Q1 2026 IBEX Ltd Earnings Call
Welcome to the Ibex first quarter FY 2026 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, please press *1, 1 on your telephone and wait for your name to be announced. To withdraw your question, please press *1, 1 again. Please note, there is an accompanying earnings presentation available on the Ibex investor relations website at investors.ibex.co. I will now turn this conference over to Mr. Michael Darwal, Head of Investor Relations for Ibex.
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 4, we're 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 which could cause our actual results to differ materially from those expected. And described today. For more detailed description of our risk factors. Please review our annual report on form. 10K filed with the US Securities and Exchange Commission on September 11th 2025 and any other risk factors. We include in subsequent filings with the SEC with that. I will now turn the call over to IBC CEO. Bob Dean
Thanks Mike. Good afternoon, and thank you all for joining us today. As we share our first quarter fiscal year 2026 results,
Before I speak to our first quarter results, I want to start by saying that our thoughts and prayers are with the people of Jamaica who are dealing with the devastation left behind by Hurricane Melissa.
I would also like to say how proud I am of our Ibex Jamaica team.
Who has shown, enormous courage and resilience through this tragedy?
And have worked tirelessly to care for our employees while getting us operational within 24 hours of the hurricane, in our Portmore and Kingston sites.
and as of Monday this week in our oo, Rio site,
I would also like to highlight the great support, we have received from our clients,
Who have offered assistance alongside our Ibex carers initiatives to help those who are significantly impacted.
Lastly.
The BPO community in Jamaica is a tight-knit community.
And our thoughts and prayers, go out to our Jamaican BPO peers and their people.
I am pleased to report that Ibex carried the momentum. We built throughout fiscal 2025 into 2026.
Delivering an outstanding first quarter with Revenue. Growth of 16.5% and adjusted, EPS growth of 74% as we continue to separate ourselves from the pack in the BPO Market.
Our sustained, double-digit Revenue, growth highlights, our competitive differentiation in the CX space.
We continue to drive exceptional operational delivery for our existing clients enabling us to win significant market share from our competition.
I am equally proud of our new logo engine that continues to win trophy clients.
Positioning us well for continued growth and margin expansion.
And I'm excited on the progress. We have made in our AI automate and translation. Deployments for our clients. Collectively, this continues to validate our position as a leader in the CX space.
Q1 was a very strong quarter.
Even more impressive, is the performance. We continue to stack quarter over quarter leading to powerful momentum into the balance of FY 26.
Over the last 12 months.
Our results have shown explosive double-digit, organic, Revenue growth, which is well above market growth.
Consistent, margin expansion and significant growth in EPs and free cash flow.
for the last 12 months, we delivered organic Revenue growth of 13% to a record 580 million
We grew gross margin 14% or 40 basis points.
Fueled in large part by revenue, growth approaching 20% in our high-margin offshore regions and digital-first services.
We delivered record adjusted IBA of nearly 76 million for the trailing 12 months up, more than 13% from the prior 12-month period while making key Investments for future growth and differentiation
We achieved record adjusted EPS of $3.17 up more than 40% from the prior trailing 12 months.
These results are an output of our sizable and distinct competitive differentiation, that we have built.
And the strength of this leadership team to consistently execute quarter over quarter.
Care about to this differentiation is our best-in-class blend of culture engagement and branding.
Our purpose-built wave IX technology and integrated AI solution Suite. Connecting seamlessly AI to human agents.
And our deep analytics and business, insights capabilities.
The Ibex leadership team is able to consistently execute against these points, outperforming the competition setting Ibex apart trusted partner.
This Playbook was key to us, delivering 1 of the most impressive starts to a fiscal year in our history.
And has this well positioned to perform throughout FY 26.
The Ibex brand is stronger than it has ever been.
Highlighting: This is our most recent employee net promoter score of 77, an all-time high.
And our client net promoter score of 71 up. Impressively from 68.
It is important to note that anything above 70 is considered world class.
These metrics play a critical part in our outstanding client Revenue retention of over 98% and validate that our competitive mode is deep and wide.
These metrics are also viewed by prospective clients as best-in-class, giving them confidence in choosing Ibex as their go-forward partner during the RFP process.
We are very excited about the wins we have had in the last two quarters. Over this time frame, we have won 7 high-profile new opportunities, facing off against our much larger multi-billion dollar competitors.
