Innodata Reports Fourth Quarter and Fiscal Year 2016 Results

(Thomson Reuters ONE) -





Innodata Reports Fourth Quarter and Fiscal Year 2016 Results

NEW YORK - March 8, 2017 - INNODATA INC. (NASDAQ: INOD) today reported results
for the fourth quarter and the 12 months ended December 31, 2016.

* Total revenue was $15.7 million in the fourth quarter of 2016, a 2%
sequential decrease from $16.1 million in the third quarter of 2016 and an
approximately 1% increase from $15.5 million in the fourth quarter of 2015.
* Net loss was $1.0 million in the fourth quarter of 2016, or $(0.04) per
diluted share, compared to a net loss of $2.8 million in the third quarter
of 2016, or $(0.11) per diluted share. Net loss in the fourth quarter of
2015 was $0.6 million, or $(0.02) per diluted share.
* Total revenue for the 12 months ended December 31, 2016 was $63.1 million,
an 8% increase from $58.5 million in 2015. Net loss for the 12 months ended
December 31, 2016 was $5.5 million, or $(0.22) per diluted share. Net loss
for the 12 months ended December 31, 2015 was $2.8 million, or $(0.11) per
diluted share.
* The net loss for 2016 was impacted by $3.2 million in one-time costs and
charges, consisting of $1.6 million in costs for a now completed internal
investigation that was previously reported, a $1.0 million charge for an
amendment to potential supplemental purchase price payments under the
MediaMiser share purchase agreement that was also previously reported, and
$600,000 of costs in connection with the acquisition of Agility and its
reorganization and integration. Revenue for 2016 was benefited by $240,000
of one-time revenue related to the acquisition of Agility.  The net loss for
the fourth quarter was impacted by $150,000 of these one-time costs and
charges.
* The net loss for 2016 was also impacted by the deferral in the third quarter

of $150,000 of revenue from one client that will be accounted for on a cash
basis. In addition, the net loss for 2016 and the fourth quarter was
impacted by the deferral of $600,000 of additional revenue from this client
that will be accounted for on a cash basis and by a $150,000 allowance for
accounts receivable from the client.
* Adjusted EBITDA as defined below was $0.4 million in the fourth quarter of
2016, compared to $(0.4) million in the third quarter of 2016 and $0.9
million in the fourth quarter of 2015. Adjusted EBITDA for the 12 months
ended December 31, 2016 was $0.7 million, a decrease of $1.2 million from
$1.9 million for the same period in 2015.
* Cash, cash equivalents and investments were $14.2 million at December
31, 2016 compared to $17.3 million at September 30, 2016.
The tables that accompany this release set out results by segment.

Jack Abuhoff, Chairman and CEO, said, "In 2016 our entire 8% revenue growth of
$4.6 million was driven by our Innodata Advanced Data Solutions (IADS) and Media
Intelligence Solutions (MIS) segments. Our data driven products from these
businesses are part of our clients' workflows, resulting in more predictable
revenue. Our Digital Data Solutions segment (DDS) experienced a decline in
revenue in 2016, primarily on account of a decline in revenue from our key eBook
client and price concessions and reduced volume from another key client. Revenue
from eBooks accounted for 11% of $50.6 million in total DDS revenue for the
year, and 6% of $11.7 million in total DDS revenue for Q4. We partially offset
this decline with DDS revenue from projects that rely on advanced technologies
in data extraction and machine learning and from projects that require foreign
language capabilities."

Abuhoff continued, "Looking ahead we are focused on growing our recurring
revenue base in IADS and MIS, and winning business in DDS that leverages our
capabilities in data extraction, machine learning and data enrichment.  On
account of high operating leverage, our IADS and MIS businesses have the
potential to translate significant portions of incremental revenue into
EBITDA."

Abuhoff concluded, "We anticipate revenue in the first quarter of 2017 to be in
the range of $14.3 - 15.7 million, consisting of DDS revenue in the range of
$11.0 - 12.0 million, IADS revenue in the range of $0.9 - 1.1 million and MIS
revenue in the range of $2.4 - 2.6 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,
changes in fair value of contingent consideration, 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:

1-800-419-9895 (Domestic)
1-913-312-0643 (International)

1-866-375-1919 (Domestic Replay)
1-719-457-0820 (International Replay)

Pass code on both: 9638309

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.

