Executive Summary

Q3 2025 delivered record revenue of $62.6M, +20% YoY and +7% QoQ; Adjusted EBITDA was $16.2M (26% margin), and cash rose to $73.9M, all at or near all-time highs .
The company reiterated FY2025 organic revenue growth of ≥45% (raised from ≥40% in Q1), citing strong Big Tech momentum and early traction from new investment areas; management framed 2026 as “transformative” on new wins and Federal ramp .
Against S&P Global consensus, INOD posted a clean beat: Revenue $62.6M vs $59.8M est., EPS $0.24 vs $0.14 est., and EBITDA outperformed S&P’s EBITDA framework (see Estimates Context) [GetEstimates*].
Key catalysts: verbal expansion from the largest customer; a verbal win with another Big Tech (~$6.5M run-rate); ~$68M potential pre‑training data programs (signed/likely); and Innodata Federal’s initial ~$25M project (mostly 2026) .

What Went Well and What Went Wrong

What Went Well
- Record Q3 revenue and margin expansion QoQ: “record revenue of $62.6 million… Adjusted EBITDA was $16.2 million, or 26% of revenue, up 23% sequentially” .
- Pipeline and customer momentum: verbal expansion with largest customer; verbal deal with another Big Tech (~$6.5M ARR) .
- New vectors with quantified traction: “$68 million of potential revenue” from pre‑training data programs (five customers) and Innodata Federal’s initial project (~$25M, mostly 2026) .
What Went Wrong
- GAAP EPS down YoY due to prior‑year tax benefit: Q3 2025 diluted EPS $0.24 vs $0.51 in Q3 2024; last year benefited from NOLCO tax benefit (~$0.27 diluted) .
- Synodex pressure: Q3 2025 gross margin compressed to 7% GAAP (14% adj.) vs 25% (31% adj.) in Q3 2024 .
- Elevated operating costs tied to growth investments: management incurred ~$9.5M 2025 capability-building investments (incl. ~$8.2M SG&A + direct ops and $1.3M capex) to capture demand, weighing near‑term GAAP profitability .

Financial Results

Metric	Q3 2024	Q1 2025	Q2 2025	Q3 2025
Revenue ($USD Millions)	52.224	58.344	58.393	62.550
Diluted EPS ($)	0.51	0.22	0.20	0.24
Adjusted EBITDA ($USD Millions)	13.858	12.716	13.234	16.214
Gross Margin (%)	41%	40%	39%	41%
Adjusted Gross Margin (%)	44%	43%	43%	44%

Segment revenue ($USD Millions)

Segment	Q3 2024	Q1 2025	Q2 2025	Q3 2025
DDS	44.694	50.831	50.576	54.779
Synodex	1.935	2.013	2.065	1.653
Agility	5.595	5.500	5.752	6.118

KPIs

KPI	Q1 2025	Q2 2025	Q3 2025
Cash & Cash Equivalents ($USD Millions)	56.556	59.792	73.859
Net Income ($USD Millions)	7.787	7.219	8.342
Adjusted Gross Margin (%)	43%	43%	44%

Notes: Net income YoY decline reflects a Q3 2024 NOLCO tax benefit that added ~$0.27 to diluted EPS last year .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Organic Revenue Growth	FY2025	≥40% (Q1 guide)	≥45% (Q2 raise)	Raised
Organic Revenue Growth	FY2025	≥45% (Q2)	≥45% (Q3 reiteration)	Maintained
Adjusted EBITDA	FY2025	Expect to exceed 2024 while investing (Q2 commentary)	Not updated in Q3 release	Maintained/Not reiterated

Management also guided to “continued transformative growth” in 2026 on Big Tech expansion, pre‑training ramp, and Federal pipeline .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 → Q2)	Current Period (Q3 2025)	Trend
Big Tech expansion	Q1: expanding relationships; deeper pipeline; onboarding large enterprise/cloud/commerce names . Q2: “beat-and-raise,” significant new deal wins; added to Wedbush AI list .	Verbal expansion with largest customer; verbal win ~$6.5M with another Big Tech; five additional Big Techs landed/near close .	Accelerating
Pre‑training data	Not highlighted in Q1/Q2 releases.	~$68M potential revenue (≈$42M signed + ≈$26M likely); five customers; programs ramping .	New vector, scaling
Innodata Federal	Not in Q1; not in Q2 release.	Business unit launched; initial project ≈$25M (mostly 2026); direct award; board adds Gen. (Ret.) Richard D. Clarke .	New vector, early traction
Sovereign AI	Not in Q1/Q2 releases.	Advanced discussions; expect ≥1 strategic partnership in 2026 .	Building pipeline
Enterprise AI services	Q1: strategic alignment to enterprise AI .	Early deployments (social media content ops savings; data-center analytics) with expansion potential .	Early deployments
Agentic AI	Q1: areas of innovation listed .	Evaluation frameworks (diagnostic/task‑success/profiling judges); product and consulting integration .	Capability buildout
Model safety	Q1: LLM trust & safety referenced .	Stress-testing multimodal AI (exfiltration/injection, etc.); GTM with top consultancy .	Commercializing

