Q1 2024 TaskUs Inc Earnings Call

Okay.

Daniel: Good afternoon, and welcome to the Taskus first quarter 2024 investor call. My name is Daniel, and I will be your conference facilitator today.

Speaker Change: Good afternoon, and welcome to the task of first quarter 2024 Investor call.

Daniel: My name is Daniel and I will be your conference facilitator today.

Daniel: At this time, all participants have been placed on mute to avoid background noise. After the speaker's remarks, there will be a question and answer period. To ask a question during the session, you will need to press star 1 1 on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star 1 1 again.

Speaker Change: At this time, all participants have been placed on mute to avoid background noise.

Daniel: After the Speakers' remarks, there will be a question and answer period.

Speaker Change: To ask a question during the session you will need to press star one on your telephone.

You will then hear an automated message advising your hand is raised.

Daniel: Your question. Please press star one again.

Daniel: Please be advised that today's conference is being recorded. I would now like to introduce Trent Thrash, Senior Vice President of Corporate Development and Investor Relations. Trent, you may begin.

Daniel: Please be advised that today's conference is being recorded.

Speaker Change: I would now like to introduce <unk> senior Vice President of corporate development and Investor Relations you may begin.

Trent Thrash: Good afternoon, and thank you for joining us for the Taskus first quarter 2024 earnings call. Joining me on today's call are Bryce Maddock, our Co-Founder and Chief Executive Officer, and Balaji Sekar, our Chief Financial Officer.

Speaker Change: Good afternoon, and thank you for joining us for the past, yes first quarter 2024 earnings call.

Speaker Change: Joining me on today's call are Brian <unk>, our co founder and Chief Executive Officer, and Bob Shocker.

Trent Thrash: Full details of our results and additional management commentary are available in our earnings release, which can be found in the investor relations section of our website at ir.taskus.com. We have also posted supplemental information on our website, including an investor presentation and an Excel-based financial metrics file. Please note that this call is being simultaneously webcast on the investor relations section of our website. Before we start, I would like to remind you that the following discussion contains forward-looking statements within the meaning of the federal securities law, including but not limited to statements regarding our future financial results and management's expectations and plans for the business.

Speaker Change: Chief Financial Officer full details of our results and additional management commentary are available in our earnings release, which can be found on the Investor Relations section of our website at IR Dot task or dot com.

Speaker Change: We have also posted supplemental information on our website, including an investor presentation.

Speaker Change: The excel based financial metrics file.

Speaker Change: Please note that this call is being simultaneously webcast on the Investor Relations section of our website.

Trent Thrash: These statements are neither promises nor guarantees and involve risks and uncertainties that may cause actual results to differ materially from those discussed here. You should not place undue reliance on any forward-looking statement. Factors that could cause actual results to differ from these forward-looking statements can be found in our annual report on Form 10-K, which was filed with the SEC on March 8th, 2024. This filing, which may be supplemented with subsequent periodic reports we file with the SEC, is available on the SEC's website and our investor relations website.

Trent Thrash: Before we start I would like to remind you that the following discussion contains forward looking statements within the meaning of the federal Securities laws.

Trent Thrash: <unk>, but not limited to statements regarding our future financial results and management's expectations and plans for the business.

Trent Thrash: These statements are neither promises or guarantees and involve risks and uncertainties that may cause actual results to differ materially from those discussed here.

Trent Thrash: You should not place undue reliance on any forward looking statements.

Speaker Change: Factors that could cause actual results to differ from these forward looking statements can be found in our annual report on Form 10-K, which was filed with the SEC on March eight of 2024.

Speaker Change: This filing which may be supplemented with subsequent periodic reports, we filed with the SEC.

Trent Thrash: Available on the Sec's website, and our Investor Relations website.

Trent Thrash: Any forward-looking statements made on today's conference call, including responses to questions, are based on current expectations as of today, and Taskus assumes no obligation to update or revise them, whether as a result of new developments or otherwise, except as required by law. The following discussion contains non-GAAP financial measures for reconciliation of these non-GAAP financial measures to the most directly comparable GAAP metrics.

Speaker Change: Any forward looking statements made on today's conference call, including responses to questions are based on current expectations as of today and task assumes no obligation to update or revise them, whether as a result of new developments or otherwise except as required by law.

Speaker Change: The following discussion contains non-GAAP financial measures for a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP metric. Please see our earnings press release, which is available on the IR section of our website.

Trent Thrash: Please see our earnings press release, which is available in the IR section of our website. Now I will turn the call over to Bryce Maddock, our Co-Founder and Chief Executive Officer. Bryce. Thank you, Trent.

Speaker Change: Now I will turn the call over to Brian <unk>, Our co founder and Chief Executive Officer right.

Bryce Maddock: Thank you, Trent. Good afternoon, everyone, and thank you for joining us. In the first quarter, we outperformed the top end of both our revenue and adjusted EBITDA guidance. We generated $227.5 million in revenue, approximately $3 million above the top end of our guidance of $224.5 million. We delivered $50.6 million of adjusted EBITDA for an adjusted EBITDA margin of 22.2%, also above our guidance of 22%. I'm very happy to announce that we now expect to return to year-over-year revenue growth in the second quarter, and we expect our growth rate to accelerate in each subsequent quarter this year.

Thank you Trent and good afternoon, everyone and thank you for joining us in the first quarter, we outperformed the top end of both our revenue and adjusted EBITDA guidance, we generated $227 $5 million in revenue approximately $3 million above the top end of our <unk>.

Bryce Maddock: Items of $224 $5 million.

Bryce Maddock: We delivered $56 million of adjusted EBITDA for an adjusted EBITDA margin of 22, 2% also above our guidance of 22%.

Speaker Change: I'm very happy to announce that we now expect to return to year over year revenue growth in the second quarter, and we expect our growth rate to accelerate in each subsequent quarter. This year.

Bryce Maddock: We've updated our annual revenue guidance and now expect to grow annual revenue year over year at any point in the guidance. I'm also very pleased with our team's financial plan, which is focused on balancing cash flow generation with our investments in sales, marketing, and technology, including our generative AI initiative. As a result, we generated strong free cash flow in the first quarter of 2024, putting us on track to deliver on our full year free cash flow guidance of $120 to $130 million. Next, I'll spend time going through some of the highlights of our Q1 performance. Balaji will then walk through our Q1 financials, our Q2 outlook, and our increased full year 2024 guidance.

Speaker Change: We've updated our annual revenue guidance and now expect to grow annual revenue year over year.

Balaji: And the guidance range.

Bryce Maddock: I'm also very pleased with our key financial discipline, which is focused on balancing cash flow generation with our investments in sales marketing and technology, including our generative AI initiatives.

Balaji: As a result, we generated strong free cash flow in the first quarter of 2020 for putting us on track to deliver on our full year free cash flow guidance of $120 million to $130 million.

Bryce Maddock: Q1 revenue was $227.5 million, a decline of 3.3% on a year-over-year basis but $4 million ahead of the midpoint of our guidance. The 2.9% sequential quarterly decline was reflective of an anticipated decline in seasonal revenue discussed during our Q4 2023 call, which was partially offset by better than expected performance by our top 20 clients during the quarter. In terms of delivery geographies, revenue from U.S. delivery declined 45% in Q1 Europe. As a result, U.S. revenue is now approximately 11% of total revenue, continuing to migrate towards our long-term view that approximately 10% of revenue will be delivered from the U.S.. Revenue for all other geographies grew by approximately 7%, demonstrating the strength of our offshore business.

Balaji: Next I'll spend time going through some of the highlights of our Q1 performance.

Bryce Maddock: He will then walk through our Q1 financials, our Q2 outlook and our increased full year 2020 for guidance.

Bryce Maddock: Q1 revenue was $227 5 million.

Bryce Maddock: Nine a three 3% on a year over year basis, but $4 million ahead of the midpoint of our guidance.

Speaker Change: The two 9% sequential quarterly decline was reflective of an anticipated decline in <unk>.

Bryce Maddock: Revenue discussed during our Q4 2023 call, which was partially offset by better than expected performance by our top 20 clients during the quarter.

