IBEX Ltd Q1 FY2026 earnings call

• Bob Dechant noted thoughts and prayers for Jamaica affected by Hurricane Melissa and praised ibex Jamaica team's resilience in responding to the hurricane. • Highlighted first quarter revenue growth of 16.5% and adjusted EPS growth of 74%, with sustained double-digit revenue growth. • Mentioned the new logo engine winning trophy clients, progress in AI automate and translation deployments. • Over the last 12 months, organic revenue growth was 13%, adjusted EBITDA nearly $76 million, and record adjusted EPS of $3.17. • Employee Net Promoter Score was 77 (all-time high) and client Net Promoter Score was 71. • Won seven high-profile new opportunities in the last 2 quarters. • Q4 2025 shift to full-scale AI deployments, and added Michael Ringman as CTO to accelerate AI technology roadmap.

First quarter revenue was $151.2 million, an increase of 16.5% from $129.7 million in the prior year quarter. Revenue growth was driven by vertical growth in retail and e-commerce (25%), HealthTech (19.5%), and travel, transportation and logistics (15.4%), partially offset by a decline in telecommunications (22.5%). Fintech vertical grew 3.4%. Highest margin offshore revenues grew 20% in the quarter, nearshore 7%, and onshore 21%. Higher-margin digital and omnichannel services grew to 82% of total revenue. Adjusted EBITDA increased 24.9% to $19.5 million or 12.9% of revenue from $15.6 million or 12.0% of revenue for the same period last year.

• Fiscal 2026 revenue expected to be in the range of $605 million to $620 million, up from $590 million to $610 million. • Adjusted EBITDA expected to be in the range of $78 million to $81 million, up from $75 million to $79 million. • Capital expenditures expected to be in the range of $20 million to $25 million.

• Forward-looking statements are subject to various risks, uncertainties, and other factors from SEC filings. • Impact of Hurricane Melissa on Jamaica, but ibex Jamaica team responded with resilience.

Q: Great job again, and you're doing exactly what you said, winning share with some of the new offerings. So congrats on all that. What have you seen -- we've had this Gen AI kind of swirling around for really a few years now. And is it becoming a catalyst both for the industry and for you guys or more for you than the industry? Or maybe talk a little bit -- maybe also just add in how much of revenue is it now? And maybe where is it going in a few years?

A: Sure. So let me kind of break those up into two parts, Dave, if that's okay. When I look at through the ibex lens, the whole AI, the excitement and also the risks that people have talked about this relative to this industry. I think for ibex, it's been all positive. And let me explain on that a little bit. We have leaned in harder, faster, I believe, than anybody in the industry on AI. And that's -- I would say, there's two dimensions to that. One where we are deploying AI internally to help us execute better, to provide tools and capabilities for our agents to deliver better for our teams to run the business more effectively, efficiently and drive better performance on our client KPIs. We're further along than anybody. And that's why I think one of the reasons we continue to outperform and then take significant market share. So that is a boom for ibex because of what we are doing above and beyond anybody else. On the other side, the second dimension I look is the -- more around using AI for customer experiences, right, where you automate experiences, AI for language translation, et cetera. Again, I think that we have leaned further into that than anybody else. We're not afraid of what that might do to our business. I feel like much of the market is very cautious and hesitant about leaning in. We're leaning in and our clients are seeing that we have a unique end-to-end model that really goes from AI all the way through to a human agent to provide an integrated and seamless solution for them. To me, I think that puts us in a really ideal position. And when clients are making decisions, they look at that and they say, this is the type of partner that we want because not only can they execute today on the BPO side, but they're looking forward and they're future-proofed basically in their model. They can -- we can grow and evolve with them as AI gets deployed more. So it's a real competitive advantage for us, Dave. And I believe that, that's something that is when you look at what our results are, when you look at the growth rates that we're doing, the margin expansion, et cetera, I think that's an output of that. Now to your question about how much of that is? We're still real early in the game. So it's not moving the needle on a whole lot of revenue and margin expansion yet, but we're positioned well. And we expect probably by the end of fourth quarter of this year and into FY '27, you'll start seeing that being another vector of growth and margin expansion that will move the needle for us.

Q: Gross margins were a little down in Q1, and I think you're holding full year margin about intact. You're raising revenue, raising EBITDA, but margin about intact. Is that -- is some of this a function of just all the investment going into AI? And I know your benefits from offshoring and AI ultimately is better margin, but maybe right now, it's a little lower as you invest?

A: Yes, Taylor, I'll throw that over to you. Yes. No, absolutely. So you're right. Our margins are -- for the year, we're projecting our EBITDA margin to be about 13%. So that's up a bit from the prior year. And what you're seeing and what we're seeing is we're getting a lot of operating leverage out of our SG&A costs because we're able to hold our SG&A costs relatively flat while our revenue is growing at a much faster pace. So seeing good leverage on the SG&A line. Gross margins are down a bit, particularly in Q1 and a bit in Q2, and you saw it in Q1. And really, a couple of impacts there. One, where as you know, we're ramping in India, so still making investments and aren't at the long-term margins we anticipate that we'll get to in India. And then probably more impactful in Q1 and Q2, it's a good problem to have. We have more wins, which mean more training revenue. And as you know, we defer the train revenue, but experience the costs upfront. So we are seeing a little bit of headwind on the gross margin line on that as well. But long term, we feel very good about gross margin, as Bob said, the vectors of growth in terms of the offshore geographies and then once we start getting a more meaningful impact from AI should certainly have a positive long-term trend on gross margins.