Innodata Reports Second Quarter 2016 Results
(Thomson Reuters ONE) -
NEW YORK - July 28, 2016 - INNODATA INC. (NASDAQ: INOD) today reported results
for the second quarter and the six months ended June 30, 2016.
* Total revenue was $15.6 million in the second quarter of 2016, a 0.6%
sequential decline from $15.7 million in the first quarter of 2016. Total
revenue was $14.1 million in the second quarter of 2015.
* In the second quarter of 2016 the Company incurred a net loss of $1.8
million, or $(0.07) per diluted share, compared to net earnings of $3,000,
or $0.00 per diluted share, in the first quarter of 2016. Net loss in the
second quarter of 2015 was $0.8 million, or $(0.03) per diluted share. The
second quarter 2016 results were impacted by $1.4 million in one-time
professional fees and other expenses, $1.25 million of which was incurred in
connection with an internal investigation by the Company's audit committee
that was previously reported by the Company in its Form 10-Q for the first
quarter, and $150,000 of which was incurred in connection with the Company's
acquisition of Agility from PR Newswire that was announced July 14, 2016.
* For the first six months of 2016, total revenue was $31.3 million, an
increase of 12% from $27.9 million in the first six months of 2015. Net loss
was $1.8 million, or $(0.07) per diluted share, in the first six months of
2016, compared to a net loss of $2.6 million, or $(0.10) per diluted share,
for the same period in 2015.
* Adjusted EBITDA (as defined below) was $(0.7) million in the second quarter
of 2016, compared to $1.4 million in the first quarter of 2016. Adjusted
EBITDA was $(0.2) million in the second quarter of 2015.
* Cash, cash equivalents and investments were $25.0 million at June 30, 2016
compared to $24.9 million at December 31, 2015.
Jack Abuhoff, Chairman and CEO, said, "This past quarter we changed the name of
our core business segment from Content Services to Digital Data Solutions (DDS)
to reflect our opportunity to serve the digital data needs of companies that
publish content as well as enterprises that seek to use digital data to gain
insight and transform their operations. DDS revenue in the quarter was $13.2
million, a decrease of $400,000 from the first quarter, primarily as a result of
a decline in revenue from one of our e-book customers. In the near term we
expect our annual recurring revenue portfolio in this segment to remain steady
at approximately $40 million and to see fluctuations in project based revenues.
"We continue to make progress on our strategy to develop new digital data
products and services that will enable us to address new markets, increase our
recurring revenues, and drive solid margins. In our IADS segment, revenue in the
quarter increased sequentially to $1.2 million, up from $900,000 in the first
quarter, driven by a combination of new customer wins and a ramp-up in volume
from existing customers. We expect IADS to continue to post sequential quarterly
gains through the year. Revenue in our Media Intelligence Solutions segment
increased by 8% in the second quarter to $1.25 million. The increase in revenue
is attributable to customers acquired since the beginning of the fourth quarter
of 2015."
Abuhoff continued, "Our recent acquisition of Agility further bolsters our Media
Intelligence Solutions segment and product portfolio. With Agility, we are now
one of only a handful of companies to offer a global media database with
workflow tools for media outreach, monitoring and measurement. By combining
Agility with MediaMiser, we now have a media intelligence solutions business
with more than 1500 customers, an estimated $10.0 million in annual recurring
revenues and an estimated gross margin contribution of 50%."
Abuhoff concluded, "We anticipate third quarter revenue to be in the range of
$15.7 - $16.8 million, consisting of Digital Data Solutions revenue in the range
of $12.5 - $13.1 million, IADS revenue in the range of $1.2 - $1.3 million and
Media Intelligence Solutions revenue, inclusive of Agility, in the range of $2.0
- $2.4 million."
Non-GAAP Financial Measures
This press release and the accompanying tables include references to Adjusted
EBITDA, which is a non-GAAP financial measure. We define Adjusted EBITDA as net
income (loss) attributable to Innodata Inc. and subsidiaries in accordance with
GAAP before income taxes, depreciation, amortization of intangible assets,
stock-based compensation, loss attributable to non-controlling interests and
interest income (expense). We believe Adjusted EBITDA is useful to our
management and investors in evaluating our operating performance and for
financial and operational decision-making purposes. In particular, it
facilitates comparisons of the core operating performance of our company from
period to period on a consistent basis and helps us identify underlying trends
in our business. We believe it provides useful information about our operating
results, enhances the overall understanding of our past performance and future
prospects, and allows for greater transparency with respect to key metrics used
by management in our financial and operational decision making. We use this
measure to establish operational goals for managing our business and evaluating
our performance.
