Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2023 | May 05, 2023 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2023 | |
Document Transition Report | false | |
Entity File Number | 001-35774 | |
Entity Registrant Name | INNODATA INC | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 13-3475943 | |
Entity Address, Address Line One | 55 Challenger Road | |
Entity Address, City or Town | Ridgefield Park | |
Entity Address, State or Province | NJ | |
Entity Address, Postal Zip Code | 07660 | |
City Area Code | 201 | |
Local Phone Number | 371-8000 | |
Title of 12(b) Security | Common Stock | |
Trading Symbol | INOD | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 27,549,984 | |
Entity Central Index Key | 0000903651 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Current assets: | ||
Cash and cash equivalents | $ 10,330 | $ 9,792 |
Short term investments - other | 512 | 507 |
Accounts receivable, net of allowance for doubtful accounts | 8,462 | 9,528 |
Prepaid expenses and other current assets | 4,189 | 3,858 |
Total current assets | 23,493 | 23,685 |
Property and equipment, net | 2,590 | 2,511 |
Right-of-use-asset, net | 4,109 | 4,309 |
Other assets | 2,252 | 1,498 |
Deferred income taxes, net | 1,583 | 1,475 |
Intangibles, net | 13,064 | 12,526 |
Goodwill | 2,044 | 2,038 |
Total assets | 49,135 | 48,042 |
Current liabilities: | ||
Accounts payable | 2,225 | 2,630 |
Accrued expenses and other | 6,843 | 7,250 |
Accrued salaries, wages and related benefits | 6,766 | 6,136 |
Income and other taxes | 3,582 | 3,230 |
Long-term obligations - current portion | 1,121 | 877 |
Operating lease liability - current portion | 633 | 693 |
Total current liabilities | 21,170 | 20,816 |
Deferred income taxes, net | 57 | 65 |
Long-term obligations, net of current portion | 6,288 | 5,079 |
Operating lease liability, net of current portion | 3,926 | 4,036 |
Total liabilities | 31,441 | 29,996 |
Commitments and contingencies | ||
Non-controlling interests | (724) | (727) |
STOCKHOLDERS' EQUITY: | ||
Serial preferred stock; 4,998,000 shares authorized, none outstanding | ||
Common stock, $.01 par value; 75,000,000 shares authorized; 30,734,000 shares issued and 27,550,000 outstanding at March 31, 2023 and 30,589,000 shares issued and 27,405,000 outstanding at December 31, 2022 | 307 | 306 |
Additional paid-in capital | 37,097 | 35,815 |
Deficit | (10,891) | (8,775) |
Accumulated other comprehensive loss | (1,630) | (2,108) |
Stockholders' Equity before Treasury Stock, Total | 24,883 | 25,238 |
Less: treasury stock, 3,184,000 shares at March 31, 2023 and December 31, 2022 at cost | (6,465) | (6,465) |
Total stockholders' equity | 18,418 | 18,773 |
Total liabilities, non-controlling interests and stockholders' equity | $ 49,135 | $ 48,042 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Mar. 31, 2023 | Dec. 31, 2022 |
CONSOLIDATED BALANCE SHEETS | ||
Serial preferred stock, shares authorized | 4,998,000 | 4,998,000 |
Serial preferred stock, outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 75,000,000 | 75,000,000 |
Common stock, shares issued | 30,734,000 | 30,589,000 |
Common stock, shares outstanding | 27,550,000 | 27,405,000 |
Treasury stock, shares | 3,184,000 | 3,184,000 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS | ||
Revenues | $ 18,839 | $ 21,192 |
Operating costs and expenses: | ||
Direct operating costs | 12,874 | 13,414 |
Selling and administrative expenses | 7,797 | 10,190 |
Interest expense, net | 63 | 3 |
Total | 20,734 | 23,607 |
Loss before provision for income taxes | (1,895) | (2,415) |
Provision for income taxes | 218 | 475 |
Consolidated net loss | (2,113) | (2,890) |
Income (loss) attributable to non-controlling interests | 3 | (75) |
Net loss attributable to Innodata Inc. and Subsidiaries | $ (2,116) | $ (2,815) |
Loss per share attributable to Innodata Inc. and Subsidiaries: | ||
Basic | $ (0.08) | $ (0.10) |
Diluted | $ (0.08) | $ (0.10) |
Weighted average shares outstanding: | ||
Basic | 27,460 | 27,158 |
Diluted | 27,460 | 27,158 |
Comprehensive Loss: | ||
Consolidated Net loss | $ (2,113) | $ (2,890) |
Pension liability adjustment, net of taxes | (5) | 40 |
Foreign currency translation adjustment | 60 | (26) |
Change in fair value of derivatives, net of taxes | 423 | 5 |
Other comprehensive income | 478 | 19 |
Total Comprehensive loss | (1,635) | (2,871) |
Less: Comprehensive income (loss) attributable to non-controlling interest | 3 | (75) |
Comprehensive Loss attributable to Innodata Inc. and Subsidiaries | $ (1,638) | $ (2,796) |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Cash flows from operating activities: | ||
Consolidated net loss | $ (2,113) | $ (2,890) |
Adjustments to reconcile consolidated net loss to net cash provided by operating activities: | ||
Depreciation and amortization | 1,091 | 873 |
Stock-based compensation | 962 | 537 |
Deferred income taxes | (94) | 44 |
Pension cost | 253 | 11 |
Loss on lease termination | 0 | 125 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 1,149 | 487 |
Prepaid expenses and other current assets | 158 | (63) |
Other assets | 21 | 144 |
Accounts payable, accrued expenses and other | (608) | (533) |
Accrued salaries, wages and related benefits | 627 | (407) |
Income and other taxes | 338 | 176 |
Net cash provided by (used in) operating activities | 1,784 | (1,496) |
Cash flows from investing activities: | ||
Capital expenditures | (1,702) | (1,939) |
Purchase of short term investments - others | (5) | 0 |
Net cash used in investing activities | (1,707) | (1,939) |
Cash flows from financing activities: | ||
Proceeds from stock option exercises | 321 | 26 |
Payment of long-term obligations | (70) | (39) |
Redemption of non-controlling interest | 0 | 1 |
Net cash provided by (used in) financing activities | 251 | (12) |
Effect of exchange rate changes on cash and cash equivalents | 210 | (28) |
Net increase (decrease) in cash and cash equivalents | 538 | (3,475) |
Cash and cash equivalents, beginning of period | 9,792 | 18,902 |
Cash and cash equivalents, end of period | 10,330 | 15,427 |
Supplemental disclosures of cash flow information: | ||
Vendor financed software licenses acquired | 1,162 | 0 |
Non cash redemption of non-controlling interest | 0 | (2,864) |
Cash paid for income taxes | 24 | 308 |
Cash paid for operating leases | 404 | 493 |
Cash paid for interest | $ 92 | $ 4 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands | Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Treasury Stock | Total |
Balance at the beginning at Dec. 31, 2021 | $ 303 | $ 35,121 | $ 3,160 | $ (2,192) | $ (6,465) | $ 29,927 |
Balance at the beginning (in shares) at Dec. 31, 2021 | 30,347,000 | |||||
Balance at the beginning (in shares) at Dec. 31, 2021 | (3,184,000) | |||||
Net loss attributable to Innodata Inc. and Subsidiaries | (2,815) | (2,815) | ||||
Stock-based compensation | 537 | 537 | ||||
Stock option exercises | $ 1 | 26 | 27 | |||
Stock option exercises (in shares) | 23,000 | |||||
Shares withheld for taxes on restricted shares vesting | 53 | 53 | ||||
Shares withheld for taxes on restricted shares vesting (in shares) | 7,000 | |||||
Redemption of non-controlling interest | (2,864) | (2,864) | ||||
Pension liability adjustment, net of taxes | 40 | 40 | ||||
Foreign currency translation adjustment | (26) | (26) | ||||
Change in fair value of derivatives, net of taxes | 5 | 5 | ||||
Balance at the end at Mar. 31, 2022 | $ 304 | 32,767 | 345 | (2,173) | $ (6,465) | 24,778 |
Balance at the end (in shares) at Mar. 31, 2022 | 30,363,000 | |||||
Balance at the end (in shares) at Mar. 31, 2022 | (3,184,000) | |||||
Balance at the beginning at Dec. 31, 2022 | $ 306 | 35,815 | (8,775) | (2,108) | $ (6,465) | $ 18,773 |
Balance at the beginning (in shares) at Dec. 31, 2022 | 30,589,000 | |||||
Balance at the beginning (in shares) at Dec. 31, 2022 | (3,184,000) | 3,184,000 | ||||
Net loss attributable to Innodata Inc. and Subsidiaries | (2,116) | $ (2,116) | ||||
Stock-based compensation | 962 | 962 | ||||
Stock option exercises | $ 1 | 320 | 321 | |||
Stock option exercises (in shares) | 148,000 | |||||
Shares withheld for exercise settlement and taxes (in shares) | (3,000) | |||||
Pension liability adjustment, net of taxes | (5) | (5) | ||||
Foreign currency translation adjustment | 60 | 60 | ||||
Change in fair value of derivatives, net of taxes | 423 | 423 | ||||
Balance at the end at Mar. 31, 2023 | $ 307 | $ 37,097 | $ (10,891) | $ (1,630) | $ (6,465) | $ 18,418 |
Balance at the end (in shares) at Mar. 31, 2023 | 30,734,000 | |||||
Balance at the end (in shares) at Mar. 31, 2023 | (3,184,000) | 3,184,000 |
Summary of Significant Accounti
Summary of Significant Accounting Policies and Estimates | 3 Months Ended |
Mar. 31, 2023 | |
Summary of Significant Accounting Policies and Estimates | |
Summary of Significant Accounting Policies and Estimates | 1. Summary of Significant Accounting Policies and Estimates Basis of Presentation - The condensed consolidated financial statements for the interim periods included herein are unaudited; however, they contain all adjustments (consisting of only normal recurring adjustments) that, in the opinion of management, are necessary to present fairly the consolidated financial position of Innodata Inc. (including its subsidiaries, the “Company”) as of March 31, 2023 and December 31, 2022, the results of its operations and comprehensive loss for the three months ended March 31, 2023 and 2022, cash flows for the three months ended March 31, 2023 and 2022, and stockholders’ equity for the three months ended March 31, 2023 and 2022. The results of operations for the interim periods are not necessarily indicative of results that may be expected for any other interim period or for the full year. Certain information and note disclosures normally included in or with financial statements prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) have been condensed or omitted from these condensed consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) and, accordingly, these condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. Unless otherwise noted, the accounting policies used in preparing these condensed consolidated financial statements are the same as those described in the notes to the consolidated financial statements for the year ended December 31, 2022. Principles of Consolidation - The condensed consolidated financial statements include the accounts of Innodata Inc. and its wholly owned subsidiaries, and docGenix, a limited liability company that is majority-owned by the Company. The non-controlling interest in the docGenix limited liability company has call and put options that can be settled in cash or stock. Accordingly, this is presented in temporary equity in accordance with the Financial Accounting Standards Board’s (the “FASB”) non-controlling interest guidance. All intercompany transactions and balances have been eliminated in consolidation. Use of Estimates - In preparing the condensed consolidated financial statements in conformity with U.S. GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities as of the date of the condensed consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Management believes that the estimates and assumptions used in the preparation of the condensed consolidated financial statements are reasonable. Actual results could differ from those estimates. Significant estimates include those related to the allowance for doubtful accounts and billing adjustments, useful life of long-lived assets, useful life of intangible assets, impairment of goodwill and intangible assets, valuation of deferred tax assets, valuation of stock-based compensation, pension benefit plan assumptions, litigation accruals and estimated accruals for various tax exposures. Revenue Recognition – The Company’s revenue is recognized when services are rendered or goods are delivered to a customer, in an amount that reflects the consideration that the Company expects to receive in exchange for those services or goods as per the agreement with the customer. In cases where there are agreements with multiple performance obligations, the Company identifies each performance obligation and evaluates whether the performance obligations are distinct within the context of the agreement at the agreement’s inception. Performance obligations that are not distinct at agreement inception are combined. For agreements with distinct performance obligations, the Company allocates the transaction price to each distinct performance obligation proportionately based on the estimated standalone selling price for each performance obligation, if any, and then evaluates how the services are performed for the customer to determine the timing of revenue recognition. For the Digital Data Solutions (DDS) segment, revenue is recognized primarily based on the quantity delivered or resources utilized in the period in which services are performed and performance conditions are satisfied as per the agreement. Revenue from agreements billed on a time-and-materials basis is recognized as services are performed. Revenue from fixed-fee agreements, which is not significant to overall revenues, is recognized based on the proportional performance method of accounting, as services are performed, or milestones are achieved. For the Synodex segment, revenue is recognized primarily based on the quantity delivered in the period in which services are performed and performance conditions are satisfied as per the agreement. A portion of the Synodex segment revenue is derived from licensing the Company’s functional software and providing access to the Company’s hosted software platform. Revenue from such services is recognized monthly when all parties to the agreement have agreed to the agreement; each party’s rights are identifiable; the payment