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 and businesses 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 INCOME (LOSS)
(Unaudited)
(Dollars in thousands, except per-share amounts)
    Three Months Ended   Twelve Months Ended
--------------------------- --------------------------
    December 31,   December 31,
--------------------------- --------------------------
    2016   2015   2016   2015
-------------- ------------ ------------- ------------


Revenues  $  15,674   $  15,523    $   63,074   $  58,523
-------------- ------------ ------------- ------------


Operating costs and
expenses:

  Direct operating costs   11,647     11,372     47,219     43,939

Selling and
administrative
  expenses   5,070     4,442     19,539     16,796

Change in fair value
of contingent
  consideration *     *           1,038   *

Interest expense
  (income), net   19     8     63     (31)
-------------- ------------ ------------- ------------
  Totals   16,736     15,822     67,859     60,704
-------------- ------------ ------------- ------------


Loss before income taxes   (1,062)     (299)     (4,785)      (2,181)

Provision for (benefit
from) income taxes   (2)        440     1,126     1,203
-------------- ------------ ------------- ------------
Net loss    (1,060)     (739)     (5,911)     (3,384)

Loss attributable to
non-controlling
interests   77     146     387     558
-------------- ------------ ------------- ------------
Net loss attributable to
Innodata Inc. and
Subsidiaries  $  (983)    $   (593)    $  (5,524)    $  (2,826)
-------------- ------------ ------------- ------------


Loss per share
attributable to Innodata
Inc. and Subsidiaries:

Basic and Diluted  $  (0.04)    $  (0.02)     $  (0.22)    $  (0.11)
-------------- ------------ ------------- ------------
Weighted average shares
outstanding:

Basic and Diluted   25,624     25,471     25,542     25,401
-------------- ------------ ------------- ------------


Comprehensive Income
(loss):



Net loss $   (1,060)     $  (739)     $  (5,911)    $  (3,384)
-------------- ------------ ------------- ------------
Pension liability
adjustment, net of taxes   111     996     (136)     1,026

Change in fair values of
derivatives, net of
taxes   (360)     115     (153)     172

Foreign currency
translation adjustment,
net of taxes   (197)     (182)     49     (995)
-------------- ------------ ------------- ------------
Other Comprehensive
income (loss) (446)   929   (240)   203
-------------- ------------ ------------- ------------
Total Comprehensive
income (loss) (1,506)   190   (6,151)   (3,181)

Comprehensive loss
attributed to non-
controlling interest 77   146   387   558
-------------- ------------ ------------- ------------
Comprehensive income
(loss) attributable to
Innodata Inc. and
Subsidiaries $   (1,429)    $   336    $  (5,764)    $  (2,623)
-------------- ------------ ------------- ------------

Supplemental Financial Data:

Adjusted EBITDA  $ 385     $ 895     $  673    $ 1,887
--------- --------- ---------- ---------

INNODATA INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
 (Dollars in thousands)


    December 31,
------------------------------
    2016   2015
-------------- -------------
ASSETS

Current assets:

Cash and cash equivalents  $  14,172    $  24,908

Accounts receivable, net   9,952     9,249

Prepaid expenses and other current assets       2,900
3,124
-------------- -------------
  Total current assets   27,248     37,057

Property and equipment, net   5,397     4,723

Other assets   2,377     2,330

Deferred income taxes   1,641     1,664

Intangibles   8,191    3,987

Goodwill   2,734     1,476
-------------- -------------
  Total assets  $  47,588    $ 51,237
-------------- -------------




LIABILITIES AND STOCKHOLDERS' EQUITY



Current liabilities:

Accounts payable and accrued expenses  $ 5,351    $  4,562

Accrued salaries, wages and related benefits
5,040 4,905

Income and other taxes   1,330     1,255

Current portion of long term obligations
1,120 1,582
-------------- -------------
  Total current liabilities   12,841     12,304

