INNODATA INC

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, 2026 and 2025 (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, 2026 and 2025 (in thousands).

Previous wording

We define Adjusted EBITDA as net income attributable to Innodata Inc. and its subsidiaries in accordance with U.S. GAAP before net interest expense (income), income taxes, depreciation and amortization of intangible assets (which derives EBITDA), plus additional adjustments for loss on impairment of intangible assets and goodwill, stock-based compensation, income attributable to non-controlling interests and other one-time costs. We use Adjusted EBITDA to evaluate core results of operations and trends between fiscal periods and believe that these measures are important components of our internal performance measurement process.

Current wording

We define Adjusted EBITDA as net income attributable to Innodata Inc. and its subsidiaries in accordance with U.S. GAAP before net interest expense (income), income taxes, depreciation and amortization of intangible assets (which derives EBITDA), plus additional adjustments for loss on impairment of intangible assets and goodwill, stock-based compensation, income attributable to non-controlling interests and other one-time costs. We use Adjusted EBITDA to evaluate core results of operations and trends between fiscal periods and believe that this measure is an important component of our internal performance measurement process.

Previous wording

The following table contains a reconciliation of U.S. GAAP net income attributable to Innodata Inc. and its subsidiaries to Adjusted EBITDA for the three- and six-month periods ended June 30, 2026 and 2025 (in thousands).

Current wording

The following table contains a reconciliation of U.S. GAAP net income attributable to Innodata Inc. and its subsidiaries to Adjusted EBITDA for the three and nine month periods ended September 30, 2026 and 2025 (in thousands).

Previous wording

Total revenues were $92.1 million and $58.4 million for the three months ended June 30, 2026 and 2025, respectively, an increase of $33.7 million or approximately 58%. Revenue increased primarily due to higher volume for AI data engineering services from existing customer programs.

Current wording

Total revenues were $95.6 million and $62.6 million for the three months ended September 30, 2026 and 2025, respectively, an increase of $33.0 million or approximately 53%. Revenue increased primarily due to higher volume for AI data engineering services from existing customer programs.

Previous wording

One customer generated approximately 37% and 58% of the Company’s total revenues for the three months ended June 30, 2026 and 2025, respectively. Another customer generated approximately 34% of the Company’s total revenues for the three months ended June 30, 2026. No other customer accounted for 10% or more of total revenues during these periods. Revenues from non-U.S. customers accounted for 13% and 17% of the Company’s total revenues for the three months ended June 30, 2026 and 2025, respectively.

Current wording

One customer generated approximately 31% and 56% of the Company’s total revenues for the three months ended September 30, 2026 and 2025, respectively. Another customer generated approximately 43% of the Company’s total revenues for the three months ended September 30, 2026. No other customer accounted for 10% or more of total revenues during these periods. Revenues from non-U.S. customers accounted for 11% and 16% of the Company’s total revenues for the three months ended September 30, 2026 and 2025, respectively.

Previous wording

Direct operating costs consist of direct and indirect labor costs, occupancy costs, data center hosting fees, cloud services, AI technology subscriptions, content acquisition costs, depreciation and amortization, travel, telecommunications, computer services and supplies, realized (gain) loss on forward contracts, foreign currency revaluation (gain) loss, recruitment costs and other direct expenses that are incurred in providing services to our customers.

Current wording

Direct operating costs consist of direct and indirect labor costs including incentives, bonuses, stock-based compensation, third-party delivery resource costs, occupancy costs, content acquisition costs, data center hosting fees, cloud services, AI technology subscriptions, depreciation and amortization, travel, telecommunications, computer services and supplies, realized (gain) loss on forward contracts, foreign currency revaluation (gain) loss, recruitment costs and other direct expenses that are incurred in providing services to customers.

Previous wording

Direct operating costs were $49.7 million and $35.4 million for the three months ended June 30, 2026 and 2025, respectively, an increase of $14.3 million or approximately 40%. The cost increase was primarily attributable to an increase in headcount to support higher volumes of AI data engineering services from existing customer programs.

