Innodata Inc. (NASDAQ:INOD) Q1 2020 Earnings Conference Call - Final Transcript

May 14, 2020 • 11:00 am ET

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Innodata Inc. (NASDAQ:INOD) Q1 2020 Earnings Conference Call - Final Transcript

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Q & A
Operator
Operator

Thank you. [Operator Instructions] And we'll take our first question from Tim Clarkson with Van Clemens.

Analyst
Tim Clarkson

Hi, guys. Just some basic questions, just in terms of the first quarter, I know there's a little bit of seasonality. With Innodata, isn't typically the fourth quarter seasonally the strongest and the first quarter seasonally one of the weaker quarters?

Executive
Jack S. Abuhoff

Tim that's absolutely right. And that comes about for several reasons. There's usually a push to -- for companies to use up their budgets in Q4, and there are some underlying conferences and proceedings that generate a lot of content. So Q4 is typically high. That's correct.

Analyst
Tim Clarkson

Right. And when you -- I know you've been shifting the Company with this emphasis in artificial intelligence. How do you actually go out if you're working in these new areas like banks and hedge funds and drugs and so on? How do you actually prove that you're better than the competition? What's that process like?

Executive
Jack S. Abuhoff

Great question. One of the most critical things that we're able to do now is we're able to do demos of our technology. We're able to flood people into our API. We're able to prove to them the capabilities that we're able to bring to bear and -- and with those live demonstrations. So it ends up being very compelling, and people see what is possible. That's in data transformation.

On data annotation, we will often be asked to provide a sample. We'll be given a data set. We'll be asked to annotate that data set. And they will ask us, and they will ask some of our new competitors in this space. And what we're finding is in have head-to-head competitions or our customer -- our prospects are finding that our data quality is much better because we've been in the data quality business now for decades, quite literally.

And a lot of the folks that we're competing against are very high valued companies, there's start-ups and things, but they don't have our data jobs. So in the head-to-head competitions, we're able to come out very strong and we're beating them.

Analyst
Tim Clarkson

Right. You mentioned that you're working with a major brokerage firm and that your -- that they were almost befounded at how much better you were than the competition?

Executive
Jack S. Abuhoff

Yeah. That's correct. One of our competitors rely on and where they came from with [Indecipherable] legacy. They came from crowdsourcing companies. They came from companies that would provision work out to crowdsource labor typically for language translation. And then they spotted this opportunity for data preparation for AI and they jumped on the bandwagon. They said, maybe our crowd can do that too. And the problem is that data is tough. And it's taken us a long, long time to develop the tools and the processes to carefully control the data. Working for the kind of companies that we worked for, Apple, and Bloomberg, and Thomson Reuters that there is no tolerance for data error. And as a result,