IBEX Ltd

Previous wording

This Form 10-Q includes certain historical consolidated financial and other data for IBEX Limited (“ibex,” “we,” “us,” “our” or the “Company”). The following discussion provides a narrative of our financial condition and results of operations for the three and six months ended December 31, 2024 compared to the three and six months ended December 31, 2023.

Current wording

This Form 10-Q includes certain historical consolidated financial and other data for IBEX Limited (“ibex,” “we,” “us,” “our” or the “Company”). The following discussion provides a narrative of our financial condition and results of operations for the three and nine months ended March 31, 2025 compared to the three and nine months ended March 31, 2024.

Previous wording

During the three and six months ended December 31, 2024, the Company delivered strong financial results, and experienced growth with leading clients in our HealthTech, Travel, Transportation & Logistics, and Retail & E-commerce verticals. We increased capacity in our offshore and nearshore regions and expanded into two new sites. Despite macroeconomic headwinds during recent years, the business performed well in several important areas this quarter and year-to-date, including total revenues and profitability.

Current wording

During the three and nine months ended March 31, 2025, the Company delivered strong financial results, and experienced growth with leading clients in our HealthTech, Travel, Transportation & Logistics, Retail & E-commerce, and Other verticals, partially offset by decreases in our FinTech vertical. We increased capacity in our offshore and nearshore regions and expanded into two new sites. The business performed well in several important areas this quarter and year-to-date, including total revenues and profitability.

Previous wording

The Company delivered revenues of $140.7 million during the three months ended December 31, 2024, a 6.1% increase compared to the same quarter in the prior year due to growth in the HealthTech, Travel, Transportation & Logistics, and Retail & E-commerce verticals. Net income during the three months ended December 31, 2024 was $9.3 million, a 52.6% increase from $6.1 million during the same quarter in the prior year. Fully diluted earnings per share for the three months ended December 31, 2024 of $0.57 increased from $0.33 during the prior year quarter. These increases were driven by winning new clients and market share within our embedded base client in our higher margin offshore regions, improved gross margin performance, and fewer diluted shares outstanding compared to the prior year quarter.

Current wording

The Company delivered revenues of $140.7 million during the three months ended March 31, 2025, an 11.0% increase compared to the prior year due to growth in the HealthTech, Travel, Transportation & Logistics, Retail & E-commerce, and Other verticals, partially offset by decreases in our FinTech vertical. Net income during the three months ended March 31, 2025 was $10.5 million, a 1.5% increase from $10.3 million during the same quarter in the prior year. Fully diluted earnings per share for the three months ended March 31, 2025 of $0.73 increased from $0.57 during the prior year quarter. These increases were driven by winning new clients and market share within our embedded base client in our higher margin offshore regions, improved gross margin performance, and fewer diluted shares outstanding compared to the prior year quarter.

Previous wording

The Company delivered revenues of $270.4 million during the six months ended December 31, 2024, a 5.1% increase compared to the same period in the prior year due to growth from existing and new clients launched throughout fiscal 2024 and first half of fiscal 2025. Net income during the six months ended December 31, 2024 was $16.8 million, a 24.4% increase from $13.5 million during the same period in the prior year. Fully diluted earnings per share for the six months ended December 31, 2024 of $1.00 increased from $0.72 in the prior year period. These increases were driven by revenue growth in our higher margin offshore regions, improved operational delivery, improved gross margin performance, and fewer diluted shares outstanding compared to the prior year period.

Current wording

The Company delivered revenues of $411.1 million during the nine months ended March 31, 2025, a 7.1% increase compared to the same period in the prior year due to growth from existing and new clients launched throughout fiscal 2024 and fiscal 2025 to-date. Net income during the nine months ended March 31, 2025 was $27.3 million, a 14.5% increase from $23.8 million during the same period in the prior year. Fully diluted earnings per share for the nine months ended March 31, 2025 of $1.70 increased from $1.29 in the prior year period. These increases were driven by revenue growth in our higher margin offshore regions, improved gross margin performance, and fewer diluted shares outstanding compared to the prior year period.

