IBEX Ltd
For the period ended Mar 31, 2024. Filed May 9, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2024 · Filed May 9, 2024
IBEX$49.52+15.2%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2023-12-31; filed 2024-02-08.
0001720420-24-000010
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-03-31; filed 2024-05-09.
0001720420-24-000031
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 139 previous paragraphs and 137 current paragraphs.
77 unchanged; 55 reworded; 5 added; 4 removed; 3 previous and 0 current paragraphs rearranged.
Tables are not compared: 6 previous and 6 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (5)
Current report
During the three months ended March 31, 2024, the Company eliminated certain positions that it considered redundant and incurred approximately $1.3 million in severance costs. We also determined that the estimated fair value for certain assets at two of our delivery locations no longer exceeded their carrying value, and recorded impairment losses of $1.3 million during the three months ended March 31, 2024. IT expenses increased $0.3 million due to continued investments in core business management systems. These increases were partially offset by decreases in variable compensation, travel, and share-based compensation expense.
Current report
Nine Months Ended March 31, 2024 and 2023
Current report
Income tax expense was $3.9 million during nine months ended March 31, 2024, a decrease of $1.0 million when compared with the same period in the prior year, primarily due to lower pre-tax income and a lower effective tax rate in the current year. The effective tax rate was 14.2% and 15.4% for the nine months ended March 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 and discrete items recorded in the quarter.
Current report
Net income margin was 8.1% for the three months ended March 31, 2024 compared to 8.6% during the prior year quarter and 6.2% for the nine months ended March 31, 2024 compared to 6.8% during the prior year period. The decreases were primarily driven by lower revenue, planned investments in our technology, sales and marketing, and client service functions as we continue to focus on revenue growth, and the impairment losses and severance costs recorded during the third quarter of our fiscal year 2024.
Current report
Adjusted EBITDA margin was 15.1% for the three months ended March 31, 2024 compared to 14.3% during the prior year quarter, and 12.3% for the nine months ended March 31, 2024 compared to 12.8% during the prior year period. The increase for the three months ended March 31, 2024 compared to the three months ended March 31, 2023 was primarily driven by cost optimization efforts undertaken during the quarter and the shift of work to higher margin offshore locations. The decrease for the nine months ended March 31, 2024 compared to thenine months ended March 31, 2023 was primarily driven by lower revenue, including training revenue recognized, and planned investments in our technology, sales and marketing, and client service functions as we continue to focus on revenue growth.
Removed paragraphs (4)
Previous report
The increase in payroll and related costs of $0.6 million was primarily driven by continued investments in our technology, sales and marketing, and client service functions as we continue to focus on revenue growth. IT expenses increased $0.7 million due to continued investments in cybersecurity and core business management systems. Rent increased $0.3 million due to an overall increase in utility expenses in certain regions, which were driven by higher fuel prices. These increases were partially offset by a decrease in legal and professional fees of $0.1 million.
Previous report
Six Months Ended December 31, 2023 and 2022
Previous report
Net income margin was 4.6% for the three months ended December 31, 2023 compared to 6.7% during the prior year quarter and 5.2% for the six months ended December 31, 2023 compared to 5.9% during the prior year period. The decrease was primarily the result of lower income from operations driven by lower revenue, including training revenue recognized, and planned investments in our technology, sales and marketing, and client service functions as we continue to focus on revenue growth.
Previous report
Adjusted EBITDA margin was 10.8% for the three months ended December 31, 2023 compared to 13.9% during the prior year quarter, and 10.9% for the six months ended December 31, 2023 compared to 12.1% during the prior year period. The decrease was primarily driven by lower revenue, including training revenue recognized, and planned investments in our technology, sales and marketing, and client service functions as we continue to focus on revenue growth
Reworded paragraphs (55)
Previous wording
This Form 10-Q includes certain historical consolidated financial and other data for IBEX (“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, 2023 compared to the three and six months ended December 31, 2022.
