Innodata Inc 10-Q for FY2024 Q2

Innodata Inc (INOD)

10-Q 2024-08-09 For: 2024-06-30

Added on April 06, 2026

About this 10-Q

Innodata Inc filed this 10-Q on August 9, 2024, covering the quarter ended June 30, 2024 (FY2024 Q2).

Headline figures

Quarter ended June 30, 2024, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $32.55M; up 65.6% from $19.66M a year earlier
Net loss: $14K; compared with a net loss of $815K a year earlier
Diluted EPS: $0.00; compared with -$0.03 a year earlier

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☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the quarterly period ended June 30, 2024

OR

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Delaware	13-3475943
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

55 Challenger Road	07660
Ridgefield Park, New Jersey	(Zip Code)
(Address of principal executive offices)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	INOD	The Nasdaq Stock Market LLC

	Part I – Financial Information
		Page No.
Item 1.	Financial Statements
	Condensed Consolidated Financial Statements (Unaudited):
	Condensed Consolidated Balance Sheets as of June 30, 2024 and December 31, 2023	2
	Condensed Consolidated Statements of Operations and Comprehensive Loss for the three months ended June 30, 2024 and 2023	3
	Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the six months ended June 30, 2024 and 2023	4
	Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2024 and 2023	5
	Condensed Consolidated Statements of Stockholders’ Equity for the three and six months ended June 30, 2024 and 2023	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	41
Item 4.	Controls and Procedures	41

	Part II – Other Information

Item 1.	Legal Proceedings	42
Item 1A.	Risk Factors	42
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	42
Item 3.	Defaults Upon Senior Securities	42
Item 4.	Mine Safety Disclosures	42
Item 5.	Other Information	42
Item 6.	Exhibits	43
Signatures		44


	June 30,		December 31,
	2024		2023
ASSETS
Current assets:
Cash and cash equivalents	$	16,509	$	13,806
Short term investments – other		14		14
Accounts receivable, net of allowance for credit losses		18,162		14,288
Prepaid expenses and other current assets		3,652		3,969
Total current assets		38,337		32,077
Property and equipment, net		3,271		2,281
Right-of-use-asset, net		4,627		5,054
Other assets		2,048		2,445
Deferred income taxes, net		1,736		1,741
Intangibles, net		13,910		13,758
Goodwill		2,044		2,075
Total assets	$	65,973	$	59,431

LIABILITIES, NON-CONTROLLING INTERESTS AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	3,725	$	2,662
Accrued expenses		5,354		3,060
Accrued salaries, wages and related benefits		6,642		7,799
Deferred revenues		4,770		3,523
Income and other taxes		3,906		3,848
Long-term obligations - current portion		1,149		1,261
Operating lease liability - current portion		828		782
Total current liabilities		26,374		22,935
Deferred income taxes, net		86		22
Long-term obligations, net of current portion		6,995		6,778
Operating lease liability, net of current portion		4,247		4,701
Total liabilities		37,702		34,436
Commitments and contingencies		-		-
Non-controlling interests		(702)		(708)

STOCKHOLDERS’ EQUITY:
Serial preferred stock; 4,998,000 shares authorized, none outstanding		-		-
Common stock, $.01 par value; 75,000,000 shares authorized; 32,172,000 shares issued and 28,988,000 outstanding at June 30, 2024 and 31,937,000 shares issued and 28,753,000 outstanding at December 31, 2023		322		320
Additional paid-in capital		45,862		43,152
Deficit		(8,708)		(9,683)
Accumulated other comprehensive loss		(2,038)		(1,621)
		35,438		32,168
Less: treasury stock, 3,184,000 shares at June 30, 2024 and December 31, 2023, at cost		(6,465)		(6,465)
Total stockholders’ equity		28,973		25,703
Total liabilities, non-controlling interests and stockholders’ equity	$	65,973	$	59,431


	Three Months Ended
	June 30,
	2024		2023

Revenues	$	32,553	$	19,655
Direct operating costs		23,202		12,715
Selling and administrative expenses		9,020		7,574
Interest (income) expense, net		55		(7)
		32,277		20,282

Income (loss) before provision for income taxes		276		(627)

Provision for income taxes		285		188

Consolidated net loss		(9)		(815)
Income attributable to non-controlling interests		5		-
Net loss attributable to Innodata Inc. and Subsidiaries	$	(14)	$	(815)

Loss per share attributable to Innodata Inc. and Subsidiaries:
Basic and Diluted	$	(0.00)	$	(0.03)

