Innodata Reports Record Third Quarter 2026 Results
Nine-month operating cash flow increased to $80.484 million from $33.732 million a year earlier.
Sentiment and the balance of points
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Rhea-AI Summary
Innodata (Nasdaq: INOD) reported third-quarter 2026 revenue of $95.6 million, up 53% year over year, and raised its annual growth outlook. Net income rose to $10.3 million from $8.3 million, with diluted earnings per share of $0.29 versus $0.24. Gross margin fell to 37% from 41%; adjusted EBITDA, a non-GAAP earnings measure, increased to $17.7 million from $16.2 million.
The company raised its 2026 revenue growth guidance to 42% or more from 40% or more, despite a customer program winding down. It expects replacement programs in Q1. An additional program signed in Q4 with its largest Q3 customer is valued at approximately $18 million. Five new programs underpin its forecast of more than $20 million in 2027 revenue from another customer. A verbal federal contract win, valued at $5 million annually for five years, remains unsigned. September 30 cash totaled $164.0 million.
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Hollow bars mark forward-looking points. How the balance works
Positive
- Moderate pointQ3 revenue of $95.6 million increased 53% year over year.
- Moderate pointQ3 net income of $10.3 million increased from $8.3 million a year earlier.
- Moderate pointQ3 adjusted EBITDA of $17.7 million, or 18.5% of revenue, increased from $16.2 million.
- Moderate point. Forward-looking: it has not happened yet and may not happen.2026 revenue growth guidance raised to 42% or more year over year, from 40% or more.
- Moderate pointApproximately $18 million additional program signed in Q4 with the largest Q3 customer. 1.2% of market cap
- Moderate point. Forward-looking: it has not happened yet and may not happen.Five new programs support a customer revenue forecast above $20 million for 2027, versus approximately $3.1 million trailing-12-month revenue.
- Moderate pointFederal verbal contract win valued at $5 million per year for five years.
- Moderate pointNine-month operating cash flow of $80.484 million increased from $33.732 million a year earlier.
- Moderate pointSeptember 30 cash of $164.0 million increased from $82.2 million at December 31, 2025.
10 minor points
- Minor pointQ3 diluted EPS of $0.29 rose from $0.24; basic EPS increased to $0.30 from $0.26.
- Minor pointQ3 gross profit of $35.537 million increased from $25.504 million a year earlier.
- Minor pointFive new customers added in Q3, including model builders and an enterprise data platform.
- Minor pointCustomer diversification improved: a customer representing less than 5% of revenue a year earlier became Q3's largest.
- Minor point. Forward-looking: it has not happened yet and may not happen.Physical AI pilot could yield approximately $7 million in 2027 revenue, the company anticipates, if successful.
- Minor pointNine-month revenue of $277.856 million increased from $179.287 million a year earlier.
- Minor pointNine-month net income of $39.639 million increased from $23.348 million a year earlier.
- Minor pointNine-month diluted EPS of $1.13 rose from $0.67; basic EPS increased to $1.18 from $0.74.
- Minor pointNine-month gross profit of $117.789 million rose from $71.779 million; gross margin increased to 42% from 40%.
- Minor pointNine-month capital expenditures of $7.714 million decreased from $8.286 million a year earlier.
Negative
- Moderate pointQ3 gross margin fell to 37% from 41% a year earlier.
- Moderate pointQ3 pretax income fell to $9.989 million from $12.179 million a year earlier.
- Moderate pointQ3 selling and administrative expenses rose to $26.882 million from $13.745 million a year earlier.
- Moderate pointLarge-customer program wind-down weighs on activity; the company expects replacement programs in Q1.
- Moderate pointNine-month stock-based compensation rose to $19.918 million from $8.309 million a year earlier.
4 minor points
- Minor pointFederal contract remains unsigned; the company expects signing by the end of Q4.
- Minor point. Forward-looking: it has not happened yet and may not happen.Physical AI pilot revenue depends on success; the approximately $7 million 2027 opportunity is conditional.
- Minor pointNine-month selling and administrative expenses rose to $76.374 million from $42.837 million a year earlier.
- Minor pointQ3 weighted-average basic shares increased to 34.389 million from 31.848 million; diluted shares rose to 35.622 million from 35.266 million.
News Explained
One successful physical-AI pilot could yield about seven million dollars in 2027 revenue, so that amount remains conditional.
