Q1 2025 Innodata Inc Earnings Call
Good afternoon, ladies and gentlemen, and welcome to the you know data first quarter 2025 results conference call. At this time all lines are in listen only mode.
Following the presentation, we will conduct a question and answer session.
General Counsel of Innodata Inc. Please go ahead.
Speaker Change: Thank you, lovely, good afternoon everyone. Thank you for joining us today. Our speakers today are Jack Abuhoff, CEO of Innodata.
Speaker Change: and Marissa Espineli in term CFO . Also on the call today is Aneesh Pendharkar, Senior Vice President, Finance, and Corporate Development. We'll hear from Jack first who will provide perspective about the business and then Marissa will follow with a review of our results for the first quarter. We'll then take questions from Annelys.
Speaker Change: Before we get started, I'd like to remind everyone that during this call, we will be making forward-looking statements, which are predictions, projections, or other statements about future
Speaker Change: These statements are based on current expectations, assumptions, and estimates, and are subject to risks and uncertainties.
Speaker Change: Actual results could differ materially from those contemplated by the stoward-looking statements.
Speaker Change: factors that could cause these results to differ materially are set forth in today's burning stress release in the risk factor section of our form 10K, forms 10Q, and other reports in filings with the Securities and Exchange Commission.
We undertake no obligation to update forward looking information.
Speaker Change: In addition, during this call, we may discuss certain non-gas financial measures.
Speaker Change: In our earnings release files with the SEC today, as well as in our other SEC filings posted on our website, you will find additional disclosures regarding these non-GAAP financial measures, including reconciliation of these measures with comparable GAAP measures .
Jack Abuhoff: Thank you. I will now turn the call over to Jack.
Thank you Amy, good afternoon everyone.
Jack Abuhoff: RQ-1 2025 revenue was 58.3 million, the year-over-year increase of 120 percent.
Jack Abuhoff: Argested EBIDOP for the quarter was 12.7 million or 22% of revenue, the 236% year-over-year increase.
Jack Abuhoff: We finished the quarter with 56.6 million of cash, which is a $9.7 million increase from last quarter.
Our $30 million credit facility remains undrawn.
Jack Abuhoff: We're pleased with our financial results this quarter, which by the way came in ahead of the analyst group in U.S.D.
Jack Abuhoff: But what's even more exciting is the meaningful progress we've made on our strategic growth initiatives, much of it in just the past few weeks.
Jack Abuhoff: I'd like to take this opportunity to walk you through the progress we're making across four of our most dynamic solutions areas, highlighting how we're aligning with the evolving customer needs.
Jack Abuhoff: and how these efforts are driving both new customer wins and meaningful account expansions.
Jack Abuhoff: Let's first look at the work we do collecting and creating generative AI training data. We are very focused on building progressively more robust capabilities to feed the progressively more complex data requirements of large language models as they advance toward our official generalized intelligence, or AGI, and eventually artificial superintelligence, or ASI.
Jack Abuhoff: We have made and we continue to make investments toward expanding the diversity of expert domains like math and chemistry for which we create LLM training data and perform reinforcement learning, while also investing in expanding languages like Arabic and French.
Jack Abuhoff: within these domains and creating the kind of data required to train even more complex recent models that can solve difficult multi-step problems within these domains.
Jack Abuhoff: We're also developing progressively more robust capabilities to collect pre-training data at scale.
Jack Abuhoff: The investments that we have made and continue to make, and the investments we have made and continue to make have enabled us to gain traction with both existing customers and potential new customers.
I'll take potential new customers first.
Jack Abuhoff: We're in the process of being unborted by a number of potentially significant customers.
I'm going to share four of them with you now.
Jack Abuhoff: The first is a global powerhouse building mission critical systems that power everything from multinational finance and telecommunications to government operations and cloud infrastructure.
Jack Abuhoff: It is integrating large language models and AI across its cloud infrastructure and enterprise applications to enhance automation, productivity and decision making, and also embeds AI directly into our horizontal and vertical applications.
Speaker Change: The second is a cloud software company that has revolutionized the way businesses manage customer relationships.
