Part I [Business](index=4&type=section&id=Item%201.%20Business) Startek is a global CX solutions provider serving diverse industries, with a majority ownership by Capital Square Partners [Business Overview](index=4&type=section&id=BUSINESS%20OVERVIEW) Startek provides global CX solutions to over 140 clients, with a significant ownership stake held by Capital Square Partners - Startek is a global customer experience (CX) solution provider with **over 33,000 employees** delivering services in 11 countries for **over 140 clients**[11](index=11&type=chunk)[13](index=13&type=chunk) - In July 2018, the company was acquired by Aegis, resulting in **Capital Square Partners (CSP) owning approximately 56%** of the company's outstanding shares[12](index=12&type=chunk) - The company has long-term relationships with key clients, with the top five clients having an **average relationship of more than nine years**[13](index=13&type=chunk) - For the reporting year, the company has classified its Middle East and Argentina operations as **'Held for Sale and Discontinued Operations'**[14](index=14&type=chunk) [Service Offerings](index=6&type=section&id=Service%20Offerings) The company provides a wide array of configurable and technology-driven CX and back-office solutions - Offers a broad range of CX, technology, and back-office support solutions[17](index=17&type=chunk) - Key service offerings include: - **Customer Engagement:** Omnichannel solutions combining live agents and digital interactions - **Social Media:** Management and analytics using the proprietary Startek LISA platform - **Customer Intelligence Analytics:** Leveraging data and technology to drive transformation - **Work from Home (WFH):** Secure, cloud-enabled virtual desktop solutions - **Startek Cloud:** A hybrid, omni-cloud platform enabling remote agent work - **Back Office Services:** Finance, accounting, HR processing, and data management[18](index=18&type=chunk)[20](index=20&type=chunk)[21](index=21&type=chunk)[22](index=22&type=chunk)[23](index=23&type=chunk)[24](index=24&type=chunk) [Our Clients](index=8&type=section&id=Our%20Clients) The company serves over 140 clients with significant revenue concentration in the telecom sector and its top ten clients Revenue by Industry (Year Ended Dec 31, 2022) | Industry | Percentage of Revenue | | :--- | :--- | | Telecom | 26% | | E-commerce & Consumer | 20% | | Financial & Business Services | 14% | | Media & Cable | 13% | | Travel & Hospitality | 13% | | Healthcare & Education | 8% | | Technology, IT & Related | 3% | | Other verticals | 3% | Client Revenue Concentration (Year Ended Dec 31, 2022) | Client Group | Percentage of Total Revenue | | :--- | :--- | | Largest Client | 10% | | Top 5 Clients | 36% | | Top 10 Clients | 54% | [Key Competitive Differentiators](index=8&type=section&id=Key%20Competitive%20Differentiators) Startek's competitive advantages stem from its global scale, CX design expertise, and large skilled workforce - Key differentiators include: - **Scale and Global Footprint:** A global business with a local approach, offering onshore, nearshore, and offshore delivery - **Customer Experience and Design:** Integrated omnichannel offerings to build brand loyalty - **Customer Lifecycle Management:** End-to-end multilingual solutions across the customer journey - **Process Innovation and Optimization:** Automating business processes using global best practices - **Technological Excellence:** Stable, centralized infrastructure enabling innovative offerings like chatbots and AI - **Operational Excellence:** Consistent service delivery through a core operating platform - **Human Capital:** A diverse and skilled workforce of approximately 33,000 employees as of December 31, 2022[31](index=31&type=chunk)[32](index=32&type=chunk)[33](index=33&type=chunk)[34](index=34&type=chunk)[35](index=35&type=chunk)[36](index=36&type=chunk)[37](index=37&type=chunk)[38](index=38&type=chunk) [Strategy](index=9&type=section&id=Strategy) The company's strategy centers on deepening client relationships, expanding in key markets, and improving profitability - The company's core strategies include: - Deepening relationships with existing global clients - Expanding market share in the U.S. within cable, media, telecom, travel, and e-commerce - Pursuing new clients