Innodata reported completed third-quarter results; at
The company says it is in pilots with leading frontier and robotics labs and estimates that one successful pilot could yield approximately
Details
Market Reaction – INOD
On Nov 5, the day this news came out, the latest delayed price for INOD is 8.04% above the previous close. Argus tracked a peak move of +20.6% during the session. Our momentum scanner has recorded 95 alerts for this stock so far that day. The latest delayed price is $41.73. Relative volume is very high at 3.5x what this stock usually trades by this time of day.
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Key Figures
- Revenue
- $95.6 million; 53% year-over-year growth
- Third quarter 2026
- Adjusted EBITDA
- $17.7 million
- Third quarter 2026
- Net income
- $10.3 million; 24% year-over-year growth
- Third quarter 2026
- Diluted earnings per share
- $0.29; beat consensus by approximately 70%
- Third quarter 2026
- 2026 revenue growth guidance
- 42% or more year over year, up from 40% or more
- Full year 2026
- Additional customer program
- Approximately $18 million
- Signed in Q4 with a customer that became the largest in Q3
- Hyperscaler customer revenue forecast
- More than $20 million
- Company forecast for 2027 following five new program wins
- Federal contract
- $5 million per year for five years
- Verbal win; expected to be signed by the end of Q4
Previous Earnings Reports
-
Reported Q2 revenue of $92.1M and reiterated full-year 2026 revenue growth guidance of 40% or more.
-
Raised 2026 revenue growth guidance to approximately 40% or more and disclosed new Big Tech engagements.
24h Move is the share-price change in the day after each event; other market factors may also have contributed.
Key Terms
non-gaap financial measures financial
gaap financial
AI-generated analysis. How Rhea-AI works. Not financial advice.
NEW YORK, NY / ACCESS Newswire / November 5, 2026 / INNODATA INC. (Nasdaq:INOD) today reported results for the third quarter ended September 30, 2026.
- Revenue of
$95.6 million , representing53% year-over-year revenue growth. - Adjusted Gross Profit of
$38.3 million , representing Adjusted Gross Margin of40% .* - Adjusted EBITDA of
$17.7 million , or18.5% of revenue, an increase of$1.5 million from$16.2 million in the same period last year.* - Net income of
$10.3 million , or$0.30 per basic share and$0.29 per diluted share for the three-month period ended September 30, 2026, compared to net income of$8.3 million , or$0.26 per basic share and$0.24 per diluted share, in the same period last year. - Cash and cash equivalents of
$164.0 million as of September 30, 2026, an increase of$81.7 million from$82.2 million as of December 31, 2025. Cash as of September 30, 2026 includes customer prepayments related to pass-through costs; net of these prepayments, cash was approximately$153.7 million as of September 30, 2026.
* Adjusted Gross Profit, Adjusted Gross Margin, and Adjusted EBITDA are non-GAAP financial measures and are defined below.
Rahul Singhal, CEO, said, "Q3 was another record revenue quarter for Innodata. Revenue of
"The story of the quarter is the breadth of what we are winning. A customer that represented less than
"We believe we are on the cusp of a profound market opportunity in physical AI. We understand that capital is flowing into robotics and embodied intelligence faster than into any category since the LLM boom began, and robot foundation models improve with data the same way LLMs do. We launched our motion capture lab in September for humanoid robot and world model training, and we are in pilots with leading frontier and robotics labs. We anticipate just one of these pilots, if successful, will yield approximately
"We also continue to gain traction beyond the frontier labs. In enterprise AI, we added new relationships with a global technology hardware company and a major financial services firm. In Federal, we have a verbal win for a contract valued at
"With this momentum, we are raising our full-year 2026 revenue growth guidance to
Amounts in this press release have been rounded. All percentages have been calculated using unrounded amounts.
Timing of Conference Call with Q&A
Innodata will conduct an earnings conference call, including a question-and-answer period, at 5:00 PM eastern time today. You can participate in this call by dialing the following call-in numbers:
The call-in numbers for the conference call are:
| (+1) 833 296 5777 | North America-Toll Free |
| (+44) 808 196 8935 | United Kingdom |
| (+1) 206 407 3228 | International |
| Participant Access Code | 730 768 717 |
For Replay:
| (+1) 833 309 1852 | North America-Toll Free |
| (+44) 800 007 4044 | United Kingdom |
| (+1) 929 828 5978 | International |
| Access Code | 730 768 717 |
It is recommended that participants dial in approximately 10 minutes prior to the start of the call. Investors are also invited to access a live Webcast of the conference call at the Investor Relations section of Innodata's website at https://investor.innodata.com/events-and-presentations/. Please note that the Webcast feature will be in listen-only mode.