Weighted average shares outstanding:
Basic and Diluted		28,878		27,860

Comprehensive Loss:
Consolidated net loss	$	(9)	$	(815)
Pension liability adjustment, net of taxes		-		(4)
Foreign currency translation adjustment		(78)		67
Change in fair value of derivatives, net of taxes		(174)		108
Other comprehensive income (loss)		(252)		171
Total comprehensive loss		(261)		(644)
Comprehensive income attributed to non-controlling interest		5		-
Comprehensive loss attributable to Innodata Inc. and Subsidiaries	$	(266)	$	(644)


	Six Months Ended
	June 30,
	2024		2023
Revenues	$	59,057	$	38,494
Direct operating costs		40,071		25,589
Selling and administrative expenses		17,325		15,371
Interest (income) expense, net		(29)		56
		57,367		41,016
Income (loss) before provision for income taxes		1,690		(2,522)

Provision for income taxes		709		406
Consolidated net income (loss)		981		(2,928)
Income attributable to non-controlling interests		6		3
Net Income (loss) attributable to Innodata Inc. and Subsidiaries	$	975	$	(2,931)

Income (loss) per share attributable to Innodata Inc. and Subsidiaries:
Basic	$	0.03	$	(0.11)
Diluted	$	0.03	$	(0.11)

Weighted average shares outstanding:
Basic		28,819		27,661
Diluted		32,691		27,661

Comprehensive Income (Loss):
Consolidated net income (loss)	$	981	$	(2,928)
Pension liability adjustment, net of taxes		(1)		(9)
Foreign currency translation adjustment		(208)		127
Change in fair value of derivatives, net of taxes		(208)		531
Other comprehensive income (loss)		(417)		649
Total comprehensive income (loss)		564		(2,279)
Comprehensive income attributed to non-controlling interest		6		3
Comprehensive income (loss) attributable to Innodata Inc. and Subsidiaries	$	558	$	(2,282)


								Accumulated
				Additional				Other
	Common Stock			Paid-in		Retained		Comprehensive		Treasury Stock
	Shares	Amount		Capital		Earnings		Loss		Shares	Amount		Total
January 1, 2024	31,937	$	320	$	43,152	$	(9,683)	$	(1,621)	(3,184)	$	(6,465)	$	25,703
Net income attributable to Innodata Inc. and subsidiaries	-		-		-		989		-	-		-		989
Stock-based compensation	-		-		1,034		-		-	-		-		1,034
Pension liability adjustments, net of taxes	-		-		-		-		(1)	-		-		(1)
Foreign currency translation adjustment	-		-		-		-		(130)	-		-		(130)
Change in fair value of derivatives, net of taxes	-		-		-		-		(34)	-		-		(34)
March 31, 2024	31,937	$	320	$	44,186	$	(8,694)	$	(1,786)	(3,184)	$	(6,465)	$	27,561
Net loss attributable to Innodata Inc. and subsidiaries	-		-		-		(14)		-	-		-		(14)
Stock-based compensation	-		-		992		-		-	-		-		992
Stock option exercises	235		2		781		-		-	-		-		783
Shares withheld for restricted stock unit net settlement	-		-		(97)		-		-	-		-		(97)
Pension liability adjustments, net of taxes	-		-		-		-		-	-		-		-
Foreign currency translation adjustment	-		-		-		-		(78)	-		-		(78)
Change in fair value of derivatives, net of taxes	-		-		-		-		(174)	-		-		(174)
June 30, 2024	32,172	$	322	$	45,862	$	(8,708)	$	(2,038)	(3,184)	$	(6,465)	$	28,973
January 1, 2023	30,589	$	306	$	35,815	$	(8,775)	$	(2,108)	(3,184)	$	(6,465)	$	18,773
Net loss attributable to Innodata Inc. and Subsidiaries	-		-		-		(2,116)		-	-		-		(2,116)
Stock-based compensation	-		-		962		-		-	-		-		962
Stock option exercises	148		1		320		-		-	-		-		321
Shares withheld for exercise net settlement	(3)		-		-		-		-	-		-		-
Pension liability adjustments, net of taxes	-		-		-		-		(5)	-		-		(5)
Foreign currency translation adjustment	-		-		-		-		60	-		-		60
Change in fair value of derivatives, net of taxes	-		-		-		-		423	-		-		423
March 31, 2023	30,734	$	307	$	37,097	$	(10,891)	$	(1,630)	(3,184)	$	(6,465)	$	18,418
Net loss attributable to Innodata Inc. and subsidiaries	-		-		-		(815)		-	-		-		(815)
Stock-based compensation	-		-		1,019		-		-	-		-		1,019
Stock option exercises	749		8		1,850		-		-	-		-		1,858
Pension liability adjustments, net of taxes	-		-		-		-		(4)	-		-		(4)
Foreign currency translation adjustment	-		-		-		-		67	-		-		67
Change in fair value of derivatives, net of taxes	-		-		-		-		108	-		-		108
June 30, 2023	31,483	$	315	$	39,966	$	(11,706)	$	(1,459)	(3,184)	$	(6,465)	$	20,651