Bryce Maddock: In terms of delivery geographies revenue from U S delivery declined 45% in Q1 year over year.

Bryce Maddock: As a result U S revenue is now approximately 11% of total revenue continuing to migrate towards our long term view that approximately 10% of revenue will be delivered from the U S.

Bryce Maddock: Revenue for all other geographies grew by approximately 7% demonstrating the strength of our offshore business.

Bryce Maddock: Q1 again saw rapid growth in Latin America, with revenue from the region growing by more than 50% year-over-year. We ended the quarter with approximately 49,600 global teammates, an increase of approximately 1,400 teammates from the end of 2020.

Bryce Maddock: Q1, again saw rapid growth in Latin America with revenue from the region growing by more than 50% year over year.

Bryce Maddock: We ended the quarter with approximately 49600 global teammates and increase of approximately 1400 teammates from the end of 2023.

Bryce Maddock: On the heels of a strong sales performance in Q4, our sales and client services teams have continued to deliver in the face of an unpredictable macro environment. In Q1, sales were again largely driven by bookings from existing clients, which accounted for approximately 72% of total new sign-ups. We're encouraged by the size, quality, and depth of pipeline opportunities across our service lines from both new and existing clients. During Q1, we also continued to make progress on our strategic goal of cross-selling our suite of specialized services to our client base.

Bryce Maddock: On the heels of our strong sales performance in Q4, our sales and client services teams continue to deliver in the face of an unpredictable macro environment.

Bryce Maddock: In Q1 sales were again, largely driven by bookings from existing clients, which accounted for approximately 72% of total new signings.

Bryce Maddock: We're encouraged by the size quality and depth of pipeline opportunities across our service lines from both new and existing clients.

Bryce Maddock: During Q1, we also continue to make progress on our strategic goal of cross selling our suite of specialized services to our client base.

Bryce Maddock: The number of clients using more than one of our specialized services increased by more than 20% year over year. We also continued expanding our presence in new markets, including adding notable use cases for enterprise clients in the banking and financial services industry, as well as with fast-growing technology clients in the professional services, travel and transportation, and social media verticals. Shifting focus to our service lines, in Q1 of 2024, digital customer experience revenue declined 8.7% compared with Q1 of 2023.

Bryce Maddock: The number of clients using more than one of our specialized services increased by more than 20% year over year.

Bryce Maddock: We also continued expanding our presence in new markets, including adding notable use cases for enterprise clients in the banking and financial services industry as well as with fast growing technology clients to the professional services travel and transportation and social media verticals.

Bryce Maddock: Shifting focus to our service lines in Q1 of 2024 digital customer experience revenue declined eight 7% compared with Q1 of 2023.

Bryce Maddock: Here we saw expansions with existing clients and new client revenue, but both of those were more than offset by a decline in revenues from the cost optimization initiatives we discussed on prior calls. In terms of DCX signings in Q1, we saw strength in bookings in our on-demand travel and transportation and non-crypto fintech verticals. Additionally, we were pleased to see the Q4 momentum in sales and customer acquisition services carry over into Q1, with wins in multiple client verticals, including a large contract signing with a new client that provides technology-enabled legal solutions.

Bryce Maddock: Here, we saw expansions with existing clients and new client revenue, but both of those were more than offset by a decline in revenues from our cost optimization initiatives, we discussed on prior calls.

Bryce Maddock: In terms of DCF signings in Q1, we saw strength in bookings in our on demand travel and transportation and non crypto fin Tech verticals.

Bryce Maddock: Additionally, we were pleased to see the Q4 momentum in sales and customer acquisition services carry over into Q1 with wins in multiple client verticals, including a large contract signing with a new client that provides technology enabled legal solutions.

Bryce Maddock: We signed a new DCX contract leveraging the capabilities of our teammates from the Helu acquisition to support another European-based financial services client. HALU also signed contracts to support a pan-European job search application and a provider of digital parking services in Q1.

Bryce Maddock: We signed a new Dcs contract leveraging the capabilities of our teammates from the how new acquisition to support another European based financial services client.

Bryce Maddock: <unk> also signed contracts to support a pan European job search application and a provider of digital parking services in Q1.

Bryce Maddock: Lastly, as a result of our strong relationship with a leading food delivery client, we signed multiple new DCX contracts to support their vendors and customers from our Columbia operation. Turning to trust and safety, which includes our risk and response solutions, revenue growth in this specialized service offering again accelerated, increasing by 36% compared with Q1 of 2023 and 5.8% quarter over quarter. Q1's rate of growth exceeded Q4's solid 24%.

Bryce Maddock: Lastly, as a result of our strong relationship with a leading food delivery client, we've signed multiple new dcs contracts to support their vendors and customers from our Colombia operations.

Bryce Maddock: Turning to trust and safety, which includes our risk and response solutions revenue growth in this specialized service offering again accelerated increasing by 36% compared with Q1 of 2023, and five 8% quarter over quarter.

Bryce Maddock: Q1's rate of growth exceeded Q4 solid 24%.

Bryce Maddock: This broad-based growth was largely driven by seven clients with increases in excess of a million dollars, including the continued strong growth of our largest client, from a large on-demand travel and transportation client, and from certain clients in the FinTech market. During Q1, our risk and response teams, which deliver financial compliance, risk, and fraud detection services, once again delivered revenue growth that was accretive to the overall growth of the trust and safety service line.

Bryce Maddock: This broad based growth was largely driven by seven clients with increases in excess of $1 million.

Bryce Maddock: Including the continued strong growth of our largest client from.

Bryce Maddock: From a large on demand traveling transportation client and from certain clients in the fin Tech market.

Bryce Maddock: During Q1, our risk and response teams, which deliver financial compliance risk and fraud detection services. Once again delivered revenue growth that was accretive to the overall growth of the trust and safety service line.

Bryce Maddock: In Q1, we were honored to be recognized as a leader in the Everest Group's Trust and Safety Services Peak Matrix for the second consecutive year, as well as their Financial Crime and Compliance Operations Services Peak Matrix for the first time, when combined with our Q1 recognition as a leader in their data annotation and labeling solutions for AI peak matrix. Taskus is now the only company to achieve leader recognition in all three specialized service offering categories.

Bryce Maddock: In Q1, we were honored to be recognized as a leader in the Everest Group's trust and safety services peak matrix for the second consecutive year as well as their financial crime and compliance operations services peak matrix for the first time.

Bryce Maddock: When combined with our Q1 recognition as a leader in their data indication and labeling solutions for AIP matrix task is now the only company to achieve a leader recognition in all three specialized service offering categories.

Bryce Maddock: From a sales perspective, demand for all of our trust and safety services continues to grow. Similar to recent quarters, we saw strong growth in the number of clients using our trust and safety services. Notably, we signed a meaningful expansion of our relationship with our largest client in Q1, increasing the scope of both our content moderation and risk and response services. We also added additional work providing pre-sanctioned screen services to a provider of card issuing and payment solutions.

Bryce Maddock: From a sales perspective demand for all of our trust and safety services continues to grow similar to recent quarters. We saw strong growth in the number of clients using our trust and safety service line.

Bryce Maddock: Notably, we signed a meaningful expansion of our relationship with our largest client in Q1, increasing the scope of both our content moderation and risk and response services.

Bryce Maddock: We also added additional work, providing pre sanction screening services to a provider of card issuing and payment solutions.

Bryce Maddock: As a new client in 2023, this revenue expansion is a testament to the quality performance her teammates consistently deliver on behalf of our clients. Moving on to AI services, revenues declined approximately $8.9 million, or 23.6%, compared to Q1 of 2020. AIS revenue continues to be impacted by declines at our largest overall client and our largest autonomous vehicle. However, we continue to see strong sales momentum for our AI service work, including at our largest client, where we signed multiple new AI projects this quarter.

Bryce Maddock: As a new client in 2023. This revenue expansion is a testament to the quality performance for teammates consistently deliver on behalf of our clients.

Bryce Maddock: Moving on to AI services revenues declined approximately $8 9 million or 23, 6% compared to Q1 of 2023.

Bryce Maddock: Aaas revenue continued to be impacted by declines at our largest overall client and our largest autonomous vehicle client.

