IBEX Ltd
For the period ended Dec 31, 2024. Filed Feb 6, 2025.
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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.
Dec 31, 2024 · Filed Feb 6, 2025
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 2024-09-30; filed 2024-11-07.
0001720420-24-000062
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-12-31; filed 2025-02-06.
0001720420-25-000009
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 112 previous paragraphs and 146 current paragraphs.
63 unchanged; 43 reworded; 35 added; 5 removed; 1 previous and 5 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 (35)
Current report
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 report
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 report
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 report
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 report
Six Months Ended December 31, 2024 and 2023
Current report
Revenue
Current report
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 report
Operating Expenses
Current report
Cost of services
Current report
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 report
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 report
D&A expense
Current report
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 report
Income from operations
Current report
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 report
Interest income
Current report
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 report
Interest expense
Current report
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 report
Provision for Income Taxes
Current report
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 report
Adjusted EBITDA margin was 11.8% for the three months ended December 31, 2024 compared to 10.8% during the prior year quarter. Adjusted EBITDA margin was 11.9% for the six months ended December 31, 2024 compared to 10.9% during the prior year period. These increases were driven by margin expansion and improved operational delivery due to the realization of site optimization efforts undertaken in the prior year.
Current report
Net (debt) / cash
Current report
HSBC Credit Facilities
Current report
U.S. Credit Agreement
Current report
On October 29, 2024 (the "Effective Date"), the Company's subsidiaries, Ibex Global Solutions, Inc. ("Ibex US") and Digital Globe Services, LLC, as borrowers, together with the Company and Ibex Global Limited, as guarantors, and the other loan parties and guarantor parties party thereto from time to time, entered into a credit agreement with HSBC Bank USA, National Association ("HSBC U.S.") (the “U.S. Credit Agreement”), which provides for a $25 million secured revolving credit facility (the “U.S. Credit Facility”). The U.S. Credit Facility matures on the earlier of October 29, 2027 and the termination or maturity of the obligations under the UAE Credit Agreement (as defined and described below).
Current report
Borrowings under the U.S. Credit Facility bear interest at a per annum rate equal to term Secured Overnight Financing Rate ("SOFR") plus 2%, or equal to alternate base rate plus 1%. The U.S. Credit Facility is secured by substantially all of the assets of Ibex US and its wholly owned subsidiaries and guaranteed by the wholly owned U.S. subsidiaries of Ibex US, with an additional guaranty by the Company and Ibex Global Limited.
Current report
UAE Credit Agreement
Current report
On the Effective Date, the Company's subsidiary, Ibex Global FZ-LLC (the “UAE Company”) entered into: (i) a revolving loan agreement (committed) together with (ii) a facility offer letter; (iii) a general terms and conditions applicable to corporate banking credit facilities; and (iv) a letter of deviation (collectively, the “UAE Credit Agreement”), in each case, with HSBC Bank Middle East Limited ("HSBC UAE”). The UAE Credit Agreement provides for a committed $50 million post shipment seller revolving loan credit facility (the “UAE Loan Facility”) and a $50,000 credit card facility (the “Commercial Card Facility” and collectively with the UAE Loan Facility, the “UAE Facilities”). The final repayment date for the UAE Credit Agreement is two years from the Effective Date. To secure the UAE Facilities, the Company provided an irrevocable and unconditional guarantee in favor of HSBC UAE with respect to all monies and liabilities owing or incurred by the UAE Company to or in favor of HSBC UAE.
Current report
Borrowings under the UAE Loan Facility bear interest at a per annum rate equal to 3-month term SOFR plus 2%. The Commercial Card Facility is subject to HSBC UAE’s standard commercial card terms and conditions.
Current report
The U.S Credit Agreement and UAE Credit Agreement contain certain financial and non-financial covenants, including, among other things, covenants in respect of a total net leverage ratio, fixed charge coverage ratio, and restrictions on incurring additional debt and liens, making certain restricted payments and investments, engaging in certain transactions with affiliates, and disposal of assets.
Current report
The U.S. Credit Facility and the UAE Credit Facilities (collectively, the "HSBC Credit Facilities") replaced the Company's prior credit facility with PNC Bank N.A., which was terminated and repaid in full on the Effective Date. In connection with the termination of the PNC Credit Facility, the Company recognized a loss on extinguishment of $0.2 million.
Current report
In connection with the HSBC Credit Facilities, the Company deferred debt issuance costs of $1.0 million, which are included in other current assets and other non-current assets in the consolidated balance sheets as of December 31, 2024.
