Innodata Reports Record Third Quarter 2026 Results
INNODATA INC (INOD) filed an SEC Form 8-K — Results of Operations and Financial Condition. Exhibit 99.1 Innodata Reports Record Third Quarter 2026 Results · Revenue Up 53% Year-Over-Year, Beats Consensus by 15% · Adjusted EBITDA of $17.7 Million, Beats Consensus by 15% · Raises Full-Year 2026 Revenue Growth Guidance to ~42% or More, Up From ~40% or More NEW YORK – Nove
How this was made
The 30-second read
Why it matters
The earnings beat and raised guidance provide a fresh catalyst that can drive the stock higher in the near term.
Market read
The report adds fresh, material data on a fast‑growing AI‑focused firm, offering a clear trading opportunity.
What to watch
Potential concentration risk from the newly dominant customer and reliance on federal contracts.
Innodata Reports Record Third Quarter 2026 Results
Third-quarter revenue grew 53% year-over-year to $95.6 million, net income rose to $10.3 million from $8.3 million, and the company raised full-year 2026 revenue growth guidance to 42% or more year-over-year.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Revenue, three months ended September 30, 2026 (in thousands)GAAP | $95.62M | – | 53% |
| Revenue, nine months ended September 30, 2026 (in thousands)GAAP | $277.9M | – | – |
| Direct operating costs, three months ended September 30, 2026 (in thousands)GAAP | 60.08M | – | – |
| Direct operating costs, nine months ended September 30, 2026 (in thousands)GAAP | 160.1M | – | – |
| Selling and administrative expenses, three months ended September 30, 2026 (in thousands)GAAP | 26.88M | – | – |
| Selling and administrative expenses, nine months ended September 30, 2026 (in thousands)GAAP | 76.37M | – | – |
| Interest income, net, three months ended September 30, 2026 (in thousands)GAAP | −1.33M | – | – |
| Interest income, net, nine months ended September 30, 2026 (in thousands)GAAP | −3.47M | – | – |
| Income before provision for income taxes, three months ended September 30, 2026 (in thousands)GAAP | 9.99M | – | – |
| Income before provision for income taxes, nine months ended September 30, 2026 (in thousands)GAAP | 44.89M | – | – |
| Provision for income taxes, three months ended September 30, 2026 (in thousands)GAAP | −340K | – | – |
| Provision for income taxes, nine months ended September 30, 2026 (in thousands)GAAP | 5.25M | – | – |
| Consolidated net income, three months ended September 30, 2026 (in thousands)GAAP | 10.33M | – | 24% |
| Consolidated net income, nine months ended September 30, 2026 (in thousands)GAAP | 39.64M | – | – |
| Net income attributable to Innodata Inc. and Subsidiaries, three months ended September 30, 2026 (in thousands)GAAP | $10.33M | – | – |
| Net income attributable to Innodata Inc. and Subsidiaries, nine months ended September 30, 2026 (in thousands)GAAP | $39.64M | – | – |
| Basic income per share attributable to Innodata Inc. and Subsidiaries, three months ended September 30, 2026GAAP | $0.30 | – | – |
| Diluted income per share attributable to Innodata Inc. and Subsidiaries, three months ended September 30, 2026GAAP | $0.29 | – | – |
| Basic income per share attributable to Innodata Inc. and Subsidiaries, nine months ended September 30, 2026GAAP | $1.18 | – | – |
| Diluted income per share attributable to Innodata Inc. and Subsidiaries, nine months ended September 30, 2026GAAP | $1.13 | – | – |
| Weighted average basic shares outstanding, three months ended September 30, 2026 (in thousands)GAAP | 34.39M | – | – |
| Weighted average diluted shares outstanding, three months ended September 30, 2026 (in thousands)GAAP | 35.62M | – | – |
| Weighted average basic shares outstanding, nine months ended September 30, 2026 (in thousands)GAAP | 33.50M | – | – |
| Weighted average diluted shares outstanding, nine months ended September 30, 2026 (in thousands)GAAP | 35.12M | – | – |
| Gross profit attributable to Innodata Inc. and Subsidiaries, three months ended September 30, 2026 (in thousands)GAAP | $35.54M | – | – |
| Gross profit attributable to Innodata Inc. and Subsidiaries, nine months ended September 30, 2026 (in thousands)GAAP | $117.8M | – | – |
| Gross margin, three months ended September 30, 2026GAAP | 37% | – | – |
| Gross margin, nine months ended September 30, 2026GAAP | 42% | – | – |
| Adjusted gross profit, three months ended September 30, 2026 (in thousands)non-GAAP | $38.33M | – | – |
| Adjusted gross profit, nine months ended September 30, 2026 (in thousands)non-GAAP | $126.3M | – | – |
