Q2 2022 Ibex Ltd Earnings Call

February 16, 2022

Speaker 1: Welcome to the IBEX second quarter full year 2022 earnings conference call. At this time all participants are in a listen only mode. After the speaker's presentation there will be a question and answer session. To ask a question during the session you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance please press star 0.

Welcome to the IMAX second quarter full year 2022 earnings conference call. At this time all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session.

I'll ask a question during the session you will need to press star one on your telephone. Please be advised that today's conference is being recorded.

You refer any further assistance. Please press star zero to note. There is also an accompanying accompanying earnings deck presentation available on the IMAX Investor Relations website at investors Dot IBEX Darko I will now turn this conference over to your host Ms. Brindley Johnson with the Blue shirt group.

Speaker 1: To note, there is also an accompanying earnings deck presentation available on the IBEX Investor Relations website at investors.ibex.co

Speaker 1: I will now turn this conference over to your host, Ms. Brynley Johnson with the Blue Shirt Crew.

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Good afternoon, and thank you for joining us today before we begin I want to remind you that matters discussed on today's call may include forward looking statements related to our operating performance financial goals and business outlook, which are based on management's current belief.

Speaker 1: Good afternoon, and thank you for joining us today. Before we begin, I want to remind you that matters discussed on today's call may include forward-looking statements related to our operating performance, financial goals, and business outlook, which are based on management's current beliefs and assumptions. Please note that these forward-looking statements reflect our opinions as of the date of this call, and we undertake no obligation to revise this information as a result of new developments which may occur.

And assumptions. Please note that these forward looking statements reflect our opinion as of the date of this call and we undertake no obligation to revise this information as a result of new developments, which may occur forward looking statements are subject to various risks uncertainties and other factors that could cause our actual results to differ materially from those expected and described today for more detailed description of <unk>.

Speaker 1: forward-looking statements are subject to various risks, uncertainties, and other factors that could cause our actual results to differ materially from those expected and described today. For a more detailed description of our risk factors, please review our annual report on Form 20F filed with the U.S. Securities and Exchange Commission on October 14, 2018.

Risk factors. Please review our annual report on form 20-F filed with the U S Securities and Exchange Commission on October 14th 2021, with that I'll turn it over to Bob <unk> CEO .

Speaker 1: With that, I'll turn it over to Bob Deckett, CEO . Thank you, Brinley.

Thank you Bradley.

Good afternoon, everyone.

Speaker 2: And thank you all for joining us today as we discuss our second quarter fiscal year 2022 results.

Thank you all for joining us today as we discuss our second quarter fiscal year 2022 results.

Speaker 2: Carl and I are excited to be presenting to you today.

Carl and I are excited to be presenting to you today.

Speaker 2: We are now 18 months since our IPO of August 2020.

We are now 18 months since our IPO of August 2020.

Speaker 2: We have made significant progress on our strategic initiatives over this time, despite the challenges from the pandemic.

We've made significant progress on our strategic initiatives over this time, despite the challenges from the pandemic.

Speaker 2: We have built a business that is evolved and is accelerating meaning.

We have built a business that has evolved and is accelerating meaningfully in terms of growth.

Speaker 2: in terms of growth and new client wins.

And new client wins.

We have improved our client diversification.

Speaker 2: which was a risk at the time of the IPO and is now an advantage.

Which was a risk at the time of the IPO and.

And there is now an advantage.

Speaker 2: At the same time, our growth continues to dominate in our high-margin region.

At the same time, our growth continues to dominate in our high margin regions.

Importantly, we continue to transform our business into a digital first business with so many great client brands.

Speaker 2: Importantly, we continue to transform our business into a digital first business with so many great client brands.

Speaker 2: referred to as BPO 2.0 over the last two years.

<unk> two point over the last two years.

We believe FY 'twenty, two will be a watershed year for IMAX with many key milestones within sight.

Speaker 2: We believe FY22 will be a watershed year for IBEX with many key milestones within sight.

Speaker 2: and our forward trajectory is even more exciting.

And our forward trajectory is even more exciting.

As we shared with you last quarter.

Speaker 2: we were confident that our business was positioned to accelerate growth into Q2 and beyond.

We were confident that our business was positioned to accelerate growth into Q2 and beyond.

Speaker 2: And this is exactly what we delivered in the second quarter with record results.

And this is exactly what we delivered in the second quarter with record results.

Speaker 2: revenues increased approximately 13% year over year.

Revenues increased approximately 13% year over year.

Speaker 2: representing a combined two-year growth of 23%.

Representing a combined two year growth of 23%.

Speaker 2: and resulting in our highest revenue quarter ever of $132.2 million.

And resulting in our highest revenue quarter ever of $132 2 million.

Speaker 2: LTM for revenue and EBITDA are $458 million and $61.8 million respectively.

LTM for revenue and EBITDA are $458 million and 61 8 million respectively.

Speaker 2: resulting in a 7.1% organic growth.

Resulting in a seven 1% organic growth and.

Speaker 2: and 13.5% EBITDA margin.

And 13, 5% EBITDA margin.

Speaker 2: The confidence we have in our business is allowing us to raise revenue.

The confidence we have in our business is allowing us to raise revenue guidance.

Speaker 2: However, the underlying narrative is even more compelling.

However, the underlying narrative is even more compelling.

Speaker 2: In my six years at the helm, the growth engine we have built here is the strongest ever.

In my six years at the helm.

The growth engine, we have built here is the strongest ever.

Speaker 2: revenue generated from new clients won since FY 16.

Our revenue generated from new clients won since FY 16.

Speaker 2: who are hyper-growth companies primarily adopting our omni-channel capabilities integrated with WaveX technologies and analytics.

Who are hyper growth companies, primarily adopting our omnichannel capabilities integrated with <unk> technologies and analytics grew.

Speaker 2: grew by an impressive 57% during the quarter.

<unk> grew by an impressive 57% during the quarter.

Speaker 2: up from 37% a year ago and 34% last quarter.

Up from 37% a year ago.

34% last quarter.

This group of customers now make up 70% of our total company revenues.

Speaker 2: This group of customers now make up 70% of our total company revenues.

Our legacy three clients.

Speaker 2: which at the time of our IPO were 44% of revenue, have stabilized as revenues for these clients were approximately flat sequentially.

Which at the time of our IPO were 44% of revenue.

Stabilized as revenues for these clients were approximately flat sequentially.

Speaker 2: Importantly, these clients now represent less than 20% of revenue.

Importantly, these clients now represent less than 20% of revenue.

Speaker 2: And we expect to continue to reduce that percentage going forward as the rest of our business accelerates.

And we expect to continue to reduce that percentage going forward as the rest of our business accelerates.

The new logo engine continues to perform at a blistering rate.

Speaker 2: The new logo engine continues to perform at a blistering rate. We closed three new

We closed three new logos for the quarter.

Speaker 2: for a total of 12 year-to-date across key vertices.

For a total of 12 year to date across key verticals.

Speaker 2: For added perspective, in FY20, we sold $12.5 million of in-year revenue from new clients.

For added perspective in <unk>.

2020, we sold $12 $5 million of in year revenue from new clients.

Speaker 2: Last year, we won 23 new clients, which built $30 million of in-year revenue.

Last year, we won 23, new clients, which builds $30 million of in year revenue.

This year, we expect to generate $50 million of in year revenue from our new clients with more important opportunities slated in the back half of the year.

Speaker 2: This year, we expect to generate 50 million of in-year revenue from our new clients with more important opportunities slated in the back half of the year.

Speaker 2: As a reminder, our growth model is designed to deploy a land and expand approach with our clients. And this is what we are achieving.

As a reminder.

Our growth model is designed to deploy a land and expand approach with our clients and this is what we are achieving.

Speaker 2: We begin our client partnerships by delivering exceptional CX results.