Current wording

Direct operating costs were $60.1 million and $37.0 million for the three months ended September 30, 2026 and 2025, respectively, an increase of $23.1 million or approximately 62%. The cost increase was primarily attributable to an increase in direct and indirect labor-related costs, third-party delivery resource costs, and content acquisition costs to support higher volumes of AI data engineering services from existing customer programs.

Previous wording

The $14.3 million increase in direct operating costs includes $10.6 million from direct and indirect labor-related costs, primarily driven by new hires, salary increases, stock-based compensation expense, and third-party delivery resources. Additional increases primarily included approximately $1.4 million in cloud services and AI technology-related subscription costs driven by increased cloud usage and data processing requirements to support higher revenue and expanded customer engagements, shipping and related costs of $0.9 million, depreciation and amortization of capitalized developed software of $0.7 million, content-related costs of $0.3 million, occupancy-related costs of $0.2 million, and travel and entertainment costs of $0.2 million. Direct operating costs as a percentage of total revenues were 54% and 61% for the three months ended June 30, 2026 and 2025, respectively. The decrease in direct operating costs as a percentage of total revenues was primarily attributable to higher revenues, offset in part by increased direct operating costs.

Current wording

The $23.1 million increase in direct operating costs includes $0.6 million from direct and indirect labor-related costs, primarily driven by higher third-party delivery resource costs, salary increases and higher stock-based compensation expense offset in part by headcount reductions in the quarter. Additional increases primarily included approximately $21.0 million in expenditures incurred for the content acquisition costs of our AI enabled projects, $1.5 million for cloud services and AI technology-related subscription costs driven by increased cloud usage and data processing requirements to support higher revenue and expanded customer engagements, depreciation and amortization of capitalized developed software of $0.5 million, occupancy-related costs of $0.3 million, and an unfavorable impact of foreign exchange rate fluctuations of $0.3 million, offset in part by lower recruitment fees of $0.8 million and other direct operating costs of $0.3 million. Direct operating costs as a percentage of total revenues were 63% and 59% for the three months ended September 30, 2026 and 2025, respectively. The increase in direct operating costs as a percentage of total revenues was primarily attributable to increased direct operating costs, offset in part by higher revenues.

Previous wording

Gross profit was $42.4 million and $23.0 million for the three months ended June 30, 2026 and 2025, respectively. The $19.4 million increase in gross profit was primarily due to higher revenues, offset in part by higher direct operating costs. Gross margin was 46% and 39% for the three months ended June 30, 2026 and 2025, respectively. The increase in gross margin was primarily due to higher revenues, offset in part by higher direct operating costs.

Current wording

Gross profit was $35.5 million and $25.5 million for the three months ended September 30, 2026 and 2025, respectively. The $10.0 million increase in gross profit was primarily due to higher revenues, offset in part by higher direct operating costs. Gross margin was 37% and 41% for the three months ended September 30, 2026 and 2025, respectively. The decrease in gross margin was primarily due to higher direct operating costs, offset in part by higher revenues.

Previous wording

Selling and administrative expenses were approximately $26.6 million and $14.1 million for the three months ended June 30, 2026 and 2025, respectively, an increase of $12.5 million or approximately 89%. The increase in selling and administrative expenses was primarily due to continued investments in growth-oriented and capability-building functions. In addition, labor costs increased as we continue to invest in sales, account management, and marketing resources to support new customer acquisition, expand relationships with existing customers, and strengthen our market presence through solution design, go-to-market execution, and thought leadership initiatives.

Current wording

Selling and administrative expenses were approximately $26.9 million and $13.7 million for the three months ended September 30, 2026 and 2025, respectively, an increase of $13.2 million or approximately 96%. The increase in selling and administrative expenses was primarily due to continued investments in growth-oriented and capability-building functions. In addition, labor costs increased as we continue to invest in sales, account management, and marketing resources to support new customer acquisition, expand relationships with existing customers, and strengthen our market presence through solution design, go-to-market execution, and thought leadership initiatives.