in high-growth, customer-centric industries - Improving profitability through operational improvements and increased utilization - Broadening service offerings with innovative, technology-enabled solutions[40](index=40&type=chunk) [Competition](index=11&type=section&id=Competition) The company competes in a fragmented CXM market against larger firms by positioning itself as more agile and innovative - The CXM market is competitive and fragmented, with the five largest competitors capturing **less than 20% of the global market**[44](index=44&type=chunk) - Primary competitors include Alorica, Concentrix, Sitel Group, TTEC, Teleperformance, and Transcom, as well as IT service firms like Accenture, Conduent, Infosys, Tech Mahindra, and Wipro[45](index=45&type=chunk) - Startek is recognized by Everest Group as one of only 14 providers with the capabilities to effectively support global CX delivery, often chosen for its **innovation and flexibility** over larger players[46](index=46&type=chunk) [Risk Factors](index=12&type=section&id=Item%201A.%20Risk%20Factors) The company faces risks from client concentration, industry dependence, talent retention, and majority shareholder influence [Market and Client Related Risks](index=12&type=section&id=Market%20and%20Client%20Related%20Risks) Revenue is highly concentrated with top clients and the telecom sector, coupled with short-term terminable contracts - A substantial portion of revenue is generated by a limited number of clients; in 2022, the largest client, top five, and top ten clients represented **10%, 36%, and 54% of total revenue**, respectively[52](index=52&type=chunk)[53](index=53&type=chunk) - The company is heavily dependent on the telecom industry, which accounted for **26% of total revenues in 2022**[56](index=56&type=chunk) - Client contracts typically do not contain minimum purchase requirements and can be terminated with **30 to 90 days' notice** without penalty[60](index=60&type=chunk) - The outsourcing services market is highly competitive, with rivals including large global firms, regional providers, and in-house departments[62](index=62&type=chunk)[63](index=63&type=chunk) [Risks Arising From Investments and Growth](index=14&type=section&id=Risks%20Arising%20From%20the%20Investments%20We%20Make%20in%20Anticipation%20of%20and%20To%20Maintain%20Our%20Growth) Growth is subject to risks from technology investments, facility utilization, and goodwill impairment - The business relies heavily on technology; failure to invest in and develop new technologies like AI and automation could harm competitiveness[65](index=65&type=chunk)[66](index=66&type=chunk) - Profitability is influenced by facility capacity utilization, and failure to maximize it can adversely affect operating results[67](index=67&type=chunk) - A **goodwill impairment of $8.05 million** was recognized in the current year, triggered by an increase in the WACC assumption[72](index=72&type=chunk) - The planned sale of the company's interest in its Saudi Arabian joint venture is subject to closing conditions and may not occur, which could significantly hamper operations in that region[70](index=70&type=chunk) [Operations Related Risks](index=15&type=section&id=Operations%20Related%20Risks) The people-intensive business faces high employee turnover, labor disputes, currency fluctuations, and debt covenants - The business is people-intensive and experiences **high employee turnover**, making the recruitment and retention of qualified employees a significant challenge and cost[75](index=75&type=chunk) - Employee strikes and collective bargaining agreements, particularly in geographies like Argentina, pose a risk of operational disruption and increased wage costs[79](index=79&type=chunk) - Foreign operations expose the company to currency exchange fluctuations, as revenues are sometimes generated in U.S. dollars while operating costs are in local currencies[84](index=84&type=chunk) - As of December 31, 2022, the company had **total indebtedness of $176 million**, which may affect operational flexibility and requires significant cash flow for debt service[91](index=91&type=chunk) - Financing agreements impose debt covenants that, if not met, could limit the company's ability to make investments, incur additional debt, or engage in