Innodata revenue jumps 58% to $92.1M as AI demand accelerates

Innodata reported Q2 revenue of $92.1 million, up 58% year-over-year and beating consensus by $5.8 million, its 12th consecutive quarter of growth.

"Q2 was another record quarter for Innodata — and another across-the-board beat," CEO Jack Abuhoff said. "Revenue, adjusted gross profit, adjusted EBITDA, and cash all reached new highs."

Adjusted EBITDA rose 92% to $25.4 million, beating consensus by 50%. Adjusted gross margin expanded to 49%, nine points above the company's 40% target. Net income doubled to $14.4 million, or $0.41 per diluted share, nearly double the consensus estimate of $0.21.

Shares fell 5.61% to $65.48 in regular trading before jumping 15.88% to $75.88 after hours. The company reiterated full-year 2026 revenue growth guidance of 40% or more, with large pipeline opportunities not yet factored into the forecast.

Customer concentration eased in the quarter. The largest customer represented 37% of revenue, down from 56% in Q1, while a Big Tech customer scaled from 17% to 34% of revenue. The company also landed a new frontier lab customer, one of the fastest-scaling in the industry.

The company announced a planned leadership transition effective September 30. Rahul Singhal will become President and CEO, while founder Jack Abuhoff transitions to Executive Chairman. "Research and innovation have become our growth engine," Singhal said. Jayant Chauhan recently joined as CFO, with Mariz Espineli stepping into the Chief Accounting Officer role.

Research-driven growth is expanding across agentic reinforcement learning, AI cyber training, and physical AI data collection. The company released two public benchmarks designed to surface failure modes standard leaderboards miss, and the first stage of its AI Cyber Training Suite — 12 datasets and evaluation systems that train AI coding agents to write secure code.

Cash and short-term investments reached $250.4 million, up from $82.2 million at year-end 2025. Net of customer prepayments, cash was approximately $134 million. The company also filed a prospectus supplement for an at-the-market equity program with Goldman Sachs as lead agent.

On the earnings call, Abuhoff said hyperscaler capital spending is guided to roughly $700 billion this year, nearly double last year, and argued the data, evaluation, and assurance layer Innodata provides benefits regardless of how AI market dynamics play out. George Sutton of Craig-Hallum and Allen Klee of Maxim Group pressed on margin sustainability and pipeline visibility during the Q&A.

The results signal continued momentum in AI data services as demand from frontier labs and enterprise customers accelerates. Investors will watch the Q3 earnings call for updates on pipeline conversion and whether the company raises its 40% growth guidance.

This article is for informational purposes only and does not constitute investment advice.