Q2 2025 Innodata Inc Earnings Call
Sergio: Good day, ladies and gentlemen, and welcome to the INNODATA to Report Second 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. If at any time during this call you require immediate assistance, please press the START, followed by the number 0 for your operator. This call is being recorded on Thursday, July 31st, 2025. I will now like to turn the conference over to Amy Agress. Please go ahead.
Good day, ladies and gentlemen, and welcome to the Eno data to report second quarter, 2025 results conference call.
If at any time during this call, you require me to assistance please press start.
Amy Agress: Thank you, Sergio. Good afternoon, everyone. Thank you for joining us today. Our speakers today are Jack Abohoff, CEO of INNODATA, and Marissa Espineli, Interim CFO. Also on the call today is Anish Pandrakar, 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 second quarter. We'll then take questions from analysts. 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, and other statements about future events. These statements are based on current expectations, assumptions, and estimates and are subject to risks and uncertainties. Actual results could differ materially from those contemplated by these forward-looking statements.
Thank you, Sergio. Good afternoon everyone. Thank you for joining us today. Our speakers today are Jack appelhof, CEO of Ina and Maris espineli interim, CFO, also on the call today is Anish pendurkar, senior, vice president, finance and corporate development. We hear from Jack first who will provide perspective about the business and then Marissa will follow with a review of our results for the second quarter, we'll then take questions from analysts.
Amy Agress: Factors that could cause these results to differ materially are set forth in today's earnings press release in the risk factor section of our Form 10-K, Form 10-Q, and other reports and filings with the Securities and Exchange Commission. We undertake no obligation to update forward-looking information. In addition, during this call, we may discuss certain non-GAAP financial measures. In our earnings release filed with the SEC today, as well as in our other SEC filings, which are posted on our website, you will find additional disclosures regarding these non-GAAP financial measures, including reconciliations of these measures with comparable GAAP measures. Thank you. I'll now turn the call over to Jack.
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, and other statements about future events. These statements are based on current expectations, assumptions, and estimates and are subject to risks and uncertainties. Actual results could differ materially from those contemplated by these forward-looking statements. Factors that could cause these results to differ materially are set forth in today's earnings press release, in the risk factor section of our Form 10-K, Form 10-Q, and other reports and filings with the Securities and Exchange Commission. We undertake no obligation to update forward-looking information. In addition, during this call we may discuss non-GAAP financial measures.
Jack Abuhoff: Thank you, Amy, and good afternoon, everyone. Thank you for joining us. We're very pleased to report that Q2 2025 was another outstanding quarter for INNODATA. We beat analysts' expectations across the board on key metrics: revenue, adjusted EBITDA, net income, and fully diluted EPS. Revenue grew 79% year-over-year to $58.4 million, and adjusted EBITDA grew 375% to $13.2 million, reflecting the operating leverage that's inherent in our model. We also continued to strengthen our balance sheet. Cash increased from $56.6 million at the end of Q1 to $59.8 million at the end of Q2. And a few days after quarter close, we collected an additional $8 million that typically would have been received by June 30th. Our $30 million credit facility remains undrawn, giving us flexibility to support future growth. Our business momentum continues to accelerate.
Measures in our earnings release filed with the FCC today, as well as in our other SEC filings which are posted on our website. You will find additional disclosures regarding these non-gaap Financial measures including reconciliations of these measures with comparable. Gaap measures. Thank you. I'll now turn the call over to Jack.
Thank you, Amy, and good afternoon, everyone. Thank you for joining us.
We're very pleased to report that Q2 2025 was another outstanding quarter for innodata, we beat analysts, expectations across the board, on key metrics Revenue, adjusted ibida, net income, and fully diluted eps.
Revenue grew 79% year-over-year to 58.4 million.
And adjusted even dog grew 375% to 13.2 million reflecting the operating leverage, that's inherent to our model.
We also continue to strengthen our balance sheet cash increased from 56.6 million at the end of q1 to 59.8 million at the end of Q2. And a few days after quarter close, we collected an additional 8 million dollars, that typically would have been received by June 30th.
Our 30 million credit facility remains undone, giving us flexibility to support future growth.
Jack Abuhoff: As a result, we are raising our full-year 2025 revenue growth guidance to 45% or more organic revenue growth, up from the 40% we communicated last quarter. Our forecast reflects significant new deals that have been finalized since our last call, as well as several deals that we believe are highly likely to close in the near term. We have a robust pipeline that includes significant dollar values positioning us for a strong second half of the year. Many of these deals are not incorporated in our forecast, leaving room for possible further increases. Demand for our services is strong and accelerating, and we are seeing success across a diversity of existing and new customers. I'll talk about our largest customer first.
Our business momentum continues to accelerate as a result. We are raising our full year 2025 Revenue. Growth guidance to 45%, or more, organic Revenue growth up from the 40%. We communicated last quarter
Our forecast, reflects significant new deals that have been finalized since our last call, as well as several deals that we believe are highly likely to close in the near term.
We have a robust pipeline that includes significant dollar values. Positioning us for strong second half of the year.