M&A[92](index=92&type=chunk) [Regulatory and Related Risks](index=18&type=section&id=Regulatory%20and%20Related%20Risks) The company is exposed to data privacy laws, cybersecurity threats, and political instability in foreign markets - Cyberattacks or the improper disclosure of personal information could result in liability and harm the company's reputation; a cyberattack was experienced in 2021, though damages were mitigated[95](index=95&type=chunk)[99](index=99&type=chunk) - **Approximately 87% of revenue ($334 million)** in 2022 was generated from operations outside the U.S., exposing the company to foreign political, economic, and regulatory risks[100](index=100&type=chunk) - The company must comply with various data privacy laws such as HIPAA and GDPR, with failures potentially leading to significant liabilities[95](index=95&type=chunk)[104](index=104&type=chunk) - Operations in Argentina, which accounted for **4.7% of 2022 revenue**, face risks from significant political and economic instability, high inflation, and currency depreciation[105](index=105&type=chunk) [Market Related Risks](index=21&type=section&id=Market%20Related%20Risks) Majority shareholder CSP has significant control, and the company's stock is volatile with low trading volume - **Capital Square Partners (CSP) is the principal shareholder, owning approximately 56%** of outstanding stock, giving it significant influence over corporate actions and the election of a majority of directors[108](index=108&type=chunk)[109](index=109&type=chunk) - The company's common stock has been volatile and trades at relatively low volumes, making its market price subject to wide fluctuations[112](index=112&type=chunk) [Properties](index=23&type=section&id=Item%202.%20Properties) The company operates 33 facilities totaling 1.8 million square feet across 10 countries, with most being leased Operating Facilities by Country (as of Dec 31, 2022) | Country | Number of Facilities | Total Sq. Ft. (Thousands) | | :--- | :--- | :--- | | US | 4 | 175 | | Philippines | 3 | 159 | | Honduras | 2 | 191 | | Caribbean | 1 | 65 | | India | 14 | 889 | | Malaysia | 2 | 125 | | Sri Lanka | 2 | 28 | | Peru | 1 | 19 | | South Africa | 3 | 110 | | Australia | 1 | 43 | | **Total** | **33** | **1,804** | - All facilities are leased except for one owned site in India[115](index=115&type=chunk) [Legal Proceedings](index=23&type=section&id=Item%203.%20Legal%20Proceedings) The company reported no legal proceedings - None[117](index=117&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=23&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's stock (NYSE: SRT) has 40.3 million shares outstanding, with no dividends planned and active share repurchases - The company's common stock is listed on the NYSE under the symbol "SRT"; as of March 20, 2023, there were **40,288,461 shares outstanding**[120](index=120&type=chunk)[121](index=121&type=chunk) - The company has not paid a dividend since November 2006 and does not plan to declare dividends in the near future[123](index=123&type=chunk) - During 2022, the company repurchased **426,455 shares** of its common stock at an average cost of **$4.29 per share**[126](index=126&type=chunk)[127](index=127&type=chunk) - As of December 31, 2022, approximately **$268,158 remained available** for future purchases under the stock repurchase program[127](index=127&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) 2022 revenue from continuing operations fell 18.1% to $385.1 million, resulting in a net loss of $0.3 million amid divestitures [SIGNIFICANT DEVELOPMENTS](index=26&type=section&id=SIGNIFICANT%20DEVELOPMENTS) Key 2022 events include strategic divestitures, redemption of the CSS Corp investment, and rejection of a take-private offer - The company accepted an offer to sell its 51% ownership in its Saudi Arabian subsidiary (CCC) and is exploring the sale of Aegis Argentina; both have been classified as **discontinued operations**[134](index=134&type=chunk)[135](index=135&type=chunk)[136](index=136&type=chunk) - A special committee rejected a non-binding proposal from majority shareholder CSP to acquire all outstanding shares; the company incurred **$2.87 million in expenses** related to this private offer[132](index=132&type=chunk)[133](index=133&type=chunk) - The company redeemed its