Our new logo engine.
That continues to win trophy new clients.
and our ability to land and expand with these clients,
as compared to 2 years ago,
our number of clients making up more than 1 million per Anam in revenue is up nearly 24%.
Clients representing 1 million to 10 million perom are up over 21% during the same time frame.
And the number of clients generating, 10 to 20 million perom is up, nearly 67%.
And the average revenue generated by clients with annual spend over 20 million during these periods. Is up approximately 14%.
This powerful combination of winning, blue chip, trophy clients and growing significant market share with them parlayed with our outstanding client retention rates. Has its own, an amazing trajectory of double digit growth.
Q4 a fiscal 2025 marked, the shift from proof of concept for our AI solutions to full-scale deployments for several of our key clients.
we continue to invest in bolstering, our team supporting this critical Vector for growth most recently with the addition of Michael, ringman as CTO,
We are an exciting time in the industry with the intersection of AI and CX. Mike brings in enormous amount of experience in both areas and will help accelerate our leadership position.
I am confident that under Mike's Direction. Our AI technology roadmap will help further separate Ibex from the pack.
Coming off a statement year. In fiscal 2025, I am proud of our start to fiscal 2026 and I am confident, that Ibex is very well positioned for Success, this year and Beyond.
With that, I will now turn the call over to Taylor to go into more details on our first quarter results and fy6. Guidance,
Taylor.
Thank you, Bob and good afternoon, everyone. Thank you for joining the call today.
In my discussions of our first quarter, fiscal year 2026 Financial results, references to revenue, net income and net cash. Generated from operations are on a US gaap basis. While adjusting that income adjusted earnings per share. Adjusted ebit da and free cash flow are on a non-gaap basis.
To our earnings press release.
Turning to our results. Our first quarter results, Mark our strongest start to a fiscal year.
We achieved record first quarter revenue. Adjusted EBITDA, adjusted EPS, EPS, and cash flow all showed significant improvements.
First quarter Revenue was 151.2 million and increase of 16.5% from 129.7 million. In the prior year quarter Revenue growth was driven by vertical growth and Retail and e-commerce of 25% Health Tech of 19.5% and travel transportation and Logistics of 15.4% and was partially offset by an expected decline in telecommunications, our smallest vertical of 22.5%.
Importantly our fintech vertical recent inflection point in the first quarter and grew 3.4% and with recent wins, we are confident in the positive trajectory of fintech going forward.
Our focused efforts to grow, our higher margin delivery locations, and services continue to have a favorable impact on bottom line results. We are really excited that we're winning in all markets, and as a result, growing revenue in all geographies.
Our highest margin offshore revenues, grew 20% in the quarter are near shore, locations, grew 7%, and our onshore region. Grew 21% driven by growth of our high margin, digital acquisition services
Revenue mix in our higher margin digital and Omni Channel Services continues to strengthen growing 25% to 82% of our total revenue versus prior year quarter.
We expect that we will continue to be successful driving growth in these higher margins services and regions as we continue to land and expand new clients from our strong pipeline as well as when further share with our embedded base clients.
First quarter, net income, increased to 122 million compared to a 7.5 million in the prior year quarter. The increase was primarily driven by the meaningful growth of work and higher margin offshore regions of 19.5% and operating leverage gained from sgna expenses. As they went from 20.2% to 17.5% of Revenue.
Fully diluted EPS with 82 cents up from 43 cents in the prior year quarter contributing to the EPS growth was. The impact from fewer diluted shares outstanding, as a result of our ongoing share repurchase program and a lower tax rate,
Diluted shares for the quarter were 14.6 million versus 17.5 million 1 year ago. Our tax rate was 11% versus 21% in the prior year, due to a discrete tax benefit related to stock-based compensation. We expect our effective tax rate before discrete items to remain consistent at 20 to 22 for the remaining quarters.
Moving to non-gaap measures adjusted ibida, increase 24.9% to 19.5 million, or 12.9% of revenue from 15.6, million or 12.0% of revenue, for the same period last year.
The 90 basis point Improvement and adjusted ebit da margin was primarily driven by growth in our higher margin offshore locations during recent years and stronger operating results.
Adjusted net income, increased to 13.1 million from 9 million. In the prior year quarter, non-gaap fully diluted adjusted. Earnings per share increased 74.1% to 90 cents from 52 cents in the prior year quarter.
