INNODATA INC

Previous wording

These forward-looking statements are based on management’s current expectations, assumptions and estimates and are subject to a number of risks and uncertainties, including, without limitation, impacts resulting from ongoing geopolitical conflicts, including between India and Pakistan, Russia and Ukraine, Hamas’ attack against Israel and the ensuing conflict and unpredictable hostilities between Hezbollah and Israel and Iran and Israel; investments in large language models; that contracts may be terminated by customers; projected or committed volumes of work may not materialize; pipeline opportunities and customer discussions which may not materialize into work or expected volumes of work; the likelihood of continued development of the markets, particularly new and emerging markets, that our services support; the ability and willingness of our customers and prospective customers to execute business plans that give rise to requirements for our services; continuing reliance on project-based work in the Digital Data Solutions (“DDS”) segment and the primarily at-will nature of such contracts and the ability of these customers to reduce, delay or cancel projects; potential inability to replace projects that are completed, canceled or reduced; our DDS segment’s revenue concentration in a limited number of customers; our dependency on content providers in our Agility segment; our ability to achieve revenue and growth targets; difficulty in integrating and deriving synergies from acquisitions, joint ventures and strategic investments; potential undiscovered liabilities of companies and businesses that we may acquire; potential impairment of the carrying value of goodwill and other acquired intangible assets of companies and businesses that we acquire; a continued downturn in or depressed market conditions; changes in external market factors; the potential effects of U.S. global trading and monetary policy, including the interest rate policies of the Federal Reserve; changes in our business or growth strategy; the emergence of new, or growth in existing competitors; various other competitive and technological factors; our use of and reliance on information technology systems, including potential security breaches, cyber-attacks, privacy breaches or data breaches that result in the unauthorized disclosure of consumer, customer, employee or Company information, or service interruptions; and other risks and uncertainties indicated from time to time in our filings with the Securities and Exchange Commission (“SEC”).

Current wording

These forward-looking statements are based on management’s current expectations, assumptions and estimates and are subject to a number of risks and uncertainties, including, without limitation, impacts resulting from ongoing geopolitical conflicts; investments in large language models; that contracts may be terminated by customers; projected or committed volumes of work may not materialize; pipeline opportunities and customer discussions which may not materialize into work or expected volumes of work; the likelihood of continued development of the markets, particularly new and emerging markets, that our services support; the ability and willingness of our customers and prospective customers to execute business plans that give rise to requirements for our services; continuing reliance on project-based work in the Digital Data Solutions (“DDS”) segment and the primarily at-will nature of such contracts and the ability of these customers to reduce, delay or cancel projects; potential inability to replace projects that are completed, canceled or reduced; our DDS segment’s revenue concentration in a limited number of customers; our dependency on content providers in our Agility segment; our ability to achieve revenue and growth targets; difficulty in integrating and deriving synergies from acquisitions, joint ventures and strategic investments; potential undiscovered liabilities of companies and businesses that we may acquire; potential impairment of the carrying value of goodwill and other acquired intangible assets of companies and businesses that we acquire; a continued downturn in or depressed market conditions; changes in external market factors; the potential effects of U.S. global trading and monetary policy, including the interest rate policies of the Federal Reserve; changes in our business or growth strategy; the emergence of new, or growth in existing competitors; various other competitive and technological factors; our use of and reliance on information technology systems, including potential security breaches, cyber-attacks, privacy breaches or data breaches that result in the unauthorized disclosure of consumer, customer, employee or Company information, or service interruptions; and other risks and uncertainties indicated from time to time in our filings with the Securities and Exchange Commission (“SEC”).

Previous wording

The following table contains a reconciliation of Gross Profit and Gross Margin in accordance with the U.S. GAAP attributable to Innodata Inc. and its subsidiaries to Adjusted Gross Profit and Adjusted Gross Margin for the three and six-month periods ended June 30, 2025 and 2024 (in thousands).

Current wording

The following table contains a reconciliation of Gross Profit and Gross Margin in accordance with the U.S. GAAP attributable to Innodata Inc. and its subsidiaries to Adjusted Gross Profit and Adjusted Gross Margin for the three and nine-month periods ended September 30, 2025 and 2024 (in thousands).

Previous wording

The following table contains a reconciliation of U.S. GAAP net income (loss) attributable to Innodata Inc. and its subsidiaries to Adjusted EBITDA for the three and six-month periods ended June 30, 2025 and 2024 (in thousands).

Current wording

The following table contains a reconciliation of U.S. GAAP net income (loss) attributable to Innodata Inc. and its subsidiaries to Adjusted EBITDA for the three and nine-month periods ended September 30, 2025 and 2024 (in thousands).

