Innodata (INOD)

Amy Agress SVP and General Counsel
Jack Abuhoff CEO
Mark Spelker CFO
Tim Clarkson Van Clemens Capital
Call transcript
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Good morning, and welcome to the Innodata Fourth 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, Mary. everyone. morning, Good joining for Thank us you today.

Mark today Innodata; XXXX. then of speakers who results perspective and for questions. Abuhoff, of quarter take a from months CEO Mark Spelker, will ended then business the the Jack the and about follow our our We'll first with review Our Jack are will and CFO. XX fourth hear We'll XX, December your

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

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

Jack Abuhoff

strides X,XXX days. the among within staff not in of of despite know Thank remote you, growing $X growing spike succeeded year to has Thanks you, thank global a along matter levels strategy. to the pretax today, team, call. revenue dramatic growth once the cash AI a XXXX, and working the improving Amy one our X%, anemic be result. and did were single balances unemployment pandemic, reporting improvement breaking in precious. cases lockdowns business and and before millions now we which global talented turned We pleased record our Today to In COVID figured us product shifting remote of we and slowdown plan, over immensely first deaths. million balance with its the made take Good companies and revenues, this to everybody businesses, year-over-year difficult out We shuttered we out working, earning a pace joining an to earnings for very way business, a in and customer century implemented decision an million economic sheet. in we're significant this morning. that with Exactly our the we brought In indefatigable in missing we're of before increase deliverable global ago year and contingency this $X XXXX. a Innodata

reaching which XXXX offering fast-moving our at emerged dynamic, services aggressive each result business billion. spaces $X.X in As to grow believe fourth and XXXX, because ever XXXX, got reach we a cash document past by are is growth this growth to essentially capable grow fact combined. expected of pandemic, AI before. The With investment, million. of businesses $X.X sequentially up annotation overall. ever Similarly, about lines. strength data in business new compounded proxying by acceleration and rate opportunities billion XXXX the estimated about and our to for respect X% enormous our at that we customers market billion for quarter data valued at our is all the and growth AI of by glimpse to XXXX of expected global the year stronger We're revenue the three than than XX%. XX and billion XXX% optimistic from are million we the stronger for up and are $XX very In expected this analytics related in believe the years we also is to from is believe annual and we to and acquired was earnings in the CAGR new the in projected a positioned our of focused with across tools XX% AI market XXXX, of The is training a solutions customers acquired that DDS of $X.X $X.X more we digital organic these future business up tailwinds data to excited validated more pretax XXXX QX, had market we notwithstanding over $XXX

product on updates It efforts. It over which and we it that regularly by have will them. [ph] that we're on option revenues our in see agility Meltwater, business sales says In ongoing customers has of best-of-breed the space [ph] we when business, agility business companies traction crowd, based roadmaps. we're marketing that is against well significant the foot discover, it businesses significantly the GX winning world's we tech product with our agility expect with agility of business technology direction getting both says Precision increasing and seeing customers, in largest executing agility expansion agility our quality product believe two that and or says that with based offering. about billion. support and door where reviews. the the new in user this in says those companies $X largest comparing and the We prefer our reviewers is leading say the manage marketplace of Data meets is and needs of review because to now Precision better combined these of preferred our the the future Meltwater

medical five Our for This calls plan in this we're of over next which our In platform XX% platform would AI next-generation years at a medical business. very us total our records. achieving Synodex business will will the enable our benefit deliver next faster, several think addressable enabled Synodex new over data will increased but cost, for highly revenue the automated for data Consequently, accurate CAGR markets of extraction, launch to extracting address analytical be generation about excited us Holy lower expanding to more throughput that market. it we in significantly allow speeds market. from our Grail the

the billion and the industry billion forecasted this addition execution year being people enable up coding significantly segments global Synodex a of is will our In of is strong of efficient. from sector, product and are in the in from customer sum data, sky patient improve to within The in needs well revenues expect two Consequently, increasingly healthcare positioned areas to our pace. XX.X%. to and our this business to key search, to size share. growth. which technology the to and focus ever with company growth seeking by in a to of but we adoption. seeing vast To as us a to documentation our which XXXX pool for more our one, seeing are vertical, of We're as and this accomplish market us customers to clinical enable not allow XX allow we make market us and investing of only our grew three outperform blue sales CAGR to to and trajectory accelerate in it interpret XX% to reach participate artificial growth expanding that volumes scale to address insurance our enhance goals expanding marketing maintain healthcare up, it analyze and leadership offerings us reach computer-assisted it's the intelligence The in two, excellence significantly are growth we efforts investing serve here