terms are identifiable; the agreement has commercial substance; access to the service is provided to the end user; and collection is probable. The Agility segment derives its revenue primarily from subscription arrangements and provision of enriched media analysis services. It also derives revenue as a reseller of corporate communication solutions. Revenue from subscriptions is recognized monthly when access to the service is provided to the end user; all parties to the agreement have agreed to the agreement; each party’s rights are identifiable; the payment terms are identifiable; the agreement has commercial substance; and collection is probable. Revenue from enriched media analysis services is recognized when the services are performed, and performance conditions are satisfied. Revenue from the reseller agreements is recognized at the gross amount received for the goods in accordance with the Company functioning as a principal due to the Company meeting the following criteria: the Company acts as the primary obligor in the sales transaction; assumes the credit risk; sets the price; can select suppliers; and is involved in the execution of the services, including after sales service. Revenue includes reimbursement of out-of-pocket expenses, with the corresponding out-of-pocket expenses included in direct operating costs. Revenue associated with the services provided in one period and billed in a subsequent period is commonly referred to as unbilled revenues and is included under Accounts receivable. The Company considers U.S. GAAP criteria for determining whether to report gross revenue as a principal versus net revenue as an agent. The Company evaluates whether it is in control of the services before the same are transferred to the customer to assess whether it is principal or agent in the arrangement. Contract acquisition costs, which are included in prepaid expenses and other current assets, are amortized over the term of a subscription agreement or contract that normally has a duration of 12 months or less. The Company reviews these prepaid acquisition costs on a periodic basis to determine the need to adjust the carrying values for early-terminated contracts. Included in prepaid expenses and other current assets on the accompanying condensed consolidated balance sheets are contract acquisition costs amounting to $0.7 million and $0.8 million as of March 31, 2023 and December 31, 2022, respectively. These acquisition costs relate to our Agility segment and are amortized over the term of the subscription agreement which normally has a duration of 12 months or less. Foreign Currency Translation - The functional currency of the Company’s subsidiaries in the Philippines, India, Sri Lanka, Israel, Hong Kong and Canada (other than the Agility subsidiary) is the U.S. dollar. Transactions denominated in Philippine pesos, Indian and Sri Lankan rupees, Israeli shekels, and Hong Kong and Canadian dollars are translated to U.S. dollars at rates which approximate those in effect on the transaction dates. Monetary assets and all liabilities denominated in foreign currencies on March 31, 2023 and December 31, 2022 are translated at the exchange rate in effect as of those dates. Non-monetary assets and stockholders’ equity are translated at the appropriate historical rates. Included in direct operating costs were foreign exchange losses (gains) resulting from such transactions of approximately $309,000 and ($419,000) for the three months ended March 31, 2023 and 2022, respectively. The functional currency for the Company’s subsidiaries in Germany, the United Kingdom and for the Company’s Agility subsidiary in Canada are the Euro, the Pound Sterling and the Canadian dollar, respectively. The financial statements of these subsidiaries are prepared in their respective currencies. Financial information is translated from the applicable functional currency to the U.S. dollar (the reporting currency) for inclusion in the Company’s condensed consolidated financial statements. Income, expenses and cash flows are translated at weighted-average exchange rates prevailing during the fiscal period, and assets and liabilities are translated at fiscal period-end exchange rates. Resulting translation adjustments are included as a component of accumulated other comprehensive loss in stockholders’ equity. Foreign exchange transaction gains or losses are included in direct operating costs in the accompanying condensed consolidated statements of operations and comprehensive loss. Derivative Instruments - The Company accounts for derivative transactions in accordance with the FASB’s Accounting Standards Codification (“ASC”) Topic 825, “Financial Instruments”. For derivative instruments that are designated and qualify as cash flow hedges, the entire change in fair value of the hedging instrument is recorded in Other comprehensive income (loss). When the amounts recorded in Other comprehensive income (loss) are reclassified to earnings, they are included as part of Direct operating costs. For derivative instruments that are not designated as hedges, any change in fair value is recorded directly in earnings as part of Direct operating costs. Capitalized Developed Software three Income Taxes - Estimated deferred taxes are determined based on the difference between the financial statement and tax basis of assets and liabilities, using enacted tax rates, as well as any net operating loss or tax credit carryforwards expected to reduce taxes payable in future years. A valuation allowance is provided when it is more likely than not that all or some portion of the estimated deferred tax assets will not be realized. While the Company considers future taxable income in assessing the need for the valuation allowance, in the event that the Company anticipates that it will be able to realize the estimated deferred tax assets in the future in excess of its net recorded amount, an adjustment to the provision for deferred tax assets would increase income in the period such determination was made. Similarly, in the event that the Company anticipates that it will not be able to realize the estimated deferred tax assets in the future considering future taxable income, an adjustment to the provision for deferred tax assets would decrease income in the period such determination was made. In assessing the realization of deferred tax assets, management considered whether it is more likely than not that all or some portion of the United States, Canadian and European (principally Germany and the United Kingdom) deferred tax assets will not be realizable. As the expectation of future taxable income cannot be predicted with certainty, the Company maintains a valuation allowance against all the United States, Canadian and European (principally Germany and the United Kingdom) net deferred tax assets. Changes in the valuation allowance from period to period are included in the Company’s tax provision in the period of change. The Company indefinitely reinvests the foreign earnings in its foreign subsidiaries. If such earnings are repatriated in the future, or are no longer deemed to be indefinitely reinvested, the Company would have to accrue as a liability the applicable amount of foreign jurisdiction withholding taxes associated with such remittances. The Company accounts for income taxes regarding uncertain tax positions, and recognizes interest and penalties related to uncertain tax positions in income tax expense in the condensed consolidated statements of operations and comprehensive loss. Deferred Revenue - Deferred revenue represents advance billings made to customers where conditions for revenue recognition have not been met. These amounts are included in accrued expenses and other on the accompanying condensed consolidated balance sheets. We expect to recognize substantially all of these performance obligations over the next 12 months. The table below provides information about contract liabilities (deferred revenue) and the significant changes in the balance for the three months ended March 31, 2023 (in thousands): Amount Balance at December 31, 2022 $ 4,366 Net deferred revenue in the period 2,585 Revenue recognized (2,744) Currency translations and other adjustments (18) Balance at March 31, 2023 $ 4,189 |
Short Term Investments - other
Short Term Investments - other | 3 Months Ended |
Mar. 31, 2023 | |
Short Term Investments - other | |
Short Term Investments - other | 2. Short Term Investments – other The Short-term investments include investments made by the Company in treasury bills and certificates of deposit which are considered as highly liquid investments having a maturity period of less than one year. March 31, December 31, 2023 2022 Treasury bills $ 499 $ 494 Certificates of deposit 13 13 Total $ 512 $ 507 |
Accounts Receivable
Accounts Receivable | 3 Months Ended |
Mar. 31, 2023 | |
Accounts Receivable | |
Accounts Receivable | 3. Accounts Receivable Accounts receivable consists of the following: March 31, December 31, 2023 2022 Gross Accounts receivable $ 9,628 $ 10,741 Allowance for doubtful accounts (1,166) (1,213) Accounts receivable, net $ 8,462 $ 9,528 As of January 1, 2023, the Company has adopted ASU 2019-04 (Codification Improvements to Topic 326, Financial Instruments—Credit Losses), and based on its assessment there was no impact on the financial statements or other related disclosures. The basis of allowance for doubtful accounts remains similar to the earlier adopted estimation procedure which is further elaborated in the paragraph below. We maintain an allowance for credit losses for estimated losses resulting from the failure of our customers to make the required payments and provisions for billing adjustments relating to quality issues on delivered services. The allowance for credit losses is based on a review of specifically identified accounts and an overall aging analysis applied to accounts pooled based on similar risk characteristics. Judgments are made with respect to the collectability of accounts receivable within each pool based on historical experience, current payment practices, and current economic trends based on our expectations over the expected life of the receivables, generally ninety days or less. Actual credit losses could differ from those estimates. Activity in the allowance for the credit losses for the three months ended March 31, 2023 was as follows (in thousands): Amount Balance at January 1, 2023 $ 1,213 Additions charged to expense 180 Write-offs against allowance (230) Foreign currency translation adjustment 3 Balance at March 31, 2023 $ 1,166 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 3 Months Ended |
Mar. 31, 2023 | |
Goodwill and Intangible Assets | |
Goodwill and Intangible Assets | 4. Goodwill and Intangible Assets The change in the carrying amount of goodwill for the three months ended March 31, 2023 was as follows (in thousands): Balance as of January 1, 2023 $ 2,038 Foreign currency translation adjustment 6 Balance as of March 31, 2023 $ 2,044 The fair value measurement of goodwill for the Agility segment was classified within Level 3 of the fair value hierarchy because the Company used the income approach, which utilizes significant inputs that are unobservable in the market and the market multiple approach using comparable entities to further validate the carrying values. The Company believes it made reasonable estimates and assumptions to calculate the fair value of the reporting unit as of the impairment test measurement date. The carrying value of Goodwill was $ 2.0 million as of March 31, 2023, and December 31, 2022. Information regarding the Company acquired intangible assets and capitalized developed software was as follows (in thousands): March 31, 2023 Foreign Gross Currency Net Carrying Accumulated Translation Carrying Value Amortization Adjustment Value Acquired Intangible Assets Developed technology $ 2,999 $ (2,414) $ 1 $ 586 Customer relationships 2,096 (1,514) - 582 Trademarks and tradenames 852 (733) - 119 Patents 43 (37) - 6 Media Contact Database 3,492 (2,357) 6 1,141 Total Acquired Intangible Assets $ 9,482 $ (7,055) $ 7 $ 2,434 Capitalized Developed Software Capitalized Developed Software $ 11,778 $ (4,779) $ 3 $ 7,002 Capitalized Developed Software - in Progress 3,631 - (3) 3,628 Total Capitalized Developed Software $ 15,409 $ (4,779) $ - $ 10,630 Total $ 24,891 $ (11,834) $ 7 $ 13,064 December 31, 2022 Foreign Gross Currency Net Carrying Accumulated Translation Carrying Value Amortization Adjustment Value Acquired Intangible Assets Developed technology $ 3,169 $ (2,468) $ (43) $ 658 Customer relationships 2,228 (1,560) (42) 626 Trademarks and tradenames 880 (740) (8) 132 Patents 45 (38) 1 8 Media Contact Database 3,648 (2,358) (68) 1,222 Total Acquired Intangible Assets $ 9,970 $ (7,164) $ (160) $ 2,646 Capitalized Developed Software Capitalized Developed Software $ 11,845 $ (4,398) $ (348) $ 7,099 Capitalized Developed Software - in Progress 2,787 - (6) 2,781 Total Capitalized Developed Software $ 14,632 $ (4,398) $ (354) $ 9,880 Total $ 24,602 $ (11,562) $ (514) $ 12,526 Amortization expense relating to acquired intangible assets was $0.2 million for each of the three-month periods ended March 31, 2023 and 2022, respectively. Amortization expense relating to capitalized developed software was $0.6 million and $0.4 million for the three months ended March 31, 2023 and 2022, respectively. As of March 31, 2023, estimated future amortization expense for intangible assets was as follows (in thousands): Year Amortization 2023 $ 3,623 2024 3,975 2025 3,054 2026 853 2027 460 Thereafter 1,099 $ 13,064 |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2023 | |
Income Taxes | |