Previous wording

Macroeconomic factors, including but not limited to, increasing inflation and interest rates, global economic and geopolitical uncertainty, changes in foreign currency exchange rates, and the impact that these factors are having on our clients and their customers, have also impacted our financial results during the six months ended December 31, 2024. Some of our customers have increased their focus on cost reduction, resulting in decisions to shift work from onshore sites to offshore sites, which may impact our revenues and operations in the near term. However, we also believe that they present opportunities with both new and existing clients, as companies maintain a focus on cost reduction and look for new solutions and delivery options.

Current wording

Macroeconomic factors, including but not limited to, increasing inflation and interest rates, global economic and geopolitical uncertainty, changes in foreign currency exchange rates, and the impact that these factors are having on our clients and their customers, have also impacted our financial results during the nine months ended March 31, 2025. Some of our customers have increased their focus on cost reduction, resulting in decisions to shift work from onshore sites to offshore sites, which may impact our revenues and operations in the near term. However, we also believe that they present opportunities with both new and existing clients, as companies maintain a focus on cost reduction and look for new solutions and delivery options.

Previous wording

Demand for customer interaction services reflects a client’s underlying business performance and priorities. Growth in a client’s business often results in increased demand for our customer engagement solutions. Conversely, a decline in a client’s business generally results in a decrease in demand for our customer engagement solutions, shifting volume to lower cost geographies, and potential increases in demand for our customer acquisition and expansion solutions. The correlation between a client's business performance and demand for outsourced customer interaction solutions can therefore be complex, and depends upon several factors, such as industry consolidation, client investments in growth, and overall macroeconomic environment, all of which can result in short term revenue volatility for outsourcing providers. Demand during the six months ended December 31, 2024 was higher when compared to the prior year quarter due to increased demand for our digital-first solutions, growth in our existing clients, and recent new client wins in strategic verticals.

Current wording

Demand for customer interaction services reflects a client’s underlying business performance and priorities. Growth in a client’s business often results in increased demand for our customer engagement solutions. Conversely, a decline in a client’s business generally results in a decrease in demand for our customer engagement solutions, shifting volume to lower cost geographies, and potential increases in demand for our customer acquisition and expansion solutions. The correlation between a client's business performance and demand for outsourced customer interaction solutions can therefore be complex, and depends upon several factors, such as industry consolidation, client investments in growth, and overall macroeconomic environment, all of which can result in short term revenue volatility for outsourcing providers. Demand during the nine months ended March 31, 2025 was higher when compared to the prior year quarter due to increased demand for our digital-first solutions, growth in our existing clients, and recent new client wins in strategic verticals.

Previous wording

As demand for delivery locations has continued to shift towards lower cost geographies during the six months ended December 31, 2024, we have continued to fill the additional capacity in our offshore region and expect this capacity to be absorbed quickly as clients and prospective clients look to relocate work to cost advantageous markets in the near term. In addition, we continue to realize cost savings as we geographically optimize our delivery centers in higher cost regions.

Current wording

As demand for delivery locations has continued to shift towards lower cost geographies during the nine months ended March 31, 2025, we have continued to fill the additional capacity in our offshore region and expect this capacity to be absorbed quickly as clients and prospective clients look to relocate work to cost advantageous markets in the near term. In addition, we continue to realize cost savings as we geographically optimize our delivery centers in higher cost regions.

Previous wording

When compensation levels of our employees increase, we may not be able to pass on such increased costs to our clients or do so on a timely basis, which tends to depress our operating profit margins if we cannot generate sufficient offsetting productivity gains. During the six months ended December 31, 2024, we continued to see increasing wage pressure in all of our geographies, in part brought on by the current global inflation and labor shortage, which is increasing competition for contact center agents from other sectors of the economy. During the six months ended December 31, 2024, we have offset some of these wage increases with higher agent quality and increased productivity, higher agent retention, and increased client prices under contractual cost of living adjustments (“COLA”). Furthermore, our overall labor cost as a percentage of revenue is impacted by the aforementioned shift in delivery location from onshore delivery centers to offshore centers.