We begin our client partnerships by delivering exceptional CX results.

Speaker 2: and then showcase the additional insights and partnership solutions that WaveX and our business intelligence tools can offer.

And then showcase the additional insights and partnership solutions that wave X and our business intelligence tools can offer.

Speaker 2: This subsequently allows us to expand into new services with these clients and increase our wallet share with them over time.

This subsequently allows us to expand into new services with these clients and increase our wallet share with them over time.

Speaker 2: On average, the revenues in year 2 of our client relationships are between 2.5x to 3.5x year 1 revenues, with continued strong growth in 2021.

On average the revenues in year two of our client relationships are between two five X 235 X year, one revenues with continued strong growth into year three.

Therefore in FY 'twenty, three we expect to drive over $100 million in revenue from this new cohort of clients with continued growth into FY 'twenty four.

Speaker 2: Therefore, in FY23, we expect to drive over $100 million in revenue from this new cohort of clients with continued growth into FY24.

Speaker 2: while I'm very excited about our performance and out.

While I'm very excited about our performance and outlook.

Speaker 2: I'm particularly proud of the robust and rapid diversification of our client base.

I'm, particularly proud of the robust and rapid diversification of our client base.

Speaker 2: We've added exceptional high growth brands. And today, our top five clients represent just 41% of our business.

We've added exceptional high growth brands and today, our top five clients represent just 41% of our business versus approximately 58% at the time of our IPO.

Speaker 2: versus approximately 58% at the time of our IPO.

And we now have nearly 50 clients with more than $1 million in annual revenue.

Speaker 2: And we now have nearly 50 clients with more than $1 million in annual revenue.

Our largest client now represents just 12% of revenue.

Speaker 2: Our largest client now represents just 12% of records.

Speaker 2: This level of diversification is now a true competitive advantage for IDEC.

This level of diversification is now a true competitive advantage for IDEXX.

Speaker 2: and is exceptional for a BPO provider of any size.

<unk> is exceptional for BPL provider of any size.

This incredible diversification extends into the strategic industry verticals, we are winning with in the market.

Speaker 2: this incredible diversification extends into the strategic industry verticals we're winning with in the market. Our FinTech.

Our fintech.

In health Tech verticals are now approximately 20% of our business combined.

Speaker 2: are now approximately 20% of our business combined.

Speaker 2: We started our initiative of targeting these markets in FY20.

We started our initiative of targeting these markets in FY 'twenty and.

Speaker 2: And we now project these to be more than $100 million in organic revenue this fiscal year.

And we now project these to be more than $100 million inorganic revenue this fiscal year.

This will represent an increase of greater than 65% for the year.

Speaker 2: This will represent an increase of greater than 65% for the year.

Speaker 2: and furthering the success of the quarter, we continue to have 100% client retention.

And furthering the success of the quarter, we continued to have 100% client retention.

Speaker 2: testimony to our value proposition and our ability to deliver for our clients.

A testimony to our value proposition and our ability to deliver for our clients.

Speaker 2: The structural design of our business that includes powerful growth and accelerated demand with our digital first clients. High win rate.

The structural design of our business that includes powerful growth.

And the accelerated demand with our digital first clients.

High win rates of our sales pipeline, well diversified client mix limited telco exposure.

Speaker 2: well-diversified client mix, limited telco exposure.

Speaker 2: and industry-leading client retention gives us great visibility and confidence in our business.

And industry, leading client retention gives us great visibility and confidence in our business.

Speaker 2: As such, we expect growth to continue to accelerate in the second half of the year beyond our Q2 growth rate of 13%.

As such we expect growth to continue to accelerate in the second half of the year beyond our Q2 growth rate of 13%.

Our geographical makeup is equally impressive.

Speaker 2: we added approximately 2,500 new seats in the corridor, with the majority of those in near shore and the Philippines market.

We added approximately 2500 new seats in the quarter.

With the majority of those in nearshore and the Philippines markets.

Since our IPO, we have added over 6500 seats in these markets.

Speaker 2: Since our IPO, we have added over 6,500 seats in these markets.

Today, 88% of our seats are in our high margin regions, which have grown at a 22% CAGR since FY 2016.

Speaker 2: Today, 88% of our seats are in our high-margin regions, which have grown at a 22% CAGR since FY16.

Speaker 2: The majority of our footprint today is operating in a socially distanced model, complemented with work at home.

The majority of our footprint today is operating in a socially distance model complemented with work at home.

Speaker 2: As we move forward to a world where we resume to a pre-COVID operating model, we are in a great position to significantly grow with limited CapEx investment.

As we move forward to a world, where we resumed to pre Covid operating model.

We're in a great position to significantly grow with limited Capex investments.

Speaker 2: This will have a very positive impact on our margins and free cash flow.

This will have a very positive impact on our margins and free cash flow.

Speaker 2: while our revenue growth was strong and margins improved sequentially from 10.6%.

While our revenue growth was strong and margins improved sequentially from 10, 6%.

Speaker 2: Adjusted EBITDA was flat on a year-over-year comparison.

Adjusted EBITDA was flat on a year over year comparison.

Speaker 2: This was driven primarily by costs associated with ramping our new business, which includes agent training and investments in the overhead.

This was driven primarily by costs associated with ramping our new business, which includes agent training and investments in overhead.

Speaker 2: We expect our overall margins to improve significantly in the second half of the year as our ramp costs stabilize.

We expect our overall margins to improve significantly in the second half of the year as our ramp costs stabilize.

Speaker 2: During the quarter, we also had a broadening of our ownership structure.

During the quarter, we also had a broadening of our ownership structure.

CR Gi.

Speaker 2: Our majority shareholder has approved the transfer of a portion of its IBEX shares to some of its shareholders.

Majority shareholder has approved the transfer of a portion of its IBEX shares to some of its shareholders.

Speaker 2: This has reduced TRGI's direct stake in IBEX from 62% to 35%.

This has reduced <unk> direct stake in IMAX from 62% to 35%.

Speaker 2: and will allow us to meaningfully broaden our investor base over time.

And will allow us to meaningfully broaden our investor base overtime.

Speaker 2: We welcome the transition of the holdings in IBEX, of these new shareholders from an indirect state to becoming direct IBEX shareholders.

We welcomed the transition of the holdings in IMAX.

These new shareholders from an indirect stake to become in direct IBEX shareholders.

Speaker 2: Our net cash position on our balance sheet continues to offer us tremendous amount of flexibility when opportunities present themselves regarding capital allocation.

Our net cash position on our balance sheet continues to offer us a tremendous amount of flexibility when opportunities present themselves regarding capital allocation.

Speaker 2: This is demonstrated by our recent share repurchase analysis.

This is demonstrated by our recent share repurchase announcement that we've made and the recent insider buying across members of our executive leadership team and the board including myself.

Speaker 2: that we've made and the recent insider buying across members of our executive leadership team and the board, including myself.

Regarding our share repurchase.

Speaker 2: our board has authorized us to repurchase up to 20 million dollars of our common stock.

Our board has authorized us to repurchase up to $20 million of our common stock.

We just recently began purchasing shares.

Speaker 2: and while we of course look forward to a re-rating of our stock price.

And while we of course look forward to a re rating of our stock price.

Speaker 2: The internal rate of return today for our shareholders is very attractive.

The internal rate of return today for our shareholders is very attractive.

Speaker 2: One of the proudest moments this quarter came amidst a terrible tragedy our team endured as Typhoon Odette ripped through the island of Bohol in the Philippines causing significant damage to our employees and their families' homes and to the community at large.

One of the proudest moments this quarter came amidst a terrible tragedy, our team endured as typhoon <unk> that ripped through the island of ball in the Philippines, causing significant damage to our employees and their families homes and to the community at large.