Income Taxes | 5. Income Taxes Taxes primarily consist of a provision for foreign taxes recorded by the Company’s foreign subsidiaries in accordance with local tax regulations. Effective income tax rates are disproportionate due to the losses incurred by the Company’s United States, Canadian, German and the United Kingdom subsidiaries and a valuation allowance recorded on deferred taxes of these entities and tax effects of foreign operations, including foreign exchange gains and losses. The reconciliations of the U.S. statutory rate with the Company’s effective tax rate for the three months ended March 31, 2023 and 2022, respectively, are summarized in the table below: For the Three Months Ended March 31, 2023 2022 Federal income tax expense at statutory rate (21.0) % (21.0) % Effect of: Change in valuation allowance 23.8 35.1 Tax effects of foreign operations 3.8 5.9 Foreign operations permanent difference - foreign exchange gains and losses 3.5 4.4 Increase in unrecognized tax benefits (ASC 740) 3.4 1.1 Foreign rate differential 0.9 (8.0) State income tax net of federal benefit 0.3 0.2 Return to provision true up (0.4) 4.7 Effect of stock based compensation (1.4) - Deemed interest (4.6) (2.6) Other 3.2 (0.1) Effective tax rate 11.5 % 19.7 % The following table presents a roll-forward of the Company’s unrecognized tax benefits and associated interest for the three months ended March 31, 2023 (in thousands): Unrecognized tax benefits Balance - January 1, 2023 $ 1,680 Increase for current period tax positions 44 Interest accrual 21 Foreign currency remeasurement 9 Balance - March 31, 2023 $ 1,754 The Company expects that unrecognized tax benefits as of March 31, 2023, if recognized, would have a material impact on the Company’s effective tax rate. Tax Assessments In September 2015, the Company’s Indian subsidiary was subject to an inquiry by the Service Tax Department in India regarding the classification of services provided by this subsidiary, asserting that the services provided by this subsidiary fall under the category of online information and database access or retrieval services (OID Services), and not under the category of business support services (BS Services) that are exempt from service tax as historically indicated in the subsidiary’s service tax filings. The Company disagrees with the Service Tax Department’s position. In November 2019, the Commissioner of Central Tax, GST & Central Excise issued an order confirming the Service Tax Department’s position. The Company is contesting this order in an appeal to the Customs, Excise and Service Tax Appellate Tribunal. In the event the Service Tax Department is ultimately successful in proving that the services fall under the category of OID Services, the revenues earned by the Company’s Indian subsidiary for the period July 2012 through November 2016 would be subject to a service tax of between 12.36% and 15% , and this subsidiary may also be liable for interest and penalties. The revenue of the Company’s Indian subsidiary during this period was approximately $57.0 million. In accordance with new rules promulgated by the Service Tax Department, as of December 1, 2016 service tax is no longer applicable to OID or BS Services. Based on the Company’s assessment in consultation with the Company’s tax counsel, the Company has not recorded any tax liability for this case. In a separate action relating to service tax refunds, in October 2016, the Company’s Indian subsidiary received notices from the Indian Service Tax Department in India seeking to reverse service tax refunds of approximately $121,000 previously granted to the Company’s Indian subsidiary for three quarters in 2014, asserting that the services provided by this subsidiary fall under the category of OID Services and not BS Services. The appeal was determined in favor of the Service Tax Department. The Company disagrees with the basis of this decision and is contesting it. The Company expects delays in its Indian subsidiary receiving further service tax refunds until this matter is adjudicated with finality, and currently has service tax credits of approximately $0.8 million recorded as a receivable. Based on the Company’s assessment in consultation with the Company’s tax counsel, the Company has not recorded any tax liability for this case. Substantial recovery against the Company in the above referenced 2015 Service Tax Department case could have a material adverse impact on the Company, and unfavorable rulings or recoveries in other tax proceedings could have a material adverse impact on the consolidated operating results of the period (and subsequent periods) in which the rulings or recovery occurs. |
Operating Leases
Operating Leases | 3 Months Ended |
Mar. 31, 2023 | |
Operating Leases | |
Operating Leases | 6. Operating Leases The Company has various lease agreements for its offices and service delivery centers. The Company has determined that the risks and benefits related to the leased properties are retained by the lessors. Accordingly, these are accounted for as operating leases. These lease agreements are for terms ranging from two The table below summarizes the amounts recognized in the condensed consolidated financial statements related to operating leases for the periods presented (in thousands): For the Three Months Ended March 31, 2023 2022 Rent expense for long-term operating leases $ 309 $ 376 Rent expense for short-term leases 95 117 Total rent expense $ 404 $ 493 The following table presents the maturity profile of the Company’s operating lease liabilities based on the contractual undiscounted payments with a reconciliation of these amounts to the remaining net present value of the operating lease liability reported in the condensed consolidated balance sheet as of March 31, 2023 (in thousands): Year Amount 2023 $ 761 2024 858 2025 890 2026 927 2027 912 2028 and thereafter 1,553 Total lease payments 5,901 Less: Interest (1,342) Net present value of lease liabilities $ 4,559 Current portion $ 633 Long-term portion 3,926 Total $ 4,559 The weighted average remaining lease terms and discount rates for all of the Company’s operating leases as of March 31, 2023 were as follows: Weighted-average lease term remaining (in months) 49 Weighted-average discount rate 9.10 % |
Long-term obligations
Long-term obligations | 3 Months Ended |
Mar. 31, 2023 | |
Long-term obligations | |
Long-term obligations | 7. Long-term obligations Total long-term obligations as of March 31, 2023 and December 31, 2022 consisted of the following (in thousands): March 31, December 31, 2023 2022 Pension obligations - accrued pension liability $ 6,239 $ 5,906 Settlement agreement - 50 Microsoft licenses (1) 1,170 - 7,409 5,956 Less: Current portion of long-term obligations 1,121 877 Totals $ 6,288 $ 5,079 (1) |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2023 | |
Commitments and Contingencies | |
Commitments and Contingencies | 8. Commitments and Contingencies Litigation – The Company is also subject to various other legal proceedings and claims that have arisen in the ordinary course of business. While management currently believes that the ultimate outcome of these proceedings will not have a material adverse effect on the Company’s consolidated financial position or overall trends in consolidated results of operations, litigation is subject to inherent uncertainties. Substantial recovery against the Company in the above-referenced Philippine action could have a material adverse impact on the Company, and unfavorable rulings or recoveries in the other proceedings could have a material adverse impact on the consolidated operating results in the period in which the ruling or recovery occurs . In addition, the Company’s estimate of the potential impact on the Company’s consolidated financial position or overall consolidated results of operations for the above referenced legal proceedings could change in the future. The Company’s legal accruals related to legal proceedings and claims are based on the Company’s determination of whether or not a loss is probable. The Company reviews outstanding proceedings and claims with external counsel to assess probability and estimates of loss. The accruals are adjusted if necessary. While the Company intends to defend these matters vigorously, adverse outcomes that it estimates could reach approximately $450,000 in the aggregate beyond recorded amounts are reasonably possible. If circumstances change, the Company may be required to record adjustments that could be material to its reported consolidated financial condition and results of operations. |
Stock Options and Restricted St
Stock Options and Restricted Stock Units | 3 Months Ended |
Mar. 31, 2023 | |
Stock Options and Restricted Stock Units | |
Stock Options and Restricted Stock Units | 9. Stock Options and Restricted Stock Units A summary of option activity under the Innodata Inc. 2013 Stock Plan, as amended and restated effective June 7, 2016 (the “2013 Plan”) and changes during each of the three-month periods ended March 31, 2023 and 2022 are presented below: Weighted-Average Number of Weighted - Average Remaining Contractual Aggregate Options Exercise Price Term (years) Intrinsic Value Outstanding at January 1, 2023 6,690,490 $ 3.09 Granted* 25,000 3.31 Exercised (148,167) 2.31 Forfeited/Expired (64,666) 6.96 Outstanding at March 31, 2023 6,502,657 $ 3.07 6.94 $ 35,414,546 Exercisable at March 31, 2023 4,041,942 $ 2.03 5.87 $ 26,301,295 Vested and Expected to Vest at March 31, 2023 6,502,657 $ 3.07 6.94 $ 35,414,546 *On January 23, 2023 25,000 stock options were issued to a non-employee member of the Company’s advisory board. The stock options vest in 12 monthly installments commencing in June 2023. Weighted-Average Number of Weighted - Average Remaining Contractual Aggregate Options Exercise Price Term (years) Intrinsic Value Outstanding at January 1, 2022 5,536,896 $ 2.66 Granted* 1,479,558 5.21 Exercised (22,500) 1.17 Forfeited/Expired (35,400) 5.10 Outstanding at March 31, 2022 6,958,554 $ 3.20 7.84 $ 26,515,544 Exercisable at March 31, 2022 3,418,917 $ 1.82 6.53 $ 17,679,562 Vested and Expected to Vest at March 31, 2022 6,958,554 $ 3.20 7.84 $ 26,515,544 *Includes 110,000 stock options granted by the Company to a non-employee director of the Company during the three-month period ended March 31, 2022. The stock option fully vests on January 1, 2025. A summary of option activity under the Innodata Inc. 2021 Equity Compensation Plan, as amended and restated effective as of April 11, 2022 (the “2021 Plan”) and changes during the three-month periods ended March 31, 2023 are presented below. There were no outstanding options under the 2021 Plan as of March 31, 2022. Weighted-Average Number of Weighted - Average Remaining Contractual Aggregate Options Exercise Price Term (years) Intrinsic Value Outstanding at January 1, 2023 1,027,500 $ 3.46 Granted - - Exercised - - Forfeited/Expired (33,500) 3.41 Outstanding at March 31, 2023 994,000 $ 3.46 9.51 $ 5,051,370 Exercisable at March 31, 2023 31,250 $ 5.20 9.29 $ 104,500 Vested and Expected to Vest at March 31, 2023 994,000 $ 3.46 9.51 $ 5,051,370 During the three months ended March 31, 2023, a total of 148,167 options were exercised at an average price of $2.31. The fair value of stock options is estimated on the date of grant using the Black-Scholes option pricing model. The weighted-average fair value of the options granted, and weighted-average assumptions were as follows: For the Three Months Ended March 31, 2023 2022 Weighted average fair value of options granted $ 1.79 $ 3.10 Risk-free interest rate 3.88 % 1.94%-2.33 % Expected term (years) 3.0 6.0-6.42 Expected volatility factor 79.95 % 62.00 % Expected dividends - - There were no outstanding awards of restricted stock under the 2013 Plan or the 2021 Plan (collectively, the “Equity Plans”) during each of the three-month periods ended March 31, 2023 and 2022. In March 2022, the Company granted restricted stock units (“RSU”) to key executives, pursuant to the Equity Plans. Each RSU has vesting conditions based on both the achievement of performance-based metrics and the continuation of employment over a defined period. The level of performance determines the number of RSUs that performance-vest, and performance vested RSUs must also time-vest in order to be fully vested. Each fully vested RSU represents the right to receive one share of the Company’s common stock or the fair market value of one share of common stock, at the Company’s discretion, and is classified as an equity award. Each RSU vests pursuant to the vesting schedule found in the respective RSU agreement. RSUs are generally subject to graduated vesting schedules and stock-based compensation expense is computed by tranche and recognized on a straight-line basis over the tranches’ applicable vesting period based on the expected achievement level. The fair value of restricted stock units is estimated on the date of grant using the Binomial option pricing model. Restricted stock unit activity under the Equity Plans during each of the three-month periods ended March 31, 2023 and 2022 are presented below: Number of Weighted-Average Restricted Stock Grant Date Units Fair Value Unvested at January 1, 2023 700,000 $ 5.59 Granted - - Vested - - Forfeited/Expired - - Unvested at March 31, 2023 700,000 $ 5.59 Number of Weighted-Average Restricted Stock Grant Date Units Fair Value Unvested at January 1, 2022 - $ - Granted* 700,000 5.59 Vested - - Forfeited/Expired - - Unvested at March 31, 2022 700,000 $ 5.59 * 200,000 RSUs were issued under the 2013 Plan and 500,000 RSUs were issued under the 2021 Plan. The compensation cost related to non-vested stock options not yet recognized as of March 31, 2023 totaled approximately $6.2 million. The weighted-average period over which these costs will be recognized is 23 months. During the fiscal year ended December 31, 2022, 700,000 performance-based restricted stock units were granted and remain unvested at March 31, 2023. Vesting of the performance-based restricted stock units is contingent on the achievement of certain financial performance goals and service vesting conditions. There were no restricted stock units granted during the three months ended March 31, 2023. The compensation cost related to non-vested restricted stock units not yet recognized as of March 31, 2023 totaled approximately $2.8 million. The weighted-average period over which these costs will be recognized is 24 months. The stock-based compensation expense related to the Equity Plans were allocated as follows (in thousands): For the Three Months Ended March 31, 2023 2022 Direct operating costs $ 63 $ 52 Selling and administrative expenses 899 485 Total stock-based compensation $ 962 $ 537 |