Current report
TRGI convertible promissory note
Current report
On November 19, 2024, the Company entered into a purchase agreement with TRGI (the “TRGI Purchase Agreement”), pursuant to which the Company purchased from TRGI 3,562,341 issued and outstanding common shares of the Company for an aggregate price of $70 million, of which $45 million was paid in cash and $25 million was in the form of a convertible promissory note issued to TRGI (the "TRGI convertible promissory note"). The TRGI convertible promissory note was repaid on January 9, 2025, using funds drawn from the HSBC Credit Facilities.
Removed paragraphs (5)
Previous report
Share-based compensation expense was $0.1 million during the three months ended September 30, 2024, compared to a benefit of $0.1 million during the prior year quarter, primarily due to a higher share price which increased the fair value of the liability classified plans.
Previous report
Income from operations was $9.1 million during the three months ended September 30, 2024 compared to $8.3 million during the prior year quarter. The operating margin was 7.0% for three months ended September 30, 2024, up from 6.7% for the three months ended September 30, 2023. The increase was primarily driven by higher revenues, and lower cost of services and D&A as a percentage of total revenues. The lower costs were partially offset by increased SG&A.
Previous report
Net income margin was 5.8% for the three months ended September 30, 2024 compared to 6.0% during the prior year quarter. The decrease was primarily driven by increased income tax expense due to a higher effective tax rate in the current year quarter.
Previous report
Adjusted EBITDA margin was 12.0% for the three months ended September 30, 2024 compared to 11.0% during the prior year quarter. The increase was primary driven by revenue growth in key verticals from existing and new clients launched throughout fiscal 2024 and first quarter of fiscal 2025, and stronger operating results due to site optimization efforts and the migration of clients to higher margin offshore locations during recent years.
Reworded paragraphs (43)
Previous wording
The following discussion and analysis should be read in conjunction with the unaudited condensed consolidated financial statements and related notes included in Part I, Item 1 of this Quarterly Report on Form 10-Q (this "Form 10-Q"), the financial statements and related notes included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2024 (the "Annual Report"), as filed with the Securities and Exchange Commission (the "SEC"), and the information included under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Annual Report. In addition to historical data, the following discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those discussed in our forward-looking statements as a result of various factors, including but not limited to those discussed under "Cautionary Note Regarding Forward-Looking Statements" in this Form 10-Q and under Part I, Item 1A, "Risk Factors" in the Annual Report.
Current wording
The following discussion and analysis should be read in conjunction with the unaudited condensed consolidated financial statements and related notes included in Part I, Item 1 of this Quarterly Report on Form 10-Q (this "Form 10-Q"), the financial statements and related notes included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2024 (the "Annual Report"), as filed with the Securities and Exchange Commission (the "SEC"), and the information included under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Annual Report. In addition to historical data, the following discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those discussed in our forward-looking statements as a result of various factors, including but not limited to those discussed under "Cautionary Note Regarding Forward-Looking Statements" in this Form 10-Q, under Part II, Item 1A. "Risk Factors" in this Form 10-Q, and under Part I, Item 1A, "Risk Factors" in the Annual Report.
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 months ended September 30, 2024 compared to the three months ended September 30, 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 six months ended December 31, 2024 compared to the three and six months ended December 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 customer experiences ("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 31,000 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.
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 customer experiences ("CX") delivery center model consisting of 30 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 Travel, Transportation & Logistics. ibex leverages its diverse global team of approximately 33,000 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 three months ended September 30, 2024, the Company delivered strong financial results, and experienced growth with leading clients in our HealthTech, Retail & E-commerce, and Travel, Transportation & Logistics verticals. We increased capacity in our offshore and nearshore geographies and expanded into two new sites. Despite macroeconomic headwinds during recent years, the business performed well in several important areas this quarter, including total revenues, profitability, strong cash from operating activities and free cash flows, new client wins in strategic verticals, and continued client and vertical diversification.
Current 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.
Previous wording
The Company delivered revenues of $129.7 million during the three months ended September 30, 2024, a 4.1% increase compared to the prior year quarter, largely due to growth in the HealthTech, Retail & E-commerce, and Travel, Transportation & Logistics verticals from existing and new clients launched throughout fiscal 2024 and first quarter of fiscal 2025. Net income during the three months ended September 30, 2024 was $7.5 million, a 1.4% increase from $7.4 million during the prior year quarter. The increase was driven by higher revenues and improved operational delivery, which is attributed to changes in geographic mix, compared to the prior year quarter. Fully diluted earnings per share of $0.43 was up from $0.39 in the prior year quarter.
Current 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.
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 three months ended September 30, 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.
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 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.
