Washington May 18 2023: 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, 2023.
“We delivered an outstanding third quarter achieving record adjusted EBITDA margin of 18.5%. We continue to see the strong growth of our strategic BPO 2.0 Digital-First and Analytics clients which results in growth in our higher margin regions,” said Bob Dechant, CEO of ibex. “This is the second straight quarter of margin above 18% and I believe that our business has reached a new normal on profitability.”
Third Quarter of Fiscal Year 2023 Highlights
Business Highlights
Achieved back-to-back quarters of record adjusted EBITDA margin.
The FinTech & HealthTech verticals continued to increase significantly to 32.2% of total revenue in the third quarter, compared to 27.9% of total revenue in the prior year quarter.
Work-from-site capacity utilization in our high margin regions increased to greater than 60% at March 31, 2023 from approximately 50% at June 30, 2022 enabling significant margin improvement.
Accelerated the migration of several key clients from the US to our offshore footprints positioning us for continued margin expansion in FY24.
Revenue
Revenue increased 1.9% to $131.6 million, compared to $129.1 million in the prior year quarter. Revenue growth was driven by our high margin regions offset by lower onshore revenue.
Revenue related to our BPO 2.0 clients grew 12.3% compared to the prior year quarter and now represents 77.6% of our quarterly revenue.
Excluding a legacy client we exited in the fourth quarter of fiscal year 2022, revenue increased 8.4% over the prior year quarter.
Revenues in our higher margin off-shore, nearshore, ROW regions grew approximately 15% in the third quarter, now representing 72.3% of revenue mix for Q3 fiscal year 2023 vs 63.8% in the prior year.
Net Income
Net income and net income margin increased to $11.7 million and 8.9%, respectively, compared to $6.6 million and 5.1%, respectively, in the prior year quarter. The increase was primarily the result of stronger operating results and revaluation of share warrants, partially offset by higher income tax expense.
The increase in income tax expense was mostly driven by a significant one-time deferred tax benefit recorded in the prior year quarter along with increased profitability in the current year quarter.
Net income and net income margin decreased to $17.9 million and 4.5% for the nine months ended March 31, 2023, compared to $18.1 million and 4.9% for the prior fiscal year.
Non-GAAP adjusted net income increased to $11.3 million, compared to $10.7 million in the prior year quarter. Non-GAAP adjusted net income margin increased to 8.6%, compared to 8.3% in the prior year quarter (see Exhibit 1 for reconciliation).
Adjusted EBITDA
Non-GAAP adjusted EBITDA increased to $24.4 million, compared to $18.8 million in the prior year quarter (see Exhibit 2 for reconciliation).
Non-GAAP adjusted EBITDA margin increased to 18.5%, compared to 14.6% in the prior year quarter (see Exhibit 2 for reconciliation).
Non-GAAP adjusted EBITDA margin increased to 17.0% for the nine months ended March 31, 2023, compared to 13.0% for the prior fiscal year (see Exhibit 2 for reconciliation).
Earnings Per Share
IFRS fully diluted earnings per share increased to $0.61, compared to $0.35 in the prior year quarter.
Non-GAAP adjusted fully diluted earnings per share increased to $0.59, compared to $0.57 in the prior year quarter.
Cash flow and balance sheet
Cash flow from operations increased to $17.2 million, compared to $12.0 million in the prior year quarter primarily driven by expanded adjusted EBITDA.
Capital expenditures were $3.8 million compared to $6.1 million in the prior year quarter, as we continue to utilize available capacity built out in previous years.
Free cash flow for the third quarter increased to $13.4 million, compared to $5.9 million in the prior year quarter.
Cash and cash equivalents were $43.7 million and availability on our revolving credit facilities of $77.6 million as of March 31, 2023, compared to cash and cash equivalents of $48.8 million and availability on our revolving credit facilities of $50.5 million as of June 30, 2022.
Total borrowings were $0.1 million as of March 31, 2023, compared to total borrowings of $15.0 million as of June 30, 2022.
Fiscal Year 2023 Guidance“We have a high degree of confidence about the trajectory of our business, driven by the growth of our digital first BPO 2.0 business that is delivered out of higher margin regions. Therefore, we expect to drive strong margins on a go forward basis but are cognizant of the impact the macro-economic environment is having on sales cycles and client volumes,” said Karl Gabel, CFO of ibex. “As a result, we are revising our previous guidance for fiscal year 2023 as follows:
Fiscal year 2023 organic revenue between $523 million and $527 million with midpoint growth of 6.4% versus fiscal year 2022.
Fiscal year adjusted EBITDA of $88 million to $90 million with midpoint margin of 17.0%.
Fiscal year 2023 capital expenditures of approximately $19 million.”
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