IBEX Ltd

Previous wording

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

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, 2026 compared to the three and nine months ended March 31, 2025.

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. ibex operates a global customer experiences ("CX") delivery center model consisting of 32 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 39,000 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, end-to-end customer engagement, and Artificial Intelligence ("AI") solutions to help companies acquire, engage, and retain valuable customers. ibex operates a global customer experiences ("CX") delivery center model consisting of 32 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 36,000 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 and six months ended December 31, 2025, the Company delivered strong financial results, and experienced growth with leading clients in our Retail & E-commerce, HealthTech, Travel, Transportation & Logistics, and Other verticals, partially offset by decreases in our Telecommunications vertical. The business performed well in several important areas this quarter, including total revenues, profitability, cash from operating activities, client and vertical diversification, and continued expansion including seven new client wins in strategic verticals during the first half of fiscal 2026.

Current wording

During the three and nine months ended March 31, 2026, the Company delivered strong financial results, and experienced growth with leading clients in our HealthTech, Retail & E-commerce, Travel, Transportation & Logistics, Technology, and Other verticals, partially offset by decreases in our Telecommunications vertical. The business performed well in several important areas this quarter, including total revenues, profitability, cash from operating activities, client and vertical diversification, and continued expansion including eight new client wins in strategic verticals year-to-date.

Previous wording

The Company delivered revenues of $164.2 million during the three months ended December 31, 2025, a 16.7% increase compared to the prior year quarter due to growth across our key verticals and digital acquisition business. Net income during the three months ended December 31, 2025 was $12.2 million, a 31.8% increase from $9.3 million during the same quarter in the prior year. Fully diluted earnings per share for the three months ended December 31, 2025 of $0.83, increased from $0.57 during the prior year quarter.

Current wording

The Company delivered revenues of $164.4 million during the three months ended March 31, 2026, a 16.8% increase compared to the prior year quarter due to growth across our key verticals and digital acquisition business. Net income during the three months ended March 31, 2026 was $13.3 million, a 27.3% increase from $10.5 million during the same quarter in the prior year. Fully diluted earnings per share for the three months ended March 31, 2026 of $0.89, increased from $0.73 during the prior year quarter.

Previous wording

The Company delivered revenues of $315.4 million during the six months ended December 31, 2025, a 16.6% increase compared to the same period in the prior year due to growth from existing and new clients launched throughout fiscal 2025 and first half of fiscal 2026. Net income during the six months ended December 31, 2025 was $24.3 million, a 44.4% increase from $16.8 million during the same period in the prior year. Fully diluted earnings per share for the six months ended December 31, 2025 of $1.65, increased from $1.00 during the prior year period.

Current wording

The Company delivered revenues of $479.8 million during the nine months ended March 31, 2026, a 16.7% increase compared to the same period in the prior year due to growth from existing and new clients launched throughout fiscal 2025 and fiscal 2026. Net income during the nine months ended March 31, 2026 was $37.6 million, a 37.8% increase from $27.3 million during the same period in the prior year. Fully diluted earnings per share for the nine months ended March 31, 2026 of $2.54, a 49.6% increase from $1.70 during the prior year period.

Previous wording

The increases in net income for both the three and six months ended December 31, 2025 were driven by revenue growth in our higher margin offshore regions resulting in improved operating margin performance. The increase in fully diluted earnings per share was driven by higher net income during the current year and fewer diluted shares outstanding compared to the same prior year periods.

Current wording

The increases in net income and fully diluted earnings per share for both the three and nine months ended March 31, 2026 were driven by revenue growth in our higher margin offshore regions resulting in improved overall operating margins. The increase in fully diluted earnings per share during the nine months ended March 31, 2026 was also driven by fewer diluted shares outstanding compared to the same period in the prior year.

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 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-enabled 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.

Current wording

We believe we are well positioned to leverage our leadership position in adopting AI technology in the CX sector to create significant value for our clients through the application of AI. Our approach of 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, minimizing risk to our overall revenue and providing opportunities for future profitability enhancement. While the initial implementation of some AI-enabled 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 higher margin AI-enabled revenue work and maintain and grow our overall business and results in the near- and long-term.