Bryce Maddock: We continue to see strong sales momentum for our AI service work, including at our largest client where we signed multiple new AI projects this quarter.

Bryce Maddock: Additionally, we signed a contract to support our largest autonomous vehicle client's expansion of their operations in Texas. As discussed in our Q4 call, we still anticipate AI service revenue from these two clients and AI services in general to stabilize over the course of 2024, as difficult comparisons lapse and recent signings continue to ramp. Before moving on to our updated 2024 Outlook, I want to provide a brief update on our generative AI initiative.

Bryce Maddock: Additionally, we signed a contract to support our largest autonomous vehicle clients expansion of their operations in Texas.

Bryce Maddock: As discussed in our Q4 call, we still anticipate AI service revenue from these two clients and AI services in general to stabilize over the course of 'twenty 'twenty four is difficult comparisons lapsed and recent signings continue to ramp.

Bryce Maddock: Before moving on to our updated 2024 outlook I want to provide a brief update on our generative AI initiatives.

Bryce Maddock: We believe these technologies have the potential to be incredibly powerful when properly trained, maintained, and integrated into our clients' operations. Taskus is well-positioned to help clients leverage Gen AI and other automation technologies across their customer experience. Some of this work will automate services we currently deliver, while other aspects of it will increase demand for our specialized services. To date, we have not experienced any material impact on our revenues from clients directly leveraging GenAI to automate processes we currently use.

Bryce Maddock: We believe these technologies have the potential to be incredibly powerful when properly trained maintained and integrated into our clients' operations.

Bryce Maddock: Task this is well positioned to help clients leverage Shanghai and other automation technology across their customer experience.

Bryce Maddock: Some of this work will automate services, we currently deliver while other aspects that it will increase demand for our specialized services.

Bryce Maddock: To date, we have not experienced any material impact on our revenues from clients directly leveraging Jim AI to automate.

Bryce Maddock: Processes, we currently support.

Bryce Maddock: Meanwhile, the development and maintenance of these technologies have increased demand for specialized, Today, we deliver services across all three of our service lines for Gen AI industry leaders. We're playing offense, supporting our client automation efforts while capturing a larger and larger share of the demand for the specialized services that support and protect their use of Gen AI. We're pleased with the results we've seen since making our task GPT-based knowledge co-pilot, Assist AI, freely available to all Taskus clients. After being trained on our clients' knowledge bases by our Gen-AI engineering team, these early use cases have demonstrated measurable improvements in our teammates' efficiency and quality.

Bryce Maddock: Meanwhile, the development and maintenance of these technologies have increased demand for our specialized services.

Bryce Maddock: To date, we deliver services across all three of our service line for Jim AI industry leaders.

Bryce Maddock: We're playing offense supporting our clients automation efforts, while capturing a larger and larger share of the demand for the specialized services that support and protect their use of journey II.

Bryce Maddock: We're pleased with the results we've seen since making our task GPT based knowledge co pilot.

Bryce Maddock: <unk> AI freely available to all task as clients.

Bryce Maddock: After being trained on our clients' knowledge basis by our AI engineering team. These early use cases have demonstrated measurable improvement in our teammates efficiency and quality.

Bryce Maddock: In summary, Chain.ai is going to have a transformative impact on our business in the years to come. We believe it creates significant opportunities for us, and that these opportunities will more than make up for the impact of successful automation efforts. While the details are always evolving, our core value proposition of delivering a well-trained combination of technology, talent, and global delivery capabilities remains the same.

Bryce Maddock: In summary, Shanghai is going to have a transformative impact on our business in the years to come we believe it creates significant opportunities for us and that these opportunities will more than make up for the impact of successful automation efforts.

Bryce Maddock: While the details of our ever evolving our core value proposition of delivering a well trained combination of technology talent and global delivery capabilities remains the same.

Bryce Maddock: Before handing it over to Balaji to provide more details about our Q1 results, I want to touch briefly on our 2024 outlook. In light of our year-to-date achievements, positive sales momentum, and our cautiously optimistic outlook for the remainder of 2024, we're increasing the low end of our full-year revenue guidance from $900 million to $925 million and maintaining the top end of our outlook at $950 million. This represents a $25 million increase to the lower end of our guidance and a $12.5 million increase in our midpoint, up from $925 million to $937.5 million.

Bryce Maddock: Before handing it over to biology to provide more details about our Q1 results I want to touch briefly on our 2020 for outlook.

Bryce Maddock: In light of our year to date achievements positive sales momentum and are cautiously optimistic outlook for the remainder of 2024, we're increasing the low end of our full year revenue guidance from $900 million.

Bryce Maddock: $925 million headwind.

Bryce Maddock: <unk> maintained the top end of our outlook at $950 million. This represents a $25 million increase to the lower end of our guidance and a $12 $5 million increase in our midpoint up from $925 million to 937 $5 million.

Bryce Maddock: Our updated guidance implies a return to annual revenue growth at any point in the year. To support our return to growth, we're accelerating our investments in sales and marketing, technology, and the capacity and infrastructure needed to deliver on this increased demand. Despite these investments, we're maintaining our adjusted EBITDA margin guidance of 22% to 23% and free cash flow guidance of $120 million to $130 million for the full year. We remain focused on executing against our strategic initiatives and investing for growth while remaining diligent about our cost structure in order to maximize cash flow and drive value for shareholders. With that, I'll hand it over to Balaji to go through the Q1 financials and our 2024 outlook in more detail.

Bryce Maddock: Our updated guidance implies a return to annual revenue growth at any point in the range.

Balaji: To support our return to growth, we're accelerating our investments in sales and marketing technology, and the capacity and infrastructure needed to deliver on this increased demand.

Balaji: Despite these investments we're maintaining our adjusted EBITDAR margin guidance of 22% to 23% and free cash flow guidance of $120 million to $130 million for the full year.

Balaji: We remain focused on executing against our strategic initiatives and investing for growth while remaining diligent on our cost structure in order to maximize cash flow and drive value for shareholders.

Balaji: With that I'll hand, it over to apology to go through the Q1 financials and our 2024 outlook in more detail.

Balaji Sekar: Thank you, Bryce, and good afternoon, everyone. I'm going to discuss our financial results for the first quarter of the year. Please note that some of these items are non-GAAP measures, and the relevant reconciliations are attached to the press release we issued earlier. In the first quarter, we earned total revenues of $227.5 million, once again beating our guidance range of $222.5 million to $224.5 million. Revenues decreased by 3.3% compared to the previous year.

Balaji: Thank you, Brian and good afternoon, everyone.

Balaji Sekar: I'm going to discuss our financial results for the fourth quarter of 2024. Please note that some of these items, our non-GAAP measures and the relevant reconciliations are attached to the press release, we issued earlier today.

Balaji Sekar: In the first quarter.

Balaji Sekar: Total revenue was up 227 $5 million once again, beating our guidance range of Jordan 20, 252 board of $24 5 million.

Balaji Sekar: Revenue decreased by three 3% compared to the previous year.

Balaji Sekar: We outperformed our guidance as a result of new client ramps and existing client volumes, both of which came in stronger than we expected. In the first quarter, our DCX service offering generated $143.5 million for a year-over-year decline of $8.7 billion. As Bryce covered earlier, the decline was primarily from certain client cost optimization initiatives, including the Q1 2023 project ramp downs from our largest client and a US client who lost a large amount, both of which we previously discussed in Q1 of 2020. This was partially offset by expansion with existing clients and new clients signing up.

Balaji Sekar: We outperformed our guidance as a result of new client ramps and existing client volumes, both of which came in stronger than we expected.

Balaji Sekar: In the first quarter, our <unk> service offering generated $43 5 million for the.

Balaji Sekar: Year over year decline of eight 7%.

Balaji Sekar: As Brian covered earlier, the decline was primarily from certain client cost optimization initiatives, including the Q1 'twenty principally project ramp downs from our largest client in the U S client, who lost a large contract.

Balaji Sekar: Both of which we previously discussed in Q1 of 'twenty. Thank you Bree.

Balaji Sekar: This was partially offset by expansion with existing clients and new client signings apps.