Speaker Change: It is leveraging large language models and AI to enhance customer relationship management and enterprise operations, and it's taking leadership position in launching and gigantic AI capabilities to autonomously handle complex enterprise tasks.
Speaker Change: The third is a Chinese technology conglomerate that operates one of the world's largest digital commerce ecosystems.
Speaker Change: It has built its own family of LLM models, incorporating hybrid reasoning capabilities and supporting multiple modalities, including text, image, audio, and video.
Speaker Change: Its models are widely used for a variety of horizontal applications, as well as industry specific applications.
Speaker Change: And the fourth is a global health care company that is a leader in advanced medical imaging, diagnostics, and digital health solutions.
Speaker Change: It was actively integrating LLMs and AI to enhance diagnostics, streamline clinical workflows, and improve patient outcomes. Developing foundation models capable of processing multi-modal data, including medical images, records, and reports.
Speaker Change: Now when it comes to existing customers, we're seeing major expansion opportunities, some we've already won, and others we expect to win in the near term.
Speaker Change: I'll share a few examples to illustrate the kind of traction we are now seeing. I'll start with three of our big tech customers, which, until recently, were relatively small accounts for us, but which are now showing signs of meaningful expansion.
Speaker Change: I'll also attach on the continued strong momentum we're seeing within our largest customer.
Speaker Change: The first example is a customer we started working with in the second quarter of last year. Now in 2024, we recognize only about $400,000 of revenue from them.
Speaker Change: But today, by contrast, we have late stage pipeline that we value as having the potential to result in more than $25 million of bookings this year and continued growth over the next several years.
Speaker Change: This customer is one of the most valuable software companies in the world.
Speaker Change: They've shared with us that improving on these fronts was critical in order to improve product experience and provide a foundation for multi-modal reasoning and and agentic models of the future.
Speaker Change: So here's a great example of an investment we are making that has specifically resulted in traction with this customer.
Speaker Change: We developed an innovative data generation pipeline that enables domain experts to create detailed hierarchical content labels across modalities while continuing to evolve the underlying taxonomies.
Speaker Change: Our approach supports multiple types of Gen.A.I workflows, including detailed descriptions, reverse prompting, and highly specific evaluations.
Speaker Change: One sign and one we believe is about to be signed that we value it approximately 1.3 million potential revenue. We also have another opportunity with them that we value it about $6 million of potential revenue in the pipeline, and I'll talk about that more in a few minutes.
Speaker Change: The third example is a big tech hyperscale with extensive generative AI capabilities across both its consumer and enterprise businesses, where it offers foundational models together with custom silicon optimized for AI workloads.
Speaker Change: We believe we will soon be engaged by it to support pre-training data collection from very specific specialized models.
Speaker Change: We'll also talk in a few minutes about additional expansion that we're driving at this account in terms of model safety and evaluation.
Speaker Change: The fourth example is one of the most highly regarded generative A.I. Lebs.
Speaker Change: We just signed a new data collection deal with them. We value it approximately $900,000 of potential revenue and we're discussing an expansion that could potentially double that.
Speaker Change: Pre-training data collection in the form of curated texts Kapora, as well as multimodal datasets, remains a cornerstone for big tech companies racing to build next generation LLMs.
Speaker Change: As models grow more sophisticated, their performance hinges not just on raw computational power but also on the breadth, depth and quality of the data they are trained on.
Speaker Change: Continuous Data Acquisition enables the models to better understand new ones, context, and intent across languages and domains.
Speaker Change: We believe that each of the companies I just mentioned is likely budgeting several hundred million dollars per year on generative AI data and model evaluation.
Speaker Change: So the traction we are now seeing is super exciting and is very much the result that we have been working toward under our business plan.
Lastly, we also see expansion opportunities with our largest customer.
Speaker Change: Literally, just this morning, we signed a second Master S.O.W. with our largest customer that we anticipate will enable us to deliver Gen AI services funded from a distinct budget category within the customer's organization.
Separate from the budget that supports our existing engagements
We believe this new budget to be materially larger.
