Innodata Inc. INOD is making notable progress in reducing customer concentration while sustaining rapid AI-driven growth. In the second quarter of 2026, the company’s revenues surged 58% year over year to $92.1 million, marking its 12th consecutive quarter of year-over-year growth.
A key development was the shift in customer mix. Innodata’s largest customer accounted for 37% of the second-quarter 2026 revenues, down sharply from 56% in the first quarter. Meanwhile, a Big Tech customer that contributed 17% of revenues in the first quarter of 2026 scaled to 34% sequentially, effectively becoming INOD’s second-largest customer. The company also added a new customer from among the fastest-scaling frontier AI labs, further broadening its revenue base.
The diversification comes alongside stronger profitability. Adjusted gross margin expanded to 49% from 43% a year ago, helped by higher-value pretraining programs and off-the-shelf datasets that Innodata can monetize across multiple customers. Adjusted EBITDA climbed 92% year over year to $25.4 million, demonstrating substantial operating leverage.
Importantly, diversification has not come at the expense of growth from its largest account. Management expects that customer to grow year over year for the full year, while new opportunities in agentic reinforcement learning, AI evaluation, cybersecurity and physical AI are expanding the addressable market. INOD also reiterated its 2026 revenue growth guidance of at least 40%, excluding several potential large programs not yet incorporated into forecasts.
Still, concentration remains meaningful, with the two largest customers accounting for 71% of the second-quarter 2026 revenues. Sustaining growth while broadening the customer base will therefore remain an important focus as Innodata scales its AI opportunity.
Is Innodata’s AI Data Focus a Competitive Edge?
Innodata is positioning itself across the AI value chain as adoption accelerates, competing with Palantir Technologies Inc. PLTR and TaskUs, Inc. TASK through differentiated approaches.
INOD focuses on AI data engineering, model training, evaluation and deployment assurance, while Palantir emphasizes AI-powered software platforms for enterprises and governments. Meanwhile, TaskUs combines digital customer experience, Trust & Safety and rapidly expanding AI Services. Palantir’s broader software platform and enterprise footprint provide substantial scale, while TaskUs benefits from a diversified services portfolio and growing AI capabilities.
Innodata’s potential edge lies in its specialized position in the data and evaluation layer of AI, alongside research-driven capabilities in agentic AI, robotics and cybersecurity. However, Palantir and TaskUs also continue diversifying their AI offerings. Thus, INOD’s advantage is more specialized AI-data expertise than an across-the-board competitive lead.
INOD Stock’s Price Performance & Valuation Trend
Shares of this global data engineering and AI systems services firm climbed 19.6% in the past six months, outperforming the Zacks Engineering - R and D Services industry, the Zacks Construction sector and the S&P 500 index.
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INOD stock is currently trading at a premium compared with its industry peers, with a forward 12-month price-to-earnings (P/E) ratio of 35.67, as evidenced by the chart below.
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Earnings Estimate Revision of INOD
INOD’s earnings estimates for 2026 and 2027 have moved up over the past 60 days to $1.18 and $1.67 per share, respectively. The revised estimates for 2026 and 2027 imply year-over-year growth of 28.3% and 41.7%, respectively.
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Innodata 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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