Previous wording
With the increasing applicability of AI in enhancing business processes, the BPO industry is increasingly evaluating and starting to integrate AI into its range of solutions to improve the customer experience and efficiencies. We are moving aggressively to leverage generative AI in our business. Our Wave iX technology is a 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. We believe that our approach to bringing a combination of our AI-enabled solutions plus a robust set of third-party AI-enabled solutions to our clients positions the company to not only be a fast-mover in the market, but also to capture an outsized share of AI-impacted future revenue, and to help minimize risk to our overall revenue and provide opportunities for future profitability enhancement. While the initial implementation of some AI-solutions may impact revenue directly derived from traditional agent-driven activities, it is our belief that by remaining on the forefront and bringing these solutions to our clients, we will be able to capture a greater share of AI-enabled revenue work and maintain and grow our overall business and results.
Current wording
With the increasing applicability of AI in enhancing business processes, the BPO industry is increasingly evaluating and starting to integrate AI into its range of solutions to improve the customer experience and efficiencies. We are moving aggressively to leverage generative AI in our business. Our Wave iX technology has a 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. We believe that our approach to bringing a combination of our AI-enabled solutions plus a robust set of third-party AI-enabled solutions to our clients positions us to not only be a fast-mover in the market, but also to capture an outsized share of AI-impacted future revenue, and to help minimize risk to our overall revenue and provide opportunities for future profitability enhancement. While the initial implementation of some AI-solutions may impact revenue directly derived from traditional agent-driven activities, it is our belief that by remaining on the forefront and bringing these solutions to our clients, we will be able to capture a greater share of AI-enabled revenue work and maintain and grow our overall business and results in the near- and long-term.
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 outsourcing providers. Demand during the three months ended September 30, 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 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.
Previous wording
As demand for delivery locations has continued to shift towards lower cost geographies during the three months ended September 30, 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 geographically optimize our delivery centers.
Current 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.
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 three months ended September 30, 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 three months ended September 30, 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 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.
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 95% as of September 30, 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 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.
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 quarter 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 experienced a faster pace of sales activity during the second half of fiscal year 2024 and through the first half of fiscal year 2025.
Previous wording
During the three months ended September 30, 2024, our largest client accounted for 11%, while our three largest clients accounted for 26% of our consolidated revenues. We believe client diversification is an important attribute in a challenging market.
Current 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.
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 three months ended September 30, 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 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.
Previous wording
The following summarizes the results of our operations for the three months ended September 30, 2024 and 2023:
Current wording
The following summarizes the results of our operations for the three and six months ended December 31, 2024 and 2023:
Previous wording
Our revenue was $129.7 million for the three months ended September 30, 2024, an increase of $5.1 million, or 4.1%, compared to the prior year quarter. This increase was primarily driven by increases in our HealthTech vertical of $3.5 million, or 23.4%, Retail & E-commerce vertical of $2.5 million, or 8.6%, and Travel, Transportation & Logistics vertical of $1.7 million, or 10.0%, compared to the prior year quarter. These increases were partially offset by decreases in the FinTech vertical of $2.4 million, or 13.0%, compared to the prior year quarter.
Current 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%.
Previous wording
Cost of services was $90.0 million during the three months ended September 30, 2024, an increase of $1.9 million, or 2.1%, 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, travel and entertainment, and share-based compensation expense.
Current 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.
Previous wording
Payroll and related costs were $67.9 million during the three months ended September 30, 2024, an increase of $1.1 million, or 1.7%, compared to the prior year quarter, due to increased revenues during the current year quarter. As a percent of revenue, payroll cost decreased to 52.4% during the three months ended September 30, 2024 compared to 53.6% during the prior year quarter, reflecting the continuing trend of shifting volume to lower cost regions.
Current 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.
Previous wording
Reseller commissions and lead expenses were $3.8 million during the three months ended September 30, 2024, an increase of $0.2 million, or 4.4%, 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 $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.
Previous wording
D&A expense was $4.4 million during the three months ended September 30, 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 the closure of two sites during the second half of fiscal 2024. As a percentage of revenue, D&A decreased to 3.4% during the three months ended September 30, 2024 compared to 4.0% in the comparative period.
Current 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.
Previous wording
Interest income during the three months ended September 30, 2024 was $0.6 million, consistent with the prior year quarter and consists primarily of income from invested funds.
Current 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.
Previous wording
Interest expense during the three months ended September 30, 2024 was $0.2 million, consistent with the prior year quarter and consists primarily of interest expense on finance leases.
Current 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).
Previous wording
Income tax expense was $2.0 million during three months ended September 30, 2024, an increase of $0.6 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 20.8% and 15.7% for the three months ended September 30, 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 during the prior year quarter.
