TaskUs Inc

Previous wording

This Quarterly Report includes certain historical consolidated financial and other data for TaskUs, Inc. ("we," "us," "our" or the "Company"). The following discussion provides a narrative of our results of operations and financial condition for the three and nine months ended September 30, 2024 and 2023.

Current wording

This Quarterly Report includes certain historical consolidated financial and other data for TaskUs, Inc. ("we," "us," "our" or the "Company"). The following discussion provides a narrative of our results of operations and financial condition for the three months ended March 31, 2025 and 2024.

Previous wording

We are a provider of outsourced digital services and next-generation customer experience to the world's most innovative companies, helping our clients represent, protect and grow their brands. We serve our clients to support their end customers’ urgent needs, navigate an increasingly complex compliance landscape, handle sensitive tasks including online content moderation, and enable artificial intelligence technology and automation.

Current wording

We are a provider of outsourced digital services and next-generation customer experience to the world's most innovative companies, helping our clients represent, protect and grow their brands. We serve our clients by supporting their end customers’ urgent needs, helping them navigate an increasingly-complex compliance landscape, handling sensitive tasks, including online content moderation, and enabling artificial intelligence technology and automation.

Previous wording

Our global, omni-channel delivery model is focused on providing our clients three key services – Digital Customer Experience ("Digital CX"), Trust and Safety, and Artificial Intelligence ("AI") Services. We have designed our platform to enable us to rapidly scale and benefit from our clients’ growth. We believe our ability to deliver “ridiculously good” outsourcing will enable us to continue to grow our client base. We use our strong reputation and expertise serving the digital economy to attract new innovators and enterprise-class brands looking to transform.

Current wording

We have designed our platform to enable us to rapidly scale and benefit from our clients’ growth. We believe our ability to deliver “ridiculously good” outsourcing will enable us to continue growing our client base. We use our strong reputation and expertise serving the digital economy to attract new innovators and enterprise-class brands looking to transform.

Previous wording

Net income for the three months ended September 30, 2024 increased to $12.7 million from $9.8 million for the three months ended September 30, 2023. This increase is due primarily to revenue growth, the impact of foreign currency exchange rate changes, including forward contracts not designated as hedging instruments, and interest income. These increases were partially offset by higher cost of services and certain litigation costs. Adjusted Net Income for the three months ended September 30, 2024 increased 14.4% to $34.3 million from $30.0 million for the three months ended September 30, 2023. Adjusted EBITDA for the three months ended September 30, 2024 increased 3.4% to $54.2 million from $52.5 million for the three months ended September 30, 2023. Adjusted Net Income and Adjusted EBITDA are non-GAAP financial measures. For definitions and reconciliations to net income, the most directly comparable measure in accordance with GAAP, see "Non-GAAP Financial Measures."

Current wording

Net income for the three months ended March 31, 2025 increased to $21.1 million from $11.7 million for the three months ended March 31, 2024. This increase is due primarily to revenue growth, partially offset by higher cost of services and selling, general and administrative expense. Adjusted Net Income for the three months ended March 31, 2025 increased 31.8% to $35.9 million from $27.3 million for the three months ended March 31, 2024. Adjusted EBITDA for the three months ended March 31, 2025 increased 17.1% to $59.3 million from $50.6 million for the three months ended March 31, 2024. Adjusted Net Income and Adjusted EBITDA are non-GAAP financial measures. For definitions and reconciliations to net income, the most directly comparable measure in accordance with GAAP, see "Non-GAAP Financial Measures."

Previous wording

AI Services was primarily driven by an increase from existing clients in Social Media, as well as new clients in Professional Services + Industry.

Current wording

AI Services was primarily driven by an increase from existing clients in Social Media, as well as new clients in Social Media.

Previous wording

India: AI Services contributed 6.1% of the total increase primarily driven by clients in Social Media and Professional Services + Industry. Trust and Safety contributed 2.9% of the total increase primarily driven by clients in Social Media. The increase was partially offset by a 3.2% decrease contributed by Digital Customer Experience, primarily driven by clients in On Demand Travel + Transportation and FinTech, partially offset by clients in Retail + E Commerce.

Current wording

United States: AI Services contributed 25.3% of the total increase driven by clients in Social Media. Trust + Safety contributed 6.1% of the total increase driven by clients in Social Media. The increase was partially offset by a 1.6% decrease contributed by Digital Customer Experience, primarily driven by clients in Technology.