Call-in replay will be available for seven days following the conference call, and Webcast replay will be available for 30 days following the conference call, at the Investor Relations section of Innodata's website at https://investor.innodata.com/events-and-presentations/.
About Innodata
Innodata (Nasdaq: INOD) is a global data engineering company. We believe that data and Artificial Intelligence (AI) are inextricably linked. Our mission is to enable the responsible advancement of artificial intelligence by providing the data, evaluation frameworks, and human expertise required to build AI systems that can be trusted at scale. We provide a range of transferable solutions, platforms, and services for Generative AI / AI builders and adopters. In every relationship, we honor our 36+ year legacy delivering the highest quality data and outstanding outcomes for our customers.
Visit www.innodata.com to learn more.
Forward-Looking Statements
This press release may contain certain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended. These forward-looking statements include, without limitation, statements concerning our operations, economic performance, financial condition, developmental program expansion and position in the AI services market. Words such as "project," "forecast," "believe," "expect," "can," "continue," "could," "intend," "may," "should," "will," "anticipate," "indicate," "guide," "predict," "likely," "estimate," "plan," "potential," "possible," "promises," or the negatives thereof, and other similar expressions generally identify forward-looking statements.
These forward-looking statements are based on management's current expectations, assumptions and estimates and are subject to a number of risks and uncertainties, including, without limitation, impacts resulting from ongoing geopolitical conflicts; anticipated and actual use cases and outcomes; investments in large language models; that contracts may be terminated by customers; projected or committed volumes of work may not materialize; pipeline opportunities and customer discussions which may not materialize into work or expected volumes of work; the likelihood of continued development of the AI markets, particularly new and emerging markets, that our services support; the ability and willingness of our customers and prospective customers to execute business plans that give rise to requirements for our services; continuing reliance on project-based work and the primarily at-will nature of such contracts and the ability of these customers to reduce, delay or cancel projects; potential inability to replace projects that are completed, canceled or reduced; revenue concentration among a limited number of customers; our dependency on third-party providers and partners; our ability to achieve revenue and growth targets; difficulty in integrating and deriving synergies from acquisitions, joint ventures and strategic investments; potential undiscovered liabilities of companies and businesses that we may acquire; potential impairment of the carrying value of goodwill and other acquired intangible assets of companies and businesses that we acquire; a continued downturn in or depressed market conditions; changes in external market factors; the potential effects of U.S. global trade and monetary policy, including the interest rate policies of the Federal Reserve; changes in our business or growth strategy; the emergence of new, or growth in existing competitors; various other competitive and technological factors; our use of and reliance on information technology systems, including potential security breaches, cyber-attacks, privacy breaches or data breaches that result in the unauthorized disclosure of consumer, customer, employee or company information, or service interruptions; and other risks and uncertainties indicated from time to time in our filings with the Securities and Exchange Commission ("SEC").
Our actual results could differ materially from the results referred to in any forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, the risks discussed in Part I, Item 1A. "Risk Factors," Part II, Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations," and other parts of our Annual Report on Form 10-K, filed with the SEC on February 26, 2026, and in our other filings that we may make with the SEC. In light of these risks and uncertainties, there can be no assurance that the results referred to in any forward-looking statements will occur, and you should not place undue reliance on these forward-looking statements. These forward-looking statements speak only as of the date hereof.
We undertake no obligation to update or review any guidance or other forward-looking statements, whether as a result of new information, future developments or otherwise, except as may be required by the U.S. federal securities laws.
Company Contact
Aneesh Pendharkar
investor@innodata.com
(201) 371-8000
Non-GAAP Financial Measures
In addition to the financial information prepared in conformity with U.S. GAAP ("GAAP"), we provide certain non-GAAP financial information. We believe that these non-GAAP financial measures assist investors in making comparisons of period-to-period operating results. In some respects, management believes non-GAAP financial measures are more indicative of our ongoing core operating performance than their GAAP equivalents by making adjustments that management believes are reflective of the ongoing performance of the business.
We believe that the presentation of this non-GAAP financial information provides investors a more complete understanding of our financial performance, competitive position, and prospects for the future, particularly by providing the same information that management and our Board of Directors use to evaluate our performance and manage the business. However, the non-GAAP financial measures presented in this press release have certain limitations in that they do not reflect all of the costs associated with the operations of our business as determined in accordance with GAAP. Therefore, investors should consider non-GAAP financial measures in addition to, and not as a substitute for, or as superior to, measures of financial performance prepared in accordance with GAAP. Further, the non-GAAP financial measures that we present may differ from similar non-GAAP financial measures used by other companies.