Previous wording

The $12.5 million increase in selling and administrative expenses was primarily attributable to increased selling, marketing, and administrative payroll and related expenses of $11.0 million, driven by new hires, salary increases, stock-based compensation expense, incentives and bonuses. Additional increases included higher business software and AI technology subscriptions of $1.3 million, marketing-related expenses of $0.4 million, travel and entertainment costs of $0.3 million, unused line of credit facilitation fees of $0.2 million, an unfavorable impact of foreign exchange rate fluctuations of $0.2 million and an increase in other selling and administrative expenses of $0.3 million, offset in part by credit loss recoveries of $0.8 million and lower professional and recruitment fees of $0.4 million. Selling and administrative expenses as a percentage of total revenues were approximately 29% and 24% for the three months ended June 30, 2026 and 2025, respectively. The increase in selling and administrative expenses as a percentage of total revenues was primarily attributable to increased selling and administrative expenses offset by higher revenues.

Current wording

The $13.2 million increase in selling and administrative expenses was primarily attributable to increased selling, marketing, and administrative payroll and related expenses of $9.2 million, driven by new hires, salary increases, stock-based compensation expense, incentives and bonuses. Additional increases included business software and AI technology subscriptions of $1.6 million, professional fees of $1.6 million, marketing-related expenses of $0.2 million, fees related to the annual shareholders meeting of $0.1 million, insurance cost of $0.1 million and other selling and administrative expenses of $0.6 million, offset in part by a favorable impact of foreign exchange rate fluctuations of $0.2 million. Selling and administrative expenses as a percentage of total revenues were approximately 28% and 22% for the three months ended September 30, 2026 and 2025, respectively. The increase in selling and administrative expenses as a percentage of total revenues was primarily attributable to increased selling and administrative expenses offset by higher revenues.

Previous wording

We recorded an income tax provision of approximately $3.1 million and $2.3 million for the three months ended June 30, 2026 and 2025, respectively. The effective tax rate was 17.9% and 23.9% for the three months ended June 30, 2026 and 2025, respectively. The effective tax rate was favorably impacted by net windfalls related to stock-based compensation, partially offset by IRS section 162(m) adjustments and the U.S tax implications of Global Intangible Low Taxed Income (GILTI) in the current quarter.

Current wording

We recorded an income tax provision of approximately ($0.3) million and $3.8 million for the three months ended September 30, 2026 and 2025, respectively. The effective tax rate was (3.4%) and 31.5% for the three months ended September 30, 2026 and 2025, respectively. Our overall effective tax rate for the three months ended September 30, 2026 was favorably impacted by net windfalls related to stock-based compensation, a U.S. deduction on Foreign-Derived Deduction Eligible Income (“FDDEI”) formerly known as Foreign-Derived Intangible Income (“FDII”), and a net benefit related to foreign tax credits (“FTC”), partially offset by IRC Section 162(m) adjustments, the U.S. tax implications of Global Intangible Low Taxed Income (“GILTI”) and the impact of foreign prior year true-ups and exchange fluctuations.

Previous wording

In each quarter, we update the estimated annual effective tax rate and make a year-to-date adjustment to the provision. The estimated annual effective tax rate is subject to significant volatility due to several factors, including our ability to accurately predict the proportion of income (loss) before provision for income taxes in multiple jurisdictions, the effects of tax law changes, and the U.S. tax implications related to Global Intangible Low-Taxed Income.

Current wording

In each quarter, we update the estimated annual effective tax rate based on the most recent annual forecast and make a year-to-date adjustment to the tax provision. The estimated annual effective tax rate is subject to significant volatility due to several factors including the Company’s ability to accurately forecast the pre-tax book income and permanent adjustments in multiple jurisdictions including certain stock-based compensation expense, IRC Section 162(m) adjustments, FDDEI, and a net benefit related to FTC and the U.S. tax implications of GILTI.

