IBEX Limited (IBEX) 8 Feb 242024 Q2 Earnings call transcript

Welcome to the IBEX Second Quarter Full Year 2024 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. To note, there is an accompanying earnings deck presentation available on the IBEX Investor Relations website at investors.ibex.co.I will now turn this conference over to Mr. Michael Darwal, Investor Relations of Ibex.

Good afternoon, and thank you for joining us today.

business want may you to and include performance, goals I on matters our assumptions. begin, based financial call are today's forward-looking and we to current that remind discussed operating on Before management's which beliefs outlook, statements related of to to new Please date subject revise those statements risks, as result forward-looking of this today. which other could of these we may factors are and that and expected results cause reflect our information call, note as uncertainties and our undertake developments, described occur.Forward-looking from opinion to various statements the this no obligation that materially differ a actual

more annual Exchange Securities a please and description Form factors, on the risk review report XX, September U.S. For Commission our XXXX. of XX-K detailed our on filed with

of will turn as on now are X, from the standard.With July as Bob CEO, became previous basis than XXXX, over reporting and filer Dechant. a rather now reminder, IFRS a the I As call domestic to such, IBEX a GAAP U.S. we that,

Mike. Good afternoon, as all today us second you, share thank and our joining fiscal we for quarter you XXXX everyone, results. Thank

clients, FY we our wins tracks we similarly new won our velocity for several 'XX banner compared logos. last XXX course our strategic into high-profile next have XX X 'XX.This opportunities and pipeline year half had half wins. size, of we X building of new quarter, we 'XX, deals Over of quality our investments new had first now our for Efforts, of totaling I'm XX in logo, report, of first the phase and fruition FY blocks Fortune made FY for with which XX the new for growth. to terms in in the our as against of head-to-head competitors. client of wins very are multibillion-dollar the include These the to Fortune months, client coming wins speed to to excited and

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our at with integrated X.X% in with million on when in and is initiative recent down us including led Our momentum in this adjusted accomplishments results bottom succeed from premier The in sales we AI prior our $X.X million, with to logo new impact had year. forward. HCM/ERP wins brands of of $XXX.X adverse and and areas, million $XX.X opportunities key well great This to continuing year a the ability second comparing decline QX into positions from million FY prior both fronts QX.Although we and half move planned line associated highlight as revenue came our $XX.X in with investments future our line the regions combination our training our to onshore EBITDA resulted engine X lower systems, build from in organization, impact quarter. top both deferred 'XX.Additionally, to softer recognition a to embedded coupled growth, client offshore volumes quarter.Revenues clients and revenue continues with the strength to for in the several our transition of volume of significant top base to

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We has pioneer, the excited a and developed platform software client with are very full first of harness about who wearable and device to AI wearables power new win the technology an build AI.

service have valuation wins use AI.From standpoint, in with program, and buyback continues bring is an current back. execute differentiation to continue our share customer and efficient are acquired product our on we market shoulder that and than position trajectory a confidence last and of to our client to successfully working the define our and showcase This these the to we in driven an capital shares We which shoulder mover It allocation this exciting our first more we September, to to by program, amazing attractive Since announced our IBEX. XXX,XXX announced be of we the capital. experience.

through for evaluate new whether markets continue acquisition. or expansion, We organically to

targeted net enviable an can into where the cash solutions and the powered and make have AI. We $XX believe BPO to position tech-led a flexibility giving closing, their million, higher-value by IBEX for winners We transform at industry inflection is investments flexibility speed, the growth.In leveraging constructively long-term will our an winner, we be use of businesses point DNA.