Many of these deals are not Incorporated. In our forecast leaving room for possible, further increases,
Jack Abuhoff: We recently won several new projects with our largest customer, and we have others in the pipeline that are not yet included in our forecast, but which we think are reasonably likely. Several of these new projects are under the second SOW we reported signing with this customer last quarter. We believe that the second SOW potentially gives us access to an even larger generative AI revenue pool with this customer. With another big tech customer, we were recently awarded a number of significant engagements, and we have additional significant engagements in the late-stage pipeline, enabling us to forecast $10 million of revenue from this customer in the second half of this year. It is worth noting that we did just $200,000 of revenue with this customer over the entire trailing 12-month period.
This is strong and accelerating, and we are seeing success across a diversity of existing and new customers. I'll talk about our largest customer first.
We recently won several new projects with our largest customer.
and we have others in pipeline that are not yet included in our forecast, but which we think are reasonably likely
Several of these new projects are under the second do w. We reported signing with this customer last quarter. We believe that the second do potentially gives us access to an even larger generative, AI Revenue pool with this customer.
With another big Tech customer. We were recently awarded a number of significant engagements and we have additional significant engagements in late-stage pipeline, enabling us to forecast, 10 million dollars of revenue from this customer in the second half of this year.
Jack Abuhoff: So this is a very significant upswing that we believe will inner to our benefit significantly next year. These are just two examples. There are more. The traction we are now seeing is exhilarating. We have built a marquee set of customers whose trust we have worked hard to earn and whose demand for our capabilities is expanding. Our big tech customers are in an all-out race towards superintelligence and autonomy, which we believe will be driven to a large degree by high-quality complex training data. We believe we are ideally situated to supply them with this high-quality complex training data. Moreover, we believe we are ideally situated to help them test models, diagnose performance issues, and prescribe data mixes required to improve performance. This is a frontier area.
It is worth noting that we did just $200,000 of revenue with this customer over the entire trailing 12-month period.
So, this is a very significant upswing that we believe will ignore to our benefits significantly next year.
These are just 2 examples. There are more
The traction. We are now seeing is exhilarating.
We have built a marquee set of customers whose trust, we've worked hard to earn and whose demand for our capabilities is expanding.
Our big Tech customers are in an all-out race towards super intelligence and autonomy, which we believe will be driven to a large degree by high quality complex training data.
We believe We Are ideally situated to supply them with this high-quality complex training data.
Moreover, We believe We Are ideally situated to help them. Test models diagnose, performance issues, and prescribed data mixes required to improve performance.
Jack Abuhoff: We believe that the future of LLM improvements lies not only in scaled data but in smart data, knowing exactly what kinds of post-training data are required to achieve specific improvements in factuality, safety, coherence, and reasoning. At the same time, we're positioning ourselves to help enterprises build and manage AI that can act autonomously, often referred to as agentic AI. This will require simulation training data to capture how humans process multivariate problems. It will also require sophisticated trust and safety monitoring and management. We believe agent-based AI is going to serve as the cornerstone technology that unlocks the full value of large language models and generative AI for enterprises. Moreover, we believe that progress on agentic AI is likely to soon result in a ChatGPT moment for robotics.
This is a frontier area. We believe that the future of llm improvements lies, not only in scale data, but in smart data, knowing exactly what kinds of post-training data are required to achieve specific improvements in factuality, safety, coherence and reasoning.
At the same time, we're positioning ourselves to help Enterprises build and manage AI that can act autonomously often referred to as agentic AI.
This will require a simulation training data to capture how humans process multivariant problems.
We will also require sophisticated trust and safety monitoring and management.
We Believe agent-based, AI is going to serve as the Cornerstone technology. That unlocks. The full value of large language models and generative AI for Enterprises
Jack Abuhoff: Within the next several years, we believe agentic AI will be served at the edge in hardware devices with which we will commonly interact in many respects in our lives. We believe the market for simulation data services and evaluation services to drive agentic AI and robotics is likely to dwarf the market for frontier model post-training data. Our growth opportunities are significant and multidimensional. We intend to invest in ways that we believe will enable us to continue our growth path over the next several years. These include short-cycle, high-return growth initiatives like custom annotation pipelines, verticalized agent development, and expanded global delivery. Strategic platform development, especially for LLM testing, safety, and real-world deployment. Also, advisory and integration services for enterprises building AI-native systems. Expansion into new domains such as multi-agent systems and robotics, and expansion into new markets.
Moreover, we believe that progress on genetic AI is likely to soon result in a ChatGPT moment for robotics.
Within the next several years, we believe agentic AI will be served at the edge in Hardware devices, with which we will commonly interact in many respects in our lives.
We believe the market for simulation data services and evaluation services to drive, agentic Ai and Robotics is likely to dwarf the market for Frontier Model post-training data.
Our growth opportunities are significant and multi-dimensional.
We intend to invest in ways that we believe will enable us to continue our growth path over the next several years.
These include short cycle, High return growth initiatives, like custom annotation pipelines verticalized, agent development, and expanded Global delivery.
Strategic platform development especially for llm testing safety and real world deployment.
