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, 2025 and 2024.

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, 2026 and 2025.

Previous wording

Our global, omnichannel delivery model is focused on providing our clients with three key services – Digital Customer Experience, Trust + Safety, and Artificial Intelligence ("AI") Services.

Current wording

Our global, omnichannel delivery model is focused on providing our clients with three key services – Digital Customer Experience, Trust & Safety, and AI Services.

Previous wording

Net income for the three months ended September 30, 2025 increased to $31.4 million from $12.7 million for the three months ended September 30, 2024. This increase is due primarily to revenue growth and foreign currency gains, partially offset by higher cost of services. Adjusted Net Income for the three months ended September 30, 2025 increased 13.7% to $39.0 million from $34.3 million for the three months ended September 30, 2024. Adjusted EBITDA for the three months ended September 30, 2025 increased 17.0% to $63.5 million from $54.2 million for the three months ended September 30, 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."

Current wording

Net income for the three months ended March 31, 2026 increased to $24.3 million from $21.1 million for the three months ended March 31, 2025. This increase is due primarily to revenue growth and foreign currency gains, partially offset by higher cost of services. Adjusted Net Income for the three months ended March 31, 2026 decreased 8.9% to $32.8 million from $35.9 million for the three months ended March 31, 2025. Adjusted EBITDA for the three months ended March 31, 2026 decreased 1.2% to $58.6 million from $59.3 million for the three months ended March 31, 2025. 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

Digital Customer Experience was primarily driven by an increase from existing clients, including Technology, Healthcare, Financial Services and Professional Services + Industry, partially offset by a decrease in On Demand Travel + Transportation. The remaining increase was primarily driven by new clients in Healthcare, Retail + E-Commerce and Technology.

Current wording

Digital Customer Experience was primarily driven by an increase from existing clients, mainly in Entertainment & Gaming, Mobility, Logistics & Travel, Healthcare and Technology, partially offset by a decrease in Financial Services and Retail & eCommerce. The remaining increase was primarily driven by new clients, mainly in Technology.

Previous wording

Trust + Safety was primarily driven by an increase from existing clients, primarily in Social Media, partially offset by a decrease in On Demand Travel + Transportation.

Current wording

Trust & Safety was primarily driven by an increase from new clients, mainly in Technology. The remaining increase was primarily driven by existing clients, mainly in Technology and Social Media, partially offset by a decrease in Retail & eCommerce.

Previous wording

United States: AI Services contributed 21.7% of the total increase primarily driven by clients in Social Media and On Demand Travel + Transportation. This increase was partially offset by a 16.1% decrease contributed by Digital Customer Experience, primarily driven by clients in Technology, Financial Services and On Demand Travel + Transportation, and a 2.2% decrease contributed by Trust + Safety primarily driven by clients in Social Media.

Current wording

United States: AI Services contributed 46.3% of the total increase primarily driven by clients in Mobility, Logistics & Travel. The increase was partially offset by an 18.9% decrease contributed by Digital Customer Experience, primarily driven by clients in Mobility, Logistics & Travel, Healthcare and Technology, and by a 3.3% decrease contributed by Trust & Safety primarily driven by clients in Social Media, partially offset by clients in Financial Services.

Previous wording

India: Digital Customer Experience contributed 20.4% of the total increase primarily driven by clients in Retail + E-Commerce, On Demand Travel + Transportation, Healthcare, Professional Services + Industry and Technology, partially offset by clients in Financial Services. AI Services contributed 9.8% of the total increase primarily driven by clients in Social Media, Professional Services + Industry and Technology. These increases were partially offset by a 5.6% decrease contributed by Trust + Safety primarily driven by clients On Demand Travel + Transportation and Social Media, partially offset by clients in Retail + E-Commerce.

Current wording

India: Digital Customer Experience contributed 28.7% of the total increase primarily driven by clients in Mobility, Logistics & Travel, Healthcare and Technology. These increases were partially offset by a 10.3% decrease contributed by Trust & Safety primarily driven by clients in Social Media, and by a 5.0% decrease contributed by AI Services primarily driven by clients in Mobility, Logistics & Travel.

Previous wording

Rest of World: Trust + Safety contributed 30.8% of the total increase primarily driven by clients in Social Media. AI Services contributed 5.0% of the total increase primarily driven by clients in Social Media. These increases were partially offset by a 2.1% decrease contributed by Digital Customer Experience primarily driven by clients in On Demand Travel + Transportation and Retail +E-Commerce, partially offset by clients in Technology. Growth in the Rest of World was led by Latin America and Europe.

Current wording

Rest of World: Trust & Safety contributed 10.5% of the total increase primarily driven by clients in Social Media and Financial Services. AI Services contributed 3.6% of the total increase primarily driven by clients in Mobility, Logistics & Travel and Social Media. These increases were partially offset by a 1.1% decrease contributed by Digital Customer Experience primarily driven by clients in Mobility, Logistics & Travel and Financial Services, partially offset by clients in Entertainment & Gaming. Growth in the Rest of World was led by Latin America.

Previous wording

The increase was primarily driven by higher personnel costs of $27.0 million associated with increased headcount. The remaining increase included facilities costs associated with site expansion and enhanced security measures. These increases were partially offset by a reduction in recruiting and professional development costs.

Current wording

The increase was primarily driven by higher personnel costs of $19.5 million associated with increased headcount. The remaining increase included facilities costs associated with site expansion and enhanced security measures.

