Innodata’s Growth Still Rests on Two Unnamed Buyers

Innodata’s second-quarter sales hit $92.1 million, and 71% of that came from two unnamed technology customers. The print, released August 6, 2026, was the firm’s 12th straight quarter of year-over-year growth, and it beat the roughly $86 million figure that sat on the Street that afternoon.

The usual bake-off still treats Innodata (Nasdaq: INOD) as the clean AI pick and BigBear.ai (NYSE: BBAI) as the broken defense name. The 2026 ledgers no longer support that split. Innodata’s “diversification” is two whales. BigBear.ai is growing again, and it is sitting on more cash than Innodata reports even before you strip customer prepayments out of the New Jersey firm’s account.

Two Buyers Now Make Up 71% of Innodata’s Quarter

Jack S. Abuhoff, Innodata’s founder and chief executive, used the August 6 call to walk through record second quarter 2026 results that look, on a slide, like a software compounder. Revenue rose 58% from $58.4 million a year earlier. Net income was $14.4 million, or $0.41 a diluted share, up from $7.2 million and $0.20. Adjusted gross margin reached 49%, nine points above the company’s 40% target. Adjusted EBITDA was $25.4 million, up 92%.

The customer mix is the line the slide deck wants you to cheer. The largest client fell to 37% of sales from 56% in the first quarter. A Big Tech account that was 17% of first-quarter revenue scaled to 34% and became the number-two customer. Add those two shares and you get 71%. In the first quarter the same pair was 73%. The largest name got smaller. The top of the book did not.

WHERE THE REVENUE ACTUALLY SAT

Two customers also held 66% of Innodata’s accounts receivable at June 30, 2026. First-half revenue was $182.2 million. Sequential growth in the second quarter was 2% from a $90.1 million first quarter. The 10-K for 2025 already warned that Digital Data Solutions work runs on master agreements plus project orders, and that those orders do not lock in future volume.

The annual report is blunt about who writes the checks. Innodata’s customer list includes five of the firms commonly called the Magnificent Seven, plus frontier labs in the United States and abroad. For the year ended December 31, 2025, one Digital Data Solutions client was 58% of company revenue, up from 48% in 2024, and no other client cleared 10%. Net income for that year was $32.2 million on $251.7 million of sales, up 48% from $170.5 million.

BigBear Is Growing Again, With $410 Million in Cash

BigBear.ai’s 2025 numbers are why the comparison hardened. Revenue fell about 19% to $127.7 million. The net loss was $293.9 million. Free cash flow was negative $46.3 million. Four customers each above 10% of sales produced 51% of the year, with the largest at 16%. That is concentration. It is not one buyer at 51%.

The second quarter of 2026, reported July 30, is a different tape. Revenue was $36.7 million, up 13% from $32.5 million. Gross margin widened 781 basis points, from 25.0% to 32.8%. The net loss shrank to $25.7 million from $228.6 million, a swing that includes fewer non-cash charges than the year-ago quarter. Adjusted EBITDA was still negative $11.6 million, worse than negative $8.5 million, because the firm spent more on sales, research, and the Ask Sage integration.

BIGBEAR’S Q2 CASH AND BACKLOG

• Cash and investments: $409.8 million at June 30, 2026, after paying for Ask Sage in cash at year-end 2025.
• Backlog: $269.6 million, up 9% from December 31, 2025.
• Full-year guide: $135 million to $165 million of revenue, which the company still describes as about 17% growth.
• New awards: more than 20 contracts in the quarter, each valued up to $5 million, on top of a $53 million intelligence-community award in the first quarter.

Kevin McAleenan, BigBear.ai’s chief executive, tied the quarter to 13% growth and 20-plus new contracts and to a cash pile large enough to keep hunting deals. Innodata’s cash and cash equivalents were $240.3 million on the same date. On the earnings call, finance staff put cash and short-term investments excluding customer prepayments at about $134 million. Those are different piles. The smaller one is the one that is actually free.