Balaji Sekar: Our Trucks and Safety business, which includes our risk and response solutions grew by 36.1% compared to Q1 of 2023, resulting in $55.3 million, As we pointed out earlier, we are excited about the fairly broad-based progress in this service line, which included Q1 growth from new and existing clients across our on-demand travel and transportation, social media and FinTech Our AI services business declined by 23.6% year over year for revenues of $28.7 million due to contractions at our largest client and our largest autonomous vehicle, We expect revenues from this service line to stabilize over the course of 2024, as we lap the difficult comparisons resulting from client-driven cost optimization programs in 2023, and as recent signings continue to, Our client base has continued to diversify in Q1. Our revenue concentration with our largest client was approximately 19% down from 20% in Q1 2023.

Balaji Sekar: Our tungsten safety business, which includes the lift in response solutions grew by 36, 1% compared to Q1 of 2023, resulting in 55 $3 million of revenue.

Balaji Sekar: As we pointed out earlier, we are excited about the fairly broad based progress in this service line.

Balaji Sekar: Included Q1 growth from new and existing clients.

Balaji Sekar: Our on demand travel and transportation, social media and print.

Balaji Sekar: Where it goes.

Balaji Sekar: Our energy services business declined by 23, 6% yoga wear year for revenues of $38 7 million new.

Balaji Sekar: <unk> largest client under the largest autonomous vehicles.

Balaji Sekar: We expect revenues from this service line to stabilize over the course of project 24, as we lap the difficult comparison, resulting from client driven cost optimization programs.

Balaji Sekar: And at least in signings continue to ramp.

Balaji Sekar: Our client base has continued to diversify in Q1.

Balaji Sekar: Our revenue concentration with our largest client was approximately 19% down from 20% in Q1 2023.

Balaji Sekar: Despite the prior year's optimization efforts, we saw revenue from our top line stabilize beginning Q2 of 2023, and we expect to grow revenues with this client this year.

Balaji Sekar: Despite the prior year's optimization efforts, we saw revenue from our top client stabilize in beginning Q2 of 2023, and we expect to grow revenues with this client. Our top 10 and top 20 clients accounted for 56% and 67%, respectively, down from 58% and 71% in Q1 of last year. However, they continue to see strength from our clients outside of our top 20, which grew 7% year over year. In the first quarter, we generated 58% of our revenues in the Philippines, 11% in the United States, 13% in India, and 18% from the rest of the world. We saw particularly strong year-over-year growth in excess of 50% in Latin America.

Balaji Sekar: Our top 10, a top 20 clients accounted for 46% and 67% respectively down from $58 71 person in Q1 of last year.

Balaji Sekar: We continue to see strength from our clients outside of our great B, which grew 7% year over year.

Balaji Sekar: In the first quarter, we generated 58% of our revenues in the Philippines 11 person in the United States, 13% in India, and 18% from the rest of the world.

Balaji Sekar: We saw particularly strong year over year growth in excess of 50 person in Latin America.

Balaji Sekar: For the full year 2024, we now expect to see year over year revenue growth in all of our delivery jobs. With the exception of United, our cost of service as a percentage of revenue was 59.5% in the first quarter, compared to 58.5% in Q1 of the prior year. The increase was due to typical wage and benefits cost inflation, as well as the net impact of the weaker dollar compared with Q1 of 2023 in Latin America, partially offset by gains from operational cost efficiency and geographic mechanics.

Balaji Sekar: For the full year 2024, we now expect to see year over year revenue growth in all of our delivery geographies with the exception of the United States.

Balaji Sekar: Our cost of service as a percentage of revenue was 59, 5% in the first quarter compared to 58, 5% in Q1 of the prior year.

Balaji Sekar: The increase was due to typical wage and benefit cost inflation.

Balaji Sekar: The net impact of the weaker dollar compared with Q1 of 2023 in Latin America, partially offset by the gains from operational cost efficiency and geography mix shift.

Balaji Sekar: In the first quarter, our HG&E expenses were $52.9 million, or 23.3% of GDP. This compares to SG&E in Q1 of 2023 of $64.3 million, or 27.3% of revenue. Unknown Attendee, Bryce Maddock, Puneet Jain, Alan Katz, Balaji Sekar, Jinli Chan, Trent. In the first quarter of 2024, we earned adjusted EBITDA of $50.6 million, or 22.2% margin, compared to $55 million and 23.4% in the previous year. Adjusted net income for the quarter was $27.3 million, and adjusted earnings per share was $36.3 million.

Balaji Sekar: In the first quarter of our SG&A expenses were $52 $9 million.

Balaji Sekar: Three 3% of revenue.

Balaji Sekar: This compares to SG&A in Q1 of 2020 fleet of $64 3 million or 27, 3% of revenue.

Balaji Sekar: Oh, no consideration and stock compensation expenses reduced $6 $6 million and $3 million, respectively compared to the previous year.

Balaji Sekar: In the first quarter of 2024, we earned adjusted EBITDA of $56 million or 22, 2% margin compared to $55 million and three four quarters thing in the previous year.

Balaji Sekar: Adjusted net income for the quarter was $27 $3 million and adjusted earnings per share was <unk> 30.

Balaji Sekar: By comparison, in the year-ago period, we earned adjusted net income of $32.5 million and adjusted EPS of $32.6 million. The reductions in Adjusted EBITDA and Adjusted Net Income were primarily driven by the impact of lower revenue, wage, and benefits cost inflation, net forex impact, and investments in strategic growth areas, which were partially offset by our G&E cost optimization issue. Now moving on to the banjo.

Balaji Sekar: By comparison in the year ago period, we earned adjusted net income of $32 5 million.

Balaji Sekar: EPS of <unk> 52 cents.

Balaji Sekar: The reduction in adjusted EBITDA and adjusted net income were primarily driven by the impact of lower revenue wage and benefit cost inflation net forex impact and investments in strategic growth areas, which were partially offset by G&A cost optimization initiatives.

Balaji Sekar: <unk>.

Balaji Sekar: Now moving on to the balance sheet.

Balaji Sekar: Cash and cash equivalents were $165.4 million as of March 31, 2024 compared with a December 31, 2023 balance of $125.8 million. In the quarter, we bought back approximately 300,000 shares at an average price of $11.91. And as of quarter end, we had approximately $53.9 million of authorization left on our plan. Our net leverage ratio continues to be healthy and was 0.4 times as of the quarter. Cash generated from operations was $51.2 million for the first quarter of 2024, as compared to $43.7 million in Q1 of 2020.

Balaji Sekar: Cash and cash equivalents were $165 4 million.

Balaji Sekar: As of March 31 to <unk> 24, compared with December 31, 2023 balance of Ireland, $25 8 million.

Balaji Sekar: In the quarter, we bought back approximately 300000 shares at an average price of $11 91.

Balaji Sekar: And that's of auto and we had approximately $53 $9 million of authorization left on our platform.

Balaji Sekar: Our net leverage ratio continues to be healthy and was five four times as of quarter end.

Balaji Sekar: Cash generated from operations was $51 $2 million for the first quarter of 'twenty 'twenty four.

Balaji Sekar: Third to $43 $7 million in Q1 of 2023.

Balaji Sekar: Our capital expenditure decreased in the first quarter of 2024 to $3.6 million, compared to $5.2 million in Q1 of 2020. As Bryce mentioned, the strength of our anticipated client ranks will drive an increase in investments during the remainder of 2020.

Balaji Sekar: Our capital expenditure decreased in the first quarter of 2024 to $3 $6 million compared to $5 $2 million in Q1 of 'twenty three.

Balaji Sekar: As Brian mentioned, the strength of our anticipated client drives will drive an increase in investments during the remainder of 2024.

Balaji Sekar: As a result, we now expect CAPEX to be approximately $39 million for the year. Free cash flow was $47.6 million, or 94.1% of adjusted EBITDA for the quarter. Our strong cash flow performance in Q1 was primarily the result of working capital decreases associated with the drop in revenue from Q4 to Q1, and strong collections activity and low capital expenditure.

Balaji Sekar: We now expect capex to be approximately $39 million for the year.

Balaji Sekar: Free cash flow was $47 $6 million or <unk> 94, 1% of adjusted EBITDA for the quarter.