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, 2024 compared to the three and nine months ended March 31, 2023.
Previous wording
ibex delivers innovative business process outsourcing (“BPO”), smart digital marketing, online acquisition technology, and end-to-end customer engagement solutions to help companies acquire, engage, and retain valuable customers. Today, ibex operates a global CX delivery center model consisting of 31 delivery centers around the world, while deploying next-generation technology to drive superior customer experiences for many of the world’s leading companies across various verticals, including Retail & E-commerce, HealthTech, FinTech, Utilities and Logistics. ibex leverages its diverse global team of approximately 32,000 employees together with industry-leading technology, including its Wave X platform, to manage customer interactions on behalf of our clients, driving a truly differentiated customer experience.
Current wording
ibex delivers innovative business process outsourcing (“BPO”), smart digital marketing, online acquisition technology, and end-to-end customer engagement solutions to help companies acquire, engage, and retain valuable customers. Today, ibex operates a global CX delivery center model consisting of 29 delivery centers around the world, while deploying next-generation technology to drive superior customer experiences for many of the world’s leading companies across various verticals, including Retail & E-commerce, HealthTech, FinTech, Utilities and Logistics. ibex leverages its diverse global team of approximately 30,000 employees together with industry-leading technology, including its Wave iX platform, to manage customer interactions on behalf of our clients, driving a truly differentiated customer experience.
Previous wording
During the second quarter of our fiscal year ending June 30, 2024, the Company continued to deliver solid financial performance, in particular, growth in our digital first solutions with leading clients in our HealthTech and Retail & E-commerce verticals, while optimizing our geographic diversity for delivery of services to our clients. Despite macroeconomic trends impacting our historical growth trends, as well as the unfavorable impact on our revenue from shifting mix from onshore to offshore geographies, the business performed well in several important areas, including new client wins with key clients in strategic verticals.
Current wording
During the third quarter of our fiscal year ending June 30, 2024, the Company continued to deliver a solid financial performance, in particular, growth in our digital first solutions with leading clients in our Retail & E-commerce and Travel, Transportation & Logistics verticals. We closed two sites during the quarter to optimize utilization in our onshore and nearshore geographies. Despite macroeconomic conditions impacting our historical growth trends, as well as the unfavorable impact on our revenue from shifting mix from onshore to offshore geographies, the business performed well in several important areas, including profitability and new client wins with key clients in strategic verticals. As expected, our new sales pipeline and wins have picked up pace, with fifteen new clients during the nine months ended March 31, 2024 versus eight in the prior year period.
Previous wording
The Company delivered revenues of $132.6 million during the three months ended December 31, 2023, a 4.8% decline compared to same quarter in the prior year, largely due to the year over year shift of delivery from onshore to higher margin offshore regions, macroeconomic conditions, lower training revenue recognized, and external factors impacting the FinTech and Telecommunications verticals, partially offset by revenue increases in the Retail & E-commerce and HealthTech verticals. Net income during the three months ended December 31, 2023 was $6.1 million, a decrease of 34.5% from $9.3 million during the same quarter in the prior year. Fully diluted earnings per share for the three months ended December 31, 2023 of $0.33, a decrease of 33% from $0.49 per share during the same quarter in the prior year.
Current wording
The Company delivered revenues of $126.8 million during the three months ended March 31, 2024, a 3.6% decline compared to same quarter in the prior year, largely due to the year over year shift of delivery from onshore to higher margin offshore regions, macroeconomic conditions, and external factors impacting the FinTech and Telecommunications verticals, partially offset by revenue increases in the Retail & E-commerce and Travel, Transportation & Logistics verticals. Net income during the three months ended March 31, 2024 was $10.3 million, a decrease of 8.6% from $11.3 million during the same quarter in the prior year. Fully diluted earnings per share for the three months ended March 31, 2024 of $0.57, a decrease of 3% from $0.59 per share during the same quarter in the prior year.