Balance - January 1, 2024	$	2,075
Foreign currency translation adjustment		(31)
Balance - June 30, 2024	$	2,044


	June 30, 2024
					Foreign
	Gross				Currency		Net
	Carrying		Accumulated		Translation		Carrying
	Value		Amortization		Adjustment		Value
Acquired Intangible Assets
Developed technology	$	3,060	$	(2,845)	$	(3)	$	212
Customer relationships		2,144		(1,770)		(16)		358
Trademarks and tradenames		862		(809)		-		53
Patents		44		(43)		-		1
Media Contact Database		3,546		(2,837)		-		709
Total Acquired Intangible Assets	$	9,656	$	(8,304)	$	(19)	$	1,333

Capitalized Developed Software
Capitalized Developed Software	$	18,504	$	(8,557)	$	(206)	$	9,741
Capitalized Developed Software - in Progress		2,840		-		(4)		2,836
Total Capitalized Developed Software	$	21,344	$	(8,557)	$	(210)	$	12,577

Total	$	31,000	$	(16,861)	$	(229)	$	13,910


	December 31, 2023
					Foreign
	Gross				Currency		Net
	Carrying		Accumulated		Translation		Carrying
	Value		Amortization		Adjustment		Value
Acquired Intangible Assets
Developed technology	$	2,999	$	(2,640)	$	7	$	366
Customer relationships		2,096		(1,645)		10		461
Trademarks and tradenames		852		(774)		2		80
Patents		43		(40)		-		3
Media Contact Database		3,492		(2,621)		16		887
Total Acquired Intangible Assets	$	9,482	$	(7,720)	$	35	$	1,797

Capitalized Developed Software
Capitalized Developed Software	$	15,216	$	(6,862)	$	138	$	8,492
Capitalized Developed Software - in Progress		3,480		-		(11)		3,469
Total Capitalized Developed Software	$	18,696	$	(6,862)	$	127	$	11,961

Total	$	28,178	$	(14,582)	$	162	$	13,758


Year	Amortization
2024	$	3,222
2025		4,714
2026		3,446
2027		1,168
2028		688
Thereafter		672
	$	13,910


	For the Six Months
	Ended June 30,
	2024		2023
Federal income tax expense (benefit) at statutory rate	21.0	%	(21.0)	%
Effect of:
GILTI provisions	17.6		-
Tax effects of foreign operations	7.1		3.8
Change in valuation allowance	6.4		51.3
Increase in unrecognized tax benefits (ASC 740)	5.5		2.6
State income tax net of federal benefit	0.8		0.4
Foreign rate differential	(1.4)		(1.5)
Effect of stock - based compensation	(2.9)		(22.7)
Return to provision true up	(3.2)		(0.6)
Deemed interest	(5.2)		(7.1)
Foreign operations permanent differences - foreign exchange gains and losses	(7.9)		4.7
Other	4.2		6.2
Effective tax rate	42.0	%	16.1	%


	Unrecognized
	Tax Benefits
Balance at January 1, 2024	$	1,942
Increase for current period tax positions		115
Decrease for prior year tax positions		(81)
Interest accrual		59
Foreign currency remeasurement		(22)
Balance at June 30, 2024	$	2,013


	For the Three Months Ended				For the Six Months Ended
	June 30,				June 30,
	2024		2023		2024		2023
Rent expense for long-term operating leases	$	314	$	312	$	628	$	621
Rent expense for short-term leases		44		83		91		178
Total rent expense	$	358	$	395	$	719	$	799


Weighted-average lease term remaining	57 months
Weighted-average discount rate	9.39	%


				Weighted-Average
	Number of	Weighted - Average		Remaining Contractual	Aggregate
	Options	Exercise Price		Term (years)	Intrinsic Value
Outstanding at January 1, 2024	5,339,162	$	3.22	6.38	$	28,640,009
Granted	-		-	-		-
Exercised	(155,899)		4.00	-		-
Forfeited/Expired	(4,001)		6.96	-		-
Outstanding at June 30, 2024	5,179,262	$	3.19	5.87	$	60,291,271