continued and team business My of Taylor through over go clients remain the encouraging. for I turn value our strengthening now on financials. are to will results to call early and employees, ever delivering our shareholders.I Taylor? and the focused Our

the decline on second My Reconciliations adjusted while year-over-year discussions million, income, at These of generated X basis. offshore to in per Thank by the attached several earnings results adjusted of for our XX% and are quarter fiscal revenue a references XX% environment XX% were year to our mix to in of versus a and the EBITDA Revenue U.S. second prior quarter the earnings HealthTech as of our from of million flow impact compared U.S. partially to telecommunications onshore of net with of cash while and now the verticals. in $XXX.X in release.Our financial you, free as net FinTech and XXXX good and trend non-GAAP on impacts, the in in and digital Omni-Channel contract comprise retail delivery. Thank tables second for the in resulted embedded revenue $XXX.X operations quarter. joining revenue XX% you basis, our to revenue ago, continued FinTech changing growth everyone. well year our press by included and the shifting delivery volume X.X% in our cash Bob, GAAP towards net quarter.Looking and share, softer-than-anticipated of e-commerce call shore non-GAAP afternoon, base business now services geographies.Digital measures offshore Omni-Channel revenues the are some near and year offshore impacted clients versus total our represents quarter verticals total mix revenue offset income adjusted are combined from business to today. and in GAAP telecommunication were our declines and strategic a revenue, total, results prior

positive impact revenue impact quarter. margin reflecting The prior revenue also margin improvement lower decrease mix.Net well our quarter, when year second was second primarily roughly in quarter adverse in training margin the training, from quarter as and impact, previously strategic the over the associated with than sales a the income the impacted revenue HCM and trends Gross XX.X% expect gross at associated prior of $X.X than [ while prior revenue the recognized and the for in Normalizing XX% of U.S. XXX but was training up XX% investments shift year the our $XXX,XXX ] only training infrastructure our expected organizations. will compared our prior new deferred to GAAP, comparing support to training a in versus pieces in XX.X% a not program quarter the the of that million recognized year versus Deferred investments year. mix was higher the margins $X.X from revenue discussed the result basis deferred these prior second In year. life was $X.X beginning We compared accordance time.Another and quarter deferred revenue including revenue with offshore negatively was as program.Deferred compared was in tax of program billed in to deferred with of revenue to These was with impact year, the marketing are the million of quarter.This ramps. for on $X.X comparisons growth increasing the and important new significant this year-over-year billed client of points the revenue and ERP revenue, business.Our is rate over gross factor million technology, a year. was impacted adverse training last our recognition have our strategy was impact to although drive had that prior million prior revenue year. our

high was We technology, in compared million to and year of accounting was for was prior was diluted organizations rate deferred support the $XX.X basis, tax to prior quarter.On well sales $X growth the $X.XX Adjusted year $XX.X quarter. to for our $X.XX share Non-GAAP compared as expect ERP $X.XX vertical diluted to compared or the HCM or period prior fiscal the year.The a the strategy. margin by our year. EPS per in as of million marketing the same income primarily remain EBITDA year revenue and fully in our non-GAAP Fully in revenue in teens investments training $XX.X infrastructure were $X.XX million adjusted net adjusted in earnings adjusted to the and driven the quarter. including last EBITDA of XX.X% compared for XX.X% revenue million strategic change in

quarter. revenue year XX% XXXX, top For year of top concentrations and versus verticals. overall XX decreased the and at to quarter revenue fiscal of of to representative our the in and XX.X% XX%, largely quarter.Conversely, year increased versus quarter to prior XX.X% of increased second client prior versus respectively, portfolio.Switching X, transportation a second quarter vertical prior of telecommunications of the HealthTech year XX XX.X% year the XX.X% in of well-diversified and remained to XX%, client logistics top to our second revenue, increased in e-commerce X.X% revenue XX.X% XX.X% prior the quarter, exposure in second revenue quarter the XX.X% versus flat to our quarter. and quarterly Retail travel,

in versus the by year changing Additionally, crypto the quarter economy FinTech decreased million $X.X revenue impacted $X.X negative the of for was the new operating to positive XX.X% quarter, year to a landscape generated from cash compared activities for million the prior clients.Net XX.X% quarter. and platform investment quarter prior for a in

positive fiscal million half first the For was of versus a our $X million. operating cash $XX.X flow year,

received $X.X prior cash in flow DSOs. $X.X of to operations continue utilize to build-outs year industry end the larger negatively impacted revenue of were of negative from the to Our with first second X.X% DSOs the end a days, the first quarter average. and versus million of due quarter up in in of X.X% quarter from DSOs the as higher the completed Several were our or to previous second were XX and the quarter.Capital in payments we lower quarter compared XX year of $X.X expenditures XXXX decreased available in line prior negative revenue in quarter year week income a years.Free or fiscal at million million client and January capacity million $X.X days the at from current the in