Previous wording

Rest of World: Digital Customer Experience contributed 21.2% of the total increase primarily driven by clients in FinTech, Professional Services + Industry and On Demand Travel + Transportation. Trust and Safety contributed 10.8% of the total increase, primarily driven by clients in Social Media and FinTech. AI Services contributed 0.9% of the total increase. Growth in the Rest of World was led by Latin America and Europe.

Current wording

Rest of World: Trust + Safety contributed 25.4% of the total increase, primarily driven by clients in Social Media. Digital Customer Experience contributed 9.2% of the total increase primarily driven by clients in Technology and Professional Services + Industry, partially offset by clients in On Demand Travel + Transportation. AI Services contributed 2.9% of the total increase, primarily driven by clients in Social Media. Growth in the Rest of World was led by Latin America and Europe.

Previous wording

The increase was primarily driven by higher personnel costs of $17.4 million associated with increased headcount. The remaining increase included facilities and recruiting costs associated with site expansion and increasing headcount associated with accelerating growth.

Current wording

The increase was primarily driven by higher personnel costs of $27.8 million associated with increased headcount. The remaining increase included facilities and recruiting costs associated with site expansion and increasing headcount associated with accelerating growth.

Previous wording

The effective tax rate for the three months ended September 30, 2024 and 2023 was 28.6% and 31.8%, respectively. Costs related to the issuance of stock-based compensation and litigation costs within the provision for income taxes calculation are adjusted for Non-GAAP purposes. If those costs are removed, the provision for income taxes would have been $6.1 million and $7.5 million and the effective tax rate would have been 18.6% and 26.5% for the three months ended September 30, 2024 and 2023, respectively.

Current wording

The effective tax rate for the three months ended March 31, 2025 and 2024 was 28.9% and 35.7%, respectively. Costs related to the issuance of stock-based compensation, operational efficiency costs, litigation costs and severance within the provision for income taxes calculation are adjusted for Non-GAAP purposes. If those costs are removed, the provision for income taxes would have been $10.3 million and $8.1 million and the effective tax rate would have been 25.7% and 27.5% for the three months ended March 31, 2025 and 2024, respectively.

Previous wording

The table below sets forth the percentage of our total service revenue derived from our largest clients for the three and nine months ended September 30, 2024 and 2023:

Current wording

The table below sets forth the percentage of our total service revenue derived from our largest clients for the three months ended March 31, 2025 and 2024:

Previous wording

For the three months ended September 30, 2024 and 2023, we generated 23% and 19%, respectively, of our service revenue from our largest client. For the nine months ended September 30, 2024 and 2023, we generated 21% and 19%, respectively, of our service revenue from our largest client.

Current wording

For the three months ended March 31, 2025 and 2024, we generated 26% and 19%, respectively, of our service revenue from our largest client.

Previous wording

Many of our clients are part of the rapidly growing digital economy and they rely on our suite of digital solutions to drive their continued success. For our existing clients, we benefit from our ability to grow as they grow and to cross sell new solutions, further deepening our entrenchment.

Current wording

Many of our clients are part of the rapidly growing digital economy and they rely on our suite of digital solutions to drive their continued success. For our existing clients, we benefit from our ability to cross sell new solutions and provide service in multiple geographies, further deepening our entrenchment. We continue to identify and target high growth industry verticals and clients. Our strategy is to win new clients and further grow with our existing ones in order to achieve meaningful client and revenue diversification over time.

Previous wording

We use Adjusted Net Income, Adjusted Earnings Per Share ("EPS"), EBITDA, Adjusted EBITDA, Free Cash Flow and Conversion of Adjusted EBITDA, as key measures to assess the performance of our business.

Current wording

We use Adjusted Net Income, Adjusted Earnings Per Share ("EPS"), EBITDA, Adjusted EBITDA, Free Cash Flow and Conversion of Adjusted EBITDA to Free Cash Flow, as key measures to assess the performance of our business.

Previous wording

Adjusted Net Income is a non-GAAP profitability measure that represents net income or loss for the period before the impact of amortization of intangible assets and certain items that are considered to hinder comparison of the performance of our businesses on a period-over-period basis or with other businesses. During the periods presented, we excluded from Adjusted Net Income amortization of intangible assets, transaction costs, earn-out consideration, the effect of foreign currency gains and losses, gains and losses on disposals of assets, non-recurring severance costs, certain non-recurring litigation costs, stock-based compensation expense and associated employer payroll tax and the related effect on income taxes of certain pre-tax adjustments, which include costs that are required to be expensed in accordance with GAAP. Our management believes that the inclusion of supplementary adjustments to net income applied in presenting Adjusted Net Income are appropriate to provide additional information to investors about certain material non-cash items and about unusual items that we do not expect to continue at the same level in the future.

