Innodata Inc. (NASDAQ: INOD) saw its stock price jump nearly 29% in after-hours trading Thursday after the company reported first-quarter results that handily exceeded analyst expectations and raised its full-year revenue forecast on the back of a significant new contract with a major technology client.
The data-services firm posted first-quarter revenue of $90.1 million, a 54% increase from the same period last year, surpassing consensus estimates. Net income came in at $14.9 million, or $0.42 per diluted share, compared with $7.8 million, or $0.22 per diluted share, in the year-ago quarter. Adjusted EBITDA reached $25.0 million, representing 28% of revenue.
Chief Executive Jack Abuhoff characterized the period as a "record-setting quarter," highlighting gains in scale, margin, and cash flow as the company executes its strategic growth plan. The company now expects full-year 2026 revenue growth of approximately 40% or higher, up from the 35% or more it projected just ten weeks ago.
The primary catalyst for the upgraded outlook is a new $51 million contract with a major technology firm. According to Abuhoff, this client generated zero revenue for Innodata a year ago but is now expected to become the company's second-largest customer this year. The contract covers pre-training, mid-training, and post-training data services essential for developing and refining large language models and other AI systems.
Innodata positions itself as an end-to-end partner for AI development, providing training, post-training optimization, evaluation, and deployment services for both established tech companies and frontier AI labs. The company's work extends beyond basic data labeling to include model evaluation and trust-and-safety checks, ensuring AI systems function properly before launch.
The competitive landscape includes firms such as Appen, TELUS Digital, and Scale AI, as well as broader consulting and outsourcing players. Innodata differentiates itself through service quality, technical depth, scale, and security protocols. However, the company faces notable risks, including customer concentration and project-based revenue. In its annual filing, Innodata disclosed that a single client represented approximately 58% of 2025 revenue, and many contracts can be terminated with 30 to 90 days' notice.
During the earnings call, BWS Financial analyst Hamed Khorsand questioned whether any one-off factors contributed to the quarter's strength. Abuhoff acknowledged that "things do start and stop" in model-training work but maintained that management does not view the quarter as an anomaly. The company also noted that anticipated projects and pipeline activity may not always materialize as expected.
Despite these caveats, investors appear to view the strong results as evidence that Innodata's role in the AI supply chain is more substantial than its current market valuation suggests. The after-hours surge reflects renewed confidence in the company's growth trajectory and the broader theme of AI data services gaining attention as the market shifts focus from chipmakers and cloud providers to the infrastructure and labor required to build and refine AI models.
INOD shares closed the regular session at $45.64, down 1.9%, before the after-hours rally to $58.91. The company's earnings call took place at 5 p.m. ET on Thursday.