Previous wording

Revenues from the Synodex segment were $4.1 million and $3.9 million for the six months ended June 30, 2025 and 2024, respectively, an increase of $0.2 million or 5%. The increase was primarily attributable to higher volume from existing customers.

Current wording

Revenues from the Synodex segment were $1.7 million and $1.9 million for the three months ended September 30, 2025 and 2024, respectively, a decrease of $0.2 million or 11%. The decrease was primarily attributable to termination of a contract with one customer.

Previous wording

Revenues from the Agility segment were $5.8 million and $5.2 million for the three months ended June 30, 2025 and 2024, respectively, an increase of $0.6 million or approximately 12%. The increase was principally attributable to higher volumes from subscriptions to our Agility AI-enabled industry platform.

Current wording

Revenues from the Agility segment were $6.1 million and $5.6 million for the three months ended September 30, 2025 and 2024, respectively, an increase of $0.5 million or approximately 9%. The increase was principally attributable to higher volumes from subscriptions to our Agility AI-enabled industry platform.

Previous wording

One customer in the DDS segment generated approximately 58% and 38% of the Company’s total revenues for the three months ended June 30, 2025 and 2024, respectively. No other customer accounted for 10% or more of total revenues during these periods. Further, revenues from non-U.S. customers accounted for 17% and 27% of the Company’s total revenues for the three months ended June 30, 2025 and 2024, respectively.

Current wording

One customer in the DDS segment generated approximately 56% and 59% of the Company’s total revenues for the three months ended September 30, 2025 and 2024, respectively. No other customer accounted for 10% or more of total revenues during these periods. Further, revenues from non-U.S. customers accounted for 16% and 17% of the Company’s total revenues for the three months ended September 30, 2025 and 2024, respectively.

Previous wording

Gross profit for the Synodex segment was $0.5 million for each of the three-month periods ended June 30, 2025 and 2024, respectively. Gross margin for the Synodex segment was 24% and 23% for the three months ended June 30, 2025 and 2024, respectively. The increase in gross margin for the Synodex segment as a percentage of revenues was primarily due to higher revenues offset by higher direct operating cost.

Current wording

Gross profit for the Agility segment was $3.2 million for each of the three-month periods ended September 30, 2025 and 2024, respectively. Gross margin for the Agility segment was 53% and 58% for the three months ended September 30, 2025 and 2024. The decrease in gross margin for the Agility segment as a percentage of revenues was primarily due to higher direct operating costs, offset by higher revenues.

Previous wording

Selling and administrative expenses consist of payroll and related costs including commissions, bonuses, and stock-based compensation; marketing, advertising, trade conferences and related expenses; new services research and related software development expenses; software subscriptions; professional and consultant fees; provision for credit losses; and other administrative overhead expenses.

Current wording

Selling and administrative expenses consist of payroll and related costs including commissions, bonuses, and stock-based compensation; marketing, advertising, trade conferences and related expenses; new services research and related software development expenses; software and cloud service subscriptions; professional and consultant fees; provision for credit losses; and other administrative overhead expenses.

Previous wording

Selling and administrative expenses for the Agility segment were $3.5 million and $2.7 million for the three months ended June 30, 2025 and 2024, respectively, an increase of $0.8 million or 30%. The increase in selling and administrative expenses includes selling and administrative labor and related expenses of $0.7 million, primarily on account of new hires, salary increases, incentives and bonuses; higher professional fees of $0.1 million and an increase in other selling and administrative expenses of $0.1 million; offset in part by a favorable impact of foreign exchange rate fluctuations of $0.1 million. Selling and administrative expenses for the Agility segment as a percentage of Agility segment revenues were 60% and 52% for the three months ended June 30, 2025 and 2024, respectively. The increase in selling and administrative expenses of the Agility segment as a percentage of Agility segment revenues was primarily due to higher selling and administrative expenses, offset in part by higher revenues.

Current wording

Selling and administrative expenses for the Agility segment were $3.3 million and $2.8 million for the three months ended September 30, 2025 and 2024, respectively, an increase of $0.5 million or 18%. The increase in selling and administrative expenses includes selling and administrative labor and related expenses of $0.5 million, primarily on account of new hires, salary increases, incentives and bonuses; an unfavorable impact of foreign exchange rate fluctuations of $0.2 million; higher professional fees of $0.1 million and higher software subscriptions of $0.1 million; offsetby lower expenses for marketing-related activities of $0.1 million and a decrease in other selling and administrative expenses of $0.3 million. Selling and administrative expenses for the Agility segment as a percentage of Agility segment revenues were 54% and 50% for the three months ended September 30, 2025 and 2024, respectively. The increase in selling and administrative expenses of the Agility segment as a percentage of Agility segment revenues was primarily due to higher selling and administrative expenses, offset by higher revenues.