Adjusted EBITDA has limitations as an analytical tool and should not be
considered in isolation or as a substitute for results reported under GAAP. Some
of these limitations are:
* Adjusted EBITDA does not reflect tax payments, and such payments reflect a
reduction in cash available to us;
* Adjusted EBITDA does not reflect changes in, or cash requirements for, our
working capital needs or for our cash expenditures or future requirements
for capital expenditures or contractual commitments;
* Adjusted EBITDA excludes the potential dilutive impact of stock-based
compensation expense related to our workforce, interest income (expense) and
net loss attributable to non-controlling interests, and these items may
represent a reduction or increase in cash available to us;
* Although depreciation and amortization are non-cash charges, the assets
being depreciated and amortized may have to be replaced in the future, and
Adjusted EBITDA does not reflect cash capital expenditure requirements for
such replacements or for new capital expenditure requirements; and
* Other companies, including companies in our own industry, may calculate
Adjusted EBITDA differently than we do, limiting its usefulness as a
comparative measure.
Because of these limitations, Adjusted EBITDA should be considered alongside
other financial performance measures, including various cash flow metrics, net
income (loss) and our other GAAP results.
A reconciliation from net loss to Adjusted EBITDA is attached to this release.
Timing of Conference Call with Q&A
Innodata will conduct an earnings conference call, including a question-and-
answer period, at 11:00 AM eastern time today. You can participate in this call
by dialing the following call-in numbers:
The call-in numbers for the conference call are:
1-800-862-9098 (Domestic)
1-785-424-1051 (International)
1-888-203-1112 (Domestic Replay)
1-719-457-0820 (International Replay)
Pass code on both: 1449286
Investors are also invited to access a live Webcast of the conference call at
the Investor Relations section of www.innodata.com. Please note that the
Webcast feature will be in listen-only mode.
Call-in or Webcast replay will be available for 30 days following the conference
call.
About Innodata
Innodata (NASDAQ: INOD) is a global digital services and solutions company.
Innodata's technology and services power leading information products and
online retail destinations around the world. Innodata's solutions help
prestigious enterprises harness the power of digital data to re-imagine how they
operate and drive performance. Innodata serves publishers, media and information
companies, digital retailers, banks, insurance companies, government agencies
and many other industries.
Founded in 1988, Innodata comprises a team of 5,000 diverse people in 8
countries who are dedicated to delivering services and solutions that help the
world's businesses make better decisions.
Recent Innodata honors include EContent Magazine's EContent 100, KMWorld
Magazine's 100 Companies That Matter in Knowledge Management, the International
Association of Outsourcing Professionals' (IAOP) Global Outsourcing Top 100, D&B
India's Leading ITeS and BPO Companies and the Black Book of Outsourcing's Top
List of Leading Outsourcing Providers to the Printing and Publishing Business.
Forward Looking Statement
This release contains forward-looking statements that are made pursuant to the
safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
The words "project," "head start," "believe," "expect," "should," "anticipate,"
"indicate," "point to," "forecast," "likely," "goals," "optimistic," "foster"
and other similar expressions generally identify forward-looking statements,
which speak only as of their dates.
These forward-looking statements are based largely on our current expectations
and are subject to a number of risks and uncertainties, including without
limitation, that contracts may be terminated by clients; projected or committed
volumes of work may not materialize; our Innodata Advanced Data Solutions
("IADS") segment is a venture formed in 2011 that has incurred losses since
inception and has recorded impairment charges for all of its fixed assets; we
currently intend to continue to invest in IADS; the primarily at-will nature of
contracts with our Digital Data Solutions clients and the ability of these
clients to reduce, delay or cancel projects; continuing Digital Data Solutions
segment revenue concentration in a limited number of clients; continuing Digital
Data Solutions segment reliance on project-based work; inability to replace
projects that are completed, canceled or reduced; difficulty in integrating and
deriving synergies from acquisitions, joint venture and strategic investments;
potential undiscovered liabilities of companies that we may acquire; depressed
market conditions; changes in external market factors; the ability and
willingness of our clients and prospective clients to execute business plans
which give rise to requirements for our services; changes in our business or
growth strategy; the emergence of new or growing competitors; various other
competitive and technological factors; and other risks and uncertainties
indicated from time to time in our filings with the Securities and Exchange
Commission.
Our actual results could differ materially from the results referred to in the
forward-looking statements. In light of these risks and uncertainties, there can
be no assurance that the results referred to in the forward-looking statements
will occur.
We undertake no obligation to update or review any guidance or other forward-
looking information, whether as a result of new information, future developments
or otherwise.