Redemption of non-controlling i
Redemption of non-controlling interest | 3 Months Ended |
Mar. 31, 2023 | |
Redemption of non-controlling interest | |
Redemption of non-controlling interest | 10. Redemption of non-controlling interest The Condensed Consolidated Balance Sheets for the fiscal period ended December 31, 2022 includes a $2.9 million charge against additional paid-in-capital representing the carrying value of the non-controlling interest in Innodata Synodex, LLC which was redeemed by the Company on March 31, 2022. The Company accounted for the transaction in accordance with ASC Topic 810, “Consolidation,” which discusses the proper accounting treatment of the carrying value for the non-controlling interest. Under the standard, any change in ownership that does not result in a loss of control must be accounted for as an equity transaction. |
Comprehensive loss
Comprehensive loss | 3 Months Ended |
Mar. 31, 2023 | |
Comprehensive loss | |
Comprehensive loss | 11. Comprehensive loss Accumulated other comprehensive loss, as reflected in the condensed consolidated balance sheets, consists of pension liability adjustments, net of taxes, foreign currency translation adjustment and changes in fair value of derivatives, net of taxes. The components of accumulated other comprehensive loss as of March 31, 2023 and 2022, and reclassifications from accumulated other comprehensive loss for the three months then ended, are presented below (in thousands): Pension Liability Fair Value of Foreign Currency Accumulated Other Adjustment Derivatives Translation Adjustment Comprehensive Loss Balance at January 1, 2023 $ (86) $ (365) $ (1,657) $ (2,108) Other comprehensive loss before reclassifications, net of taxes - 242 60 302 Total other comprehensive loss before reclassifications, net of taxes (86) (123) (1,597) (1,806) Net amount reclassified to earnings (5) 181 - 176 Balance at March 31, 2023 $ (91) $ 58 $ (1,597) $ (1,630) Foreign Currency Pension Liability Fair Value of Translation Accumulated Other Adjustment Derivatives Adjustment Comprehensive Loss Balance at January 1, 2022 $ (858) $ (353) $ (981) $ (2,192) Other comprehensive loss before reclassifications, net of taxes - (78) (26) (104) Total other comprehensive loss before reclassifications, net of taxes (858) (431) (1,007) (2,296) Net amount reclassified to earnings 40 83 - 123 Balance at March 31, 2022 $ (818) $ (348) $ (1,007) $ (2,173) Taxes related to each component of other comprehensive loss were not material for each of the three-month periods presented and therefore not disclosed separately. All reclassifications from accumulated other comprehensive loss had an impact on direct operating costs in the condensed consolidated statements of operations and comprehensive loss. |
Segment reporting and concentra
Segment reporting and concentrations | 3 Months Ended |
Mar. 31, 2023 | |
Segment reporting and concentrations | |
Segment reporting and concentrations | 12 . Segment reporting and concentrations The Company’s operations are classified in three reporting segments: Digital Data Solutions (DDS), Synodex and Agility. The DDS segment provides AI data preparation services, collecting or creating training data, annotating training data, and training AI algorithms for its customers, and AI model deployment and integration. The DDS segment also provides a range of data engineering support services including data transformation, data curation, data hygiene, data consolidation, data extraction, data compliance, and master data management. The Synodex segment provides an industry platform that transforms medical records into useable digital data organized in accordance with its proprietary data models or customer data models. The Agility segment provides an industry platform that provides marketing communications and public relations professionals with the ability to target and distribute content to journalists and social media influencers world-wide and to monitor and analyze global news channels (print, web, radio and TV) and social media channels. A significant portion of the Company’s revenue is generated from its locations in the Philippines, India, Sri Lanka, Canada, Germany, the United Kingdom and Israel. Revenues from external customers, segment operating profit (loss), and other reportable segment information are as follows (in thousands): For the Three Months Ended March 31, 2023 2022 Revenues: DDS $ 12,746 $ 15,911 Synodex 1,865 1,669 Agility 4,228 3,612 Total Consolidated $ 18,839 $ 21,192 Income (loss) before provision for income taxes (1) DDS $ (281) $ 1,452 Synodex (111) (988) Agility (1,503) (2,879) Total Consolidated $ (1,895) $ (2,415) Income (loss) before provision for income taxes (2) DDS $ (423) $ 1,296 Synodex 14 (859) Agility (1,486) (2,852) Total Consolidated $ (1,895) $ (2,415) March 31, 2023 December 31, 2022 Total assets: DDS $ 26,251 $ 25,758 Synodex 3,433 3,270 Agility 19,451 19,014 Total Consolidated $ 49,135 $ 48,042 March 31, 2023 December 31, 2022 Goodwill: Agility $ 2,044 $ 2,038 Total $ 2,044 $ 2,038 (1) Before elimination of any inter-segment profits (2) After elimination of any inter-segment profits The table below shows intersegment revenues which are eliminated in consolidation (in thousands). For the Three Months Ended March 31, 2023 2022 Revenues of DDS Segment from: Synodex $ 447 $ 564 Agility 32 33 Totals $ 479 $ 597 Revenues for the period ended March 31, 2023 and 2022 by geographic region (determined based upon customer’s domicile), were as follows (in thousands): March 31, 2023 2022 United States $ 11,409 $ 13,393 United Kingdom 2,555 3,082 The Netherlands 1,723 1,652 Canada 1,438 1,377 Others - principally Europe 1,714 1,688 Totals $ 18,839 $ 21,192 Long-lived assets as of March 31, 2023 and December 31, 2022 by geographic region were comprised of (in thousands): March 31, December 31, 2023 2022 United States $ 7,944 $ 7,205 Foreign countries: Canada 7,633 7,675 United Kingdom 1,160 1,198 Philippines 3,631 3,682 India 991 1,195 Sri Lanka 446 426 Israel 2 3 Germany - - Total foreign 13,863 14,179 Totals $ 21,807 $ 21,384 Long-lived assets include the unamortized balance of right-of-use assets amounting to $4.1 million and $4.3 million as of March 31, 2023 and December 31, 2022, respectively. One customer in the DDS segment generated approximately 11% and another customer in the DDS segment generated 11% of the Company’s total revenues for the three months ended March 31, 2023. Another customer in the DDS segment generated approximately 21% of the Company’s total revenues for the three months ended March 31, 2022. No other customer accounted for 10% or more of total revenues during these periods. Further, for the three months ended March 31, 2023 and 2022, revenues from non-U.S. customers accounted for 39% and 37% , respectively, of the Company’s total revenues. As of March 31, 2023, approximately 38% of the Company’s accounts receivable was due from foreign (principally European) customers and 30% of the Company’s accounts receivable was due from two customers. As of December 31, 2022, approximately 44% of the Company’s accounts receivable was due from foreign (principally European) customers and 45% of the Company’s accounts receivable was due from four customers. No other customer accounted for 10% or more of the accounts receivable as of March 31, 2023 and December 31, 2022 . |
Loss Per Share
Loss Per Share | 3 Months Ended |
Mar. 31, 2023 | |
Loss Per Share | |
Loss Per Share | 13. Loss Per Share For the Three Months Ended March 31, 2023 2022 Net Loss attributable to Innodata Inc. and Subsidiaries $ 2,116 $ 2,815 Weighted average common shares outstanding 27,460 27,158 Dilutive effect of outstanding options - - Adjusted for dilutive computation 27,460 27,158 Basic income (loss) per share is computed using the weighted-average number of common shares outstanding during the year. Diluted income (loss) per share is computed by considering the impact of the potential issuance of common shares, using the treasury stock method, on the weighted-average number of shares outstanding. For those securities that are not convertible into a class of common stock, the “two-class” method of computing income (loss) per share is used. Options to purchase 6.6 million and 7.0 million shares of common stock for the three months ended March 31, 2023 and 2022, respectively, were outstanding but not included in the computation of diluted loss per share because the effect would have been anti-dilutive. |
Derivatives
Derivatives | 3 Months Ended |
Mar. 31, 2023 | |
Derivatives | |
Derivatives | 14. Derivatives The Company conducts a large portion of its operations in international markets, which subjects it to foreign currency fluctuations. The most significant foreign currency exposures occur when revenue and associated accounts receivable are collected in one currency and expenses to generate that revenue are incurred in another currency. The Company is also subject to wage inflation and other government mandated increases and operating expenses in Asian countries where the Company has the majority of its operations. The Company’s primary inflation and exchange rate exposure relates to payroll, other payroll costs and operating expenses in the Philippines, India, Sri Lanka and Israel. In addition, although most of the Company’s revenue is denominated in U.S. dollars, a significant portion of total revenues is denominated in Canadian dollars, Pound Sterling and Euros. The Company’s policy is to enter derivative instrument contracts with terms that coincide with the underlying exposure being hedged for a period of up to 12 months. As such, the Company’s derivative instruments are expected to be highly effective. For derivative instruments that are designated and qualify as cash flow hedges, the entire change in fair value of the hedging instrument is recorded to Other comprehensive income (loss). Upon settlement of these contracts, the change in the fair value recorded in Other comprehensive income (loss) are reclassified to earnings and included as part of Direct operating costs. For derivative instruments that are not designated as hedges, any change in fair value is recorded directly in earnings as part of Direct operating costs . The Company formally documents all relationships between hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking hedge transactions. The Company does not hold or issue derivatives for trading purposes. All derivatives are recognized at their fair value and classified based on the instrument’s maturity date. The total notional amount for outstanding derivatives designated as hedges was $9.8 million and $14.2 million as of March 31, 2023 and December 31, 2022, respectively. The following table presents the fair value of derivative instruments included within the condensed consolidated balance sheets as of March 31, 2023 and December 31, 2022 (in thousands): Balance Sheet Location Fair Value 2023 2022 Derivatives designated as hedging instruments: Foreign currency forward contracts Prepaid expenses and other current assets $ 58 $ - Foreign currency forward contracts Accrued expenses and other $ - $ 365 The effect of foreign currency forward contracts designated as cash flow hedges on the condensed consolidated statements of operations for the three months ended March 31, 2023 and 2022 were as follows (in thousands): For the Three Months Ended March 31, 2023 2022 Net gain (loss) recognized in OCI (1) $ 242 $ (78) Net (gain) loss reclassified from accumulated OCI into income (2) $ 181 $ 83 Net gain recognized in income (3) $ - $ - (1) Net change in fair value of the effective portion classified into other comprehensive income (“OCI”) (2) Effective portion classified within direct operating costs. (3) There were no ineffective portions for the period presented. |
Subsequent Event
Subsequent Event | 3 Months Ended |
Mar. 31, 2023 | |
Subsequent Event | |
Subsequent Event | 15. Subsequent Event On April 4, 2023, Innodata Inc. entered into a Credit Agreement (the “Credit Agreement”) with Wells Fargo Bank, National Association, as lender, Innodata Synodex, LLC, Innodata docGenix, LLC, and Agility PR Solutions LLC. The Credit Agreement provides for a secured revolving line of credit (the “Revolving Credit Facility”) up to an amount equal to the lesser of the borrowing base and $10.0 million with a maturity date of April 4, 2026. The Revolving Credit Facility’s borrowing base is calculated in accordance with the terms of the Credit Agreement and on the basis of 85% of eligible accounts, 85% of eligible foreign accounts up to $2.0 million and certain other reserves and adjustments. The Credit Agreement contains a financial covenant that will require the Borrowers, on a consolidated basis, to maintain a fixed charge coverage ratio of not less than 1.10 to 1.00 by December 31, 2023. Except as set forth in the Credit Agreement, borrowings under the Revolving Credit Facility bear interest at a rate equal to the daily simple secured overnight financing rate (“SOFR”) plus 2.25%. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies and Estimates (Policies) | 3 Months Ended |
