PR-Inside.com: 2018-11-08 14:25:18
NEW YORK, NY / ACCESSWIRE / November 8, 2018 / INNODATA INC. (NASDAQ: INOD) today reported results for the third quarter and the nine months ended September 30, 2018.
Total revenue was $14.0 million in the third quarter of 2018, a 2% sequential decrease from $14.3 million in the second quarter of 2018. Total revenue was $15.0 million in the third quarter of 2017.
Net income was $0.7 million in the third quarter of 2018, or $0.03 per diluted share, compared to a net loss of $0.5 million in the second quarter of 2018, or $(0.02) per diluted share. The results for the second quarter of 2018 included a $675,000 non-cash goodwill impairment charge for the DDS segment. Net loss in the third quarter of 2017 was $1.1 million, or $(0.04) per diluted share.
For the first nine months of 2018, total revenue was $42.4 million, a decline of 6% from $45.3 million in the first nine months of 2017. Net loss was $46,000, or $(0.00) per diluted share, in the first nine months of 2018. The results for the first nine months of 2018 include the $675,000 non-cash goodwill impairment charge referred to above. Net loss was $3.0 million, or $(0.11) per diluted share, in the first nine months of 2017.
Adjusted EBITDA (as defined below) was $2.3 million in the third quarter of 2018, compared to $1.6 million in the second quarter of 2018. Adjusted EBITDA was $0.2 million in the third quarter of 2017.
Cash and cash equivalents were $11.9 million at September 30, 2018, compared to $11.4 million at December 31, 2017.
Some amounts in this press release may not add due to rounding. All percentages have been calculated using unrounded amounts.
The tables that accompany this release set out results by segment.
Jack Abuhoff, Chairman and CEO, said, "In the third quarter of 2018 we achieved Adjusted EBITDA of $2.3 million, a 38% increase from Adjusted EBITDA of $1.6 million in the second quarter of 2018. The increase in Adjusted EBITDA is primarily the result of cost reductions we initiated in late 2017 and the first half of 2018.
"Revenue in our Digital Data Solutions (DDS) segment was $10.8 million in both the second and third quarters of 2018. Adjusted EBITDA as a percentage of revenue increased by 7% in the third quarter to 22% of revenue from 15% of revenue in the second quarter. Revenue in the third quarter exceeded the high end of our guidance by approximately $0.4 million as a result of higher than anticipated volumes of work from two customers. We continue to develop our AI-based solutions which have enabled us to drive increased operating efficiencies.
"Revenue in our Synodex segment was $1.0 million in both the second and third quarters of 2018. The segment remained profitable with an Adjusted EBITDA of 13% of revenue. We added two new customers in the third quarter and also expanded our business with an existing customer."
Abuhoff continued, "Revenue in our Agility segment was $2.3 million in the third quarter of 2018, a decline of $150,000 from the second quarter of 2018. Recurring revenue from Agility subscriptions remained steady from the second quarter to the third quarter. During the third quarter Agility onboarded and trained an expanded new client acquisition team and in the fourth quarter we expect to begin benefitting from this increased sales capacity."
Abuhoff concluded, "We anticipate fourth quarter revenue to be in the range of $13.9 - $14.6 million, consisting of DDS revenue in the range of $10.5 - $10.8 million, Synodex revenue in the range of $1.1 - $1.3 million, and Agility revenue in the range of $2.3 - $2.5 million."
Non-GAAP Financial Measures
This press release and the accompanying tables include references to Adjusted EBITDA, which is a non-GAAP financial measure. We define Adjusted EBITDA as net income (loss) attributable to Innodata Inc. and subsidiaries in accordance with GAAP before income taxes, depreciation, amortization of intangible assets, goodwill impairment, changes in fair value of contingent consideration, stock-based compensation, loss attributable to non-controlling interests and interest income (expense). We believe Adjusted EBITDA is useful to our management and investors in evaluating our operating performance and for financial and operational decision-making purposes. In particular, it facilitates comparisons of the core operating performance of our company from period to period on a consistent basis and helps us identify underlying trends in our business. We believe it provides useful information about our operating results, enhances the overall understanding of our past performance and future prospects, and allows for greater transparency with respect to key metrics used by management in our financial and operational decision making. We use this measure to establish operational goals for managing our business and evaluating our performance.
Adjusted EBITDA has limitations as an analytical tool and should not be considered in isolation or as a substitute for results reported under GAAP. Some of these limitations are:
Adjusted EBITDA does not reflect tax payments, and such payments reflect a reduction in cash available to us;
Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs or for our cash expenditures or future requirements for capital expenditures or contractual commitments;
Adjusted EBITDA excludes the potential dilutive impact of stock-based compensation expense related to our workforce, interest income (expense) and net loss attributable to non-controlling interests, and these items may represent a reduction or increase in cash available to us;
Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements; and
Other companies, including companies in our own industry, may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure.
Because of these limitations, Adjusted EBITDA should be considered alongside other financial performance measures, including various cash flow metrics, net income (loss) and our other GAAP results.
A reconciliation from net loss to Adjusted EBITDA is attached to this release.
Timing of Conference Call with Q&A
Innodata will conduct an earnings conference call, including a question-and-answer period, at 11:00 AM eastern time