IBEX Ltd Q3 FY2025 earnings call

• Record revenue of $140.7 million, up 11% from the prior year quarter, with adjusted EBITDA of $19.4 million at a margin of 13.8% and expanded gross margin by 50 basis points.
• Achieved a strategic milestone with entry into the India market for a leading healthcare client.
• Won 4 key new logo opportunities in the quarter, totaling 12 for the year; significant win with a top-tier global e-commerce company providing content moderation and expanding to global English customer support.
• Land and expand strategy in Q3 saw strong growth in top 25 and top 5 clients.
• Wave iX AI solutions had 75 opportunities in the pipeline and 9 deployments expected in Q4 FY 2025; offshore regions grew 19% year over year; digital and omnichannel revenue grew 16% year over year.

Third quarter revenue was $140.7 million, an 11% increase from $126.8 million in the prior year quarter. Revenue growth was driven by vertical growth in health tech (20%), travel, transportation, and logistics (19%), and retail and e-commerce (15%), partially offset by a 12% decline in the fintech vertical. Offshore revenues now comprise 51% of total revenue (up from 48% prior year), contributing to a 50 basis point gross margin improvement to 31.8%. Digital and omnichannel delivery represented 81% of total revenue (up from 78% prior year) and grew 16% year over year.

• Raised full-year 2025 revenue guidance to $540-$545 million (previously $525-$535 million).
• Raised adjusted EBITDA guidance to $68-$70 million (previously $68-$69 million).
• Capital expenditures expected to remain in the range of $15 million to $20 million.
• Launched a new $15 million share repurchase program.

• Matters discussed include forward-looking statements subject to various risks, uncertainties, and other factors that could cause actual results to differ materially from those expected. For a detailed description of risk factors, review the annual report on Form 10-K filed with the U.S. Securities and Exchange Commission in September 2024.

Q: Comment on Q4 sequential trends and future trends A: Bob Dechant and Taylor Greenwald discuss that the sequential decline from Q2 to Q3 will be muted, with a small decline from Q3 to Q4 expected, but momentum continues. They note structural changes in the business and continued market share gains drive this.

Q: Year-over-year margin decline A: Bob Dechant explains that while there was a margin decline in the quarter due to investments in India, the business grew gross margin by 50 basis points year over year from high-margin services. He highlights that AI solutions are expected to be higher margin and position the business for growth.

Q: AI revenue uplift timeline and impact on existing contracts A: Bob Dechant states that AI deployments are moving from pilots to production, starting to generate revenue and margin expansion in Q4 FY 2025 and continuing into FY 2026. Wins have a two-quarter effect of piloting and then moving to full-scale production, with AI automate and AI translate solutions being accretive to revenue.