Balaji Sekar: Our strong cash flow performance in Q1 was primarily the result of working capital decrease associated with the drop in revenue from Q4 to Q1.

Balaji Sekar: Strong collections activity.

Balaji Sekar: <unk> capital expenditures further.

Balaji Sekar: For the remainder of 2024, we expect lower fee cash flow conversion due to increased capital expenditures and the buildup of working capital associated with our return to revenue. In terms of a financial outlook for the remainder of the year, we now anticipate full year 2024 total revenues to be in the range of 925 million to 950 million. Consistent with Q1, we expect to earn a full year 2024 adjusted EBITDA margin of between 22 and 23%.

Balaji Sekar: For the remainder of 2024, we expect lower free cash flow conversion due to increased capital expenditures.

Balaji Sekar: And the buildup of working capital associated with double digit total revenue growth.

Balaji Sekar: In terms of our financial outlook for the remainder of the year. We now anticipate full year two deepened before total revenues to be in the range of 925 million to $950 million.

Balaji Sekar: Consistent with Q1.

Balaji Sekar: <unk> full year, particularly for adjusted EBITDA margin of between two.

Balaji Sekar: Im going to get 30%.

Balaji Sekar: Including the additional investments supporting our improved outlook, we are maintaining our free cash flow guidance between $120 and $130 million at any point in our guidance. This implies a conversion rate of over 50% from adjusted EBITDA, a great demonstration of our financial strength. For the second quarter, we expect revenues to be in the range of 230 million to 232 million dollars. And we expect our adjusted EBITDA margin to be between 22 and 22.5% for the quarter.

Balaji Sekar: Including the additional investments supporting our improved outlook, we are maintaining our free cash flow guidance between heartland to impede on $130 million at any point in our guidance range.

Balaji Sekar: This implies a conversion rate of over 50% from adjusted EBITDA, a great demand creation of financial discipline.

Balaji Sekar: For the second quarter, we expect revenues to be in the range of $230 million.

Balaji Sekar: The $32 million.

Balaji Sekar: And we expect our adjusted EBITDA margin to be between 22, and 22, 5% for the quarter.

Balaji Sekar: The adjusted EBITDA margin guidance for the second quarter and full year is based on current forex rates, so any change to currency rates would impact our margin. As a reminder, the majority of our revenue is built and collected in US dollars, so we do not see the impact of US dollar fluctuations in our revenue. Also, please note that our free cash flow guidance excludes the impact of certain litigation costs, which are non-recurring and outside the ordinary course of business. In Q1, we have, and we will continue to add back these costs to our adjusted. While new material this quarter, we anticipate these expenses will increase as we progress further I will now hand it back to Bryce.

Balaji Sekar: The adjusted EBITDA margin guidance for the second quarter and full year is based on current Forex rates. So any change to current Cvs would impact our margins.

Bryce Maddock: As a reminder, the majority of our revenue is billed and collected in U S. Dollars. So we do not see the impact of U S dollar fluctuation in our revenues.

Balaji Sekar: Also please note that our free cash flow guidance excludes the impact of certain litigation costs, which are nonrecurring and outside the ordinary course of business.

Bryce Maddock: Q1, we have.

Bryce Maddock: And we will continue to add back these costs adjusted EBITDA.

Balaji Sekar: While material this quarter, we anticipate these expenses will increase as we progress further into 2024.

Balaji Sekar: I will now hand, it back to Brian.

Bryce Maddock: Thank you, Balaji. Before we open up for questions, I'd like to share another Taskus teammate's story. John Raleigh de Guzman has been navigating life with cerebral palsy since birth. Cerebral palsy affects movement and muscle tone and makes everyday mobility very challenging for Rowley, who relies on crutches to get around.

Bryce Maddock: Thank you apologies before we open for questions I'd like to share another task us teammates story.

Bryce Maddock: John Rally bigger has been has been navigating life with cerebral policy since birth, cerebral palsy, and FX movement and muscle tone and makes every day mobility very challenging for rally relies on crutches to get around.

Bryce Maddock: As a Tier 2 Dispute Teammate supporting a FinTech campaign, Rowley is responsible for providing timely resolutions to escalated customer complaints. Leveraging his comprehensive understanding of the dispute process and strong customer service skills, he recommends solutions and solves customer problems with each interaction. Rowley says that his work at Taskus is more than just a job. It's a source of purpose and fulfillment.

Bryce Maddock: As a tier two dispute teammate supporting it Fintech campaign rallies responsible for providing timely resolutions to escalated customer complaints.

Bryce Maddock: Leveraging his comprehensive understanding of the dispute process and strong customer service skills, you recommend solutions and solves customer problems with each interaction.

Bryce Maddock: Rally says to his work at caskets is more than just a job it's a source of purpose and fulfillment.

Bryce Maddock: He is an active member of the Taskus community in Bulacan, Philippines, where his site is located. On a recent visit to the site, his colleagues shared with me how impressive he is; he never makes excuses, shows up to work early, and always delivers for our customers. Rowley embodies our core value of inspiring others by believing in yourself. His story is just one example of the positive impact Taskus has on people and communities all around the world. With that, I'll ask the operator to open our line for our questions and answers. Operator. As a reminder,

Bryce Maddock: He is an active member of the task this community in Google Com, Philippines, where his site is located.

Bryce Maddock: On a recent visit to the site. His colleagues shared with me how impressive. He is he never makes excuses shows up to work early and always delivers for our customers.

Bryce Maddock: <unk> embodies our core value inspire others I, believing in yourself. His story is just one example of the positive impact task. This has on people and communities all around the world.

Bryce Maddock: With that I'll ask the operator to open our lines for our question and answer session operator.

Operator: As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 1 again.

Bryce Maddock: As a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced.

Operator: To withdraw your question. Please press star one again in.

Operator: In the interest of time, we ask that you. Please limit yourself to one question and one follow up please.

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

Operator: In the interest of time, we ask that you please limit yourselves to one question and one follow-up. Please stand by while we compile the Q&A roster. Our first question comes from Jonathan Lee with Guggenheim Partners. Your line is now open. Brilliant. Thanks for taking our questions. And good to see the earlier inflection expectations here.

Operator: Our first question comes from Jonathan Lee with Guggenheim Partners. Your line is now open.

Jonathan Lee: Brilliant thanks for taking my questions and good CV earlier inflection expectations here.

Jonathan Lee: Price was contemplated in your outlook from a macroeconomic perspective and across your solutions here.

Bryce Maddock: I think we're taking an appropriately cautious stance when we look at the macroeconomic conditions across the rest of the year. Some of you will have undoubtedly seen that a number of our clients have had slower than expected growth rates announced in their own earnings calls. That's not a surprise to us. The vast majority of our largest clients continue to grow revenue and contact volumes year over year, and that's reflected in the updated guidance. So, you know, we're cautiously optimistic, but we're aware that there is risk in the macroeconomic environment, and that's been factored in. I appreciate the color there.

Jonathan Lee: I think we're taking that are appropriately cautious stance when we look at the macroeconomic conditions across the rest of the year.

Bryce Maddock: Some of you will.

Bryce Maddock: Undoubtedly seen that a number of our clients have had slower than expected growth rates announced in their own earnings calls.

Bryce Maddock: Surprise to us.

Bryce Maddock: The vast majority of our largest clients continue to grow revenue and contact volumes year over year and that's reflected in the updated guidance.

Bryce Maddock: So we're cautiously optimistic but we are aware.

Speaker Change: There is.

Bryce Maddock: Our risk in the macroeconomic environment and that's been factored in.

Bryce Maddock: And just the follow-up. Can you talk about any sort of evolution? Transcripts provided by Transcription Outsourcing, LLC. 2013 Transcription Outsourcing, LLC. All rights reserved.

Speaker Change: Got it I appreciate the color there and just a follow up can you talk about any sort of evolution you've seen.

Bryce Maddock: And the demand environment through the quarter or since the start of the year and how your customer conversations have trended since the start of this quarter.

