Innodata Inc [INOD] — Financial Model Notes
As of 2026-07-29. Every figure below is traced to a filed XBRL fact or a filed statement. Derived figures are marked and the derivation is shown.
1. Quarterly revenue — the series the whole memo rests on
$000. RevenueFromContractWithCustomerExcludingAssessedTax / Revenues, 80–100 day periods.
Q4 values are DERIVED as FY minus the first three quarters (the company does not tag a standalone Q4).
| Quarter | Revenue | Source | y/y | q/q |
|---|---|---|---|---|
| 2024-Q1 | 26,504 | 10-Q | +40.7% | +1.5% |
| 2024-Q2 | 32,553 | 10-Q | +65.6% | +22.8% |
| 2024-Q3 | 52,224 | 10-Q | +135.6% | +60.4% |
| 2024-Q4 | 59,180 | DERIVED (170,461 − 111,281) | +126.6% | +13.3% |
| 2025-Q1 | 58,344 | 10-Q | +120.1% | −1.4% |
| 2025-Q2 | 58,393 | 10-Q | +79.4% | +0.1% |
| 2025-Q3 | 62,550 | 10-Q | +19.8% | +7.1% |
| 2025-Q4 | 72,376 | DERIVED (251,663 − 179,287) | +22.3% | +15.7% |
| 2026-Q1 | 90,096 | 10-Q | +54.4% | +24.5% |
TTM (to 2026-03-31) = 58,393 + 62,550 + 72,376 + 90,096 = $283,415k. Ties the screen exactly.
Read the shape, not just the CAGR. Growth was explosive through 2024, went flat for two quarters in H1 2025 (58,344 → 58,393, +0.1% q/q), then re-accelerated sharply. The H1 2025 stall is the single best existing evidence of what project-based revenue does when a programme pauses — and it happened inside the "70.3% demonstrated CAGR."
Annual: FY2021 69,755 · FY2022 79,001 · FY2023 86,775 · FY2024 170,461 · FY2025 251,663. Demonstrated 2y CAGR = (251,663 ÷ 86,775)^½ − 1 = 70.3% ✅ reproduces the screen.
2. Margin bridge
| $000 | FY2023 | FY2024 | FY2025 | Q1 2026 | TTM |
|---|---|---|---|---|---|
| Revenue | 86,775 | 170,461 | 251,663 | 90,096 | 283,415 |
| Direct operating costs | 55,482 | 103,387 | 152,184 | 50,304 | 167,396* |
| Gross profit | 31,293 | 67,074 | 99,479 | 39,792 | 116,019* |
| Gross margin | 36.1% | 39.3% | 39.5% | 44.2% | 40.9% |
| SG&A | 30,975 | 42,738 | 59,606 | 22,892 | 67,518* |
| Operating income | 318 | 24,336 | 39,873 | 16,900* | 48,501* |
| Operating margin | 0.4% | 14.3% | 15.8% | 18.8% | 17.1% |
| Net income | (908) | 28,660 | 32,181 | 14,898 | 39,292* |
| Diluted EPS | (0.03) | 0.89 | 0.92 | 0.42 | |
| SBC | 4,027 | 3,998 | 11,144 | 5,908 | 14,171* |
| CFO | 5,903 | 34,864 | 46,752 | 37,259 | 73,222* |
| Capex | — | 7,741 | 11,104 | 2,421 | 11,175* |
| FCF | 27,123 | 35,648 | 34,838 | 62,047* |
* DERIVED. TTM = FY2025 − Q1 2025 + Q1 2026. Q1 2026 operating income = 90,096 − 50,304 − 22,892
(the filed P&L nets interest income into operating costs; income before tax of 17,342 = 16,900 + 442 interest
income, which reconciles ✅).
Quarterly operating margin, the operating-leverage evidence: Q1'25 14.2% → Q2'25 15.3% → Q3'25 18.8% → Q4'25 15.1% → Q1'26 18.8%. Up 4.6pp y/y. Not monotonic — Q4 2025 gave back 3.7pp, consistent with the 10-K's disclosed Q4 seasonality (Asian facility holiday closures raise wage costs).