Previous wording
The Company delivered revenues of $257.2 million during the six months ended December 31, 2023, a 3.7% decline compared to same period in the prior year, largely due to aforementioned macroeconomic conditions. Net income during the six months ended December 31, 2023 was $13.5 million, a decrease of 14.5% from $15.8 million during the same period in the prior year. The decrease in net income was primarily driven by lower revenue, including training revenue recognized, and planned investments in our technology, and sales and marketing, and client service functions as we continue to focus on revenue growth. Fully diluted earnings per share for the six months ended December 31, 2023 of $0.72, a decrease of 14% from $0.84 per share during the same period in the prior year.
Current wording
The Company delivered revenues of $384.0 million during the nine months ended March 31, 2024, a 3.7% decline compared to same period in the prior year, largely due to aforementioned factors and macroeconomic conditions. Net income during the nine months ended March 31, 2024 was $23.8 million, a decrease of 12.0% from $27.1 million during the same period in the prior year. The decrease in net income was primarily driven by lower revenue, including training revenue recognized, impairment losses and severance costs related to our continued optimization efforts, and planned investments in our technology, sales and marketing, and client service functions as we continue to focus on revenue growth. Fully diluted earnings per share for the nine months ended March 31, 2024 was $1.29, a decrease of 10% from $1.44 per share during the same period in the prior year.
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, 2023. Some of our customers have increased their focus on cost reduction, resulting in decisions to shift work from onshore sites to offshore sites, which has contributed to a modest decline in revenue during the six months ended December 31, 2023 when compared to the same period in the prior year. We expect that these factors will continue to impact our 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.
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, 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 has contributed to a modest decline in revenue during the nine months ended March 31, 2024 when compared to the same period in the prior year. We expect that these factors will continue to impact our 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.
Previous wording
We are moving aggressively to develop the “Next wave of Wave X” by leveraging generative AI in our business. We have created our three-pronged AI strategy, which continues to keep ibex at the forefront of digital transformation. Our solutions are focused on increasing agent productivity, providing deeper customer insights to elevate the customer experience and putting AI in front of the customer journey with voice and chat bots. We believe we are well positioned to leverage our leadership position in adopting new technology in the CX sector and to create significant value for our clients through the application of AI. More information on the risks related to the adoption of AI is described in Part 1. Item 1A of the Annual Report.
Current wording
We are moving aggressively to develop the “Next wave of Wave iX” by leveraging generative AI in our business. We introduced WaveiX on January 30, 2024. We have created our three-pronged AI strategy, which continues to keep ibex at the forefront of digital transformation. Our solutions are focused on increasing agent productivity, providing deeper customer insights to elevate the customer experience and putting AI in front of the customer journey with voice and chat bots. We believe we are well positioned to leverage our leadership position in adopting new technology in the CX sector and to create significant value for our clients through the application of AI. More information on the risks related to the adoption of AI is described in Part 1. Item 1A of the Annual Report.
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 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 providers. Demand during the six months ended December 31, 2023 was constrained when compared to the same period in the prior year, due in large part to the aforementioned macroeconomic conditions.
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 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 providers. Demand during the nine months ended March 31, 2024 was constrained when compared to the same period in the prior year, due in large part to the aforementioned macroeconomic conditions.
Previous wording
As demand for delivery locations has continued to shift towards lower cost geographies during the six months ended December 31, 2023, 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. We also realized cost savings as we reduced the number of onshore and nearshore delivery centers year over year.
Current wording
As demand for delivery locations has continued to shift towards lower cost geographies during the nine months ended March 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. We continue to realize cost savings as we optimize the number of onshore and nearshore delivery centers.
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, 2023, 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, 2023, 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, 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 nine months ended March 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.
Previous wording
We generate greater profit margins from our work carried out by agents located in offshore and nearshore geographies 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 94% as of December 31, 2023. We regularly evaluate new markets to continue to service our clients.
