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Maria Dranishnikova

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Innodata guides for at least 40% revenue growth in 2025 amid rising demand for its LLMs. / Photo: Unsplash/Markus Spiske

Shares of Innodata, a small-cap developer of LLMs for training other companies’ AI, surged more than 15% in early trading today, February 21. The trigger was record 2024 earnings reported yesterday. The company says it is expanding partnerships with Big Tech clients and guides for at least 40% revenue growth in 2025.

Details

Innodata jumped over 15% in premarket trading today, briefly surpassing the $63-per-share mark within the first half hour. This marked an all-time high for the stock, a beat on the $62.30-per-share level reached just days ago, on February 19.

Yesterday, after the market closed, Innodata reported record financials for 2024. It managed to turn a profit after a small loss the previous year and doubled its revenue. Note that from 2019 to 2023, Innodata’s top line grew at a CAGR of 12%, according to the Motley Fool.

The 2024 earnings were driven largely by a strong fourth-quarter performance. In the fourth quarter, Innodata secured a new contract with its largest client (undisclosed), which will increase its total annualized run rate revenue from the client by nearly 18% to $135 million. Additionally, annual revenue from seven other Big Tech clients was up 159% quarter over quarter. Overall revenue grew 127% year over year in the fourth quarter to $59.2 million, beating the company’s most ambitious expectations. Net income for the same period surged sixfold to $10.3 million.

In 2025, Innodata guides for revenue growth of at least 40%. The company is currently working on several pilot projects with Big Tech firms, which, if won, could result in “seven- or even eight-figure revenue opportunities.”

About Innodata

Founded in 1988, Innodata initially focused on digitizing documents. With the rise of e-books, it started developing technology for converting print books into digital formats.

For 25 years after its IPO, Innodata was considered a slow-growth IT services and enterprise software provider, the Motley Fool has noted. This changed in 2019, when the company decided to focus on AI, in particular, helping other companies train their AI models. Its clients, as mentioned, include Big Tech firms, and it advertises its collaboration with the likes of Google, Amazon, Microsoft, and Apple.

According to CEO Jack Abuhoff, AI-driven capex spending by the Magnificent Seven, innovation in hardware optimization, as recently seen with China’s DeepSeek, and lower compute costs for training and inferencing should all buoy Innodata’s business.

Stock performance

Over the last five years, Innodata stock has delivered a nearly 4,500% return to investors. It has risen so rapidly that analysts struggle to keep up. In November, BWS Financial raised its target price by 50% to $45 per share. In mid-December, Chardan Capital came out with a $45-per-share target price, as well, while less than a week later, Wedbush set a new target price of $49 per share.

The average target price across five coverage analysts, according to Benzinga, is $38.20 per share. This is still about 36% below the last closing price.

There are dissenters on the company’s prospects, however. In February 2024, Wolfpack Research disclosed a short position in Innodata and put out a report calling it a “deteriorating, manual data-entry business driven by offshore labor, not innovation.” This triggered a one-day plunge of more than 30% in Innodata stock on February 15, though it quickly bounced back.

A week after the Wolfpack report, the U.S. District Court for the District of New Jersey registered a lawsuit from Innodata investors, led by David D’Agostino, against the company and several of its top executives. No resolution of the lawsuit has been reported yet.

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