What happened
Innodata (INOD -0.43%) stock is soaring today following the publication of the company's second-quarter earnings results. The data services company's share price was up 22.1% at 11:30 a.m. ET according to data from S&P Global Market Intelligence.
Innodata published its Q2 results after the market closed on Thursday, showing sales and earnings performance that topped the market's expectations. While the company's revenue fell 1.5% year over year (YOY) to $19.7 million, its net loss of $0.8 million for the period was significantly lower than the $3.8 million loss it posted in the prior-year quarter. Innodata also had some big news about landing a new customer.
So what
While Innodata's revenue fell YOY in Q2, it did climb 4% from this year's first quarter. The YOY sales decline stemmed from the loss of business from a large social media company that had accounted for $2.5 million in sales in Q2 last year.
Despite the sales drop-off, expense reduction initiatives helped the business trim its net loss substantially compared to the prior-year period. The company ended the quarter with $13.7 million in cash and short-term equivalents against no debt.
With its quarterly report, Innodata also announced that it had started providing generative artificial intelligence development services for a "big five" technology company. The big five are Apple, Microsoft, Alphabet, Amazon, and Meta Platforms, and Innodata is now providing services for four of these businesses. The data specialist had announced on July 18 that it had entered into preliminary discussions with its new big-five tech customer, and the company should see a significant sales increase now that services have started.
Now what
Innodata expects that its contract with its new big-five tech customer could reach an annualized revenue run rate of $15 million by the end of this year. The two companies are also in discussions about potentially expanding services beyond existing levels. With contributions from the new deal, management anticipates that sales performance will ramp up in the second half of this year and that growth momentum will continue into 2024.