Previous wording

Net income was $14.4 million and $7.2 million for the three months ended June 30, 2026 and 2025, respectively. The $7.2 million increase was a result of higher revenue, offset in part by higher direct operating costs and higher selling and administrative expenses in the current quarter.

Current wording

Net income was $10.3 million and $8.3 million for the three months ended September 30, 2026 and 2025, respectively. The $2.0 million increase was a result of higher revenue, offset in part by higher direct operating costs and higher selling and administrative expenses in the current quarter.

Previous wording

For the three months ended June 30, 2026, basic and diluted earnings per share were $0.43 and $0.41, respectively, compared to $0.23 and $0.20 for the prior year period. This represents a per share increase of $0.20 for basic EPS and $0.21 for diluted EPS. Earnings per share increased for the quarter due to continued improvement in profitability and operating leverage, reflecting higher revenues and cost efficiencies across the business.

Current wording

For the three months ended September 30, 2026, basic and diluted earnings per share were $0.30 and $0.29, respectively, compared to $0.26 and $0.24 for the prior year period. This represents a per share increase of $0.04 for basic EPS and $0.05 for diluted EPS. Earnings per share increased for the quarter due to continued improvement in profitability and operating leverage, reflecting higher revenues and cost efficiencies across the business.

Previous wording

Adjusted gross profit was $45.4 million and $25.0 million for the three months ended June 30, 2026 and 2025, respectively. The $20.4 million increase in adjusted gross profit was primarily due to higher revenues, offset in part by higher direct operating costs. Adjusted gross margin was 49% and 43% for the three months ended June 30, 2026 and 2025, respectively. The increase in adjusted gross margin was primarily due to higher revenues, offset in part by higher direct operating costs.

Current wording

Adjusted gross profit was $38.3 million and $27.7 million for the three months ended September 30, 2026 and 2025, respectively. The $10.6 million increase in adjusted gross profit was primarily due to higher revenues, offset in part by higher direct operating costs. Adjusted gross margin was 40% and 44% for the three months ended September 30, 2026 and 2025, respectively. The decrease in adjusted gross margin was primarily due to higher direct operating costs, offset in part by higher revenues.

Previous wording

Adjusted EBITDA was $25.4 million and $13.2 million for the three months ended June 30, 2026 and 2025, respectively. The $12.2 million increase in Adjusted EBITDA was due to higher net income, higher stock-based compensation and depreciation and amortization, offset in part by higher interest income in the current quarter.

Current wording

Adjusted EBITDA was $17.7 million and $16.2 million for the three months ended September 30, 2026 and 2025, respectively. The $1.5 million increase in Adjusted EBITDA was due to higher net income, higher stock-based compensation and depreciation and amortization, offset in part by higher interest income in the current quarter.

Previous wording

Total revenues were $182.2 million and $116.7 million for the six months ended June 30, 2026 and 2025, respectively, an increase of $65.5 million or approximately 56%. Revenue increased primarily due to higher volume for AI data engineering services from existing customer programs.

Current wording

Total revenues were $277.9 million and $179.3 million for the nine months ended September 30, 2026 and 2025, respectively, an increase of $98.6 million or approximately 55%. Revenue increased primarily due to higher volume for AI data engineering services from existing customer programs.

Previous wording

One customer generated approximately 46% and 59% of the Company’s total revenues for the six months ended June 30, 2026 and 2025, respectively. Another customer generated approximately 26% of the Company’s total revenues for the six months ended June 30, 2026. No other customer accounted for 10% or more of total revenues during these periods. Revenues from non-U.S. customers accounted for 13% and 17% of the Company’s total revenues for the six months ended June 30, 2026 and 2025, respectively.

Current wording

One customer generated approximately 41% and 58% of the Company’s total revenues for the nine months ended September 30, 2026 and 2025, respectively. Another customer generated approximately 32% of the Company’s total revenues for the nine months ended September 30, 2026. No other customer accounted for 10% or more of total revenues during these periods. Revenues from non-U.S. customers accounted for 12% and 16% of the Company’s total revenues for the nine months ended September 30, 2026 and 2025, respectively.

