Good morning and welcome to the Innodata Isogen Third Quarter 2007 Earnings Release Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Vice President of Marketing and Communication, Al Girardi. Please, go ahead, sir. TRANSCRIPT SPONSOR Outsourcing The Way It Was Meant To Be ™ : Tired of outsourced projects that come in over-budget and behind schedule? Concerned about the heavy time burden they impose on your staff? Frustrated that anything out of the ordinary brings your vendor to a dead stop? Angry that nothing gets done right the first time, and that no one is home when you call?: Experience the Green Point difference! At Green Point, all projects are engineered and managed by a dedicated, knowledgeable US-based project manager - your sole point of contact. He or she reviews your deliverables to minimize unpleasant surprises and unnecessary demands on your time. Native English speakers are used for all production tasks that benefit from a mother-tongue knowledge of English. US-educated and certified domain experts, such as legal, business, medical and scientific specialists, are utilized for content development and enhancement.: Join the growing list of satisfied Green Point customers in publishing, legal, financial, transcription and engineering services who have experienced Outsourcing The Way It Was Meant To Be ™ and won't have it any other way! Visit our website, or email, for an instant response by a member of our team!: To sponsor a Seeking Alpha transcript click here.

Thanks Greg. Good morning and thank you for joining us on our third quarter 2007 Earnings Call. Our speakers today are Jack Abuhoff, Chairman and CEO of Innodata Isogen and Steve Ford, our company's Chief Financial Officer. Statements made during this call and answers to your questions are intended to provide abbreviated, unofficial background to assist you in your review of the company's press release and SEC filings. In addition, there may be some forward-looking comments regarding the company's operations, economic performance, and conditions. These forward-looking statements are made pursuant to the Safe Harbor provisions of the Private Securities and Litigation Reform Act. The words "believe," "expect," "anticipate," "indicate," "point to," and other similar expressions generally, identify forward-looking statements, which speak only as of their dates. These forward-looking statements are based on the company's current expectations, and are subject to a number of risks and uncertainties, including without limitation, continuing revenue concentration in a limited number of clients, continuing reliance on project-based work, worsening of market conditions, changes in external market factors, the ability and willingness of the company's current clients and prospective clients to execute their business plans which give rise to requirements for our services, difficulty in integrating and deriving synergies from acquisitions, potential undiscovered liabilities of companies that Innodata Isogen acquires, changes in the company's business or growth strategy, the emergence of new or growing competitors, and various other competitive and technological factors, and other risks and uncertainties indicated from time-to-time in the company's filings with the Securities and Exchange Commission. Actual results could differ materially from the results referred to in these forward-looking statements. Along with these risks and uncertainties, there can be no assurance that the results referred to in these forward-looking statements will occur. We encourage you to read the risk factors described in Innodata Isogen's various SEC filings for an understanding of the factors that may affect the company's businesses and results. And now, I will turn the call over Jack Abuhoff. Jack?

Thank you, Al. Good morning everyone. Thank you for joining us today. We are three quarters into this year and on plan to deliver record revenue growth in 2007. Today, Steve and Al are in New Jersey and I'm in Manila, the Philippines. In our call today, I will review with you the highlights of our third quarter performance. Then we'll discuss the business, its direction, its improving dynamics and areas of expanding opportunity. I'll also discuss certain challenges we face and what we're doing about them. Then Steve Ford, will breakout the numbers in more detail. And, when Steve concludes, we'll take your questions and comments in our Q&A period. Third quarter 2007 revenues were approximately $18.1 million, up nearly 75% from third quarter 2006 revenues of approximately $10.4 million, and up 11% from second quarter revenues of $16.3 million. The third quarter was our fifth straight quarter of sequential quarterly revenue growth. With only three quarters of the year in, we've already exceeded our 2006 revenues by $6.3 million. On our last earnings call, we said we expected 65% year-over-year increase in revenues in the second half of 2007. We're now revising that guidance upward as a result of strong client demand and strong execution. We now anticipate in excess of 75% year-over-year revenue growth in the second half of 2007, with Q4 revenues exceeding Q3. Moreover, we have some important new deals in late stages. If we are able to make good progress on these deals, as I think we can, we will be further sowing the seeds for a strong 2008, and depending upon timing, we may even see some additional Q4 contribution from these deals. Looking after 2008, we anticipate continued strong performance. One of the most attractive elements of our business model is the…