Speaker Change: Now to prepare ourselves to deliver services under this new SW, we are making investments in customizing our proprietary LLM data annotation platforms, specifically for the work that will be required under this new SW, and we are building some additional service support capabilities.
Aneesh Pendharkar,
Speaker Change: Another major area of strategic focus for us is building agentic AI solutions for our big tech customers as well as our enterprise customers.
Speaker Change: With one of our smaller big tech relationships, one that I discussed a few minutes ago, we have begun a collaboration around both AI, agent, data set creation and AI agent building.
Speaker Change: The work we are hoping to kick off with them this quarter will involve creating approximately 200 conversational and autonomous agents across multiple domains.
Speaker Change: The work involves defining use cases, developing synthetic knowledge Kapora, generating demonstration data sets, building and debugging agents, and then managing agent orchestration.
Speaker Change: We believe this opportunity has the potential to be worth approximately $6 million to start.
Speaker Change: We believe agent-based AI is going to serve as the cornerstone technology that unlocks the full value of large language models and generate a AI for enterprises.
Speaker Change: Transforming them from powerful but isolated tools into autonomous gold-driven systems that can reason, take action, and drive measurable business outcomes at scale.
Speaker Change: The Genetic AI refers to artificial intelligence systems that can autonomously initiate and carry out complex tasks in pursuit of specified goals with minimal ongoing human input.
Speaker Change: These systems go beyond reactive execution. They exhibit goal-oriented behavior. They make decisions. They adapt to changing context. And they even take initiative to achieve outcomes.
Speaker Change: In contrast to traditional AI, which typically responds to prompts or instructions, agentic AI is designed to operate with a degree of independence, managing multi-step processes, reasoning through uncertainty and dynamically adjusting actions based on feedback.
Speaker Change: It represents a shift from AI as a tool to AI as a collaborator, one that could understand objectives plan strategically and act accordingly.
Speaker Change: Now on the subject of unlocking value for enterprises, in the last several months, we have won engagements that we value at approximately $1.6 million, helping one of the world's largest social media companies integrate Gen AI into their engineering operations.
Speaker Change: We were in active discussions about expanding this successful effort to other business units within the customer as well.
Speaker Change: We are providing integration services, prompt engineering, program management, and non-site consulting for implementing generative AI.
Speaker Change: So far, we have automated five workflows, which we estimate will help our customer generate approximately $6 million in cost savings.
Speaker Change: The plan is to automate about 60% of 90 identified workflows by the end of 2025.
Speaker Change: And for this to result in at least 10 million of additional savings for this customer this year, while providing additional benefits in terms of reduced friction and increased development and velocity, as the engineering team can wear rapidly prototype tests and refine solutions.
Speaker Change: We were also in advanced discussions with several other companies about helping them use generative AI to enhance both products and operations.
Speaker Change: And we've discussed how our investments and expanded capabilities in the LLM training data creation and agentic AI are fueling a surge from customer engagement.
Speaker Change: We're seeing that same momentum carry over into the work in generative AI trust and safety.
Speaker Change: Marking a significant expansion of our presence in a fast-growing mission-critical segment of the market.
Speaker Change: We are pleased to announce that we have one expanded engagements to provide trust and safety evaluations for one of our existing big tech customers. Again, not our largest customer, but one of the smaller relationships that's now successfully expanded. [inaudible]
Speaker Change: The engagements together have a potential value of approximately $4.5 million of what we believe will be annual recurring revenue.
Speaker Change: We just started ramping the engagements up a couple of weeks ago.
Speaker Change: We anticipate working across several of their divisions spanning English, Spanish, German, and Japanese languages. We anticipate providing ongoing testing of both their public models as well as their beta models that they have not yet launched.
Speaker Change: Under these engagements, we anticipate testing both generic models and domain specific models as well For example, we might help ensure that a model trained to assist chemists and nuclear scientists will refuse to provide advice on how to build a bond or create crystal meth
Speaker Change: Again, our willingness and insight to make investments proved critical in enabling us to capture this opportunity.