Speaker 2: Our team responded immediately and with such incredible care.

Our team responded immediately.

With such incredible care.

Speaker 2: Very quickly, IBEX employees donated over US$100,000, which the company matched for a total of over US$200,000.

Very quickly IDEXX employees donated over 100000 U S dollars.

Which the company match for a total of over $200000.

To provide for essential needs like food and water and for the rebuilding of the homes of our team members.

Speaker 2: to provide for essential needs like food and water and for the rebuilding of the homes of our team members.

We are also using a portion of the funds for community outreach programs to go along with the many hours our employees have volunteered to help the community get back on its feet.

Speaker 2: We are also using a portion of the funds for community outreach programs to go along with the many hours our employees have volunteered to help the community get back on its feet.

Speaker 2: Our business and our employees demonstrated an incredible resilience as they remained operational throughout the storm.

Our business and our employees demonstrated an incredible resilience as they remained operational throughout the storm and they continue to remain operational and perform at very high levels.

Speaker 2: and they continue to remain operational and perform at very high level.

Speaker 2: while we wish we would never know of tragedies like this again.

While we wish we would never know of tragedies like this again.

Speaker 2: It is amazing to watch the IBEX culture at work.

It is amazing to watch the IBEX culture at work.

As we continue to provide compelling solutions for our clients. We also develop meaningful and impactful initiatives for our employees and the communities we operate in.

Speaker 2: As we continue to provide compelling solutions for our clients, we also develop meaningful and impactful initiatives for our employees and the communities we operate in.

In particular.

Speaker 2: Our diversity, equity, and inclusion programs that are part of our corporate ESG strategy have helped our employees develop critical skills necessary for elevating into new roles with added responsibility and decision-making.

Our diversity equity and inclusion programs that are part of our corporate ESG strategy.

Helped our employees develop critical skills necessary for elevating into new roles with added responsibility and decision making.

Since our IPO, we have launched the women in IBEX, where we have created multiple programs to support and advance women in the workplace.

Speaker 2: Since our IPO, we have launched the Women in IBEX, where we have created multiple programs to support and advance women in the workplace.

Speaker 2: keynote female speakers from our top clients have provided time and resources to this program.

Keynote female speakers from our top clients have provided time and resources to this program.

Speaker 2: as well as participating in our global mentorship initiative where leaders are matched with college graduates from underserved countries all over the world.

As well as participating in our global Mentorship initiative, where leaders are matched with college graduates from underserved countries all over the world.

Speaker 2: Our commitment to the development of our workforce is second to none and we are energized by the advancements we are enabling in the lives of our employees around the globe.

Our commitment to due to the development of our workforce.

To none and we are energized by the advancements we are enabling in the lives of our employees around the globe.

Speaker 2: We are also proud of the diversity we have built at IBEX.

We are also proud of the diversity, we have built at IMAX.

Speaker 2: from our board of directors, through our leadership, and through our agent population.

From our board of directors through our leadership and through our agent population.

In closing.

Speaker 2: We are confident in the business we have built and its outcome.

We are confident in the business, we have built and its outlook.

Speaker 2: We are a key partner for many great brands in the industry.

We are a key partner for many great brands in the industry.

Speaker 2: We continue to add many new hyper growth clients to our base in our strategic vertical.

We continue to add many new hyper growth clients to our base in our strategic verticals.

Speaker 2: The growth we have is predominantly in our high margin geographies and services.

The growth we have is predominantly in our high margin geographies and services.

Speaker 2: We expect our revenue growth and EBITDA margins to accelerate.

We expect our revenue growth and EBITDA margins to accelerate.

Speaker 2: As such, we are increasing our guidance for revenue growth to 10% to 12% from 7% to 9%.

As such we are.

We're increasing our guidance for revenue growth to 10% to 12%.

From 7% to 9% previously.

Speaker 2: while maintaining our previous EBITDA guidance of 69 to 71 million.

Maintaining our previous EBITDA guidance of $69 million to $71 million.

Speaker 2: I will now turn the call over to Carl. Carl? Thank you, Bob, and good afternoon, everyone.

I will now turn the call over to Carl.

Carl.

Thank you Bob and good afternoon, everyone.

Thank you for joining the call today.

Speaker 3: We are excited about our progress and the results we delivered in Q2. Our business is accelerating as a result of our success with clients in the digital first market.

We are excited about our progress and the results we delivered in Q2.

Our business is accelerating as a result of our success with clients in the digital first marketplace.

Speaker 3: as well as in our strategic fintech and health tech vertical.

As well as in our strategic Fintech and health Tech verticals.

Speaker 3: Our performance highlights the level of differentiation that we have with our services, including our Wave X technology.

Our performance highlights the level of differentiation that we have with our services, including our wave X technologies.

Speaker 3: The momentum we are building will have a positive effect on our long-term growth and margin trajectory.

The momentum we are building will have a positive effect on our long term growth and margin trajectory.

Speaker 3: In my discussions of financial results, references to revenue and net income are

In my discussion of financial results references to revenue and net income.

On an IRS basis, while the adjusted net income adjusted EBITDA and adjusted earnings per share on a non-GAAP basis.

Speaker 3: while the Adjusted Net Income, Adjusted EBITDA, and Adjusted Earns Per Share are on a non-GAAP

Speaker 3: Reconciliations of our IFRS to non-GAAP measures are included in the tables attached to our earnings press release.

Reconciliations of our IRS. The non-GAAP measures are included in the tables attached to our earnings press release.

Speaker 3: Second quarter revenue increased 12.8% to $132.2 million compared to $117.2 million in the prior year quarter and 21.7% sequentially.

Second quarter revenue increased 12, 8%.

$32 2 million compared to $117 2 million in the prior year quarter.

21, 7% sequentially.

Speaker 3: we continue to experience high growth and our clients won since fiscal year 16. This cohort grew by 57% over the prior year quarter and now represents 70%.

We continue to experience high growth in our clients won since fiscal year 2016.

This cohort grew by 57% over the prior year quarter and now represents 70% of our total revenue.

Speaker 3: The growth in revenue this quarter was offset by significant decreases related to our legacy top three clients.

The growth in revenue this quarter was offset by significant decreases related to our legacy top three clients.

Speaker 3: While these clients are down 38% from the prior year quarter, they are flat sequentially and now represent less than 20% or approximately 26 million in quarterly revenue.

While these clients are down 38% from the prior year quarter, they're flat sequentially and now represents less than 20% or approximately $26 million in quarterly revenue.

Speaker 3: We expect this group's revenue base to remain around this level going forward and that it will decrease as a percent of revenue over time.

We expect this group's revenue base to remain around this level going forward and then it will decrease as a percent of revenue over time.

Speaker 3: Net income in the second quarter was $8.5 billion compared to $2.5 billion in the same period last year.

Net income in the second quarter was $8 5 billion compared to $2 5 million in the same period last year.

Speaker 3: The increase in net income was primarily driven by a $6.3 million decrease in the fair value measurement related to the warrant liability offset by an increase of $1.7 million in depreciation as we continue to invest in the growth of the business.

The increase in net income was primarily driven by a $6 $3 million decrease in the fair value measurement related to the warrant liability offset by an increase of $1 7 million in depreciation as we continue to invest in the growth of the business.

Speaker 3: We expect our annual effective tax rate to be in the high single digits on a normalized basis excluding the effect of the warrant fair value adjustment.

We expect our annual effective tax rate to be in the high single digits on a normalized basis, excluding the effect of the warrant fair value adjustment.

Speaker 3: This excludes a one-time deferred tax benefit of approximately $4 million, which is expected to be realized in the second half of our fiscal year, reflecting the benefits of our ongoing tax planning efforts, as discussed last quarter.

This excludes a one time deferred tax benefit of approximately $4 million, which is expected to be realized in the second half of our fiscal year, reflecting the benefits of our ongoing tax planning efforts as discussed last quarter.