Previous wording

As demand for delivery locations has grown and continued to shift towards lower cost geographies during the six months ended December 31, 2025, we are in the process of building additional capacity in our offshore regions. We also continue to realize cost savings as we geographically optimize our delivery centers in higher cost regions.

Current wording

As demand for delivery locations has grown and continued to shift towards lower cost geographies during the nine months ended March 31, 2026, we are in the process of building additional capacity in our offshore regions. We also 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. 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, 2025. We were able to 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. 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, 2026. We were able to offset some of these wage increases with higher agent quality and increased productivity, higher agent retention, and increased client prices under contractual cost of living adjustments ("COLA"). Furthermore, our overall labor cost as a percentage of revenue is impacted by the aforementioned shift in delivery location from onshore delivery centers to offshore centers.

Previous wording

We generate greater profit margins from our work carried out by agents located in offshore and nearshore regions compared to our work carried out from onshore locations in the United States. As a result, our operating margins are influenced by the proportion of our work delivered from these higher margin locations. Over time we have expanded and further diversified our delivery network by adding facilities in these locations, offering a significant relative cost advantage. Our percentage of workstations in nearshore and offshore geographies is approximately 97% as of December 31, 2025 versus 95% as of December 31, 2024. We regularly evaluate whether to procure additional space or enter into new markets as we continue to add employees and expand geographically to meet the demands of our business.

Current wording

We generate greater profit margins from our work carried out by agents located in offshore and nearshore regions compared to our work carried out from onshore locations in the United States. As a result, our operating margins are influenced by the proportion of our work delivered from these higher margin locations. Over time we have expanded and further diversified our delivery network by adding facilities in these locations, offering a significant relative cost advantage. Our percentage of workstations in nearshore and offshore geographies is approximately 97% as of March 31, 2026. 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

During the six months ended December 31, 2025, our largest client accounted for 10%, while our three largest clients accounted for 26% of our consolidated revenues. We believe our client diversification is a strength and mitigates risk.

Current wording

During the nine months ended March 31, 2026, our largest client accounted for 10%, while our three largest clients accounted for 25% of our consolidated revenues. We believe our client diversification is a strength and mitigates risk.

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, 2025 and the six months ended December 31, 2025, the tightening in the global labor market and corresponding wage inflation, as well as increasing facilities expenses have resulted in us pursuing and successfully negotiating price increases or COLA with many of our clients.

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, 2025 and the nine months ended March 31, 2026, the tightening in the global labor market and corresponding wage inflation, as well as increasing facilities expenses have resulted in us pursuing and successfully negotiating price increases or COLA with many of our clients.

Previous wording

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

Current wording

The following summarizes the results of our operations for the three and nine months ended March 31, 2026 and 2025:

Previous wording

Our revenue was $164.2 million for the three months ended December 31, 2025, an increase of $23.5 million, or 16.7%, compared to the prior year quarter. This increase was primarily driven by increases in our HealthTech vertical of $7.4 million, or 35.1%, Retail & E-commerce vertical of $6.9 million, or 17.2%, Travel, Transportation & Logistics vertical of $3.9 million, or 20.2% and Other vertical of $7.6 million, or 51.3%, due to growth in our digital acquisition business, compared to the prior year quarter. These increases were partially offset by decreases in the Telecommunications vertical of $4.3 million, or 23.1%.

Current wording

Our revenue was $164.4 million for the three months ended March 31, 2026, an increase of $23.7 million, or 16.8%, compared to the prior year quarter. This increase was primarily driven by increases in our HealthTech vertical of $11.9 million, or 53.7%, Technology vertical of $4.5 million, or 42.6%, Retail & E-commerce vertical of $3.0 million, or 8.3%, Travel, Transportation & Logistics vertical of $3.0 million, or 15.1% and Other vertical of $4.8 million, or 26.5%, due to growth in our digital acquisition business, compared to the prior year quarter. These increases were partially offset by decreases in the Telecommunications vertical of $4.3 million, or 23.1%.

Previous wording

As a percentage of total revenue, our HealthTech vertical increased to 17.4% compared to 15.1% in the prior year quarter, our Travel, Transportation & Logistics vertical increased to 14.1% compared to 13.7% in the prior year quarter, our Retail & E-commerce vertical remained consistent with 28.6% in both the current and prior year quarters, and our Other vertical increased to 13.7% compared to 10.6% in the prior year quarter. Conversely, our Telecommunications vertical decreased to 8.7% compared to 13.1% in the prior year quarter.