Speaker Change: Rebolstered our proprietary trust and evaluation platform with some innovative features that our customer found compelling. Just last week the customer completed security reviews of our platform, enabling us to start work this week.
Speaker Change: We believe there is a near-term potential to expand further our trust and safety work with this customer.
Speaker Change: We intend to be running paid pilots for other trust and safety workflows over the next few months.
Speaker Change: And to support this opportunity, we've invested in methodologies for predicting emerging areas of user interaction with advanced language models, enabling us potentially to proactively surface and address high-risk topics for trust and safety assessment.
Speaker Change: We recently demonstrated this capability to our customer who responded with strong enthusiasm.
Speaker Change: Notably, part of these engagements involve evaluating LLMs embedded in physical devices and robotics, with which our teams will be working directly in our customer's labs to test performance at the hardware level.
Speaker Change: With another enterprise customer, one that I mentioned earlier, we have been shortlisted as lead vendor for a multi-year program aimed at evaluating the customer's
Speaker Change: We anticipate the annual return revenue of this engagement is 1 to be approximately $3.3 million.
Speaker Change: You're currently conducting proofs of concept that the Compass adversarial testing, model probing, and early stage fine-tuning pipelines.
Speaker Change: The proposed production scope includes comprehensive red teaming, implementation of guardrails, and rigorous evaluation model behavior across text, image, video, and audio outputs.
Speaker Change: In the first quarter, we introduced our general to the AI testing evaluation platform at NVIDIA's GTC 2025.
Speaker Change: The Enterprise Great Solution is designed to assess the integrity, reliability, and performance of large language models across the full development lifecycle.
Speaker Change: from pre-deployment refinement to post-deployment monitoring, enabling both internal operational use cases and external customer-facing applications.
Speaker Change: Master class served as our inaugural charter customer, and we are now in active discussions with several additional high-profile enterprises with diverse generative AI deployments.
Speaker Change: In addition, we are in active discussions with one of the world's leading global consulting firms regarding a potential go-to-market partnership that would position them as a strategic distribution and implementation channel for our platform.
Speaker Change: From a competitive differentiation standpoint, the platform encapsulates the range of advanced techniques developed through our ongoing services engagements with leading big tech customers.
Speaker Change: These capabilities are now productized into an autonomous system that allows enterprises to benchmark, evaluate, and continuously monitor their agents and foundation models.
Speaker Change: The platform supports evaluation against high-quality standardized benchmarks across key safety dimensions, including hallucination, bias, factual accuracy, and brand alignment, while also enabling customization through client-specific safety vectors and proprietary evaluation criteria.
Speaker Change: A key feature of the platform is its continuous attack agent, which autonomously generates thousands of adversarial props and conversational probes to uncover vulnerabilities in real time.
Speaker Change: Detected issues are flagged for review, allowing customers to take swift remedial action.
Speaker Change: Recommended Mitigation Strategies may include tailored system message design and the generation of supplemental fine-tuning data sets.
Speaker Change: The platform is currently available through an early access program for enterprise customers with general availability targeted for late Q2.
Speaker Change: Preston Safety Evaluation is critical at both the development and production stages of large language models. During development, rigorous testing, including adversarial red teaming, is essential to uncover vulnerabilities, biases, and harmful behaviors before models are deployed. [inaudible]
Speaker Change: This proactive approach enables developers to build safety guards into the model architecture and fine-training processes.
Speaker Change: In production, continuous evaluation ensures that the models remain aligned with safety standards as they interact with real users in evolving contexts.
Speaker Change: Together, these measures are vital for ensuring that LLMs operate responsibly, mitigate risk, and maintain user trust at scale. We believe the rapid adoption of a gentick and multi-agent systems will push us to a new phase of complexity when it comes to trust and safety.
Speaker Change: In their most recent quarterly earnings reports, the Magnificent Seven Technology Companies, Apple, Microsoft, Amazon, Alphabet, Meta, NVIDIA, and Tesla.
Speaker Change: At each underscored their commitments to generative AI investment, viewing it as a pivotal component of their future growth strategies.