Speaker 3: On a non-GAAP basis, adjusted net income was $5.2 million versus $6.1 million in the prior year quarter. And adjusted fully diluted earnings per share was $0.27 versus $0.33 in the prior year quarter.

On a non-GAAP basis, adjusted net income was $5 2 million versus $6 1 million in the prior year quarter and.

And adjusted fully diluted earnings per share was <unk> 27 versus 30 <unk> in the prior year quarter.

Speaker 3: The decrease in adjusted net income and adjusted fully diluted earnings per share was primarily driven by an increase in depreciation as mentioned previously.

The decrease in adjusted net income and adjusted fully diluted earnings per share was primarily driven by an increase in depreciation as mentioned previously.

Speaker 3: Adjusted EBITDA for the second quarter of fiscal year 2022 was $17.8 million or 13.5% of revenue compared to $18 million or 15.3% of revenue in the prior year quarter.

The EBITDA for the second quarter of fiscal year, 2022 was $17 8 million with 13, 5% of revenue compared to $18 million or 15, 3% of revenue in the prior year quarter.

Speaker 3: The adjusted even a margin decrease compared to the prior year quarter was primarily driven by the cost associated with granting our benefits.

The adjusted EBITDA margin decreased compared to the prior year quarter was primarily driven by the costs associated with ramping our business along with continuing investment in overhead to accommodate our growth sequentially.

Speaker 3: along with continuing investment in overhead to accommodate our growth.

Speaker 3: Sequentially, adjusted even margin increased 290 basis points over the first quarter.

Sequentially adjusted EBITDA margin increased 290 basis points over the first quarter.

Switching to our verticals, our Fintech health Tech verticals continue to grow in response to our aggressive investments two years ago, increasing significantly to 19, 5% in the second quarter up from 11% in the second quarter of fiscal year 'twenty one.

Speaker 3: Switching to our verticals. Our FinTech and HealthTech verticals continue to grow in response to our aggressive investments two years ago, increasing significantly to 19.5% in the second quarter, up from 11% in the second quarter of fiscal year 21.

Speaker 3: Travel and logistics increased to 13.2% of revenue compared to 8.4% in the prior year quarter, driven by new economy clients. Retailing commerce now represents 23.7% of revenue compared to 21.7% in the prior year quarter as we continue to win in a digital first marketplace.

<unk> and logistics increased to 13, 2% of revenue compared to eight 4% in the prior year quarter.

Driven by new economy clients retail E. Commerce now represents 23, 7% of revenue compared to 21, 7% in the prior year quarter as we continue to win in the digital first marketplace.

Speaker 3: Our exposure to the telecommunications vertical decreased to 17.2 percent of revenue compared to 29.5 percent a year ago. In summary, we have made great progress on our revenue diversification goals.

Our exposure to the telecommunications vertical decreased to 17, 2% of revenue compared to 29, 5% a year ago. In summary, we have made great progress on our revenue diversification goals.

Total capital expenditures were $11 8 million or eight 9% of revenue in the second quarter of fiscal year 'twenty two.

Speaker 3: or 8.9% of revenue in the second quarter of fiscal year 22 versus 6.4 million or 5.4% of revenue last year.

Versus $6 4 million were five 4% of revenue last year.

Speaker 3: We added over 2,500 new seats, primarily in our high-margin, near-shore, and offshore locations during the quarter.

We added over 2500, new seats, primarily in our high margin near shore and offshore locations during the quarter.

Net cash generated from operations was $3 4 million for the quarter compared to $4 3 million in the second quarter of fiscal year 'twenty one.

Speaker 3: Net cash generated from operations was $3.4 million for the quarter, compared to $4.3 million in the second quarter of fiscal year 21, impacted by higher working capital usage, offset by lower cash packs.

Impacted by higher working capital usage offset by lower cash taxes.

Speaker 3: DSOs for 62 days for the second quarter, an increase of 14 days from the same period last year, and decreased one day sequentially. The year-over-year increase

Dsos were 62 days for the second quarter, an increase of 14 days for the same period last year and decreased one day sequentially.

The year over year increase was driven by revenue growth.

Timing of collections and one of our larger clients reverting to standard payment terms in the fourth quarter of fiscal year 2021.

Speaker 3: timing of collections, and one of our larger clients reverting to standard payment terms in the fourth quarter of fiscal year 2021.

non-GAAP free cash flow decreased to negative $8 4 million from negative $2 1 million in the prior year.

Speaker 3: non-GAAP pre-cash flow decreased to negative $8.4 million from negative $2.1 million in the prior year.

Speaker 3: The decrease in free cash flow is primarily driven by an increase in capital expenditures of $11.8 million as compared to $6.4 million from last year.

The decrease in free cash flow was primarily driven by an increase in capital expenditures of $11 8 million as compared to $6 4 million from last year.

Speaker 3: Our balance sheet remained strong and we ended the quarter with $51.5 million in cash.

Our balance sheet remains strong and we ended the quarter with 51 $5 million in cash.

Speaker 3: total borrowings of $37.7 million and lease liabilities of $89.4 million compared to cash of $57.8 million.

Total borrowings of $37 7 million.

Lease liabilities of $89 4 million compared to cash of 57 8 million total borrowings of $28 5 billion and lease liabilities of 84 million as of June 2021.

Speaker 3: total borrowings of $28.5 million, and lease liabilities of $84 million as of June 2021.

Speaker 3: With continued focus on our strategic verticals, winning digital-first marketplace new clients, and technology investments to expand our customized WaveX solutions, we believe we are well-positioned for a continued future growth.

With continued focus on our strategic verticals, winning digital first marketplace, new clients and technology investments to expand our customized wave X solutions. We believe we are well positioned for continued future growth.

Speaker 3: With that, Bob and I will now take questions. Operator, please open the line.

With that Bob and I will now take questions. Operator, please open the line.

Speaker 4: As a reminder, to ask a question, you will need to press star 1 on your telephone. To withdraw your question, press the pound key. Please stand by while we compile the Q&A roster.

As a reminder to ask a question you will need to press star one on your telephone to withdraw your question Brett <unk>.

Please standby, while we compile the Q&A roster.

Our first question comes from the line of Tobey Sommer from curious Securities. Your line is now open.

Speaker 4: Our first question comes from the line of Toby Sommer from Truist Securities. Your line is now open.

Thank you.

Speaker 3: I was wondering if you could give us sort of a map out over the next several quarters.

I was wondering if you could give us sort of map out over the next.

Several quarters, how the margins improve and I'm focusing in on two vectors.

Speaker 3: how the margins improve, and I'm focusing in on two vectors, the growth that you've done in seats as well as kind of the added expenses associated with remote work at the same time you're adding seats, sort of that duplicative nature and how that, could you bridge us to the more profitable profile? Thank you.

The growth that you've done in feet.

In <unk> as well as.

Kind of the added expenses associated with remote work at the same time, you are adding some sort of duplicative nature and how that could you bridge us to the to the more profitable profile. Thank you.

Speaker 2: Sure, Toby, and hey, thanks for joining and appreciate the question. So when I think about our business, we, I think, have done a really, really good job of structurally building this business.

Sure Toby and thanks for joining and appreciate.

I appreciate the question so when I think about our business.

We I think have done a really really good job of structurally building this business.

Speaker 2: for double-digit growth and continued trajectory on our EBITDA margin. But based on when certain clients, which come in clusters sometimes like it did recently for us, you might get some fluctuations in your margins in quarters.

For double digit growth in.

Continued trajectory on.

Our EBITDA margin.

And.

But based on when certain clients, which coming cluster, sometimes like it did recently for us.

Get some.

Fluctuations in your margins in quarter, but when I think more longer term on this I feel like we've built this business that.