minority investment in CSS Corp. LP for a **cash price of $45.6 million**[137](index=137&type=chunk) - The company repurchased **426,445 shares** of its common stock at an average cost of **$4.29 per share** during the year[131](index=131&type=chunk) [RESULTS OF CONTINUING OPERATIONS — YEAR ENDED DECEMBER 31, 2022, AND 2021](index=28&type=section&id=RESULTS%20OF%20CONTINUING%20OPERATIONS%20%E2%80%94%20YEAR%20ENDED%20DECEMBER%2031%2C%202022%2C%20AND%202021) 2022 revenue fell 18.1% to $385.1 million, resulting in an operating loss of $0.7 million due to higher SG&A and impairment Financial Performance from Continuing Operations (in thousands) | Metric | 2022 | 2021 | | :--- | :--- | :--- | | Net Revenue | $385,074 | $470,329 | | Gross Profit | $57,797 | $64,798 | | Gross Margin | 15% | 14% | | Operating Income (Loss) | ($707) | $15,888 | | Income (Loss) from Continuing Ops | ($285) | ($1,093) | - The decline in revenue in the Americas region was mainly due to the high base impact from a short-term government COVID vaccination support program **($25 million)** in the previous year[145](index=145&type=chunk) - SG&A expenses increased to 13% of revenue from 9% in the prior year, partly due to **$2.87 million in costs** related to the rejected private offer[154](index=154&type=chunk)[133](index=133&type=chunk) - The company recorded impairment and restructuring costs of $9.8 million, primarily from an **$8.1 million goodwill impairment charge** due to increased WACC assumptions[155](index=155&type=chunk) - A **gain of $8.5 million** was recognized on the redemption of the company's investment in CSS Corp LP[156](index=156&type=chunk) [INCOME FROM DISCONTINUED OPERATIONS](index=31&type=section&id=INCOME%20FROM%20DISCONTINUED%20OPERATIONS) Discontinued operations in Saudi Arabia and Argentina generated a combined net income of $4.5 million in 2022 Net Income from Discontinued Operations (in thousands) | Metric | 2022 | 2021 | | :--- | :--- | :--- | | Income from Discontinued Operations | $4,516 | $10,819 | - Saudi Arabia (CCC) operations saw revenue increase to **$244.3 million** in 2022 from $201.2 million in 2021, but gross margin decreased from 16% to 13%[160](index=160&type=chunk)[162](index=162&type=chunk) - Argentina operations revenue decreased to **$30.6 million** in 2022 from $32.1 million in 2021, largely due to significant depreciation of the Argentine Peso; the segment reported a negative gross margin for the year[164](index=164&type=chunk)[165](index=165&type=chunk) [LIQUIDITY AND CAPITAL RESOURCES](index=32&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) Cash increased to $72.4 million, boosted by a $45.6 million investment redemption, with total debt at $176 million Cash and Debt Position (in thousands, as of Dec 31) | Metric | 2022 | 2021 | | :--- | :--- | :--- | | Cash, cash equivalents, and restricted cash | $72,404 | $34,083 | | Total Indebtedness | $176,000 | $169,855 | Cash Flow Summary (in thousands, for year ended Dec 31) | Cash Flow Activity | 2022 | 2021 | | :--- | :--- | :--- | | Operating | $8,212 | $18,151 | | Investing | $33,655 | ($37,823) | | Financing | $2,903 | $22,003 | - The increase in cash was primarily driven by **$45.7 million in proceeds** from the redemption of the investment in CSS Corp. LP[172](index=172&type=chunk) [CRITICAL ACCOUNTING POLICIES AND ESTIMATES](index=35&type=section&id=CRITICAL%20ACCOUNTING%20POLICIES%20AND%20ESTIMATES) Goodwill impairment is a critical policy, with an $8.05 million charge recognized in 2022 due to increased WACC - Goodwill is tested for impairment annually or when circumstances warrant; the company performs a quantitative assessment if it is more likely than not that a reporting unit's fair value is less than its carrying amount[181](index=181&type=chunk) - The annual impairment test for 2022 resulted in an **impairment charge of $4.19 million in the Americas and $3.87 million in the Malaysia** reporting units, mainly due to a sharp increase in WACC assumptions[181](index=181&type=chunk) [Financial Statements and Supplementary Data](index=36&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section contains audited 2022/2021 financials with an unqualified opinion; goodwill assessment is a critical audit matter Consolidated Income Statement Highlights (in thousands) | Metric | 2022 | 2021 | | :--- | :--- | :--- | | Net Revenue | $385,074 | $470,329 | | Gross Profit | $57,797 | $64,798 | | Operating Income (Loss) | ($707) | $15,888 | | Income (Loss) from Continuing Operations | ($285) | ($1,093) | | Income from Discontinued Operations | $4,516 | $10,819 | | Net Income Attributable to Startek | ($2,259) | $1,500 | | Diluted EPS (Continuing Ops) | ($0.01) | ($0.02) | | Diluted EPS (Discontinued Ops) | ($0.05) | $0.06 | | **Total Diluted EPS** | **($0.06)** | **$0.04** | Consolidated Balance Sheet Highlights (in thousands) | Metric | Dec 31, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Total Current Assets | $355,738 | $225,018 | | Total Assets | $626,043 | $642,475 | | Total Current Liabilities | $288,461 | $148,267 | | Total Liabilities | $374,477 | $389,155 | | Total Stockholders' Equity | $251,566 | $253,320 | - The independent auditor, BDO India LLP, identified the **assessment of the recoverability of goodwill as a critical audit matter** due to the subjective judgments involved in management's assumptions[189](index=189&type=chunk)[191](index=191&type=chunk) [Controls and Procedures](index=86&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal controls over financial reporting were effective as of year-end - Management, including the CEO and CFO, concluded that the company's **disclosure controls and procedures were effective** as of December 31, 2022[387](index=387&type=chunk)[389](index=389&type=chunk) - Management concluded that the company's **internal control over financial reporting was effective** as of December 31, 2022, based on the COSO 2013 framework[390](index=390&type=chunk) - No changes in internal control over financial reporting occurred during the fourth quarter of 2022 that materially affected, or are reasonably likely to materially affect, internal controls[391](index=391&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=87&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) This section details the board, executive team, and governance policies, noting CSP's board representation - The Board of Directors as of December 31, 2022, includes representatives from majority shareholder **Capital Square Partners (CSP)** such as Sanjay Chakrabarty and Mukesh Sharda, as well as independent directors[397](index=397&type=chunk)[398](index=398&type=chunk) - Bharat Rao was appointed CEO effective January 27, 2022, succeeding Aparup Sengupta[400](index=400&type=chunk)[410](index=410&type=chunk) - Nishit Shah was appointed Global Chief Financial Officer effective February 1, 2022[411](index=411&type=chunk)[413](index=413&type=chunk) - The Audit Committee is composed of **three independent directors**: Mr. Schafer (Chairman), Mr. Aboody, and Mr. Balasubramanian[407](index=407&type=chunk) - There were two instances of late Form 4 filings by insiders during the 2022 fiscal year[409](index=409&type=chunk) [Executive Compensation](index=90&type=section&id=Item%2011.%20Executive%20Compensation) This section discloses compensation for named executives, with CEO Bharat Rao's 2022 total compensation at $1.03 million 2022 Summary Compensation Table (Select Officers) | Name and Principal Position | Year | Salary ($) | Bonus ($) | Option Awards ($) | Total ($) | | :--- | :--- | :--- | :--- | :--- | :--- | | Bharat Rao, Global CEO | 2022 | 618,606 | - | 379,849 | 1,028,293 | | Aparup Sengupta, former CEO | 2022 | 43,706 | 557,953 | 24,000 | 655,944 | | Nishit Shah, CFO | 2022 | 274,577 | 159,124 | 74,972 | 525,879 | | SM Gupta, Global Chief People Officer | 2022 | 380,000 | 152,920 | 87,450 | 620,793 | - CEO Bharat Rao's employment agreement includes an annual base salary of **$812,713** and a target annual bonus of **100% of base salary**[441](index=441&type=chunk) - Non-employee directors are compensated with quarterly equity awards valued at **$22,500**, which can be taken as stock options, common stock, or deferred stock units[453](index=453&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=99&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) CSP Management Ltd. is the largest shareholder with 56.0% beneficial ownership of the company's common stock Principal Stockholders (as of March 1, 2023) | Name of Beneficial Owner | Percentage of Class | | :--- | :--- | | CSP Management Ltd. | 