Current wording

When compensation levels of our employees increase, we may not be able to pass on such increased costs to our clients or do so on a timely basis, which tends to depress our operating profit margins if we cannot generate sufficient offsetting productivity gains. During the nine months ended March 31, 2025, we continued to see increasing wage pressure in all of our geographies, in part brought on by the current global inflation and labor shortage, which is increasing competition for contact center agents from other sectors of the economy. During the nine months ended March 31, 2025, we have offset some of these wage increases with higher agent quality and increased productivity, higher agent retention, and increased client prices under contractual cost of living adjustments (“COLA”). Furthermore, our overall labor cost as a percentage of revenue is impacted by the aforementioned shift in delivery location from onshore delivery centers to offshore centers.

Previous wording

We generate greater profit margins from our work carried out by agents located in offshore and nearshore regions compared to our work carried out from onshore locations in the United States. As a result, our operating margins are influenced by the proportion of our work delivered from these higher margin locations. Over time we have expanded and further diversified our delivery network by adding facilities in these locations, offering a significant relative cost advantage. Our percentage of workstations in nearshore and offshore centers is approximately 95% as of December 31, 2024. We regularly evaluate whether to procure additional space or enter into new markets as we continue to add employees and expand geographically to meet the demands of our business.

Current wording

We generate greater profit margins from our work carried out by agents located in offshore and nearshore regions compared to our work carried out from onshore locations in the United States. As a result, our operating margins are influenced by the proportion of our work delivered from these higher margin locations. Over time we have expanded and further diversified our delivery network by adding facilities in these locations, offering a significant relative cost advantage. Our percentage of workstations in nearshore and offshore centers is approximately 97% as of March 31, 2025. We regularly evaluate whether to procure additional space or enter into new markets as we continue to add employees and expand geographically to meet the demands of our business.

Previous wording

We have a strong track record of winning key new client accounts and as a result of our land and expand strategy, we have been successful in winning an increasing number of new client engagements, and subsequently increasing our revenues with these clients period over period. Historically, our in-year new client wins have generated 2.5x to 3.0x revenue in the second and third years of the engagement. The slowing economic environment impacted the length of our sales cycles during recent years, however, we experienced a faster pace of sales activity during the second half of fiscal year 2024 and through the first half of fiscal year 2025.

Current wording

We have a strong track record of winning key new client accounts and as a result of our land and expand strategy, we have been successful in winning an increasing number of new client engagements, and subsequently increasing our revenues with these clients period over period. Historically, our in-year new client wins have generated 2.5x to 3.0x revenue in the second and third years of the engagement. The slowing economic environment impacted the length of our sales cycles during recent years, however, we have experienced a recovery in the pace of sales activity beginning the second half of fiscal year 2024.

Previous wording

During the six months ended December 31, 2024, our largest client accounted for 11%, while our three largest clients accounted for 27% of our consolidated revenues. We believe client diversification is an important attribute in a challenging market.

Current wording

During the nine months ended March 31, 2025, our largest client accounted for 11%, while our three largest clients accounted for 27% of our consolidated revenues. We believe our client diversification is a strength in a challenging market.

Previous wording

Our revenues are dependent upon both volumes and unit pricing for our services. Client pricing is often expressed in terms of a base price per minute or hour as well as, in limited cases, with bonuses and occasionally penalties depending upon our achievement of certain client objectives. During the fiscal year ended June 30, 2024 and the six months ended December 31, 2024, the tightening in the global labor market and corresponding wage inflation, as well as increasing facilities expenses have resulted in us pursuing and successfully negotiating price increases or COLA with many of our clients.

Current wording

Our revenues are dependent upon both volumes and unit pricing for our services. Client pricing is often expressed in terms of a base price per minute or hour as well as, in limited cases, with bonuses and occasionally penalties depending upon our achievement of certain client objectives. During the fiscal year ended June 30, 2024 and the nine months ended March 31, 2025, the tightening in the global labor market and corresponding wage inflation, as well as increasing facilities expenses have resulted in us pursuing and successfully negotiating price increases or COLA with many of our clients.

Previous wording

The following summarizes the results of our operations for the three and six months ended December 31, 2024 and 2023:

Current wording

The following summarizes the results of our operations for the three and nine months ended March 31, 2025 and 2024:

Previous wording

Our revenue was $140.7 million for the three months ended December 31, 2024, an increase of $8.0 million, or 6.1%, compared to the prior year quarter. This increase was primarily driven by increases in our HealthTech vertical of $5.0 million, or 31.2%, Travel, Transportation & Logistics vertical of $2.8 million, or 16.7%, and Retail & E-commerce vertical of $1.7 million, or 4.4% compared to the prior year quarter. These increases were partially offset by decreases in the FinTech vertical of $2.7 million, or 14.7%.