Speaker 2: But when I think more longer term on this, I feel like we've built this business that, you know, top line growth can be in that, you know, let's say, upper single digits, you know, all the way up into, you know, to the mid teens.

Topline growth can be in that.

Let's say.

Upper single digits.

All the way up into the mid teens.

Speaker 2: And I also believe that, you know, as we said, even a little while back, our midterm trajectory was, you know, north of 15 percent EBITDA. I think we're structurally pretty close to that. And, you know, so I think that trajectory really looks like that, you know, out over the next several quarters.

I also believe that as we said, even though we're <unk>.

Our mid term trajectory.

North of 15% EBITDA I think we're structurally pretty close to that and so.

So I think that trajectory really looks like that out over the next several quarters.

Speaker 3: And you indicated that...

And.

You indicated that.

Capex you have some visibility into that perhaps.

Speaker 5: CapEx, you have some visibility into that perhaps diminishing from this elevated level. How do you sort of get comfort in that view?

Sure.

Diminishing after this.

From this elevated level.

How do you.

Sort of get comfort that you will see right.

Speaker 2: Sure, Toby. And, you know, our capex over the last, you know, last

Sure.

Toby.

Our capex over the last.

Last.

Speaker 2: year driven by social distancing of our centers has been at a higher rate than historically has been.

Year, driven by social distancing of our centers has been at a higher rate than historically has been.

Speaker 2: And so, you know, we believe that there is, you know, at some point when we resume back to pre-pandemic operating models are close to that. We believe that we have a nice 18-month to two-year trajectory of a lot lower CapEx. But then if we step back and think maybe just a little bit longer term.

And so we believe that there is.

At some point when we resume back to pre pandemic operating models are close to that we believe that we have a nice 18 months to two year trajectory.

Your Capex, but then if we step back and think maybe just a little bit longer term.

Speaker 2: we're a growth company. And so, you know, I kind of feel like that our CapEx will be.

We're a growth company and so.

I kind of feel like.

That our Capex will be.

Speaker 2: know, in the overall to grow this business would be in about a, you know, all in at about, I don't know, maybe about 5%, you know, 5% range.

In the overall to grow this business would be in about Ah.

All in at about I don't know, maybe 5% 5% range.

Speaker 2: And, you know, that will allow us to, you know, allow us to grow that. But we're also excited about that, you know, that kind of next 24 months.

And.

That will allow us to allow us to grow that but we're also excited about that that kind of the next 24 months.

Speaker 2: of, you know, limited CapEx and really, you know, as our centers fill back up again in a non-social distance environment. And as said in my remarks, I think at that point we'll be generating, you know, it will be a very, you know,

Limited Capex and really as our centers filled back up again in the non social distance environment and I've said in my remarks, I think at that point, we will be generating.

It will be a very.

Very good.

Speaker 2: very good effect from a free cash flow standpoint.

From a free cash flow standpoint for us.

Speaker 3: If I could squeeze in one more, could we get your perspective on wages and inflation, both from a pricing perspective as you interface with customers, as well as internal costs and elevated rates of turnover as a result, potentially, and I know you have multiple geographies to draw from in terms of your answer.

Thanks, if I could squeeze in one more could we get your perspective on.

Wages and inflation, both from a pricing perspective.

You interface with customers as well as internal costs.

Elevated rates of turnover as a result, potentially and I know you have multi multiple geographies.

To draw from in terms of your range.

Speaker 2: Sure. So very, very pertinent question today, in today's environment. And when you think about our business, we are growing outside the US.

Sure. So very very pertinent question today in today's environment.

When you think about our business.

Our growing outside the U S and certainly in a market like U S.

Speaker 2: And certainly, in a market like the U.S., you know, wages are, you know, certainly under, you know, under pressure. Our, how I look at this is our agent wages, which are really, really the important element. They range between 50 to 70% of, call it like our total cost to operate. So, you know, depending upon the geo.

Wages are certainly under under pressure.

How I look at this as our agent wages, which are really really the important element.

They range between 50% to 70%.

Like our total cost to operate so.

Pending upon the Geos.

Speaker 2: And so we've engaged around that, we've engaged with clients and have had success with clients with sharing where the wages are going and consequently getting price adjustments, price increases from them. We are in a lot of our contracts, we've negotiated COLA or cost of living adjustments into the contract.

And so we've engaged around that we've engaged with clients and have had success with clients with sharing where the <unk>.

<unk> are going and consequently.

Getting price adjustments.

Price increases from them.

We are in a lot of our contracts, we negotiated co lower cost of living adjustments into the contracts.

Speaker 2: So while we feel like maybe we're not 100% covered right now, we've done a really good job as a company, you know, kind of covering this ourselves that way or a lot of it, you know, we'll continue to have, you know, further discussions with, you know, with our current clients. And like I said, a lot of our new clients we've brought on board have, you know, have cost adjustments built into it.

So while we feel like.

Maybe we're not 100% covered right now we've done a really good job as a company kind of covering this ourselves that way or a lot of it will continue to have further discussions with.

With our current clients and like I said, a lot of our new clients. We brought on board have have cost adjustments built into it.

Thank you very much.

Speaker 4: Thank you. Our next question comes from the line of Dave Koenig from Baird. Your line is now open. Yeah. Hey, guys. Great.

Thank you. Our next question comes from the line of Dave Koning from Baird. Your line is now open.

Yes, Hey, guys great revenue momentum.

Speaker 2: Yeah, thanks Dave. Yeah, we're really excited about that. You know, we knew we had, with all the new logos, you know, that we've been winning and, you know, just in the growth inside the base that, you know, we have a lot of good things going on here. Thanks.

Yes, Thanks, Dave Yes, we're really excited about that.

We knew we had.

With all the new logos that we've been winning in.

And the growth inside the base that we have a lot of good things going on here.

Speaker 6: Yeah, no, it's great to see. And I guess, yeah, my first question kind of relates to that. It looked like when we put kind of some of the numbers you gave around the top three, it looked like those were down $5 million, but that means the non-top three were actually up sequentially $28 million. I mean, that's a massive amount. Was there anything non-recurring in there? Or is it all pretty steady kind of going forward? Or how should we think of all that?

Yeah, it's great to see and I guess my first question kind of relates to that it looked like when we put it kind of some of the numbers you gave around the top three it looked like those were down $5 million, but that means the non top three were actually up sequentially $28 million I mean, that's a massive amount.

Was there anything nonrecurring in there or is it all pretty steady kind of going forward, how should we think of all of that.

Speaker 2: Sure. What we're most excited about is, you know, there's, you know, you know, our business that we do have seasonal from the retail, you know, around the holidays. And so there is a little bit of that.

Sure what we're most excited about is theirs.

Yes.

You know our business that we do have seasonal from the retail around the holidays and so there is a little bit of that.

Speaker 2: But the lion's share of our growth is go forward, sustainable, it's even, you know, what I'll say, growth into, you know, historical, it would be growth into Q3 and Q4 for us. So we're, we're excited about that trajectory. And, you know, Dave, one data point I'll just share with you our, you know, historically, our

But the lion's share of our growth is go forward sustainable achieving what I'll say growth into.

Historical would be growth into Q3 and Q4 for us. So we're we're excited about that trajectory and Dave one data point I'll just share with you are.

Historically our.

Speaker 2: Q1 to Q2 growth is kind of in that seven, eight, nine percent, you know, and us being, you know, in the 20s, you know, 22 percent for us was really, you know, really excited. And that's all the new stuff that we brought on board that we were, you know, shared last quarter.

Q1 to Q2 growth is kind of in that seven 9%.

And us being.

In the twenties 20.

2022% for US was really re.

Really excited and that's all the new stuff that we brought onboard that we shared.

<unk> last quarter.