Exercisable at June 30, 2024	3,402,382	$	2.20	4.92	$	42,967,259

Vested and Expected to Vest at June 30, 2024	5,179,262	$	3.19	5.87	$	60,291,271


				Weighted-Average
	Number of	Weighted - Average		Remaining Contractual	Aggregate
	Options	Exercise Price		Term (years)	Intrinsic Value
Outstanding at January 1, 2023	6,690,490	$	3.09	7.19	$	5,989,709
Granted*	25,000		3.31	-		-
Exercised	(871,884)		2.34	-		-
Forfeited/Expired	(75,766)		6.96	-		-
Outstanding at June 30, 2023	5,767,840	$	3.16	6.84	$	47,137,674

Exercisable at June 30, 2023	3,600,261	$	1.91	5.73	$	33,897,858

Vested and Expected to Vest at June 30, 2023	5,767,840	$	3.16	6.84	$	47,137,674


				Weighted-Average
	Number of	Weighted - Average		Remaining Contractual	Aggregate
	Options	Exercise Price		Term (years)	Intrinsic Value
Outstanding at January 1, 2024	923,571	$	3.41	8.76	$	4,786,252
Granted	-		-	-		-
Exercised	(46,430)		3.41	-		-
Forfeited/Expired	(7,668)		3.41	-		-
Outstanding at June 30, 2024	869,473	$	3.41	8.27	$	9,927,362

Exercisable at June 30, 2024	339,779	$	3.33	8.24	$	3,907,176

Vested and Expected to Vest at June 30, 2024	869,473	$	3.41	8.27	$	9,927,362


	For the Six Months Ended June 30,
	2024		2023
Weighted average fair value of options granted	$	-	$	1.79
Risk-free interest rate		-		3.88	%
Expected term (years)		-		3.0
Expected volatility factor		-		79.95	%
Expected dividends		-		-


	Number of	Weighted-Average
	Restricted Stock	Grant Date
	Units	Fair Value
Unvested at January 1, 2024	749,756	$	5.77
Granted	28,973		15.10
Vested	(48,761)		8.42
Forfeited/Expired	(995)		8.29
Unvested at June 30, 2024	728,973	$	5.96


					Foreign Currency
	Pension Liability		Fair Value of		Translation		Accumulated Other
	Adjustment		Derivatives		Adjustment		Comprehensive Loss
Balance at April 1, 2024	$	(413)	$	7	$	(1,380)	$	(1,786)
Other comprehensive loss before reclassifications, net of taxes		-		(193)		(78)		(271)
Total other comprehensive loss before reclassifications, net of taxes		(413)		(186)		(1,458)		(2,057)
Net amount reclassified to earnings		-		19		-		19
Balance at June 30, 2024	$	(413)	$	(167)	$	(1,458)	$	(2,038)


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2024		2023		2024		2023
Revenues:
DDS	$	25,410	$	13,180	$	45,116	$	25,927
Synodex		1,986		2,112		3,857		3,976
Agility		5,157		4,363		10,084		8,591
Total Consolidated	$	32,553	$	19,655	$	59,057	$	38,494

Income (loss) before provision for income taxes⁽¹⁾:
DDS	$	(27)	$	(216)	$	972	$	(497)
Synodex		195		(22)		345		(133)
Agility		108		(389)		373		(1,892)
Total Consolidated	$	276	$	(627)	$	1,690	$	(2,522)

Income (loss) before provision for income taxes⁽²⁾:
DDS	$	(172)	$	(368)	$	676	$	(792)
Synodex		316		121		592		135
Agility		132		(380)		422		(1,865)
Total Consolidated	$	276	$	(627)	$	1,690	$	(2,522)


	June 30, 2024		December 31, 2023
Total assets:
DDS	$	42,925	$	37,232
Synodex		3,759		3,379
Agility		19,289		18,820
Total Consolidated	$	65,973	$	59,431


	June 30, 2024		December 31, 2023
Goodwill:
Agility	$	2,044	$	2,075
Total	$	2,044	$	2,075


	Balance Sheet Location	Fair Value
		June 30,		December 31,
		2024		2023
Derivatives designated as hedging instruments:
Foreign currency forward contracts	Accrued expenses	$	167	$	-
Foreign currency forward contracts	Prepaid expenses and other current assets	$	-	$	41


	Three Months Ended June 30,						Six Months Ended June 30,
Consolidated	2024			2023			2024			2023

Gross Profit attributable to Innodata Inc. and Subsidiaries	$	9,351		$	6,940		$	18,986		$	12,905
Depreciation and amortization		1,394			1,124			2,634			2,188
Severance**		-			-			-			327
Stock-based compensation		73			62			157			126
Adjusted Gross Profit	$	10,818		$	8,126		$	21,777		$	15,546