Speaker Change: Microsoft has announced plans to invest approximately 80 billion in AI infrastructure during Fiscal 2025, aiming to build data centers designed to handle artificial intelligence workloads.
Speaker Change: Meta has raised its capital expenditure guidance to 64 to 72 billion for 2025, reflecting increased investment in AI infrastructure, including the development of new AI tools such as 64 and a standalone AI assistant step.
Speaker Change: Amazon's expanding AI capabilities, particularly within its cloud computing division, AWS.
Speaker Change: In his annual letter to shareholders, the Amazon CEO emphasized the company's aggressive investment in AI writing, quote, we continue to believe AI as a once-in-a-lifetime reinvention of everything
Speaker Change: Alphabet, meanwhile, reported a 20% increase in operating income and a 46% rise in net income in Q1 2025, attributing this growth to its quote, unique full stack approach to AI, which encompasses infrastructure, models, and applications.
Speaker Change: Given this sentiment and the significance of the magnificent Seven and other large global technologies to our revenue stream, we do not believe that short term business cycles or trade policies have much of an impact on our business prospects.
Speaker Change: It is worth noting how bullish sophisticated venture capital investors are on our sector.
Speaker Change: Our largest direct competitor is reported to be close to finalizing a secondary stock sale Dallying in the company at $25 billion.
Speaker Change: A multiple of 29 X last year's reported revenue with $870 million, which came with reported the EBIDAL loss of $150 million.
Speaker Change: Today, we are reaffirming our full-year revenue growth guidance of 40% or greater.
Speaker Change: As the breadth of activity across our business illustrates, we believe the current momentum in positions as well for continued strong performance.
Amy Agress: Amy Agress, Marissa Espineli, Amy Agress, Amy Agress, Marissa Espineli, Amy Agress,
Speaker Change: I want to say something about how we intend to manage the business over the next couple of years.
Speaker Change: Our intention is to embrace growth from both the broadening customer footprint and our largest customer.
Speaker Change: I've shared with you today how we are achieving significant success success with the diversity of large customers that we believe could become material contributors over the coming fiscal periods.
Speaker Change: At the same time, we also see significant growth potential with our largest customer.
Speaker Change: We believe this customer will continue to expand its overall relationship with us and we're deeply aligned with its long-term roadmap.
Speaker Change: Given that we intend to drive growth from this broadening customer footprint and our largest customer at the same time, we intend to embrace customer concentration as a natural part of our evolution.
Many leading technologies companies have seen similar patterns.
Speaker Change: An early period of customer concentration followed by a broad-based growth as the value proposition
Speaker Change: We believe we are following that same path and remain confident in our ability to continue executing with discipline while building a durable, diversified revenue engine.
Speaker Change: Inevitably, customer concentration can result in quarter to quarter volatility. For example, with our largest customer, the Exit in 2024 had an annualized revenue run rate of approximately more than $135 million.
Speaker Change: In Q1, we were running higher than this by about 5%, and in Q2 we anticipate that we could be lower by about 5%, but the customers' demand signals are updated continually and are highly
Speaker Change: Going forward, we do not intend to provide granular updates at a customer level.
Speaker Change: Our 2025 Financial Plan reflects our conviction and the scale of the opportunity ahead. We believe we are well positioned to drive business with an increasingly diverse group of leading big tech companies and enterprises and become a market leader in one of the most transformative technology cycles in decades.
Speaker Change: Accordingly, we intend to reinvest a meaningful portion of our operating cash flow into product innovation, go to market expansion, and talent acquisition, while still delivering adjusted EBITDA above our 2024 results.
Speaker Change: This, too, is an intentional strategy aimed at capturing long-term value in a rapidly growing and strategically important market.
Speaker Change: I'll now turn the call over to Mariz to go over the financial results after which Mariz Aneesh and I will be available to take questions from analysts.
Marissa: Thank you, Jack, and good afternoon, everyone. Revenue for Q1 2025, rich 58.3 million, representing a new overview increase of 120%.
Marissa: and demonstrating strong momentum to start the year. Adjacent growth margin was 43% for the quarter, up from 41% in Q1 of last year.