Adjusted Gross Profit and Adjusted Gross Margin
We define Adjusted Gross Profit as revenues less direct operating costs attributable to Innodata Inc. and its subsidiaries in accordance with GAAP, plus depreciation and amortization of intangible assets, stock-based compensation and other one-time costs included within direct operating cost.
We define Adjusted Gross Margin by dividing Adjusted Gross Profit over total GAAP revenues.
We use Adjusted Gross Profit and Adjusted Gross Margin to evaluate results of operations and trends between fiscal periods and believe that these measures are important components of our internal performance measurement process.
A reconciliation of Adjusted Gross Profit and Adjusted Gross Margin to the most directly comparable GAAP measure is included in the tables that accompany this release.
Adjusted EBITDA
We define Adjusted EBITDA as net income attributable to Innodata Inc. and its subsidiaries in accordance with GAAP before interest expense, income taxes, depreciation and amortization of intangible assets (which derives EBITDA), plus additional adjustments for loss on impairment of intangible assets and goodwill, stock-based compensation, income attributable to non-controlling interests and other one-time costs.
We use Adjusted EBITDA to evaluate core results of operations and trends between fiscal periods and believe that this measure is an important component of our internal performance measurement process.
A reconciliation of Adjusted EBITDA to the most directly comparable GAAP measure is included in the tables that accompany this release.
INNODATA INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per-share amounts)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
Revenues | $ | 95,618 | $ | 62,550 | $ | 277,856 | $ | 179,287 | ||||||||
Operating costs and expenses: | ||||||||||||||||
Direct operating costs | 60,081 | 37,046 | 160,067 | 107,508 | ||||||||||||
Selling and administrative expenses | 26,882 | 13,745 | 76,374 | 42,837 | ||||||||||||
Interest income, net | (1,334 | ) | (420 | ) | (3,471 | ) | (1,124 | ) | ||||||||
| 85,629 | 50,371 | 232,970 | 149,221 | |||||||||||||
Income before provision for income taxes | 9,989 | 12,179 | 44,886 | 30,066 | ||||||||||||
Provision for income taxes | (340 | ) | 3,837 | 5,247 | 6,718 | |||||||||||
Consolidated net income | 10,329 | 8,342 | 39,639 | 23,348 | ||||||||||||
Income attributable to non-controlling interests | - | - | - | - | ||||||||||||
Net income attributable to Innodata Inc. and Subsidiaries | $ | 10,329 | $ | 8,342 | $ | 39,639 | $ | 23,348 | ||||||||
Income per share attributable to Innodata Inc. and Subsidiaries: | ||||||||||||||||
Basic | $ | 0.30 | $ | 0.26 | $ | 1.18 | $ | 0.74 | ||||||||
Diluted | $ | 0.29 | $ | 0.24 | $ | 1.13 | $ | 0.67 | ||||||||
Weighted average shares outstanding: | ||||||||||||||||
Basic | 34,389 | 31,848 | 33,497 | 31,690 | ||||||||||||
Diluted | 35,622 | 35,266 | 35,119 | 34,996 | ||||||||||||
INNODATA INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
| September 30, 2026 | December 31, 2025 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 163,967 | $ | 82,230 | ||||
Accounts receivable, net | 44,399 | 46,510 | ||||||
Prepaid expenses and other current assets | 24,730 | 6,654 | ||||||
Total current assets | 233,096 | 135,394 | ||||||
Property and equipment, net | 8,367 | 7,966 | ||||||
Right-of-use asset, net | 3,281 | 4,094 | ||||||
Other assets | 3,002 | 1,648 | ||||||
Deferred income taxes, net | 5,404 | 3,429 | ||||||
Intangibles, net | 14,356 | 13,983 | ||||||
Goodwill | 2,043 | 2,079 | ||||||
Total assets | $ | 269,549 | $ | 168,593 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 6,156 | $ | 9,615 | ||||
Advances from customers | 8,607 | 1,812 | ||||||
Accrued expenses and other liabilities | 32,999 | 7,800 | ||||||
Accrued salaries, wages and related benefits | 17,567 | 16,480 | ||||||