Previous wording

Although the Company generated taxable income in the United States during the period, the related current tax liability was partially offset by deferred tax assets arising from the net operating loss carryforwards (“NOLCOs”).

Current wording

Although the Company generated taxable income in the United States during the period, the related current tax liability was partially offset by the utilization of deferred tax assets arising from the net operating loss carryforwards (“NOLCOs”).

Previous wording

Net income was $15.0 million and $1.0 million for the six months ended June 30, 2025 and 2024, respectively. The $14.0 million increase was a result of higher revenue in all segments and higher interest income, offset in part by higher direct operating costs and higher selling and administrative expenses in all segments, and a higher income tax provision in the current period.

Current wording

Net income was $8.3 million and $17.4 million for the three months ended September 30, 2025 and 2024, respectively. The $9.1 million decrease was due to a higher income tax provision, higher direct operating costs in the DDS and Agility segments, higher selling and administrative expenses in all segments and lower revenues in the Synodex segment; offset in part by higher revenues in the DDS and Agility segments and higher interest income in the current quarter.

Previous wording

The Agility segment had a net loss of $0.4 million and a net income of $0.1 million for the three months ended June 30, 2025 and 2024, respectively. The $0.5 million change was due to higher selling and administrative expenses and higher direct operating costs, offset in part by higher revenues in the current quarter.

Current wording

The Agility segment had a net loss of $0.1 million and a net income of $0.5 million for the three months ended September 30, 2025 and 2024, respectively. The $0.6 million change was due to higher selling and administrative expenses and higher direct operating costs, offset in part by higher revenues in the current quarter.

Previous wording

Adjusted gross profit for the Synodex segment was $0.5 million and $0.6 million for the three months ended June 30, 2025 and 2024, respectively. The $0.1 million decrease in adjusted gross profit in the Synodex segment was due to higher direct operating costs offset by higher revenues. Adjusted gross margin for the Synodex segment was 26% and 31% for the three months ended June 30, 2025 and 2024, respectively. The decrease in the adjusted gross margin for the Synodex segment as a percentage of revenues was primarily due to higher direct operating costs, offset by higher revenues.

Current wording

Adjusted gross profit for the Synodex segment was $0.2 million and $0.6 million for the three months ended September 30, 2025 and 2024, respectively. The $0.4 million decrease in adjusted gross profit in the Synodex segment was due to lower revenues. Adjusted gross margin for the Synodex segment was 14% and 31% for the three months ended September 30, 2025 and 2024, respectively. The decrease in the adjusted gross margin for the Synodex segment as a percentage of revenues was primarily due to lower revenues.

Previous wording

Adjusted EBITDA was $13.2 million and $2.8 million for the three months ended June 30, 2025 and 2024, respectively. The $10.4 million increase in Adjusted EBITDA was due to higher net income, higher income tax provision, higher stock-based compensation and higher depreciation and amortization, offset in part by higher interest income in the current quarter.

Current wording

Adjusted EBITDA was $16.2 million and $13.9 million for the three months ended September 30, 2025 and 2024, respectively. The $2.3 million increase in Adjusted EBITDA was due to a higher income tax provision, higher stock-based compensation and higher depreciation and amortization, offset in part by lower net income and higher interest income in the current quarter.

Previous wording

Revenues from the Agility segment were $11.3 million and $10.1 million for the six months ended June 30, 2025 and 2024, respectively, an increase of $1.2 million or approximately 12%. The increase was principally attributable to higher volumes from subscriptions to our Agility AI-enabled industry platform.

Current wording

Revenues from the Agility segment were $17.4 million and $15.7 million for the nine months ended September 30, 2025 and 2024, respectively, an increase of $1.7 million or approximately 11%. The increase was principally attributable to higher volumes from subscriptions to our Agility AI-enabled industry platform.

Previous wording

One customer in the DDS segment generated approximately 59% and 31% of the Company’s total revenues for the six months ended June 30, 2025 and 2024, respectively. No other customer accounted for 10% or more of total revenues during these periods. Further, revenues from non-U.S. customers accounted for 17% and 29% of the Company’s total revenues for the six months ended June 30, 2025 and 2024, respectively.