had XX In biggest terms in marketing. will investment of people sales. XXXX, and of we be Through people, sales most in our

ending and sales budget by total; XX and XXXX XX XX XX enablement sales a business development in sales team sales executives, with anticipate XXXX contrast of Our managers directors. resources

deliver will years. this expect We returns in significant future

our In technology are on of terms and three focusing key areas. we solutions,

our next, Because building the of ways enabled class not, reducing do about that of this apply AI that annotation potentially cost of have consistency launch First, generative improving differentiation to we'll data existing We up. be proprietary have we classical data what the charter and annotation market and we the We new tech annotation tasks. to expect source platform the AI in in anticipate will a XXXX source for incorporate will both of platform and that text. building we'll and quality intelligence have be output. been plan will We'll already revenue. We lined commercially auto June. success best it our customers in AI we platform platform and in by in started talk and tools data competitive license

it and nutshell, cognitive building text been Gate applications. are proprietary documents people tells accepts Golden powering and and document matter call any we of of a the to that Golden PDFs In Golden we've series for a intelligence web and a generating use copy, engines, what kind gate documents analytical AI reads inferences you about. performs doesn't Gate. tasks Second, can platform or extract it

and data models no a five built learning science AI, require neural code In work AI it is data and developed models real-world Gate code, performs customers. models is Using cutting-edge the number with language perfected orchestrate years industrial Synodex were terms no for industry that with that to serving of a AI Golden to in our platform we've to address on also in transfer Golden of it's Gate Gate able that hood be and our platform we under models brings the build scientists platform so models. data high-performing Golden technology AI powers past deep and Agility. to the deploying it up will combination truly our it over problems. require platforms capabilities like networks. generative state-of-the-art SMEs or [indiscernible] will large be update doesn't for foundational build annotation

engine customer for journey is phasing further to and through an technology Golden platform Our the and Gate. Synodex, AI as other data enabled XXXX XXXX, In we using Agility both commercialize solutions. as annotation potential it tend industry

and use we're was and accelerated production platform working staff Pre-COVID, to investing management for served when but our centers, in scalability. model cloud-based resource remote forced way scalability. employees XXX% another freelancers lemons. to almost which us made and allowing lemonade lower now exclusively and Lastly operating specifically COVID remote a large be geared greater We're costs to managing will we find practically we for fixed got full-time operating

We from over internal outside resources need I’ll fund our expect the to the of now fully for these call Mark our to financing. Spelker, new CFO. investments all turn without

Mark Spelker

of Thank million from you, of an income Good in revenue results share $XX.X $X.XX fourth basic XXXX. net $XX.X $X.X fourth at $XX.X ended morning, year patience. XXXX of in of fourth and per million XXXX. XXXX or ended basic ended XXXX per diluted and quarter diluted a net equivalents million $X.X in XX, income December basic fourth to the income Cash per XX, $X.XX $X.X much. basic year going the XXXX. I'm were some the in in our in was your Jack. X% $X.X over per or earnings of or million Thank Total compared of December diluted revenue the XXXX. million at and a XXXX. the to million XXXX revenue share per compared over diluted in historical loss third $X.X increase share share the for or was XXXX, Total welcome and XXXX. of the the million December third year XX, diluted net for and I $X.XX loss XXXX was share was $XX.X of for appreciate a of million in share and in everyone million the $X.XX per was December quarter diluted of or million briefly fourth net quarter $X.XX basic of Net you increase and to X% our quarter $XX.X and and $XX.X quarter a XX, quarter and million go very $X.XX $XX.X million quarter XXXX call. cash Total the to and


go now our ahead. And question take [Operator we'll instructions] Please first from [indiscernible]