Current wording

Our revenue was $140.7 million for the three months ended March 31, 2025, an increase of $13.9 million, or 11.0%, compared to the prior year quarter. This increase was primarily driven by increases in our HealthTech vertical of $3.7 million, or 20.0%, Travel, Transportation & Logistics vertical of $3.1 million, or 18.7%, Retail & E-commerce vertical of $4.6 million, or 14.6%, and Other vertical of $4.2 million, or 30.4%, due to growth in our digital acquisition business, compared to the prior year quarter. These increases were partially offset by decreases in the FinTech vertical of $2.1 million, or 12.2%.

Previous wording

As a percentage of total revenue, the revenue from our HealthTech vertical increased to 15.1% compared to 12.2% in the prior year quarter, and the revenue from our Travel, Transportation & Logistics vertical increased to 13.7% compared to 12.5% in the prior year quarter. Conversely, the revenue from our Retail & E-commerce vertical decreased slightly to 28.5% compared to 29.0% in the prior year quarter, and the revenue from our FinTech vertical decreased to 11.0% compared to 13.7% in the prior year quarter.

Current wording

As a percentage of total revenue, the revenue from our HealthTech vertical increased to 15.8% compared to 14.6% in the prior year quarter, the revenue from our Travel, Transportation & Logistics vertical increased to 14.0% compared to 13.1% in the prior year quarter, the revenue from our Retail & E-commerce vertical increased to 25.7% compared to 24.9% in the prior year quarter, and the revenue from our Other vertical increased to 13.0% compared to 11.0% in the prior year quarter. Conversely, the revenue from our FinTech vertical decreased to 10.8% compared to 13.7% in the prior year quarter.

Previous wording

Cost of services was $98.8 million during the three months ended December 31, 2024, an increase of $2.9 million, or 3.0%, compared to the prior year quarter. The increase in cost of services was primarily due to increases in payroll and related costs, reseller commissions and lead expenses, and IT expenses.

Current wording

Cost of services was $96.0 million during the three months ended March 31, 2025, an increase of $8.9 million, or 10.3%, compared to the prior year quarter. The increase in cost of services was primarily due to increases in payroll and related costs, reseller commissions and lead expenses, IT expenses, and telecom, local transportation and other site related expenses.

Previous wording

Payroll and related costs were $76.2 million during the three months ended December 31, 2024, an increase of $1.5 million, or 2.0%, compared to the prior year quarter, due to increased revenues during the current year quarter. As a percent of revenue, payroll cost decreased to 54.1% during the three months ended December 31, 2024 compared to 56.3% during the prior year quarter, reflecting the continuing trend towards lower cost, higher margin regions.

Current wording

Payroll and related costs were $72.4 million during the three months ended March 31, 2025, an increase of $4.8 million, or 7.1%, compared to the prior year quarter, due to increased revenues during the current year quarter. As a percent of revenue, payroll cost decreased to 51.4% during the three months ended March 31, 2025 compared to 53.3% during the prior year quarter, reflecting the continuing trend towards lower cost, higher margin regions.

Previous wording

Reseller commissions and lead expenses were $3.7 million during the three months ended December 31, 2024, an increase of $0.8 million, or 28.0%, compared to the prior year quarter. These increases were primarily due to increases in the utilization of our third-party affiliates for inbound inquiries as well as search engine costs in connection with our digital sales and marketing efforts.

Current wording

Reseller commissions and lead expenses were $5.5 million during the three months ended March 31, 2025, an increase of $2.8 million, or 106.1%, compared to the prior year quarter. These increases were primarily due to increases in the utilization of our third-party affiliates for inbound inquiries as well as search engine costs in connection with increased revenues in our higher margin digital sales and marketing efforts.

Previous wording

IT expenses were $1.6 million during the three months ended December 31, 2024, an increase of $0.5 million, or 39.2%, compared to the prior year quarter, primarily due to additional software license fees.