Current 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.
Previous wording
As a percentage of total revenue, the revenue from our HealthTech vertical increased to 14.1% for the three months ended September 30, 2024 compared to 11.9% in the prior year quarter, the revenue from our Retail & E-commerce vertical increased to 24.5% compared to 23.4%, and the revenue from our Travel, Transportation & Logistics vertical increased to 14.2% compared to 13.5%. Conversely, the revenue from our FinTech vertical decreased to 12.4% for the three months ended September 30, 2024 compared to 14.8% in the prior year quarter.
Current 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.
Previous wording
Travel and entertainment expenses were $0.6 million during the three months ended September 30, 2024, an increase of $0.2 million or 66.5%, compared to the prior year quarter. These increases were primarily due to higher engagement expenses in the current year quarter.
Current wording
Travel and entertainment expenses were $1.2 million during the six months ended December 31, 2024, an increase of $0.3 million or 27.4%, compared to the prior year period. These increases were primarily due to higher engagement expenses in the current year period.
Previous wording
SG&A expense was $26.2 million during the three months ended September 30, 2024, an increase of $3.2 million, or 13.8%, compared to the prior year quarter. The increase in SG&A expense was primarily due to an increase of $1.4 million in payroll and related costs due to continuing investments in technology, sales and marketing, and client service functions as we focus on revenue growth, and changes in foreign currency gains / losses of $2.3 million year over year, partially offset by decreases in legal and professional fees of $0.8 million.
Current 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.
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 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: 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 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: 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
•EBITDA, adjusted EBITDA and adjusted EBITDA marginare not intended to be a measure of free cash flow for our discretionary use, as they do not reflect: (i) changes in, or cash requirements for, our
Current wording
•EBITDA, adjusted EBITDA and adjusted EBITDA marginare not intended to be a measure of free cash flow for our discretionary use, as they do not reflect: (i) changes in, or cash requirements for, our working capital needs; (ii) debt service requirements; (iii) tax payments that may represent a reduction in cash available to us; and (iv) other cash costs that may recur in the future;
Previous wording
Net cash provided by operating activities during the three months ended September 30, 2024 was $7.8 million compared to $8.7 million during the prior year quarter. Free cash flow during the three months ended September 30, 2024 was $4.1 million compared to $6.6 million during the prior year quarter. The increase in capital expenditures during the current year quarter was driven by expansions in our offshore and nearshore regions.
Current wording
Net cash provided by operating activities during the three and six months ended December 31, 2024 was $1.1 million and $8.9 million, respectively, compared to $(1.6) million and $7.0 million, respectively, during the prior year periods. Free cash flow during the three and six months ended December 31, 2024 was $(3.2) million and $1.0 million, respectively, compared to $(4.5) million and $2.1 million, respectively, during the prior year periods. The increase in capital expenditures during the current year was driven by expansions in our offshore and nearshore regions and purchases of IT and telecommunications equipment.
Previous wording
Net cash is a non-GAAP liquidity measure that represents cash and cash equivalents less total debt. We believe that net cash provides useful information to investors in understanding and evaluating our ability to pay off debt. Our use of net cash has limitations as an analytical tool, and investors should not consider it in isolation or as a substitute for analysis of our financial results as reported under GAAP. Further, other companies, including companies in our industry, may adjust their cash or debt differently, which may reduce the value of net cash as a comparative measure.
Current wording
Net (debt) / cash is a non-GAAP liquidity measure that represents cash and cash equivalents less total debt. We believe that net (debt) / cash provides useful information to investors in understanding and evaluating our ability to pay off debt. Our use of net (debt) / cash has limitations as an analytical tool, and investors should not consider it in isolation or as a substitute for analysis of our financial results as reported under GAAP. Further, other companies, including companies in our industry, may adjust their cash or debt differently, which may reduce the value of net (debt) / cash as a comparative measure.
Previous wording
Net cash is calculated below:
Current wording
Net (debt) / cash is calculated below:
Previous wording
As of September 30, 2024, our principal sources of liquidity were cash and cash equivalents totaling $62.3 million, cash flows from operations, and the unused availability under our existing credit facility of $61.0 million.
Current wording
As of December 31, 2024, our principal sources of liquidity were cash and cash equivalents totaling $20.2 million, cash flows from operations, and the unused availability under our new HSBC Credit Facilities (as defined below) of $50.1 million.
Previous wording
As of September 30, 2024, our total indebtedness was $1.5 million, consisting of our finance leases. We were in compliance with all debt covenants as of September 30, 2024. See Note 6, "Debt" in the consolidated financial statements included in this Form 10-Q for additional information regarding our debt.