The Contracts Tell You Who Can Walk Away

The 2025 Form 10-K is the document that should sit next to every Innodata multiple. Customer agreements are generally terminable on 30 to 90 days notice. A large share of the work is project-based. Customers can cut, delay, or cancel without a multi-year lock. That is how a 58% client, and then a 37% client plus a 34% client, can move a year.

BigBear.ai’s book is also lumpy, and many awards stay unnamed for classification reasons. The difference is the buyer and the switching cost. The McLean, Virginia, firm sells into defense, intelligence, border, and logistics missions that have to run on accredited networks. Ask Sage, closed December 31, 2025, is a FedRAMP-authorized generative AI workspace cleared for DoD IL5, IL6, and Top Secret use. As of January 2026 the 10-K put it with more than 16,000 government teams, 100,000 Department of War users, and 2,500 companies.

WHAT EACH BOOK IS MADE OF

• Innodata terms: Master service agreements plus statements of work that do not obligate future purchases, with 30 to 90 days to cancel.
• Innodata labor: A global data-engineering workforce that still does training, post-training, evaluation, and safety work for frontier labs, with Asian subsidiaries carrying a large share of delivery.
• BigBear.ai terms: Government contracts that can be partly funded, delayed, or terminated, but that sit inside accreditation regimes most commercial AI vendors cannot enter.
• BigBear.ai mix: Mission software plus services, with Ask Sage contributing $6.1 million of the $36.7 million second-quarter total.

Prosper Stars & Stripes, a long-short fund that covered an Innodata short after the first-quarter print, put the margin test in one sentence in its second-quarter letter. “Innodata presents itself as a software company, but the work is delivered primarily by a large offshore workforce,” the letter said, pointing to first-quarter gross margin near 44% against the 70% and up that software names print. Second-quarter adjusted gross margin of 49% is better. It is still a services print.

A $300 Million ATM Landed With the Earnings Beat

The same afternoon as the second-quarter release, Innodata filed a prospectus supplement for an at-the-market program covering up to $300 million of common stock. Goldman Sachs is lead agent, with Craig-Hallum, Wells Fargo Securities, Maxim Group, and Wedbush on the syndicate, at commissions of up to 2% of gross proceeds. The company does not have to sell a share. The shelf means it can.

That filing, not the income statement, is the cleanest explanation for why a 58% growth quarter did not hold the stock. Shares closed at $54.64 on September 9, 2026, down 12.06% over the prior month and 10.38% over 52 weeks. First-half operating cash flow of $164.4 million was swollen by customer advances. The ATM tells the market the board wants a tap anyway, for working capital, capital spending, and “general corporate purposes.”

BigBear.ai already ran that play in 2025, which is how a firm that lost $293.9 million last year can hold $409.8 million of cash and Treasuries after writing a $272.1 million check for Ask Sage, $267.6 million of it in cash at close and $4.5 million in holdback later settled. Dilution at BigBear.ai is a 2025 story sitting on the balance sheet. Dilution at Innodata is a 2026 option hanging over the tape.

What the 2025 Scorecard Still Gets Wrong

A full-year 2025 bake-off is how Innodata keeps winning the comparison. It was profitable. BigBear.ai was not. It grew. BigBear.ai shrank. On trailing sales, Innodata also looked cheaper. Those facts were true for the year ended December 31, 2025. They are a lagging snapshot of two businesses that have since moved in opposite directions on growth, and in the same direction on customer risk.

FY 2025 VERSUS THE 2026 RUN RATE

Stock-based compensation at Innodata was $11.1 million in 2025, added back into the $57.9 million adjusted EBITDA figure. That is not a crime. It is a reminder that the cash story and the adjusted story are not the same thing. BigBear.ai’s adjusted EBITDA is still negative, and the second half of its guide requires a lift from the $36.7 million quarterly run rate if the company is going to land in the middle of $135 million to $165 million.

