WASHINGTON, Feb. 16, 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 second fiscal quarter ended December 31, 2021.
“Our business is accelerating as our strategic shift into the digital-first marketplace takes effect,” said Bob Dechant, CEO of ibex. “In Q2, we delivered the highest quarterly revenue in the company’s history, which represented a 12.8% growth from prior year. Our business will continue to pick up pace in the second half of the fiscal year, driven by growth from our integrated omnichannel solutions across both our new and existing clients. Revenues from our new customers since 2016, which represent our strategic shift into the digital-first marketplace, grew by an impressive 57% on a year over year basis and now represent 70% of our total company revenue, up from 50% a year ago. Our legacy 3 clients, which at the time of the IPO were our largest 3 clients and predominantly Telco, now represent less than 20% of our total revenues, compared to 36% a year ago and 38% at the time of our IPO. We are excited about the trajectory of the business for the second half of FY22 and beyond due to the increasing dominance in our top line by our more recent customer wins.”
Dechant continued, “I’m very excited about our performance and outlook, particularly the robust and rapid diversification of our client base. We've added exceptional high-growth brands and today our top 5 clients represent 41% of our business, versus approximately 54% at the time of our IPO, and we now have nearly 50 clients with more than $1 million of annual revenue. Our largest client represents just 12% of revenue. The level of diversification is now a true competitive advantage for Ibex and is exceptional for a BPO provider of any size.
While revenue growth for the quarter was strong and margins improved sequentially, adjusted EBITDA was flat on a year-over-year comparison. This was driven primarily by the costs associated with ramping our business such as agent training and investment in overhead. Consequently, our EBITDA margin was down year over year from 15.3% to 13.5%. We expect our overall margins to improve in the second half of the year as our ramp training costs stabilize.
In January, we also had a broadening of our ownership structure. TRGI, our majority shareholder, retired a portion of its share capital and approved the transfer of a portion of the ibex shares held by TRGI to some of its shareholders. This has reduced TRGI’s stake in ibex from 62% to 35%, which will meaningfully broaden our public float over time. We welcome the transition of the holdings in ibex of these new shareholders from an indirect stake via TRGI to becoming direct ibex shareholders.
Overall, we are very confident about the outlook in our business. This was demonstrated by the recent share repurchase announcement where our board authorized us to buy back up to $20 million of our common shares, at what we expect will be a very attractive IRR for our shareholders. Additionally, key members of our Executive Leadership Team and Board, including myself, participated in planned purchases in December.”
Second Quarter of Fiscal Year 2022 Financial Highlights
- Revenue increased 12.8% to $132.2 million, compared to $117.2 million in the prior year quarter.
- Revenue related to our new clients won since FY16 grew 57% compared to the prior year quarter and now represents 70% of our quarterly revenue.
- Our current quarter revenue growth was partially impacted by decreases related to our legacy top 3 clients. Our legacy top 3 clients now represent less than 20% of our revenue and consequently are expected to have less of an impact on our revenue outlook.
- Net income increased to $8.5 million, compared to $2.5 million in the prior year quarter. The increase in net income was primarily driven by a decrease in the fair value measurement related to the warrant liability offset by an increase in depreciation as we continue to invest in the growth of the business.
- Net income margin increased to 6.4%, compared to 2.1% in the prior year quarter.
- Non-GAAP adjusted net income was $5.2 million, compared to $6.1 million in the prior year quarter (see Exhibit 1 for reconciliation).
- Non-GAAP adjusted net income margin decreased to 3.9%, compared to 5.2% in the prior year quarter (see Exhibit 1 for reconciliation).
- Non-GAAP adjusted EBITDA was $17.8 million, compared to $18.0 million in the prior year quarter (see Exhibit 2 for reconciliation).
- Non-GAAP adjusted EBITDA margin was 13.5%, compared to 15.3% in the prior year quarter (see Exhibit 2 for reconciliation).
- Adjusted EBITDA margin decreased primarily due to costs associated with ramping our business such as agent training and investment in overhead.
Earnings Per Share
- IFRS basic and fully diluted earnings per share were $0.46 and $0.45, respectively, compared to $0.14 and $0.13, respectively, in the prior year quarter.
- Non-GAAP adjusted fully diluted earnings per share were $0.27, compared to $0.33 in the prior year quarter (see Exhibit 1 for reconciliation).
Cash Flow and Balance Sheet
- Cash flow from operations was $3.4 million, compared to $4.3 million in the prior year quarter.
- Capex increased to $11.8 million, compared to $6.4 million in the prior year quarter, as we invest for the future and expand our capacity across existing and new geographies.
- Cash and cash equivalents were $51.5 million, total borrowings were $37.7 million, and lease liabilities were $89.4 million as of December 31, 2021, 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.
- Won three new clients in the quarter and twelve in the fiscal year-to-date. We expect our new clients that launched this year to generate in-year revenue of more than $50 million, which will represent a 66% increase from the in-year revenues from new clients in the prior fiscal year. Our past cohort trends indicate that annual revenues from new clients increase by a factor of 2.5-3.5x from year one to year two. We expect this trend to continue for our cohort of new clients in fiscal 2022 at a slightly more moderated level of 2x, which will provide a strong revenue driver for the next few years.
- Revenue generated from FinTech and Healthcare (our two strategic investment verticals since FY20) increased 100% from the prior year quarter and now represent 20% of our business. These verticals are on track to generate over $100 million of annual revenues in fiscal 2022, compared to $44 million only two years ago.
- Legacy top 3 client concentration decreased to 19.9% of revenue from 36% in the prior year.
- Telecommunications vertical decreased to 17.2% of revenue from 30% in the prior year.
- Added over 2,500 seats in high margin nearshore and offshore locations.
- Successfully launched in a new region, Honduras, with a strategic client and over 250 employees.
- ibex Cares raised over $200,000 for our team members affected by the devastating Typhoon Odette (Rai) in the Philippines, with 50% of the funds raised by our very own team members.
Fiscal Year 2022 Business Outlook
We are raising our revenue guidance while reaffirming adjusted EBITDA and capex guidance for our fiscal year 2022.
- Raising fiscal year 2022 organic revenue growth to 10% to 12% from 7% to 9% previously. Revenue growth will continue to accelerate as we onboard new capacity.
- Reaffirming adjusted EBITDA guidance of $69.0 million to $71.0 million.
- Reaffirming capex guidance of $30.0 million to $35.0 million. We expect to return to lower capex spend when social distancing restrictions subside.
Share Repurchase Authorization
During the quarter, the company’s board of directors has authorized the repurchase of up to $20 million of the company’s common shares. As of February 15, the company has repurchased $1.3 million of its common shares at an average price of $13.95 per share.
Conference Call and Webcast Information
IBEX Limited will host a conference call and live webcast to discuss its second quarter of fiscal year 2022 financial results at 4:30 p.m. Eastern Time today, February 16, 2022. To access the conference call, dial (833) 614-1408 for the U.S. or Canada, or for international callers (914) 987-7129 and provide conference ID 3209898. The webcast will be available live on the investors section of ibex’s website at: https://investors.ibex.co/.
An audio replay of the call will also be available to investors beginning at approximately 7:30 p.m. Eastern Time on February 16, 2022, until 7:30 p.m. Eastern Time on February 23, 2022, by dialing (855) 859-2056 for the U.S. or Canada, or for international callers, (404) 537-3406 and entering passcode 3209898. In addition, an archived webcast will be available on the Investors section of ibex’s website at: https://investors.ibex.co/.
This announcement does not contain sufficient information to constitute an interim financial report as defined in International Accounting Standards 34, “Interim Financial Reporting.” The financial information in this press release has not been audited.
Non-GAAP Financial Measures
We present non-GAAP financial measures because we believe that they and other similar measures are widely used by certain investors, securities analysts and other interested parties as supplemental measures of performance and liquidity. We also use these measures internally to establish forecasts, budgets and operational goals to manage and monitor our business, as well as evaluate our underlying historical performance, as we believe that these non-GAAP financial measures provide a more accurate depiction of the performance of the business by encompassing only relevant and manageable events, enabling us to evaluate and plan more effectively for the future. The non-GAAP financial measures may not be comparable to other similarly titled measures of other companies, have limitations as analytical tools, and should not be considered in isolation or as a substitute for analysis of our operating results as reported under IFRS as issued by the IASB. Non-GAAP financial measures and ratios are not measurements of our performance, financial condition or liquidity under IFRS as issued by the IASB and should not be considered as alternatives to operating profit or net income / (loss) or as alternatives to cash flow from operating, investing or financing activities for the period, or any other performance measures, derived in accordance with IFRS as issued by the IASB or any other generally accepted accounting principles.
ibex is not providing a quantitative reconciliation of forward-looking non-GAAP adjusted EBITDA to the most directly comparable IFRS measure because it is unable to predict with reasonable certainty the ultimate outcome of certain significant items without unreasonable effort. These items include, but are not limited to, non-recurring expenses, fair value adjustments, and share-based compensation expense. These items are uncertain, depend on various factors, and could have a material impact on IFRS reported results for the guidance period.
ibex helps the world’s preeminent brands more effectively engage their customers with services ranging from customer support, technical support, inbound/outbound sales, business intelligence and analytics, digital demand generation, and CX surveys and feedback analytics.
Forward Looking Statements
In addition to historical information, this release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by terminology such as “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “should,” “plan,” “expect,” “predict,” “potential,” or the negative of these terms or other similar expressions. These statements include, but are not limited to, statements regarding our future financial and operating performance, including our outlook and guidance, and our strategies, priorities and business plans. Our expectations and beliefs regarding these matters may not materialize, and actual results in future periods are subject to risks and uncertainties that could cause actual results to differ materially from those projected. Factors that could impact our actual results include: developments relating to COVID-19; our ability to attract new business and retain key clients; our ability to enter into multi-year contracts with our clients at appropriate rates; the potential for our clients or potential clients to consolidate; our clients deciding to enter into or further expand their insourcing activities; our ability to operate as an integrated company under the ibex brand; our ability to manage portions of our business that have long sales cycles and long implementation cycles that require significant resources and working capital; our ability to manage our international operations, particularly in Pakistan and the Philippines and increasingly in Jamaica, Nicaragua, and Honduras; our ability to comply with applicable laws and regulations, including those regarding privacy, data protection and information security; our ability to manage the inelasticity of our labor costs relative to short-term movements in client demand; our ability to realize the anticipated strategic and financial benefits of our relationship with Amazon; our ability to recruit, engage, motivate, manage and retain our global workforce; our ability to anticipate, develop and implement information technology solutions that keep pace with evolving industry standards and changing client demands; our ability to maintain and enhance our reputation and brand; and other factors discussed under the heading “Risk Factors” in our annual report on Form 20-F filed with the U.S. Securities and Exchange Commission on October 14, 2021 and any other risk factors we include in subsequent reports on Form 6-K. Because of these uncertainties, you should not make any investment decisions based on our estimates and forward-looking statements. Except as required by law, we undertake no obligation to publicly update any forward-looking statements for any reason after the date of this press release whether as a result of new information, future events or otherwise.