The FY2024 EPS trap — do not use $0.89 as a base
FY2024 net income ($28.7m) exceeds operating income ($24.3m). The FY2024 effective tax rate was
−17.1%, per the 10-K rate reconciliation: change in valuation allowance (30.7), effect of stock-based
compensation (64.8). The 10-K states Q3 2024 included "a favorable one-time valuation allowance adjustment
of $6.0 million."
Reported EPS $0.89 → $0.92 is +3%. Pre-tax income ~$24.5m → ~$42m is +71%. Model pre-tax or operating income. FY2025's effective rate normalises to roughly 24–25%; use ~25% going forward, not the FY2024 rate.
3. Balance sheet and the net-cash reconciliation
$000, at 2026-03-31 (10-Q):
| 2026-03-31 | 2025-12-31 | |
|---|---|---|
| Cash and cash equivalents | 117,366 | 82,230 |
| Accounts receivable, net | 45,937 | 46,510 |
| Total assets | 210,406 | 168,593 |
| Deferred revenue | 7,154 | 7,493 |
| Long-term obligations, current | 2,304 | 1,659 |
| Long-term obligations, non-current | 9,546 | 7,625 |
| Total liabilities | 82,231 | 61,531 |
| Stockholders' equity | 128,175 | 107,062 |
Long-term obligations, componentised (10-Q Note 7):
| 2026-03-31 | |
|---|---|
| Pension obligations — accrued pension liability | 9,314 |
| Microsoft licences (vendor financing, ~$0.9m/yr through Feb 2029) | 2,536 |
| Total | 11,850 |
Revolving Credit Facility: undrawn. "The Company did not utilize the Revolving Credit Facility during the three months ended March 31, 2026 or during the subsequent period through the filing date." Press release: "carries no appreciable debt."
| Net cash definition | Value | Use |
|---|---|---|
| Cash − financing obligations (Microsoft licences only) | $114,830k | Used throughout this memo |
| Cash − all long-term obligations (incl. pension) | $105,516k | Conservative alternative |
| Screen's figure | $112,287k | Implies debt of exactly $5,079k — matches no 2026 line item, and is precisely the 2022-12-31 LongTermDebtNoncurrent XBRL tag. Stale-tag artifact. Impact 0.4% of EV |
4. Share count — the material screen defect
| Measure | Value | Date |
|---|---|---|
| Common shares issued | 35,839k | 2026-03-31 |
| Less treasury | (3,184k) | 2026-03-31 |
| Shares outstanding (basic) | 32,655k | ✅ reconciles to the 10-Q cover's 32,655,358 at 2026-04-30 |
| Weighted-average basic | 32,625k | Q1 2026 |
| Weighted-average diluted | 35,572k | Q1 2026 — +8.9% over basic |
Scale cross-check (brief-mandated): 14,898 ÷ 32,625 = $0.457 vs filed basic $0.46 ✅; 14,898 ÷ 35,572 = $0.419 vs filed diluted $0.42 ✅. Scale confirmed. Not a 4.1x or 54% error.
Not dual class. Single class, $0.01 par, 75,000k authorised. 4,998k preferred authorised, none issued.
But the screen used basic. On 35.572m diluted, market cap is $2,047m not $1,879m and EV is $1,933m not $1,767m — EV/Sales 6.82x not 6.23x. The dilution is real and growing: SBC ran 6.6% of revenue in Q1 2026 and shareholders approved an expanded equity plan on 2026-06-04.
Share-count trajectory: 28,988k (2024-06) → 29,000k (2024-09) → 31,300k (2024-12) → 32,655k (2026-03). +12.6% in 21 months, entirely from equity compensation and option exercises — no capital raise.