A U.S. District Court in New Jersey dismissed the D’Agostino securities class action against Innodata, Abuhoff, and finance executives on April 27, 2026, without prejudice, after a short-seller report in February 2024 had knocked the shares. BigBear.ai spent 2025 restating results and disclosing a material weakness; the company said that weakness was remediated as of December 31, 2025, and that the 2025 audit opinion was unqualified. Neither docket is the operating story. Both are why trust in the numbers still carries a surcharge.

Ask Sage Puts BigBear Inside the Secure AI Stack

The acquisition that closed on the last day of 2025 is the reason BigBear.ai’s gross margin moved. Ask Sage is model-agnostic on purpose. Agencies can keep their data in one place and swap frontier models underneath, including on air-gapped hardware the company added in 2026. NASA, Naval Air Systems Command, and other federal shops have been named as users. CMMC Level 2 certification, completed ahead of the firm’s own schedule, is the badge that lets those conversations continue.

It has been another strong quarter. Double-digit growth, significant margin expansion and more than 20 new contracts show that the BigBear.ai leadership team is following through on our commitments. We are in a strong financial position with $410 million of cash and investments, we’re on track for our target of 17% revenue growth, and we intend to accelerate.

Kevin McAleenan, CEO, BigBear.ai Q2 2026 earnings release

McAleenan’s $410 million is the rounded version of the $409.8 million cash-and-investments line. The second half, he said, is about execution and more deals. CargoSeer, a cargo-inspection product, signed a five-year commercial deployment in El Salvador after a year-long pilot. ConductorOS has been run in U.S. Army exercises for drone and sensor fusion. Those are small dollars next to Innodata’s $92.1 million quarter. They are also work that does not get re-bid every 30 to 90 days by a lab that can take labeling in-house.

The open risk on this side of the comparison is the one the 10-K lists first: public-sector funding. Awards slip. Shutdowns freeze invoices. Large primes still crowd the same corridors. Adjusted EBITDA going the wrong way while revenue turns up is the bill for the salesforce McAleenan is hiring to chase that book.

September 30 Is Also Innodata’s CEO Handoff

On August 3, 2026, Innodata’s board approved a planned transition. Effective September 30, 2026, Rahul Singhal, 52, the president and chief revenue officer, becomes chief executive and joins the board. Abuhoff, the founder, becomes executive chairman and stays board chair. Singhal told the August 6 call he was honored by the confidence and that he intends to repay it with results.

THE 2026 CLOCK

1. December 31, 2025: BigBear.ai closes Ask Sage for $272.1 million in cash and holdback.
2. February 26, 2026: Innodata files the 2025 10-K showing one client at 58% of sales and $32.2 million of profit.
3. April 27, 2026: The New Jersey court dismisses the Innodata securities class action without prejudice.
4. July 30, 2026: BigBear.ai reports 13% growth, a $269.6 million backlog, and $409.8 million of cash and investments.
5. August 6, 2026: Innodata reports the $92.1 million quarter, names the 37% and 34% clients, and files the $300 million ATM.
6. September 30, 2026: Singhal becomes Innodata CEO.

Abuhoff’s own summary of the quarter was that it was another record, with revenue, adjusted gross profit, adjusted EBITDA, and cash at new highs, and that Innodata beat consensus on every key metric. That sentence can be true in the same week the top two customers still book 71% of sales, the ATM hangs over the float, and the founder hands the operating job to the revenue chief. Guidance remains 40% or more revenue growth for 2026, with management saying some large programs sit outside that figure until they are scoped.

Singhal takes the job on September 30. The two customers that delivered 71% of second-quarter sales will still be on the books when he does.

Disclaimer: This article is news reporting and analysis of publicly filed financial results, and it is for information only. It is not investment advice, a recommendation to buy or sell Innodata or BigBear.ai shares, or a forecast of future returns. Readers should consult a licensed financial advisor or registered investment professional who can weigh concentration risk, dilution, and government-contract exposure against their own circumstances. Revenue figures, customer percentages, cash balances, guidance, and legal statuses are taken from the company filings and releases cited above and can change with later quarters, new contracts, or further court action.