Current wording

Adjusted Net Income is a non-GAAP profitability measure that represents net income or loss for the period before the impact of amortization of intangible assets and certain items that are considered to hinder comparison of the performance of our businesses on a period-over-period basis or with other businesses. During the periods presented, we excluded from Adjusted Net Income amortization of intangible assets, operational efficiency costs, the effect of foreign currency gains and losses, gains and losses on disposals of assets, certain severance costs, certain non-recurring litigation costs, stock-based compensation expense and associated employer payroll tax and the related effect on income taxes of certain pre-tax adjustments, which include costs that are required to be expensed in accordance with GAAP. Our management believes that the inclusion of supplementary adjustments to net income applied in presenting Adjusted Net Income are appropriate to provide additional information to investors about certain material non-cash items and about unusual items that we do not expect to continue at the same level in the future.

Previous wording

(1) Represents professional service fees related to non-recurring transactions.

Current wording

(1) Represents professional service fees related to certain efforts to enhance efficiency of client delivery and operations support.

Previous wording

(6) Represents tax impacts of adjustments to net income which resulted in a tax benefit during the period, including stock-based compensation expense and litigation costs. After these adjustments, we applied a non-GAAP effective tax rate of 18.6% and 26.5% for the three months ended September 30, 2024 and 2023, respectively, to non-GAAP income before income taxes.

Current wording

(6) Represents tax impacts of adjustments to net income which resulted in a tax benefit during the period, including stock-based compensation expense and litigation costs. After these adjustments, we applied a non-GAAP effective tax rate of 25.7% and 27.5% for the three months ended March 31, 2025 and 2024, respectively, to non-GAAP income before income taxes.

Previous wording

The following table reconciles GAAP diluted EPS, the most directly comparable GAAP measure, to Adjusted EPS for the three and nine months ended September 30, 2024 and 2023:

Current wording

The following table reconciles GAAP diluted EPS, the most directly comparable GAAP measure, to Adjusted EPS for the three months ended March 31, 2025 and 2024:

Previous wording

Adjusted EBITDA is a non-GAAP profitability measure that represents EBITDA before certain items that are considered to hinder comparison of the performance of our businesses on a period-over-period basis or with other businesses. During the periods presented, we excluded from Adjusted EBITDA transaction costs, earn-out consideration, the effect of foreign currency gains and losses, gains and losses on disposals of assets, non-recurring severance costs, certain non-recurring litigation costs, stock-based compensation expense and associated employer payroll tax and interest income, which include costs that are required to be expensed in accordance with GAAP. Our management believes that the inclusion of supplementary adjustments to EBITDA applied in presenting Adjusted EBITDA are appropriate to provide additional information to investors about certain material non-cash items and about unusual items that we do not expect to continue at the same level in the future.

Current wording

Adjusted EBITDA is a non-GAAP profitability measure that represents EBITDA before certain items that are considered to hinder comparison of the performance of our business on a period-over-period basis or with other businesses. During the periods presented, we excluded from Adjusted EBITDA operational efficiency costs, the effect of foreign currency gains and losses, gains and losses on disposals of assets, certain severance costs, certain non-recurring litigation costs, stock-based compensation expense and associated employer payroll tax and interest income, which include costs that are required to be expensed in accordance with GAAP. Our management believes that the inclusion of supplementary adjustments to EBITDA applied in presenting Adjusted EBITDA are appropriate to provide additional information to investors about certain material non-cash items and about unusual items that we do not expect to continue at the same level in the future.

Previous wording

The following table reconciles net cash provided by operating activities, the most directly comparable GAAP measure, to Free Cash Flow for the nine months ended September 30, 2024 and 2023:

Current wording

The following table reconciles net cash provided by operating activities, the most directly comparable GAAP measure, to Free Cash Flow for the three months ended March 31, 2025 and 2024:

Previous wording

As of September 30, 2024, our principal sources of liquidity were cash and cash equivalents totaling $180.4 million, which were held for working capital purposes, as well as the borrowing availability under the 2022 Revolving Credit Facility of $190.0 million.

Current wording

As of March 31, 2025, our principal sources of liquidity were cash and cash equivalents totaling $196.9 million, which were held for working capital purposes, as well as the borrowing availability under the 2022 Revolving Credit Facility of $190.0 million.

