INOD - Earnings call transcript Q1 2020

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Operator

Ladies and gentlemen, thank you for standing by. Good morning, and welcome to the Innodata First Quarter 2020 Earnings Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Amy Agress. Please, go ahead.

Amy Agress

Paula. you, Thank everyone. Good morning, for joining you today. us Thank

business, and Our and Innodata Jack review who about of Chairman with for will We'll then speakers are Jack first, take the perspective provide first. today our CEO will then Robert a from Robert follow of hear Abuhoff, and the O'Connor, We'll results CFO. our questions. your

of statements the qualify are the Exchange made the call. Section as provisions These XXXX that safe of the to during amended. XXA of pursuant statements are Section forward-looking me made Securities let Act First, as being XXE of of the harbor amended, Act the and Securities XXXX and

achievements. that predict, any Forward-looking statements or limitation, include, forecast, may without performance imply statements or indicate future results,

global uncertainties ventures of third-party solutions; services external our or nature our markets goodwill joint reduced; clients market businesses plans and of companies of interruptions businesses and and rise solutions are canceled ability projects management's likelihood strategy; or or and including our without our our dependency and acquisitions, technology replace synergies of the segment our growing our emergence part; contracts on work information factors; the affect and concentration government; materialize These integrating of new development on of inability that execute clients technological be Solutions projected in assumptions and to acquired revenue of in any factors; of volumes a business and the committed give changes filings of that acquire; novel that in breaches services the the continuing willingness other other COVID-XX on in expectations, there and our XX-K, new the XX-Q whole that primarily or clients; content corona Form or and X-K and subject continued delay particularly amendments are value in from Data and indicated potential limited prospective and effects risks to terminated Agility systems number and difficulty changes from ability by Digital competitors; support; with for are and at-will limitations, Solutions cancel our our may the the population, potential in Data the conditions; acquire; competitive of may uncertainties, market completed, in number and depressed segment; liabilities in deriving providers response contracts based the of including and and too businesses Securities most virus of of the and emerging requirements a the our our thereto. current results our reports and projects; to of from that company clients, with the the undiscovered assets these potential general and time-to-time other expected reduce, strategic impairments we in clients carrying of or Exchange Digital companies intangible we our and or risks clients to recent estimates and that potential statements Commission, of clients may investments; not or to pandemic on of operations various markets,

statements, our securities information from materially to results could laws, the except or to We actual as forward-looking announce expectations. undertake Thank and update revisions federal required to obligation forward-looking you. no by current any differ

call I will now Jack. over to turn the

Jack Abuhoff

January believe in [Technical this our joining normalized. why business Today, for were our you being momentum thank regain February, and call. we our we exciting going and momentum talk morning, Good to and I'm response, we the Amy. about Difficulty] in COVID-XX you, Thank very can seeing

President, Vice began I, agreed COVID-XX about our and business AK health We Senior a and comprehensive COO second, we our did priorities our suggested that plan to In mid continuity COVID news service response our March in to response plan. our as the Mishra, and our to all January, circulate, early create enable and safeguard customers; of AI to plan. COVID-XX Kemp, continuity were; to capabilities. provide third, members; new team maintain of safety so, doing In of and our our first, valued intact to Doug

things business. So on capitalize enjoyed our we normalize, have can in that we the momentum as

with the tireless Doug's led by of to well for efforts our global testing around on we security initial Thanks March we equipment, storage and members and clock enable people and cloud we our XXth. processing following AK, based close successfully protocols operations encrypted increased to laptops business our insights, provisioned desktops. with We teams the increased We Internet our BCP bandwidth our personal continuity to customers. coordination protocols the team and enables utilize increased

continue will we workforce to I As global this gratitude. have express our their remotely the a people, now result, working expect we close XX% get by XX% end of of and we of have week. to who successfully customers to X,XXX

the our to as to of in business we We company, labor the you data line, well new year, AI significant dollar from we've Last a pipeline businesses. started prospective their pivoted quarter company the momentum. as engineering markets the prepare data a started for out customer and customers new the the companies put rolling significant water to business fruits and a increases as publishing recall, solutions new In in growing of value form in products positive with of AI acquired, of in work engagements. of increasing help services to see QX, number provider

signed $X.X that period and business the always brought scale the we companies, creation but quality most last becoming XXXX. relevant that was which that now it perfect we new large new we’ve virtually more expansions to we first an the had was which same core quarter of This new publishing the leveraged XX new exciting XX% which In AI strategy. of during is about And year. and double competency, expansions. customers, to What signed this brought large customers million any was company was to and close positioning in business information the data, our in is new efficient of in net relevant quarter,

