Innodata Raises 2026 Revenue Growth Forecast to 42% or More After Strong Results
Key Facts
Innodata raised its forecast for 2026 revenue growth to 42% or more year over year, from a previous forecast of 40% or more, according to a filing with the U.S. Securities and Exchange Commission. The revision came alongside its third-quarter results, with revenue reaching $95.6 million, up 53% from the same period a year earlier. Revenue exceeded analyst consensus by about $12.3 million, or 15%, according to an investor relations statement. Chief Executive Rahul Singhal said the quarter was a record for revenue and that the company had recorded 13 consecutive quarters of annual growth. The higher forecast puts continued demand for AI-related data services at the forefront of developments at the company, while the impact of programs shifting between quarters remains a factor in the near-term revenue trajectory.
Results also showed an improvement in net income, which reached $10.3 million in the third quarter, compared with $8.3 million in the same period a year earlier, according to the company’s filing. Adjusted gross profit was $38.3 million, with an adjusted gross margin of 40%. Adjusted EBITDA was $17.7 million, up $1.5 million from $16.2 million a year earlier. Cash and cash equivalents rose to $164 million on September 30, 2026, an increase of $81.7 million from December 31, 2025, with the company noting that the balance includes customer advances. These indicators provide a picture of the quarter on which the company based its higher forecast, alongside revenue growth.
But the company expects the end of a program at one of its largest customers to weigh on fourth-quarter revenue by about $12 million, according to the earnings call. It said the program’s conclusion would affect revenue during that quarter and that it expects new programs at the customer to offset the impact in the first quarter. In parallel, Innodata signed a new data pre-training program with the same customer, with a contract value of $29 million. It also signed an additional program with the customer in the fourth quarter worth about $18 million, according to the call. This reflects the differing timing of revenue between the end of an existing program and the start of new ones, with the company expecting the offset to come in the first quarter.
On new customers, Innodata said it won five programs at a hyperscale cloud computing company, after generating about $3.1 million from the customer during the previous twelve months. The company expects revenue from this customer to exceed $20 million in 2027, based on the new programs. It added five new customer organizations in the third quarter, including model-building companies and an enterprise data platform. It also said a customer that represented less than 5% of its revenue a year ago became its largest customer in the third quarter, giving it two customers of similar size. These developments expand the company’s base of contracts and customers underpinning its forecasts, while the timing of when programs convert to revenue varies.
The company counts physical AI and robotics among its future areas of work. It launched a motion-capture lab in September to train humanoid robots and world models, and is working on pilot projects with advanced labs and robotics labs. It said one pilot project could generate about $7 million in 2027 if successful, an estimate contingent on the outcome of the trial. In its federal business, the company said it has a verbal award for a contract worth $5 million annually for five years and expects it to be signed by the end of the fourth quarter. The stock closed at $37.03 on November 6, after closing at $38.62 in the previous session, according to EL7 data. Singhal said the company expects to finish 2026 strongly and that 2027 could be more exciting as AI moves into agents, reinforcement learning and embodied intelligence.