Current wording

IT expenses were $1.8 million during the three months ended March 31, 2025, an increase of $0.6 million, or 48.2%, compared to the prior year quarter, primarily due to additional software license fees.

Previous wording

SG&A expense was $25.7 million during the three months ended December 31, 2024, an increase of $0.8 million, or 3.4%, compared to the prior year quarter. The increase was driven by higher payroll and related costs of $1.2 million and professional and other fees of $0.3 million, as we focus on revenue growth and expansion, higher IT expenses of $0.3 million due to continued investments in core business management systems, and an increase in our allowance for credit losses and other reserves of $0.6 million. These increases were partially offset by changes in foreign currency gains / losses of $1.6 million compared to the prior year quarter.

Current wording

SG&A expense was $27.1 million during the three months ended March 31, 2025, an increase of $3.5 million, or 14.8%, compared to the prior year quarter. The increase was driven by higher payroll and related costs of $1.7 million due to higher performance-based incentives, share based compensation of $1.0 million primarily due to new grants issued and a higher share price impacting liability-based grants, professional and other fees of $0.7 million related to legal and accounting consulting fees, higher IT expenses of $0.5 million due to continued investments in core business management systems and additional software license fees, and increases in net foreign currency losses of $0.6 million period over period. These increases were partially offset by the impairment charges of $1.3 million recorded during the prior year quarter.

Previous wording

D&A expense was $4.3 million during the three months ended December 31, 2024, a decrease of $0.7 million or 13.3% compared to the prior year quarter. The decrease was primarily due to lower depreciation expense due to an increase in fully depreciated assets. As a percentage of revenue, D&A decreased to 3.0% during the three months ended December 31, 2024 compared to 3.7% during the prior year quarter.

Current wording

D&A expense was $4.3 million during the three months ended March 31, 2025, a decrease of $0.5 million or 11.0% compared to the prior year quarter. The decrease was primarily attributable to lower depreciation expense due to an increase in fully depreciated assets. As a percentage of revenue, D&A decreased to 3.1% during the three months ended March 31, 2025 compared to 3.8% during the prior year quarter.

Previous wording

Income from operations was $9.3 million during the three months ended December 31, 2024 compared to $6.1 million during the prior year quarter. The operating margin was 8.5% for three months ended December 31, 2024, up from 5.2% for the prior year quarter. The increase was primarily driven by margin expansion as we continued to realize growth in our higher margin offshore regions and realize site optimization efforts undertaken in the prior year.

Current wording

Income from operations was $13.3 million during the three months ended March 31, 2025 compared to $11.3 million during the prior year quarter. The operating margin was 9.5% for three months ended March 31, 2025, up from 8.9% for the prior year quarter. The increase was primarily driven by margin expansion as we continued to realize growth in our higher margin offshore regions and realize site optimization efforts undertaken in the prior year.

Previous wording

Interest income during the three months ended December 31, 2024 was $0.3 million, compared to $0.5 million during the prior year quarter and consisted primarily of income from invested funds.

Current wording

Interest income during the three months ended March 31, 2025 was $0.03 million, compared to $0.4 million during the prior year quarter and consisted primarily of income from invested funds.

Previous wording

Interest expense during the three months ended December 31, 2024 was $0.6 million, an increase of $0.5 million when compared to prior year quarter, and consisted of interest expense on finance leases, a loss on extinguishment of $0.2 million related to the termination of our PNC Credit Facility, and interest expense of $0.2 million on the TRGI convertible promissory note (as defined and described below).

Current wording

Interest expense during the three months ended March 31, 2025 was $0.4 million, an increase of $0.3 million when compared to the prior year quarter, and consisted of interest on borrowings of $0.2 million, interest on finance leases of $0.1 million, and amortization of deferred debt issuance costs of $0.1 million.

Previous wording

Income tax expense was $2.4 million during three months ended December 31, 2024, an increase of $1.1 million when compared with the prior year quarter, primarily due to higher pre-tax income and a higher effective tax rate in the current year quarter. The effective tax rate was 20.2% and 17.3% for the three months ended December 31, 2024 and 2023, respectively. The changes in effective tax rates between these periods was primarily attributable to changes in revenue mix across our taxable jurisdictions.