Previous wording

The decrease was primarily driven by a reduction of litigation costs of $4.4 million. The remaining increase was primarily driven by lower personnel costs of $1.0 million, due to a $3.9 million reduction in stock-based compensation expense, partially offset by increased headcount. These decreases were partially offset by higher transaction costs of $1.8 million and operational efficiency costs of $0.9 million.

Current wording

The increase was primarily driven by transaction costs of $1.1 million and software costs associated with enhanced security measures. These increases were partially offset by lower personnel costs of $0.9 million, due to a $2.3 million reduction in stock-based compensation expense, partially offset by increased headcount, and a reduction of operational efficiency costs of $0.3 million.

Previous wording

The effective tax rate for the three months ended September 30, 2025 and 2024 was 24.8% and 28.6%, respectively. Costs related to the issuance of stock-based compensation, operational efficiency costs, litigation costs, transactions 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 $10.7 million and $6.1 million and the effective tax rate would have been 20.9% and 18.6% for the three months ended September 30, 2025 and 2024, respectively.

Current wording

The effective tax rate for the three months ended March 31, 2026 and 2025 was 32.9% and 28.9%, respectively. Costs related to the issuance of stock-based compensation, operational efficiency costs, transactions 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 $11.0 million and $10.3 million and the effective tax rate would have been 24.8% and 25.7% for the three months ended March 31, 2026 and 2025, 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, 2025 and 2024:

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, 2026 and 2025:

Previous wording

For the three months ended September 30, 2025 and 2024, we generated 27% and 23%, respectively, of our service revenue from our largest client. For the nine months ended September 30, 2025 and 2024, we generated 26% and 21%, respectively, of our service revenue from our largest client.

Current wording

For the three months ended March 31, 2026 and 2025, we generated 24% and 26%, respectively, of our service revenue from our largest client.

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, 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.

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, transaction costs, operational efficiency costs, the effect of foreign currency gains and losses, gains and losses on disposals of assets, certain severance 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

(7) Represents tax impacts of adjustments to net income which resulted in a tax benefit during the period, including stock-based compensation expense, transaction costs, operational efficiency costs, and litigation costs. After these adjustments, we applied a non-GAAP effective tax rate of 20.9% and 18.6% for the three months ended September 30, 2025 and 2024, 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, transaction costs, operational efficiency costs and severance. After these adjustments, we applied a non-GAAP effective tax rate of 24.8% and 25.7% for the three months ended March 31, 2026 and 2025, 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, 2025 and 2024:

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, 2026 and 2025:

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 business on a period-over-period basis or with other businesses. During the periods presented, we excluded from Adjusted EBITDA transaction costs, 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.

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 transaction costs, operational efficiency costs, the effect of foreign currency gains and losses, gains and losses on disposals of assets, certain severance 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, 2025 and 2024:

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, 2026 and 2025:

Previous wording

As of September 30, 2025, our principal sources of liquidity were cash and cash equivalents totaling $210.0 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, 2026, our principal sources of liquidity were cash and cash equivalents totaling $152.3 million, which were held for working capital purposes, as well as the borrowing availability under the 2026 Revolving Credit Facility of $100.0 million.

Previous wording

As of September 30, 2025, our total indebtedness, net of debt financing fees was $246.3 million. The interest rate in effect for the 2022 Term Loan Facility as of September 30, 2025 was 6.352% per annum. We were in compliance with all debt covenants as of September 30, 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.

Current wording

As of March 31, 2026, our total indebtedness, net of debt financing fees was $491.6 million. The interest rate in effect for the 2026 Term Loan Facility as of March 31, 2026 was 6.412% per annum. We were in compliance with all covenants under the 2026 Credit Agreement as of March 31, 2026. 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

Net cash provided by operating activities for the nine months ended September 30, 2025 was $107.5 million compared to net cash provided by operating activities of $98.2 million for the nine months ended September 30, 2024. Net cash provided by operating activities for the nine months ended September 30, 2025 reflects net income of $72.6 million and the add back for non-cash charges totaling $66.9 million, partially offset by changes in operating assets and liabilities of $31.9 million. Non-cash charges primarily consisted of $30.7 million of depreciation, $23.4 million in stock-based compensation expense and $15.0 million of amortization related to intangibles. 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.

Current wording

Net cash provided by operating activities for the three months ended March 31, 2026 was $46.3 million compared to net cash provided by operating activities of $36.3 million for the three months ended March 31, 2025. Net cash provided by operating activities for the three months ended March 31, 2026 reflects net income of $24.3 million and the add back for non-cash charges totaling $23.1 million, partially offset by changes in operating assets and liabilities of $1.1 million. Non-cash charges primarily consisted of $11.1 million of depreciation, $6.6 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, 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.

Previous wording

Net cash used in investing activities for the nine months ended September 30, 2025 was $43.8 million compared to net cash used in investing activities of $18.8 million for the nine months ended September 30, 2024. Purchase of property and equipment increased primarily due to higher site build-out costs as well as technology and computer purchases due to growth.

Current wording

Net cash used in investing activities for the three months ended March 31, 2026 was $10.2 million compared to net cash used in investing activities of $14.5 million for the three months ended March 31, 2025. Purchase of property and equipment decreased primarily due to lower site build-out costs and a reduction in technology hardware purchases.