Innodata (INOD) shares are experiencing a significant pre-market plunge of 12.48% on Friday, continuing the downward trend that began in after-hours trading following the release of the company's second-quarter financial results. The sharp decline comes as a surprise to many investors, given that the company's earnings appeared to surpass analyst expectations and included raised guidance for the year.

According to the company's SEC filing, Innodata reported impressive quarterly earnings per share (EPS) of $0.20, comfortably beating the analyst consensus estimate of $0.14. Revenue for the quarter came in at $58.4 million, slightly above the expected $56.3 million. In a move that typically boosts investor confidence, Innodata also increased its revenue guidance for 2025, projecting organic revenue growth of 45% or more.

Despite these seemingly positive results, the significant stock price drop suggests that investors may have had even higher expectations or identified other concerning factors in the report. Market analysts speculate that the negative reaction could be due to profit-taking following the earnings announcement or concerns about the sustainability of growth in future quarters. It's worth noting that pre-earnings options activity had implied a potential 15.2% move in share price post-earnings, highlighting the market's anticipation of volatility surrounding this report. As trading continues, investors will be closely watching for any additional insights or guidance from Innodata's management to explain the disconnect between the company's performance and the stock's movement.