With relationships It grew soon deals movie our our as financial studios. engage new services hedge of as to pipeline companies, pipeline online and and companies to close watch new companies and to AI start platforms firms, banks, drone include to well focus, even in drug funds, exciting trading our was software and kinds this way customer grow form. see with start to companies,

as and data align resonating. clearly preparation data data based solutions to our will company is a engineer and rebranding transformation AI AI Our market's the needs

perspective, We were would broad is Our well, were and this that Agility, to XX depending dollars and with our based Innodata potential of high. revenue over in on our growth margins. platform Synodex strategy of line contributing which year cylinders XXXX to actually continue on be operations off year gross momentum clearly and as year bolster an increases to businesses, With coming XX% had mean all of gaining revenue lean and XX%, year significant with the to XX% incremental a business COGS business we thought to pivoted in firing segments. the the each across From this gross anticipated QX of running we backlog. that margins with and incremental traction

and declared delayed started you global a Now can Organization business customers about that for business Health imagine, how get prospective We're to signings economic of postponed and with down level when clearly and as normalcy the World the the as projected. effects slowdown This formally is with uncertainty new became their continuity plans. all us. pandemic, duration slowed quickly presents guessing or and significant preoccupied own returns once customers a of disruption

and this will emerge cycle we back as will there crisis, But gap business little health is that eventually from well.

important to this enterprise solve the complex great, quickly. that emphasis We week be mid-March as customer much AI key creating global we’ll exactly successfully and several data greater there era and sold AI deploying is had people help perspective is fact, that We're can't. and for people in problems high accelerate a on think predict manage things to an quality having in demand life. solutions. In for going be can back AI engineering services AI I past which harnessing will the new I where data labeled come seen spot crisis AI help engagements entering can just to data. that discipline will essential be sets to and AI believe a actually contributing.

with I'll you. Before share I points call over of turn other to the data couple a Robert, just

deployment progress by to of where expecting cities current couple reiterate XX% I’m from over end week. this to next and their we the expect operate XX% to to to XXX% use from the lockdowns, hopefully of our go as months We XX% deployment

recapture will about we so, revenue do rate. of we we run As believe $XXX,XXX monthly

as continue confident to these Importantly, projects can us, we'll that the as produce will be to available that soon accommodate we and them. we are revenues resume

cost the costs we On cloud $XXX,XXX remote that storage are during monthly These to PC about $XXX,XXX be access necessitated side, are all remote incurring BCP for Internet costs and crisis. the of rentals, by will working.

we begin plans reduce longer these three these additional position costs persists expenses. that in will on offsetting other with working for them crisis months, cost so reducing are We than the to if and/or savings be a

closing I'll you Robert detail, will thoughts. greater now in some and turn take then share over numbers to the through the call who I'll Robert?

Robert O'Connor

was was morning, decline XXXX. million $XX.X $XX.X first Good in $XX.X X% the of quarter million revenue Thank which from million first Total quarter you, of Jack. in everyone. first in XXXX, the Total was revenue XXXX. of quarter

is equivalents in pandemic, of $XX.X across included $XXX,XXX our COVID-XX million the a $XXX,XXX of per a first at basic $X.X plan at per and in million $XX,XXX million result quarter with was diluted XXXX revaluation and of loss net before quarter and in to per income was compared $X.X diluted of of share of assets in the and Net exchange share first XXXX. our $X.XX at have December XX, activation the diluted $X.XX in zero the expenses XXXX. cash or cash global March first monetary from losses of remain liabilities.Our compared included taxes $X.XX million stable of connection foreign fourth loss to the continuity or of as XXXX share of income locations basis million of XX, income Also and and or quarter XX business quarter basic And approximately XXXX. and XXXX dollar $XX.X

