Innodata Inc Q4 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: George Sutton - Craig-Hallum Capital Group LLC - Analyst : Thank you. Fabulous job, guys. So I was particularly excited to see the 159% sequential growth from your seven other big tech customers. I wondered if you could just lay out the future for that group, if you would. And how does it dovetail with the number of pilots that you're seeing? You mentioned seven to eight-figure opportunities. Are those coming from those seven or those additional customers?

Question: George Sutton - Craig-Hallum Capital Group LLC - Analyst : So I want to go back to the football-dime analogy that you used in terms of where the current models are and talk about your largest customer by example. And this is really a duration question, because I think one of the challenges people have is how long will this customer be this size or larger? Can you just address it from that football-dime analogy perspective? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 20, 2025 / 10:00PM, INOD.OQ - Q4 2024 Innodata Inc Earnings Call

Question: George Sutton - Craig-Hallum Capital Group LLC - Analyst : Got you. And then one other question. A lot of discussion relative to models being either open or closed. Can you talk about your opportunity as it may differ from one versus the other?

Question: George Sutton - Craig-Hallum Capital Group LLC - Analyst : All right. Good stuff. Thank you very much.

Question: Allen Klee - Maxim Group LLC - Analyst : Great. Congrats. One business question, then a couple of financials. he business one is, there's been a lot of questions in the market with DeepSeek and some thinking of like that maybe through inferencing, whether using other AI models to kind of figure out the answers instead of training. And does that mean that there could potentially be less training done? And I think you did address it, but could you just kind of go into that a little more? Because I think there's some questions in the market.

Question: Allen Klee - Maxim Group LLC - Analyst : Very good. Thank you. And a couple of financial questions. I'll try to be quick. Your gross margins were 45.2% versus 40.8% in the third quarter and 34.8% in the prior year, fourth quarter. You mentioned that of the reasons why one of them, I heard you guys say that it was a new tech customer, something you were working on, but also automation and less headcount and Synodex. What I'm trying to understand is, do you think there's potential from where it's at now to potentially expand as we go through '25? Or is there any reason why it was unusually a little high in the fourth quarter?

Question: Allen Klee - Maxim Group LLC - Analyst : Yes, that's very helpful. Thank you. The last question, and I know you may not answer this because you didn't do it yet, but can you help us in any way, you say, you're going to be reinvesting, which I believe is the right thing to do for long term, medium term, long term growth. EBITDA will be up year over year. Is there anything you can help us with in terms of qualitatively what that is, of being up year over year and how to think about that?

Question: Allen Klee - Maxim Group LLC - Analyst : Okay, great. Thank you very much.

Question: Hamed Khorsand - BWS Financial Inc - Analyst : Hi. Just on the topic of you're looking to invest, are you at capacity now with the client base you have? Do you need it for new projects? Do you need it because you have a sales funnel? Why do you feel like you need to expand your headcount now? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 20, 2025 / 10:00PM, INOD.OQ - Q4 2024 Innodata Inc Earnings Call

Question: Hamed Khorsand - BWS Financial Inc - Analyst : Okay. And then on the pilot trials you were talking about earlier, is that opportunity as far as taking business away from a competitor or competitors? Or is that brand new projects that you hope to win?

Question: Hamed Khorsand - BWS Financial Inc - Analyst : Okay. And then my final question is, do you feel like you're under less stress because you're cash-positioned now? Or do you think because you're at a higher revenue run rate, you still need a little bit more liquidity than you have now?

Question: Hamed Khorsand - BWS Financial Inc - Analyst : Okay, thank you.