Also advisory and integration services for Enterprises building, AI native systems.
Jack Abuhoff: We believe now is the time to lean in, investing in capabilities that can compound value over the next decade. This year, we intend to substantially increase investments, most of which will be expensed, while at the same time beating 2024 adjusted EBITDA. In the second quarter, we incurred approximately $1.4 million of operating expenses that we think of as investments. This largely consisted of new hires in delivery, product innovation, go-to-market expansion, and talent acquisition. At the heart of this performance is a simple truth. We are deeply aligned with the most significant technological invention of our era, generative AI. Across the entire lifecycle of generative AI model training, from pre-training to post-training to evaluation to safety, we're delivering the services that unlock the performance of GenAI models.
Expansion into new domains such as multi-agent systems and Robotics and expansion into new markets.
We believe now is the time to lean in.
Investing in capabilities that can that can compound value or over the next decade.
This year, we intend to substantially increase Investments, most of which will be expensed while at the same time, beating 2024 adjusted ibida.
In the second quarter, we incurred approximately 1.4 million of operating expenses that we think of as Investments, this largely consisted of new hires and delivery product Innovation, go to Market expansion and talent acquisition.
We are deeply aligned with the most significant technological invention of our error generative. AI
Jack Abuhoff: I'll now turn the call over to Marissa to go over the financial results, after which Marissa, Anish, and I will be available to take questions from analysts.
Across the entire life cycle of generative, AI model training from pre-training to post-training to evaluation to safety. We're delivering the services that unlock the performance of Genai models.
Amy Agress: Thank you, Jack, and good afternoon, everyone. Revenue for Q2 2025 reached $58.4 million, representing a year-over-year increase of 79% and demonstrating strong continuing momentum. Adjusted gross margin was 43% for the quarter, up 33% in Q2 of last year. Our adjusted EBITDA for Q2 2025 was $13.2 million, or 23% of revenue, compared to $2.8 million, or 9% of revenue in the same quarter last year. Net income was $7.2 million in the second quarter, up from a loss of $14,000 in the same period last year. In Q2, we were able to utilize the benefit of accumulated net operating losses, or NALCO, to partially offset our tax liability. Looking ahead to the coming quarters, barring any changes in the tax environment, we expect our tax rate to be approximately 27% to 28%.
I'll now turn the call over to Ms. Espineli to go over the financial results. After which, Maria, Jack, and I will be available to take questions from analysts.
Thank you, Jack and good afternoon. Everyone revenue for Q2 2025 Rich, 58.4 million. Representing a year-over-year increase of 79% and demonstrating strong continuing momentum. Adjusted gross margin was 43% for the quarter up 32% in Q2 of last year our adjusted ebita or Q2 2025 was 13.2 million or 23% of Revenue compared to the 2.8 million or 9% of Revenue in the same quarter last year.
Net income was 7.2 million in the second quarter up from loss of 14,000 in the same period last year in Q2, we were able to utilize the benefits of accumulated net, operating losses or nalco to partially upset. Our tax liability.
Amy Agress: Our cash position at the end of Q2 2025 was $59.8 million, reflecting a sequential increase of about $3.2 million, shaped by strong profitability and disciplined cash management. As Jack mentioned, we collected an additional $8 million in early July that in ordinary curse would have likely been collected in Q2. We still have not drawn down on our $30 million Wells Fargo credit facility. The amount drawable under this facility at any point in time is determined based on the borrowing-based formula. I'll reiterate what Jack said. The momentum in our business is nothing short of amazing. We believe we got a tiger by the tail and were investing with a goal of positioning the company to align with what we project the market needs are going to be over the next few years.
Looking ahead to the coming quarters, barring any changes in the tax environment, we expect our tax rate to be approximately 27% to 28%.
Our cash position at the end of Q2 2025 was $59.8 million, reflecting a sequential increase of about $3.2 million, shaped by strong profitability and disciplined cash management.
Jack mentioned, we collected an additional 8 million in early July that in ordinary cars would have likely been collected in Q2
We still have not drawn down on our 30 million Wells. Fargo credit facility. The amount drawable under this facility at any point in time is determined based on borrowing base formula
Amy Agress: In Q2, we incurred approximately $1.4 million of operating costs to build out a variety of technical capabilities to expand our go-to-market as investment toward a future that we believe is truly exciting. Thank you, everyone. Sergio, we're ready for questions.
I'll reiterate what Jack said the momentum in our business is nothing short of amazing. We believe we got a tiger by the tail and we're investing with a goal of positioning the company to align with what we project. The market needs are going to be over the next few years. In Q2 we incurred, approximately, 1.4 million of operating costs to build out a variety of technical capabilities to expand our go, to market as investment toward a future that we believe is truly exciting.
Thank you, everyone. Zario, we're ready for questions.
Operator: Thank you, ladies and gentlemen. We will now begin the question and answer session. Should you have a question, please press the START, followed by the number 1 on your touch-tone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press the START, followed by the number 2. If you are using a speakerphone, please lift the handset before pressing any key. One moment, please, for your first question. Your first question comes from George Stutton from Kennecott-Hellam. Please go ahead.
