Google AI partner Innodata tumbles on 2Q25 top-line miss

Shares of Innodata, a small-cap AI data solutions provider, tumbled nearly 13% in post-market trading yesterday, July 31. Driving the slide was a slight quarterly revenue miss relative to Wall Street expectations, even though other financial metrics came in better than expected.

Innodata tanked 12.6% in post-market trading yesterday to $48.00 per share, squandering almost all the intraday gain. The drop reflects disappointment with the company's second-quarter revenue, which fell short of expectations and overshadowed a bottom-line beat, explains Investing.com.

Innodata reported after the close yesterday. Second-quarter revenue rose 79% year over year to $58.4 million, about 2% below the Wall Street consensus, writes Investing.com. At the same time, other numbers beat analysts' forecasts. For example, diluted EPS of $0.20 was 60% higher than expected, based on Yahoo Finance data. 

Innodata itself called it "another outstanding quarter." The performance allowed the management to raise its full-year revenue growth guidance by 5 percentage points to 45%. Last year, for context, the company recorded 96% top-line growth to $170.5 million.

Founded nearly four decades ago, Innodata began as a document digitization service before expanding into e-book content conversion as digital publishing gained traction.

Long viewed as a slow-growth company and largely overlooked by Wall Street, Innodata pivoted in 2019 to focus on AI, specifically generative AI and the development and refinement of LLMs for enterprise clients. It now supports AI training and data annotation for some of the biggest names in tech, including Google, Amazon, Microsoft, and Apple.

Innodata is up nearly 39% year to date and nearly 183% over the last 12 months.

In May, Wedbush highlighted Innodata as one of 30 stocks for the "next phase of the AI trade," along with the likes of Nvidia, Palantir, Microsoft, and Alphabet. Nevertheless, later that month, the investment bank lowered its target price on Innodata by nearly 23% to $58 per share while maintaining its "buy" recommendation on them, according to Yahoo Finance data. 

The stock has a total of five ratings from Wall Street analysts, and all are "buys," according to MarketWatch. Their average target price of $64.40 per share implies upside of more than 17% to the July 31 closing price.

The AI translation of this story was reviewed by a human editor.