Mar. 31, 2023 | |
Summary of Significant Accounting Policies and Estimates | |
Basis of Presentation | Basis of Presentation - The condensed consolidated financial statements for the interim periods included herein are unaudited; however, they contain all adjustments (consisting of only normal recurring adjustments) that, in the opinion of management, are necessary to present fairly the consolidated financial position of Innodata Inc. (including its subsidiaries, the “Company”) as of March 31, 2023 and December 31, 2022, the results of its operations and comprehensive loss for the three months ended March 31, 2023 and 2022, cash flows for the three months ended March 31, 2023 and 2022, and stockholders’ equity for the three months ended March 31, 2023 and 2022. The results of operations for the interim periods are not necessarily indicative of results that may be expected for any other interim period or for the full year. Certain information and note disclosures normally included in or with financial statements prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) have been condensed or omitted from these condensed consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) and, accordingly, these condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. Unless otherwise noted, the accounting policies used in preparing these condensed consolidated financial statements are the same as those described in the notes to the consolidated financial statements for the year ended December 31, 2022. |
Principles of Consolidation | Principles of Consolidation - The condensed consolidated financial statements include the accounts of Innodata Inc. and its wholly owned subsidiaries, and docGenix, a limited liability company that is majority-owned by the Company. The non-controlling interest in the docGenix limited liability company has call and put options that can be settled in cash or stock. Accordingly, this is presented in temporary equity in accordance with the Financial Accounting Standards Board’s (the “FASB”) non-controlling interest guidance. All intercompany transactions and balances have been eliminated in consolidation. |
Use of Estimates | Use of Estimates - In preparing the condensed consolidated financial statements in conformity with U.S. GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities as of the date of the condensed consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Management believes that the estimates and assumptions used in the preparation of the condensed consolidated financial statements are reasonable. Actual results could differ from those estimates. Significant estimates include those related to the allowance for doubtful accounts and billing adjustments, useful life of long-lived assets, useful life of intangible assets, impairment of goodwill and intangible assets, valuation of deferred tax assets, valuation of stock-based compensation, pension benefit plan assumptions, litigation accruals and estimated accruals for various tax exposures. |
Revenue Recognition | Revenue Recognition – The Company’s revenue is recognized when services are rendered or goods are delivered to a customer, in an amount that reflects the consideration that the Company expects to receive in exchange for those services or goods as per the agreement with the customer. In cases where there are agreements with multiple performance obligations, the Company identifies each performance obligation and evaluates whether the performance obligations are distinct within the context of the agreement at the agreement’s inception. Performance obligations that are not distinct at agreement inception are combined. For agreements with distinct performance obligations, the Company allocates the transaction price to each distinct performance obligation proportionately based on the estimated standalone selling price for each performance obligation, if any, and then evaluates how the services are performed for the customer to determine the timing of revenue recognition. For the Digital Data Solutions (DDS) segment, revenue is recognized primarily based on the quantity delivered or resources utilized in the period in which services are performed and performance conditions are satisfied as per the agreement. Revenue from agreements billed on a time-and-materials basis is recognized as services are performed. Revenue from fixed-fee agreements, which is not significant to overall revenues, is recognized based on the proportional performance method of accounting, as services are performed, or milestones are achieved. For the Synodex segment, revenue is recognized primarily based on the quantity delivered in the period in which services are performed and performance conditions are satisfied as per the agreement. A portion of the Synodex segment revenue is derived from licensing the Company’s functional software and providing access to the Company’s hosted software platform. Revenue from such services is recognized monthly when all parties to the agreement have agreed to the agreement; each party’s rights are identifiable; the payment terms are identifiable; the agreement has commercial substance; access to the service is provided to the end user; and collection is probable. The Agility segment derives its revenue primarily from subscription arrangements and provision of enriched media analysis services. It also derives revenue as a reseller of corporate communication solutions. Revenue from subscriptions is recognized monthly when access to the service is provided to the end user; all parties to the agreement have agreed to the agreement; each party’s rights are identifiable; the payment terms are identifiable; the agreement has commercial substance; and collection is probable. Revenue from enriched media analysis services is recognized when the services are performed, and performance conditions are satisfied. Revenue from the reseller agreements is recognized at the gross amount received for the goods in accordance with the Company functioning as a principal due to the Company meeting the following criteria: the Company acts as the primary obligor in the sales transaction; assumes the credit risk; sets the price; can select suppliers; and is involved in the execution of the services, including after sales service. Revenue includes reimbursement of out-of-pocket expenses, with the corresponding out-of-pocket expenses included in direct operating costs. Revenue associated with the services provided in one period and billed in a subsequent period is commonly referred to as unbilled revenues and is included under Accounts receivable. The Company considers U.S. GAAP criteria for determining whether to report gross revenue as a principal versus net revenue as an agent. The Company evaluates whether it is in control of the services before the same are transferred to the customer to assess whether it is principal or agent in the arrangement. Contract acquisition costs, which are included in prepaid expenses and other current assets, are amortized over the term of a subscription agreement or contract that normally has a duration of 12 months or less. The Company reviews these prepaid acquisition costs on a periodic basis to determine the need to adjust the carrying values for early-terminated contracts. Included in prepaid expenses and other current assets on the accompanying condensed consolidated balance sheets are contract acquisition costs amounting to $0.7 million and $0.8 million as of March 31, 2023 and December 31, 2022, respectively. These acquisition costs relate to our Agility segment and are amortized over the term of the subscription agreement which normally has a duration of 12 months or less. |
Foreign Currency Translation | Foreign Currency Translation - The functional currency of the Company’s subsidiaries in the Philippines, India, Sri Lanka, Israel, Hong Kong and Canada (other than the Agility subsidiary) is the U.S. dollar. Transactions denominated in Philippine pesos, Indian and Sri Lankan rupees, Israeli shekels, and Hong Kong and Canadian dollars are translated to U.S. dollars at rates which approximate those in effect on the transaction dates. Monetary assets and all liabilities denominated in foreign currencies on March 31, 2023 and December 31, 2022 are translated at the exchange rate in effect as of those dates. Non-monetary assets and stockholders’ equity are translated at the appropriate historical rates. Included in direct operating costs were foreign exchange losses (gains) resulting from such transactions of approximately $309,000 and ($419,000) for the three months ended March 31, 2023 and 2022, respectively. The functional currency for the Company’s subsidiaries in Germany, the United Kingdom and for the Company’s Agility subsidiary in Canada are the Euro, the Pound Sterling and the Canadian dollar, respectively. The financial statements of these subsidiaries are prepared in their respective currencies. Financial information is translated from the applicable functional currency to the U.S. dollar (the reporting currency) for inclusion in the Company’s condensed consolidated financial statements. Income, expenses and cash flows are translated at weighted-average exchange rates prevailing during the fiscal period, and assets and liabilities are translated at fiscal period-end exchange rates. Resulting translation adjustments are included as a component of accumulated other comprehensive loss in stockholders’ equity. Foreign exchange transaction gains or losses are included in direct operating costs in the accompanying condensed consolidated statements of operations and comprehensive loss. |
Derivative Instruments | Derivative Instruments - The Company accounts for derivative transactions in accordance with the FASB’s Accounting Standards Codification (“ASC”) Topic 825, “Financial Instruments”. For derivative instruments that are designated and qualify as cash flow hedges, the entire change in fair value of the hedging instrument is recorded in Other comprehensive income (loss). When the amounts recorded in Other comprehensive income (loss) are reclassified to earnings, they are included as part of Direct operating costs. For derivative instruments that are not designated as hedges, any change in fair value is recorded directly in earnings as part of Direct operating costs. |
Capitalized Developed Software | Capitalized Developed Software three |
Income Taxes | Income Taxes - Estimated deferred taxes are determined based on the difference between the financial statement and tax basis of assets and liabilities, using enacted tax rates, as well as any net operating loss or tax credit carryforwards expected to reduce taxes payable in future years. A valuation allowance is provided when it is more likely than not that all or some portion of the estimated deferred tax assets will not be realized. While the Company considers future taxable income in assessing the need for the valuation allowance, in the event that the Company anticipates that it will be able to realize the estimated deferred tax assets in the future in excess of its net recorded amount, an adjustment to the provision for deferred tax assets would increase income in the period such determination was made. Similarly, in the event that the Company anticipates that it will not be able to realize the estimated deferred tax assets in the future considering future taxable income, an adjustment to the provision for deferred tax assets would decrease income in the period such determination was made. In assessing the realization of deferred tax assets, management considered whether it is more likely than not that all or some portion of the United States, Canadian and European (principally Germany and the United Kingdom) deferred tax assets will not be realizable. As the expectation of future taxable income cannot be predicted with certainty, the Company maintains a valuation allowance against all the United States, Canadian and European (principally Germany and the United Kingdom) net deferred tax assets. Changes in the valuation allowance from period to period are included in the Company’s tax provision in the period of change. The Company indefinitely reinvests the foreign earnings in its foreign subsidiaries. If such earnings are repatriated in the future, or are no longer deemed to be indefinitely reinvested, the Company would have to accrue as a liability the applicable amount of foreign jurisdiction withholding taxes associated with such remittances. The Company accounts for income taxes regarding uncertain tax positions, and recognizes interest and penalties related to uncertain tax positions in income tax expense in the condensed consolidated statements of operations and comprehensive loss. |
Deferred Revenue | Deferred Revenue - Deferred revenue represents advance billings made to customers where conditions for revenue recognition have not been met. These amounts are included in accrued expenses and other on the accompanying condensed consolidated balance sheets. We expect to recognize substantially all of these performance obligations over the next 12 months. The table below provides information about contract liabilities (deferred revenue) and the significant changes in the balance for the three months ended March 31, 2023 (in thousands): Amount Balance at December 31, 2022 $ 4,366 Net deferred revenue in the period 2,585 Revenue recognized (2,744) Currency translations and other adjustments (18) Balance at March 31, 2023 $ 4,189 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies and Estimates (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Summary of Significant Accounting Policies and Estimates | |