Marissa: As we've discussed previously, we target an adjusted growth margin of around 40%, so we're pleased to have exceeded that benchmark to begin the year.
Marissa: Our adjusted EBITDA for Q1 2025 was $12.7 million or 22% of revenue compared to $3.8 million in the same quarter last year.
Marissa: Net income was $7.8 million in the first quarter up from $1 million in the same period last year. We were able to utilize the benefits of accumulated net operating losses or notfall in Q1s to partially upset our tax provisions.
Marissa: Looking ahead, barring and changes in the tax environment, we expect that our tax rate in the Common Quarters to be approximately 29%
Marissa: Our cast position at the end of Q1 2025 was 56.6 million, up from 46.9 million at the end of Q4 2024 and 19 million at the end of Q1 2024. The flattening strong profitability and this acquaintance management.
Marissa: We still have not drawn on our $30 million of Fargo Kled's facilities, the Mount Drogable at any point in time doesn't mean based on the borrowing base formula.
Marissa: With this active linkage in investor relations activities over the past year and expect the bill from the diplomat from either Marissa Feds.
Marissa: We'll be participating in several upcoming investor conference sets and non-build road shows to continue to increase awareness and deepen relationships with institutional investors.
Marissa: Looking ahead, as Jack mentioned, we're planning targeted investment to expand our capabilities.
Marissa: This includes continued investment in technology to support both current and prospective customers in their AI journey, as well as increasing solid hiring in sales and solutioning to drive
Marissa: Inclusive, we plan to invest approximately 2 million to support a new statement of work and related programs with our largest customer, as Jack noted earlier.
Marissa: We expect that this investment will occur ahead of the associated revenue, and is expected to temporarily impact margins in that quarter.
Marissa: to review this as a strategic investment that helps position us to meet customers' evolving needs and to build on the land and expand success with already a shape with them.
Marissa: As always, we'll remain disciplined in managing our cash and expenses while continuing the deaths where we see strong return potential and meaningful long-term value for sure holders. That's all from my end and thanks, everyone. Lovely. We're ready to take questions.
Thank you.
Speaker Change: Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press the star, followed by the number one on your touchtone phone, you will hear a pump that your hand has been raised.
Marissa: If you are using a speaker phone, please lift the handset before pressing any keys. One moment please for your first question.
Speaker Change: Your first question comes from the line of George Sutton from Craig Hallam. Your line is now open, please go ahead.
George Sutton: Thank you and thanks for all the detail on the pipeline. So, Jack, I wonder if you could walk through this statement of work with your largest customer.
Speaker Change: If I understood correctly, you suggested it could be larger and then you sort of cut off from them. So what would larger than be relative to this statement of work opportunity?
Sure. We'll take it for the question.
Speaker Change: The statement of work will enable our customer to start using us in basically what you can think as another division or another area of their Gen-A-I spent.
Speaker Change: associated with that new area, we believe to be significantly higher than the budget that has been supporting all of our programs to date. So we're very excited about that.
Speaker Change: And obviously, what you're suggesting in terms of the sequential revenues from this customer in Q2, which could be down 5%, that is completely separate from the statement of work, that would be meaningfully in addition to correct.
I think it's, you know, the requirements.
of this customer, very dynamic.
Speaker Change: You know, we learn about things almost, you know, multiple times in the course of even a week
Speaker Change: I just want to make sure that as people see that we were up in Q1, you don't necessarily take that and assume that that's like a new threshold. We think in any quarter there are projects at end, there are new projects that start.
Speaker Change: So, you know, in terms of the USW, there's clearly-
Speaker Change: A greater amount of work that we can do. There's additional share of wallet that we can tap into and I think that bodes very well for long-term continuing to grow that account.
Speaker Change: So you walk through a number of different customer opportunities and gave a good sense of the size of the opportunities. Can you give us a sense of what you're finding your win rate to be when you go into these opportunities?
Speaker Change: You know, Winrate is a hard thing to track for us, the-
Speaker Change: Most important thing is to get into a customer, start doing small requirements, build trust.