Speaker 6: That's great to see. And then two just kind of quick ones, I'll just give them together. The wage inflation, is there any lag impact from the revenue like the COLA that you can get? Like does this year have more wage inflation and next year you get kind of that pickup in revenue that you can charge? And then when do those new shares that are being distributed, when do those hit the market? And then I'm good.

It's great to see.

And then two just kind of quick ones I'll, just give them together.

The wage inflation is there any lag impact from the revenue like the Cola that you can get like does this year have more wage inflation next year get kind of that that pickup in revenue that you can charge and then when do those new shares.

Being distributed when do those hit the market.

I'm good thank you.

Speaker 2: Okay, sure. So, you know, there is a little bit of a lag, but we we got out in front of this with some of our, you know, key clients, our key embedded base clients. And so, you know, we, I guess I would say I, from 25 years of being in this industry, I really like how our partnership with our clients have allowed us to get out in front of

Okay sure. So there is a little bit of a lag, but we got out in front of this with some of our.

Key clients are key embedded base clients and so.

I guess I would say.

From 25 years of being in this industry.

I really like how our.

Partnering with our clients has allowed us to get out in front of this.

Speaker 2: So, you know, feel very, you know, very good about that. And then, you know, obviously, with a lot of the new clients that we've brought on board just recently,

So.

Feel very.

Very good about that and then I'll.

<unk> with a lot of the new clients that we've brought on board just recently.

Speaker 2: the cost structures we built are pretty current. And so, I just like our position as we go forward. Obviously, there will be risk. There will be some pressure, but again, our U.S. business is a much smaller percentage and that's where it's immediate now. We expect probably we'll have some pressures in some of the other markets as we look out, but I think we're,

The cost structure as we built a pretty.

Pretty correct and so.

Just like our position as we go forward obviously.

That will be risk.

There will be.

Some pressure, but again our U S businesses is a much smaller percentage and that's where it's at.

Immediate now we expect probably.

We will have some pressures in some of the other markets as we look out but.

I think we're.

Speaker 2: You know, we've done a good job on that. And then, Dave, the second part of your question, the new shares, so, you know, as customary, you know, there is a lockup period as those shares got distributed to the limited partners. That's, I believe, about a six, not about, it's a six-month lockup. So, you know, I'd look at, you know, that to occur later in the calendar year.

We've done a good job on that and then Dave the second part of your question the new shares so.

As customary.

There is a lock up period as those shares got distributed to the limited partners.

That's I believe about six not about six month lockup, So I would look at.

Debt to occur later in the later in the calendar year.

Got you thanks, guys.

Thanks, Doug.

Speaker 4: Thank you. Our next question comes in the line of Arvin Ramnani from Piper Sandler. Your line is now open.

Thank you. Our next question comes from the line of Arvin Ramani from Piper Sandler Your line is now open.

Speaker 6: Hi. Thanks for taking my questions. You know, the first question I had was around kind of the exposure you have to certain industries. You know, I think the one company that stands out is Lyft, you know, and I'm sure there are others, but just with...

Hi.

Thanks for taking my questions.

The first quick question had was around.

Kind of the.

Exposure there would have to set an industry as you know I think one company that stands out.

Lift.

And im sure the others, but just wood.

Speaker 7: kind of a lot of vaccinations in and, you know, as we look into 22, kind of the kind of the kind of COVID, some of the COVID impact behind us.

Kind of a lot of vaccinations and then as we look into 'twenty two.

Kind of this kind of event.

The.

I kind of covered Covid some of the COVID-19 impact behind us.

Speaker 7: Do you expect to see an uptick in transaction-based volume from a certain segment of your customers? And is it material enough to kind of think about it or you feel there's various counterbalance where it doesn't really matter?

Do you expect to see an uptick in transaction based volume from a certain segment.

Customers.

And is it material.

To kind of have to think about it or is it you feel it.

Counterbalance that it doesn't really matter.

Speaker 2: Arvid, great, great question. I think your last part of that was probably most appropriate. I think there's some counter, you know, counterbalance as well. So

Great Great question I think your last part of that was probably most appropriate I think theres some counter counter balanced as well so.

Speaker 2: And there are some sub-segments that we think the transactions will start moving up, but I think those get offset and will kind of get offset with some counterbalances. And I'll just share with you, in the retail and e-commerce world, with the supply chain issues and things like that, the

And there are some sub segments that we think the transactions will start moving up.

But.

But I think those get offset.

And we will.

Kind of get offset with some counter balances and I'll just share with you in the retail and E Commerce world with the supply chain issues and things like that.

<unk>.

The.

Speaker 2: the number of, you know, the amount of, you know, overall transactions, I think they're, you know, are a little bit off from where they were a year ago. And I think that's directly, you know, to the supply chain. So when I think of those issues, those are probably out there for a little while and probably even a little while past, you know, past, let's say if we get to a post COVID world. And so, you know, I think those are counterbalances to some of the upsides.

The <unk>.

A number of.

The amount of overall transactions I think they are.

<unk>.

A little bit off from where they were a year ago, and I think thats directly to the supply chain. So when I think of those issues those are probably out there for a little while and probably even a little wild past.

Let's say, if we get to a post COVID-19 world and so I think those are counterbalances to some of the upsides.

Speaker 7: Yeah, that's helpful and you know, just in terms of the

Okay, Yes.

That's helpful.

Just in terms of the.

Speaker 7: kind of the share repurchases that you have, as well as kind of the – yeah, I think maybe to start with the share repurchases.

Kind of the.

Kind of the share repurchases.

As well as kind of the.

Yes, I can maybe just talk about the share repurchases.

Speaker 7: I mean, certainly there's a vote of confidence in going and buying stock at these levels, but do you kind of worry about kind of liquidity as well, you know, just given kind of the market cap of the stock, like, you know, kind of $20 million is...

So I think there's a vote of confidence in going and buying buying stock at these at these.

At these levels, but.

Do you kind of worry about it.

Kind of liquidity as well just given kind of the market cap of the stock kind.

$20 million.

Speaker 7: You know, almost like 10% of float, right? So that's a big, big sort of...

Almost like 10% of fluid right. So that's a big big sort of.

Speaker 7: repurchase it. How do you think of kind of the balance and flow?

Repurchase.

Just how do you think of.

Think of kind of the.

Balance on float.

Speaker 2: Great question. So first and foremost, the compelling IRR with where we're trading is

Great question, So first and foremost.

Compelling.

IRR.

Where we're trading.

Speaker 2: Candidly, it's too hard to pass up just to be very clear on that because we have so much confidence in our business.

Candidly, it's too hard to pass up just to be very clear on that because we have so much confidence.

In our business.

Speaker 2: but they're back to, like we talked just prior, counterbalances, right? So, a counterbalance is the, what I believe is what TRG has done, you know, of the distribution. And so, you know, if you look out over, you know, over

But they are back to like we talked just prior counterbalances alright, so counterbalances the what I believe is what <unk> has done.

The distribution and so if you look out over and over.

Speaker 2: you know, beyond six months, I think our float will be in a much better environment as, you know, as, as some of that becomes available. And so, you know, we think it's such a great

Beyond six months I think our float will be in a much better environment as as.

Some of that becomes available and so we think.

It's such a great.

Speaker 2: great investment from our standpoint. We could not do that from a wise use of our capital. And again, we're comparing that versus, for us right now, investing into further build-outs, centers that we've been doing and doing that aggressively. And those have very short ROIs.

Great investment from our standpoint, we could not do that.

From a wise use of our.

Why is use of our capital and again, we're comparing that versus for us right now.

Investing to further build outs centers that we've been doing and doing that aggressively and those have very short rois with share buyback.

Speaker 2: the share buyback was even more compelling.

What's even more compelling.

Speaker 7: Yes, it makes sense. And just a point of clarification, you know, on December 8th, you had announced this $20 million. Is this the same $20 million or the same $20 million?