Current wording
As of December 31, 2024, our total indebtedness was $33.9 million, consisting of $7.5 million on our HSBC Credit Facilities, $1.4 million of finance leases, and $25.0 million for the TRGI convertible promissory note. We were in compliance with all debt covenants as of December 31, 2024. See Note 5, "Debt" in the consolidated financial statements included in this Form 10-Q for additional information regarding our debt.
Previous wording
To the extent additional funds are necessary to meet our long-term liquidity needs as we execute on our business strategy, we anticipate that they will be obtained through the utilization of current availability under our revolving credit facilities, additional indebtedness, additional equity financings or a combination of these potential sources of funds; however, such additional financing may not be available on favorable terms, or at all. If we are unable to raise additional funds when desired, our business, financial condition and results of operations could be adversely affected. See Note 15, "Subsequent Event" in the consolidated financial statements included in this Form 10-Q for additional information regarding our credit facilities.
Current wording
To the extent additional funds are necessary to meet our long-term liquidity needs as we execute on our business strategy, we anticipate that they will be obtained through the utilization of current availability under our revolving credit facilities, additional indebtedness, additional equity financings or a combination of these potential sources of funds; however, such additional financing may not be available on favorable terms, or at all. If we are unable to raise additional funds when desired, our business, financial condition and results of operations could be adversely affected.
Previous wording
The Board may authorize share repurchases of the Company’s common shares and the Company had multiple share repurchase plans during the three months ended September 30, 2024 and 2023. On May 1, 2024, the Board authorized the Company’s current share repurchase program of $30 million in share repurchases during the next twelve months. During the three months ended September 30, 2024 and 2023, the Company repurchased 282,129 and 134,524 shares, respectively, of its common shares totaling $4.7 million, and $2.0 million, respectively. All repurchases under these programs were funded with our existing cash balance.
Current wording
The Board may authorize share repurchases of the Company’s common shares and the Company had multiple share repurchase plans during the six months ended December 31, 2024 and 2023. During the six months ended December 31, 2024 and 2023, the Company repurchased 327,230 and 623,327 shares, respectively, of its common shares totaling $5.6 million, and $10.4 million respectively. All repurchases under these programs were funded with our existing cash balance.
Previous wording
The following discussion highlights our cash flow activities during the three months ended:
Current wording
The following discussion highlights our cash flow activities during the six months ended December 31, 2024:
Previous wording
As of September 30, 2024, we had cash and cash equivalents of $62.3 million, including $8.2 million located outside of the United States, and $2.8 million that is subject to certain local regulations on repatriation. As of June 30, 2024, we had cash and cash equivalents of $62.7 million, including $5.1 million located outside of the United States, and $2.5 million that is subject to certain local regulations on repatriation.
Current wording
As of December 31, 2024, we had cash and cash equivalents of $20.2 million, including $10.7 million located outside of the United States, and $3.7 million that is subject to certain local regulations on repatriation. As of June 30, 2024, we had cash and cash equivalents of $62.7 million, including $5.1 million located outside of the United States, and $2.5 million that is subject to certain local regulations on repatriation.
Previous wording
Net cash inflow from operating activities during the three months ended September 30, 2024 decreased to $7.8 million compared to $8.7 million during the prior year quarter. The decrease in net cash inflow from operating activities was primarily driven by an increase in working capital, offset by the impact of stronger operating results.
Current wording
Net cash inflow from operating activities during the six months ended December 31, 2024 increased to $8.9 million compared to $7.0 million during the same period in the prior year. The increase in net cash inflow from operating activities was primarily driven by increased revenues, stronger operating results, and net changes in operating assets and liabilities of $1.7 million.
Previous wording
During the three months ended September 30, 2024, we incurred net expenditures of $3.6 million on investing activities primarily driven by expansions in our offshore and nearshore regions.
Current wording
During the six months ended December 31, 2024, we incurred expenditures of $7.9 million on investing activities primarily driven by expansions in our offshore and nearshore regions and purchases of IT and telecommunications equipment.
Showing the first 40 of 43 pairs. Open the source sections for the rest.
Rearranged current paragraphs (5)
Current report — wording carried from elsewhere
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 report — wording carried from elsewhere
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 report — wording carried from elsewhere
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 report — wording carried from elsewhere
Selling, general and administrative expense (“SG&A”)
Current report — wording carried from elsewhere
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.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
working capital needs; (ii) debt service requirements; (iii) tax payments that may represent a reduction in cash available to us; and (iv) other cash costs that may recur in the future;