INNODATA INC. (NASDAQ: INOD) today reported results for the first quarter ended March 31, 2015.
- Total revenue was $13.8 million in the first quarter of 2015, a 13% sequential decline from $15.9 million in the fourth quarter of 2014 and a 2% decline from $14.1 million in the first quarter of 2014.
- Net loss was $1.8 million in the first quarter of 2015, or $(0.07) per diluted share, compared to a net loss of $0.3 million in the fourth quarter of 2014, or $(0.01) per diluted share. Net earnings in the first quarter of 2014 were $0.2 million, or $0.01 per diluted share.
- Adjusted EBITDA (as defined below) was a loss of $0.4 million in the first quarter of 2015. Adjusted EBITDA was $1.0 million for the fourth quarter of 2014 and $0.9 million in the first quarter of 2014.
- Cash, cash equivalents and investments were $25.4 million at March 31, 2015 compared to $24.2 million at December 31, 2014.
Jack Abuhoff, Chairman and CEO, said, "Our revenue in the first quarter was lower than last quarter primarily as a result of a decrease in volume from a large e-book client and several projects that completed in the fourth quarter of 2014.
"We continue to invest in new products and solutions such as Synodex and MediaMiser that we expect will provide compelling value to our clients and enable us to build our portfolio of long term recurring revenue.
"This quarter, our Synodex subsidiary signed an updated contract with a major reinsurance company with which we had announced a strategic relationship last year. We also added four new clients, including industry leader John Hancock which we announced earlier this week. We anticipate the total recurring revenue value of these contracts to be approximately $2.8 million per year once fully ramped up. We anticipate Synodex revenue to increase on a sequential quarterly basis through 2015.
"In our Media Intelligence Solutions segment the total number of clients for our MediaMiser subscription products increased by 6% to 110 clients. The value our products provide to our clients is underscored by our more than 90 percent client retention rate. We anticipate a more than 20% increase in Media Intelligence Solutions revenue in 2015 on a year over year basis."
Abuhoff continued, "Revenue of our Content Services segment aggregated $12.2 million during the first quarter. We regard approximately 80% of this revenue to be recurring in nature. We are working to grow the recurring revenue base by expanding our portfolio of services that bring predictable revenue streams, such as end-to-end outsourced services and technology platforms that we license to our clients on a subscription basis. At the same time, we will continue to seek large one-time project opportunities that enhance our balance sheet. We expect Content Services revenue to increase in the second quarter."
Abuhoff concluded, "We anticipate second quarter revenue to be in the range of $13.8 - 14.5 million, consisting of Content Services revenue in the range of $12.2 - 12.7 million, IADS revenue in the range of $0.5 - 0.6 million and Media Intelligence Solutions revenue in the range of $1.1 - 1.2 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, 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 income (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 today. You can participate in this call by dialing the following call-in numbers:
The call-in numbers for the conference call are:
1-888-203-1112 (Domestic Replay)
1-719-457-0820 (International Replay)
Pass code on both: 1257527
Investors are also invited to access a live Webcast of the conference call at the Investor Relations section of https://www.innodata.com. Please note that the Webcast feature will be in listen-only mode.
Call-in or Webcast replay will be available for 30 days following the conference call.
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