Innodata Inc. (NASDAQ:INOD) Q2 2023 Earnings Call Transcript

Jack Abuhoff: Yes, happy to. There was just really so much to talk about in terms of what’s going on in the business that we were already probably beyond some people’s attention span. So we left a few things out. But what’s going on in Synodex and Agility is very, very impressive. And we’re very happy with performance there. Agility, we had year-over-year growth of 13%. We returned to adjusted EBITDA positive in the quarter. So, we look at it like the – we’re now making money there. Again we had solid bookings, our gross retention levels were actually beyond what we had targeted in terms of our internal planning. And we’re seeing improvements on our average selling price and in our sales cycle in part attributed to the work we’ve done integrating our new product PR CoPilot into that platform.

PR CoPilot is of course a AI-powered or generative AI-powered capability that allows people to gain AI augmentation, AI assistance in generating market pitches or PR pitches and press releases. So, very, very happy with what’s going on there. On Synodex, over the past year we’ve had some problems in Synodex mostly related to kind of COVID and some attrition issues that we attribute to COVID, but we’re nicely digging out of that. We had an increased gross margin for the second consecutive quarter, positive gross margin for second consecutive quarter. We are working with two of our largest customers, kind of charting out new products, including some automated products, which is very, very exciting. And we’re happy with that business as well.

Dana Buska: Excellent. Yes they do both looks like they are going along well for you. And just to go back to your – to DDS, could you talk a little bit about capacity with all these new projects that you have, will you need to be adding capacity or do you have the capacity already available?

Jack Abuhoff: So in combination we’ve got the engineering capabilities and the performance management capabilities and things like that that are required. We add human resources as and when needed, but we don’t have any issues relative to scaling around that and adding resources kind of just in time when we need them.

Dana Buska: Okay, wonderful. That does it for me. Congratulations on having things go so well. It looks very impressive to me. So thanks.

Jack Abuhoff: Thank you, David.

Operator: Thank you. [Operator Instructions] Your next question is coming from Bruce Galloway from Galloway Capital. Your line is live.

Bruce Galloway: Hey, Jack, congratulations. Great quarter. And looks like you are firing on all cylinders. In the past you spoke about growth rates and net margins, going forward like two or three years. And then I guess you stopped when the world stopped. Are you going to be giving us some guidance going forward along those lines? And also now that you are doing so well and you are sort of in the middle of the ground swell, are you going to be getting any Wall Street coverage?

Jack Abuhoff: Sure. Bruce, good to hear from you. Thank you for joining the call. So the answer is as we – we’ve given some guidance in terms of we’re expecting year-over-year and sequential growth in terms of both revenue and adjusted EBITDA as we ramp up these programs. We also talked a lot about how there is uncertainty in timing of ramp up over the next few months. And for that reason, we’re kind of – we’re staying with the guidance that we’ve given previously in terms of adjusted EBITDA going forward and such. We’re giving some guidance on what we expect gross margin uptick to be. What’s so interesting about the opportunities that we’ve got in front of us is all of the contracts virtually that we are entering into our framework agreements.