Previous wording

Direct operating costs consist of direct and indirect labor costs, occupancy costs, data center hosting fees, cloud services, AI technology subscriptions, content acquisition costs, depreciation and amortization, travel, telecommunications, computer services and supplies, realized (gain) loss on forward contracts, foreign currency revaluation (gain) loss, recruitment costs and other direct expenses that are incurred in providing services to our customers.

Current wording

Direct operating costs consist of direct and indirect labor costs including incentives, bonuses, stock-based compensation, third-party delivery resource costs, occupancy costs, content acquisition costs, data center hosting fees, cloud services, AI technology subscriptions, depreciation and amortization, travel, telecommunications, computer services and supplies, realized (gain) loss on forward contracts, foreign currency revaluation (gain) loss, recruitment costs and other direct expenses that are incurred in providing services to customers.

Previous wording

Direct operating costs were $100.0 million and $70.5 million for the six months ended June 30, 2026 and 2025, respectively, an increase of $29.5 million or approximately 42%. The cost increase was primarily attributable to an increase in headcount to support higher volumes of AI data engineering services from existing customer programs.

Current wording

Direct operating costs were $160.1 million and $107.5 million for the nine months ended September 30, 2026 and 2025, respectively, an increase of $52.6 million or approximately 49%. The cost increase was primarily attributable to an increase in direct and indirect labor-related costs, third-party delivery resource costs and content acquisition costs to support higher volumes of AI data engineering services from existing customer programs.

Previous wording

The $29.5 million increase in direct operating costs includes $24.6 million from direct and indirect labor-related costs, primarily driven by new hires, salary increases, stock-based compensation expense, severance and third-party delivery resources. Additional increases primarily included approximately $2.4 million in cloud services and AI technology-related subscription costs driven by increased cloud usage and data processing requirements to support higher revenue and expanded customer engagements, shipping and related costs of $1.6 million, depreciation and amortization of capitalized developed software of $1.2 million, content-related costs of $0.8 million, occupancy-related costs of $0.4 million, and travel and entertainment costs of $0.2 million, offset in part by a reduction in recruitment fees of $1.0 million and a favorable impact of foreign exchange rate fluctuations of $0.7 million. Direct operating costs as a percentage of total revenues were 55% and 60% for the six months ended June 30, 2026 and 2025, respectively. The decrease in direct operating costs as a percentage of total revenues was primarily attributable to higher revenues, offset in part by increased direct operating costs.

Current wording

The $52.6 million increase in direct operating costs includes $25.3 million from direct and indirect labor-related costs, primarily driven by new hires, salary increases, incentives, stock-based compensation expense, severance and third-party delivery resources. Additional increases primarily included approximately $23.4 million in expenditures incurred for the content acquisition costs of our AI enabled projects, $3.8 million for cloud services and AI technology-related subscription costs driven by increased cloud usage and data processing requirements to support higher revenue and expanded customer engagements, depreciation and amortization of capitalized developed software of $1.7 million, occupancy-related costs of $0.6 million, travel and entertainment costs of $0.2 million, offset in part by a reduction in recruitment fees of $1.8 million, a favorable impact of foreign exchange rate fluctuations of $0.4 million and other direct operating costs of $0.2 million. Direct operating costs as a percentage of total revenues were 58% and 60% for the nine months ended September 30, 2026 and 2025, respectively. The decrease in direct operating costs as a percentage of total revenues was primarily attributable to higher revenues, offset in part by increased direct operating costs.

Previous wording

Gross profit was $82.2 million and $46.2 million for the six months ended June 30, 2026 and 2025, respectively. The $36.0 million increase in gross profit was primarily due to higher revenues, offset in part by higher direct operating costs. Gross margin was 45% and 40% for the six months ended June 30, 2026 and 2025, respectively. The increase in gross margin was primarily due to higher revenues, offset in part by higher direct operating costs.