Current wording
We generate greater profit margins from our work carried out by agents located in offshore and nearshore geographies 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 March 31, 2024. We regularly evaluate new markets to continue to service our clients.
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. However, in the current slowing economic environment, our sales cycles have lengthened. We believe that the sales activity has and will continue to pick up pace in fiscal year 2024.
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. However, in the slowing economic environment, our sales cycles were lengthening in fiscal year 2023 and the first two quarters of fiscal year 2024. We have seen sales activity pick up pace in the third quarter of fiscal year 2024.
Previous wording
During the six months ended December 31, 2023, our largest client accounted for 13%, while our three largest clients accounted for 31% 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, 2024, our largest client accounted for 13%, while our three largest clients accounted for 29% of our consolidated revenues. We believe client diversification is an important attribute 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, 2023 and the six months ended December 31, 2023, the tightening in the global labor market and corresponding wage inflation, as well as increasing facilities expenses has 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, 2023 and the nine months ended March 31, 2024, the tightening in the global labor market and corresponding wage inflation, as well as increasing facilities expenses has 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, 2023 and 2022:
Current wording
The following summarizes the results of our operations for the three and nine months ended March 31, 2024 and 2023:
Previous wording
Our revenue was $132.6 million during the three months ended December 31, 2023, a decrease of $6.7 million, or 4.8%, compared to the prior year quarter. This decrease was primarily driven by macroeconomic factors impacting the FinTech and Telecommunications verticals, which decreased $8.6 million or 32.3%, and $3.6 million or 15.4%, respectively, from the comparative period. These decreases were partially offset by increases in the HealthTech vertical of $4.1 million, or 34.0%, and Retail & E-commerce vertical of $0.9 million, or 2.5%, from the comparative period.
Current wording
Our revenue was $126.8 million during the three months ended March 31, 2024, a decrease of $4.8 million, or 3.6%, compared to the prior year quarter. This decrease was primarily driven by macroeconomic factors impacting the FinTech and Telecommunications verticals, which decreased $7.0 million or 28.7%, and $3.6 million or 16.7%, respectively, from the comparative period. These decreases were partially offset by increases in the Retail & E-commerce vertical of $2.7 million, or 9.3%, and Travel, Transportation & Logistics vertical of $2.5 million, or 17.7% from the comparative period.
Previous wording
As a percentage of total revenue, the revenue from our Retail & E-commerce vertical increased to 29.0% during the three months ended December 31, 2023 compared to 26.9%, and the revenue from our HealthTech vertical increased to 12.2% compared to 8.7% during the prior year quarter. Conversely, the revenue from our FinTech vertical decreased to 13.7% compared to 19.2%, and the revenue from our Telecommunications vertical decreased to 14.8% compared to 16.7% during the prior year quarter.
Current wording
As a percentage of total revenue, the revenue from our Retail & E-commerce vertical increased to 24.9% during the three months ended March 31, 2024 compared to 22.0%, and the revenue from our Travel, Transportation & Logistics vertical increased to 13.1% compared to 10.7% during the prior year quarter. Conversely, the revenue from our FinTech vertical decreased to 13.7% compared to 18.5%, and the revenue from our Telecommunications vertical decreased to 14.0% compared to 16.2% during the prior year quarter.
Previous wording
Cost of services was $95.9 million during the three months ended December 31, 2023, a decrease of $3.9 million, or 3.9%, compared to the prior year quarter. The decrease in cost of services was primarily due to decreases in payroll and related costs, facilities, and local transportation expenses, partially offset by an increase in lead costs.
Current wording
Cost of services was $87.1 million during the three months ended March 31, 2024, a decrease of $4.6 million, or 5.0%, compared to the prior year quarter. The decrease in cost of services was primarily due to decreases in payroll and related costs, facilities, telecom, reseller commissions and lead costs, and printing and production related expenses.
