The Zacks Analyst Blog Highlights Innodata, ExlService and Cognizant Technology Solutions

Here are highlights from Wednesday’s Analyst Blog:

Innodata Reaffirms 40% Growth Outlook: Is More Upside Ahead?

Innodata Inc. entered the second half of 2026 with strong momentum after reaffirming its expectation for at least 40% year-over-year revenue growth. Importantly, management said several large potential engagements with existing and new customers are not yet included in the outlook, suggesting room for upside if those opportunities convert.

The confidence follows another record quarter. Second-quarter revenues jumped 58% year over year to $92.1 million, while adjusted EBITDA surged 92% to $25.4 million. Adjusted gross margin reached 49%, nine percentage points above the company's publicly stated 40% target, helped by high-value pretraining programs and proprietary off-the-shelf datasets.

Growth is also becoming more diversified. Innodata's largest customer accounted for 37% of second-quarter revenues, down sharply from 56% in the first quarter, while a newer Big Tech customer expanded to 34% from 17%. The company also added a fast-scaling frontier AI lab.

Beyond existing programs, agentic reinforcement learning, model evaluation, cybersecurity and physical AI could broaden Innodata's growth runway. The company is scaling long-horizon agent programs, developing enterprise AI assurance capabilities and pursuing large multimodal and robotics data opportunities.

Still, upside may not arrive smoothly. Management acknowledged that project timing could produce sequential revenue declines in individual quarters. Nonetheless, with major prospective wins excluded from guidance, improving customer diversification and expanding AI use cases, Innodata's 40% outlook appears to leave scope for stronger growth if pipeline conversion remains healthy.

Innodata vs. Key AI Services Rivals: Who Has the Growth Edge?

Innodata operates in a competitive AI data engineering and digital services market, with ExlService Holdings, Inc. and Cognizant Technology Solutions Corporation among its relevant publicly traded peers. Innodata itself identifies both ExlService and Cognizant among broader technology and business-process providers offering overlapping services.

ExlService is increasingly focused on data, analytics and AI-led services, making it a meaningful competitor as enterprises increase spending on generative AI and automation. However, Innodata’s reaffirmed 40%-plus 2026 revenue growth outlook highlights a faster near-term growth trajectory, supported by frontier-model work, agentic AI and model evaluation.

Cognizant brings considerably greater scale, enterprise relationships, and broader technology capabilities. That scale gives Cognizant an advantage when competing for large transformation programs. Yet Innodata’s specialization in AI data engineering, post-training, evaluation and deployment support provides differentiation. If Innodata converts its unrecognized pipeline opportunities, it could strengthen its growth position against both ExlService and Cognizant.

INOD’s Price Performance, Valuation & Estimates

Shares of Innodata have gained 23.1% year to date (YTD), lagging the industry’s growth.

From a valuation standpoint, INOD trades at a forward 12-month price-to-earnings ratio of 43.72, higher than the industry’s average.

The Zacks Consensus Estimate for INOD’s 2026 sales and earnings implies year-over-year growth of 42.1% and 28.3%, respectively. Earnings per share estimates for 2026 have increased over the past seven days, as you can see below.

INOD currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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