Bryce Maddock: Yeah, it's accelerated. The demand environment last year was challenging with delayed decision making and a real focus on cost reduction. What we've seen thus far this year is both an acceleration in new client sales and expansions amongst our broad base of existing clients. We focused just on our largest clients. Our largest client is back to growth year over year this year. But, in fact, if you look at our top five clients, we expect four of our top five clients will increase revenue in 2024 when compared to 2023. And some of those are back at double digit growth rates. So, you know, we're seeing just a quite broad-based increase in demand for our services from both new and existing clients.

Speaker Change: Yes, it's it's accelerated.

Bryce Maddock: Demand environment last year was.

Bryce Maddock: Challenging with delayed decision, making and a real focused on cost reduction what we are.

Bryce Maddock: <unk> seen thus far this year as both an acceleration in new.

Bryce Maddock: <unk> sales and expansions amongst our.

Bryce Maddock: <unk> base of existing clients refocus just on our largest clients.

Bryce Maddock: Our largest client is back to growth year over year. This year, but in fact, if you look at our top five clients. We expect four of our top five clients will increase revenue in 2024, when compared to 2023 and some of those are back in double digit growth rates.

Bryce Maddock: So we're seeing just.

Bryce Maddock: At a broad based increase in demand for our services from both new and existing clients.

Speaker Change: Thanks for that color. Thanks, Jonathan.

Operator: Thank you. One moment for our next question. Our next question comes from Maggie Nolan with William Blair. Your line is now open.

Speaker Change: Thank you one moment for our next question.

Operator: Our next question comes from Maggie Nolan with William Blair. Your line is now open.

Bryce Maddock: Thank you. Maybe to dig into that a little bit further, is it trust and safety that's driving the better outlook for Q2 and beyond? Is it a particular client, perhaps, you know, better traction with your top client that you spoke of? And then what level of visibility and confidence do you have into, you know, this trend continuing into the second quarter and the second half of the year that allowed you to raise the bottom end of guidance? Yes,

Margaret Marie Niesen Nolan: Thank you maybe to dig into that a little bit further is it trust and safety that's driving the better outlook for Q2 and beyond is it a particular client perhaps better traction with your top client that you spoke of and then what level of visibility and confidence do you have in Q.

Bryce Maddock: This trend continuing into the second quarter in the second half of the year that allowed you to raise the bottom end of guidance yes.

Bryce Maddock: Yeah, so obviously, trust and safety is really the shining star amongst our service lines at the moment. We've seen an increase in demand for content moderation services amongst our social and dating clients. We've seen an increase in demand for our risk and response services amongst both fintech and enterprise financial service clients. And we're also seeing a lot of new demand from generative AI clients to help secure their models. So a fair amount of that growth for the rest of the year will come from trust and safety.

Speaker Change: Yes, So obviously trust and safety issues.

Bryce Maddock: <unk> really been a shining star amongst our service lines at the moment, we've seen an increase in demand for content moderation services amongst our social and dating clients we've seen.

Bryce Maddock: An increase in demand for our risk and response services amongst amongst both fin Tech and enterprise financial service clients and we're also seeing a lot of new demand for regenerative AI clients to help secure their models. So.

Bryce Maddock: There is.

Bryce Maddock: Fair amount of that growth for the rest of the year will come from trust and safety. We're also expecting the declines in digital customer experience that AI services to moderate in particular on AI services.

Bryce Maddock: We're also expecting the declines in digital customer experience at AI services to moderate. In particular, on AI services, we've got some very challenging comps when we look at 2023, just given the onshore to offshore shifts that we saw at our largest services clients. But the number of projects that we're working on in AI services continues to increase both year over year and sequentially, and the demand for this looks like it will help to slowly decline and get us back to growth by the end of the year.

Bryce Maddock: We've got some very challenging comps when we look at 2023, just given the onshore to offshore shifts that we saw at our largest AD services clients, but the number of projects that we're working on and add services continues to increase both year over year and sequentially and the demand for this.

Bryce Maddock: It looks like it will help to slow the decline to get us back to growth by the end of the year as far as visibility goes we've proven an ability to accurately forecast.

Bryce Maddock: As far as visibility goes, we've proven an ability to very accurately forecast and, in all cases, beat the revenue guidance we provide on a quarterly basis. That's just given the strong client conversations and contractual commitments that we have from our clients. And when we look at the back half of the year, we've had conversations with many of our largest clients. We are actively selling new locations and new services, and so that gives us confidence that we'll be able to deliver on that.

Bryce Maddock: In all cases beat the revenue guidance, we provide on a quarterly basis. That's just given the strong client conversations and contractual commitments that we have from our clients.

Bryce Maddock: And when we look at the back half of the year, we've had conversations with many of our largest clients.

Bryce Maddock: We are actively selling new locations and new services and so that gives us confidence that we'll be able to deliver on this guidance.

Bryce Maddock: Okay, thank you. And then you talked a couple of times in the script about incremental investments. I'm assuming to prepare for this incremental revenue that's coming, and that would likely primarily be headcount additions. Help me understand what this means for margins. Does that mean that, you know, margins are a little bit more compressed in Q2, and you start to see some, you know, leverage in the back half of the year? Or does that mean that, you know, margins look better more like in 2025 as you get some of those investments in here in the near term?

Bryce Maddock: Okay. Thank you and then you talked a couple of times in the script about incremental investments I'm, assuming to prepare for that incremental revenue that's coming.

Bryce Maddock: And that would likely primarily be head. Count addition, help me understand what this means for margins does that mean that margins are a little bit more compressed in Q2, and you start to see some.

Bryce Maddock: Leverage in the back half of the year or does that mean that margins look better more like in 2025, if you get some of those investments and here in the near term.

Bryce Maddock: Yeah, I'll have Balaji add color here, but let me just provide a 30,000-foot perspective. At the start of this year, we made a decision that we were going to play offense. We were going to go out and hire sales and marketing leaders and continue to invest in our generative AI initiatives by expanding our technology. And those investments are beginning to pay off with our return to growth and our expectation of accelerating growth rates over the course of OneWeed. When we consider sort of just that level of investment, there's naturally going to be some downward pressure on our margins, but we expect to maintain best-in-class margins, and we would expect Balaji, do you want to add color to that? Yeah.

Speaker Change: Yeah, I'll have quality add color here, but let me just provide a 30000 foot perspective at the start of this year. We made a decision that we were going to play offense, we were going to got higher sales and marketing leaders and.

Balaji Sekar: <unk> to invest in our generative AI initiatives by expanding our technology team and those investments are beginning to pay off with our return to growth in our expectation of accelerating growth rates over the course of the rest of the year.

Balaji Sekar: When we.

Balaji Sekar: When we consider sort of just that level of investment there is naturally going to be some downward pressure on our margins.

Balaji Sekar: We expect to maintain best in class margins.

Balaji Sekar: And we would expect that margins would expand as we get back to us.

Balaji Sekar: A state of growth into 2025, Oh do you want to add color on that thanks.

Bryce Maddock: Yeah, and thanks, Bryce. And so, Maggie, from an investment perspective, we're continuing to invest in strategic growth areas between sales, marketing, and technology. And like you mentioned, to support the revision in the revenue guidance that we are providing right now, we are going to be investing in facilities, and we'll also be incurring certain ramp costs to deliver those revenues. So both of those are baked into the forecast that we are providing today.

Balaji Sekar: Thanks, Brian So Maggie from all like just to reiterate what Brian said is from an investment perspective, we're continuing to invest in strategic growth.

Bryce Maddock: Within sales marketing and technology and like you mentioned to support the.

Bryce Maddock: The revision in the revenue guidance that we're providing right now we are going to be investing in facilities and will also be putting sort of implant costs to deliver those revenues are both of those are baked into the forecast that we're providing today. So from an adjusted EBITDA perspective, the full year would be somewhere between 22% to 3%. So that's unchanged from what we gave last time.

Bryce Maddock: So from an adjusted beta perspective, the full year would be somewhere between 22 to 23%. So that's unchanged from what we gave last time. And for Q2, we would be somewhere between 22 and 22.5%. So, from a calendarization perspective, in the back half of the year, I would expect Q3 to be the highest quarter from an EBITDA perspective, EBITDA percentage, and then Q4 will incur some additional seasonal costs that we typically incur every year. So that's how the calendarization is going to be looking from a

Bryce Maddock: And for Q2, we would be somewhere between 40 to undo.