Current wording

Gross profit was $117.8 million and $71.8 million for the nine months ended September 30, 2026 and 2025, respectively. The $46.0 million increase in gross profit was primarily due to higher revenues, offset in part by higher direct operating costs. Gross margin was 42% and 40% for the nine months ended September 30, 2026 and 2025, respectively. The increase in gross margin was primarily due to higher revenues, offset in part by higher direct operating costs.

Previous wording

Selling and administrative expenses were approximately $49.5 million and $29.1 million for the six months ended June 30, 2026 and 2025, respectively, an increase of $20.4 million or approximately 70%. The increase in selling and administrative expenses was primarily due to continued investments in growth-oriented and capability-building functions. In addition, labor costs increased as we continue to invest in sales, account management, and marketing resources to support new customer acquisition, expand relationships with existing customers, and strengthen our market presence through solution design, go-to-market execution, and thought leadership initiatives.

Current wording

Selling and administrative expenses were approximately $76.4 million and $42.8 million for the nine months ended September 30, 2026 and 2025, respectively, an increase of $33.6 million or approximately 79%. The increase in selling and administrative expenses was primarily due to continued investments in growth-oriented and capability-building functions. In addition, labor costs increased as we continue to invest in sales, account management, and marketing resources to support new customer acquisition, expand relationships with existing customers, and strengthen our market presence through solution design, go-to-market execution, and thought leadership initiatives.

Previous wording

The $20.4 million increase in selling and administrative expenses was primarily attributable to increased selling, marketing, and administrative payroll and related expenses of $19.4 million, driven by new hires, salary increases, stock-based compensation expense, incentives and bonuses. Additional increases included higher business software and AI technology subscriptions of $1.8 million, travel and entertainment costs of $0.4 million, marketing-related expenses of $0.3 million, unused line of credit facilitation fees of $0.3 million, higher insurance cost of $0.2 million, an increase in indirect taxes of $0.2 million, an increase in proxy filing expenses of $0.1 million and an increase in other selling and administrative expenses of $0.5 million, offset in part by lower professional and recruitment fees of $2.0 million, and credit loss recoveries of $0.8 million. Selling and administrative expenses as a percentage of total revenues were approximately 27% and 25% for the six months ended June 30, 2026 and 2025, respectively. The increase in selling and administrative expenses as a percentage of total revenues was primarily attributable to increased selling and administrative expenses offset by higher revenues.

Current wording

The $33.6 million increase in selling and administrative expenses was primarily attributable to increased selling, marketing, and administrative payroll and related expenses of $28.6 million, driven by new hires, salary increases, stock-based compensation expense, incentives and bonuses. Additional increases included business software and AI technology subscriptions of $3.5 million, marketing-related expenses of $0.7 million, unused line of credit facilitation fees of $0.3 million, indirect taxes of $0.3 million, travel and entertainment costs of $0.2 million, insurance cost of $0.2 million, fees related to the annual shareholders meeting of $0.2 million and other selling and administrative expenses of $0.9 million, offset in part by credit loss recoveries of $0.8 million and lower professional and recruitment fees of $0.5 million. Selling and administrative expenses as a percentage of total revenues were approximately 27% and 24% for the nine months ended September 30, 2026 and 2025, respectively. The increase in selling and administrative expenses as a percentage of total revenues was primarily attributable to increased selling and administrative expenses offset by higher revenues.

Previous wording

We recorded an income tax provision of approximately $5.6 million and $2.9 million for the six months ended June 30, 2026 and 2025, respectively. The effective tax rate was 16.0% and 16.1% for the six months ended June 30, 2026 and 2025, respectively. The effective tax rate was favorably impacted by net windfalls related to stock-based compensation, partially offset by IRS section 162(m) adjustments, the U.S tax implications of Global Intangible Low Taxed Income (GILTI) and the impact of foreign exchange fluctuations in the current period.