Speaker Change: Execute very, very well and then expand from there. I think the things that we end up piloting that proceed, that move forward with customers and some things don't. Some things are experimental.
Speaker Change: The things that move forward, you know, we win a very large percentage of those, I believe.
Speaker Change: So what's so exciting about what's going on now in the businesses, you know, for a while we've been talking about these multiple big tech customers and multiple.
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Speaker Change: You know, Magnificent Seven customers that we've got, but some of them have been small. You know, there are a couple of that one.
Speaker Change: to tap into the hundreds of millions of dollars that are being spent on data engineering. What we're seeing now, and the reason we're just so excited by all of this, is our plan is coming together. We're doing exactly what we plan to do, and we're super excited about that.
Okay, thanks. I'll turn it over to others.
Amy Agress: My name is Amy Agress. I'm an author. I'm a writer. I'm a filmmaker. I write stories. I'm an illustrator. I'm a music director. I'm a filmmaker. I'm an artist. I'm an illustrator. I'm an illustrator. I'm an artist. I'm an artist. I'm an artist. I'm an artist.
Speaker Change: Your next question comes from the line of Allen Klee from Max & Group. Your line is now open. Please go ahead
Alan Klee: Yes, hi, great quarter, George actually asked my questions, but I'll try to come up with some others. Can you remind us what more?
You said some stuck last quarter of related to
Speaker Change: Think about the impact of them being down five percent. I think last quarter you said.
Speaker Change: That with a win of 24 million a manual that ran around 135 million in revenue.
Speaker Change: I guess that means annually, but that annual run rate grew 5% this quarter, but then we'll be down 5% next quarter. Is that the way to think of it or am I mixing things up?
Speaker Change: Thank you. Yes, I think the way we're encouraging everyone to think about it is to understand how we intend to manage the company. We believe we have an incredible opportunity to drive
Speaker Change: Broadening customer engagements that I described, we think that will be one source of growth, a very important source obviously.
Speaker Change: But at the same time, you know, we don't intend to take our foot off the accelerator with respect to driving
Speaker Change: considerable growth, hopefully, at our largest customer. That's a choice that we're making. We don't have to do that. We could choose to lower revenue concentration as an alternative and cut back on that.
Speaker Change: But, you know, we're very plugged in with that customer. We've got a great relationship. We're very tied into the things that we're doing and we intend to at Citrus we're making. We intend to grow that as well.
Speaker Change: We believe there's lots of precedent in the market for embracing
Speaker Change: Customer Concentration is a natural part of that evolution. We've seen that at many tech companies over the years and recently at Snowflake and Data Dog even Palantir.
Speaker Change: You know, we think over time as we execute this plan, you know, it'll result in broad-based growth in the interim there'll be quarter to quarter volatility.
Speaker Change: It is specifically what you're referring to, I think, is last year in Q4 we announced that we had...
$135 million dollar annualized revenue run rate with that customer.
Speaker Change: But fact is, Q1, we exceeded that, and Q2, we might be lower than that, but we don't really know because of how dynamic the demand signals are and how their needs are.
are changing all of the time. We think that that...
Speaker Change: is going to be a natural part of what to expect by virtue of the strategic choice we're making to drive growth.
That's great.
Agress.
I'm just in general for training how-
Speaker Change: There's no change. It sounds like you have a ton of opportunities and it's expanding and safety sounded really interesting because that gives you a recurring revenue. Is fair?
Peace.
Speaker Change: Is there a way that people are spending money more differently with you now than maybe they had a year ago?
I think what we're seeing isn't the cross.
Arroster of...
Speaker Change: Big tech companies is a willingness and a desire to do more with us, and I think we earned our way.
Speaker Change: You know, and built trust over time. It takes a while to do it, but, you know, we're now seeing the fruition of those efforts, which, again, is super exciting.
Speaker Change: Trust and Safety is, you know, obviously it's a huge opportunity to take your day.
Speaker Change: It's an opportunity to become even richer and more interesting as we think about the complexity and richness of technology ecosystems that are populated by agents potentially.