Current wording

One customer in the DDS segment generated approximately 58% and 44% of the Company’s total revenues for the nine months ended September 30, 2025 and 2024, respectively. No other customer accounted for 10% or more of total revenues during these periods. Further, revenues from non-U.S. customers accounted for 16% and 24% of the Company’s total revenues for the nine months ended September 30, 2025 and 2024, respectively.

Previous wording

Direct operating costs were $70.5 million and $40.1 million for the six months ended June 30, 2025 and 2024, respectively, an increase of $30.4 million or 76%. The cost increase was primarily due to increased headcount to support higher volumes from an existing customer. The increase in direct operating costs includes $29.5 million from direct and indirect labor related costs primarily on account of new hires, higher incentives, salary increases and severance; higher cloud service subscriptions of $1.0 million; an unfavorable impact of foreign exchange rate fluctuations of $0.8 million; higher depreciation and amortization of capitalized developed software of $0.5 million; higher content costs of $0.1 million and an increase in other direct operating costs of $0.4 million; offset in part by lower recruitment fees of $1.9 million. Direct operating costs as a percentage of total revenues were 60% and 68% for the six months ended June 30, 2025 and 2024, respectively. The decrease in direct operating cost as a percentage of total revenues was primarily due to higher revenues in all segments, offset in part by higher direct operating costs in all segments.

Current wording

Direct operating costs were $107.5 million and $71.0 million for the nine months ended September 30, 2025 and 2024, respectively, an increase of $36.5 million or 51%. The cost increase was primarily due to increased headcount to support higher volumes from existing customers. The increase in direct operating costs includes $34.2 million from direct and indirect labor related costs primarily on account of new hires, higher incentives and salary increases; higher cloud service subscriptions of $1.5 million, higher content costs of $0.7 million; higher depreciation and amortization of capitalized developed software of $0.7 million; an increase in travel and related costs of $0.2 millionandan increase in other direct operating costs of $0.4 million; offset in part by lower recruitment fees of $1.2 million. Direct operating costs as a percentage of total revenues were 60% and 64% for the nine months ended September 30, 2025 and 2024, respectively. The decrease in direct operating cost as a percentage of total revenues was primarily due to higher revenues in the DDS and Agility segments, offset in part by higher direct operating costs in all segments.

Previous wording

Direct operating costs for the Synodex segment were $3.1 million and $3.0 million for the six months ended June 30, 2025 and 2024, respectively, an increase of $0.1 million or 3%. The increase in direct operating costs is due to higher cloud service subscriptions of $0.1 million and an increase in other direct operating costs of $0.1 million; offset in part by lower depreciation and amortization of $0.1 million. Direct operating costs for the Synodex segment as a percentage of Synodex segment revenues were 76% and 77% for the six months ended June 30, 2025 and 2024, respectively. The decrease in direct operating costs of the Synodex segment as a percentage of Synodex segment revenues was due to higher revenues, offset in part by higher direct operating costs.

Current wording

Direct operating costs for the Synodex segment were $4.6 million and $4.5 million for the nine months ended September 30, 2025 and 2024, respectively, an increase of $0.1 million or 2%. The increase in direct operating costs is due to higher indirect labor related costs of $0.1 million; higher cloud service subscriptions of $0.2 million; offset in part by lower depreciation and amortization of $0.1 million and a decrease in other direct operating costs of $0.1 million. Direct operating costs for the Synodex segment as a percentage of Synodex segment revenues were 81% and 78% for the nine months ended September 30, 2025 and 2024, respectively. The increase in direct operating costs of the Synodex segment as a percentage of Synodex segment revenues was due to higher direct operating costs and lower revenues.

Previous wording

Direct operating costs for the Agility segment were $5.1 million and $4.6 million for the six months ended June 30, 2025 and 2024, respectively, an increase of $0.5 million or 11%. The increase in direct operating costs was a result of higher direct labor costs of $0.1 million, higher cloud service subscriptions of $0.2 million, higher content costs of $0.1 million and an increase in other direct operating costs of $0.1 million. Direct operating costs for the Agility segment as a percentage of Agility segment revenues were 45% and 46% for the six months ended June 30, 2025 and 2024. The decrease in direct operating costs of the Agility segment as a percentage of Agility segment revenues was due to higher revenues offset in part by higher direct operating costs.

Current wording

Direct operating costs for the Agility segment were $8.0 million and $6.9 million for the nine months ended September 30, 2025 and 2024, respectively, an increase of $1.1 million or 16%. The increase in direct operating costs was a result of higher direct labor costs of $0.1 million, higher content costs of $0.7 million, higher recruitment fees of $0.1 million and an increase in other direct operating costs of $0.2 million. Direct operating costs for the Agility segment as a percentage of Agility segment revenues were 46% and 44% for the nine months ended September 30, 2025 and 2024. The increase in direct operating costs of the Agility segment as a percentage of Agility segment revenues was due to higher direct operating costs offset by higher revenues.