Bryce Maddock: 5%. So one is going to happen from a cannibalization in the back half of the year I would expect Q3 to be the highest quarter from an EBITDA perspective, EBITDA percentage and then Q4 now.

Bryce Maddock: Cause some additional seasonal costs that we typically you've got it. So that's what the cannibalization is going to be from a margin perspective.

Operator: Very helpful. Thank you.

Speaker Change: Very helpful. Thank you.

Operator: Thank you. One moment for our next question. Our next question comes from Ryan Potter with Citi. Your line is now open.

Speaker Change: Thank you one moment for our next question.

Operator: Our next question comes from Ryan Potter with Citi. Your line is now open.

Ryan Edward Potter: Hey, thanks for taking my question and giving good results here. I want to start with GenAI.

Ryan Edward Potter: Hey, Thanks for taking my question and good results here.

Ryan Edward Potter: How has client adoption of offerings like TAS, GPT, and SSAI looked so far? And in instances where clients are leveraging these tools, have they been able to see tangible benefits? And have you also seen some tangible benefits or share shifts yet from this?

Ryan Edward Potter: I wanted to start on Gen AI.

Ryan Edward Potter: Client adoption of offerings like task GPT, a as I say I look so far and then this is where our clients are leveraging these tools have David most of the casual about defense and have you also are seeing some tangible benefits our shareholders get from from the <unk>.

Bryce Maddock: Yeah, thanks for the question, Ryan. So, we're continuing to have success deploying GenAI to our customers through the Tash GPT platform and our Assist AI offering, which we're offering to all of our Taskus clients free of charge. That offering has seen a steady increase in demand. I would say that, more generally, we have seen a number of clients deploy generative AI themselves in various ways. Some of these initiatives have driven modest efficiency increases, but I would classify most of the work that we've seen from our clients as in the experimental stage at this phase.

Ryan Edward Potter: Missiles.

Speaker Change: Yeah. Thanks for the question Ryan So we're continuing to have success deploying Jan AI into our customers through the task GPT platform in our assist AI offering, which we're offering to all of our task as clients free of charge that offering.

Bryce Maddock: A steady increase in demand.

Bryce Maddock: I would say that more generally we have seen a number of clients deploy generative AI.

Bryce Maddock: Themselves.

Bryce Maddock: <unk> waves.

Bryce Maddock: Some of these initiatives have driven.

Bryce Maddock: Modest efficiency increases.

Bryce Maddock: But I would classify most of the work that we've seen from our clients.

Bryce Maddock: As in the experimental stage to this space.

Bryce Maddock: And so.

Bryce Maddock: We have not yet seen any material impact to revenue as a result of clients deploying generate generative AI automating volumes.

Bryce Maddock: And so, we have not yet seen any material impact on revenue as a result of clients deploying generative AI and automating volumes, but we have seen an uptick in demand for our GenAI-related services, whether that's trust and safety or AI services to support those models. So, we fully expect that we will see an increase in efficiency gains, both from Taskus GPT and our Assist AI platform, as well as from our clients' own initiatives, but we continue to expect that those gains will

Bryce Maddock: But we have seen an uptick in demand for our journey I related services, whether Thats trust and safety or AI services to support those those models.

Bryce Maddock: So we fully expect that we will see an increase in <unk>.

Bryce Maddock: Efficiency gains both from past GPT.

Bryce Maddock: Our assist AI platform as well as from our clients own initiatives, but we continue to expect that those will.

Bryce Maddock: Be exceeded by the gains that we get from selling Jimmy and services to our customers.

Bryce Maddock: And then on headcount, it was nice and a surprise, honestly, to see the sequential headcount growth following the seasonal headcount drop that I usually see from 4Q to 1Q. Were you able to fill some of the seasonal headcount better than expected? And then, just in terms of the headcount growth, where are you adding the most headcount currently across your geographies and service lines, and should we expect this sequential headcount growth to continue through the rest of the year? Yeah, given the more robust demand that we saw in

Speaker Change: Got it that makes sense.

Bryce Maddock: It was nice thing a surprise, obviously to see the sequential headcount growth.

Bryce Maddock: Following the seasonal head count drop they usually see from <unk> to <unk>.

Bryce Maddock: Are you able to staff some of the seasonal seasonal kind of better than I expected.

Bryce Maddock: And then just in terms of the headcount growth where are you, adding the most headcount currently across your Geo is in service lines and should we expect a sequential headcount growth continues through the rest of the year.

Bryce Maddock: Yeah, given the more robust demand that we saw in Q1, we were able to retain many of our seasonal staff and move them on to new programs successfully. The overall talent environment remains competitive, but not as competitive as it was in 2021 and 2022.

Bryce Maddock: Yes, given the more robust demand that we saw in Q1, we were able to retain many of our seasonal staff and move them onto new programs successfully.

Bryce Maddock: The overall talent environment remains competitive, but not as competitive as it was in 2021 and 2022.

Bryce Maddock: We saw increases in headcount in a number of different geographies. We've seen very robust growth in Latin America, in both Colombia and Mexico. We've got strong growth in the Philippines and in Europe. And so we would expect in those regions a continuation of this kind of headcount growth and perhaps even an acceleration.

Bryce Maddock: We saw increases in head count and a number of different geographies, we've seen very robust growth in Latin America, but Colombia, Mexico, We've got.

Bryce Maddock: Strong growth in the Philippines.

Bryce Maddock: And in Europe, and so we would expect in those regions.

Bryce Maddock: Continuation of this kind of head count growth and perhaps even an acceleration places like Europe and the Philippines.

Bryce Maddock: Into the back half of the year.

Ryan Edward Potter: Great, thanks again. Yeah, thanks Ryan. Thank you.

Speaker Change: Great. Thanks, Scott Yeah. Thanks, Ryan.

Operator: Thank you. As a reminder, to ask a question, please press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 1 again. Our next question comes from Kathy Chan with Bank of America. Your line is now open.

Ryan Edward Potter: Thank you as a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw your question. Please press star one again.

Kathy Chan: Our next question comes.

Kathy Chan: From Cathy Chan with Bank of America. Your line is now open.

Kathy Chan: Hey, guys. Thanks for taking my question. First, I just wanted to ask, you know, obviously, you guys are just piggybacking off of the LATAM growth of greater than 50%. How big is that geography relative to some of the others sitting in the rest of the world? And, you know, and I'll just stop there for my first question.

Kathy Chan: Hey, guys. Thanks for taking my question first I just wanted to ask obviously you guys, just maybe backing up and a lot of growth of the greater than 50%, how big is that relative to some of the other thing in the world.

Kathy Chan: And.

Kathy Chan: And I'll just stop there for my first question.

Bryce Maddock: Yeah, so the region is relatively new for us. We only entered Columbia in the last couple of years, and we entered Mexico in the last five years. But we're talking about a region that's on its way to triple-digit millions in revenue and growing at 40 to 50% year-over-year growth rates. So obviously, we expect the percentage growth rates to moderate somewhat as those numbers get bigger, but it will become one of the biggest regions for us over the course of the next 12.

Speaker Change: Yes so.

Bryce Maddock: The reach is relatively recent for us we.

Bryce Maddock: Only entered Colombia in the last couple of years, we entered Mexico in the last.

Bryce Maddock: Five years I believe.

Bryce Maddock: But we're talking about a region that's on its way.

Bryce Maddock: To triple digit millions in revenue.

Bryce Maddock: And growing at 40% to 50%.

Bryce Maddock: Year over year growth rates.

Bryce Maddock: So obviously, we expect the percentage growth rates.

Bryce Maddock: Moderate somewhat as those numbers get bigger.

Bryce Maddock: But it will become one of the biggest regions for us over the course of the next 12 months.

Kathy Chan: Got it. And are you still expecting revenues from some of those few top clients to be flat to slightly up in 24 as contemplated in your updated guide? And on the back of that, any changes in the pricing environment that you guys have seen as of late? Thank you.

Speaker Change: Got it and are you still expecting revenues from your top clients to be flat to slightly up in 24 that contemplated in your updated guide and on the back of that like any changes in the pricing environment that you guys have seen as of late thank you.