Speaker Change: Well, you know, each one of those agents will need to be measured and monitored in the recessed. It's a huge opportunity for us.
Speaker Change: and the competitive advantage we think we have is we've been doing trust and safety work now for you know, several of our large customers and that's expanding.
Speaker Change: to test models and evaluate models, and we can build those techniques into a platform, and we can build that platform in a way that runs on an automated, continuous basis, providing real-time feedback to people.
Speaker Change: So yeah, now we're super excited about that. I think you're right. You point out a very important point.
Speaker Change: We believe that these opportunities on the surfaces side and hopefully on the platform side as well will be recurring. We think that there will be an ongoing need for that as the technology becomes more pervasive within the, you know, our company's ecosystems for sure. [inaudible]
That's great. Thank you so much.
Speaker Change: Your next question comes from the line of Hamed Khorsand, from Beating Wall Street Financial, your line is not open, please go ahead
Speaker Change: I was just wondering, in the last quarter, you gave this guidance of 40% growth. How to these projects that you're talking about today, where you're expecting within that guidance?
Speaker Change: So yeah, you know, when we give guidance, we try to take a long view. We look at what's booked, we take a conservative view of what we think expansionist can be.
Speaker Change: You know, on our largest accounts, we estimate, you know, based on demand signals from the customer. Those are highly, you know, dynamic, as we've said. Of course, you know, our predictions will only be perfect in retrospect. We know that, but we try to do our best.
and we try to-
Speaker Change: To be reasonably conservative as we make those predictions because we don't want to be wrong. We'd much rather surprise on the upside. So some of the accounts that I'm describing, especially the new relationships, you know, they're not baked in at all.
Speaker Change: There's so much that we don't know about from how long will it take, what will it look like, you know, and so again, you know, we had an abundance of Khorshan and Azizar, not to be wrong, we don't as a practice, we at least we try not to get ahead of our skis on any of that.
Speaker Change: Yeah, so that's what I was getting to is that you have all these projects on all as far as revenue opportunity. Why keep the guidance of 40% growth? What makes you nervous that you can't grow faster?
Speaker Change: Well, you know, it's a little bit like that, if we take some of the new customers that were now onboarding.
Speaker Change: We don't necessarily know. Even movies are exciting customers and we think there's huge opportunities. We don't know necessarily.
Speaker Change: How fast are we going to be able to convert that into opportunity? Are they going to want to work with us for a while before really opening the spigot or is this thing going to open up and work quickly?
Speaker Change: We've seen customers that move fast, we've seen customers that require getting to know us for a while.
Speaker Change: with our largest customers, as I said, the demand is very dynamic, it changes very quickly.
Speaker Change: So, again, you know, what we're looking to do is be conserved if we're looking to not be wrong in our growth estimates and if we can meaningfully surprise on the upside like we did last year, then we prefer to err in that direction.
Okay, great. Thank you. Thank you.
Jack Abuhoff: There are no further questions at this time. Please continue, Mr. Jack Abuhoff.
Thank you.
Jack Abuhoff: So Q-1 is in rate quarter with 120% year-of-year growth and while revenue is class sequentially,
Jack Abuhoff: Our business right now is on fire. The growth we're seeing year over year is just the beginning. You know, what's happening now inside the company is really like, we're unlike anything we've seen before.
Jack Abuhoff: We're winning major new customers, we're expanding existing relationships into entirely new
We're building a pipeline that's...
Jack Abuhoff: Deeper and more advanced than at any point in our history. It feels like the engine is fully lit and we're accelerating down the runway.
Jack Abuhoff: Our teams are energized, our customers are leaning in and our conviction in what comes next has never been stronger.
Jack Abuhoff: So, thanks everyone for joining us today for being part of our journey.
Jack Abuhoff: My executive team and I are all in building in a data into one of the defining AI solutions
Jack Abuhoff: and we're excited to keep sharing our progress with you with your unfolds. We're focused on delivering long-term value for shareholders and with the momentum that we're seeing we've never been more confident about what lies ahead. Thank you.
Speaker Change: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.
Speaker Change: Oh.