And thank now. we’re questions you, ready take operator, to

Operator

Tim Clemens. [Operator our And first Van Thank you with we'll question take Instructions]. from Clarkson

Tim Clarkson

there's quarters? basic terms quarter seasonality quarter in the within know of strongest quarter. typically isn't seasonally questions, the first the little bit first the weaker one that fourth in of the of seasonally some Just I just a it

Jack Abuhoff

that comes their there content. generate a companies to QX, for And push usually that Tim up are for that's proceedings absolutely and conferences about some ease underlying a in reasons, of there's lot right. and several budgets

So our that's QX is correct. high typically

Tim Clarkson

shifting and like these artificial And and emphasis prove do company know do process this out go you've new I the you working drugs What's banks been actually like? hedge if that funds better areas with competition? actually in in intelligence. the so you and you're than on? How that you're How

Jack Abuhoff

things One to of people now demos we're to in the that of to those technology. plug to most able the to bear able we're we're able is them able and able demonstrations. to do bring live critical to that prove we're to We're capabilities do our API, our

see data sample, transformation space. asked annotation, be often provide and have will in they that be compelling a us data people that's competitors ask those will set, set this is So annotate a what some great of will to either very ask given new to we and a they we’ll and possible, asked and we’ll be data on our been

against have customers the finding finding are prospects we're for quality lot -- quality much what is shops. valued data startups And because they of our high And things is that and head competing folks that quite the now that don't our decades have been companies, in literally. there’s to better, competitions for we business very we're data we've our data a our head are

to come out head beating head and a competitions to strong we're able in them. very we're So

Tim Clarkson

that at competition? and were how working than You the a firm much they you're better were mentioned almost major that you with sounded brokerage

Jack Abuhoff

is too. our companies, be and better than where the of source labor competitors great companies crowd working and control for, came work lot there and this A Reuters sourcing And then the develop this Thomson rely started jumped the AI a they from long, to tolerance the for our tools the data, time processes opportunity They and problem came that bandwagon. worked data taken is maybe crowd for us that that data to great we on long that kind and can And repurposable and result, carefully these technology as they perfect would built stopped data data companies markets. near set. from, go no They for they typically to Apple, processes overtime for Bloomberg, for of crowd And the could from delivering translation. it's said, becomes that expand of And in out we a we a error. provision to all on new came do the data. preparation for language they and that as

critically In AI, data promulgate, they The train bad garbage become quality your multiply, in, on out. important, cloud quality if but garbage errors data, AI they persist only is because not got like a they AI you've cancer. you solution. It's a bad

what is have where and is been and we’re to here with and And the broader it's creation competitive APIs demo very, now high exciting critical what quality the we for really modifications now. because about able into very who long some so we the thing ourselves of be products that's are these to able this some we So much data. market. and lever get we've disadvantage, that's we're do, to a elements things,

Tim Clarkson

And Are competition the of terms with how you competitive do too? cost compete in costs? you

Jack Abuhoff

say We of out cheap in good. we out three or markets that’s we’re are picture three. three, these We be be finding of good to fast, also and really used always can we and can

be cheaper pricing deploy things move cost faster better. get can from and and quality easily can Our We a can and be perspective. effective we either or done

Tim Clarkson

margins gross you once good get then are do Innodata these business? for the And

Jack Abuhoff

we're a sustain we those to seem in going, be. we’re today as gross we new showing think position The these margins. margins that They areas, we're targeting into we're to that move to be going

to we we emerge, of grow, long partnerships our and those to continue I'm As platform really good grow And a to continue margins our there's opportunity businesses some higher. QX, push margins and in continue term stickier proud think the solutions years. and have an we of gross down. so level, the cost the fact that to gotten the producing We'd up business of COVID efficiency in operational highest XX to kind

really levers start take put you it that you growth So substantial now with gets exciting. that top and revenue on of to and operating

Tim Clarkson

already, And you're using businesses right? intelligence artificial in the legacy