Previous wording
Payroll and related costs were $74.3 million during the three months ended December 31, 2023, a decrease of $3.4 million, or 4.4%, compared to the prior year quarter. As a percent of revenue, payroll costs remained consistent at 56.0% during the three months ended December 31, 2023 compared to 55.8% during the prior year quarter.
Current wording
Payroll and related costs were $67.2 million during the three months ended March 31, 2024, a decrease of $3.2 million, or 4.5%, compared to the prior year quarter. As a percent of revenue, payroll cost decreased to 53.0% during the three months ended March 31, 2024 compared to 53.5% during the prior year quarter, reflecting the continuing trend of shifting volume to lower cost regions.
Previous wording
Facilities expenses, including rent and utilities, were $13.0 million during the three months ended December 31, 2023, a decrease of $0.5 million, or 3.4%, compared to the prior year quarter, and local transportation expenses were $1.7 million during the three months ended December 31, 2023, a decrease of $0.2 million, or 10.7%, compared to the prior year quarter. These decreases were primarily due to the site optimization efforts completed in the fourth quarter of fiscal year 2023.
Current wording
Facilities expenses, including rent and utilities, were $12.2 million during the three months ended March 31, 2024, a decrease of $0.7 million, or 5.7%, compared to the prior year quarter. Telecom, reseller commissions and lead costs, and local transportation and other site related expenses were $6.0 million during the three months ended March 31, 2024, a decrease of $0.7 million, or 10.6%, compared to the prior year quarter. These decreases were primarily due to the site optimization efforts completed in the fourth quarter of fiscal year 2023.
Previous wording
SG&A expense was $47.9 million during the six months ended December 31, 2023, an increase of $5.1 million, or 11.9%, compared to the same period in the prior year. The increase in SG&A expense was primarily due to increases in payroll and related costs, IT expenses, legal and professional fees, and travel and other expenses.
Current wording
SG&A expense was $23.6 million during the three months ended March 31, 2024, an increase of $1.4 million, or 6.4%, compared to the prior year quarter. The increase in SG&A expense was primarily due to impairment losses, severance costs, and IT expenses, partially offset by decreases in variable compensation, travel, and shared-based compensation expense.
Previous wording
D&A expense was $4.9 million during the three months ended December 31, 2023, an increase of $0.4 million or 7.9% compared to the prior year quarter. As a percentage of revenue, depreciation and amortization expense increased to 3.7% during the three months ended December 31, 2023 compared to 3.3% in the comparative period.
Current wording
D&A expense was $4.9 million during the three months ended March 31, 2024, an increase of $0.2 million or 4.1% compared to the prior year quarter. As a percentage of revenue, depreciation and amortization expense increased to 3.8% during the three months ended March 31, 2024 compared to 3.6% in the comparative period.
Previous wording
Income from operations was $6.9 million during the three months ended December 31, 2023 compared to $11.5 million compared to the prior year quarter. The operating margin was 5.2% for three months ended December 31, 2023, down from 8.2% for the three months ended December 31, 2022. The decrease was primarily driven by lower revenue, including training revenue recognized, as well as planned investments in technology, sales and marketing, and client service functions as we continue to focus on revenue growth.
Current wording
Income from operations was $11.3 million during the three months ended March 31, 2024 compared to $13.1 million compared to the prior year quarter. The operating margin was 8.9% for three months ended March 31, 2024, down from 9.9% for the three months ended March 31, 2023. The decrease was primarily driven by lower revenue and the impairment losses and severance costs, partially offset by lower facilities costs, variable compensation, travel, and share-based compensation expense.
Previous wording
Interest income during the three months ended December 31, 2023 was $0.5 million compared to $0.1 million for the three months ended December 31, 2022 as income on invested funds increased compared to the prior year quarter.
Current wording
Interest income during the three months ended March 31, 2024 was $0.4 million compared to $0.2 million for the three months ended March 31, 2023 as income on invested funds increased compared to the prior year quarter.
