Washington May 19 2022: IBEX Limited (“ibex”), a leading global provider in business process outsourcing and end-to-end customer engagement technology solutions, today announced financial results for its third fiscal quarter ended March 31, 2022.
Company reported Net income of $6.6 million in third quarter compared to $8.5 million in previous quarter as revenue of the company decline to $129.1 million in third quarter compared to $132.2 million in the previous quarter.
“We delivered a strong third quarter with record year-over-year organic revenue growth of 19%, which accelerated from an impressive 13% revenue growth in Q2. Our growth was driven by integrated omnichannel solutions across both new and existing clients,” said Bob Dechant, CEO of ibex. “Over the last two years, revenue has grown at a combined 28% over the prior year period.”
Dechant continued, “Our business has reached an inflection point, and we are very excited about our trajectory. Revenue from new customers won since FY16 grew by an impressive 60% on a year-over-year basis, which represents our strategic shift into the digital-first marketplace, and now represents 70% of total company revenue, up from 52% a year ago. Our FinTech and HealthTech business grew by over 100% over the prior year and now represents 25% of total revenues. Expanding into these verticals will insulate the business from the impact of seasonality seen with some of our other verticals and lead to further stability of the revenue base. These growth drivers significantly outpace the downward pressure from our legacy business.
Our adjusted EBITDA margin improved sequentially this quarter and continues to experience short-term pressure as we ramp new clients and programs into our newly expanded capacity. We expect a meaningful mid-term margin improvement with the steady state impact of our continued onboarding of new programs, especially as we place these programs into additional capacity made available with the removal of social distancing requirements in our delivery markets.
Looking forward to FY23 and beyond, we expect to sustain our revenue trajectory firmly in excess of 10% per annum. This revenue growth is driven primarily by the continued success of our profitable new logo engine that, over the last several years, has delivered an annualized growth rate between 40% and 60% and is now 70% of our overall business. This growth has offset the decline of our legacy 3 clients, primarily in the telecommunications & legacy technology industry, whose revenues have been declining on average by around 30% on an annualized basis and now make up only 19% of our revenue base. We do expect the trajectory among these legacy clients to continue as a result of organic demand decline and a strategic decision that allowed us to replace our lowest margin business within this client group with a new higher margin HealthTech client. As a result, we expect revenues from this legacy set of clients to have a less pronounced effect on our business.”
Third Quarter of Fiscal Year 2022 Highlights
Business Highlights
• Won seven new significant clients in the quarter and nineteen in the fiscal year-to-date.
• Wins highlight the continued success in the HealthTech and digital first space. We had two key wins in HealthTech, one with a top job website company, as well as a leading collaborative graphics design company.
• The wins are in all our key geographies, including the Philippines, Nearshore, and the US, and are a catalyst for double-digit growth in all these regions.
• Client diversification continued to improve with less than 56% of total revenue from our top 10 clients, down from 69% in the prior year quarter and top 25 clients to 84% from 90% of total revenue.
Revenue
• Revenue increased 18.6% to $129.1 million, compared to $108.8 million in the prior year quarter.
• Revenue related to our new clients won since FY16 grew 60% compared to the prior year quarter and now represents 70% of our quarterly revenue and up from 52% in the prior year quarter.
• Revenue growth was driven by strength in our FinTech, HealthTech, Retail & Ecommerce, and Travel, Transportation & Logistics verticals, partially offset by continuing decreases in our Telecommunications verticals.
• FinTech and HealthTech (our two strategic investment verticals since FY20) increased 101% from the prior year quarter and now represent 24.6% of our business.
• Legacy 3 clients now represent 19% of revenue, compared to 34.1% in the prior year quarter and are expected to have less of an impact on our overall results going forward.
Net Income
• Net income increased to $6.6 million, compared to $(0.2) million in the prior year quarter. The increase in net income was primarily driven by stronger operating results and tax benefits recognized in the current quarter.
• Net income margin increased to 5.1%, compared to (0.2)% in the prior year quarter.
• Non-GAAP adjusted net income increased to $10.7 million, compared to $6.0 million in the prior year quarter (see Exhibit 1 for reconciliation).
• Non-GAAP adjusted net income margin increased to 8.3%, compared to 5.5% in the prior year quarter (see Exhibit 1 for reconciliation).
Adjusted EBITDA
• Non-GAAP adjusted EBITDA increased to $18.8 million, compared to $16.7 million in the prior year quarter (see Exhibit 2 for reconciliation).
• Non-GAAP adjusted EBITDA margin decreased to 14.6%, compared to 15.3% in the prior year quarter (see Exhibit 2 for reconciliation).
• Non-GAAP adjusted EBITDA margin decreased primarily due to an increase in agent training costs associated with ramping our business, investment in overhead to support our growth, and the opening of our Honduras center.
Earnings Per Share
• IFRS basic and fully diluted earnings per share increased to $0.36 and $0.35, respectively, compared to $(0.01) and $(0.01) in the prior year quarter.
• Non-GAAP adjusted fully diluted earnings per share increased to $0.57, compared to $0.32 in the prior year quarter (see Exhibit 1 for reconciliation).
Cash Flow and Balance Sheet
• Cash flow from operations was $12.0 million, compared to $13.9 million in the prior year quarter.
• Capex was $6.1 million compared to $6.3 million in the prior year quarter.
• Cash and cash equivalents were $41.5 million, total borrowings were $27.4 million, and lease liabilities were $90.6 million as of March 31, 2022, compared to cash and cash equivalents of $57.8 million, total borrowings of $28.5 million, and lease liabilities of $84.0 million as of June 30, 2021.