Current wording

Income tax expense was $2.5 million during three months ended March 31, 2025, an increase of $1.2 million when compared with the prior year quarter, primarily due to higher pre-tax income and a higher effective tax rate in the current year quarter. The effective tax rate was 19.2% and 11.0% for the three months ended March 31, 2025 and 2024, respectively. The changes in effective tax rates between these periods was primarily attributable to changes in revenue mix across our taxable jurisdictions and discrete items recorded during the prior year quarter.

Previous wording

Our revenue was $270.4 million for the six months ended December 31, 2024, an increase of $13.2 million, or 5.1%, compared to the same period in the prior year. This increase was primarily driven by increases in our HealthTech vertical of $8.5 million, or 27.5%, Travel, Transportation & Logistics vertical of $4.4 million, or 13.3%, and Retail & E-commerce vertical of $4.2 million, or 6.2% compared to the same period in the prior year. These increases were partially offset by decreases in the FinTech vertical of $5.1 million, or 13.8%, compared to the prior year period.

Current wording

Our revenue was $411.1 million for the nine months ended March 31, 2025, an increase of $27.1 million, or 7.1%, compared to the same period in the prior year. This increase was primarily driven by increases in our HealthTech vertical of $12.2 million, or 24.7%, Travel, Transportation & Logistics vertical of $7.5 million, or 15.1%, Retail & E-commerce vertical of $8.8 million, or 8.9%, and Other vertical of $6.8 million, or 16.6%, due to growth in our digital acquisition business, compared to the same period in the prior year. These increases were partially offset by decreases in the FinTech vertical of $7.2 million, or 13.3%, compared to the prior year period.

Previous wording

As a percentage of total revenue, the revenue from our HealthTech vertical increased to 14.6% for the six months ended December 31, 2024 compared to 12.0% in the same period in the prior year, the revenue from our Travel, Transportation & Logistics vertical increased to 14.0% compared to 13.0% in the prior year period, and the revenue from our Retail & E-commerce vertical increased to 26.6% compared to 26.3% in the prior year period. Conversely, the revenue from our FinTech vertical decreased to 11.7% for the six months ended December 31, 2024 compared to 14.2% in the prior year period.

Current wording

As a percentage of total revenue, the revenue from our HealthTech vertical increased to 15.0% for the nine months ended March 31, 2025 compared to 12.9% in the same period in the prior year, the revenue from our Travel, Transportation & Logistics vertical increased to 14.0% compared to 13.0% in the prior year period, the revenue from our Retail & E-commerce vertical increased to 26.3% compared to 25.8% in the prior year period, and the revenue from our Other vertical increased to 11.6% compared to 10.7% in the prior year period. Conversely, the revenue from our FinTech vertical decreased to 11.4% for the nine months ended March 31, 2025 compared to 14.0% in the prior year period.

Previous wording

Cost of services was $188.8 million during the six months ended December 31, 2024, an increase of $4.7 million, or 2.6%, compared to the prior year period. The increase in cost of services was primarily due to increases in payroll and related costs, reseller commissions and lead expenses, travel and entertainment, and IT expenses.

Current wording

Cost of services was $284.8 million during the nine months ended March 31, 2025, an increase of $13.7 million, or 5.0%, compared to the prior year period. The increase in cost of services was primarily due to increases in payroll and related costs, reseller commissions and lead expenses, IT expenses, share based compensation, and telecom, local transportation and other site related expenses.

Previous wording

Payroll and related costs were $144.6 million during the six months ended December 31, 2024, an increase of $3.0 million, or 2.1%, compared to the prior year period, due to increased revenues during the current year. As a percent of revenue, payroll cost decreased to 53.5% during the six months ended December 31, 2024 compared to 55.0% during the prior year period, reflecting the continuing trend towards lower cost regions.

Current wording

Payroll and related costs were $216.9 million during the nine months ended March 31, 2025, an increase of $7.8 million, or 3.7%, compared to the prior year period, due to increased revenues during the current year. As a percent of revenue, payroll cost decreased to 52.8% during the nine months ended March 31, 2025 compared to 54.5% during the prior year period, reflecting the continuing trend towards lower cost regions.