Schedule of information about contract liabilities (deferred revenue) | Amount Balance at December 31, 2022 $ 4,366 Net deferred revenue in the period 2,585 Revenue recognized (2,744) Currency translations and other adjustments (18) Balance at March 31, 2023 $ 4,189 |
Short Term Investments - other
Short Term Investments - other (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Short Term Investments - other | |
Schedule of other short term investments | March 31, December 31, 2023 2022 Treasury bills $ 499 $ 494 Certificates of deposit 13 13 Total $ 512 $ 507 |
Accounts Receivable (Tables)
Accounts Receivable (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Accounts Receivable | |
Schedule of accounts receivable | March 31, December 31, 2023 2022 Gross Accounts receivable $ 9,628 $ 10,741 Allowance for doubtful accounts (1,166) (1,213) Accounts receivable, net $ 8,462 $ 9,528 |
Schedule of allowance for credit losses | Amount Balance at January 1, 2023 $ 1,213 Additions charged to expense 180 Write-offs against allowance (230) Foreign currency translation adjustment 3 Balance at March 31, 2023 $ 1,166 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Goodwill and Intangible Assets | |
Schedule of carrying amount of goodwill | The change in the carrying amount of goodwill for the three months ended March 31, 2023 was as follows (in thousands): Balance as of January 1, 2023 $ 2,038 Foreign currency translation adjustment 6 Balance as of March 31, 2023 $ 2,044 |
Schedule of company's acquisition-related intangible assets and capitalized developed software | Information regarding the Company acquired intangible assets and capitalized developed software was as follows (in thousands): March 31, 2023 Foreign Gross Currency Net Carrying Accumulated Translation Carrying Value Amortization Adjustment Value Acquired Intangible Assets Developed technology $ 2,999 $ (2,414) $ 1 $ 586 Customer relationships 2,096 (1,514) - 582 Trademarks and tradenames 852 (733) - 119 Patents 43 (37) - 6 Media Contact Database 3,492 (2,357) 6 1,141 Total Acquired Intangible Assets $ 9,482 $ (7,055) $ 7 $ 2,434 Capitalized Developed Software Capitalized Developed Software $ 11,778 $ (4,779) $ 3 $ 7,002 Capitalized Developed Software - in Progress 3,631 - (3) 3,628 Total Capitalized Developed Software $ 15,409 $ (4,779) $ - $ 10,630 Total $ 24,891 $ (11,834) $ 7 $ 13,064 December 31, 2022 Foreign Gross Currency Net Carrying Accumulated Translation Carrying Value Amortization Adjustment Value Acquired Intangible Assets Developed technology $ 3,169 $ (2,468) $ (43) $ 658 Customer relationships 2,228 (1,560) (42) 626 Trademarks and tradenames 880 (740) (8) 132 Patents 45 (38) 1 8 Media Contact Database 3,648 (2,358) (68) 1,222 Total Acquired Intangible Assets $ 9,970 $ (7,164) $ (160) $ 2,646 Capitalized Developed Software Capitalized Developed Software $ 11,845 $ (4,398) $ (348) $ 7,099 Capitalized Developed Software - in Progress 2,787 - (6) 2,781 Total Capitalized Developed Software $ 14,632 $ (4,398) $ (354) $ 9,880 Total $ 24,602 $ (11,562) $ (514) $ 12,526 |
Schedule of estimated amortization expense for intangible assets | As of March 31, 2023, estimated future amortization expense for intangible assets was as follows (in thousands): Year Amortization 2023 $ 3,623 2024 3,975 2025 3,054 2026 853 2027 460 Thereafter 1,099 $ 13,064 |
Income Taxes (Tables)
Income Taxes (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Income Taxes | |
Schedule of effective income tax rate reconciliation | For the Three Months Ended March 31, 2023 2022 Federal income tax expense at statutory rate (21.0) % (21.0) % Effect of: Change in valuation allowance 23.8 35.1 Tax effects of foreign operations 3.8 5.9 Foreign operations permanent difference - foreign exchange gains and losses 3.5 4.4 Increase in unrecognized tax benefits (ASC 740) 3.4 1.1 Foreign rate differential 0.9 (8.0) State income tax net of federal benefit 0.3 0.2 Return to provision true up (0.4) 4.7 Effect of stock based compensation (1.4) - Deemed interest (4.6) (2.6) Other 3.2 (0.1) Effective tax rate 11.5 % 19.7 % |
Schedule of unrecognized tax benefits | The following table presents a roll-forward of the Company’s unrecognized tax benefits and associated interest for the three months ended March 31, 2023 (in thousands): Unrecognized tax benefits Balance - January 1, 2023 $ 1,680 Increase for current period tax positions 44 Interest accrual 21 Foreign currency remeasurement 9 Balance - March 31, 2023 $ 1,754 |
Operating Leases (Tables)
Operating Leases (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Operating Leases | |
Schedule of operating lease expense recognized in financial statements | The table below summarizes the amounts recognized in the condensed consolidated financial statements related to operating leases for the periods presented (in thousands): For the Three Months Ended March 31, 2023 2022 Rent expense for long-term operating leases $ 309 $ 376 Rent expense for short-term leases 95 117 Total rent expense $ 404 $ 493 |
Schedule of net present value of operating lease liability | The following table presents the maturity profile of the Company’s operating lease liabilities based on the contractual undiscounted payments with a reconciliation of these amounts to the remaining net present value of the operating lease liability reported in the condensed consolidated balance sheet as of March 31, 2023 (in thousands): Year Amount 2023 $ 761 2024 858 2025 890 2026 927 2027 912 2028 and thereafter 1,553 Total lease payments 5,901 Less: Interest (1,342) Net present value of lease liabilities $ 4,559 Current portion $ 633 Long-term portion 3,926 Total $ 4,559 |
Schedule of weighted average remaining lease terms and discount rates | The weighted average remaining lease terms and discount rates for all of the Company’s operating leases as of March 31, 2023 were as follows: Weighted-average lease term remaining (in months) 49 Weighted-average discount rate 9.10 % |
Long-term obligations (Tables)
Long-term obligations (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Long-term obligations | |
Schedule of total long-term obligations | Total long-term obligations as of March 31, 2023 and December 31, 2022 consisted of the following (in thousands): March 31, December 31, 2023 2022 Pension obligations - accrued pension liability $ 6,239 $ 5,906 Settlement agreement - 50 Microsoft licenses (1) 1,170 - 7,409 5,956 Less: Current portion of long-term obligations 1,121 877 Totals $ 6,288 $ 5,079 (1) |
Stock Options and Restricted _2
Stock Options and Restricted Stock Units (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Stock Options and Restricted Stock Units | |
Schedule of stock option activity | Weighted-Average Number of Weighted - Average Remaining Contractual Aggregate Options Exercise Price Term (years) Intrinsic Value Outstanding at January 1, 2023 6,690,490 $ 3.09 Granted* 25,000 3.31 Exercised (148,167) 2.31 Forfeited/Expired (64,666) 6.96 Outstanding at March 31, 2023 6,502,657 $ 3.07 6.94 $ 35,414,546 Exercisable at March 31, 2023 4,041,942 $ 2.03 5.87 $ 26,301,295 Vested and Expected to Vest at March 31, 2023 6,502,657 $ 3.07 6.94 $ 35,414,546 *On January 23, 2023 25,000 stock options were issued to a non-employee member of the Company’s advisory board. The stock options vest in 12 monthly installments commencing in June 2023. Weighted-Average Number of Weighted - Average Remaining Contractual Aggregate Options Exercise Price Term (years) Intrinsic Value Outstanding at January 1, 2022 5,536,896 $ 2.66 Granted* 1,479,558 5.21 Exercised (22,500) 1.17 Forfeited/Expired (35,400) 5.10 Outstanding at March 31, 2022 6,958,554 $ 3.20 7.84 $ 26,515,544 Exercisable at March 31, 2022 3,418,917 $ 1.82 6.53 $ 17,679,562 Vested and Expected to Vest at March 31, 2022 6,958,554 $ 3.20 7.84 $ 26,515,544 *Includes 110,000 stock options granted by the Company to a non-employee director of the Company during the three-month period ended March 31, 2022. The stock option fully vests on January 1, 2025. Weighted-Average Number of Weighted - Average Remaining Contractual Aggregate Options Exercise Price Term (years) Intrinsic Value Outstanding at January 1, 2023 1,027,500 $ 3.46 Granted - - Exercised - - Forfeited/Expired (33,500) 3.41 Outstanding at March 31, 2023 994,000 $ 3.46 9.51 $ 5,051,370 Exercisable at March 31, 2023 31,250 $ 5.20 9.29 $ 104,500 Vested and Expected to Vest at March 31, 2023 994,000 $ 3.46 9.51 $ 5,051,370 |
Schedule of weighted average assumptions | For the Three Months Ended March 31, 2023 2022 Weighted average fair value of options granted $ 1.79 $ 3.10 Risk-free interest rate 3.88 % 1.94%-2.33 % Expected term (years) 3.0 6.0-6.42 Expected volatility factor 79.95 % 62.00 % Expected dividends - - |
Schedule of stock-based compensation expense | For the Three Months Ended March 31, 2023 2022 Direct operating costs $ 63 $ 52 Selling and administrative expenses 899 485 Total stock-based compensation $ 962 $ 537 |
Restricted Stock Units | |
Stock Options and Restricted Stock Units | |
Summary of restricted stock under the company's plan | Number of Weighted-Average Restricted Stock Grant Date Units Fair Value Unvested at January 1, 2022 - $ - Granted* 700,000 5.59 Vested - - Forfeited/Expired - - Unvested at March 31, 2022 700,000 $ 5.59 * 200,000 RSUs were issued under the 2013 Plan and 500,000 RSUs were issued under the 2021 Plan. |
Comprehensive loss (Tables)
Comprehensive loss (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Comprehensive loss | |
Schedule of accumulated other comprehensive loss | Pension Liability Fair Value of Foreign Currency Accumulated Other Adjustment Derivatives Translation Adjustment Comprehensive Loss Balance at January 1, 2023 $ (86) $ (365) $ (1,657) $ (2,108) Other comprehensive loss before reclassifications, net of taxes - 242 60 302 Total other comprehensive loss before reclassifications, net of taxes (86) (123) (1,597) (1,806) Net amount reclassified to earnings (5) 181 - 176 Balance at March 31, 2023 $ (91) $ 58 $ (1,597) $ (1,630) Foreign Currency Pension Liability Fair Value of Translation Accumulated Other Adjustment Derivatives Adjustment Comprehensive Loss Balance at January 1, 2022 $ (858) $ (353) $ (981) $ (2,192) Other comprehensive loss before reclassifications, net of taxes - (78) (26) (104) Total other comprehensive loss before reclassifications, net of taxes (858) (431) (1,007) (2,296) Net amount reclassified to earnings 40 83 - 123 Balance at March 31, 2022 $ (818) $ (348) $ (1,007) $ (2,173) |
Segment reporting and concent_2
Segment reporting and concentrations (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Segment reporting and concentrations | |
Schedule of segment reporting information, by segment | For the Three Months Ended March 31, 2023 2022 Revenues: DDS $ 12,746 $ 15,911 Synodex 1,865 1,669 Agility 4,228 3,612 Total Consolidated $ 18,839 $ 21,192 Income (loss) before provision for income taxes (1) DDS $ (281) $ 1,452 Synodex (111) (988) Agility (1,503) (2,879) Total Consolidated $ (1,895) $ (2,415) Income (loss) before provision for income taxes (2) DDS $ (423) $ 1,296 Synodex 14 (859) Agility (1,486) (2,852) Total Consolidated $ (1,895) $ (2,415) March 31, 2023 December 31, 2022 Total assets: DDS $ 26,251 $ 25,758 Synodex 3,433 3,270 Agility 19,451 19,014 Total Consolidated $ 49,135 $ 48,042 March 31, 2023 December 31, 2022 Goodwill: Agility $ 2,044 $ 2,038 Total $ 2,044 $ 2,038 (1) Before elimination of any inter-segment profits (2) After elimination of any inter-segment profits For the Three Months Ended March 31, 2023 2022 Revenues of DDS Segment from: Synodex $ 447 $ 564 Agility 32 33 Totals $ 479 $ 597 |
Schedule of revenue from external customers and long-lived assets | March 31, 2023 2022 United States $ 11,409 $ 13,393 United Kingdom 2,555 3,082 The Netherlands 1,723 1,652 Canada 1,438 1,377 Others - principally Europe 1,714 1,688 Totals $ 18,839 $ 21,192 |
Schedule of revenue from external customers based on client domicile | March 31, December 31, 2023 2022 United States $ 7,944 $ 7,205 Foreign countries: Canada 7,633 7,675 United Kingdom 1,160 1,198 Philippines 3,631 3,682 India 991 1,195 Sri Lanka 446 426 Israel 2 3 Germany - - Total foreign 13,863 14,179 Totals $ 21,807 $ 21,384 |
Loss Per Share (Tables)
Loss Per Share (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Loss Per Share | |
Schedule of earnings per share, basic and diluted | For the Three Months Ended March 31, 2023 2022 Net Loss attributable to Innodata Inc. and Subsidiaries $ 2,116 $ 2,815 Weighted average common shares outstanding 27,460 27,158 Dilutive effect of outstanding options - - Adjusted for dilutive computation 27,460 27,158 |
Derivatives (Tables)
Derivatives (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Derivatives | |
Schedule of fair value of derivative instruments | Balance Sheet Location Fair Value 2023 2022 Derivatives designated as hedging instruments: Foreign currency forward contracts Prepaid expenses and other current assets $ 58 $ - Foreign currency forward contracts Accrued expenses and other $ - $ 365 |
Schedule of effects of foreign currency forward contracts designated as cash flow hedges | For the Three Months Ended March 31, 2023 2022 Net gain (loss) recognized in OCI (1) $ 242 $ (78) Net (gain) loss reclassified from accumulated OCI into income (2) $ 181 $ 83 Net gain recognized in income (3) $ - $ - (1) Net change in fair value of the effective portion classified into other comprehensive income (“OCI”) (2) Effective portion classified within direct operating costs. (3) There were no ineffective portions for the period presented. |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies and Estimates (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Summary of Significant Accounting Policies and Estimates | |||
Amortization period | 12 months | ||