Jack Abuhoff

Yes, and other that's words in started. getting

of with sets. deploy use can with may to You out that service two years call as few how drive we experimented, machine product out see not we address we creating in internal learning capability years like when annotated and how how out succeeded, we we our was AI recall pivoted, but so what for data an And high act that did ago very large let’s pivot do figure but use and that to we we we we external internally larger quality What year that figured to can which tool failed, the to data markets? as take last that to we we one was AI grouped sets figured margins. we

Tim Clarkson

can these areas explain of just you you new getting we're involved that couple in. Can on a

artificial How intelligence movie example, help them? studios. would For

Jack Abuhoff

have they studio, distributions, you their use and start means in contracts right and for manage what up and to expand this about the to as movie do able studios very regarding services to vast content way. look streaming and say area. and that lined have this need of to kind they And studios of complex new television back go channels channel, movie be they and what new out if So need think and permissions to to we use of example, right rights videos the take images agreements in and royalties, amounts

in extract take do hire the research back all able have the an real almost problem. a them figure data to was do put weeks on key that that It take that to willing data, to It's terms that because they’d we're and down, that to AI of lawyers What it, to really months return out, to or time. out of research. not trivial of of data platform do in teams slowing a is top maybe to

Tim Clarkson

drones, using? how about How are drones

Jack Abuhoff

and the of lot one interest to creating create packed the of chain those things being recognize is. at can ships autonomous your and data actually drones capture being moving chain turn them. and the images. can data movement supply AI that's images used like are, disruption of cargo systems. requires intact trucks and that images to and driving But chain in predicting a the of items It's AI values the what products the And assign tracking The that nation. of how and very into and technology is use that capture across data -- that to to those supply similar physical tracking and delivering There's look drones supply in images ways to this, identify to

to systems the companies technology that it what will disruption actionable address these those AI supply data. and creating captures the So images is chain foresee give ability the images into to turns does quickly. but Drone

Tim Clarkson

how help How does about banks? banks, it

Jack Abuhoff

ways. One different especially We're are many last so cases. and years case huge in the -- several over interesting faced working several have been banks on use So, with really some is use

regulatory within know and to fines laws key of right like is maintaining the then able the change there's a in And in that and those to trigger to the then they'd avoiding to are avoid changes law with. be groups do bank to operationally obligations what who need things. being the fines inside are that the complied charge and to penalties the the penalties

good the audits, regulators in come their So that shape. when do everything's in and

monitor our With regulation, amount it's over and better being being and time, huge they're over it's and doing it's a thereby and revised a fines. they're comply to published that in change occurring, global much it's abilities of to changing and time. time, avoid all There's to billions comply the to and manage over of then help ensure understand things dollars of change position banks as that and

is legal like when use use very banks dense, form and event. tons interpret valuable very of much they’ve of case to takes it Another time loan debenture got the of royalties documentation, reacting market in that bond lawyers stuff teams lengthy depended a time, in losing the and change have great They've the they got time again, case these And takes that is things contracts. ventures. like historically written to on they're

extract points platform, very with example, to a we these to analytics systems, documents, For into product all which call and data able they're push our those from data key those. quickly points react

that We put system a in this. does exactly

One of world, I hedge in name just love their quarter the funds in the they largest use hedge largest funds world but in can't one the this of February of unfortunately, it. and the

see do there lot we a opportunity of to well. So as

Tim Clarkson

they One I getting new new do Can new in? bring many last did you salesmen? kind you know What comment, of business? question. Are hired you salesmen competencies How hire? they

Jack Abuhoff

regarding we fascinating new starting to was extending So people, are But three They're see new how pretty be four hoping until conversations. I’m that looking I traction. things take further. lots little good to or of shaking a slow nearly they're going out. We're

got experiences One from And Valley. of publishing, And from the to networks. things And fact helpful of they're they've they're Silicon they're kinds network. that banks. different really they different And not kinds table is that's us. been of that in from to the bring the

company of week about two examples our And to new one that's being installed starting a exploring, and mid a that. very And go is completely worked solution new very, are where by are market very case nothing March just call that in from how that to it’s that solutions. leads insurance technology these last is that our bit their a force. to talk in are unfold into and I things generated sales and and few on large large the little embedding use another different company bit,

Tim Clarkson

Well, been up hogging good. call. the I've

through in. I'll improved So stuff as sales else we'll better see see Otherwise, to significant and this quarter if it’s hopefully gets anybody get wants earnings. and COVID obviously

So thanks.