Current wording

As a percentage of total revenue, our HealthTech vertical increased to 20.8% compared to 15.8%, our Technology vertical increased to 9.2% compared to 7.5%, and our Other vertical increased to 14.0% compared to 13.0% in the prior year quarter. Conversely, our Telecommunications vertical decreased to 8.6% compared to 13.1%, our Retail & E-commerce vertical decreased to 23.9% compared to 25.8%, and our Travel, Transportation & Logistics remained consistent at 13.8% compared to the prior year quarter.

Previous wording

Cost of services was $116.6 million during the three months ended December 31, 2025, an increase of $17.9 million, or 18.1%, 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, IT, facility expenses, and local transportation expenses.

Current wording

Cost of services was $115.6 million during the three months ended March 31, 2026, an increase of $19.6 million, or 20.4%, compared to the prior year quarter. The increase in cost of services was primarily due to increases in payroll and related costs, reseller commissions and lead expenses, IT, facility expenses, and local transportation expenses.

Previous wording

Payroll and related costs were $87.4 million during the three months ended December 31, 2025, an increase of $11.2 million, or 14.7%, compared to the prior year quarter, due to additional headcount to support increased revenues during the current year quarter. As a percent of revenue, payroll cost decreased to 53.2% during the three months ended December 31, 2025 compared to 54.1% during the prior year quarter, reflecting the continuing trend towards lower cost, higher margin regions.

Current wording

Payroll and related costs were $84.8 million during the three months ended March 31, 2026, an increase of $12.4 million, or 17.1%, compared to the prior year quarter, due to additional headcount to support increased revenues during the current year quarter and severance costs of $0.7 million due to migrating volume from our nearshore to offshore regions. As a percent of revenue, payroll costs were 51.5% during the three months ended March 31, 2026, consistent with the prior year quarter.

Previous wording

Reseller commissions and lead expenses were $7.5 million during the three months ended December 31, 2025, an increase of $3.8 million, or 101.4%, 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 increased revenues in our higher margin digital sales and marketing efforts.

Current wording

Reseller commissions and lead expenses were $8.7 million during the three months ended March 31, 2026, an increase of $3.2 million, or 57.3%, 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 increased revenues in our higher margin digital sales and marketing efforts.

Previous wording

IT expenses were $2.4 million during the three months ended December 31, 2025, an increase of $0.8 million, or 46.7%, compared to the prior year quarter, primarily due to additional software license fees.

Current wording

IT expenses were $2.8 million during the three months ended March 31, 2026, an increase of $1.0 million, or 53.6%, compared to the prior year quarter, primarily due to additional software license fees.

Previous wording

Facility expenses were $13.5 million during the three months ended December 31, 2025, an increase of $0.9 million, or 7.2%, compared to the prior year quarter, primarily driven by expansions in the Philippines and Pakistan.

Current wording

Facility expenses were $13.8 million during the three months ended March 31, 2026, an increase of $2.3 million, or 19.6%, compared to the prior year quarter, primarily driven by expansions in our offshore regions.

Previous wording

Local transportation expenses were $2.2 million, an increase of $0.5 million, or 27.9%, compared to the prior year period. These increases were primarily due to increased activity corresponding to our increased revenues during the current year quarter.

Current wording

Local transportation expenses were $2.1 million, an increase of $0.4 million, or 26.4%, compared to the prior year period. These increases were primarily due to increased transportation needs in offshore regions to support increasing revenue during the current year quarter.

Previous wording

SG&A expense was $27.6 million during the three months ended December 31, 2025, an increase of $1.8 million, or 7.2%, compared to the prior year quarter. The change was driven by increased payroll and related costs of $2.2 million due to higher performance-based incentives and new hires to support growth, higher IT expenses of $0.3 million due to additional software license fees, as well as unfavorable foreign currency impacts of $0.5 million. These increases were partially offset by decreases in legal and professional fees, facilities expenses, and other expenses of $1.2 million compared to the prior year quarter.