June million, from million For the as half $XX.X cash of a million $XX prior cash by during quarter was ended down our from Net XXXX, versus $X.X year, free share of the quarter. million negative June year.We second $XX.X $XXX,XXX a flow in as $XX.X XXXX. first fiscal repurchase the positive driven was the of in million with down cash,

repurchase We of announced share September to up our million continued program to with $XX repurchase XX, worth XXXX, on authorizing us shares.

repurchased During shares quarter, we the second million. $X.X for XXX,XXX

of therefore, through For to to term, year-to-date client shares XXXX, expect $XX.X quarters expect similarly million.Looking fiscal on for January continue softness near XXXX, XXX,XXX a year-over-year of some and cost volumes the total first revenues in third for trend repurchased X our we to XX, forward remainder of as a the we the basis. quarter

strength the by an optimizing our confident rescale in through ] client factors, fourth result guidance. site strategy half in and the we we value basis, offshore $XXX to feel bring the the million we fundamentals and be We between expect margin revenues our and our strategic remain position in and the Operator, XX%. to investments move recent we EBITDA us We and fiscal full full year inflection footprint remain ahead.As will drive accelerated these a of proposition and a believe and towards realizing savings our our years wins, take higher-margin our our Bob new to improvement our are in well our wins differentiated adjusted million please business of pipeline now year will questions. EBITDA of growth.We [ quarter, clients. the about growth updating overall business of On forward.With anticipate our new line. As strongly ramps $XXX adjusted client in margins XX% and that second that, for cost year in range client as driving our open I will our regions excited we

of Our David Koning [Operator from from question Instructions] the first comes line Baird.

it Maybe, was like FinTech was about I down looking the it first at XX% all, year-over-year. of just segment, it, looked

Maybe the go to what decline of was a what little happened You talked rest the total little just a do That it's really entire quite just of seem that more bit through the that about and bit company, was? a better. really piece there.

for question. thanks And David. Sure, that

have as markets, kind -- [ down. those cetera. So economy, of the are well have had millennial their of a so FinTech in kind client. a crypto side, et the those partner app both And crypto really And with we ] impacted some client businesses of economy the as -- been trading new

-- side there's lot winners, the On various a equation, of there's verticals and losers. would look of the that the I other say

talked various look, -- that winners, that -- that when down. about there segment so the wasn't sub-segment, losers as FinTech of And we across verticals.So an kind we overall -- were softness in, one really from the like isn't it's of aside segments came it kind moving where biggest macro really our like, aren't

some various And are on so are that solutions around losers putting deploying we that of call some volumes. are have winners, that those, some various down, pressure shedding

And then were there? know know But but quite like something What's there? had. dynamic going bit weak. to I little And best get dynamic ever maybe a the the margins it's the one quite was -- the yet, what's of yes, you've utilization a actually I good, better

you biggest quarter, Yes, down that. great like $X.X out way deferred me free do And adding, the top starts million. but to all that the the start training feel the line, so Taylor, if to question. with, and bottom let the in line, impact feel But with

running strengthening in high where shore near offshore utilizations, of the our view the -- then of interesting have margins large So our we really certainly, about those -- that, points.And gross kind margin half. the normalize -- the the that percentage the significantly ramps, business and a feel -- confident for some are mirror what impact. we now up why that that's that or was running look feel if an basis, our rear we EBITDA are went large Taylor we and XXX shared, like in second you margins basis if that in they in had What's of at on at actually you from

in. go I to Taylor if sorry, is ahead. Yes, jump -- just maybe And going

They we that gross just going healthy. -- confirm margins very good just the underlying feel No, about. I remain was to

need in basis site are our contribution We already adjust and I'm [ to as mentioned, opportunities we to regions, margins help forward, as roughly said, which as for Bob to we're going look deferred higher-margin look points. and Bob bear a at -- continue we training we're going revenue. margin going starting to We ] then XXX some And there and see spots the have And then some some wins to drive they're As region see in see initiatives of couple specific those the to the we new well. our propel to up footprint fruit.