56.0% | | Steven D. Lebowitz | 7.8% | | MCI Capital, LC | 7.4% | | A. Emmet Stephenson, Jr. | 7.2% | - As of December 31, 2022, there were **969,811 securities available for future issuance** under equity compensation plans approved by stockholders[455](index=455&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=101&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) This section highlights the company's 'controlled company' status by CSP and key related-party transactions - The Board has determined that **four of its members are 'independent'** under NYSE regulations[471](index=471&type=chunk) - Aegis pays an annual management fee of **$400,000** to its stockholder, an entity controlled by majority owner CSP, for management and advisory services[472](index=472&type=chunk) - In 2022, the company sold its investment in CSS Corp LP to CSP Fund II LP, an affiliate of its majority shareholder, for a cash price of **$45.6 million**[475](index=475&type=chunk) - The Stockholders Agreement grants the Aegis Stockholder (CSP) the right to appoint a majority of the Board of Directors as long as its **ownership exceeds 50%**[477](index=477&type=chunk) [Principal Accounting Fees and Services](index=103&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) BDO India LLP received $560,000 in 2022, exclusively for audit-related services Audit and Non-Audit Fees (2022) | Fee Category | Amount | | :--- | :--- | | Audit fees | $560,000 | | **Total** | **$560,000**| - All fees were for audit services, including the audit of annual financial statements, internal controls, and reviews of quarterly reports on Form 10-Q[484](index=484&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=104&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists all documents filed with the Form 10-K, including material contracts and executive certifications - Lists all exhibits filed with the Form 10-K, including financial statements and schedules[487](index=487&type=chunk) - Key exhibits include governance documents, material contracts such as the Aegis Transaction Agreement and Stockholders Agreement, debt agreements, and executive compensation plans and agreements[487](index=487&type=chunk)[488](index=488&type=chunk)[489](index=489&type=chunk) - Includes required certifications from the CEO and CFO under Sections 302 and 906 of the Sarbanes-Oxley Act[489](index=489&type=chunk)

PART I - FINANCIAL INFORMATION [Financial Statements](index=5&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) Unaudited consolidated financial statements for Q3 and YTD September 2022 show decreases in revenue, assets, liabilities, and operating cash flow Consolidated Statement of Income (Loss) Highlights (in thousands) | Metric | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | **Net Revenue** | $163,135 | $172,787 | $498,093 | $524,888 | | **Gross Profit** | $23,117 | $21,523 | $60,901 | $70,764 | | **Operating Income** | $5,596 | $8,339 | $11,604 | $29,232 | | **Net Income** | $2,264 | $3,122 | $5,178 | $1,387 | | **Net Income Attributable to Startek Shareholders** | $243 | $76 | $867 | $(5,194) | | **Diluted EPS** | $0.01 | $0.00 | $0.02 | $(0.13) | Consolidated Balance Sheet Highlights (in thousands) | Metric | September 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | **Total Current Assets** | $223,699 | $225,018 | | **Total Assets** | $612,334 | $642,475 | | **Total Current Liabilities** | $152,988 | $147,629 | | **Total Liabilities** | $361,544 | $389,155 | | **Total Stockholders' Equity** | $250,790 | $253,320 | Consolidated Statement of Cash Flows Highlights (in thousands) | Metric | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $21,324 | $31,032 | | **Net cash used in investing activities** | $(10,994) | $(41,256) | | **Net cash (used in) / provided by financing activities** | $(1,962) | $24,091 | | **Cash and cash equivalents at end of period** | $51,703 | $56,840 | [Note 1: Overview and Basis of Preparation](index=13&type=section&id=Note%201%20Overview%20and%20Basis%20of%20Preparation) Startek provides global technology-enabled business process management solutions, serving over 170 clients across 13 countries - Startek provides technology-enabled business process management solutions, including omni-channel customer experience and digital transformation