Thank you very much, Jack. Good morning and thank you all for joining us. Now let's take a closer look at the numbers. I will take you through the changes in revenue, provide insight on the cost structure including discussing the impact on our operations of the fall in U.S. dollar, explain our cash generated from operations and then conclude with some general comments. Revenues in the third quarter were up 11% from $16.3 million in Q2 to $18.1 million this quarter. On a year-over-year basis, revenues improved 74% from $10.4 million in Q3 2006. We customarily separate our revenue into recurring and non-recurring categories. Recurring revenue, which represents 62% of total revenues, consist of services that we anticipate a client will require for an indefinite period. Non-recurring revenue, which is the remaining 38%, refers to projects that have a more specific timeframe for completion. Another important measure of revenue is the growth in knowledge process outsourcing or KPO. KPO activities drove approximately 76% of the growth in the third quarter of 2007, as compared to Q2 of this year and 60% of the 2007 third quarter, year-over-year growth of $7.7 million. Looking at revenue from a segment standpoint, our content services business generated $17.4 million in Q3 2007, up $2 million from $15.4 million in Q2 2007. This increase principally reflects revenue from winnings announced earlier this year. The Professional Services segment revenue declined 19% from $967,000 in Q2 2007 to $784,000 in Q3 2007. This decrease is the result of projects completed in the third quarter. As the professional services group completed projects, we refocused the teams on supporting new KPO and content services revenue initiatives. We are continuing to examine ways to use our professional services group in growing new business offerings and in further penetrating our…

Thank you. (Operator Instructions) We will take our first question from Bill Sutherland with Boenning & Scattergood. Bill Sutherland - Boenning & Scattergood: Thanks, good morning. Jack you mentioned in the KPO space, I think you talked about a potential run rate worth over $100 million and first of all, did I hear you correctly? And then, perhaps you can just address a little bit more specifically the timeframe you are thinking of?

Hi, Bill. Thanks for the question. I did mention that we are targeting to get to $100 million. We think, since the opportunity and the potential is there and we think that we are making some good headway towards that direction what we have said is, in the next few years, we haven't put a timeframe on that at this point, but we are going to run as hard and as fast as we can to get to that goal. Bill Sutherland - Boenning & Scattergood: But does that - I am sorry, I just want to make sure I am clear. Does that essentially refer to all content management in other words the $17 million in Q3? Is that what you mean by KPO or…?

In terms of the $100 million, I am talking about the overall business. Bill Sutherland - Boenning & Scattergood: Okay. Can you all talk about offshore utilization and also turnover?

We do internally. We have not been sharing metrics regarding utilization or turnover. Metrics in our business are a little bit more complicated than they are in some others because we have the mix of different types of facilities and facilities that use seats in different numbers of shift. And what we find is that depending on the mix of revenue that we are bringing in, we're incrementally adding to our workstation base as we move forward.

We'll go next to [Tim Clarkson with Van Clemente].

Yes, great quarter guys, in particular [osculates] to hedging as quite skillful. What I wanted to ask about was could you just discuss this KPO in the context of the historical strengths of the company that you experienced with XML and also your offshore labor facilities that can do things more cheaply.

Sure, we've got a long history providing high-end domain specific services and what we're finding now is the opportunity has emerged to provide that at a much greater scale. Critically, what we're able to do is leverage on the things that we've put in place. So, as a company we're very strong in terms of process management. We know how to construct processes that are very efficient. We're very strong in terms of project management. We have got great capabilities in terms of global resourcing of people and then, of course, we've got a highly differentiated capability in terms of engineering. I think we are the only company that I am aware of in our competitor set that is selling engineering services directly to customers to help them reengineer their own processes. So when we turn those capabilities inwardly, as we increasingly have, we've got a very compelling offering. It goes beyond labor arbitrage and it goes to the heart of what we are looking to accomplish for customers, which is making them more efficient and more productive and helping them save money.

Okay. Let me just see if I got this right. So, to put it more simply, I mean, I assume that there is a lot of companies that try to do BPO and they screwed up for various reasons. They underestimate the difficulty of going offshore. So in other words, what you do as you are kind of an experienced guy, you allow them to go offshore and experience the cost savings without screwing up?

That's right. In other words, the critical threshold requirement is you've got to be able to execute well and executing well requires great processes and matured methodologies. We've got those in place and that's what makes us very good of what we do. What we are able to do is go beyond that and deploy technology and engineering skills to get savings beyond just the savings that labor arbitrage brings.

Alright.

And I think I mentioned at the beginning of the call, in Manila, this evening, I am here with some customers who came to understand how we do certain work and they were very impressed by the way we've taken labor out of the work flows by virtue of the technologies we've created.

Great, thank you

(Operator Instructions) We will go next to [Tim Reynolds] with Goldman Sachs.

How are you doing, Jack?

Hi, thank you for joining us.

Congratulations on your quarter.

Thank you very much.

A couple of things, I'm looking at basically where you guys are at. I know, I think looking at the company itself, you guys are pretty much undervalued here and the number $100 million looking at the way you guys are growing is it possible that you can give a little bit more of a number of next year's bottom line?

Yeah, I think at this point we are going to. We are comfortable talking about obviously, the rest of this year and we are comfortable saying that performance is going to be very solid next year in terms of revenue growth and in terms of earnings. I think we are getting a little bit more time to be able to quantify that further, because, as I said, we've got a number of very significant deals in somewhat late stages and some more behind that. So, as we see how those shape up, I think we will be in a better position to provide a little bit more color to what the range of possibilities is for 2008.

Okay. I guess, I just want to congratulate you on a good quarter and I do think you guys are pretty much undervalued. I think a lot of more companies will start looking at you guys now, congratulations.

Well, that's great to hear. Thank you. And I think one of the things that Steve and Al and I have in our calendar working with Stan Berger is to increase the IR efforts fairly substantially starting in the next several weeks. Actually, we started already.

Great.

(Operator Instructions) And we will go to [Sudhir Kona with Kona Finance].

Hi, yes, great quarter. I have a question on the percentage of revenues coming from KPO, I mean, is it the $17 million, what percentage growth is that just if you take the KPO part?

If you look at our revenue and you look at the revenue base, we grew year-over-year $7.7 million, about 60% of that represents KPO.

Okay. And most of KPO is recurring revenue?

KPO by its nature tends to be more towards recurring. That is correct.

Okay, great. Thank you very much.

You're welcome.

And we will go next to [Perry Highland with Van Clemens].

Hi, Jack and Steve, great quarter, no question about it. Can you just give us any idea if you are making any enrolls with the government contracts or projects or bidding or whatever?

Sure. There is a lot of good work there for us to do. We mentioned the important hire that we brought on to the team this quarter. He has integrated well into the work that we are doing and sees lots more possibility where that came from. We've expanded the work that we are doing there. I believe there is more late stage pipeline that we are looking at in terms of further expansion. And as you know, what we are doing there is essentially building information management systems that help intelligence analysts relate and find information quickly. It's an important requirement that we have got right now as a country, providing that type of knowledge based decision support. So lots of opportunity there, lots of opportunity in terms of the publishing sector. Also, taking some of those semantic technologies that we were applying and bringing those two information media companies that are our bread and butter business. They are helping customers relate and find information just like the analysts have to relate and find information. So it's kind of a double-play. We have got lot of opportunities to drive that growth into the sector and then we have got additional opportunity to take the things we are doing there and bring them to the core customer base in information media.

And one last question. Are you still - so you're still biding on like projects then, rather -- I mean, the ongoing the KPO and [stuff]. Is there still project based business you bid on or?

Yeah, absolutely, I think there is going to always be a project a portion of the business that's project based and in terms of how that effects the revenue base, we are not going to manage, we are not going to overly manage that when we can take large scale projects that are lucrative and enable us to make money we are going to do it. And we will hope to even out the project flow in terms of having a larger number of projects going on and of course, by focusing primarily on the KPOs business.

Now we will take a follow up from Bill Sutherland with Boenning & Scattergood. Bill Sutherland - Boenning & Scattergood: Thanks very much. Jack actually, where I was headed with my question on utilization was just, you have been able since you've kept the capacity in place, to manage this really nice uptick in demand and I am just curious if it were to continue at a very rapid pace, to what degree there might be a limitation as far as professional, the availability of the talent offshore? Thanks.

Bill, thank you for coming back with that because I realize you had a two part question and I didn't get the second part. What we're finding is that there is not a lack of talent that we can tap into. The biggest problems relative to attrition frankly, are among two labor pools IT labor, particularly certain types of IT skills and then separately, the types of people with skill sets that would have them working in call centers. For the most part, we're not actively competing at a large scale for that type of labor. Bill Sutherland - Boenning & Scattergood: Okay. So, and even though they are higher level degree candidates, they are readily available in Philippines as well as India?

That's correct. Bill Sutherland - Boenning & Scattergood: Okay, that's great. And then Jack, I am sorry, Steve. On the hedge, how far out did you go with that and kind of what portion of your cost did you cover with it?

The way that works is that, we generally try to evaluate this at least initially on a quarter-by-quarter basis with a look out over the six to nine months horizon. So, we're still refining our approach to this area and certainly the whole idea here is to try to lock in a more favorable cost when we feel that it's appropriate to do that type of hedge. So, that's really what we're looking at here and we're going to continue to look into 2008. So, we started at the middle of this year looking through the end of this year. We're now looking at 2008 right now, but we are covered through the end of this year at this point.

And we'll go next to [James McGuire] with Global Capital.

Hi Jack, great numbers. I know you commented that you couldn't possibly comment on the earnings estimate, but is it possible you can just give us some kind of a guideline from the business that you have now and a possible acquisition going forward to next year?

Could you just repeat the last part of that sentence, outlook in terms of…

Could you give some kind of a guideline with the current business going forward through first quarter, second quarter, of 2008, well, about any possible acquisition going forward into 2008?

Some additional color in terms of what we would look for in an acquisition or timing of acquisition?

Right, what you will look for in the acquisition and what kind of numbers on the bottom line would that bring into the bottom line?

I see, okay. I guess in terms of timing, as Steve mentioned we have increased our focus on acquisitions. We've actively got a list of companies that we're interested in and we're progressively making contact with those companies. We've got our targets set on companies that have certain differentiating KPO capabilities, which we believe could fit well in terms of a portfolio with the KPO capabilities we've got now. I think in terms of timing I wouldn't expect anything in the first quarter certainly. I think it would be later in the year.

Now we'll take our final question from Jane Levy with Seal Capital

Hi there, just a couple of questions. First a housekeeping question, you said content services were $17.5 million in Q3 up from what year-over-year to September '06? Did you say it was up $2 million or up --

It was up $2 million Jane, from the prior quarter. So the prior quarter, the $2 million number, it was $17.4 million compared to $15.4 million Q3 of this year compared to Q2 of this year, that's the $2 million you are referring to.

Yeah, got it. And then just wanted to check, 31% gross margin is really excellent seeing that you have this pressure from currency. Just wanted to get a sense, I am trying to define in my own mind how much of that improvement came from the increasing proportion of KPO revenue? Is there any frame that you can give us perhaps for the margin profile of KPO relative to the rest of business?

The KPO business, Jane, carries a very high margin with it and it's a very lucrative business for us to be in. And so, we haven't really come out and differentiated the margin. The best way for you to try to get a better sense of that is to take a look at the growth and the percentage that we've indicated represents KPO. The reason I say that is because we have a variety of KPO services. We have KPO services that involved various professions, both in the medical field, in the legal field and in others. They carry a variety of margins, but the blended margin, the overall margin is significantly more favorable. So as we have indicated, our growth is primarily KPO and obviously, the move up in margins as you can see is primarily associated with that.

Okay, great. And are we still in line for $2 million to $3 million in CapEx in the second half, I guess, you did about $1.7 million in Q3?

Yeah, I think the $2 million to $3 million for the second half is not a bad number to use as an estimate. Our number in Q3 was $1.7 million and I would expect we would do a number, maybe in the $1 million to $2 million range in Q4.

Okay.

And we're generally looking at over a 12 months horizon of a $3 million to $4 million range in total. It varies, some quarters it will be higher or lower than others. It's tied into our need to provide more technology for our production. And our productions and technology needs to be put in place obviously immediately in advance of us generating revenue. So there is a sort of a natural ebb and flow to that investment in CapEx. But, generally speaking, over 12 months horizon, right now we're looking at $3 million to $4 million as a reasonable range.

Okay. And then, my final question. Last quarter, you did talk about revenue concentration from your biggest clients. Is there a number that you care to share with us this quarter?

Our revenue concentration has increased. I don't have the percentages here right now, but it has increased slightly since the last quarter numbers that we put out. And we'll actually be putting that information in our 10-Q, which we will be filing shortly.

Okay. And it's the same clients as last quarter?

Yes.

Okay, great. Thanks.

You're welcome.

That concludes the question-and-answer session today. At this time, I would like to turn the conference back over to Mr. Abuhoff for any additional or closing remarks.

Well, thank you, everybody. Thanks for your questions and thanks for joining us today. I guess I will just summarize our discussion today. We are growing our business. We are delivering strong financial performance. In Q3, we increased revenue year-over-year by nearly 75%, boosted recurring revenue by more than 60% and more than doubled profitability from Q2 to Q3. We anticipate that we will see strong revenue performance and sustained profitability in the fourth quarter. Further, we are anticipating that revenues in Q4 will rise more than 75% from Q4 2006 and will be up strongly from Q3 2007, so that is up strongly from the quarter that we are reporting on now, as well. And again, we are confident that we will sustain strong financial performance and profitability in 2008. Our balance sheet shows cash increased by about a $1 million in Q3 to more than $12.1 million, at the same time receivables rose from $10.5 million to $11.3 million. We are engaged in an acquisition strategy. We are looking for select deals, good deals that are accretive to earnings. I am working with Steve and Al and Stan Berger to intensify our investor relations efforts and get out and tell our increasingly compelling story to a broader pool of interested investors. We are also working on several significant opportunities, which we believe could help fuel further our rapid growth. So, I guess today, as always, I want to thank you for your confidence and for your continued support. I very much appreciate it and very much appreciate the large number of new callers on with us today. And perhaps, if anybody is interested in getting together after the call for a more in-depth meeting, we would love to do that. So thank you, and look forward to being with you next time.

Once again, that does conclude today's conference call. We thank you for your participation. You may now disconnect. TRANSCRIPT SPONSOR Outsourcing The Way It Was Meant To Be ™Tired of outsourced projects that come in over-budget and behind schedule? Concerned about the heavy time burden they impose on your staff? Frustrated that anything out of the ordinary brings your vendor to a dead stop? Angry that nothing gets done right the first time, and that no one is home when you call?: Experience the Green Point difference! At Green Point, all projects are engineered and managed by a dedicated, knowledgeable US-based project manager - your sole point of contact. He or she reviews your deliverables to minimize unpleasant surprises and unnecessary demands on your time. Native English speakers are used for all production tasks that benefit from a mother-tongue knowledge of English. US-educated and certified domain experts, such as legal, business, medical and scientific specialists, are utilized for content development and enhancement.: Join the growing list of satisfied Green Point customers in publishing, legal, financial, transcription and engineering services who have experienced Outsourcing The Way It Was Meant To Be ™ and won't have it any other way! Visit our website, or email, for an instant response by a member of our team!: