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Innodata Inc. INOD is slated to release third-quarter 2025 results on Nov. 6, after the closing bell.
In the last reported quarter, the company’s earnings beat the Zacks Consensus Estimate by 81.8%. INOD’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 138%, as shown in the chart below.
The Zacks Consensus Estimate for third-quarter earnings per share (EPS) has been unchanged at 14 cents in the past 90 days. The projected figure indicates a decline of 60% from the year-ago reported EPS of 35 cents. The consensus mark for revenues is pegged at $59.79 million, implying 14.5% year-over-year growth.
Our proven model does not conclusively predict an earnings beat for INOD this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. This is not the case here.
INOD’s Earnings ESP: Innodata currently has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Zacks Rank of INOD: The company carries a Zacks Rank #1 at present.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Innodata’s top-line growth in the third quarter of 2025 is likely to have been driven by strong momentum in its AI data services business and expanding partnerships with large technology clients. The company’s focus on delivering high-quality, complex training data for generative AI models has positioned it at the core of rapid developments in artificial intelligence.
During the prior quarter, Innodata secured several new projects with its largest customer, under a second statement of work, which significantly expanded revenue opportunities. Additionally, new multi-million-dollar engagements with another major tech client indicated robust demand for its services, reflecting the company's effective capitalization on the rising needs for AI-model training across big tech platforms.
Another key factor supporting Innodata’s revenue growth was its broadening customer base and pipeline of high-value deals. Management highlighted that the company’s clients are increasingly turning to it not only for large-scale data but also for “smart data” solutions that improve model factuality, safety and reasoning. The company’s data science team has evolved from being a data provider to a strategic partner, co-developing model improvements with clients’ engineering teams.
This elevated role has deepened customer relationships and created stickier revenue streams. Furthermore, Innodata’s growing presence in emerging areas like agentic AI and simulation data for robotics promises to unlock new avenues for top-line expansion, enhancing its long-term growth trajectory.
Finally, the company’s proactive approach to scaling its operational capabilities has underpinned sustained growth. Innodata has increased investments in delivery, product innovation and go-to-market initiatives, steps that supported execution of new contracts and improved service delivery to existing clients. The company’s ability to combine technical expertise with timely capacity expansion has enabled it to capture strong market demand amid accelerating AI adoption. Management’s upward revision of full-year organic revenue growth guidance to at least 45% underscores this confidence in continued top-line acceleration driven by new business wins and expanding market share.
On the flip side, the company’s bottom line in the third quarter might have faced pressure from rising operating expenses tied to growth investments. During the previous quarter, Innodata incurred about $1.4 million in operating costs viewed as strategic investments and signaled a further step-up in third-quarter 2025 spending, approximately $1.5 million higher, to expand sales, delivery and product development capabilities. While these outlays are essential to strengthening its long-term competitive position, they are likely to have weighed on near-term profitability and margins.
INOD stock has surged 229.1% over the past year, underperforming its industry peers and the broader market. In the same time frame, INOD’s shares have outperformed other industry players like Cognizant Technology Solutions CTSH, Infosys INFY and ExlService EXLS.
Analysts have expressed concerns that INOD stock is overvalued. The company is currently valued at a premium compared with its industry on a forward 12-month P/E basis. Its forward 12-month price-to-earnings ratio stands at 69.76, higher than the industry average.
Investors may consider buying the stock as Innodata stands at the forefront of the artificial intelligence transformation, driven by its deep integration into generative AI and data intelligence ecosystems. Innodata’s strong execution, expanding relationships with leading technology companies and rising demand for high-quality training and simulation data position it for sustained growth.
The company’s shift from being a traditional data provider to a strategic AI solutions partner enhances its long-term value proposition, while the proactive investments in innovation, delivery and go-to-market expansion are likely to fuel continued top-line momentum. With a robust project pipeline, growing market share and alignment with the most powerful technology trend of the decade, Innodata offers investors an attractive opportunity to participate in the accelerating adoption of enterprise AI.
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This article originally published on Zacks Investment Research (zacks.com).
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