Unidentified Analyst

My calls first person you I it of right force. or revenue if developing have per sales have question your I you're your type was that sales sales guys targeting now. around wondering any

Jack Abuhoff

are digital in the quotas are in per Synodex different business different the In $XXX,XXX and bigger data designed come around the quota. with People solutions business years in accounts, yes So with base business account of people these sales about $X.X agility in business. quotas meaning bigger in roughly the subsequent the quotas year. million and quotas come their the then

Unidentified Analyst

full for that the up how and the it how ramp with reaching you and you quota. do long going in Great sales see take your think can you Okay. people, to do be people

Jack Abuhoff

happen call, would selective automatically. with in think who I and I sales the going we to hire in. So XX will we the people not XX managers plan to around XX expect, being in going to we as of We're account but people be exiting as account bring think we enablement those a supporting it's year BDRs said that. people process continuing people, It's be executives then XX then, representatives, and on very

and hire to going is selectively to move investment as we of be return I exactly adequately compounding going of investment. we're customer adjustment We're sure do the back see creating of part value next and sharing to that on in obtaining what important you making our well. new the we're our what forward. to year and So each that hire going level we're be going We value what very quarters we're here with a as is think is that of we're being wins paying

Unidentified Analyst

anticipate what's with how you're right Okay. exciting up guys I see opportunity an Great around now have other force now. your it's and right of that question the your How with be in revenue very are going say really that now predictable more I look of as that a the like do you front you especially be forward? see such revenues past how have? the to Do anticipate market because you ramping do that things on your lumpy. revenue offerings you you will your that able one hard one going will It's to excellent at AI in AI. working sales I you and

Jack Abuhoff

it's from you appetite very, After with and grow building AI very when companies have has revenue adoption, of is certain we're look those longer. a contrast. segments information companies, our market. the quality at the I now seeing predicted a strongly road us, for industry they different our a one-time it's and I look we're single think when I company who every building stark are project there then is all looks very half and look that publishers very like four road high company what the very four single When view. any would quality who constituted an where not customer. small for we ahead one companies years. creating when past over serving we were the segments and In and really project became strong contrast forward, several It's quarters and It's those I high data. that huge was next were a companies every the now When AI any that data on a where to had now customer behind forward,

looking of that. is we're customer customers, at not think that to to of help the diversity I that there projects this in very that diversity case going care of won't are I there take base be and am but even lumpiness So because that say that I it think large going some now,


can We from instructions] next Please take now ahead. go [Operator question [indiscernible]. our

Unidentified Analyst

ramping little could I the if give the just curious stay a cash as you all am year. additional this maybe and flavor positive question, my and to is people, up you're that us throughout happen flows the ability

Mark Spelker

Jack with I the you make certainly we're a growth comment, investments over as going said augment, long-term, few next years. towards mean can selectively when to I'll I say these view long-term and

accordingly. dividends see expect if to to starting XXXX investments our with get some will part Jack? we will the expectations, in and of We of we not are adjust our commensurate latter returns out

Jack Abuhoff

that's No I fair. think that

the terms are in and think that I marketing initiatives, sales attractive. extremely of expecting returns the we're on return

cash offering proving selectively. it investing, we to that whole. positive that themselves making at we said, to going that's metrics it. we're a we're that very require spend resources relative obtaining. that we a got careful, going very the We We've now need when got resources hopeful but metrics. on do that tracking showing like we as and equity the do intend from around we're we're to doing going with and sheet prudent. very think Mark and a I flow we're As be that be got the year expect almost we're out bank investments lot we We be we've immediately balance the don't return to rate compelling our on an We're debt. we of tracking to go and to We've in can that, bringing If look cash results to we're of we cash eye an see of come what got free that the and or the high, flow safely are to happening

So excited [ph]. the and we're pretty excited we're prospects about

Unidentified Analyst

you're done? now where you industries and and year sales from? ones do in other question see Just good new XX the One of then hires, ahead curious at am of that the last marketplace I reps end, or the looking what you are out getting the