Management Commentary

“We delivered record revenue of $62.6 million… Adjusted EBITDA was $16.2 million, or 26% of revenue… Cash rose to $73.9 million… Our results exceeded analyst expectation across key metrics.” — Jack Abuhoff, CEO .
“We’ve since signed contracts we believe could result in approximately $42 million of revenue… expect to soon sign… approximately $26 million… $68 million of potential revenue… programs… are just ramping up.” — Jack Abuhoff on pre‑training data .
“We anticipate this initial [Federal] project to result in approximately $25 million of revenue, mostly in 2026… We expect to issue a joint press release… prior to year-end.” — Jack Abuhoff .
“We reiterate prior guidance of 45% or more year-over-year growth in 2025, and we anticipate potentially transformative growth in 2026.” — Jack Abuhoff .
“Adjusted EBITDA was $16.2 million, up 23% quarter-over-quarter… Net income… $8.3 million… The decrease [YoY] was mainly due to [Q3’24] tax benefit… NOLCO.” — Marissa Espineli, Interim CFO .

Q&A Highlights

Contract sizing/timing: Analysts tallied close to ~$100M across mentioned wins; management clarified some are annualized recurring vs multi‑year and most revenue skews to 2026 as ramps occur .
Incremental spending: ~$8.2M of incremental 2025 SG&A (vs 2024) is part of ~$9.5M capability investments to capture demand .
Largest customer: relationship “strong,” business up sequentially; verbal confirmation for a “very large new program” to be onboarded under current MSA/SOW framework .
Federal procurement: management cited executive orders and GSA acquisition changes accelerating AI procurement; positioning INOD to scale without traditional bottlenecks .
Market size: Enterprise AI services market could be “10x” model builder market; early deployments showing tangible cost savings (e.g., ~$24M for a social media customer) .

Estimates Context

Q3 2025 Actual vs S&P Global Consensus

Metric	Consensus	Actual	Commentary
Revenue ($USD)	$59.78M*	$62.55M	Beat; strong Big Tech demand and ramping programs.
Diluted EPS ($)	$0.137*	$0.24	Beat; YoY EPS lower due to prior‑year tax benefit; core profits improving QoQ.
EBITDA ($USD)	$10.33M*	$12.51M*	Beat within S&P’s EBITDA framework; note INOD’s Adjusted EBITDA was $16.21M (non‑GAAP) .

Values with asterisks (*) retrieved from S&P Global.

Why beats: Management cited accelerating Big Tech expansions (largest customer + new logos), early wins in pre‑training data (~~$68M potential), and initial Federal award (~~$25M), driving topline and operating leverage .

Key Takeaways for Investors

Momentum broadening beyond post‑training data: quantified pre‑training deals (~~$68M potential) and Federal (~~$25M initial) expand TAM and diversify mix into 2026 .
Demand durability: reiterated ≥45% FY2025 growth and “transformative” 2026 outlook anchored by largest‑customer expansion, new Big Tech wins, and sovereign/enterprise vectors .
Profit trajectory: QoQ margin expansion (Adj. EBITDA 26%) despite capability investments; expect EBITDA expansion with scale and utilization, though GAAP EPS comps are muddied by last year’s tax benefit .
Execution leverage: onboarding under existing MSA/SOW enables rapid scaling of the largest‑customer program, a near‑term catalyst if converted from verbal to signed .
Federal/government as new growth pillar: procurement tailwinds and marquee customer relationships can improve revenue visibility and reduce single‑vertical risk .
Watch Synodex/segment mix: Synodex margin compression is a minor headwind, but DDS and Agility strength, plus new vectors, offset .
Near‑term trading setup: Confirmed verbal expansions and potential pre‑year‑end Federal press release are catalysts; sustained revenue beats vs consensus could drive positive estimate revisions* [GetEstimates*].

Appendix: Source Comparisons and Non‑GAAP

INOD highlights Adjusted EBITDA ($16.2M) which adds back stock‑based comp and other items per its definition; S&P’s EBITDA series (est./actual) reflects a different framework (~$12.5M Q3 2025), so use care when comparing EBITDA across sources [GetEstimates*].
Q3 diluted EPS decline YoY is explained by the prior‑year NOLCO tax benefit of ~$0.27 (diluted), not operational deterioration; sequential profitability improved .

Citations:

Q3 2025 8‑K press release and financials .
Q3 2025 earnings call transcript .
Q2 2025 press release/8‑K .
Q1 2025 press release/8‑K .
S&P Global consensus and actual series where noted with asterisks [GetEstimates*].

INNODATA INC (INOD)·Q3 2025 Earnings Summary