Innodata Stockholders Meeting June 2017 SAFE HARBOR STATEMENT: This presentation contains “forward looking” statements which are based largely on our current expectations, and which are subject to a number of risks and uncertainties. These risks and uncertainties have been detailed in the reports filed by Innodata with the Securities and Exchange Commission and these filings are available at www.sec.gov. Actual results could differ materially from those that may be projected by these forward-looking statements, and we undertake no obligation to update forward-looking information. This presentation may also contain references to findings of various reports available in the public domain. Innodata makes no representation as to their accuracy or that Innodata subscribes to those findings.
Three key questions 2 How will growth translate to earnings? 3 What are our 1 When will specific growth How are we earnings strategies? going to grow? improve?
Looking back… Client A and Client A and Client A and Client A and ? Client B product Client B product Client B < $5M. Client B < $5M. builds. Total builds. Total Investments in Investments in revenue: $130+ revenue: $130+ IADS, Agility, IADS, Agility, million million and DDS Europe and DDS Europe E2E offering. E2E offering. Revenues Chasm Projects Recurring 2018 & beyond 2016-17 2007 to 2015 Before 2007 Time …to forge ahead
We’re living in a world that is putting digital data to work “Data is the new electricity” 4.4 44 ZB ZB 2020 2014 Source: IDC, 2014
44 Innodata is a company that puts digital data to work ZB Innodata Platform Private business Public Data data: and Published Healthcare records Data: used in life and disability insurance 2020 • SEC filings • Legal Social Media and opinions New & Traditional • Patent filings Media: 300K sources, • Legislation including • Books & Journals Structure Enrich Store & Manage Deliver …and more
Why is recurring revenue growth our #1 priority? Because it drives EBITDA growth DDS IADS MIS > 40% > 50% > 60% Percent of revenue flowing directly to EBITDA in each business line
Modelling 2017 – driving growth in recurring revenues (a scenario analysis) $Mil Recurring 83% Recurring 78% DDS IADS MIS Note: This is not guidance or a forecast.
…and what it means for EBITDA $’000 DDS IADS MIS Notes: 1) This is not guidance or a forecast. 2) 2016 EBITDA excludes one-time expenses of $1.6M in DDS and $350K in MIS.
Looking ahead: How driving recurring revenue growth + operating leverage = higher EBITDA growth EBITDA $4M $Mil 25 20 20 EBITDA -$0.2M 15.1 15 14 11.5 10 5 4 2.6 2 1 0 Q1 2017 2018 Qx 2019 DDS IADS MIS Total Linear (Total ) Note: This is not guidance or a forecast.
Growth Strategies DDS IADS Synodex MIS Client Partners. Convert Channel Productized pipeline - $13M. partnerships. offerings. Evolve Marketing-led Enterprise automated direct sales. market. underwriting. Increase New revenue Disability retention to models. market. 80%.
Cost Takeout Strategies DDS IADS Synodex MIS Increase Reduce SG&A $400K of automation to costs. content improve direct Improve acquisition margins. production synergies. Selective hiring efficiency. freezes. Target: Target: $600K/year cost $1.2M/year cost reduction to reduction to lower lower EBITDA breakeven to breakeven to $1M/Q by Q4. $10.5M/Q by Q4.
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