Previous wording

Gross profit was $46.2 million and $19.0 million for the six months ended June 30, 2025 and 2024, respectively. The $27.2 million increase in gross profit was primarily due to higher revenues in all segments, offset in part by higher direct operating costs in all segments. Gross margin was 40% and 32% for the six months ended June 30, 2025 and 2024, respectively. The increase in gross margin was primarily due to higher revenues in all segments, offset in part by higher direct operating costs in all segments.

Current wording

Gross profit was $71.8 million and $40.3 million for the nine months ended September 30, 2025 and 2024, respectively. The $31.5 million increase in gross profit was primarily due to higher revenues in the DDS and Agility segments, offset in part by higher direct operating costs in all segments. Gross margin was 40% and 36% for the nine months ended September 30, 2025 and 2024, respectively. The increase in gross margin was primarily due to higher revenues in the DDS and Agility segments, offset in part by higher direct operating costs in all segments.

Previous wording

Gross profit for the Synodex segment was $1.0 million and $0.9 million for the six months ended June 30, 2025 and 2024, respectively. The $0.1 million increase in gross profit for the Synodex segment was primarily due to higher revenues, offset in part by higher direct operating cost. Gross margin for the Synodex segment was 24% and 22% for the six months ended June 30, 2025 and 2024, respectively. The increase in gross margin for the Synodex segment as a percentage of revenues was primarily due to higher revenues, offset in part by higher direct operating costs.

Current wording

Gross profit for the Synodex segment was $1.1 million and $1.3 million for the nine months ended September 30, 2025 and 2024, respectively. The $0.2 million decrease in gross profit for the Synodex segment was primarily due to lower revenues and higher direct operating cost. Gross margin for the Synodex segment was 19% and 23% for the nine months ended September 30, 2025 and 2024, respectively. The decrease in gross margin for the Synodex segment as a percentage of revenues was primarily due to lower revenues and higher direct operating costs.

Previous wording

Selling and administrative expenses consist of payroll and related costs including commissions, bonuses, and stock-based compensation; marketing, advertising, trade conferences and related expenses; new services research and related software development expenses; software subscriptions; professional and consultant fees; provision for credit losses; and other administrative overhead expenses.

Current wording

Selling and administrative expenses consist of payroll and related costs including commissions, bonuses, and stock-based compensation; marketing, advertising, trade conferences and related expenses; new services research and related software development expenses; software and cloud service subscriptions; professional and consultant fees; provision for credit losses; and other administrative overhead expenses.

Previous wording

Selling and administrative expenses were $14.1 million and $9.0 million for the three months ended June 30, 2025 and 2024, respectively, an increase of $5.1 million or 57%. The increase in selling and administrative expenses was primarily due to higher expenses associated with the increase in revenues. The increase in selling and administrative expenses includes higher selling and administrative payroll and related expenses of $3.2 million, primarily on account of new hires, salary increases, incentives and bonuses; higher professional fees of $1.6 million; higher subscriptions of $0.3 million; higher expenses for marketing-related activities of $0.1 million; offset in part by a favorable impact of foreign exchange rate fluctuations of $0.1 million. Selling and administrative expenses as a percentage of total revenues were 24% and 28% for the three months ended June 30, 2025 and 2024, respectively. The decrease in selling and administrative expenses as a percentage of total revenues was primarily attributable to higher revenues in all segments, offset in part by higher selling and administrative expenses in the DDS and Agility segments.

Current wording

Selling and administrative expenses were $42.8 million and $27.2 million for the nine months ended September 30, 2025 and 2024, respectively, an increase of $15.6 million or 57%. The increase in selling and administrative expenses was primarily due to higher expenses associated with the increase in revenues. The increase in selling and administrative expenses includes higher selling and administrative payroll and related expenses of $11.1 million, primarily on account of new hires, salary increases, incentives and bonuses; higher professional fees of $3.3 million, higher expenses for marketing-related activities of $0.7 million, and higher software subscriptions of $0.6 million; offset in part by a decrease in other selling and administrative expenses of $0.1 million. Selling and administrative expenses as a percentage of total revenues were 24% for each of the nine-month periods ended September 30, 2025 and 2024.

