Innodata Inc. reported third‑quarter 2025 revenue of $62.6 million, a 20% year‑over‑year increase from $52.2 million in Q3 2024. The growth was driven largely by the Digital Data Solutions (DDS) segment, which generated $54.8 million—up 23% YoY—reflecting strong demand for AI‑enabled data services from large technology clients. Sequentially, revenue rose from $58.4 million in Q2 2025, indicating a steady acceleration in the company’s core data‑engineering business.
Earnings per share for the quarter were $0.24, beating the consensus estimate of $0.14 by $0.10 or 71%. The beat was largely attributable to disciplined cost management and a favorable mix shift toward higher‑margin DDS contracts, which offset the impact of a 4% decline in legacy data‑processing revenue. The company’s operating income increased to $9.2 million from $7.8 million in the prior year, supporting the EPS outperformance.
Adjusted gross margin held steady at 44% YoY, reflecting a balance between pricing power in the DDS segment and rising direct operating costs. Net income, however, fell to $6.3 million from $17.4 million in Q3 2024, largely due to a higher tax provision and increased operating expenses associated with expanding AI capabilities. Despite the net income decline, the company’s cash position reached an all‑time high, underscoring its strong liquidity profile.
Management reaffirmed its full‑year 2025 revenue guidance at 45% or more organic growth, raising the target from the previously announced 40% in Q2 2025. The guidance reflects confidence in sustained demand for generative‑AI data services and the momentum generated by new wins, including the launch of Innodata Federal, a unit focused on defense and intelligence data solutions. The company also reiterated expectations for “transformative growth” in 2026, driven by continued AI adoption across enterprise and government sectors.
CEO Jack Abuhoff highlighted the quarter as “another record‑setting performance” and emphasized the company’s position at the “center of the AI revolution.” He noted that the combination of high‑quality data offerings and strategic investments in AI infrastructure positions Innodata to capture a growing share of the generative‑AI market, while the new federal unit expands its footprint into high‑value public‑sector contracts.
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