Release Date: February 06, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• IBEX Ltd (NASDAQ:IBEX) achieved its highest revenue for a quarter in the company's history, with a 6.1% growth.
• The company reported a record Q2 adjusted net income of $9.6 million, up 20% from the previous year.
• IBEX Ltd (NASDAQ:IBEX) expanded its adjusted EBITDA margin by 100 basis points to 11.8% compared to the prior year.
• The company successfully closed five new logos in the quarter, demonstrating the effectiveness of its new logo engine.
• IBEX Ltd (NASDAQ:IBEX) executed a strategic repurchase of approximately 3.6 million shares, enhancing its independence as a company.

Negative Points

• The fintech vertical experienced a decline of 15%, impacting overall revenue growth.
• Net cash generated from operating activities was only $1.1 million, indicating potential cash flow challenges.
• The company's DSO increased to 79 days, reflecting delays in client payments.
• Capital expenditures rose to 3.1% of revenue, up from 2.2% in the prior quarter, which could impact free cash flow.
• The decrease in net cash position was significant, primarily due to the share repurchase, resulting in a net debt of $13.7 million.

Q & A Highlights

• Warning! GuruFocus has detected 4 Warning Sign with IBEX.

Q: Can you elaborate on the factors driving revenue growth? Is it due to a better market backdrop, winning against competitors, or the impact of generative AI? A: Bob Dean, CEO: It's a combination of factors. Our primary driver is winning new logos, which then grow significantly in subsequent years. Additionally, we're gaining market share by outperforming competitors, especially as clients move business to lower-cost markets. The demand has stabilized, allowing us to build momentum and continue top-line growth.

Q: Despite strong margins, the guidance suggests a slight margin decline in the second half. Can you explain this? A: Taylor, CFO: While gross margins have improved significantly, we're intentionally investing in SG&A, sales resources, and AI capabilities to support growth. Despite these investments, we're maintaining a strong adjusted margin of around 14% for the year, thanks to improved profitability.

Q: How has the shift to offshore delivery impacted your financial results? A: Taylor, CFO: Offshore revenues now make up 53% of total revenue, up from 49% last year. This shift has positively impacted our bottom line, contributing to a 100 basis point improvement in adjusted EBITDA margin, driven by growth in higher-margin offshore locations.

Q: What are the key verticals contributing to revenue growth, and how are they performing? A: Taylor, CFO: Health tech grew by 31%, travel, transportation, and logistics by 17%, and retail and e-commerce by 4%. These verticals are benefiting from demand in multiple offshore geographies and our ability to secure significant new clients.

Q: How is the company positioned for future growth, particularly with AI solutions? A: Bob Dean, CEO: We're bullish on our trajectory, with significant wins in AI solutions like Wave IX Translate and Automate. These solutions enhance customer experience and reduce costs, positioning us well for continued growth and competitive advantage in the coming years.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.