So our going and are we head. margins good feel where they're to where about

one I of I training lower revenue just say ]? so just when it one down go sneak a much you explain training be more. Can ratable if Why the up did can $XXX,XXX kind And you $X.X added cost, then more $X.X million recognition? that million to [ time, revenue should heard and year-over-year

Yes.

So the it's is built the training the a [ beginning revenue at works, accounting of recognized program. the it's way but ] built, the of life over program, when

all versus new or So the additional versus at because year, cash no amortization that if about you logos revenue the recently that cash recognition $XXX,XXX this year. programs, -- the -- revenue we $X.X recognized has once the we the look ramping with schedule this received then of last million new an upfront. the And associated deferred out, year is are some way deferred year, prior worked actively

that -- provide kind can our our if at end [ detailed those also impact I insight X So look helps financials.And that footnote as X, the Q there's ] to $X.X of our you net footnote point adverse you you, of deferred of together ] X and can some and see revenue into well. at schedule you a the million [

question Securities. from the Tobey line comes of next from Sommer Truist Our

on Tobey. This is ] for [ Jack Wilson

any for Do margin So Or question. -- for year? see to just sort is going we remainder sort to expect be sort varied? Could more follow-up the of cadence that margin a we ramp the the of it little of expect a that of just up? on

year, implies to to notable if margin And at the the for between look for to came in of in up. a we XX%. a expect back some No, year to year, the EBITDA between back you QX. improvement And up -- our I said would the ramp XX%, expect be them and see margins I that expect I we half some think in XX% around our XX%. We'll ramp of those XX% which would X half first half quarters. margins bit be the to And see

sort well. on And follow-up as of then utilization the a

shifts complete, point? of sort high full offshore utilization the that is ramp sort once more is a of part is or this So I XX% a, sustainable? of know, to Or don't that

That's us. is at flexes XXs. I a And seasonality good have, QX, we especially a the up kind the that typically of look with our metric that Jack. great it question, which how is, for into That's

the so but say running would And really is that sustainable. -- in I that XX% not plus

That's Our goal a the range. is good probably in range. XX%

So guardrails ramps that, XX% pace And up.And XX% as picking of lot sitting really currently engine seasonality the we we at. this and of about share are that and and will so excited shore between dissipate, that we year market. we somewhere ramps to new what a up the, is, have near logo say, this underway we're in run let's feel that that is the are line of some offshore the the that kind are -- filling of

gross those strengthening in pretty keeping it generating markets, that's should going continue those good in in layer half. we in So be some to high, those, the think pretty utilizations to we back regions that, then margins which

one me. just last for then one And

them is and when to of sort differentiator? So that you're using Or something asking it asking about you're pitching sort about for? of they're -- talking a AI, something is clients as you that to

And Great fantastic you you both, would have that's a cover that question. say I described. -- as that engagements Boy,

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they're are strong think, So both. both at I areas.More partners are looking spanning -- Most in clients BPO importantly, though, is, that

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like of we clients BPO as our the for And out really partner. looking so a both position are

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comes [Operator Potter Citi. Instructions] line of from Our the from Ryan next question

the impacts saw FinTech about in it know beyond what volume volume guess, there. to XQ. start other continue attribute the in AI the is Is stuff showing you're But verticals in any on that coming like you some and and factors from FinTech? to vertical you softness out you too? concentrated expect and softness like volumes seeing already technology that? there other talked mentioned from macro-related up mostly Or Also, I factors impact call would softness quarter Want the to the factors? impact you this you in I

Sure.

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sneak could I if last one in. And one

and IX, X announced I ago. guys Wave X you You or that think week mentioned

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Sure.

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back Thank turn now would over Bob for closing the like you. to conference I to CEO, remarks. Dechant,

of Great. the really and industry proud of Look, Thank positioned think do. really this This team strongly half I for you, And winner business We're think appreciate beyond. in operator. moving everybody in where what my the I position is continues industry joining to is think to I great here. a leader second an this And said. kind -- at a as point, -- we're be and a in the inflection is to. I

your So Have to a and day. good trust thanks IBEX. in all confidence for

call. for today's participating. concludes Thank This you you. Thank conference

may You disconnect. now