Gross Margin		29	%		35	%		32	%		34	%
Adjusted Gross Margin		33	%		41	%		37	%		40	%


	Three Months Ended June 30,						Six Months Ended June 30,
DDS Segment	2024			2023			2024			2023

Gross Profit attributable to DDS Segment	$	6,079		$	4,398		$	12,637		$	8,557
Depreciation and amortization		455			230			793			429
Severance**		-			-			-			28
Stock-based compensation		64			60			138			112
Adjusted Gross Profit	$	6,598		$	4,688		$	13,568		$	9,126

Gross Margin		24	%		33	%		28	%		33	%
Adjusted Gross Margin		26	%		36	%		30	%		35	%


	Three Months Ended June 30,						Six Months Ended June 30,
Synodex Segment	2024			2023			2024			2023

Gross Profit attributable to Synodex Segment	$	456		$	295		$	855		$	498
Depreciation and amortization		157			162			294			324
Severance**		-			-			-			-
Stock-based compensation		-			-			-			-
Adjusted Gross Profit	$	613		$	457		$	1,149		$	822

Gross Margin		23	%		14	%		22	%		13	%
Adjusted Gross Margin		31	%		22	%		30	%		21	%


	Three Months Ended June 30,						Six Months Ended June 30,
Agility Segment	2024			2023			2024			2023

Gross Profit attributable to Agility Segment	$	2,816		$	2,247		$	5,494		$	3,850
Depreciation and amortization		782			732			1,547			1,435
Severance**		-			-			-			299
Stock-based compensation		9			2			19			14
Adjusted Gross Profit	$	3,607		$	2,981		$	7,060		$	5,598

Gross Margin		55	%		52	%		54	%		45	%
Adjusted Gross Margin		70	%		68	%		70	%		65	%

Exhibit No.		Description

10.1*		First Amendment to the Credit Agreement, dated as of May 22, 2024, to Credit Agreement dated as of April 4, 2023, by and among Innodata Inc., Innodata Synodex, LLC, Innodata Docgenix, LLC, Agility PR Solutions LLC, and Innodata Services, LLC as borrowers, and Wells Fargo Bank, National Association, as lender.

31.1*		Certificate of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*		Certificate of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1**		Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2**		Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101		The following materials from Innodata Inc.’s Quarterly Report on Form 10-Q for the three months ended June 30, 2024, formatted in Extensible Business Reporting Language (XBRL): (i) Condensed Consolidated Balance Sheets as of June 30, 2024 (unaudited) and December 31, 2023; (ii) Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the three and six months ended June 30, 2024 and 2023 (unaudited); (iii) Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2024 and 2023 (unaudited); (iv) Condensed Consolidated Statements of Stockholders’ Equity for the three and six months ended June 30, 2024 and 2023 and (v) Notes to Condensed Consolidated Financial Statements (unaudited).

104		Cover Page Interactive Data File, formatted in iXBRL and contained in Exhibit 101.


Date:	August 8, 2024	/s/ Jack S. Abuhoff
		Jack S. Abuhoff
		Chief Executive Officer and President


Date:	August 8, 2024	/s/ Marissa B. Espineli
		Marissa B. Espineli
		Interim Chief Financial Officer
		(Principal Financial Officer and Principal Accounting Officer)

INNODATA INC.

By:	/s/ Marissa B. Espineli 5/22/24
Name: Marissa Espineli
Title: Interim CFO

INNODATA SYNODEX, LLC

By:	/s/ Marissa B. Espineli 5/22/24
Name: Marissa Espineli
Title: Interim CFO, Innodata Inc. Sole Member


INNODATA DOCGENIX, LLC

By:	/s/ Marissa B. Espineli5/22/24
Name: Marissa Espineli
Title: Interim CFO, Innodata Inc. 94% Member


AGILITY PR SOLUTIONS LLC

By:	/s/ Marissa B. Espineli5/22/24
Name: Marissa Espineli
Title: Interim CFO, Innodata Inc. Sole Member


INNODATA SERVICES, LLC

By:	/s/ Marissa B. Espineli5/22/24
Name: Marissa Espineli
Title: Interim CFO, Innodata Inc. Sole Member

WELLS FARGO BANK, NATIONAL ASSOCIATION

By:	/s/ Marc Zawatsky
Name:
Title: VP


Dated: August 8, 2024

	/s/ Jack S. Abuhoff
	Jack S. Abuhoff
	Chief Executive Officer and President