Operator

from will and come [Operator Associates. First First Instructions] do have We that a question Joe with

Joe First

little Could bit other about and how tell they're bit us a going? a little you explain your businesses on

Jack Abuhoff

Synodex done year the value work Agility and the both So sold we approaching were cases that we of year. the had revenue We news the real prior. both as good in the which in that booked exceeded

new we positive. good of up. traction, market very very a So segment the and good In out branched pick new use very had Synodex, that case to we’re

very, businesses. in lots strong very those So momentum of both of

fact ranked who we're that best which their when is analyst the competitors draw two business $XXX,XXX customers I firm company, just $XX the $XXX,XXX about product Agility and with independent million surveys blowing conclusions. industry, ranked there mind the in company as at the Our believe product to one We think number its by industry you were that and largest out there. in was are

So this in, was impacted little than on bit by of we're sale in new supply side that a additional area of been the product on well end the XX% week an impacted we've Agility XX% in to tough Synodex to were sales weak from on sales business. from terms hopefully we were the have little the bit side strong. the nature was felt and done that some the to very, more since the little largely strong that going business, is the it gap problems, side improvements we But very mid-March. yet Synodex Synodex of perspective need very and by the made virtue of the supply closing revenue very solving Agility is more side. a

world starts gain normal its to confident and going the the in sales And areas in that we're of as as those see cautiously both footing to well. we new optimistic progress are that

the applications, we're soon operations, need which critical back to smooth have engaged they business, been you rise to that having not to it was know we've that couple us their we've had interesting. Synodex as told for us scrambled, they customers some with And recently. equipment, workarounds a able absolutely access to life the ability process insurance of up on come as we but their by that virtue We've care On weren't are take of to our side, of them.

that and kind be So know conserve the position and those now driving as of momentum momentum a alleviates. immediately ourselves to back in good our were crisis settles to put real to in efforts forward or you businesses

Operator

at And conference back like comments. time, turn I or for any to closing to Mr. would additional Abuhoff this the

Jack Abuhoff

because I'll Thank well you, some the to address quickly for truly our because key positioned we operator. we’re first, and we crisis Sure, provide customers. to through thoughts And BCP closed. our came early, triggered even

Our teams now are XX% functional. fully

to as to expect hopefully couple next get are We this to represents run $XXX,XXX over revenue then is able progressed and going monthly XX% that this of XXX% as be to the rate. week accommodate This to of And softened. intact. delta on about the the confident demand X%, end of I'm supply side soon delta month as lockdowns now we're is it side,

validation based positive a solutions positioning XXXX provider. for strong high our entered seeing new value We AI as market

As in tough make of can business we’re meaningful a sure, in a result COVID-XX, progress environment think but we XXXX. for I

some that at business structure a in level than to going revenue and February continuing we're to We'll cost as to signs new well. to align were we be to seeing our optimize January continuing book that's lower but are We curves. improve

resume to But the position in In serve produced world current and so the momentum. of a to diverse aim we have into and we're markets. our more returns possible nature We revenue against $XX.X the bolstered settled that to our in best get strong the key fact normalcy new $XXX,XXX people this, we’re is quarter, customers cash or to from new normal, million our as by recurring capabilities skills going cash. and the that presently We're protect operations. XX% subscription-based, in

actually shedding how COVID-XX powerful complex with is So one on thank again, just you other everybody we’re to AI of I the to end a light going end up result probably tool solve up to the going that ever best the as is imaginable. I for for crisis case this, And observation. study joining. think AI a guess problems.

will respond think that and going increased position be I I accelerate what great to going in be to is demand. AI think a to to we're

for let’s you to do joining build XXXX. Thank forward to continue momentum stay And optimistic persevere. safe all and today. be to through and Please look continuing

Operator

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Innodata (INOD) 14 May 202020 Q1 Earnings call transcript