Foreign currency transaction gain (loss), before tax | $ 309,000 | $ (419,000) | |
Prepaid expenses and other current assets on contract acquisition costs | $ 700 | $ 800 | |
Minimum | Capitalized software development | |||
Summary of Significant Accounting Policies and Estimates | |||
Estimated useful life of intangibles | 3 years | ||
Maximum | Capitalized software development | |||
Summary of Significant Accounting Policies and Estimates | |||
Estimated useful life of intangibles | 10 years |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies and Estimates - Deferred revenue (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2023 USD ($) | |
Summary of Significant Accounting Policies and Estimates | |
Balance at December 31, 2022 | $ 4,366 |
Net deferred revenue in the period | 2,585 |
Revenue recognized | (2,744) |
Currency translations and other adjustments | (18) |
Balance at March 31, 2023 | $ 4,189 |
Short Term Investments - othe_2
Short Term Investments - other (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Short Term Investments - other | ||
Treasury bills | $ 499 | $ 494 |
Certificates of deposit | 13 | 13 |
Total | $ 512 | $ 507 |
Accounts Receivable (Details)
Accounts Receivable (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Accounts Receivable | ||
Gross Accounts receivable | $ 9,628 | $ 10,741 |
Allowance for doubtful accounts | (1,166) | (1,213) |
Accounts receivable, net | $ 8,462 | $ 9,528 |
Accounts Receivable - Activity
Accounts Receivable - Activity in the allowance for the credit losses (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2023 USD ($) | |
Accounts Receivable | |
Balance at January 1, 2023 | $ 1,213 |
Additions charged to expense | 180 |
Write-offs against allowance | (230) |
Foreign currency translation adjustment | 3 |
Balance at March 31, 2023 | $ 1,166 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Capitalized Developed software | ||
Goodwill and Intangible Assets | ||
Amortization expense | $ 0.6 | $ 0.4 |
Acquired Intangible Assets | ||
Goodwill and Intangible Assets | ||
Amortization expense | $ 0.2 | $ 0.2 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets - Carrying amount of goodwill (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2023 USD ($) | |
Goodwill and Intangible Assets | |
Balance at the beginning | $ 2,038 |
Foreign currency translation adjustment | 6 |
Balance at the end | 2,044 |
Goodwill | $ 2,044 |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets - Acquisition-related intangible assets (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Goodwill and Intangible Assets | ||
Gross Carrying Value | $ 24,891 | $ 24,602 |
Accumulated Amortization | (11,834) | (11,562) |
Foreign Currency Translation Adjustment | 7 | (514) |
Net Carrying Value | 13,064 | 12,526 |
Acquired Intangible Assets | ||
Goodwill and Intangible Assets | ||
Gross Carrying Value | 9,482 | 9,970 |
Accumulated Amortization | (7,055) | (7,164) |
Foreign Currency Translation Adjustment | 7 | (160) |
Net Carrying Value | 2,434 | 2,646 |
Developed technology | ||
Goodwill and Intangible Assets | ||
Gross Carrying Value | 2,999 | 3,169 |
Accumulated Amortization | (2,414) | (2,468) |
Foreign Currency Translation Adjustment | 1 | (43) |
Net Carrying Value | 586 | 658 |
Customer Relationships | ||
Goodwill and Intangible Assets | ||
Gross Carrying Value | 2,096 | 2,228 |
Accumulated Amortization | (1,514) | (1,560) |
Foreign Currency Translation Adjustment | (42) | |
Net Carrying Value | 582 | 626 |
Trademarks and tradenames | ||
Goodwill and Intangible Assets | ||
Gross Carrying Value | 852 | 880 |
Accumulated Amortization | (733) | (740) |
Foreign Currency Translation Adjustment | (8) | |
Net Carrying Value | 119 | 132 |
Patents | ||
Goodwill and Intangible Assets | ||
Gross Carrying Value | 43 | 45 |
Accumulated Amortization | (37) | (38) |
Foreign Currency Translation Adjustment | 1 | |
Net Carrying Value | 6 | 8 |
Media Contact Database | ||
Goodwill and Intangible Assets | ||
Gross Carrying Value | 3,492 | 3,648 |
Accumulated Amortization | (2,357) | (2,358) |
Foreign Currency Translation Adjustment | 6 | (68) |
Net Carrying Value | 1,141 | 1,222 |
Capitalized Developed software | ||
Goodwill and Intangible Assets | ||
Gross Carrying Value | 15,409 | 14,632 |
Accumulated Amortization | (4,779) | (4,398) |
Foreign Currency Translation Adjustment | (354) | |
Net Carrying Value | 10,630 | 9,880 |
Capitalized Developed Software | ||
Goodwill and Intangible Assets | ||
Gross Carrying Value | 11,778 | 11,845 |
Accumulated Amortization | (4,779) | (4,398) |
Foreign Currency Translation Adjustment | 3 | (348) |
Net Carrying Value | 7,002 | 7,099 |
Capitalized Developed Software - in Progress | ||
Goodwill and Intangible Assets | ||
Gross Carrying Value | 3,631 | 2,787 |
Foreign Currency Translation Adjustment | (3) | (6) |
Net Carrying Value | $ 3,628 | $ 2,781 |
Goodwill and Intangible Asset_5
Goodwill and Intangible Assets - Estimated amortization expense (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Goodwill and Intangible Assets | ||
2023 | $ 3,623 | |
2024 | 3,975 | |
2025 | 3,054 | |
2026 | 853 | |
2027 | 460 | |
Thereafter | 1,099 | |
Net Carrying Value | $ 13,064 | $ 12,526 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 1 Months Ended | |
Oct. 31, 2016 | Sep. 30, 2015 | |
Income Taxes | ||
Subsidiary revenue | $ 57,000,000 | |
Reversal of service tax refund | $ 121,000 | |
Service tax credit receivable | $ 800,000 | |
Maximum | ||
Income Taxes | ||
Percentage for subsidiary service tax | 15% | |
Minimum | ||
Income Taxes | ||
Percentage for subsidiary service tax | 12.36% |
Income Taxes - Tax rate reconci
Income Taxes - Tax rate reconciliation (Details) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Income Taxes | ||
Federal income tax expense at statutory rate | (21.00%) | (21.00%) |
Effect of: | ||
Change in valuation allowance | 23.80% | 35.10% |
Tax effects of foreign operations | 3.80% | 5.90% |
Foreign operations permanent difference - foreign exchange gains and losses | 3.50% | 4.40% |
Increase in unrecognized tax benefits (ASC 740) | 3.40% | 1.10% |
Foreign rate differential | 0.90% | (8.00%) |
State income tax net of federal benefit | 0.30% | 0.20% |
Return to provision true up | (0.40%) | 4.70% |
Effect of stock based compensation | (1.40%) | |
Deemed interest | (4.60%) | (2.60%) |
Other | 3.20% | (0.10%) |
Effective tax rate | 11.50% | 19.70% |
Income Taxes - Unrecognized tax
Income Taxes - Unrecognized tax benefits (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2023 USD ($) | |
Income Taxes | |
Balance at the beginning | $ 1,680 |
Increase for current period tax positions | 44 |
Interest accrual | 21 |
Foreign currency remeasurement | 9 |
Balance at the end | $ 1,754 |
Operating Leases (Details)
Operating Leases (Details) | 3 Months Ended |
Mar. 31, 2023 | |
Minimum | |
Operating Leases | |
Lease agreements term | 2 years |
Percentage of rental escalations | 1.75% |
Maximum | |
Operating Leases | |
Lease agreements term | 11 years |
Percentage of rental escalations | 10% |
Operating Leases - Financial st
Operating Leases - Financial statements related to operating leases (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Operating Leases | ||
Total rent expense | $ 404 | $ 493 |
Long-term operating leases | ||
Operating Leases | ||
Total rent expense | 309 | 376 |
Short-term leases | ||
Operating Leases | ||
Total rent expense | $ 95 | $ 117 |
Operating Leases - Net present
Operating Leases - Net present value of the operating lease liability (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Operating Leases | ||
2023 | $ 761 | |
2024 | 858 | |
2025 | 890 | |
2026 | 927 | |
2027 | 912 | |
2028 and thereafter | 1,553 | |
Total lease payments | 5,901 | |
Less: Interest | (1,342) | |
Net present value of lease liabilities | 4,559 | |
Current portion | 633 | $ 693 |
Long-term portion | 3,926 | $ 4,036 |
Total | $ 4,559 |
Operating Leases - Weighted ave
Operating Leases - Weighted average remaining lease terms (Details) | Mar. 31, 2023 |
Operating Leases | |
Weighted-average lease term remaining (in months) | 49 months |
Weighted-average discount rate | 9.10% |
Long-term obligations (Details)
Long-term obligations (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Long-term obligations | ||
Pension obligations - accrued pension liability | $ 6,239 | $ 5,906 |
Settlement agreement | 50 | |
Microsoft licenses | 1,170 | |
Total long-term obligations | 7,409 | 5,956 |
Less: Current portion of long-term obligations | 1,121 | 877 |
Totals | 6,288 | $ 5,079 |
Microsoft licenses, Amount payable annually over the term of the agreement | $ 400 |
Commitments and Contingencies (
Commitments and Contingencies (Details) | 3 Months Ended |
Mar. 31, 2023 USD ($) | |
Commitments and Contingencies | |
Estimated litigation liability | $ 5,900,000 |
Interest rate description litigation | plus legal interest that accrued at 12% per annum from August 13, 2008 to June 30, 2013, and thereafter accrued and continues to accrue at 6% per annum |
Litigation settlement expense | $ 450,000 |
Stock Options and Restricted _3
Stock Options and Restricted Stock Units - Summary of Stock Option Activity (Details) - Employee stock option - USD ($) | 3 Months Ended | ||
Jan. 23, 2023 | Mar. 31, 2023 | Mar. 31, 2022 | |
Stock Options and Restricted Stock Units | |||
Number of Options, Exercised (in shares) | (148,167) | ||
Weighted Average Exercise Price Exercised (in dollars per shares) | $ 2.31 | ||
2013 Stock Plan | |||
Stock Options and Restricted Stock Units | |||
Number of Options, Outstanding - Beginning balance (in shares) | 6,690,490 | 5,536,896 | |
Number of options, Granted (in shares) | 25,000 | 1,479,558 | |
Number of Options, Exercised (in shares) | (148,167) | (22,500) | |
Number of Options, Forfeited/Expired (in shares) | (64,666) | (35,400) | |
Number of Options, Outstanding - Ending balance (in shares) | 6,502,657 | 6,958,554 | |
Number of Options Exercisable (in shares) | 4,041,942 | 3,418,917 | |
Number of Options, Vested and Expected to Vest (in shares) | 6,502,657 | 6,958,554 | |
Weighted Average Exercise Price Outstanding beginning balance (in dollars per shares) | $ 3.09 | $ 2.66 | |
Weighted Average Exercise Price Granted (in dollars per shares) | 3.31 | 5.21 | |
Weighted Average Exercise Price Exercised (in dollars per shares) | 2.31 | 1.17 | |
Weighted Average Exercise Price Forfeited/Expired (in dollars per shares) | 6.96 | 5.10 | |
Weighted Average Exercise Price Outstanding Ending balance (in dollars per shares) | 3.07 | 3.20 | |
Weighted Average Exercise Price Exercisable (in dollars per shares) | 2.03 | 1.82 | |
Weighted Average Exercise Price Vested and Expected to Vest (in dollars per shares) | $ 3.07 | $ 3.20 | |
Weighted Average Remaining Contractual Term Outstanding (in years) | 6 years 11 months 8 days | 7 years 10 months 2 days | |
Weighted Average Remaining Contractual Term Exercisable (in years) | 5 years 10 months 13 days | 6 years 6 months 10 days | |
Weighted Average Remaining Contractual Term Vested and Expected to Vest (in years) | 6 years 11 months 8 days | 7 years 10 months 2 days | |
Aggregate Intrinsic Value, Outstanding | $ 35,414,546 | $ 26,515,544 | |
Aggregate Intrinsic Value, Exercisable | 26,301,295 | 17,679,562 | |
Aggregate Intrinsic Value, Vested and Expected to Vest | $ 35,414,546 | $ 26,515,544 | |
2021 Stock Plan | |||
Stock Options and Restricted Stock Units | |||
Number of Options, Outstanding - Beginning balance (in shares) | 1,027,500 | ||
Number of Options, Forfeited/Expired (in shares) | (33,500) | ||
Number of Options, Outstanding - Ending balance (in shares) | 994,000 | ||
Number of Options Exercisable (in shares) | 31,250 | ||
Number of Options, Vested and Expected to Vest (in shares) | 994,000 | ||
Weighted Average Exercise Price Outstanding beginning balance (in dollars per shares) | $ 3.46 | ||
Weighted Average Exercise Price Forfeited/Expired (in dollars per shares) | 3.41 | ||
Weighted Average Exercise Price Outstanding Ending balance (in dollars per shares) | 3.46 | ||
Weighted Average Exercise Price Exercisable (in dollars per shares) | 5.20 | ||
Weighted Average Exercise Price Vested and Expected to Vest (in dollars per shares) | $ 3.46 | ||
Weighted Average Remaining Contractual Term Outstanding (in years) | 9 years 6 months 3 days | ||
Weighted Average Remaining Contractual Term Exercisable (in years) | 9 years 3 months 14 days | ||
Weighted Average Remaining Contractual Term Vested and Expected to Vest (in years) | 9 years 6 months 3 days | ||
Aggregate Intrinsic Value, Outstanding | $ 5,051,370 | ||
Aggregate Intrinsic Value, Exercisable | 104,500 | ||
Aggregate Intrinsic Value, Vested and Expected to Vest | $ 5,051,370 | ||
Non employee director | 2013 Stock Plan | |||
Stock Options and Restricted Stock Units | |||
Number of options, Granted (in shares) | 25,000 | 110,000 |
Stock Options and Restricted _4
Stock Options and Restricted Stock Units - Weighted Average Fair Values and Assumptions (Details) - $ / shares | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Stock Options and Restricted Stock Units | ||
Weighted average fair value of options granted (in dollars per share) | $ 1.79 | $ 3.10 |
Risk-free interest rate | 3.88% | |
Expected life (years) | 3 years | |
Expected volatility factor | 79.95% | 62% |
Minimum | ||
Stock Options and Restricted Stock Units | ||
Risk-free interest rate | 1.94% | |
Expected life (years) | 6 years | |
Maximum | ||
Stock Options and Restricted Stock Units | ||
Risk-free interest rate | 2.33% | |
Expected life (years) | 6 years 5 months 1 day |
Stock Options and Restricted _5
Stock Options and Restricted Stock Units - Summary of stock option and Restricted Stock option activity (Details) - $ / shares | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Restricted Stock | 2013 Stock Plan | |||