Previous wording
Interest expense during the three months ended December 31, 2023 was $0.1 million, down from $0.3 million during the three months ended December 31, 2022 driven by lower borrowings for this quarter.
Current wording
Interest expense during the three months ended March 31, 2024 was $0.1 million, consistent with the prior year quarter.
Previous wording
Income tax expense was $1.3 million during three months ended December 31, 2023, a decrease of $0.7 million when compared with the same period of the prior year, primarily due to lower pre-tax income in the current year.
Current wording
Income tax expense was $1.3 million during three months ended March 31, 2024, a decrease of $0.6 million when compared with the same period of the prior year, primarily due to lower pre-tax income and a lower effective tax rate in the current year. The effective tax rate was 11.0% and 14.2% for the three months ended March 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 and discrete items recorded in the quarter.
Previous wording
Our revenue was $257.2 million during the six months ended December 31, 2023, a decrease of $9.9 million, or 3.7%, compared to the same prior year period. This decrease was primarily driven by macroeconomic factors impacting the FinTech and Telecommunications verticals, which decreased $15.6 million or 30.0%, and $4.7 million or 10.4%, respectively, from the comparative period. These decreases were partially offset by increases in the HealthTech vertical of $5.9 million, or 23.5%, Retail & E-commerce vertical of $2.9 million, or 4.4%, and Cable vertical of $1.8 million, or 17.8%, from the comparative period.
Current wording
Our revenue was $384.0 million during the nine months ended March 31, 2024, a decrease of $14.6 million, or 3.7%, compared to the same prior year period. This decrease was primarily driven by macroeconomic factors impacting the FinTech and Telecommunications verticals, which decreased $22.6 million or 29.5%, and $8.3 million or 12.4%, respectively, from the comparative period. These decreases were partially offset by increases in the HealthTech vertical of $6.3 million, or 14.6%, Retail & E-commerce vertical of $5.6 million, or 6.0%, and Travel, Transportation & Logistics vertical of $3.2 million, or 6.9%, from the comparative period.
Previous wording
As a percentage of total revenue, the revenue from our Retail & E-commerce vertical increased to 26.3% during the six months ended December 31, 2023 compared to 24.2%, and the revenue from our HealthTech vertical increased to 12.0% compared to 9.4% during the same prior year period. Conversely, the revenue from our FinTech vertical decreased to 14.2% compared to 19.6%, and the revenue from our Telecommunications vertical decreased to 15.8% compared to 17.0% during the same prior year period.
Current wording
As a percentage of total revenue, the revenue from our Retail & E-commerce vertical increased to 25.8% during the nine months ended March 31, 2024 compared to 23.5%, the revenue from our HealthTech vertical increased to 12.9% compared to 10.8%, and the revenue from our Travel, Transportation & Logistics vertical increased to 13.0% compared to 11.7% during the same prior year period. Conversely, the revenue from our FinTech vertical decreased to 14.0% compared to 19.2%, and the revenue from our Telecommunications vertical decreased to 15.2% compared to 16.7% during the same prior year period.
Previous wording
Cost of services was $184.1 million during the six months ended December 31, 2023, a decrease of $11.9 million, or 6.1%, compared to the same prior year period. The decrease in cost of services was primarily due to decreases in payroll and related costs, facilities, telecom, printing and production related, and local transportation expenses, partially offset by an increase in lead costs.
Current wording
Cost of services was $271.2 million during the nine months ended March 31, 2024, a decrease of $16.5 million, or 5.7%, compared to the same prior year period. The decrease in cost of services was primarily due to decreases in payroll and related costs, facilities, telecom, local transportation and other site related expenses, partially offset by an increase in reseller commissions and lead expenses.