Yes.

And then just point of clarification.

Yes.

No.

<unk> announced the $20 million is this the same 20 or is it.

Speaker 7: Is it like 20 plus 20? I just wanna kind of clarify that. Yeah, yeah, thank you for that, the clarifying. That is the same, you know, the same 20. By the time we, you know, this got implemented and all, it just kicked off literally in, you know, in this quarter.

Is it like 20 <unk>.

Yes, yes, thank you for clarifying that isn't the same.

The same the same 20 by the time, we got implemented at all it just kicked off.

Literally in the in this quarter.

Okay perfect.

Speaker 6: Okay, perfect. Yeah, that's all the questions. Thank you. Yeah, thanks.

Thats all the questions I had thank you.

Yes, Thanks, Sean.

Speaker 4: Thank you. Our next question comes from the line of Matthew Rothwolf from RBC Capital Markets. Your line is now open.

Thank you. Our next question comes from the line of Matthew Roswell from RBC capital markets. Your line is now open.

Speaker 8: Yes, good evening. A couple of questions around the revenue growth cadence. How should we think about differences between the third and fourth quarter with the new contract ramping up? And as part of that, when does the sort of legacy business stop being a headwind to year-on-year revenue?

Yes, good evening.

Couple of questions around the revenue growth cadence, how should we think about differences between third and fourth quarter with the new contract ramping up and that's part of that when does the sort of legacy.

Legacy business.

Headwind year on year revenue growth.

Speaker 2: Great question and I appreciate that and so look you know as we've guided and if you know

Great question.

Appreciate that and so look as we've.

<unk> guided.

Speaker 2: we obviously have what I think is really good visibility to our business, and if you do the mathematics of everything, I like this Q3, Q4 will follow a different curve than what we've had in the past, which is a sequential downturn. We have a lot of confidence.

We obviously have the.

What I think is really good visibility to our business and if you do the mathematics of everything.

Like the <unk>.

Q3, Q4 will follow a different curve than what we've had in the past which is.

A sequential sequential downturn, we have a lot of confidence.

In in that Matthew.

Speaker 2: in that, Matthew. And so, and I apologize, if you could, Part B of your question, if you could just touch on that again, I apologize.

And I apologize if you could parse part B of your question. If you could just touch on that again I apologize.

Speaker 8: When do the legacy clients stop being a headwind? Do you run your revenue growth? Sure. So, yeah, yeah, yeah. So, we look at that business as basically sequentially flat right now. And so,

When did the legacy client being a headwind to year on year revenue growth.

Sure so yes.

Yes, yes, yes. So so we we look at that business is basically sequentially flat right now.

And.

And so.

Speaker 2: but it did have several quarters of sequential downturns. So, you know, when I think of full comparisons by Q1 of this FY23,

But it could have.

Quarters of sequential downturn so when.

I think a full comparisons by Q1 of this FY 'twenty three.

Speaker 2: that'll be flat. But literally, with it being 20% of our, less than 20% of our business, and now kind of in this flat sequential, we don't see that that really moving our, you know, really factoring into many headwinds into our business. So you will see the true growth engine of our business as we move into Q3, Q4, and then certainly as we hit the ground running in FY23.

It will be that will be flat, but literally with it being 20% of our less than 20% of our business and now kind of in this flat sequential we don't see that really moving our.

Really.

During into many headwinds into our business. So you will see the true growth engine of our business as we move into Q3 Q4, and then certainly as we as we hit the ground running in FY 'twenty three.

Speaker 8: Okay, and a final accounting question if I can sneak one in. The revaluation on the Amazon warrants, that's solely tied to your stock price performance as opposed to any change in the relationship with Amazon, correct?

Okay and a final accounting question, if I can sneak one in.

The revaluation on the Amazon warrants, that's solely tied to that your stock price performance as opposed to any change in the relationship with Amazon correct.

Speaker 2: Correct. And Carl, why don't, you know, if you want, maybe you could add a little color on.

Correct and Carl why don't if you want maybe you could add a little color on that.

Speaker 7: Sure. Sure. It is. It's related to you do a mark the market on the on the liability at the end of each quarter, which is impacted by the stock price. So the stock price goes up, which would have been consistent with.

Sure sure. It is it's related to do a mark to market on the on the liability at the end of each quarter.

Is impacted by the stock price so the stock price goes up which would have been.

Consistent with <unk>.

Speaker 3: Q2 of last year, you saw a positive impact, and if it goes down like Q2 of this year, fiscal year 22, it was a negative to the income statement. But it's solely on the market that you're doing on the liability, nothing with the overall relationship with Amazon.

Q2 of last year.

So a positive impact and if it goes down in Q2 of this year fiscal year 'twenty two.

It was a negative to the income statement, but it's solely on the mark to market.

That youre doing on the liability nothing with the overall relationship with Amazon.

Okay. Thank you.

Speaker 4: Thank you. At this time, I'm showing no further questions. I would like to turn the call back over to management for closing remarks.

Thank you at this time I am showing no further questions I would like to turn the call back over to management for closing remark.

Speaker 2: Gigi, thanks. So look, I thank you all for attending. We are, as you can tell, very excited about the trajectory of our business. What we built here is we feel very proud about, and we look forward to seeing you all next quarter as we share the exciting journey here. So thank you all, and have a good night.

Gigi. Thanks, So look thank you all for attending.

As you can tell very excited about the trajectory of our business.

What we built here.

We feel very very proud about and we look forward to seeing you all next quarter as well.

As we sure sure the exciting journey here. So thank you all and have a good night.

Speaker 4: This concludes today's conference call. Thank you for participating. You may now disconnect.

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

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Speaker 4: Welcome to the IBEX second quarter full year 2022 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one on your telephone.

Welcome to the IMAX second quarter full year 2022 earnings conference call.

At this time all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session.

Ask a question during this session you will need to press star one on your telephone. Please be advised that today's conference is being recorded if you require any further assistance. Please press star zero.

Of note. There is also an accompanying accompanying earnings deck presentation available on the IMAX Investor Relations website at investors Dot <unk> Dot com.

Speaker 4: I will now turn this conference over to your host, Ms. Brynn Lee Johnson with the Blue Shirt Group.

I will now turn this conference over to your host MS. Brindley Johnson with the Blue shirt group.

Speaker 1: Good afternoon and thank you for joining us today. Before we begin, I want to remind you that matters discussed on today's call may include forward-looking statements related to our operating performance, financial goals, and business outlook, which are based on management's current beliefs and assumptions. Please note that these forward-looking statements reflect our opinions as of the date of this call, and we undertake no obligation to revise this information as a result of new developments which may occur.

Good afternoon, and thank you for joining us today before I begin I want to remind you that matters discussed on today's call may include forward looking statements related to our operating performance financial goals and business outlook, which are based on management's current belief.

And assumptions. Please note that these forward looking statements reflect our opinion as of the date of this call and we undertake no obligation to revise this information as a result of new developments, which may occur forward looking statements are subject to various risks uncertainties and other factors that could cause actual results to differ materially from those expected and described today what might detailed description of <unk>.

Speaker 1: Forward-looking statements are subject to various risk uncertainties and other factors that could cause our actual results to differ materially from those expected and described today. For a more detailed description of our risk factors, please review our annual report on Form 20-F filed with the U.S. Securities and Exchange Commission on October 14,

Risk factors. Please review our annual report on form 20-F filed with the U S Securities and Exchange Commission on October 14th 2021, with that I'll turn it over to Bob Deca CEO .

Speaker 1: 2021. With that, I'll turn it over to Bob Deckett, CEO . Thank you, Brynn Lee.

Thank you Brent.

Good afternoon, everyone.

Speaker 2: And thank you all for joining us today as we discuss our second quarter fiscal year 2022 results.