Thank you, ladies and gentlemen. We will now begin the question-and-answer session. Should you have a question, please press star, followed by the number 1 on your touchtone phone.
You'll hear a prompt that your hand has been raised.
Should you wish to decline from the following process?
Please press the star, followed by the number 2.
If you are using a speaker-phone, please leave the handset before pressing any key.
1 moment, please for your first question.
Your first question comes from George Sutton from K Helm. Please, go ahead.
George Sutton: Thank you. keeping nice results. Congratulations. So I wondered if we could talk about, during the quarter, your largest competitor, ScaleAI, was, a large majority purchased by Meta. And we've had a few of the large tech companies come out and say they would no longer work with ScaleAI. these ostensibly would be tech companies that you have statements of work with. So I'm just curious if you can kind of give us the after-effect of that acquisition as you've seen it.
Thank you. Uh,
Keaton nice results. Congratulations, so
I wondered if we could talk about um during the quarter your largest competitor scale, AI uh was uh a large majority purchased by meta and we've had a few of the large tech companies come out and say they would no longer work with scale AI. Um these extensively would be tech companies that you have statements of work with. So I'm just curious, if you can kind of give us the after effect of that acquisition, as you've seen it.
Jack Abuhoff: Hi, George. Well, thank you. thank you for being on the call. So I guess, you know, first, you know, we we congratulate Scale for, you know, having delivered a great success for their shareholders. And, you know, we believe their success and and their valuation is a proof point of, you know, the key role that data plays in model performance and the path towards superintelligence. you know, we compete with them successfully. And, you know, we believe that their shift in focus is likely to accelerate market opportunity for us.
Hi George. Well thank you. Uh, thank you for bringing the call.
So I guess, you know, first, you know, we we congratulate scale for, you know, having delivered a great success for their shareholders and um, you know, we believe their success and and their valuation is a proof point.
Of, uh, you know, the key role that data plays in model performance on the path towards superintelligence.
um,
You know, we compete with them successfully and uh you know we believe that they're shifting focus is likely to accelerate Market opportunity for us.
George Sutton: Let's think about it a little more holistically. So they obviously were working with major tech companies. How quickly should we start to see that business shift? So if, for example, OpenAI comes out and says, "We are no longer going to be working with them," does that shift very quickly? And how do you go to market differently or more aggressively, given the opportunities that will get created?
Um,
Let's think about it a little more holistically. So,
Uh, we're working with major tech companies. How quickly should we start to see that business shift? So if...
Uh for example, open AI comes out and says we are no longer going to be working with them, does that shift very quickly. And how do you go to market differently or more aggressively? Uh, given the opportunities that will get created.
Jack Abuhoff: So I think even before this, you know, we were and and continue to, you know, very aggressively outreach to market participants and to market our capabilities. you know, we have, in light of this, stepped up, that effort with certain companies. And there are certain conversations that are going on and and are are now planned to be happening over the next couple of months that I think, you know, could be very exciting for us. I don't know that I can get into particulars much beyond that, but, you know, I'll reiterate that we do see an opportunity to, you know, accelerate our our our market presence.
so I think even before this, you know, we were and and continue to, you know, very aggressively,
Outreach to Market participants into Market our capabilities. Um,
You know, we have in light of this stepped up, um, that effort with certain companies and there are certain conversations that are going on and and are are now planned to be happening over the next.
Couple of months that I think, you know, could be very exciting for us. Um,
I don't know that I can get into particulars much beyond that, but, you know, I'll reiterate that we do see an opportunity to, uh, you know, accelerate our market presence.
George Sutton: Okay. And lastly, for me, you throw out an interesting nugget about robotics and the attachment to hardware, creating, significant, even even more significant opportunities than the large language model training. So can you just walk through how you envision that would work for you and and, just lay out that opportunity?
Okay. And lastly, for me, you throw out an interesting nugget about Robotics and the attachment to Hardware um, creating uh significant even even more significant opportunities than the large language model training. So can you just walk through how you envision that would work for you and and uh just lay out that opportunity
Jack Abuhoff: Sure. So I think that, you know, we tend to, you know, read about these technologies somewhat as if they exist in isolation. You know, but the reality is that as large language models become, you know, more and more competent and able to interpret ambiguous language and, you know, have capabilities to to plan and articulate, you know, multi-step responses to problems. you know, there are technologies that will be added to that capability, you know, enabling those models to invoke external APIs or other tools, enabling for multi-step tasks using, you know, greater memory and and planning capabilities. Well, when you take that and then you think about deploying that at the edge within devices, what you have is a very capable robot.
Sure. So I I think that, you know, we tend to
you know read about these Technologies somewhat as if they exist in isolation, you know, but the reality is that
as large language models become, you know, more and more competent and able to interpret ambiguous language and you know, have capabilities to
To plan and articulate, you know, uh multi-step responses to problems.
Um, you know, there are technologies that will be added to that capability, you know?