Previous wording
Payroll and related costs were $141.1 million during the six months ended December 31, 2023, a decrease of $10.2 million, or 6.7%, compared to the same prior year period. As a percent of revenue, payroll costs decreased to 54.9% during the six months ended December 31, 2023 compared to 56.6% during the same period in the prior year driven by an increasing percentage of revenue generated from nearshore and offshore regions with lower labor costs.
Current wording
Payroll and related costs were $208.4 million during the nine months ended March 31, 2024, a decrease of $13.4 million, or 6.0%, compared to the same prior year period. As a percent of revenue, payroll costs decreased to 54.3% during the nine months ended March 31, 2024 compared to 55.6% during the same period in the prior year reflecting the continuing trend of shifting volume to lower cost regions.
Previous wording
Facilities expenses were $9.0 million during six months ended December 31, 2023, a decrease of $0.8 million, or 8.2%, compared to the same period in the prior year, local transportation expenses were $3.3 million during the three months ended December 31, 2023, a decrease of $0.3 million, or 9.0%, compared to the same period in the prior year, and telecom, printing and production related expenses were $4.3 million during the six months ended December 31, 2023, a decrease of $1.0 million, or 18.6%, compared to the same period in the prior year. These decreases were primarily due to the site optimization efforts completed in the fourth quarter of fiscal year 2023.
Current wording
Facilities expenses, including rent and utilities, were $37.7 million during nine months ended March 31, 2024, a decrease of $1.8 million, or 4.6%, compared to the same period in the prior year. Telecom, local transportation and other site related expenses were $10.9 million during the nine months ended March 31, 2024, a decrease of $1.9 million, or 14.7%, compared to the same period in the prior year. These decreases were primarily due to the site optimization efforts completed in the fourth quarter of fiscal year 2023.
Previous wording
Lead expenses were $6.5 million during the six months ended December 31, 2023, an increase of $0.9 million, or 15.5%, compared to the same period in the prior year. 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, which may continue throughout the remainder of fiscal year 2024.
Current wording
Lead expenses were $9.2 million during the nine months ended March 31, 2024, an increase of $0.7 million, or 8.7%, compared to the same period in the prior year. 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, which may continue throughout the remainder of fiscal year 2024.
Previous wording
SG&A expense was $24.9 million during the three months ended December 31, 2023, an increase of $1.4 million, or 5.8%, compared to the prior year quarter. The increase in SG&A expense was primarily due to increases in payroll and related costs, IT expenses, rent and utilities, partially offset by decreases in legal and professional fees.
Current wording
SG&A expense was $71.5 million during the nine months ended March 31, 2024, an increase of $6.5 million, or 10.0%, compared to the same period in the prior year. The increase in SG&A expense was primarily due to impairment losses, increases in payroll and related costs (including severance), IT expenses, legal and professional fees, and facilities expenses, partially offset by decreases in share-based compensation expense.
Previous wording
The increase in payroll and related costs of $2.2 million was primarily driven by continued investments in our technology, sales and marketing, and client service teams as we continue to focus on revenue growth. IT expenses increased $1.3 million due to continued investments in cybersecurity and core business management systems. The increase in legal and professional fees of $1.1 million was primarily related to strategic projects and higher compliance expenses. Travel and other expenses increased by $0.4 million as the business continues to expand in our offshore region.
Current wording
The increase in payroll and related costs of $2.9 million was primarily driven by severance costs of $1.3 million related to the elimination of certain positions that we considered redundant, and investments in our technology, sales and marketing, and client service teams as we continue to focus on revenue growth. IT expenses increased $1.5 million due to continued investments in cybersecurity and core business management systems. The increase in legal and professional fees of $0.9 million was primarily related to strategic projects and higher compliance expenses. Facilities expense, including rent and utilities, increased by $0.6 million as the business continues to expand in our offshore region. During the nine months ended March 31, 2024, we determined that the estimated fair value for certain assets at two of our delivery centers no longer exceeded their carrying value, and recorded impairment losses of $1.3 million. These increases were partially offset by decreases in share-based compensation expense.
