sure. Is you're the still had data. mentioned your close when XX% that me know to that ratio of a

Jack Abuhoff

even holding see operationalizing still – is I in to our up that. successfully between is not success. reason how that or just at look that success our may think but failure is and models, AI people quality data for that's only you we not difference data, up, holding accuracy expansion means and seem Yes, close thing only that just when It's we critical it the But that the aren't success another. high and forward one everything. some moving want creating things The or to and analytical sound high extraordinary

doing So our moving figuring of we've requirement, what that's data beyond near-perfect decades text many create past moving voice is AI for we're – many, the be me, or few that to you and been out to has moving do it's excuse last experimentation beyond just we're stage and broadened businesses. and voice It's really – now. right images part of excited how

Tim Clarkson

about Synodex with can relationships insurance these life how your division, us are you How on additional the right. color All – going? companies give on

Jack Abuhoff

We're they well. Our renewing relationships clients very, going up come renewal. for as are very

looking the nine to – growth markets some integrating a accelerating, document looking AI seen successfully for growth, makes it mentioned months, We're year, into that next I number drivers see one. do, finding Number we As more there. new year-over-year we've the even that which couple two, out what our we are platform, in at we powerful. XX% call, past of intelligence

expanding as excitement we're there and the markets well. as force also for a Synodex like sales well, our lot So, of other

Tim Clarkson

it spur it the off customer with cars, sugar sure. it like at that guys is look and has the the other and I'll they when one the makes clean Sure, put it's competition get I sputters. the last Innodata, the do gasoline Well, in almost the – and other I gasoline my you and [indiscernible] mean, analogy way only in call. engine have –

with people So, that? who business to like do wants

Jack Abuhoff

Well, thank the be you like quote some you, in to Tim. I'll proposals. our new sure I of analogy.

Tim Clarkson

All right. Great, thanks.

Okay. I'm Thanks. done.

Jack Abuhoff

you. Thank


next from The question comes [Operator [indiscernible]. Instructions]

Unidentified Analyst

Hi, Jack.

Jack Abuhoff

morning. Good Dan. Hi,

Unidentified Analyst

a nice on Congratulations quarter.

Jack Abuhoff

much. so you Thank

Unidentified Analyst

business values targeting You're net with a your around talk the contract on new in in you very – in revenue welcome. AI and how question recurring about My that annual be business terms recurring bit you contract. contract is you're of developing Can value getting? revenue little and you're see what to

Jack Abuhoff


days So early still it's for us.

pretty spread And that of big dollars from We in the several value are a or that we're to of engagements there's TCV signing. value terms $XX,XXX. they're million seeing the ranging of ACV

things of the always we One feed is that virtue operationalized, seeing refined AI data. of way are it improved by the a requires continuous is of that and

revenue them there to component heavy component that out that of will have these ongoing then well. projects upfront playing believe a So, we recurring lift an and kind likely be to seems an to will be Most maintenance that.

Unidentified Analyst

what for Okay. estimate is Great. And then the market one question around addressable you do Agility? Agility; total

Jack Abuhoff

about So if the out addressable billion billion, $X.X back down you for market then to that communications it total PR newswire, billion. communications and about you of $X $X.X comes it's take intelligence,

I what consider that's would our market. addressable So

$X the think our We platform about X.X billion, is are that integrated that's reselling newswires, into I market other but targeting billion. now, the the and are piece core and monitoring

Unidentified Analyst

or like those for And that selling are that do Okay. there? you value have something that, contract average subscriptions an with then annual on you your target you

Jack Abuhoff


$X,XXX the $X,XXX terms platform. get SaaS but on on there XX% increasing for that renewables things about content and feeds in we rate is basis, The increased probably a to retention and of about like gross XX% about it's typically. on So uplift

On revenue closer to the is about per average managed services customer probably $XX,XXX. side,

Unidentified Analyst

questions. right. answers my congratulations your Great. Well, on progress. All Okay. Thank you, that and

Jack Abuhoff

much. Thank you so


the further no additional are questions back at for Mr. to you It Abuhoff, Instructions] there or appears call time. [Operator like closing I'd any turn remarks. this to

Jack Abuhoff

operator. you, Thank

thoughts. So key I'll some probably provide closing

business in this in and expecting both We're in First, deliver especially segments. level be to across trying to our such XXXX a pleased to business, with growth confidence consolidated we're able on basis you very our share of times.

each while which tough underlying the year, it's how in that next be risk a years to board. coming across of environment consolidated which clearly making out will companies by growth confidence in supported there's for budget, we're macroeconomic on in XX% we And growth believe organization basis. the predict our and growth investments businesses a to position in Looking we're to will

of I'll progress. over at We'll million We strong forward us $XX.X $X.X with of our by sheet which reporting continuing everybody joined million And to have a for look QX. today. an in thanking was the increase continue having QX, balance close just end cash to


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