Enabling those models to invoke external apis or other tools um enabling for a multi-step tasks using you know, greater memory and and planning capabilities.
but when you take that,
Jack Abuhoff: So I think what this means for us is there's a whole new set of activities both to, you know, train these devices, to fine-tune models, and to evaluate their performance that together constitutes a market that I believe will exceed that of post-creating post-training data and evaluating models for frontier model builders. So it's something we're hugely excited about and intend to be investing very significantly in.
And then you think about deploying that at the edge within devices. What you have is a very capable robot.
So I think what this means for us is there's a whole new set of activities. Both to, you know, train these devices
um,
to fine-tune models and to evaluate their performance that together constitutes a market that I believe will exceed that of post, droning post creating post-training data and evaluating models for Frontier Model Builders. So it's something we're hugely excited about and intend to be investing very significantly in
George Sutton: Perfect. Thank you.
Perfect, thank you.
Operator: Thank you, George. Your next question comes from Alan Klee from Maxine Group, LLC. Please go ahead.
Thank you, George.
Your next question comes from Alan. Click from Maxine Group LLC.
Please go ahead.
Allen Klee: Yes. Good afternoon. so when you reported last quarter, you kind of said that you thought revenue might be down around 5% in the second quarter. Your actual number was was was flat, a very slightly sequential. So you outperformed. So I'm kind of curious, like, where did the variance come from?
Yes uh good afternoon. Um so when you reported last quarter you kind of said that you thought Revenue might be down around 5% in the second quarter your actual number was was was flat sequent. A a very slightly sequential. So you outperformed. So I'm kind of curious like where did the variance come from?
Jack Abuhoff: Sure. I'll I'll start. And then, Anish, if you want to give any additional color. I think I think that, you know, what we were trying to communicate last quarter is, you know, revenue was up. We were up on a run-rate basis from our largest customer, and we were, of course, very happy about that. but we wanted to focus, you know, our investors on the guidance that we were giving because there are a lot of, you know, pluses, you know, puts and takes that get factored into that guidance. and underlying the work that we're doing, you know, there are dependencies on engineering teams that we're working hand in glove with. So it's entirely possible that, you know, a quarter could be up or down, and that isn't necessarily something that should be extrapolated out and considered, you know, locked and loaded, you know, permanently.
Sure. I'll I'll start and then we should if you want to give any additional color. I think I think that you know what we were trying to communicate last quarter is you know, Revenue was
Oh, we were up on a run rate basis from our largest customer and we were, of course, very happy about that. Um, but we wanted to focus, you know, our investors on the guidance that we were giving because there are a lot of
um,
you know, pluses, you know, uh, puts and takes that get factored into that guidance.
Um,
and underlying the work that we're doing, you know, there are dependencies on engineering teams that were working hand in glove with. So it's entirely possible that, you know, a quarter could be up or down and that isn't necessarily something that should be extrapolated out and considered, you know, locked and loaded, you know, permanently
Jack Abuhoff: we weren't anticipating that it would necessarily, you know, be down, though, and we're very happy to see that it wasn't. you know, as I said, you know, looking at the largest customer and well, as well as several, you know, quite a number, actually, of other customers, we see, you know, an incredible pipeline of opportunity right now. We're very excited about that. And, you know, we're only baking into our guidance and our forecast things that we think are are highly likely to close within the next, you know, it's really 30 to 60 days. There's a lot beyond that. I think we're going to be winning as well. So, hope that's helpful. Anish, anything you want to add to that?
Um, we weren't anticipating that it would necessarily you know be down though and and we're very happy to see that it wasn't.
As well as several.
you know, quite a number actually of of other customers we see, you know,
a an incredible pipeline of opportunity right now.
Um,
We're very excited about that. And, you know, we're only baking into our guidance and our forecast things that we think are highly likely to close within the next, you know, really 30 to 60 days. There's a lot beyond that I think that we're going to be winning as well. So, uh,
Uh, hope that's helpful.
Aneesh Pendharkar: Yeah. I think you framed that correctly, Jack. You know, just to kind of reiterate, Alan, you know, we're not seeing any slowdown with our largest customer. You know, in Q2, we generated approximately $33.9 million of revenue from this account. You know, and as Jack mentioned, you know, we've secured several new projects and have additional opportunities in the pipeline that, you know, while not yet included in our forecast, a few, you know, reasonably likely. So again, we feel very bullish and optimistic of, you know, our prospects in the back half of the year, and we remain very excited.
Anisha anything. You want to add to that?
Yeah.
I think you framed that correctly Jack, you know, just to kind of reiterate Allan, you know, we're not seeing any slowdown with our largest customer, um, you know, in Q2 we generated, approximately 33.9 million of revenue from this account, you know, as Jack mentioned, you know, we've secured several new projects and have additional opportunities in the pipeline.
That you know, while not yet included, enough forecasts, a few you know, reasonably likely. So again, we.
Feel very bullish, and optimistic of, you know, a prospects in the back half of the year and, you know, remain very excited.
Allen Klee: Thank you. you you highlighted, one of the things you highlighted was enterprise and the opportunity there. there's a lot of enterprises out there. I'm just curious how you think about the go-to-market to to to to attack it.