Deferred revenue | 7,887 | 7,493 | ||||||
Income and other taxes | 5,045 | 4,471 | ||||||
Long-term obligations - current portion | 2,370 | 1,659 | ||||||
Operating lease liability - current portion | 1,333 | 1,202 | ||||||
Total current liabilities | 81,964 | 50,532 | ||||||
Deferred income taxes, net | 50 | 146 | ||||||
Long-term obligations, net of current portion | 8,890 | 7,625 | ||||||
Operating lease liability, net of current portion | 2,195 | 3,228 | ||||||
Total liabilities | 93,099 | 61,531 | ||||||
STOCKHOLDERS' EQUITY | 176,450 | 107,062 | ||||||
Total liabilities and stockholders' equity | $ | 269,549 | $ | 168,593 | ||||
INNODATA INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
| Nine Months Ended | ||||||||
| September 30, | ||||||||
| 2026 | 2025 | |||||||
Cash flows from operating activities: | ||||||||
Consolidated net income | $ | 39,639 | $ | 23,348 | ||||
Adjustments to reconcile consolidated net income to net cash | ||||||||
provided by operating activities: | ||||||||
Stock-based compensation | 19,918 | 8,309 | ||||||
Depreciation and amortization | 6,730 | 4,913 | ||||||
Deferred income taxes, net | (2,029 | ) | 3,201 | |||||
Pension cost | 1,181 | 984 | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | 1,945 | (11,167 | ) | |||||
Prepaid expenses and other current assets | (17,284 | ) | (299 | ) | ||||
Other assets | 421 | (248 | ) | |||||
Accounts payable, accrued expenses and other | 28,546 | 5,963 | ||||||
Accrued salaries, wages and related benefits | 1,103 | 1,397 | ||||||
Income and other taxes | 603 | (2,530 | ) | |||||
Pension benefit payments | (289 | ) | (139 | ) | ||||
Net cash provided by operating activities | 80,484 | 33,732 | ||||||
Cash flows from investing activities: | ||||||||
Capital expenditures | (7,714 | ) | (8,286 | ) | ||||
Net cash used in investing activities | (7,714 | ) | (8,286 | ) | ||||
Cash flows from financing activities: | ||||||||
Proceeds from exercise of stock options | 10,952 | 1,548 | ||||||
Withholding taxes on net settlement of restricted stock units | (319 | ) | (37 | ) | ||||
Payment of long-term obligations | (849 | ) | (230 | ) | ||||
Net cash provided by financing activities | 9,784 | 1,281 | ||||||
Effect of exchange rate changes on cash and cash equivalents | (817 | ) | 235 | |||||
Net increase in cash and cash equivalents | 81,737 | 26,962 | ||||||
Cash and cash equivalents, beginning of period | 82,230 | 46,897 | ||||||
Cash and cash equivalents, end of period | $ | 163,967 | $ | 73,859 | ||||
INNODATA INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(Unaudited)
(In thousands)
Adjusted Gross Profit and Adjusted Gross Margin
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
Gross Profit attributable to Innodata Inc. and Subsidiaries | $ | 35,537 | $ | 25,504 | $ | 117,789 | $ | 71,779 | ||||||||
Depreciation and amortization | 2,199 | 1,729 | 6,559 | 4,855 | ||||||||||||
Stock-based compensation | 597 | 444 | 1,943 | 1,312 | ||||||||||||
Adjusted Gross Profit | $ | 38,333 | $ | 27,677 | $ | 126,291 | $ | 77,946 | ||||||||
Gross Margin | 37 | % | 41 | % | 42 | % | 40 | % | ||||||||
Adjusted Gross Margin | 40 | % | 44 | % | 45 | % | 43 | % | ||||||||
Adjusted EBITDA
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
Net income attributable to Innodata Inc. and Subsidiaries | $ | 10,329 | $ | 8,342 | $ | 39,639 | $ | 23,348 | ||||||||
Provision for income taxes | (340) | 3,837 | 5,247 | 6,718 | ||||||||||||
Interest income, net | (1,334) | (420) | (3,471) | (1,124) | ||||||||||||
Depreciation and amortization | 2,256 | 1,748 | 6,730 | 4,913 | ||||||||||||
Stock-based compensation | 6,814 | 2,707 | 19,918 | 8,309 | ||||||||||||
Adjusted EBITDA | $ | 17,725 | $ | 16,214 | $ | 68,063 | $ | 42,164 | ||||||||
SOURCE: Innodata Inc.
View the original press release on ACCESS Newswire
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