Thank you all for joining us today as we discuss our second quarter fiscal year 2022 results.

Speaker 2: Carl and I are excited to be presenting to you today.

Carl and I are excited to be presenting to you today.

Speaker 2: We are now 18 months since our IPO of August 2020.

We are now 18 months since our IPO of August 2020.

Speaker 2: We have made significant progress on our strategic initiatives over this time despite the challenges from the pandemic.

We've made significant progress on our strategic initiatives over this time, despite the challenges from the pandemic.

Speaker 2: We have built a business that is evolved and is accelerating meaningfully in terms of growth and new client wins.

We have built a business that has evolved and is accelerating meaningfully in terms of growth and.

And new client wins.

We have improved our client diversification.

Speaker 2: which was a risk at the time of the IPO and is now an advantage.

It was a risk at the time of the IPO and.

And this now and then advantage.

Speaker 2: At the same time, our growth continues to dominate in our high-margin region.

At the same time, our growth continues to dominate in our high margin regions.

Speaker 2: Importantly, we continue to transform our business into a digital first business with so many great client brands.

Importantly, we continue to transform our business into a digital first business with so many great client brands.

Speaker 2: referred to as BPO 2.0 over the last two years.

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Speaker 2: We believe FY22 will be a watershed year for IBEX with many key milestones within sight.

We believe FY 'twenty, two will be a watershed year for IMAX with many key milestones within sight.

Speaker 2: and our forward trajectory is even more exciting.

And our forward trajectory is even more exciting.

As we shared with you last quarter.

Speaker 2: we were confident that our business was positioned to accelerate growth into Q2 and beyond.

We were confident that our business was positioned to accelerate growth into Q2 and beyond.

Speaker 2: And this is exactly what we delivered in the second quarter with record results.

And this is exactly what we delivered in the second quarter with record results.

Speaker 2: revenues increased approximately 13% year over year.

Revenues increased approximately 13% year over year.

Speaker 2: representing a combined two-year growth of 23%.

Representing a combined two year growth of 23%.

Speaker 2: and resulting in our highest revenue quarter ever of $132.2 million.

And resulting in our highest revenue quarter ever of $132 2 million.

Speaker 2: LTM for revenue and EBITDA are $458 million and $61.8 million respectively.

LTM for revenue and EBITDA are $458 million and 61 8 million respectively.

Speaker 2: resulting in a 7.1% organic growth.

Resulting in a seven 1% organic growth and.

Speaker 2: and 13.5% EBITDA margin.

And 13, 5% EBITDA margin.

Speaker 2: The confidence we have in our business is allowing us to raise revenue.

The confidence we have in our business is allowing us to raise revenue guidance.

Speaker 2: However, the underlying narrative is even more compelling.

However, the underlying narrative is even more compelling.

Speaker 2: In my six years at the helm, the growth engine we have built here is the strongest ever.

In my six years at the helm.

The growth engine, we have built here is the strongest ever.

Speaker 2: revenue generated from new clients won since FY 16.

Our revenue generated from new clients won since FY 16.

Speaker 2: who are hyper-growth companies, primarily adopting our omni-channel capabilities integrated with WaveX technologies and analytics.

Who are hyper growth companies, primarily adopting our omnichannel capabilities integrated with wave X technologies and analytics grew.

Speaker 2: grew by an impressive 57% during the quarter.

<unk> grew by an impressive 57% during the quarter.

Speaker 2: up from 37 percent a year ago and 34 percent last quarter.

Up from 37% a year ago.

34% last quarter.

Speaker 2: This group of customers now make up 70% of our total company revenues.

This group of customers now make up 70% of our total company revenues.

Our legacy three clients.

Speaker 2: which at the time of our IPO were 44% of revenue, have stabilized as revenues for these clients were approximately flat sequentially.

Which at the time of our IPO were 44% of revenue.

Stabilized as revenues for these clients were approximately flat sequentially.

Speaker 2: Importantly, these clients now represent less than 20% of revenue.

Importantly, these clients now represent less than 20% of revenue.

Speaker 2: and we expect to continue to reduce that percentage going forward as the rest of our business accelerates.

And we expect to continue to reduce that percentage going forward as the rest of our business accelerates.

The new logo engine continues to perform at a blistering rate.

Speaker 2: The new logo engine continues to perform at a blistering rate. We closed three new

We closed three new logos for the quarter.

Speaker 2: for a total of 12 year to date across key verticals.

For a total of 12 year to date across key verticals.

Speaker 2: For added perspective, in FY20, we sold $12.5 million of in-year revenue from new clients.

For added perspective.

2020, we sold $12 $5 million of in year revenue from new clients.

Speaker 2: Last year, we won 23 new clients, which built $30 million of in-year revenue.

Last year, we won 23, new clients, which builds $30 million of in year revenue.

Speaker 2: This year, we expect to generate 50 million of in-year revenue from our new clients with more important opportunities slated in the back half of the year.

This year, we expect to generate $50 million of in year revenue from our new clients with more important opportunities slated in the back half of the year.

Speaker 2: As a reminder, our growth model is designed to deploy a land and expand approach with our clients. And this is what we are achieving.

As a reminder.

Our growth model is designed to deploy a land and expand approach with our clients and this is what we are achieving.

Speaker 2: We begin our client partnerships by delivering exceptional CX results.

We begin our client partnerships by delivering exceptional CX results.

Speaker 2: and then showcase the additional insights and partnership solutions that WaveX and our business intelligence tools can offer.

And then showcase the additional insights and partnership solutions that way back in our business intelligence tools can offer.

Speaker 2: This subsequently allows us to expand into new services with these clients and increase our wallet share with them over time.

This subsequently allows us to expand it to new services with these clients and increase our wallet share with them overtime.

Speaker 2: On average, the revenues in year two of our client relationships are between 2.5X to 3.5X year one revenues, with continued strong growth in two years.

On average the revenues in year two of our client relationships are between two five X 235 X year, one revenues with continued strong growth in tier three.

Speaker 2: Therefore, in FY23, we expect to drive over 100 million in revenue from this new cohort of clients with continued growth into FY24.

Therefore in FY 'twenty, three we expect to drive over $100 million in revenue from this new cohort of clients with continued growth into FY 'twenty four.

Speaker 2: while I'm very excited about our performance and out.

While I'm very excited about our performance and outlook.

Speaker 2: I'm particularly proud of the robust and rapid diversification of our client base.

I'm, particularly proud of the robust and rapid diversification of our client base.

Speaker 2: We've added exceptional high growth brands. And today, our top five clients represent just 41% of our business.

We've added exceptional high growth brands and today, our top five clients represent just 41% of our business versus approximately 58% at the time of our IPO.

Speaker 2: versus approximately 58% at the time of our IPO.

And we now have nearly 50 clients with more than $1 million in annual revenue.

Speaker 2: And we now have nearly 50 clients with more than $1 million in annual revenue.

Our largest client now represents just 12% of revenue.

Speaker 2: Our largest client now represents just 12% of reps.

Speaker 2: This level of diversification is now a true competitive advantage for IBEX.

This level of diversification is now a true competitive advantage for IDEXX.

Speaker 2: and is exceptional for a BPO provider of any size.

And his exceptional for BPL provider of any size.

This incredible diversification extends into the strategic industry verticals, we are winning with in the market.

Speaker 2: this incredible diversification extends into the strategic industry verticals we're winning with in the market. Our FinTech.

Our fintech.

In health Tech verticals are now approximately 20% of our business combined.

Speaker 2: are now approximately 20% of our business combined.

Speaker 2: We started our initiative of targeting these markets in FY20.

We started our initiative of targeting these markets in FY 'twenty and.

Speaker 2: and we now project these to be more than 100 million in organic revenue this fiscal year.