Previous wording

Reseller commissions and lead expenses were $7.5 million during the six months ended December 31, 2024, an increase of $1.0 million, or 14.9%, compared to the prior year period. These increases were primarily due to increases in the utilization of our third-party affiliates for inbound inquiries as well as search engine costs in connection with our digital sales and marketing efforts.

Current wording

Reseller commissions and lead expenses were $13.0 million during the nine months ended March 31, 2025, an increase of $3.8 million, or 41.4%, compared to the prior year period. These increases were primarily due to increases in the utilization of our third-party affiliates for inbound inquiries as well as search engine costs in connection with increased revenue in our higher margin digital sales and marketing efforts.

Previous wording

IT expenses were $3.0 million during the six months ended December 31, 2024, an increase of $0.5 million or 18.5%, compared to the prior year period, primarily due to additional software license fees.

Current wording

IT expenses were $4.8 million during the nine months ended March 31, 2025, an increase of $1.0 million or 28.2%, compared to the prior year period, primarily due to additional software license fees.

Previous wording

SG&A expense was $51.9 million during the six months ended December 31, 2024, an increase of $4.0 million, or 8.4%, compared to the prior year period. The increase was driven by higher payroll and related costs of $2.6 million and facilities expenses, including rent and utilities, of $0.4 million, as we focus on revenue growth and expansion, higher IT expenses of $0.4 million due to continued investments in core business management systems, an increase in our allowance for credit losses and other reserves of $0.6 million, and changes in foreign currency gains / losses of $0.6 million year over year, partially offset by decreases in legal and professional fees of $0.6 million.

Current wording

SG&A expense was $79.0 million during the nine months ended March 31, 2025, an increase of $7.5 million, or 10.5%, compared to the prior year period. The increase was driven by higher payroll and related costs of $4.3 million due to higher performance-based incentives and new hires to support growth, higher IT expenses of $0.9 million due to continued investments in core business management systems and additional software license fees, facilities expenses of $0.6 million and other costs including shipping and business permits of $0.5 million driven by growth in our higher margin offshore regions, share based compensation of $0.4 million primarily due to new grants issued and a higher share price impacting liability-based grants, offset by lower expense for our performance-based restricted stock units, increases in our allowance for credit losses and other reserves of $0.7 million, and increases in net foreign currency losses of $1.2 million year over year. These increases were partially offset by the impairment charges of $1.3 million recorded during the prior year period.

Previous wording

D&A expense was $8.7 million during the six months ended December 31, 2024, a decrease of $1.3 million or 13.3%, compared to the prior year period. The decrease was primarily due to lower depreciation expense due to an increase in fully depreciated assets. As a percentage of revenue, D&A decreased to 3.2% during the six months ended December 31, 2024 compared to 3.9% in the prior year period.

Current wording

D&A expense was $13.0 million during the nine months ended March 31, 2025, a decrease of $1.9 million or 12.6%, compared to the prior year period. The decrease was primarily due to lower depreciation expense due to an increase in fully depreciated assets. As a percentage of revenue, D&A decreased to 3.2% during the nine months ended March 31, 2025 compared to 3.9% in the prior year period.

Previous wording

Income from operations was $21.0 million during the six months ended December 31, 2024 compared to $15.3 million during the prior year period. The operating margin was 7.8% for six months ended December 31, 2024, up from 5.9% for the prior year period. The increase was primarily driven by margin expansion as we continued to realize growth in our higher margin offshore regions and realize site optimization efforts undertaken in the prior year.

Current wording

Income from operations was $34.3 million during the nine months ended March 31, 2025 compared to $26.6 million during the prior year period. The operating margin was 8.4% for nine months ended March 31, 2025, up from 6.9% for the prior year period. The increase was primarily driven by margin expansion as we continued to realize growth in our higher margin offshore regions and realize site optimization efforts undertaken in the prior year.

Previous wording

Interest income during the six months ended December 31, 2024 was $0.9 million, compared to $1.1 million during the prior year period, and consisted primarily of income from invested funds.

Current wording

Interest income during the nine months ended March 31, 2025 was $0.9 million, compared to $1.5 million during the prior year period, and consisted primarily of income from invested funds.

Previous wording

Interest expense during the six months ended December 31, 2024 was $0.8 million, an increase of $0.6 million when compared to the prior year period, and consisted of interest expense on finance leases, a loss on extinguishment of $0.2 million related to the termination of our PNC Credit Facility, and interest expense of $0.2 million on the TRGI convertible promissory note (as defined and described below).