Jack Abuhoff

this we've Chief unfortunately The very being you relationships We're answer we hey very, product with in that my We positions tough. going said and for Officer Sales billion just and Tom in, a We've as that I it's are but And single very great really that thing tough leadership are wonderful. where and have It's a best and times there know class. brought about press said is Tom, We're said, I've product, get sales who creative. we our and done sales a the can talent. well to got I in where with this Tom said got our here get to before people weeks Perchinsky of devalue is market. contribution, is ago million to who before. several done in helpful going tap recruiters brought is organization. we be want a our have no salespeople. we we great he don't several for and now he to $XX is number building I him be $X build this release playbook that's hiring

very work. So occurred is he he is not Tom few tapping me able is is hard that that be wells a to at would have optimistic I'm deliver. He to executing, to and going

Unidentified Analyst

and up. growth was and strategy good, ramp based this Thanks expected starting on really this of than much quarter the one I better

So Thanks people good guys. it's a work.


And now of from Clemens question go next Please Van we Capital ahead. take our Clarkson Management. Tim can

Tim Clarkson

you you out startup wanted of more customers from to those customers new starting AI migrated would the significant to XX? Just area. got deal have many to give business order in of already say How the this you XX ask

Jack Abuhoff

I That I all those with most think growing potential think that significant of days with is all there very most for very business we're said in early customers. them. of

wins. be landing how expanding. think looking to customers on I I that are we're carefully periods very for I critical so come great is the potential expansion what's each and think new am in is much going from value those new bringing many because will that compounding customer and at

XX that. good on things but days early from the So expect

Tim Clarkson

tell salesman far? salesman hired how have you many Sure can the actually hires, you us on so

Jack Abuhoff

exited, had XX the handy number the of that year. an end have we don't toward average we I where of

brought business Prior who on sales on be to we new business DDS none. I that another effort. were our another the going had Synodex in people to business agility we small the In think brought had we two we in the handful. three,

but interviewing, and training. we're be much our we're So testing way, very to heads down on the assessing, soon on recruiting,

Tim Clarkson

So maybe like X to XX something like that.

Jack Abuhoff

right, probably the probably closer that's Yes seven. to

Tim Clarkson

your of it's differentiation terms to it. understand hard us on nontechnology artificial for in Now guys intelligence,

So the information it of let at think correct does I you oriented processing me explain terms least that what the and in me.

that that they the lastly, proprietary so you information with sure that AI fields made first mistakes they while meaning you internally. One a and they the sure example has have having there even that that out of terms you the refining So use books the good is in with Philippines in translating information that making which not phase. of it but class, very kind highly in and India and for experience processes probably have got of human information. is and it that's like process the experience element digitizing years this that then of that are accurately of that you go accurately. translated is skilled any most their make it's the detail when may and us guys particular to and experienced ferret have at There's all accurately and one five, got developed do And may college, phase that's understand. then look to that through people the most XX well-known top three I where And work the experience, people experts they're have top XX, in are there's second they you oriented the

is so medical Is looking and accurate? that documents, that or on. lawyers you looking that secret be at have allows has do more at complicated doctors to it legal documents Innodata them you sauce more what than that the or what's So

Jack Abuhoff

more great that. that Yeah think complicated I and don’t so it's questions

I bigger think lot that. I think simple than a it's actually but pretty it's

AI build just applications data applications You you programmers. with build conventional with like

to think code be there go we application, code when people about So no programmers, Python. about an think Jave and can build an there about in is who application, When and think AI programming. you will we you

carefully order with you're be very that's to quality. it very, very very been You're and with building it exact building in high data cultivated data

it application built with you low a If data, application. to data, AI you with get quality it low-quality build a AI get you high high-performing performing

with But Gate So which subject edge switch. build have that that we in might help matter Agility models are businesses them that layers. people platforms that taking quality be and now We're the data AI combining have industrial that Golden people need Gate who doing gauge solutions to create their and those cutting-edge that three high-quality want team but for sciences who do doing models their combining and into data doing like We're to models. own we're don't high train for can to then run and used we're earlier we're AI. better e-books those we We're powered like our we're and also high things train that building AI that is Synodex by that AI experts, in to Golden used technology with AI. people to people very cutting the performing data

platforms in delivered market delivering that to we're run accessible of processes of AI very delivering for much back create delivering e-books data. AI data the into high and to to be high-quality that systematical of of them the require in data AI that to the So better. to and things much in program order industry they history tethered world businesses quality about legacy, things our the platforms training data subject we're their that quality now do culture We're having done visualize solutions, very matter with being to having and to us experts and our technology around our quality it's of in instead the people data