Previous wording

As of September 30, 2024, our total indebtedness, net of debt financing fees was $259.4 million. The interest rate in effect for the 2022 Term Loan Facility as of September 30, 2024 was 6.954% per annum. We were in compliance with all debt covenants as of September 30, 2024. See Note 8, "Long-Term Debt" in the Notes to Unaudited Condensed Consolidated Financial Statements included in this Quarterly Report for additional information regarding our debt.

Current wording

As of March 31, 2025, our total indebtedness, net of debt financing fees was $252.9 million. The interest rate in effect for the 2022 Term Loan Facility as of March 31, 2025 was 6.649% per annum. We were in compliance with all debt covenants as of March 31, 2025. See Note 7, "Long-Term Debt" in the Notes to Unaudited Condensed Consolidated Financial Statements included in this Quarterly Report for additional information regarding our debt.

Previous wording

During the nine months ended September 30, 2024, we repurchased 1,343,154 shares of our Class A common stock under the share repurchase program for $15.4 million, which we funded principally with available cash. As of September 30, 2024, $41.8 million remained available for share repurchases under our share repurchase program. For additional information about our share repurchase program, see Part II, Item 2., "Unregistered Sales of Equity Securities and Use of Proceeds—Issuer Purchases of Equity Securities" in this Quarterly Report.

Current wording

During the three months ended March 31, 2025, we repurchased 750,691 shares of our Class A common stock under the share repurchase program for $10.1 million, which we funded principally with available cash. As of March 31, 2025, $29.5 million remained available for share repurchases under our share repurchase program. For additional information about our share repurchase program, see Part II, Item 2., "Unregistered Sales of Equity Securities and Use of Proceeds—Issuer Purchases of Equity Securities" in this Quarterly Report.

Previous wording

Net cash provided by operating activities for the nine months ended September 30, 2024 was $98.2 million compared to net cash provided by operating activities of $103.9 million for the nine months ended September 30, 2023. Net cash provided by operating activities for the nine months ended September 30, 2024 reflects net income of $37.0 million and the add back for non-cash charges totaling $75.8 million, partially offset by changes in operating assets and liabilities of $14.6 million. Non-cash charges primarily consisted of $32.0 million in stock-based compensation expense, $30.5 million of depreciation and $15.0 million of amortization related to intangibles. Net cash provided by operating activities for the nine months ended September 30, 2023 reflects net income of $29.4 million, as well as the add back for non-cash charges totaling $94.1 million, partially offset by changes in operating assets and liabilities of $19.6 million. Non-cash charges primarily consisted of $42.3 million in stock-based compensation expense, $29.5 million of depreciation and $15.3 million of amortization related to intangibles.

Current wording

Net cash provided by operating activities for the three months ended March 31, 2025 was $36.3 million compared to net cash provided by operating activities of $51.2 million for the three months ended March 31, 2024. Net cash provided by operating activities for the three months ended March 31, 2025 reflects net income of $21.1 million and the add back for non-cash charges totaling $24.2 million, partially offset by changes in operating assets and liabilities of $9.1 million. Non-cash charges primarily consisted of $10.0 million of depreciation, $8.7 million in stock-based compensation expense and $5.0 million of amortization related to intangibles. Net cash provided by operating activities for the three months ended March 31, 2024 reflects net income of $11.7 million, the add back for non-cash charges totaling $26.1 million, as well as changes in operating assets and liabilities of $13.3 million. Non-cash charges primarily consisted of $10.8 million of depreciation, $10.2 million in stock-based compensation expense and $5.0 million of amortization related to intangibles.

Previous wording

Net cash used in investing activities for the nine months ended September 30, 2024 was $18.8 million compared to net cash used in investing activities of $23.9 million for the nine months ended September 30, 2023. Purchase of property and equipment decreased primarily due to lower site build-out costs.

Current wording

Net cash used in investing activities for the three months ended March 31, 2025 was $14.5 million compared to net cash used in investing activities of $3.6 million for the three months ended March 31, 2024. Purchase of property and equipment increased primarily due to higher site build-out costs and technology and computer purchases.

Previous wording

Net cash used in financing activities for the nine months ended September 30, 2024 was $21.3 million compared to net cash used by financing activities of $96.3 million for the nine months ended September 30, 2023. The decrease was due primarily to lower payments to acquire shares under our share repurchase program.

Current wording

Net cash used in financing activities for the three months ended March 31, 2025 was $18.0 million compared to net cash used by financing activities of $5.7 million for the three months ended March 31, 2024. The increase was due primarily to the additional shares acquired under our share repurchase program and payments for taxes related to net share settlement.