| Adjusted gross margin, three months ended September 30, 2026non-GAAP | 40% | – | – |
| Adjusted gross margin, nine months ended September 30, 2026non-GAAP | 45% | – | – |
| Adjusted EBITDA, three months ended September 30, 2026 (in thousands)non-GAAP | $17.73M | – | – |
| Adjusted EBITDA, nine months ended September 30, 2026 (in thousands)non-GAAP | $68.06M | – | – |
| Cash and cash equivalents as of September 30, 2026 (in thousands)GAAP | $164.0M | – | – |
| Accounts receivable, net, as of September 30, 2026 (in thousands)GAAP | 44.40M | – | – |
| Total assets as of September 30, 2026 (in thousands)GAAP | $269.5M | – | – |
| Long-term obligations, current portion, as of September 30, 2026 (in thousands)GAAP | 2.37M | – | – |
| Long-term obligations, net of current portion, as of September 30, 2026 (in thousands)GAAP | 8.89M | – | – |
| Total liabilities as of September 30, 2026 (in thousands)GAAP | 93.10M | – | – |
| Stockholders' equity as of September 30, 2026 (in thousands)GAAP | 176.4M | – | – |
| Net cash provided by operating activities, nine months ended September 30, 2026 (in thousands)GAAP | 80.48M | – | – |
| Capital expenditures, nine months ended September 30, 2026 (in thousands)GAAP | −7.71M | – | – |
| Net cash used in investing activities, nine months ended September 30, 2026 (in thousands)GAAP | −7.71M | – | – |
| Net cash provided by financing activities, nine months ended September 30, 2026 (in thousands)GAAP | 9.78M | – | – |
| Net increase in cash and cash equivalents, nine months ended September 30, 2026 (in thousands)GAAP | 81.74M | – | – |
Amounts quoted below without a unit are in thousands, as in the filing’s tables. Per-share figures are as printed.
full-year 2026 outlook
- Revenue42% or more year-over-year revenue growth
What drove it
- Revenue was $95.6 million and grew 53% year-over-year.
- A customer that represented less than 5% of revenue a year ago became the largest customer in Q3, resulting in two customers of comparable scale.
- The company signed an additional Q4 program with that customer valued at approximately $18 million.
- The company won five new programs with a large hyperscaler and added five new logos in Q3, including model builders and an enterprise data platform.
- Innodata launched its motion capture lab in September for humanoid robot and world model training and reported pilots with frontier and robotics labs.
- The company added enterprise AI relationships with a global technology hardware company and a major financial services firm.
Concerns
- GAAP gross margin was 37% in the third quarter of 2026 versus 41% in the third quarter of 2025, while adjusted gross margin was 40% versus 44%.
- Selling and administrative expenses were 26,882 (in thousands) in the third quarter of 2026 versus 13,745 (in thousands) in the prior-year period.
- The company expects a program at one large customer to wind down, though it expects new programs to replace it in Q1.
- The Federal opportunity is described as a verbal win that the company expects to sign by the end of the fourth quarter.
- Revenue concentration remains a disclosed risk, notwithstanding management's stated progress toward diversification.
What to watch
- Execution and revenue timing of the approximately $18 million Q4 program with the company's largest customer.
- Conversion of the five new hyperscaler programs, for which the company forecasts more than $20 million of revenue in 2027.
- Progress of motion-capture pilots, including management's expectation that one successful pilot would yield approximately $7 million in revenue in 2027.
- Signing of the Federal contract described as valued at $5 million per year for five years.
- Whether new programs replace the large-customer program expected to wind down in Q1.
- Delivery against full-year 2026 revenue growth guidance of 42% or more year-over-year.
Balance sheet and cash flow
- Cash and cash equivalents were $164.0 million as of September 30, 2026, compared with $82.2 million as of December 31, 2025.
- Cash as of September 30, 2026 included customer prepayments related to pass-through costs; net of these prepayments, cash was approximately $153.7 million.
- Net cash provided by operating activities for the nine months ended September 30, 2026 was 80,484 (in thousands), compared with 33,732 (in thousands) in the prior-year period.
- Capital expenditures for the nine months ended September 30, 2026 were (7,714) (in thousands), compared with (8,286) (in thousands) in the prior-year period.
