Innodata Reports Record Quarterly and Nine Months Revenue 40% Revenue Increase From Comparable Nine Month Period

NEW YORK--(BUSINESS WIRE)--Nov. 11, 1999-- Innodata Corporation (Nasdaq: INOD) today announced record revenues of $7,073,000 for the third quarter ended September 30, 1999, an increase of $1,763,000, or 33%, compared to revenues for the third quarter of 1998, and record revenues of $19,710,000 for the nine months ended September 30, 1999, an increase of $5,601,000, or 40%, from the comparable period in 1998.

Income before taxes for the quarter was $780,000 in 1999 compared to $469,000 in 1998. Net income for the 1999 quarter was $585,000, or $.11 per diluted share, based on 5,563,000 shares, compared to net income of $469,000 in the 1998 period, or $.10 per diluted share, based on 4,576,000 shares. The 1998 period has no provision for income taxes.

Income before taxes for the nine months ended September 30, 1999 was $2,553,000 compared to $1,032,000, before a gain on foreign currency contracts of $487,000, in 1998. Net income for the 1999 nine months was $1,844,000, or $.35 per diluted share, based on 5,203,000 shares, compared to net income of $1,519,000 in the 1998 period, or $.34 per diluted share, based on 4,505,000 shares. The 1998 period includes a gain on foreign currency contracts of $487,000 and has no provision for income taxes.

Commenting on the results, Jack Abuhoff, President and CEO, said, ``We are pleased to report record revenues, the highest in our company history, in each of the first three quarters of 1999. We now have delivered five sequential quarters of revenue growth. Additionally, we achieved the highest nine month earnings in our history.''

``In the third quarter, Innodata began to aggressively execute actions in preparation for the contract we announced yesterday, which has the potential during its first phase of $50 million in revenues to the Company in 2000, and other project starts that we are anticipating near term. These actions resulted in increased direct operating expenses which lowered earnings per share. Based on this preparation, however, we are confident that we have paved the way for accomplishing the challenges that lie ahead.''

Yesterday Innodata announced that it signed an agreement with an unaffiliated newly-formed client company to provide all of this client's data conversion services. Depending on the client's requirements and financing, Innodata reported that the first phase of the agreement could potentially result in $50 million in revenues to the Company during 2000, and that two additional phases may result in additional revenue to the Company in subsequent years of the agreement. The client is an early-stage company that has been established and staffed by a senior management team, most of whom were previously employed in key positions by a Fortune 100 technology company. Pursuant to the terms of a non-disclosure agreement, the name of the client and its business strategy was not disclosed.

Abuhoff further stated, ``It is our vision that over the next few years the Innodata name becomes synonymous with having engineered content for some of the world's largest web-hosted information repositories. We have the strongest backlog of business in our history with both existing and new customers, and we look forward to future growth and delivering increased value for our shareholders.''

Innodata is a leading provider of Internet and on-line data conversion and content creation and management services, providing all the necessary steps to enable its clients to create and disseminate vast amounts of information via the Internet and on-line. Innodata's customers represent an array of major electronic publishers and Internet content providers, as well as document-intensive companies repurposing proprietary information into electronic resources that can be referenced via web-centric applications. For more information, visit the Company's web site at http://www.inod.com or contact Ms. Casey Linnemeyer, Investor Relations, at (201) 488-1200 or via e-mail at investor_relations@inod.com.

This release contains certain forward-looking statements, including without limitation, statements concerning the Company's operations and the agreement with a newly-formed client company referred to herein. These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The words ``believe,'' ``expect,'' and ``anticipate'', as well as the words ``may,'' ``could,'' and ``will likely,'' and other words of similar purport and other similar expressions generally, identify forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates. These forward-looking statements are based largely on the Company's current expectations and are subject to a number of risks and uncertainties, including without limitation, changes in external market factors, changes in the Company's business or growth strategy or an inability to execute its strategy due to changes in its industry or the economy generally, the emergence of new or growing competitors, the ability of the Company and the client company to perform their respective obligations under the agreement referred to herein, the ability of the Company and the client company to obtain requisite financing, the ability of the client company to execute its strategy which would give rise to requirements for data conversion services, and various other competitive factors and risks and uncertainties indicated from time to time in the Company's filings with the Securities and Exchange Commission, including the Company's Forms 10-KSB, S-3 and S-8. Actual results could differ materially from the results referred to in the forward-looking statements. In light of these risks and uncertainties, there can be no assurance that the results referred to in the forward-looking statements contained in this release will in fact occur.

                         FINANCIAL HIGHLIGHTS


                    Three Months Ended        Nine Months Ended
                       September 30              September 30
                     1999         1998         1999        1998

Revenues        $ 7,073,000  $ 5,310,000  $19,710,000  $14,109,000

Income before
 taxes              780,000      469,000    2,553,000    1,519,000(a)

Net income          585,000      469,000(b) 1,844,000    1,519,000(a)

Basic income
 per share (c)         $.12         $.11         $.40         $.34

Weighted
 average
 shares (c)       4,761,000    4,421,000    4,577,000    4,438,000

Diluted
 income per
 share (c)      $       .11  $       .10  $       .35  $       .34

Diluted
 shares (c)       5,563,000    4,576,000    5,203,000    4,505,000

(a)  Includes a gain on foreign currency contracts of $487,000 and
     there is no provision for income taxes in 1998.

(b)  There is no provision for income taxes.

(c)  All share and per share amounts give retroactive effect to the
     three-for-one stock split paid on September 9, 1999.