Thank you. Um, you highlighted, um, one of the things you highlighted was the enterprise and the opportunity there. Um,
There's a lot of Enterprises out there. I'm just curious how you think about the go to market to to to to attack it.
Jack Abuhoff: Yeah, it's a great question. well, we're we're attacking it already. And, you know, what we're finding is that the the interest in the technology and the opportunities to, you know, instantiate it into, you know, workflows exist across markets. So, you know, naturally, we're we're looking at the markets where we have the most penetration and the most relationships today. but we're also reaching out to companies in in markets where we don't have as much reach. And we're finding great, you know, receptivity. So, you know, I think the highlight there is that agentic AI, as it's proven, is going to be the catalyst that unlocks enterprise opportunity. And I think that, you know, among enterprises that I talk to and, and, and, you know, more broadly, you know, they're they're no longer just looking at this like a, you know, a frontier technology that's interesting to monitor.
Yeah, it's a great question. Um,
Well, we're we're attacking it already. And you know what we're finding is that the interest in the technology and the opportunities to, you know, instantiate it into, you know, workflows
Exists across markets. So, you know, naturally we're we're looking at
the markets where we have the most penetration, and the most relationships today
um, but we're also reaching out to
companies in in markets where we don't have as much reach and we're finding great, you know receptivity.
so, you know, I think the Highlight there is that
Jack Abuhoff: They're seeing it as, you know, a new economic infrastructure that they're going to need to be embracing, and they're going to, you know, need to be adopting. And I think that we can play a very significant role in that. you know, when we have conversations with them about the things that we think they need to do, and our consultants are working with them to to figure out what's the right order of operations and how they gain control of their data in order to, you know, harvest these opportunities. We've got a lot of experience, both from working with the large, you know, big techs on the frontier models such that we know where things are going and and how they can best utilize them.
Agentic AI as it's proven is going to be the Catalyst that unlocks Enterprise opportunity. And I think that, you know, among Enterprises that I talked to and and, and you know more broadly, um, you know, they're they're no longer just looking at this like a, you know, a frontier technology. That's interesting to monitor. They're saying it is, you know, a new economic infrastructure that they're going to need to be embracing and they're going to, you know, need to be adopting. And I think that we can play a very significant role in that, um, you know,
When we?
Have conversations with them about the things that we think they need to do and our Consultants are working with them to, to figure out what the right order of operations and how they gain control of their data in order to, you know, Harvest these opportunities. Um,
Jack Abuhoff: And, and, also on all the work we've done historically, taking apart workflows and and thinking about how to integrate new technologies into workflows to make them more efficient. So, you know, super, super excited about the opportunities there.
we've got a lot of experience, both from working with large, you know, big Techs on the frontier models. Such that we know where things are going and, and how they can best utilize them. And, and, uh, also on all the work we've done historically taking apart workflows and and thinking about how to integrate new technologies into workflows to make them more efficient. So um
Yeah. Super, super excited about the opportunities there.
Allen Klee: That's great. I'll ask one more, and then I'll jump back in the queue. you you highlighted a certain amount of money this quarter, spent that you operating expenses that you viewed as like investment. Is is there any reason to think that the scale of how much you're going to be investing for growth in the second half is is going to change meaningfully from where it's been?
That's great. I'll ask 1 more and then I'll jump back in the queue. Um
You you highlighted a certain amount of money, this quarter, um, spend that you operating expenses that you viewed as like investment.
Is, is there any reason to think that the scale of how much you're going to be?
Investing for growth in the second half is is going to change meeting quality from where it's been?
Aneesh Pendharkar: Yeah, no, great question, Alan. So we, as you as you rightly pointed out, we we said we invested about $1.3 million in Q2 across several functional areas, including sales, delivery, and and product solution capabilities. We anticipate that stepping that up from Q2 to Q3, by approximately another $1.5 million. And the reason for for doing that is we see tremendous opportunity in in the space, and we want to be able to capitalize on that. So we will be making some incremental investments in sales, delivery, you know, solutioning, and product to be able to, you know, capitalize on what we think is a very significant opportunity right now.
A great question, Alan. So we as you, as you rightly pointed out, we we said, we invested about 1.3 million in Q2 across.
Several functional areas, including sales delivery and and product solution and capabilities.
We anticipate that stepping that up from Q2 to Q3 um by approximately another 1 and a half million dollars. And the reason for doing that is we see tremendous opportunity in in the space and we want to be able to capitalize on that. So we will be making some incremental investments in sales.
Uh delivery no solutioning and product to be able to you know capitalize on what we think is a very significant opportunity right now.
Allen Klee: Great. Congrats. Thank you.
Great great. Congrats. Thank you.
Operator: Thank you. Your next question comes from Hamid Forsen from AWS Financial. Please go ahead.
Thank you. Your next question comes from Hamid Person from PWS Financial. Please go ahead.
Allen Klee: Hi. So my first question was, could you just talk about, you know, why you mentioned organic growth and what your intentions are there?
Hi. So my first question was, could you just talk about, you know, why you mentioned organic growth and what your intentions are there?