Bryce Maddock: Yeah, as far as the biggest clients go, I think on our last call we talked about the top three clients, which declined at a double-digit percentage year over year in 2023 would be back to single-digit percentage growth. That is still the case, although the growth amongst those clients is now higher than we had last quarter. And as I mentioned, our top five clients, four of them are going to be growing revenue in 2024. And two of those will be by double digit percentages. So we're back to some robust growth rates among those clients.

Kathy Chan: As far as the biggest clients go I think on our last call. We talked about the top three clients, which declined at a double digit percentage year over year in 2023 would be back to a single digit percentage.

Bryce Maddock: Growth that is still the case, although the growth amongst those clients is now higher than the <unk>.

Bryce Maddock: Last quarter.

Bryce Maddock: And as I mentioned, our top five clients of our top five clients four of them are going to be growing revenue in 2024 and.

Bryce Maddock: Two of those will be by double digit percentages. So we're back to some robust growth rates.

Bryce Maddock: Amongst those clients.

Operator: Thank you. One moment for our next question. Our next question comes from Robert Bamberger with Baird. Your line is now open.

Speaker Change: Thank you one moment for our next question.

Robert Bamberger: Our next question comes from.

Operator: Robert Bamberger with Baird. Your line is now open.

Robert Bamberger: Yeah, thanks for taking my question. So just given the recent solid crypto volumes of fintech, did that contribute anything to Q1? And then, I guess, what amount do you expect for all of 2024? I think you had talked about it being somewhere around four to 5% of total revenue. Should that tick up a little bit?

Robert W. Bamberger: Yes, thanks for taking my question so.

Robert Bamberger: Just given the recent solid crypto volumes of Fintech.

Robert Bamberger: Did that contribute anything to Q1, and then I guess what amount do you expect for all of 2024, I think you had talked about it being somewhere around 4% to 5% of total revenue should that pick up a little bit.

Bryce Maddock: Yeah, we've seen the crypto markets really grow rapidly, but that hasn't been as directly reflected in the volumes that we've seen from our crypto customers. I think what we said was that last year, revenues from crypto and equity trading clients were 4%. They were also 4% in Q1, and we're forecasting full year 2024 crypto and equity related revenues to be 5% of total. As a reminder, at their peak for a full year, we had 12% of our revenues coming from crypto and equity trading clients, and Balaji can correct me on any of those numbers if they are wrong, but obviously, you know that was a very different time.

Speaker Change: Yes, we've seen the crypto markets.

Bryce Maddock: Really grow rapidly, but that hasnt been as directly reflected in the volumes that we've seen from our crypto customers.

Bryce Maddock: Think what we said was that last year revenues from crypto in equity trading clients or 4%. They were also 4% in Q1, and we're forecasting full year 2020 for crypto and equity related revenues to be 5% of total revenues.

Bryce Maddock: As a reminder, at their peak for a full year, we had 12% of our revenues coming from crypto in equity trading clients.

Bryce Maddock: Apology can correct me on any of those numbers if those are wrong, but.

Bryce Maddock: But obviously that was a very different time I think what we saw ways.

Bryce Maddock: I think what we saw was that the clients who moved work from onshore to offshore have kept all that work offshore, and they've taken a much more conservative approach to scaling up in the face of the recent bull market.

Bryce Maddock: What we've seen is <expletive> clients, who move work from onshore to offshore have caps all of that work offshore.

Bryce Maddock: We're taking a much more conservative approach to scaling up in the face of the recent bull market.

Robert Bamberger: Yeah, that all makes sense. Thanks.

Balaji Sekar: Yes that all makes sense. Thanks, and then in terms of just the shift to offshore has that slowed down at all recently or does that 10% of US Revenue is still makes sense longer term from that 11% now or do you think it could be lower or higher from the 10% you talked about previously.

Bryce Maddock: And then in terms of just the shift to offshore, has that slowed down at all recently? Or does that 10% of US revenue still make sense longer term from that 11% now? Or do you think it could be lower or higher from the 10% you talked about previously? Yeah, we've seen

Bryce Maddock: Yeah, we've seen a gradual reduction in onshore to offshore shifts. I think the majority of the work that we have in the U.S. now is going to stay. Historically, we've said that we don't expect U.S. revenues to drop below 10% of overall revenues, and we still feel that way. Obviously, we're down to 11% in Q1, but we expect to be somewhere between 10% and 11% for the full year.

Bryce Maddock: Yeah, we've seen a gradual reduction in onshore to offshore shifts.

Bryce Maddock: I think the majority of the work that we've got in the U S. Now is going to stay historically, we've said that we don't expect U S revenues to drop below 10% of overall revenues and we still feel that way, obviously were down to 11% in Q1, but.

Bryce Maddock: We expect to be somewhere between 10 and 11% for the full year.

Robert Bamberger: Perfect. Thanks, guys.

Speaker Change: Perfect. Thanks, guys.

Operator: Thank you. One moment for our next question. Our next question comes from Matthew Roswell with RBC Capital Markets. Your line is now open.

Speaker Change: Thank you one moment for our next question.

Operator: Okay.

Operator: Our next question comes from Matthew Roswell with RBC capital markets. Your line is now open.

Matthew Van Roswell: Yes, good evening. Congratulations on a nice quarter. Most of my questions have been answered, so I'm going to ask a somewhat difficult one to tease out, and that is, the better performance that you're seeing, how much of that would you attribute to industry trends, and how much of that would you attribute to specifically, where you are, you know, where you're getting increased volumes because clients are consolidating vendors.

Matthew Van Roswell: Yes, good evening, congratulations on a nice quarter most of my questions have been answered so I'm going to ask.

Matthew Van Roswell: Somewhat difficult to tease out.

Matthew Van Roswell: The better performance that you're seeing how much debt would you attribute to industry trends and how much of that would you attribute to <unk>.

Matthew Van Roswell: <unk> got specifically, where youre, where youre getting increased volumes because van because clients are consolidating vendors.

Matthew Van Roswell: Hopefully, that question makes sense. Yeah, it totally does. So I think that

Bryce Maddock: Yeah, it totally does. So I think that we have a cohort of clients that cut earlier than others. In particular, I think generally we've seen that the high growth technology space began reducing their spending in 2022 and into 2023 but are now back to a period of growth. I think what we see when we look across the industry is that some of the more legacy clients are beginning to go through that same cycle now. And given that we're not as exposed to those verticals, we're probably less impacted.

Matthew Van Roswell: Hopefully that question makes sense.

Speaker Change: Totally does so I think that we have a cohort of clients.

Bryce Maddock: The cut for earlier than others.

Bryce Maddock: Particularly I think generally we've seen that the high growth technology space.

Bryce Maddock: And reducing their spending in 2022 and into 2023, but now our pack.

Bryce Maddock: A period of growth.

Bryce Maddock: I think what we see when we look across the industry is that some of the more legacy clients are beginning to go through that same cycle now and given that we're not as exposed to those verticals.

Bryce Maddock: But we have a four-part growth strategy, which I talked about on our last earnings call, and the first part of that strategy was to take share from the competition. I'm really proud to say that we've been very successful at that. In the first quarter, we took tens of millions of dollars of business from our competitors on the heels of superior performance. And so I think it's a little bit of both to answer your question.

Bryce Maddock: We're probably less impacted.

Bryce Maddock: But we have a four part growth strategy, which I talked about on our last earnings call in the first part of that strategy.

Bryce Maddock: Sure from the competition I'm really proud to.

Bryce Maddock: To say that we've been very successful at that in the first quarter, we took tens of millions of dollars of business.

Bryce Maddock: Our competitors.

Bryce Maddock: On the heels of superior performance.

Bryce Maddock: So I think.

Bryce Maddock: It's a little bit of both to answer your question.

Speaker Change: Okay. Thank you very much.

Speaker Change: Thank you.

Operator: I'm showing no further questions at this time. This concludes today's conference call. Thank you for participating. You may now disconnect.

Speaker Change: I'm showing no further questions at this time.

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

Operator: Okay.

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Operator: Okay.

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Operator: Yes.

Operator: [music].