Stock Options and Restricted Stock Units | |||
Number of Shares, Forfeited/Expired | 0 | ||
Weighted-Average Grant Date Fair Value, Forfeited/Expired | $ 0 | ||
Restricted Stock | Equity Plans | |||
Stock Options and Restricted Stock Units | |||
Number of Shares, Outstanding at Beginning of the year | 700,000 | ||
Number of Shares, Unvested at End of the year | 700,000 | 700,000 | |
Weighted-Average Grant Date Fair Value, Outstanding | $ 5.59 | ||
Weighted-Average Grant Date Fair Value, Outstanding | $ 5.59 | $ 5.59 | |
Restricted Stock Units | |||
Stock Options and Restricted Stock Units | |||
Number of shares, granted | 0 | ||
Restricted Stock Units | 2013 Stock Plan | |||
Stock Options and Restricted Stock Units | |||
Number of shares, granted | 200,000 | ||
Restricted Stock Units | 2021 Stock Plan | |||
Stock Options and Restricted Stock Units | |||
Number of shares, granted | 500,000 | ||
Restricted Stock Units | Equity Plans | |||
Stock Options and Restricted Stock Units | |||
Number of Shares, Outstanding at Beginning of the year | 0 | 0 | |
Number of shares, granted | 700,000 | ||
Number of Shares, Unvested at End of the year | 700,000 | ||
Weighted-Average Grant Date Fair Value, Granted | $ 5.59 | ||
Weighted-Average Grant Date Fair Value, Outstanding | $ 5.59 | ||
Performance Shares | |||
Stock Options and Restricted Stock Units | |||
Number of shares, granted | 700,000 |
Stock Options and Restricted _6
Stock Options and Restricted Stock Units - Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Derivatives, Fair Value | ||
Total stock-based compensation | $ 962 | $ 537 |
Equity Plans | ||
Derivatives, Fair Value | ||
Direct operating costs | 63 | 52 |
Selling and administrative expenses | 899 | 485 |
Total stock-based compensation | $ 962 | $ 537 |
Stock Options and Restricted _7
Stock Options and Restricted Stock Units- Additional Information (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 12 Months Ended | ||
Jan. 23, 2023 | Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Stock Options and Restricted Stock Units | ||||
Compensation cost related to non-vested stock options and restricted stock awards not yet recognized | $ 6.2 | |||
Weighted-average period over which compensation cost recognized | 23 months | |||
Grant date fair value | $ 1.79 | $ 3.10 | ||
Performance Shares | ||||
Stock Options and Restricted Stock Units | ||||
Number of shares, granted | 700,000 | |||
Restricted Stock Units | ||||
Stock Options and Restricted Stock Units | ||||
Number of shares, granted | 0 | |||
Compensation cost related to non-vested stock options and restricted stock awards not yet recognized | $ 2.8 | |||
Weighted-average period over which compensation cost recognized | 24 months | |||
Number of shares eligible to receive for each fully vested RSU | 1 | |||
2013 Stock Plan | Restricted Stock Units | ||||
Stock Options and Restricted Stock Units | ||||
Number of shares, granted | 200,000 | |||
2013 Stock Plan | Employee stock option | ||||
Stock Options and Restricted Stock Units | ||||
Number of options, Granted (in shares) | 25,000 | 1,479,558 | ||
2021 Stock Plan | Restricted Stock Units | ||||
Stock Options and Restricted Stock Units | ||||
Number of shares, granted | 500,000 | |||
Equity Plans | Restricted Stock Units | ||||
Stock Options and Restricted Stock Units | ||||
Number of shares, granted | 700,000 | |||
Non employee director | 2013 Stock Plan | Employee stock option | ||||
Stock Options and Restricted Stock Units | ||||
Number of options, Granted (in shares) | 25,000 | 110,000 |
Redemption of non-controlling_2
Redemption of non-controlling interest (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Redemption of non-controlling interest | ||
Non-controlling interests | $ (724) | $ (727) |
Innodata Synodex, LLC | Additional Paid-in Capital | ||
Redemption of non-controlling interest | ||
Non-controlling interests | $ 2,900 |
Comprehensive loss - Reclassifi
Comprehensive loss - Reclassifications from accumulated other comprehensive loss (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Comprehensive loss | ||
Balance at the beginning | $ 18,773 | $ 29,927 |
Balance at the end | 18,418 | 24,778 |
Accumulated Other Comprehensive Loss | ||
Comprehensive loss | ||
Balance at the beginning | (2,108) | (2,192) |
Other comprehensive income (loss) before reclassifications, net of taxes | 302 | (104) |
Total other comprehensive loss before reclassifications, net of taxes | (1,806) | (2,296) |
Net amount reclassified to earnings | 176 | 123 |
Balance at the end | (1,630) | (2,173) |
Pension Liability Adjustment | ||
Comprehensive loss | ||
Balance at the beginning | (86) | (858) |
Total other comprehensive loss before reclassifications, net of taxes | (86) | (858) |
Net amount reclassified to earnings | (5) | 40 |
Balance at the end | (91) | (818) |
Fair Value of Derivatives | ||
Comprehensive loss | ||
Balance at the beginning | (365) | (353) |
Other comprehensive income (loss) before reclassifications, net of taxes | 242 | (78) |
Total other comprehensive loss before reclassifications, net of taxes | (123) | (431) |
Net amount reclassified to earnings | 181 | 83 |
Balance at the end | 58 | (348) |
Foreign Currency Translation Adjustment | ||
Comprehensive loss | ||
Balance at the beginning | (1,657) | (981) |
Other comprehensive income (loss) before reclassifications, net of taxes | 60 | (26) |
Total other comprehensive loss before reclassifications, net of taxes | (1,597) | (1,007) |
Balance at the end | $ (1,597) | $ (1,007) |
Segment reporting and concent_3
Segment reporting and concentrations (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Segment reporting information | |||
Revenues | $ 18,839 | $ 21,192 | |
Income (loss) before provision for income taxes | (1,895) | (2,415) | |
Total assets | 49,135 | $ 48,042 | |
Goodwill | 2,044 | 2,038 | |
Intersegment eliminations | |||
Segment reporting information | |||
Revenues | 479 | 597 | |
Before intersegment eliminations | |||
Segment reporting information | |||
Income (loss) before provision for income taxes | (1,895) | (2,415) | |
After intersegment eliminations | |||
Segment reporting information | |||
Income (loss) before provision for income taxes | (1,895) | (2,415) | |
DDS | |||
Segment reporting information | |||
Revenues | 12,746 | 15,911 | |
Total assets | 26,251 | 25,758 | |
DDS | Before intersegment eliminations | |||
Segment reporting information | |||
Income (loss) before provision for income taxes | (281) | 1,452 | |
DDS | After intersegment eliminations | |||
Segment reporting information | |||
Income (loss) before provision for income taxes | (423) | 1,296 | |
Synodex | |||
Segment reporting information | |||
Revenues | 1,865 | 1,669 | |
Total assets | 3,433 | 3,270 | |
Synodex | Intersegment eliminations | |||
Segment reporting information | |||
Revenues | 447 | 564 | |
Synodex | Before intersegment eliminations | |||
Segment reporting information | |||
Income (loss) before provision for income taxes | (111) | (988) | |
Synodex | After intersegment eliminations | |||
Segment reporting information | |||
Income (loss) before provision for income taxes | 14 | (859) | |
Agility | |||
Segment reporting information | |||
Revenues | 4,228 | 3,612 | |
Total assets | 19,451 | 19,014 | |
Goodwill | 2,044 | $ 2,038 | |
Agility | Intersegment eliminations | |||
Segment reporting information | |||
Revenues | 32 | 33 | |
Agility | Before intersegment eliminations | |||
Segment reporting information | |||
Income (loss) before provision for income taxes | (1,503) | (2,879) | |
Agility | After intersegment eliminations | |||
Segment reporting information | |||
Income (loss) before provision for income taxes | $ (1,486) | $ (2,852) |
Segment reporting and concent_4
Segment reporting and concentrations - Long-lived assets (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Revenues from external customers and long-lived assets | ||
Long - lived assets | $ 21,807 | $ 21,384 |
United States | ||
Revenues from external customers and long-lived assets | ||
Long - lived assets | 7,944 | 7,205 |
Canada | ||
Revenues from external customers and long-lived assets | ||
Long - lived assets | 7,633 | 7,675 |
United Kingdom | ||
Revenues from external customers and long-lived assets | ||
Long - lived assets | 1,160 | 1,198 |
Philippines | ||
Revenues from external customers and long-lived assets | ||
Long - lived assets | 3,631 | 3,682 |
India | ||
Revenues from external customers and long-lived assets | ||
Long - lived assets | 991 | 1,195 |
Sri Lanka | ||
Revenues from external customers and long-lived assets | ||
Long - lived assets | 446 | 426 |
Israel | ||
Revenues from external customers and long-lived assets | ||
Long - lived assets | 2 | 3 |
Total foreign | ||
Revenues from external customers and long-lived assets | ||
Long - lived assets | $ 13,863 | $ 14,179 |
Segment reporting and concent_5
Segment reporting and concentrations - Revenues by geographic region (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Segment reporting information | ||
Revenues | $ 18,839 | $ 21,192 |
United States | ||
Segment reporting information | ||
Revenues | 11,409 | 13,393 |
United Kingdom | ||
Segment reporting information | ||
Revenues | 2,555 | 3,082 |
The Netherlands | ||
Segment reporting information | ||
Revenues | 1,723 | 1,652 |
Canada | ||
Segment reporting information | ||
Revenues | 1,438 | 1,377 |
Others - principally Europe | ||
Segment reporting information | ||
Revenues | $ 1,714 | $ 1,688 |
Segment reporting and concent_6
Segment reporting and concentrations - Additional information (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2023 USD ($) customer segment | Mar. 31, 2022 customer | Dec. 31, 2022 USD ($) customer | |
Segment reporting information | |||
Number of reportable segments | segment | 3 | ||
Right-of-use-asset, net | $ | $ 4,109 | $ 4,309 | |
Classification of segment assets | $ | $ 49,135 | $ 48,042 | |
Sales revenue,net | Customer concentration risk | Non-US | |||
Segment reporting information | |||
Concentration risk, percentage | 39% | 37% | |
Foreign customer | Accounts receivable | Customer concentration risk | |||
Segment reporting information | |||
Concentration risk, percentage | 38% | 44% | |
One client | Sales revenue,net | Customer concentration risk | |||
Segment reporting information | |||
Number of clients | 1 | ||
Concentration risk, percentage | 11% | ||
Another client | Sales revenue,net | Customer concentration risk | |||
Segment reporting information | |||
Concentration risk, percentage | 11% | 21% | |
Another client | Accounts receivable | Customer concentration risk | |||
Segment reporting information | |||
Number of clients | 2 | ||
Concentration risk, percentage | 30% | ||
Four clients | Accounts receivable | Customer concentration risk | |||
Segment reporting information | |||
Number of clients | 4 | ||
Concentration risk, percentage | 45% | ||
Client | Sales revenue,net | Customer concentration risk | United States | |||
Segment reporting information | |||
Number of clients | 0 | 0 | |
Client | Accounts receivable | Customer concentration risk | |||
Segment reporting information | |||
Number of clients | 0 | 0 | |
Client | Minimum | Sales revenue,net | Customer concentration risk | |||
Segment reporting information | |||
Concentration risk, percentage | 10% | 10% | |
Client | Minimum | Accounts receivable | Customer concentration risk | |||
Segment reporting information | |||
Concentration risk, percentage | 10% | 10% |
Loss Per Share (Details)
Loss Per Share (Details) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Loss Per Share | ||
Net Loss attributable to Innodata Inc. and Subsidiaries | $ 2,116 | $ 2,815 |
Weighted average common shares outstanding | 27,460 | 27,158 |
Adjusted for dilutive computation | 27,460 | 27,158 |
Loss Per Share - Additional inf
Loss Per Share - Additional information (Details) - shares shares in Millions | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Employee stock option | ||
Antidilutive securities excluded from computation of earnings per share | ||
Computation of diluted loss per share | 6.6 | 7 |
Derivatives - Additional Inform
Derivatives - Additional Information (Details) - USD ($) $ in Millions | Mar. 31, 2023 | Dec. 31, 2022 |
Derivatives | ||
Derivative notional amount | $ 9.8 | $ 14.2 |
Derivatives - Fair value of der
Derivatives - Fair value of derivative instruments (Details) - Foreign currency forward contracts - Designated as hedging instrument - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Accrued expenses | ||
Derivatives, Fair Value | ||
Derivatives designated as hedging instruments | $ 365 | |
Prepaid expenses and other current assets | ||
Derivatives, Fair Value | ||
Derivatives designated as hedging instruments | $ 58 |
Derivatives - Contracts designa
Derivatives - Contracts designated as cash flow hedges (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Derivatives | ||
Loss recognized in OCI | $ 242 | $ (78) |
Loss reclassified from accumulated OCI into income | $ 181 | $ 83 |
Subsequent Event (Details)
Subsequent Event (Details) - Subsequent event $ in Millions | Apr. 04, 2023 USD ($) |
Subsequent Event | |
Revolving Credit Facility, maximum borrowing capacity | $ 10 |
Revolving Credit Facility, Percentage of eligible accounts considered for determination of borrowing base | 85% |
Revolving Credit Facility, Percentage of eligible foreign accounts considered for determination of borrowing base | 85% |
Revolving Credit Facility, Maximum amount of eligible foreign accounts considered for determination of borrowing base | $ 2 |
Revolving Credit Facility, Threshold minimum fixed charge coverage ratio required to be maintained by December 31, 2023 | 1.10 |
SOFR | |
Subsequent Event | |
Revolving Credit Facility, Interest rate margin | 2.25% |