services[29](index=29&type=chunk) - The company operates with over **44,000 employees** in **36 delivery campuses** across **13 countries**, serving over **170 clients**[29](index=29&type=chunk)[30](index=30&type=chunk) [Note 3: Goodwill and Intangible Assets](index=19&type=section&id=Note%203%20Goodwill%20and%20Intangible%20Assets) Goodwill remained unchanged at **$183.4 million**, with net intangible assets decreasing to **$82.3 million** due to amortization and no impairment Goodwill and Intangible Assets (in thousands) | Asset | September 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | **Goodwill** | $183,397 | $183,397 | | **Net Intangible Assets** | $82,347 | $90,092 | - A qualitative assessment as of September 30, 2022, concluded that there was **no impairment** of goodwill or intangible assets[65](index=65&type=chunk)[66](index=66&type=chunk) [Note 4: Revenue](index=21&type=section&id=Note%204%20Revenue) Revenue from customer care services saw Telecom as the largest contributor, while Healthcare & Education and Media & Cable verticals experienced significant declines Revenue by Industry Vertical (Nine Months Ended Sep 30, in thousands) | Vertical | 2022 | 2021 | | :--- | :--- | :--- | | Telecom | $174,565 | $161,961 | | E-commerce & Consumer | $59,966 | $74,757 | | Financial & Business Services | $52,312 | $48,374 | | Media & Cable | $45,139 | $72,435 | | Travel & Hospitality | $41,238 | $33,066 | | Healthcare & Education | $26,348 | $73,020 | | **Total Gross Revenue** | **$498,093** | **$525,879** | [Note 6: Impairment Losses and Restructuring/Exit Cost](index=23&type=section&id=Note%206%20Impairment%20Losses%20and%20Restructuring%20%2F%20Exit%20cost) The company recorded **$3.15 million** in restructuring costs for facility closures in Argentina and the Philippines, with **$0.54 million** remaining to be paid - For the nine months ended September 30, 2022, the company accrued **$3.15 million** in restructuring costs, primarily from closing facilities in Argentina and the Philippines[83](index=83&type=chunk)[84](index=84&type=chunk) - The remaining accrued restructuring cost as of September 30, 2022, was **$543 thousand**, which is expected to be paid by the end of Q4 2022[83](index=83&type=chunk)[85](index=85&type=chunk) [Note 9: Debt](index=27&type=section&id=Note%209%20Debt) Total debt was **$169.6 million** as of September 30, 2022, with the company in compliance with all financial covenants following a **$185 million** debt refinancing Debt Summary (in thousands) | Debt Category | September 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Short term debt & Current portion of long term debt | $27,074 | $9,852 | | Long term debt | $142,515 | $160,175 | | **Total Debt** | **$169,589** | **$170,027** | - In February 2021, the company secured a **$185 million** senior debt facility, comprising a **$165 million** term loan and a **$20 million** revolving credit facility[97](index=97&type=chunk) - The company utilizes non-recourse factoring agreements to sell certain accounts receivable, with **$15.8 million** factored as of September 30, 2022[103](index=103&type=chunk) [Note 12: Segment Reporting](index=32&type=section&id=Note%2012%20Segment%20Reporting) The Middle East segment was the largest revenue contributor and grew significantly, while the Americas segment declined, with a single client accounting for **18%** of consolidated net revenue Revenue by Segment (Nine Months Ended Sep 30, in thousands) | Segment | 2022 | 2021 | | :--- | :--- | :--- | | Americas | $126,811 | $203,348 | | India & Sri Lanka | $82,112 | $75,032 | | Malaysia | $34,068 | $41,502 | | Middle East | $181,680 | $143,783 | | Argentina & Peru | $26,895 | $27,060 | | Rest of World | $46,527 | $34,163 | | **Total** | **$498,093** | **$524,888** | - A single client accounted for **18%** of consolidated total net revenue during the nine months ended September 30, 2022 and 2021[114](index=114&type=chunk) [Note 14: Investment in Equity-Accounted Investees](index=36&type=section&id=Note%2014%20Investment%20in%20Equity-Accounted%20Investees) The company's equity-method investment in CSS Corp LP increased to **$35.8 million** as of September 30, 2022, reflecting its share of income - The company holds a **61.35% ownership interest** in CSS Corp LP, which is accounted for as