As a company, we are pleased with the client diversification. We've established over the last several years, for the first quarter of fiscal year 2026, our largest client accounted for 10% of Revenue. And our top 5, top 10 and top 25 client concentrations, represented 37% 55% and 79% of overall Revenue, respectively, as compared to 36% 51% and 77% of over.
Overall revenue in the prior year, representative of a well-diversified client portfolio.
Pushing to our verticals retail and e-commerce increased to 26.3% versus 24.5%. In the prior year. Quarter Health Tech, increase of 14.5% first quarter, Revenue, versus 14.1% in the prior year quarter.
And travel transportation and Logistics remain relatively flat at 14.1% in the quarter.
These results were driven by continued growth and multiple offshore geographies and our continued ability to win significant new clients in these verticals.
Conversely, our exposure to the Telecommunications vertical decreased to 10.2% of revenue for the quarter versus 15.4% in the prior year quarter, as we see lower volume from Legacy carriers.
% sequentially marking a return to growth and the lapping of Prior impacts. We had noted at fiscal year end.
Moving to cash flow. Net cash generated from operating activities increased to 15.7 million. For the first quarter of fiscal 2026 compared to 7.8 million for the prior year quarter.
The increase in net cash. Inflow from operating activities was primarily due to higher Revenue which drove increased profitability as well as a lower use of working capital,
We have seen a notable improvement in our days sales outstanding with dsos for the quarter at 71 days down from 75 days, a year ago and 72 days as of June 30th.
We expect our dsos to remain relatively stable on a go forward basis.
Capital expenditures were 7.6 million or 5.1% of revenue. For the first quarter of fiscal year, 2026 versus 3.6 million or 2.8% of Revenue. In the prior year quarter, this increase was primarily driven by expansion in our offshore regions that support growth in these higher margins geographies.
Free cash flow with a first quarter record of 8 million compared to 4.1 million in the prior quarter. The increase was driven by increased revenues during the current quarter and the aforementioned shorter dsos.
During the quarter, we purchased 92,000 shares for $2.7 million. We have $10.6 million remaining on our current share repurchase program.
We ended the first quarter with cash and net cash balances of 22.7 million and 21.1 million respectively, an increase from 15.3 million and 13.7 million as of June 30th 2025.
To summarize our first quarter of fiscal 2026, we achieved outstanding Revenue growth in profitability. And once again, allowing us to build on our existing momentum entering the fiscal year.
Our Revenue growth drove increased operating, leverage and positioned us to post record first quarter. Adjusted ibaon margin of 12.9% adjusted EPS of 90 cents and free cash flow of 8 million.
Our continued strong financial results and healthy balance sheet are enabling strategic investments in our growing AI capabilities and sales resources as well as further expansion to strategic markets and in our top performing geographies.
Importantly, with our outstanding start to the fiscal year. We have the confidence in our business, to raise our revenue and adjusted ebit dog guys. For fiscal year 2026,
For fiscal year 2026.
Revenue is expected to be in the range of 605 to 620 million up from 590 to 610 million.
Adjusted IA is expected to be in the range of 78 to 81 million, up from 75 to 79 million.
And capital expenditures are expected to be in the range of 20 to 25 million.
Our business is well positioned for today and the years ahead and we are excited about the future vivex. As we head into the second quarter of fiscal year 2026 and Beyond
With that, Bob, I will now take questions. Operator, please open the line.
Thank you as a reminder, to ask a question. Please press star, 1, 1 1 on your telephone and wait for your name, to be announced to withdraw your question. Please press star 1 1 1 again, 1 moment for questions.
Our first question comes from David coning with beard, you may proceed.
Yeah. Hey guys great. Great job again. And um you're doing exactly what you said winning share with some of the new offerings. So congrats on all that.
Thank you, Dave. Yeah, we're, we're really proud of, uh, proud of the quarter, proud of the role we're on.
Yeah, yeah, great. Well and maybe first off, you know what have you seen? You know, we've we've had this gen AI, you know, kind of swirling around for really a few years now. And is it, is it becoming a catalyst both for the industry and for you guys or more for you than the industry or, you know, maybe talk a little bit and maybe also just to add in, how much a revenue is it now? And maybe where is it going in, in a few years?