Previous wording

Selling and administrative expenses for the Synodex segment were $0.4 million and $0.3 million for the six months ended June 30, 2025 and 2024, respectively, an increase of $0.1 million or 33%. The increase in selling and administrative expenses includes selling and administrative labor and related expenses of $0.2 million, primarily on account of incentives and bonuses, offset in part by a decrease in other selling and administrative expenses of $0.1 million. Selling and administrative expenses for the Synodex segment as a percentage of Synodex segment revenues were 10% and 8% for the six months ended June 30, 2025 and 2024, respectively. The increase in selling and administrative expenses of the Synodex segment as a percentage of Synodex segment revenues was primarily attributable due to higher selling and administrative expenses offset in part by higher revenues.

Current wording

Selling and administrative expenses for the Synodex segment were $0.6 million and $0.3 million for the nine months ended September 30, 2025 and 2024, respectively, an increase of $0.3 million or 100%. The increase in selling and administrative expenses includes selling and administrative labor and related expenses of $0.1 million, primarily on account of incentives and bonuses and an increase in other selling and administrative expenses of $0.2 million. Selling and administrative expenses for the Synodex segment as a percentage of Synodex segment revenues were 11% and 5% for the nine months ended September 30, 2025 and 2024, respectively. The increase in selling and administrative expenses of the Synodex segment as a percentage of Synodex segment revenues was primarily attributable due to higher selling and administrative expenses and lower revenues.

Previous wording

We recorded a provision for income taxes of $2.9 million and $0.7 million for the six months ended June 30, 2025 and 2024, respectively. The provision for the current period primarily reflects Federal and State income tax expense on U.S. operations, income tax expense attributable to the Company’s subsidiaries in foreign jurisdictions in accordance with applicable local tax regulations, including the tax impact of IRS section 162(m) adjustments and Global Intangible Low-Taxed Income (“GILTI”) inclusions. The tax provision was partially offset by the favorable effect of stock-based compensation and the release of valuation allowances on deferred tax assets of the Company’s Canadian and German subsidiaries, resulting from improved expectations of future taxable income in those jurisdictions, and the reversal of previously recorded uncertain tax positions, in accordance with ASC 740.

Current wording

The provision for the current period primarily reflects Federal and State income tax expense on U.S. operations, the tax impact of IRS section 162(m) adjustments, deemed interest provision, and income tax expense attributable to the Company’s subsidiaries in foreign jurisdictions in accordance with applicable local tax regulations. The tax provision was partially offset by the favorable effect of stock-based compensation, the favorable impact of withholding taxes, and the release of valuation allowances on deferred tax assets of one of the Company’s Canadian and the Company’s German subsidiary, resulting from improved expectations of future taxable income in those jurisdictions.

Previous wording

Although the Company generated taxable income in the United States during the period, the related current tax liability was partially offset by deferred tax assets arising from the net operating loss carryforwards (“NOLCOs”).

Current wording

Although the Company generated taxable income in the United States during the period, the related current tax liability was partially offset by the utilization of deferred tax assets arising from the net operating loss carryforwards (“NOLCOs”).

Previous wording

Net income was $7.2 million and breakeven for the three months ended June 30, 2025 and 2024, respectively. The $7.2 million increase was a result of higher revenue in all segments and higher interest income, offset in part by higher direct operating costs in all segments, higher selling and administrative expenses in the DDS and Agility segments, and a higher income tax provision in the current quarter.

Current wording

Net income was $23.3 million and $18.4 million for the nine months ended September 30, 2025 and 2024, respectively. The $4.9 million increase was a result of higher revenues in the DDS and Agility segments and higher interest income, offset in part by higher direct operating costs, higher selling and administrative expenses in all segments, and an increase in the income tax provision in the current period.

Previous wording

The Agility segment had a net loss of $0.6 million and a net income of $0.4 million for the six months ended June 30, 2025 and 2024, respectively. The $1.0 million change was due to higher selling and administrative expenses and direct operating costs, offset in part by higher revenues in the current period.

Current wording

The Agility segment had a net loss of $0.6 million and a net income of $0.9 million for the nine months ended September 30, 2025 and 2024, respectively. The $1.5 million change was due to higher selling and administrative expenses, and higher direct operating costs, offset in part by higher revenues in the current period.

Previous wording

Adjusted gross profit was $25.0 million and $10.8 million for the three months ended June 30, 2025 and 2024, respectively. The $14.2 million increase in adjusted gross profit was primarily due to higher revenues in all segments, offset in part by higher direct operating costs in all segments. Adjusted gross margin was 43% and 33% for the three months ended June 30, 2025 and 2024, respectively. The increase in adjusted gross margin was primarily due to higher revenues in all segments, offset in part by higher direct operating costs in all segments.

