Innodata Raises Outlook as Margins Expand
The AI-services provider lifted its full-year revenue-growth target to at least 40% after first-quarter sales climbed 54%.
The AI-services provider Innodata (INOD) raised its full-year revenue outlook after first-quarter sales jumped 54% from a year earlier, though growth slowed from the prior quarter’s pace. Revenue reached $90.1 million, up from $58.3 million in the same period last year. The result marked a deceleration from 79% year-over-year growth in the second quarter of 2025 and 48% in the fourth quarter.
The quarter underscored a strategic shift toward higher-margin AI services, even as profitability metrics showed mixed trends. Adjusted gross margin widened to 47%, extending a three-quarter expansion from 39% in the second quarter of 2025. Adjusted EBITDA, however, compressed to 28% of revenue from 30% in the prior quarter and 45% a year earlier, reflecting investments in new customer engagements and platform development.
A new Big Tech customer contributed to the quarter’s growth, with management projecting $51 million in revenue from the relationship in 2026, up from zero in 2025. The company also reported progress in diversifying its customer base, with revenue from other large technology clients rising 453% year-over-year. The largest customer’s share of total revenue is expected to shrink in 2026 despite absolute dollar growth.
Innodata consolidated its three prior segments into a single reporting unit in the quarter, citing an integrated AI-focused strategy. The former DDS segment, which drove the bulk of revenue, grew 54% year-over-year to $64.6 million, while the Synodex segment declined 23% to $1.6 million. The company also launched a beta version of its Evaluation and Observability Platform, securing a $1 million engagement shortly after the release.
The company raised its full-year revenue growth guidance to at least 40%, up from a prior target of 35% or more, and reaffirmed the outlook in its latest release. Adjusted EBITDA grew 96% year-over-year to $25.0 million, while net income rose 91% to $14.9 million, both decelerating from triple-digit growth rates in prior quarters.
Cash reserves climbed to $117.4 million, up 43% from the prior quarter and 124% from a year earlier. Innodata’s 2025 full-year revenue reached $251.7 million, exceeding its fourth-quarter guidance of approximately $245 million.