Deferred income taxes   680     792

Long term obligations   3,917     3,436

Non-controlling interests    (3,634)     (3,507)

STOCKHOLDERS' EQUITY   33,784     38,212
-------------- -------------
  Total liabilities and stockholders' equity  $  47,588    $  51,237
-------------- -------------






INNODATA INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(Unaudited)
(Dollars In thousands)

Adjusted EBITDA Three Months Ended   Twelve Months Ended
---------------------- --------------------------
  December 31,   December 31,
---------------------- --------------------------
  2016   2015   2016   2015
----------- ---------- ------------- ------------
Net income (loss)
attributable to Innodata Inc.
and Subsidiaries  $  (983) $  (593)  $  (5,524)  $  (2,826)

Depreciation and amortization   995     660     3,195     2,773

Stock-based compensation   433     526     1,162     1,326

Provision for (benefit from)
income taxes   (2)   440 1,126  1,203

Change in fair value of
contingent consideration   -   - 1,038   -

Interest expense (income),
net   19   8   63   (31)

Non-controlling interests   (77)     (146)     (387)     (558)
----------- ---------- ------------- ------------

Adjusted EBITDA  $  385 $  895 $  673  $  1,887
----------- ---------- ------------- ------------



Adjusted EBITDA - DDS Segment Three Months Ended   Twelve Months Ended
--------------------- ----------------------
  December 31,   December 31,
--------------------- ----------------------
  2016   2015   2016   2015
---------- ---------- ------------ ---------
Net income (loss) attributable to
DDS Segment $  (731) $  646 $  (2,570) $  2,028

Depreciation and amortization   690   515     2,309   2,185

Stock-based compensation 431   521     1,172   1,307

Provision for income taxes 12   454   1,181   1,264

Change in fair value of contingent
consideration - - 1,038 -

Interest expense (income), net 19   8   63   (31)

Non-controlling interests (77)   (146)   (387)   (558)
---------- ---------- ------------ ---------
Adjusted EBITDA - DDS Segment $  344   $  1,998   $  2,806   $  6,195
---------- ---------- ------------ ---------


Adjusted EBITDA - IADS Segment Three Months Ended   Twelve Months Ended
--------------------- ------------------------
  December 31,   December 31,
--------------------- ------------------------
  2016   2015   2016   2015
---------- ---------- ------------ -----------
Net loss attributable to IADS
Segment $  (180) $  (912) $  (1,778) $  (3,684)

Stock-based compensation 2   5     (10)   19
---------- ---------- ------------ -----------
Adjusted EBITDA - IADS Segment $  (178)   $  (907)   $  (1,788)   $  (3,665)
---------- ---------- ------------ -----------


Adjusted EBITDA - MIS Segment Three Months Ended   Twelve Months Ended
-------------------- ------------------------
  December 31,   December 31,
-------------------- ------------------------
  2016   2015   2016   2015
--------- ---------- ------------ -----------
Net loss attributable to MIS
Segment $  (72) $  (327) $  (1,176) $  (1,170)

Depreciation and amortization   305   145   886   588

Benefit from income taxes (14)   (14)   (55)   (61)
--------- ---------- ------------ -----------
Adjusted EBITDA - MIS Segment $  219   $  (196)   $  (345)   $  (643)
--------- ---------- ------------ -----------


INNODATA INC. AND SUBSIDIARIES
REVENUE
(Unaudited)
(Dollars In thousands)


Revenue (by segment)


  Three Months Ended   Twelve Months Ended
-------------------------- ------------------------
  December 31,   December 31,
-------------------------- ------------------------
  2016   2015   2016   2015
------------ ------------- ------------ -----------


DDS  $  11,711     $ 13,686     $  50,639    $  51,721

IADS 1,256    677      4,347     2,111

MIS   2,707    1,160      8,088     4,691
------------ ------------- ------------ -----------
Revenue $ 15,674      $ 15,523     $ 63,074    $ 58,523
------------ ------------- ------------ -----------








This announcement is distributed by Nasdaq Corporate Solutions on behalf of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.

Source: Innodata Inc. via GlobeNewswire

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