- Proceeds from exercise of stock options for the nine months ended September 30, 2026 were 10,952 (in thousands), compared with 1,548 (in thousands) in the prior-year period.
Analysis
Innodata reported a record third quarter, with GAAP revenue of $95.6 million, up 53% year-over-year. GAAP net income was $10.3 million, compared with $8.3 million in the same period last year, while diluted income per share was $0.29 compared with $0.24. For the first nine months, revenue was $277,856 (in thousands) and net income attributable to Innodata Inc. and Subsidiaries was $39,639 (in thousands).
The revenue performance reflected expanding customer activity and new program wins. Management said that a customer representing less than 5% of revenue a year ago became its largest customer in Q3, producing two customers of comparable scale. It also cited an additional Q4 program valued at approximately $18 million, five new hyperscaler programs, and five new logos. The company is forecasting more than $20 million of revenue from the hyperscaler customer in 2027 based on the new wins.
Profitability expanded in dollars but gross margins were lower year-over-year. GAAP gross profit was $35,537 (in thousands), versus $25,504 (in thousands), but GAAP gross margin was 37% versus 41%. Adjusted gross profit was $38,333 (in thousands), while adjusted gross margin was 40% versus 44%. Adjusted EBITDA was $17,725 (in thousands), up from $16,214 (in thousands), and selling and administrative expenses increased to 26,882 (in thousands) from 13,745 (in thousands).
Liquidity strengthened materially. Cash and cash equivalents were $163,967 (in thousands) at September 30, 2026, compared with $82,230 (in thousands) at December 31, 2025. Net cash provided by operating activities for the first nine months was 80,484 (in thousands), while capital expenditures were (7,714) (in thousands). Management noted that cash included customer prepayments related to pass-through costs and stated that cash net of those prepayments was approximately $153.7 million.
Management raised full-year 2026 revenue growth guidance to 42% or more year-over-year from 40% or more. The guide incorporates the expected wind-down of a program at a large customer, which management expects to replace with new programs in Q1. The key operating issues are execution on new customer programs, conversion of robotics and physical-AI pilots, the planned Federal contract signing, continued customer diversification, and the trajectory of gross margins as growth continues.
Management, verbatim
Q3 was another record revenue quarter for Innodata. Revenue of $95.6 million grew 53% year-over-year and exceeded analyst consensus by approximately $12.3 million, or 15%, marking our 13th consecutive quarter of year-over-year growth.
Rahul Singhal, CEO
The story of the quarter is the breadth of what we are winning. A customer that represented less than 5% of our revenue a year ago became our largest customer in Q3, giving us two customers of comparable scale and meaningfully advancing our diversification.
Rahul Singhal, CEO
With this momentum, we are raising our full-year 2026 revenue growth guidance to 42% or more year-over-year, up from 40% or more, even after absorbing the wind-down of a program at one of our large customers that we expect to be replaced by new programs in Q1.
Rahul Singhal, CEO
Not in the filing
stated, not guessed- Segment revenue and segment profitability were not reported.
- GAAP operating income was not reported.
- Quarterly operating cash flow was not reported.
- Free cash flow was not reported.
- Share repurchases and dividends were not reported.
- Forward gross-margin, operating-expense, and tax-rate guidance were not reported.
- A separately provided prior outlook was not supplied; therefore, no formal actual-versus-prior-guidance comparison is included.
Written by an AI language model from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure is checked against the filing text, and a metric the filing does not print, or whose value, prior period and change do not add up, is dropped from the metrics. The model can still misread a table, in the metrics or in the text, so check a number in the filing before you rely on it. Consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.
Background
Innodata (Nasdaq: INOD) is a data‑engineering company serving AI developers. The Q3 2026 release shows rapid growth and new large contracts.
Ticker impact
Innodata reported Q3 2026 results with revenue up 53% YoY and raised full-year revenue growth guidance to ~42% or more.
likely upward pressure as investors price in higher revenue growth.
The earnings beat and raised guidance provide fresh, material information that can move the stock immediately.
Market effects
Strong AI data services growth may boost related AI and data‑analytics firms.
Positive for U.S. tech sector sentiment.
Highlights expanding demand for embodied AI, relevant to global AI supply chains.
Counterpoint
If the raised guidance is already priced in, the stock may face a short‑term pull‑back.
Key entities
- CEORahul Singhal
Provided commentary on the results and guidance.