Company Contact
Raj Jain
Vice President
Innodata Inc.
rjain(at)innodata.com
(201) 371-8024
INNODATA INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE LOSS
(Unaudited)
(In thousands, except per-share amounts)
Three Months Ended Six Months Ended
----------------------------- --------------------------
June 30 June 30
----------------------------- --------------------------
2016 2015 2016 2015
--------------- ------------- ------------- ------------
Revenues $ 15,642 $ 14,063 $ 31,340 $ 27,865
--------------- ------------- ------------- ------------
Operating costs and
expenses:
Direct operating
costs 11,685 10,991 23,150 22,115
Selling and
administrative
expenses 5,553 4,278 9,364 8,413
Interest expense
(income), net 16 (19) 29 (45)
--------------- ------------- ------------- ------------
Totals 17,254 15,250 32,543 30,483
--------------- ------------- ------------- ------------
Loss before income
taxes (1,612) (1,187) (1,203) (2,618)
Provision for (benefit
from) income taxes 258 (254) 776 301
--------------- ------------- ------------- ------------
Net loss (1,870) (933) (1,979) (2,919)
Loss attributable to
non-controlling
interests 92 134 204 280
--------------- ------------- ------------- ------------
Net loss attributable
to Innodata Inc. and
Subsidiaries $ (1,778) $ (799) $ (1,775) $ (2,639)
--------------- ------------- ------------- ------------
Loss per share
attributable to
Innodata Inc.
and Subsidiaries:
Basic and Diluted $ (0.07) $ (0.03) $ (0.07) $ (0.10)
--------------- ------------- ------------- ------------
Weighted average
shares outstanding:
Basic and Diluted 25,445 25,337 25,445 25,337
--------------- ------------- ------------- ------------
Comprehensive loss:
Net loss $ (1,870) $ (933) $ (1,979) $ (2,919)
--------------- ------------- ------------- ------------
Pension liability
adjustment, net of
taxes (82) 10 (164) 20
Change in fair values
of derivatives, net of
taxes (193) (23) 246 483
Foreign currency
translation
adjustment, net of
taxes 8 119 364 (420)
--------------- ------------- ------------- ------------
Other Comprehensive
income (loss) (267) 106 446 83
--------------- ------------- ------------- ------------
Total Comprehensive
loss (2,137) (827) (1,533) (2,836)
Comprehensive loss
attributed to non-
controlling interest 92 134 204 280
--------------- ------------- ------------- ------------
Comprehensive loss
attributable to
Innodata Inc. and
Subsidiaries $ (2,045) $ (693) $ (1,329) $ (2,556)
--------------- ------------- ------------- ------------
Supplemental Financial Data:
Adjusted EBITDA
$ (681) $ (223) $ 672 $ (668)
----------- ----------- ---------- ----------
INNODATA INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in thousands)
June 30, December 31,
--------------------------
2016 2015
------------ -------------
ASSETS
Current assets:
Cash and cash equivalents $ 24,961 $ 24,908
Accounts receivable, net 9,702 9,249
Prepaid expenses and other current assets 3,042 2,900
Deferred income taxes 417 282
------------ -------------
Total current assets 38,122 37,339
Property and equipment, net 4,756 4,723
Other assets 2,309 2,330
Deferred income taxes 1,333 1,382
Intangibles, net 4,002 3,987
Goodwill 1,531 1,476
------------ -------------
Total assets $ 52,053 $ 51,237
------------ -------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 6,022 $ 4,562
Accrued salaries, wages and related benefits 5,386 4,905
Income and other taxes 1,236 1,255
Current portion of long term obligations 1,307 1,582
Deferred income taxes - 76
------------ -------------
Total current liabilities 13,951 12,380
Deferred income taxes 722 716
Long term obligations 3,686 3,436
Non-controlling interests (3,451) (3,507)
------------ -------------
STOCKHOLDERS' EQUITY: 37,145 38,212
------------ -------------
Total liabilities and stockholders' equity $ 52,053 $ 51,237
------------ -------------
INNODATA INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(Unaudited)
(Dollars in thousands)
Adjusted EBITDA
Three Months Ended Six Months Ended
-------------------------- ---------------------------
June 30, June 30,
-------------------------- ---------------------------
2016 2015 2016 2015
------------- ------------ ------------- -------------
Net loss attributable to
Innodata Inc. and
Subsidiaries $ (1,778) $ (799) $ (1,775) $ (2,639)
Depreciation and
amortization 672 709 1,324 1,436
Stock-based compensation 243 274 522 559
Provision for (benefit
from) income taxes 258 (254) 776 301
Interest expense
(income), net 16 (19) 29 (45)
Non-controlling
interests (92) (134) (204) (280)
------------- ------------ ------------- -------------
Adjusted EBITDA $ (681) $ (223) $ 672 $ (668)
------------- ------------ ------------- -------------
Adjusted EBITDA (by
segment)
Three Months Ended Six Months Ended
-------------------------- ---------------------------
June 30, June 30,
-------------------------- ---------------------------
2016 2015 2016 2015
------------- ------------ ------------- -------------
Digital Data Solutions $ 136 $ 910 $ 2,499 $ 1,521
IADS (372) (894) (1,059) (1,903)
MIS (445) (239) (768) (286)
------------- ------------ ------------- -------------
Adjusted EBITDA $ (681) $ (223) $ 672 $ (668)
------------- ------------ ------------- -------------
This announcement is distributed by GlobeNewswire on behalf of
GlobeNewswire clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: Innodata Inc. via GlobeNewswire
[HUG#2031280]
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