Current wording

We recorded an income tax provision of approximately $5.2 million and $6.7 million for the nine months ended September 30, 2026 and 2025, respectively. The effective tax rate was 11.7% and 22.3% for the nine months ended September 30, 2026 and 2025, respectively. Our overall effective tax rate for the nine months ended September 30, 2026 was favorably impacted by net windfalls related to stock-based compensation, a U.S. deduction on FDDEI and a net benefit related to FTC, partially offset by IRC Section 162(m) adjustments, the U.S. tax implications of GILTI and the impact of foreign prior year true-ups and exchange fluctuations.

Previous wording

In each quarter, we update the estimated annual effective tax rate and make a year-to-date adjustment to the provision. The estimated annual effective tax rate is subject to significant volatility due to several factors, including our ability to accurately predict the proportion of income (loss) before provision for income taxes in multiple jurisdictions, the effects of tax law changes, and the U.S. tax implications related to Global Intangible Low-Taxed Income.

Current wording

In each quarter, we update the estimated annual effective tax rate based on the most recent annual forecast and make a year-to-date adjustment to the tax provision. The estimated annual effective tax rate is subject to significant volatility due to several factors including the Company’s ability to accurately forecast the pre-tax book income and permanent adjustments in multiple jurisdictions including certain stock-based compensation expense, IRC Section 162(m) adjustments, FDDEI, and a net benefit related to FTC and the U.S. tax implications of GILTI.

Previous wording

(Refer to Note 6 of Notes to Condensed Consolidated Financial Statements for the components of the income tax provision for the six-month periods ended June 30, 2026 and 2025).

Current wording

(Refer to Note 6 of Notes to Condensed Consolidated Financial Statements for the components of the income tax provision for the nine-month periods ended September 30, 2026 and 2025).

Previous wording

Net income was $29.3 million and $15.0 million for the six months ended June 30, 2026 and 2025, respectively. The $14.3 million increase was a result of higher revenue, offset in part by higher direct operating costs and higher selling and administrative expenses in the current period.

Current wording

Net income was $39.6 million and $23.3 million for the nine months ended September 30, 2026 and 2025, respectively. The $16.3 million increase was a result of higher revenue, offset in part by higher direct operating costs and higher selling and administrative expenses in the current period.

Previous wording

For the six months ended June 30, 2026, basic and diluted earnings per share were $0.89 and $0.86, respectively, compared to $0.47 and $0.43 for the prior year period. This represents a per share increase of $0.42 for basic EPS and $0.43 for diluted EPS. Earnings per share increased for the period due to continued improvement in profitability and operating leverage, reflecting higher revenues and cost efficiencies across the business.

Current wording

For the nine months ended September 30, 2026, basic and diluted earnings per share were $1.18 and $1.13, respectively, compared to $0.74 and $0.67 for the prior year period. This represents a per share increase of $0.44 for basic EPS and $0.46 for diluted EPS. Earnings per share increased for the period due to continued improvement in profitability and operating leverage, reflecting higher revenues and cost efficiencies across the business.

Previous wording

Adjusted gross profit was $88.0 million and $50.3 million for the six months ended June 30, 2026 and 2025, respectively. The $37.7 million increase in adjusted gross profit was primarily due to higher revenues, offset in part by higher direct operating costs. Adjusted gross margin was 48% and 43% for the six months ended June 30, 2026 and 2025, respectively. The increase in adjusted gross margin was primarily due to higher revenues, offset in part by higher direct operating costs.

Current wording

Adjusted gross profit was $126.3 million and $78.0 million for the nine months ended September 30, 2026 and 2025, respectively. The $48.3 million increase in adjusted gross profit was primarily due to higher revenues, offset in part by higher direct operating costs. Adjusted gross margin was 45% and 43% for the nine months ended September 30, 2026 and 2025, respectively. The increase in adjusted gross margin was primarily due to higher revenues, offset in part by higher direct operating costs.