Current wording

Adjusted gross profit was $78.0 million and $44.7 million for the nine months ended September 30, 2025 and 2024, respectively. The $33.3 million increase in adjusted gross profit was primarily due to higher revenues in the DDS and Agility segments, offset in part by higher direct operating costs in all segments. Adjusted gross margin was 43% and 40% for the nine months ended September 30, 2025 and 2024, respectively. The increase in adjusted gross margin was primarily due to higher revenues in the DDS and Agility segments, offset in part by higher direct operating costs in all segments.

Previous wording

Adjusted gross profit for the DDS segment was $20.5 million and $6.6 million for the three months ended June 30, 2025 and 2024, respectively. The $13.9 million increase in adjusted gross profit for the DDS segment was due to higher revenues, offset in part by higher direct operating costs. Adjusted gross margin for the DDS segment was 41% and 26% for the three months ended June 30, 2025 and 2024, respectively. The increase in the adjusted gross margin for the DDS segment as a percentage of revenues was primarily due to higher revenues, offset in part by higher direct operating costs.

Current wording

Adjusted gross profit for the DDS segment was $64.8 million and $31.9 million for the nine months ended September 30, 2025 and 2024, respectively. The $32.9 million increase in adjusted gross profit for the DDS segment was due to higher revenues, offset in part by higher direct operating costs. Adjusted gross margin for the DDS segment was 41% and 35% for the nine months ended September 30, 2025 and 2024, respectively. The increase in the adjusted gross margin for the DDS segment as a percentage of revenues was primarily due to higher revenues, offset in part by higher direct operating costs.

Previous wording

Adjusted gross profit for the Synodex segment was $1.2 million and $1.1 million for the six months ended June 30, 2025 and 2024, respectively. The $0.1 million increase in adjusted gross profit in the Synodex segment was due to higher revenues, offset in part by higher direct operating cost. Adjusted gross margin for the Synodex segment was 29% and 30% for the six months ended June 30, 2025 and 2024, respectively. The decrease in the adjusted gross margin for the Synodex segment as a percentage of revenues was primarily due to higher revenues, offset in part by higher direct operating cost.

Current wording

Adjusted gross profit for the Synodex segment was $1.4 million and $1.7 million for the nine months ended September 30, 2025 and 2024, respectively. The $0.3 million decrease in adjusted gross profit in the Synodex segment was due to lower revenues and higher direct operating costs. Adjusted gross margin for the Synodex segment was 25% and 30% for the nine months ended September 30, 2025 and 2024, respectively. The decrease in the adjusted gross margin for the Synodex segment as a percentage of revenues was primarily due to lower revenues and higher direct operating costs.

Previous wording

Adjusted gross profit for the Agility segment was $7.7 million and $7.1 million for the six months ended June 30, 2025 and 2024, respectively. The $0.6 million increase in adjusted gross profit for the Agility segment was due to higher revenues, offset in part by higher direct operating costs. Adjusted gross margin for the Agility segment was 68% and 70% for the six months ended June 30, 2025 and 2024, respectively. The decrease in the adjusted gross margin for the Agility segment as a percentage of revenues was primarily due to higher revenues, offset in part by higher direct operating costs.

Current wording

Adjusted gross profit for the Agility segment was $11.8 million and $11.1 million for the nine months ended September 30, 2025 and 2024, respectively. The $0.7 million increase in adjusted gross profit for the Agility segment was due to higher revenues, offset in part by higher direct operating costs. Adjusted gross margin for the Agility segment was 68% and 71% for the nine months ended September 30, 2025 and 2024, respectively. The decrease in the adjusted gross margin for the Agility segment as a percentage of revenues was primarily due to higher direct operating costs offset by higher revenues.

Previous wording

Adjusted EBITDA was $25.9 million and $6.6 million for the six months ended June 30, 2025 and 2024, respectively. The $19.3 million increase in Adjusted EBITDA was due to higher net income and higher stock-based compensation, higher income tax provision, and higher depreciation and amortization, offset in part by higher interest income in the current period.

Current wording

Adjusted EBITDA was $42.2 million and $20.4 million for the nine months ended September 30, 2025 and 2024, respectively. The $21.8 million increase in Adjusted EBITDA was due to higher net income, a higher income tax provision, higher stock-based compensation, and higher depreciation and amortization, offset in part by higher interest income in the current period.

Previous wording

Adjusted EBITDA for the Synodex segment was $0.9 million and $1.0 million for the six months ended June 30, 2025 and 2024, respectively. The $0.1 million decrease in Adjusted EBITDA in the Synodex segment was due to lower depreciation and amortization in the current period.