5. Working capital and the cash-quality caveat
| Q1 2026 cash flow item | $000 |
|---|---|
| Consolidated net income | 14,898 |
| SBC | 5,908 |
| D&A | 2,176 |
| Deferred income taxes | (1,922) |
| Accounts receivable | +360 |
| Prepaid / other | (3,035) |
| AP, accrued expenses and other liabilities | +11,600 |
| Accrued salaries, wages, benefits | +4,932 |
| Income and other taxes | +1,881 |
| CFO | 37,259 |
~$16.5m of the $37.3m is an accrual build. Ex-working-capital operating cash ≈ $23m, which reconciles to Adjusted EBITDA of $25.0m less cash taxes of $0.8m. Do not annualise $37.3m.
DSO — the receivable-quality test, passed:
| Q1'25 | Q3'25 | Q4'25 | Q1'26 | |
|---|---|---|---|---|
| AR net | 29,577 | 39,440 | 46,510 | 45,937 |
| DSO | 45.6 | 56.8 | 57.8 | 45.9 |
Receivables fell in the quarter revenue rose 24.5% sequentially. No stuffing.
Deferred revenue = $7,154k = 2.5% of TTM revenue, and falling. There is no backlog, no RPO and no committed contract value disclosed anywhere. 97.5% of the revenue base is uncommitted.
UNRESOLVED: Accrued expenses and other liabilities 9,612 → 27,180 (+183%) in one quarter, against
+24.5% revenue — 19% of quarterly revenue in one unexplained line. No component breakdown is filed. This is
the one open accounting question on the name.
6. Quality metrics as computed
| Metric | Value | Computation |
|---|---|---|
| ROIC (TTM) | ~144% | NOPAT 48,501 × 0.75 = 36,376; invested capital = equity 128,258 − net cash 114,830 + obligations 11,850 ≈ 25,278 |
| Gross profitability (Novy-Marx) | 55.1% | TTM GP 116,019 ÷ total assets 210,406 |
| Sloan accruals FY2025 | −10.1% | (32,181 − 46,752) ÷ avg assets ≈ 144,000. Negative = high quality |
| Piotroski F-score | ~7–8 / 9 | Profitable; CFO > NI; ROA rising; no debt; GM rising; asset turnover rising. Current ratio 2.49 vs 2.68 (slightly down); shares up 1.0% q/q from SBC |
| Cash conversion FY2025 | 1.45x | CFO 46,752 ÷ NI 32,181 |
The ROIC figure is arithmetically true but should be read correctly: invested capital is near zero because this is an asset-light offshore-labour business. Growth capital is headcount, expensed through the P&L, not capitalised. The evidenced redeployment mechanism is hiring: FY2025 direct labour +$42.6m produced DDS revenue +$79.8m. That is the reinvestment engine, and it is disclosed.
7. What was NOT modelled, deliberately
- No FY2027 revenue forecast beyond the NTM band in
INOD_Valuation.md§3.2 — no FY2027 guidance exists. - No Evaluation & Observability Platform revenue. $1m closed to date, no GA date, no guide. Zero.
- No federal or sovereign AI revenue. Described in the 10-K; no contract or dollar disclosed.
- No M&A. $117m cash and an M&A-background CFO, but no target, process or date.
- No forward DCF as a verdict instrument. Terminal value is 100% of EV under
reverse_dcf.py, far above the 60% threshold, so the reverse DCF is the mandatory primary output. - No consensus estimates. Alpha Vantage quota exhausted. Consensus Criteria INDETERMINATE.
- No segment forecast. Segment reporting was retired effective Q1 2026; DDS/Synodex/Agility can no longer be modelled separately.
8. Reproducibility
Every number above is reproducible from:
- SEC XBRL companyfacts, CIK 0000903651 (https://data.sec.gov/api/xbrl/companyfacts/CIK0000903651.json)
- 10-K acc. 0001104659-26-020655; 10-Q acc. 0001104659-26-057270; 8-K/EX-99.1 acc. 0001104659-26-057150
- Forms 4 and 144, parsed from EDGAR XML
- Alpaca Markets: 894 SIP daily bars 2023-01-03 → 2026-07-28; options contracts and snapshots 2026-07-29