Sure. So let me kind of break those up into 2 parts, Dave. If if that's okay, you know, when I look at, um,
Through the Ibex lens.
the whole, um,
AI, you know the excitement and and also the you know the the risks that you know people have talked about this relative to this industry. I think Rybeck it's been all positive and and let me explain on that a little bit. Um
In the industry on AI. And that's, I would say there's 2 Dimensions to that 1 where we are deploying AI, internally to help us. Execute better to provide tools and capabilities for agents to deliver better for our teams to uh run the business. More effectively efficiently and drive better performance on our client kpis.
We're further along than anybody. And that's why I think 1 of the reasons we continue to outperform and then take significant market share
So that is a boom for Ibex because of what we are doing above and beyond anybody else.
On the other side, um, the second dimension.
I look at the opportunities around using AI for customer experiences. Right now, we automate experiences with AI for language translation, etc.
Again, I think that we have leaned further into that than anybody else, we're not afraid of what that might do to our business. I feel like much of the market is very cautious and, and, and hesitant about about leaning in
We're leaning in.
And our clients are seeing that. We have a unique end-to-end.
Uh, end-to-end model that really goes from AI all the way through to a human agent, to provide an integrated and seamless.
Solution for them.
To me, I think that puts us in a really ideal position, and when clients are making decisions, they look at that and they say, this is the type of partner that we want because not only can they execute today on the BPO side, but they're looking forward and they're, you know, for in their future proof basically, in their model, they can, we can grow and evolve with them as AI gets deployed, uh, more. So, it's a real competitive Advantage for us, Dave. And, uh, you know, I, I, I believe that, you know, that's something that
Is when you look at what our results are and when you look at the growth rates that we're doing, the margin expansion, Etc, I think that's a output of of that.
Now to your question about, how much of that is, we're still real early in the game. So you know, it's not moving the needle on a whole lot of Revenue and margin expansion yet.
But but you know, but we're positioned well and we expect probably by the end of, you know, fourth quarter of this year. And into FY 27, you'll start seeing that being another Vector of growth and margin expansion that will move the needle for us.
Yeah. Gotcha. Thank you and maybe just a follow-up. Um, gross margins were a little down in q1, and I think you're holding full year margin about intact, you're raising revenue raising a margin about intact is that is some of this, a function of your saw the investment going into Ai. And I, I know you're, you're benefits from offshoring and AI, ultimately is better margin, but maybe right now it's a little lower as you invest.
Yeah, Taylor I'll throw that over to you. Yeah, no. Um, absolutely. So, you're right our our, our margins are for the year, we're projecting our EBA margin to be about 13%. So that's up a bit from the, the prior year. And what you're seeing and what we're seeing is we're getting a lot of operating leverage out of our sgna costs because we're able to hold our sgna costs relatively flat. While our revenue is growing at a much faster pace so seeing good, leverage on the sgna line, gross margins are down a bit particularly in q1, and a bit in Q2 and you saw it in q1 and really um, a couple impacts their 1. Whereas you know, we're ramping in India so still making Investments and are at the the long term margins. We anticipate
That we'll get to in India and then probably more impactful in q1 and Q2, it's a good problem to have. We have, you know, more more wins, which mean more training revenue. And as you know, we defer the, the train Revenue, but experience the costs upfront. Um, so we are are, are seeing a little bit of headwind on the gross margin line on that as well. But long term, we feel very good about gross. Margins as Bob said, you know, the vectors of growth in terms of the the offshore geography. And then once we start getting more meaningful impact from AI, should should certainly have a, a positive long-term trend on on Gross margins.
Great thanks, guys. Great job.
Appreciate it. Great, thanks for joining. Thank you. David.
Thank you. I would now like to turn the call back over to Bob Deen for any closing remarks.
Josh, thanks and uh, everybody appreciate you listening.
Quarter that we continue to deliver.
As we separate ourselves, uh, from from this, uh, from this industry from our competitors. I'm also proud of what they've been doing in responding to emergencies. And, you know, uh,
issues like, uh, we incurred in Jamaica with hurricane Melissa and even in markets, like the Philippines, there's been a whole lot going on there. Uh, with typhoons, as well as, uh, as well as earthquakes in that team has my team has delivered and kept this amazingly resilient for that. Um, I want to thank them all for that because they are the best in the industry and with that, thank you all for listening and uh, we'll look forward to talking to you next quarter.
Good night.
Thank you, this concludes the conference. Thank you for your participation. You may now disconnect