WASHINGTON, Sept. 22, 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 fourth quarter and fiscal year ended June 30, 2022.
“Fiscal year 2022 was a great year for ibex with record revenues, adjusted EBITDA, EPS, free cash flow and new client revenue,” said Bob Dechant, CEO of ibex. “Our momentum continues to build. We have delivered three consecutive quarters of accelerated revenue growth and our adjusted EBITDA margins continued to expand over the same period. Revenue generated from our BPO 2.0 clients won since fiscal year 2016 grew 49% this fiscal year and represented 69% of total revenue. Our success in winning new clients and navigating the global pandemic demonstrates our ability to win across all key verticals and be disruptive as a leader in the market.”
Dechant continued, “The fourth quarter was a very strong quarter for ibex with organic revenue growth of 13.6%, record adjusted EBITDA margin of 15.1% and generating over $25 million in free cash flow. We accomplished these results while at the same time exiting away from a low-margin legacy client and strategically transitioning our agents to a new, high growth HealthTech client. Although we incurred costs associated with the transition in the quarter, we believe we are in a great position starting Q1 of FY23 to realize immediate and long term benefits from this pivot.”
“Looking ahead, we are confident in our ability to continue to win business as clients look to outsource more in a turbulent market. We expect to surpass our historical 10% revenue growth rate with continued margin expansion, as we utilize capacity created with the roll-off of social distancing in our centers. Despite challenges in the macro environment, we believe we are well positioned for a strong first quarter and fiscal year 2023,” concluded Mr. Dechant.
Fourth Quarter of Fiscal Year 2022 Highlights
Business Highlights
- Won 4 new logos in the quarter across key verticals.
- The FinTech & HealthTech verticals, where we made strategic investments in early fiscal year 2020, increased significantly to 30.4% of total revenue in the fourth quarter, compared to 20.6% of total revenue in the prior year quarter.
- Approximately 10,000 seats of additional capacity became available as a result of removing social distancing requirements.
Revenue
- Revenue increased 13.6% to $123.7 million, compared to $108.9 million in the prior year quarter.
- Revenue related to our new clients won since fiscal year 2016 grew 43% compared to the prior year quarter and now represents 74% of our quarterly revenue.
Net Income
- Net income increased to $4.9 million, compared to $4.0 million in the prior year quarter. The increase in net income was primarily driven by stronger operating results, including a decrease in non-recurring costs, and a deferred tax benefit recognized in the current quarter, partially offset by increased depreciation, and a negative impact of fair value measurement of share warrants.
- Net income margin increased to 4.0%, compared to 3.7% in the prior year quarter.
- Non-GAAP adjusted net income increased to $7.9 million, compared to $5.8 million in the prior year quarter (see Exhibit 1 for reconciliation).
- Non-GAAP adjusted net income margin increased to 6.4%, compared to 5.3% in the prior year quarter (see Exhibit 1 for reconciliation).
Adjusted EBITDA
- Non-GAAP adjusted EBITDA increased to $18.7 million, compared to $15.9 million in the prior year quarter (see Exhibit 2 for reconciliation).
- Non-GAAP adjusted EBITDA margin increased to 15.1%, compared to 14.6% in the prior year quarter (see Exhibit 2 for reconciliation).
Earnings Per Share
- IFRS basic and fully diluted earnings per share increased to $0.27 and $0.26, respectively, compared to $0.22 and $0.21 in the prior year quarter.
- Non-GAAP adjusted fully diluted earnings per share increased to $0.42, compared to $0.31 in the prior year quarter (see Exhibit 1 for reconciliation).
Cash flow
- Cash flow from operations increased to $27.8 million, compared to $1.8 million in the prior year quarter primarily due to improved collections, stronger operating results, including lower non-recurring expenses, and lower cash taxes.
- Free cash flow for the fourth quarter increased to $25.1 million, compared to ($3.2) million in the prior year quarter.
- DSOs were 55 days in the fourth quarter, down 1 day compared to prior year, and down 5 days sequentially.
Fiscal Year 2022 Highlights
Business Highlights
- Won 23 new clients, primarily in the HealthTech, Retail & E-Commerce, Travel, Transportation & Logistics, and Technology verticals.
- We continued to improve our client diversification, including increases in the HealthTech and FinTech and Retail and E-Commerce verticals.
- Added over 3,400 seats in high margin nearshore and offshore locations.
Revenue
- Revenue increased 11.2% to $493.6 million, compared to $443.7 million in the prior year.
- Revenue growth was primarily driven by strength in our HealthTech, Retail & E-Commerce, Travel and Transportation & Logistics verticals.
- The Telecom vertical now represents 18.1% of our annual revenue, compared to 29.3% in the prior year, as we continue diversifying our client base.
Net Income
- Net income increased to $23.0 million, compared to $2.8 million in the prior year. The improvement was primarily due to the positive impact of the fair value adjustment on share warrants, decreases in non-recurring costs and share-based payments expense, and a deferred tax benefit, partially offset by higher depreciation related to our capacity expansion over the last two years.
- Net income margin increased to 4.7%, compared to 0.6% in the prior year.
- Non-GAAP adjusted net income increased to $24.6 million, compared to $23.6 million in the prior year (see Exhibit 1 for reconciliation).
- Non-GAAP adjusted net income margin was 5.0%, compared to 5.3% in the prior year (see Exhibit 1 for reconciliation).
Adjusted EBITDA
- Non-GAAP adjusted EBITDA increased to $66.8 million, compared to $66.2 million in the prior year (see Exhibit 2 for reconciliation).
- Non-GAAP adjusted EBITDA margin was 13.5%, compared to 14.9% in the prior year (see Exhibit 2 for reconciliation).
Earnings Per Share
- Fully diluted earnings per share increased to $1.23, compared to $0.15 in the prior year.
- Non-GAAP fully diluted adjusted earnings per share increased to $1.32, compared to $1.28 in the prior year (see Exhibit 1 for reconciliation).
Cash flow and balance sheet
- Cash flow from operations increased to $50.1 million, compared to $25.9 million in the prior year. The increase was primarily driven by improvements in operating results and working capital, along with lower non-recurring expenses and cash taxes paid in fiscal year 2022.
- Capex was $25.9 million compared to $20.8 million in the prior year.
- Full year free cash flow increased to $24.2 million, compared to $5.1 million in the prior year.
- Cash and cash equivalents were $48.8 million and availability on our revolving credit facilities was $50.5 million as of June 30, 2022, compared to cash and cash equivalents of $57.8 million and availability on our revolving credit facilities of $33.6 million as of June 30, 2021.
- Total borrowings were $15.0 million as of June 30, 2022, compared to total borrowings of $28.5 million as of June 30, 2021.
First Quarter and Fiscal Year 2023 Business Outlook
- First quarter 2023 organic revenue of $124 million to $127 million with midpoint growth of 15.6% versus the prior year quarter.
- First quarter 2023 adjusted EBITDA of $16.5 million to $18.5 million with midpoint margin of 13.9%.
- Fiscal year 2023 organic revenue between $545 million and $555 million with midpoint growth of 11.4% versus fiscal year 2022.
- Fiscal year adjusted EBITDA of $77 million to $79 million with midpoint margin of 14.2%.
- Fiscal year 2023 capex of $18 million to $22 million.
“While we have not given quarterly guidance in the past, we are choosing to provide guidance on a one-off basis for the first quarter of fiscal year 2023 due to the volatility that exists in today’s markets,” said CFO Karl Gabel.