Jack Abuhoff: Sure, Hamid. I think we we mentioned it to draw attention to the fact that this is organic growth. You know, I think if if you look across a, you know, companies who are reporting and and reporting, you know, growth, a lot of them are growing, you know, inorganically, and that can be a great strategy for them, but it's a different strategy. And I think our strategy and the kind of growth that we're reporting is testament to, you know, the product set and the capabilities that we've developed. And from, you know, a risk-adjusted basis, I think that's probably a safer bet for investors. So, you know, we're very proud of it. We're, you know, we're very proud of what we've been able to accomplish.
Sure. Hmm, I I think we we mentioned it to draw attention to the fact that this is organic growth. Um,
you know, I I think if if you look at a uh,
You know, companies who are reporting and and Reporting, you know growth.
A lot of them are growing, you know?
Inorganically, and that can be a great strategy for them, but it's a different strategy. I think our strategy...
Um, and the kind of growth that we're reporting.
Jack Abuhoff: And looking ahead to, you know, how well-aligned we are with what we, you know, see as today's market opportunities and tomorrow's likely market opportunities, we think that that organic growth can can continue.
Is Testament to, you know the product set and the capabilities that we've developed and uh from you know a risk adjusted basis. I think that's probably a safer bet for investors so uh, you know, we're very proud of it. We're, you know, we we're very proud of what we've been able to accomplish and
Looking ahead to, you know, how well aligned we are with.
what we, you know, see as today's market opportunities and tomorrow's likely Market opportunities, we think that
that organic growth can, uh,
Can continue.
Allen Klee: And the organic growth that you're seeing in your business, is that coming with any kind of competitive pressures on pricing, or you're able to, you know, maintain pricing and capture new customers?
And the organic growth that you're seeing in your business, is that coming with any kind of competitive pressures on pricing or you're able, you know, maintain pricing and capture new customers.
Jack Abuhoff: Well, you know, it's a robust market. I think that, we expect, well, what I just we expect, we we do experience, of course, competitive, you know, a competitive environment. But what we're seeing is that the most important thing to our customers isn't our price. it's the quality of our data and the extent now to which we can work hand in glove with them in order to help understand model performance, understand model deficiencies, understand use cases, and make recommendations about the data sets that are required to remediate or to extend those capabilities. so it's a holistic service, and the investments that they're making are so extraordinary. And there's, you know, there's there's such a deep desire to win in this race that that when we're contributing as well as we are in so many accounts, they become much less price-sensitive.
well, you know, if it's a robust Market I think that um we expect
Well, when I just, we expect we do experience, of course, competitive. Um,
You know, competitive environment. But what we're seeing is that the most important thing to
Our customers aren't our price; it's the quality of our data and the extent to which we can work hand in glove with them.
In order to help understand model performance, understand model deficiencies, understand use cases, and make recommendations about the data sets that are required to remediate or to extend those capabilities. Um, so it's a holistic service, and the investments that they're making are so extraordinary, and there's, you know, there's such.
A deep desire to win in this race. That the fact that when we're contributing as well as we are, and so many accounts.
Jack Abuhoff: Now, that having been said, I don't believe that we're the most expensive among our competitive set, but I do think we're among the best. And that's a position that I think if if we can sustain, that will, you know, significantly in order to our benefits from a competitive perspective and a growth perspective.
They become much less price sensitive. Now that having been said,
I don't believe that we're the most expensive among our competitors set, but I do think we're among the best, and that's position that I think. If, if we can sustain that will, uh, you know, significantly in order to our benefits from a competitive perspective and a growth perspective,
Allen Klee: And lastly, last quarter, you had a series of different customers you were describing and talking about. And this quarter, I think, sounds a little less. So I'm just trying to understand, you know, where are you in terms of those relationships? Have they started up what you were talking about last quarter? And, you know, so, you know, where where where do you sit as far as revenue opportunity goes when you look out into, you know, year-end '26?
And lastly uh last quarter, you had a series of different customers you were describing and talking about this quarter. I think sounds a little less so I'm just trying to understand, you know, where are you in terms of those relationships have they started up, what you were talking about last quarter and you know, so you know where where where do you sit as far as Revenue opportunity goes when you look out into you know year end 26
Jack Abuhoff: Yeah, no, there's actually more opportunity, and there's a bigger pipeline today than there was, a quarter ago. you know, I I just looked at that earnings call and thought that maybe that was a little long and decided stylistically to to try to condense it a bit. there's more opportunity. There are things that we talked about last time that have closed and that are now in our forecast. There are things that we're continuing to progress that are real interesting. you know, by memory, I'm thinking about the things we talked about. I think there's only one thing that kind of went dormant a little bit, but everything else is either closed, moving forward well, advancing significantly in discussions, and, that we feel, you know, very bullish about.
Yeah, no, there’s actually more opportunity and there’s a bigger pipeline today than there was a quarter ago.
You know, I I just looked at that earnings call and thought that maybe that was a little long and decided stylistically to to try to condense it a bit. Um, there there's more opportunity, there were things that we talked about
Last time that have closed and that are now in our forecast, there are things that we're continuing to progress that are real interesting.
