Innodata's 'Smart Data' Strategy: The Next Growth Catalyst in AI Services?

Innodata Inc. INOD is emerging as a critical enabler in the generative AI ecosystem, where high-quality training data increasingly defines model performance. The company’s second-quarter 2025 highlighted the strength of its “smart data” strategy, with revenue soaring 79% year over year to $58.4 million, adjusted EBITDA climbing 375% to $13.2 million and net income reaching $7.2 million.

The momentum is fueled by wins with major technology customers. Innodata deepened ties with its largest client and secured $10 million in new second-half engagements with another top tech firm — up sharply from just $200,000 a year earlier. Management raised its 2025 organic revenue growth target to at least 45%, citing a robust pipeline and accelerating demand.

What sets Innodata apart is its pivot from “scale data” to “smart data” — analyzing model deficiencies and prescribing precise datasets to improve factuality, safety and reasoning. This positions the company not just as a data supplier but as a partner embedded in customers’ AI development cycles. CEO Jack Abuhoff also sees the rise of Agentic AI — autonomous, simulation-driven systems — as a transformational tailwind, potentially creating a data services market larger than today’s LLM training.

With a strong cash position of nearly $60 million and no debt drawn, Innodata is investing in talent, delivery capacity, and LLM safety platforms while still outpacing prior-year EBITDA. If execution holds, its “smart data” advantage could make Innodata one of the most strategically positioned AI services firms in the years ahead.

Clarivate and Veritone in AI Data Services

Innodata operates in a competitive arena where U.S.-listed peers like Clarivate CLVT and Veritone VERI are also pushing into AI-driven data solutions. Clarivate, known for its vast information services and analytics platforms, has been investing heavily in AI tools to enhance research, intellectual property and enterprise data workflows. With its large-scale customer base across industries, Clarivate represents a significant competitor in applying AI to structured and unstructured data.

Veritone, meanwhile, is carving its niche with AI-powered cognitive engines that help enterprises process, analyze and monetize large datasets. Veritone has leaned into media, legal and government markets, and its expansion into agentic AI and data orchestration overlaps with Innodata’s focus on smart data. Both Clarivate and Veritone have brand recognition and scale advantages, yet Innodata’s tight integration with frontier AI builders and emphasis on precision “smart data” could give it an edge in capturing high-value growth opportunities.

INOD’s Price Performance, Valuation & Estimates

Shares of Innodata have gained 46.3% in the past three months against the industry’s decline of 2%.

INOD Three-Month Price Performance

From a valuation standpoint, INOD trades at a forward price-to-earnings ratio of 66.97, much higher than the industry’s average of 16.66.

The Zacks Consensus Estimate for INOD’s 2025 and 2026 earnings per share (EPS) has increased in the past 60 days, respectively, as shown below. The estimated figures indicate a year-over-year decline of 6.7%, while the same for 2026 indicates an increase of 38%.

INOD currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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