Tim Clarkson

to much put it's it Well simply. bigger evolved deal into Okay. a sounds it like

Jack Abuhoff

for be all it's a We're lot opportunity just think it really excited fun. huge participating about a us and of in and it's we this to of

Tim Clarkson

still good was mentioned and big gotten it Now and call in evolving. the true? that that one that relationship the you was Is of you’ve previous five

Jack Abuhoff

discussed It them we and very to We're we it. will a and new used not course continue asked were way that we'll in but most with help that we of all we're minutes see excited being that many not we're hopeful the only we few is feel to or XX about cases stopping. continue of evolve customers new brought with to ago and about relationship, as other that that

Our building of proof really evolved, we're fairly the have side. prototypes marketing marketing on efforts really continuous We're new whom doing for doing up. we're of picked concept. great for and We're whom funnel seeing customers work

Tim Clarkson

this guess what things revenue. some the see companies that is you Sure value ratio Innodata, do typical kinds valuations? a in publicly and one What's to to they similar I would see of question, last of market of revenue stock question things be to on you these for price in market more private the valuations typical price terms a that

Jack Abuhoff

Good question.

the public saw a company Append revenue. business, XX We -- side, most They are on at we're XX who $XXX recently is see so million traded. publicly sold So we revenue. Lionbridge

million I think of and valued $XXX revenue they billion. about got $X they're at

that -- a XX about that's multiple. So be would XX to whatever revenue

think, Beyond revenue $XXX billion billion that, a public just are revenue $X.X there $XXX X.XX. evaluation; million Social million with I like of that's of Sprout went at about companies with valued $X.X Meltwater

bought revenue Trendkite of M&A side private the They last Vision a year went XX a I about multiple. On at private on [ph] side, XX the multiple. guess end

seeing. we're So that's what

Tim Clarkson

respects, with last one these you're compete from these of them you you of to a question, so able terms Right companies and that being that of I on. to lot in business think a people take in superior assume lot

Jack Abuhoff

the having very the side we're appreciating valuing that be which to saying that. fun we of it Media support seem with and clearly, the it's and hard where time a around gas is What interesting. and Intelligence on and great marketing sales analysts product pedal is it's Yeah we've we're now why great that provide side and lot customer so seeing to are got on

consumed that through side, seeing some AI moving it AI the think what was we're kind to early make On early of by we we've first innovators very adopters adopter got takes those and adoption happy. really aggressively now to process early the

for some So companies their when against business, these we're competing of winning. we're

I I want the to and ones bring where to investment critical we that new that's to in XX bringing critical, more more we this our lend that than year to our that So bringing again in, we're bring relationship. more customers. expand and I the many in want opening know. customers, see want dial-up

Tim Clarkson


Okay. forward I to more looking we're done. quarter a great obviously. It's am and


at any or for this And further to closing questions back like I'd Jack with remarks. to it time, now no additional Abuhoff hand

Jack Abuhoff

operator. you, Thank

making years. yeah delivered a basis some be to the I'll expecting provide and growth across investments growth we'll to earnings segments from We business position revenue, internal year-over-year. going. fully in We're and where and the each finance for thoughts. QX also to in We're intend deliver cash sequentially We're and So the business closing in have be to able XXXX the on consolidated these XXXX organization resources. coming pleased very continuing of to quickly excited investments we in see about really in growth and

of on cash of characteristics which QX, you investment. for us you balance QX. in beginning return inherent at got we've $X.X cash mentioned the capability we in how the sheet, we sharing think operating with wonderful we'll of quarter end sharing I QX, of got about its a and we'll underlying are was $XX.X million As with the you be be and the generation business understand made in an the increase which to very the investment leverage, strong that help over We business million that

I to to opportunity So tailwinds the got we execute the have got to market the think and We've provide need. we we resources that the execute. talent

to for again, So everybody you us thank next today. being joining you with time. forward Look


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