Current wording

SG&A expense was $27.5 million during the three months ended March 31, 2026, an increase of $0.4 million, or 1.5%, compared to the prior year quarter. The change was driven by increased payroll and related costs of $2.5 million due to higher performance-based incentives and new hires to support growth, as well as higher IT expenses of $0.3 million due to additional software license fees. These increases were partially offset by favorable foreign currency impacts of $1.0 million, lower legal and professional fees and facilities expenses of $0.9 million and lower stock-based compensation expenses of $0.5 million compared to the prior year quarter.

Previous wording

D&A expense was $4.8 million during the three months ended December 31, 2025, an increase of $0.5 million, or 10.8% compared to the prior year quarter. The increase was primarily due to new capital additions partially offset by lower depreciation expense resulting from an increase in fully depreciated assets. As a percentage of revenue, D&A was 2.9% during the three months ended December 31, 2025, consistent with 3.0% during the prior year quarter.

Current wording

D&A expense was $5.2 million during the three months ended March 31, 2026, an increase of $0.8 million, or 19.4% compared to the prior year quarter. The increase was primarily due to new capital additions partially offset by lower depreciation expense resulting from an increase in fully depreciated assets. As a percentage of revenue, D&A was 3.1% during the three months ended March 31, 2026, consistent with 3.1% during the prior year quarter.

Previous wording

31, 2025, up from 8.5% 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 compared to the prior year quarter.

Current wording

Income from operations was $16.2 million during the three months ended March 31, 2026 compared to $13.3 million during the prior year quarter. The operating margin was 9.8% for three months ended March 31, 2026, up from 9.5% 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 compared to the prior year quarter.

Previous wording

Interest income during the three months ended December 31, 2025 was $0.1 million, compared to $0.3 million during the prior year quarter and consisted primarily of income from invested funds.

Current wording

Interest income during the three months ended March 31, 2026 was $0.06 million, compared to $0.03 million during the prior year quarter and consisted primarily of income from invested funds.

Previous wording

Interest expense during the three months ended December 31, 2025 was $0.2 million, a decrease of $0.4 million, primarily due to expenses incurred during the prior year quarter including the loss on extinguishment related to the termination of our PNC Credit Facility and interest expense on the convertible promissory note which was repaid during fiscal 2025.

Current wording

Interest expense during the three months ended March 31, 2026 was $0.2 million, a decrease of $0.2 million, and consisted primarily of interest on borrowings and finance leases.

Previous wording

Income tax expense was $2.9 million during the three months ended December 31, 2025, an increase of $0.5 million when compared with the prior year quarter, primarily due to higher pre-tax income in the current year quarter. The effective tax rate was 19.1% and 20.2% for the three months ended December 31, 2025 and 2024, respectively. The change in effective tax rates between these periods was primarily attributable to changes in revenue mix across our taxable jurisdictions and favorable discrete tax benefits in the current year quarter.

Current wording

Income tax expense was $2.6 million during the three months ended March 31, 2026, an increase of $0.2 million when compared with the prior year quarter, primarily due to higher pre-tax income in the current year quarter. The effective tax rate was 16.6% and 19.2% for the three months ended March 31, 2026 and 2025, respectively. The change in effective tax rates between these periods was primarily attributable to changes in revenue mix across our taxable jurisdictions and favorable discrete tax benefits in the current year quarter.

Previous wording

Our revenue was $315.4 million for the six months ended December 31, 2025, an increase of $45.0 million, or 16.6%, compared to the same period in the prior year. This increase was primarily driven by increases in our Retail & E-commerce vertical of $14.8 million, or 20.7%, HealthTech vertical of $11.0 million, or 27.9%, Travel, Transportation & Logistics vertical of $6.7 million, or 17.9%, and Other vertical of $17.2 million, or 58.2%, due to growth in our digital acquisition business, compared to the same period in the prior year. These increases were partially offset by decreases in the Telecommunications vertical of $8.8 million, or 22.8%, compared to the prior year period.