Um, you know by memory, I'm thinking about things we talked about. I think there's only 1 thing where that kind of went dormant a little bit, but everything else is either closed moving forward. Well, um, advancing significantly in discussions and uh
um,
that we feel, you know, very bullish about
Allen Klee: Very good. Thank you.
very good. Thank you.
Jack Abuhoff: Thank you.
Thank you.
Operator: Thank you. Your next question comes from Mr. Alan Klee from Maxine Group, LLC. Please go ahead.
Thank you.
Your next question comes from Mr. Alen Lee.
From maxing Group LLC.
Please go ahead.
Allen Klee: Oh, hi. I just want to follow up. I thought it was really interesting how you said that you you can make the data smarter for the customers to get better results. But could you go into that a little bit? Thank you.
Oh, hi. I just had a follow-up. I thought it was really interesting. How you said that you you can make the data smarter for the customers to get better results. Could could you go into that a little bit?
Thank you.
Jack Abuhoff: Sure. So, there are a lot of different dimensions that we use to look at data and analyze data. Our data science team is rapidly expanding. We end up, for engineering teams, producing what are the equivalent of, in many cases, the equivalent of white papers with all sorts of, you know, mathematical formula and statistical analysis that correlate what we what we benchmark as a model's performance or, you know, identify as a model's deficiency with what data sets are required in order to remediate that. And what that capability has resulted in is that we're no longer just providing data, but we're, you know, our our our status, our our role has been elevated to, you know, sitting at the table with the data scientists who are building these models, and figuring it out with them. You know, the journey is about data.
Sure. So um,
There are a lot of different dimensions that we use to look at data and analyze data.
Um,
It our data science team is rapidly expanding. Um,
We end up for engineering teams producing, what are the equivalent of in many cases? The equivalent of white papers with all sorts of, you know, mathematical formula and statistical analysis.
That correlate.
What we?
What we Benchmark as a model's performance or, you know, identify as a model's deficiency with what data sets are required in order to remediate that.
and what that capability is resulted in is that we're no longer just providing data but we're
Jack Abuhoff: And it's about, as I, you know, said in the prepared remarks, it's about not just scale data, but smart data. So being able to do all that, you know, deep, you know, technical scientific analysis of data, of model performance, of correlating the data that's required in order to to achieve the level of performance that's required. in just the last, you know, I'd say several months, that's become a problem space that we're getting to occupy. And that's tremendously exciting for us.
You know, our our, our status, our, our role has been elevated to, you know, sitting at the table, with the data scientists who are building these models, um, and figuring it out with them. You know, the journey is about data and it's about, as I, you know, said the prepared remarks, it's about not just scale data, but smart data. So being able to do all that, you know, deep, you know, technical scientific analysis of data of model, performance of correlating, the data that's required in order to, to achieve the level of performance that's required. Um, in just the last. You know, I'd say several months that's become a problem space that we're getting to occupy and that's tremendously exciting for us.
Allen Klee: Okay. Great. Thank you so much.
Okay, great. Thank, thank you so much.
Operator: Thank you. There are no further questions at this time. I will now turn the call over to Jack Abohoff for closing remarks. Please go ahead.
Thank you.
There are no further questions at this time. I will now turn the call over to Yaakov for closing remarks. Please go ahead.
Jack Abuhoff: Thank you, operator. So, Q2 was a high-performing quarter with 79% year-over-year growth, and we're anticipating a strong second half to the year. in the second half, we anticipate potentially winning, you know, major new customers, significantly deepening relationships, and further broadening our base. We'll also be continuing to make investments in infrastructure, talent, and platforms that we believe are key to continuing our growth trajectory over the years to come. As a result of our successful execution, we're raising our guidance today from 40% to 45% or more organic revenue growth for the year. And, yeah, I mean, we're humbled by our good fortunes that scale data, our specialty, is, you know, we believe, the sine qua non of the greatest technological innovation of our lifetimes.
Thank you, operator. So, uh, Q2 was a high-performing quarter with 79% year-over-year growth, and we're anticipating a strong second half to the year. In the second half, we anticipate potentially winning major new customers, significantly deepening relationships, and further broadening our base.
We'll also be continuing to make investments in infrastructure talent and platforms that we believe are key to continuing our growth trajectory over the years to come.
As a result of our successful execution, we're raising our guidance today from 40 to 45 or more organic Revenue growth for the year.
and uh,
Jack Abuhoff: And, you know, with the runway we see ahead, our goal remains to build in a data into one of the leading AI services companies for this era. So, you know, thank you all for your continued support. And, you know, we'll look forward to being with you a quarter from now.
Yeah, I mean we're humbled by our good fortunes that scale data. Our specialty is, you know, we believe the dawn of the greatest technological innovation of our lifetimes. And, um, you know, with the runway we see ahead, our goal remains to build data into one of the leading AI services companies for this era. So, you know, thank you all for your continued support, and um, you know, we'll look forward to being with you a quarter from now.
Operator: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.
And this concludes today's conference call. Thank you for your participation. You may now disconnect.