Current wording

Adjusted EBITDA for the Synodex segment was $1.0 million and $1.5 million for the nine months ended September 30, 2025 and 2024, respectively. The $0.5 million decrease in Adjusted EBITDA in the Synodex segment was due to lower net income and lower depreciation and amortization in the current period.

Previous wording

Adjusted EBITDA for the Agility segment was $1.3 million and $2.1 million for the six months ended June 30, 2025 and 2024, respectively. The $0.8 million decrease in Adjusted EBITDA in the Agility segment was due to lower net income, offset in part by higher stock-based compensation in the current period.

Current wording

Adjusted EBITDA for the Agility segment was $2.2 million and $3.4 million for the nine months ended September 30, 2025 and 2024, respectively. The $1.2 million decrease in Adjusted EBITDA in the Agility segment was due to lower net income, offset in part by higher stock-based compensation and a higher income tax provision in the current period.

Previous wording

On June 30, 2025, we had cash and cash equivalents of $59.8 million, of which $16.4 million was held by our foreign subsidiaries, and $43.4 million was held in the United States. Despite the passage of the new tax law under which we may repatriate funds from overseas after paying the toll charge, it is our intent, as of June 30, 2025, to indefinitely reinvest the overseas funds in our foreign subsidiaries.

Current wording

On September 30, 2025, we had cash and cash equivalents of $73.9 million, of which $20.7 million was held by our foreign subsidiaries, and $53.2 million was held in the United States.

Previous wording

We have used, and plan to use, our cash and cash equivalents for (i) capital investments; (ii) the expansion of our operations; (iii) technology innovation; (iv) product management and strategic marketing; (v) general corporate purposes, including working capital; and (vi) possible business acquisitions. As of June 30, 2025, we had working capital of approximately $65.6 million, as compared to working capital of approximately $41.5 million as of December 31, 2024. The increase in working capital is due to increased collections from higher revenues and proceeds from stock option exercises in the period, offset by capital expenditures during the period to build future capacity.

Current wording

We have used, and plan to use, our cash and cash equivalents for (i) capital investments; (ii) the expansion of our operations; (iii) technology innovation; (iv) product management and strategic marketing; (v) general corporate purposes, including working capital; and (vi) possible business acquisitions. As of September 30, 2025, we had working capital of approximately $75.3 million, as compared to working capital of approximately $41.5 million as of December 31, 2024. The increase in working capital is due to increased collections from higher revenues and proceeds from stock option exercises in the period, offset by capital expenditures during the period to build future capacity.

Previous wording

Cash provided by our operating activities for the six months ended June 30, 2025 was $15.1 million resulting from net income of $15.0 million, adjusted for non-cash expenses of $10.8 million and a decrease in working capital of $10.7 million. Refer to the Condensed Consolidated Statements of Cash Flows for further details.

Current wording

Cash provided by our operating activities for the nine months ended September 30, 2025 was $33.9 million resulting from net income of $23.3 million, adjusted for non-cash expenses of $17.4 million and a decrease in working capital of $6.8 million. Refer to the Condensed Consolidated Statements of Cash Flows for further details.

Previous wording

Cash provided by our operating activities for the six months ended June 30, 2024 was $6.3 million resulting from net income of $1.0 million, adjusted for non-cash expenses of $5.1 million and an increase in working capital of $0.2 million. Refer to the Condensed Consolidated Statements of Cash Flows for further details.

Current wording

Cash provided by our operating activities for the nine months ended September 30, 2024 was $17.7 million resulting from net income of $18.4 million, adjusted for non-cash expenses of $1.9 million and a decrease in working capital of $2.6 million. Refer to the Condensed Consolidated Statements of Cash Flows for further details.

Previous wording

Cash used in our investing activities was $4.1 million for each of the six-month periods ended June 30, 2025 and 2024, respectively. These capital expenditures were principally for the purchase of technology equipment including servers, network infrastructure and workstations, and expenditures for capitalized developed software. Capital expenditures for the six months ended June 30, 2025 amounting to $4.1 million consisted of $2.3 million for the DDS segment, $1.2 million for the Agility segment and $0.6 million for the Synodex segment.

Current wording

Cash used in our investing activities was $8.3 million and $5.5 million for the nine-month periods ended September 30, 2025 and 2024, respectively. These capital expenditures were principally for the purchase of technology equipment including servers, network infrastructure and workstations, and expenditures for capitalized developed software. Capital expenditures for the nine months ended September 30, 2025 amounting to $8.3 million consisted of $5.6 million for the DDS segment, $1.8 million for the Agility segment and $0.9 million for the Synodex segment.