Current wording

Our revenue was $479.8 million for the nine months ended March 31, 2026, an increase of $68.7 million, or 16.7%, compared to the same period in the prior year. This increase was primarily driven by increases in our HealthTech vertical of $22.9 million, or 37.2%, Retail & E-commerce vertical of $17.8 million, or 16.5%, Travel, Transportation & Logistics vertical of $9.7 million, or 16.9%, Technology vertical of $8.1 million, or 25.0%, and Other vertical of $22.0 million, or 46.1%, due to growth in our digital acquisition business, compared to the same period in the prior year. These increases were partially offset by decreases in the Telecommunications vertical of $13.0 million, or 22.9%, compared to the prior year period.

Previous wording

As a percentage of total revenue, our Retail & E-commerce vertical increased to 27.5% for the six months ended December 31, 2025 compared to 26.6% in the same period in the prior year, our HealthTech vertical increased to 16.0% compared to 14.6% in the prior year period, our Travel, Transportation & Logistics vertical remained consistent at 14.1% compared to 14.0% in the prior year period, and our Other vertical increased to 14.8% compared to 10.9% in the prior year period. Conversely, our Telecommunications vertical decreased to 9.4% for the six months ended December 31, 2025 compared to 14.2% in the prior year period.

Current wording

As a percentage of total revenue, our HealthTech vertical increased to 17.6% compared to 15.0%, our Technology vertical increased to 8.5% compared to 7.9%, and our Other vertical increased to 14.5% compared to 11.6% in the prior year period. Our Retail & E-commerce vertical and our Travel, Transportation & Logistics vertical remained consistent at 26.3% and 14.0%, respectively, compared to the prior year period. Conversely, our Telecommunications vertical decreased to 9.1% for the nine months ended March 31, 2026 compared to 13.8% in the prior year period.

Previous wording

Cost of services was $223.2 million during the six months ended December 31, 2025, an increase of $34.4 million, or 18.2%, compared to the prior year period. The increase in cost of services was primarily due to increases in payroll and related costs, reseller commissions and lead expenses, IT, facility, and local transportation expenses.

Current wording

Cost of services was $338.8 million during the nine months ended March 31, 2026, an increase of $54.0 million, or 19.0%, compared to the prior year period. The increase in cost of services was primarily due to increases in payroll and related costs, reseller commissions and lead expenses, IT, facility, and local transportation expenses.

Previous wording

Payroll and related costs were $165.2 million during the six months ended December 31, 2025, an increase of $20.7 million, or 14.3%, compared to the prior year period, due to additional headcount to support increased revenues during the current year. As a percent of revenue, payroll cost decreased to 52.4% during the six months ended December 31, 2025 compared to 53.5% during the prior year period, reflecting the continuing trend towards lower cost, higher margin regions.

Current wording

Payroll and related costs were $250.0 million during the nine months ended March 31, 2026, an increase of $33.0 million, or 15.2%, compared to the prior year period, due to additional headcount to support increased revenues during the current year and severance costs of $0.7 million due to migrating volume from our nearshore to offshore regions. As a percent of revenue, payroll cost decreased to 52.1% during the nine months ended March 31, 2026 compared to 52.8% during the prior year period, reflecting the continuing trend towards lower cost, higher margin regions.

Previous wording

Reseller commissions and lead expenses were $15.8 million during the six months ended December 31, 2025, an increase of $8.3 million, or 110.6%, compared to the prior year period. These increases were primarily due to increases in the utilization of our third-party affiliates for inbound inquiries as well as search engine costs in connection with increased revenue in our higher margin digital sales and marketing efforts.

Current wording

Reseller commissions and lead expenses were $24.5 million during the nine months ended March 31, 2026, an increase of $11.5 million, or 88.0%, compared to the prior year period. These increases were primarily due to increases in the utilization of our third-party affiliates for inbound inquiries as well as search engine costs in connection with increased revenue in our higher margin digital sales and marketing efforts.

Previous wording

IT expenses were $4.3 million during the six months ended December 31, 2025, an increase of $1.4 million or 46.1%, compared to the prior year period, primarily due to additional software license fees.

Current wording

IT expenses were $7.1 million during the nine months ended March 31, 2026, an increase of $2.3 million or 48.9%, compared to the prior year period, primarily due to additional software license fees.

Previous wording

Facility expenses were $26.4 million during the six months ended December 31, 2025, an increase of $1.8 million, or 7.4%, compared to the prior year period, primarily driven by expansions in the Philippines and Pakistan and higher expenses for our nearshore regions to support revenue growth during the current year.