Current wording

Interest expense during the nine months ended March 31, 2025 was $1.2 million, an increase of $0.8 million when compared to the prior year period, and consisted of interest on borrowings of $0.3 million, interest on finance leases of $0.2 million, amortization of deferred debt issuance costs of $0.1 million, interest of $0.2 million on the TRGI convertible promissory note (as defined and described below), and a loss on extinguishment of $0.2 million related to the termination of our PNC Credit Facility.

Previous wording

Income tax expense was $4.3 million during the six months ended December 31, 2024, an increase of $1.7 million when compared to the prior year period, primarily due to higher pre-tax income and a higher effective tax rate in the current year. The effective tax rate was 20.5% and 16.5% for the six months ended December 31, 2024 and 2023, respectively. The changes in effective tax rates between these periods was primarily attributable to changes in revenue mix across our taxable jurisdictions.

Current wording

Income tax expense was $6.8 million during the nine months ended March 31, 2025, an increase of $2.9 million when compared to the prior year period, primarily due to higher pre-tax income and a higher effective tax rate in the current year. The effective tax rate was 20.0% and 14.2% for the nine months ended March 31, 2025 and 2024, respectively. The changes in effective tax rates between these periods was primarily attributable to changes in revenue mix across our taxable jurisdictions and discrete items recorded during the prior year period.

Previous wording

Adjusted net income is a non-GAAP profitability measure that represents net income before the effect of the following items: warrant contra revenue, foreign currency gains and losses, and share-based compensation expense, net of the tax impact of such adjustments. We define adjusted net income margin as adjusted net income divided by revenue. We define adjusted earnings per share as adjusted net income divided by weighted average diluted shares outstanding.

Current wording

Adjusted net income is a non-GAAP profitability measure that represents net income before the effect of the following items: severance costs, impairment losses, warrant contra revenue, foreign currency gains and losses, and share-based compensation expense, net of the tax impact of such adjustments. We define adjusted net income margin as adjusted net income divided by revenue. We define adjusted earnings per share as adjusted net income divided by weighted average diluted shares outstanding.

Previous wording

EBITDA is a non-GAAP profitability measure that represents net income before the effect of the following items: interest expense, income tax expense, and D&A. Adjusted EBITDA is a non-GAAP profitability measure that represents EBITDA before the effect of the following items: interest income, warrant contra revenue, foreign currency gains and losses, and share-based compensation expense. Adjusted EBITDA margin is a non-GAAP profitability measure that represents adjusted EBITDA divided by revenue.

Current wording

EBITDA is a non-GAAP profitability measure that represents net income before the effect of the following items: interest expense, income tax expense, and D&A. Adjusted EBITDA is a non-GAAP profitability measure that represents EBITDA before the effect of the following items: severance costs, impairment losses, interest income, warrant contra revenue, foreign currency gains and losses, and share-based compensation expense. Adjusted EBITDA margin is a non-GAAP profitability measure that represents adjusted EBITDA divided by revenue.

Previous wording

Net income margin was 6.6% for the three months ended December 31, 2024 compared to 4.6% during the prior year quarter. Net income margin was 6.2% for the six months ended December 31, 2024 compared to 5.2% during the prior year period. These increases were primarily driven by margin expansion as we continued to realize growth in our higher margin offshore regions and site optimization efforts undertaken in the prior year, partially offset by increases in interest expense and income tax expense compared to the same periods in the prior year.

Current wording

Net income margin was 7.4% for the three months ended March 31, 2025 compared to 8.1% during the prior year quarter. This decrease was primarily driven by increases in interest expense, income tax expense, and share-based compensation, as well as lower interest income during the three months ended March 31, 2025 compared to the same quarter in the prior year. Net income margin was 6.6% for the nine months ended March 31, 2025 compared to 6.2% during the prior year period. This increase was primarily driven by margin expansion as we continued to realize growth in our higher margin offshore regions and site optimization efforts undertaken in the prior year, partially offset by increases in interest expense and income tax expense, as well as lower interest income during the nine months ended March 31, 2025 compared to the same period in the prior year.