Previous wording

Adjusted EBITDA was $50.3 million and $25.9 million for the six months ended June 30, 2026 and 2025, respectively. The $24.4 million increase in Adjusted EBITDA was due to higher net income, higher stock-based compensation and depreciation and amortization, offset in part by higher interest income in the current period.

Current wording

Adjusted EBITDA was $68.1 million and $42.2 million for the nine months ended September 30, 2026 and 2025, respectively. The $25.9 million increase in Adjusted EBITDA was due to higher net income, higher stock-based compensation and depreciation and amortization, offset in part by higher interest income in the current period.

Previous wording

As of June 30, 2026, $31.3 million of our cash and cash equivalent balance was held by our foreign subsidiaries, and $209.0 million was held in the United States.

Current wording

As of September 30, 2026, $36.3 million of our cash and cash equivalents balance was held by our foreign subsidiaries, and $127.7 million was held in the United States.

Previous wording

As of June 30, 2026, cash and cash equivalents were $240.3 million, including amounts received in advance in connection with ongoing customer programs. At June 30, 2026, $67.0 million remained recorded within advances from customers, while $61.8 million of related project costs that had been incurred but remained unpaid was included in accounts payable and accrued expenses.

Current wording

As of September 30, 2026, cash and cash equivalents were $164.0 million, which includes $8.6 million received in connection with ongoing customer programs remained recorded within advances from customers. In addition, as of September 30, 2026, $3.8 million of advance from customers remained unpaid and is included in accrued expenses.

Previous wording

The cash is not required to be segregated. Management considers both advances from customers and the related unpaid project obligations when assessing the Company’s liquidity requirements.

Current wording

The cash is not required to be segregated. Management considers both advances from customers and the related unpaid project obligations when assessing our liquidity requirements.

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, 2026, we had working capital of approximately $135.2 million, as compared to working capital of approximately $84.9 million as of December 31, 2025. Working capital grew primarily due to strong revenue-driven cash inflows, which were partially offset by increased payroll and other operating expenses to support expanding AI and AI-related services and customer engagements.

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, 2026, we had working capital of approximately $151.1 million, as compared to working capital of approximately $84.9 million as of December 31, 2025. Working capital grew primarily due to strong revenue-driven cash inflows, which were partially offset by increased payroll and other operating expenses to support expanding AI and AI-related services and customer engagements.

Previous wording

Cash provided by our operating activities for the six months ended June 30, 2026 was $164.4 million resulting from net income of $29.3 million, adjusted for non-cash expenses of $17.2 million and an increase in working capital of $117.9 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, 2026 was $80.5 million resulting from net income of $39.6 million, adjusted for non-cash expenses of $25.8 million and an increase in working capital of $15.1 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, 2025 was $15.0 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 $10.8 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 $33.7 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 $7.0 million. Refer to the Condensed Consolidated Statements of Cash Flows for further details.

Previous wording

Cash used in our investing activities was $15.4 million and $4.1 million for the six-month periods ended June 30, 2026 and 2025, respectively. This increase in cash usage was primarily driven by purchases of short-term investments of $10.1 million, reflecting our strategy to optimize yields on surplus cash generated from operations and capital expenditures of $5.3 million principally for the purchase of technology equipment including servers, network infrastructure and workstations, and expenditures for capitalized developed software.

Current wording

Cash used in our investing activities was $7.7 million and $8.3 million for the nine-month periods ended September 30, 2026 and 2025, respectively, principally for the purchase of technology equipment including servers, network infrastructure and workstations, and expenditures for capitalized developed software.

Previous wording

During the next 12 months, it is anticipated that capital expenditures for capitalized developed software and ongoing technology, equipment and infrastructure upgrades will approximate to $13.1 million, a portion of which we may finance.

Current wording

During the next 12 months, it is anticipated that capital expenditures for capitalized developed software and ongoing technology, equipment and infrastructure upgrades will approximate to $10.0 million, a portion of which we may finance.