Current wording

Facility expenses were $40.1 million during the nine months ended March 31, 2026, an increase of $4.1 million, or 11.3%, compared to the prior year period, primarily driven by expansions in our offshore regions.

Previous wording

Local transportation expenses were $4.2 million during the six months ended December 31, 2025, an increase of $0.9 million or 27.6%, compared to the prior year period, driven primarily by increased activity corresponding to our increased revenues during the current year.

Current wording

Local transportation expenses were $6.4 million during the nine months ended March 31, 2026, an increase of $1.4 million or 27.2%, compared to the prior year period, driven primarily by transportation needs in offshore regions to support increasing revenues during the current year.

Previous wording

SG&A expense was $54.1 million during the six months ended December 31, 2025, an increase of $2.2 million, or 4.2%, compared to the prior year period. The increase was driven by higher payroll and related costs of $3.6 million due to higher performance-based incentives and new hires to support growth, stock-based compensation of $1.7 million due to new grants issued and a higher share price impacting liability-based grants, and higher IT expenses of $0.9 million due to additional software license fees. These increases were partially offset by favorable foreign currency impacts of $2.3 million, lower legal and professional fees of $0.9 million, and lower telecommunication, insurance, facilities and other site related expenses of $0.6 million compared to the prior year period.

Current wording

SG&A expense was $81.5 million during the nine months ended March 31, 2026, an increase of $2.6 million, or 3.2%, compared to the prior year period. The increase was driven by higher payroll and related costs of $6.1 million due to higher performance-based incentives and new hires to support growth, stock-based compensation of $1.2 million due to new grants issued during the current year, and higher IT expenses of $1.2 million due to additional software license fees. These increases were partially offset by favorable foreign currency impacts of $3.3 million, lower legal and professional fees of $1.6 million, and lower telecommunication, insurance, facilities and other site related expenses of $0.8 million compared to the prior year period.

Previous wording

D&A expense was $9.1 million during the six months ended December 31, 2025, an increase of $0.5 million or 5.5%, compared to the prior year period. The increase was primarily due to new capital additions in our offshore regions partially offset by lower depreciation expense resulting from an increase in fully depreciated assets. As a percentage of revenue, D&A decreased to 2.9% during the six months ended December 31, 2025 compared to 3.2% in the prior year period.

Current wording

D&A expense was $14.3 million during the nine months ended March 31, 2026, an increase of $1.3 million or 10.1%, compared to the prior year period. The increase was primarily due to new capital additions in our offshore regions partially offset by lower depreciation expense resulting from an increase in fully depreciated assets. As a percentage of revenue, D&A decreased to 3.0% during the nine months ended March 31, 2026 compared to 3.2% in the prior year period.

Previous wording

Income from operations was $29.0 million during the six months ended December 31, 2025 compared to $21.0 million during the prior year period. The operating margin was 9.2% for six months ended December 31, 2025, up from 7.8% 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 focus on site optimization efforts in our onshore regions.

Current wording

Income from operations was $45.1 million during the nine months ended March 31, 2026 compared to $34.3 million during the prior year period. The operating margin was 9.4% for nine months ended March 31, 2026, up from 8.4% 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.

Previous wording

Interest income during the six months ended December 31, 2025 was $0.1 million, compared to $0.9 million during the prior year period, and consisted primarily of income from invested funds.

Current wording

Interest income during the nine months ended March 31, 2026 was $0.2 million, compared to $0.9 million during the prior year period, and consisted primarily of income from invested funds.

Previous wording

Interest expense during the six months ended December 31, 2025 was $0.5 million, a decrease of $0.3 million, or 40.5%, primarily due to expenses incurred during the prior year period including the loss on extinguishment related to the termination of our PNC Credit Facility and interest expense on the convertible promissory note which was repaid during fiscal 2025.

Current wording

Interest expense during the nine months ended March 31, 2026 was $0.7 million, a decrease of $0.5 million, or 39.8%, primarily due to expenses incurred during the prior year period including the loss on extinguishment related to the termination of our PNC Credit Facility and interest expense on the convertible promissory note which was repaid during fiscal 2025.