Previous wording
D&A expense was $10.0 million during the six months ended December 31, 2023, an increase of $0.7 million or 7.9%, compared to the same prior year period. As a percentage of revenue, depreciation and amortization expense increased to 3.9% during six months ended December 31, 2023 compared to 3.5% in the comparative period.
Current wording
D&A expense was $14.9 million during the nine months ended March 31, 2024, an increase of $0.9 million or 6.6%, compared to the same prior year period. As a percentage of revenue, depreciation and amortization expense increased to 3.9% during nine months ended March 31, 2024 compared to 3.5% in the comparative period.
Previous wording
Income from operations was $15.3 million during the six months ended December 31, 2023 compared to $19.1 million compared to the same period in the prior year. The operating margin was 5.9% for six months ended December 31, 2023, down from to 7.2% for the six months ended December 31, 2022. The decrease was primarily driven by lower revenue, including training revenue recognized, and planned investments in our technology, sales and marketing, and client service functions as we continue to focus on revenue growth.
Current wording
Income from operations was $26.6 million during the nine months ended March 31, 2024 compared to $32.2 million compared to the same period in the prior year. The operating margin was 6.9% for nine months ended March 31, 2024, down from to 8.1% for the nine months ended March 31, 2023. The decrease was primarily driven by lower revenue, impairment losses, severance costs, and planned investments in our technology, sales and marketing, and client service functions as we continue to focus on revenue growth, partially offset by lower share-based compensation expense.
Previous wording
Interest income during the six months ended December 31, 2023 was $1.1 million compared to $0.2 million for the six months ended December 31, 2022 as income on invested funds increased compared to the same period in the prior year.
Current wording
Interest income during the nine months ended March 31, 2024 was $1.5 million compared to $0.4 million for the nine months ended March 31, 2023 as income on invested funds increased compared to the same period in the prior year.
Previous wording
Interest expense during the six months ended December 31, 2023 was $0.2 million, down from $0.4 million during the six months ended December 31, 2022 driven by lower borrowings.
Current wording
Interest expense during the nine months ended March 31, 2024 was $0.3 million, down from $0.6 million during the nine months ended March 31, 2023 driven by lower borrowings.
Previous wording
Adjusted net income is a non-GAAP profitability measure that represents net income before the effect of the following items: non-recurring expenses (including legal and settlement costs), warrant contra revenue, foreign currency gains and losses, and share-based compensation expense, net of the tax impact of such adjustments. 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: non-recurring expenses (including legal and settlement costs), severance costs, impairment losses, warrant contra revenue, foreign currency gains and losses, gain on sale of subsidiaries, and share-based compensation expense, net of the tax impact of such adjustments. 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 depreciation and amortization. Adjusted EBITDA is a non-GAAP profitability measure that represents EBITDA before the effect of the following items: non-recurring expenses (including legal and settlement costs), 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 depreciation and amortization. Adjusted EBITDA is a non-GAAP profitability measure that represents EBITDA before the effect of the following items: non-recurring expenses (including legal and settlement costs), severance costs, impairment losses, interest income, warrant contra revenue, foreign currency gains and losses, gain on sale of subsidiaries, and share-based compensation expense. Adjusted EBITDA margin is a non-GAAP profitability measure that represents adjusted EBITDA divided by revenue.
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Previous report — wording carried elsewhere
Lead expenses were $2.9 million during the three months ended December 31, 2023, an increase of $0.4 million, or 17.3%, 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, which may continue throughout the remainder of fiscal year 2024.
Previous report — wording carried elsewhere
Income tax expense was $2.7 million during six months ended December 31, 2023, a decrease of $0.4 million when compared with the same period in the prior year, primarily due to lower pre-tax income in the current year.
Previous report — wording carried elsewhere
or as a substitute for analysis of our operating results as reported under U.S. GAAP. Some of these limitations are as follows: