Good day, ladies and gentlemen. Thank you for standing by. Welcome to the Innodata Second Quarter 2018 Earnings Conference Call's. Today's conference is being recorded. At this time, I'd like to turn the conference over to Amy Agress. Please go ahead, ma'am.

Thank you, Catherine. Good morning, everyone. Thank you for joining us today. Our speakers today are Jack Abuhoff, Chairman and CEO of Innodata; and AK Mishra, our COO. We'll hear from AK first, who will provide a detailed review of our results for the second quarter, and then Jack will follow with additional perspective about the business. We'll then take your questions. First, let me qualify the forward-looking statements that are made during the call. These statements are based largely on our current expectations and are subject to a number of risks and uncertainties, including, without limitation, that contracts may be terminated by clients; projected or committed volumes of work may not materialize; the primarily at-will nature of contracts with our Digital Data Solutions clients and the ability of these clients to reduce, delay or cancel projects; continuing Digital Data Solutions segment revenue concentration in a limited number of clients; inability to replace projects that are completed, canceled or reduced; our dependency on content providers in our Agility segment; depressed market conditions; changes in external market factors; the ability and willingness of our clients and prospective clients to execute business plans which give rise to requirements for our services; difficulty in integrating and deriving synergies from acquisition, 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; changes in our business growth strategy; the emergence of new or growing competitors; various other competitive and technological factors; and other risks and uncertainties indicated from time to time in our filings with the Securities and Exchange Commission. We undertake no obligation to update forward-looking information, and actual results could differ materially. Thank you. I will now turn the call over to AK.

Thank you, Amy. Good morning, everyone. Thank you for joining us today to review our financial performance for the second quarter of 2018. Total revenue in quarter 2 of 2018 was $14.3 million compared to $14.1 million in quarter 1 of 2018. Our adjusted EBITDA for this quarter was $1.6 million compared to $1.3 million in the first quarter, an increase of $300,000 or 23%. The increase in adjusted EBITDA was mainly due to higher revenues this quarter combined with lower costs. I will now review key line items and segment performance on a sequential quarterly basis, comparing the second quarter of 2018 with the first quarter of 2018. At the segment level, DDS revenues increased by $350,000 or 3% to $10.8 million this quarter compared to $10.5 million in the prior quarter. This increase was due to revenue from new projects and increased volume from existing projects. Synodex revenue was $1 million this quarter, a 3% increase from the prior quarter. Agility revenue decreased by $231,000 from $2.66 million in the first quarter, a 9% reduction, to $2.43 million in this quarter. This decrease is primarily the result of onetime additional revenue from one of the Agility resellers and seasonal revenue from our annual Bulldog awards program that was recognized in the first quarter. Moving on to gross margins. Gross margins in DDS were $3.2 million or 29% of revenue this quarter compared to $3 million or 28% of revenues in the first quarter, an increase of $236,000 or 8% on account of higher revenues and benefiting from our cost reduction initiatives. Gross margins in our Synodex segment increased to $300,000 in the current quarter from $200,000 in the previous quarter due to realized cost efficiencies. Gross margins in the Agility segment were $900,000 or 38% of revenue this…

Thank you, AK. Good morning, everyone. Thank you for joining us today. I'm going to provide some general perspective on where we are at the 2018 half year mark and then provide some additional perspective on each of our segment's performance in the quarter. We are tracking well to our 2018 plan, which called for cost rationalizing the business to support the balance sheet and positioning each of the segments for growth. As a result, in the first half of the year, we have close to 4x our adjusted EBITDA over the same period last year. We are forecasting growth for the year in both of our venture businesses, Synodex and Agility, and we think the work we are doing this year in our core DDS business will position us for growth in 2019. Let's now take a closer look at the segments. In our core DDS segment, first half adjusted EBITDA close to doubled from that of a year ago, going from approximately $1.5 million to approximately $3 million, despite the fact that this year's revenue was $2.5 million lower. Had this year's revenue been in line with last year's revenue, our adjusted EBITDA probably would have been in the area of $4 million to $4.5 million, an increase of close to 300%. I'm pointing this out for 2 reasons: first, to emphasize the extent to which we have driven costs down; and second, to underscore the leverage that is inherent in our DDS business. We are using our Innodata lab, AI and deep learning development to both decrease our costs and position the business for growth. We have reinvigorated our pipeline with a combination of expansion and net new potential engagements which feature our new technologies, resulting in good strategic engagement with our key customers. Two weeks ago,…

[Operator Instructions] We'll go to Timothy Clarkson with Van Clemens.

Jack, just wanted to say that there's been some progress, obviously, in terms of the profitability. You're essentially breakeven, marginally profitable now, generating cash. The balance sheet is strong and not deteriorating anymore. So obviously, the key is growth, and the 2 new divisions are probably going to grow because they're in very dynamic new areas. But the legacy business, the DDS, what's -- give us some more color on why you think you can that division now because that's where the -- in the near-term, the biggest swing can occur from?

Tim, thanks for the question. Yes, excellent point. I think that the technologies that we've developed in machine learning, deep learning, artificial intelligence that has helped us to drive the swing in terms of profitability are also helping us reconceptualize the business in a very powerful way. We see ourselves going from a business that work with people who are enabled by technology and migrating to a business that's all about technology that is enabled by people, and that's a very important reconceptualization. Beyond the fact that it has helped us reduce expenses, it's also helping us build growth and build pipeline. So we see, as we look forward, that, that same set of technology is going to be very important to us going forward. In addition to that, we see the possibility of value-added customer and partner relationships forming up, again, principally around that technology. We see opportunities in the enterprise markets, what has been described as the global data awakening, where increasing numbers of enterprises are looking to mine data for strategic advantages. We see a role in helping them manage the vast stores of unstructured data that they're working with. And our intention is, in order to enable all this, we're going to be reinvesting in strategic and product marketing to improve our go-to-market performance.

Great. How many -- how much on these new deals are you involved personally in trying to close the deals?

I'm involved in a good number of them. I'm not involved in all of them, but a good number.

[Operator Instructions] We'll hear from Joe Furst with Furst Associates.

I want to commend you on the progress that you're making. You are making some progress. Unfortunately, over the last 5 years, we've heard all sorts of things about the future looking great, but it never seemed to happen very much, and that you're doing the best you can, I think. But at what point, especially with DDS, would you decide, "Maybe we just can't do this and we ought to try selling the company?" Because the company, even right now, is got to be worth at least double of what the stock price is. But anyway, what are your thoughts about that? I know one shareholder has raised that question with you before, too. What are your thoughts about that?

Sure. So Joe, thanks for the question. As you know, our board appointed a special committee in December, and the job of the special committee is to look at the company through a shareholder value-creation lens. It did so by working with some outside consultants who were able to provide a perspective on effectively turning around the company operationally and providing a means by which to grow it as well as consultants who were able to look at the wider markets that we operate in and the trends and directions that people are going and help us conceptualize a role for ourselves. I think where we are now is that -- maybe is looking at how do we take advantage of what's, in some respects, a new company, enabled by new technology, enabled by a new value proposition, having turned the corner on cash losses, having interesting assets in technology. And the committee is exploring all possibilities. There's nothing sacred, and there's nothing that's off the table. So I think we're going to progress that. We're following a pretty rigorous methodology in order to do so, and we'll be continuing down that road. I hope that's helpful.

[Operator Instructions] It appears we have no additional questions. I'll turn the floor back over to today's speakers for any additional or closing remarks.

So thanks, operator. I'll just reiterate a few key takeaways from the quarter. Our adjusted EBITDA in the first half of 2018 was close to 4x the first half of 2017. In DDS, we're forecasting a 50% or greater increase in new business sold this year. So even though DDS revenues will likely be down this year over last year, we're setting up DDS well for top line growth in 2019. And we're forecasting growth this year in both our Synodex and Agility venture businesses. So thanks again, everybody, for joining us today. We look forward to reporting continued progress.

Ladies and gentlemen, today's conference is available for replay from 2 p.m. Eastern time today to August 9, 2018, at 2 p.m. Eastern. You may access the recording by dialing (719) 457-0820 or 1 (888) 203-1112 using passcode 3375687. This concludes today's conference. You may now disconnect.