an equity-method investment[122](index=122&type=chunk)[123](index=123&type=chunk) Investment in CSS Corp LP (in thousands) | Metric | September 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | **Carrying Amount** | $35,810 | $31,688 | - The company's share of income from equity-accounted investees was **$4.1 million** for the nine months ended September 30, 2022[122](index=122&type=chunk) [Note 15: Common Stock](index=38&type=section&id=Note%2015%20Common%20Stock) The company repurchased **370,133 shares** of common stock for approximately **$1.6 million** during the nine months ended September 30, 2022 - During the nine months ended September 30, 2022, the company repurchased **370,133 shares** of common stock[133](index=133&type=chunk) - The average price paid per share was **$4.4**, for a total repurchase value of approximately **$1.64 million**[133](index=133&type=chunk) [Note 16: Private Offer Transaction Cost](index=39&type=section&id=Note%2016%20Private%20Offer%20Transaction%20Cost) The company incurred **$2.6 million** in expenses for financial and legal advisors related to a rejected and withdrawn non-binding acquisition proposal - A special committee was formed to evaluate a non-binding acquisition proposal from CSP Management Limited[134](index=134&type=chunk) - The company incurred total expenses of **$2,603 thousand** during the nine months ended September 30, 2022, related to the private offer[134](index=134&type=chunk) - The special committee rejected the proposal, which was subsequently withdrawn by CSP, and the committee was dissolved[135](index=135&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=40&type=section&id=ITEM%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q3 and YTD September 2022 financial results, highlighting revenue declines, gross margin impacts, and costs from a withdrawn take-private offer [Results of Operations — Three Months Ended September 30, 2022 and 2021](index=40&type=section&id=Results%20of%20Operations%20%E2%80%94%20Three%20Months%20Ended%20September%2030%2C%202022%20and%202021) Q3 2022 net revenue decreased by **5.6%** due to Americas client insourcing, with gross margin improving to **14.2%**, but operating income declined due to higher SG&A Q3 2022 vs Q3 2021 Performance (in thousands) | Metric | Q3 2022 | Q3 2021 | Change (%) | | :--- | :--- | :--- | :--- | | **Net Revenue** | $163,135 | $172,787 | (5.6%) | | **Gross Profit** | $23,117 | $21,523 | 7.4% | | **Gross Margin** | 14.2% | 12.5% | +1.7 p.p. | | **Operating Income** | $5,596 | $8,339 | (32.9%) | - The revenue decline in the Americas was primarily due to a client in the media vertical insourcing its operations[144](index=144&type=chunk) - Gross margin improved due to a change in geography mix with higher revenues from higher-margin offshore and nearshore delivery, and rationalization of facility rent costs[153](index=153&type=chunk)[154](index=154&type=chunk)[157](index=157&type=chunk) - SG&A expenses increased to **10.1% of revenue** from **7.6%** in the prior year, including **$1.4 million** in costs related to the take-private transaction[159](index=159&type=chunk) [Results of Operations — Nine Months Ended September 30, 2022 and 2021](index=44&type=section&id=Results%20of%20Operations%20%E2%80%94%20Nine%20Months%20Ended%20September%2030%2C%202022%20and%202021) YTD 2022 net revenue decreased by **5.1%** due to Americas impacts, gross margin contracted to **12.2%** from wage inflation, and operating income significantly dropped due to higher SG&A YTD 2022 vs YTD 2021 Performance (in thousands) | Metric | YTD 2022 | YTD 2021 | Change (%) | | :--- | :--- | :--- | :--- | | **Net Revenue** | $498,093 | $524,888 | (5.1%) | | **Gross Profit** | $60,901 | $70,764 | (13.9%) | | **Gross Margin** | 12.2% | 13.5% | -1.3 p.p. | | **Operating Income** | $11,604 | $29,232 | (60.3%) | - The revenue decline in the Americas was due to the high base impact from a short-term government COVID vaccination program in the prior year and client insourcing[166](index=166&type=chunk) - Gross margin decreased primarily due to inflation-led wage increases and an increase in outsourcing costs[176](index=176&type=chunk)[179](index=179&type=chunk) - SG&A expenses for the period included **$2.6 million** in costs related to the take-private transaction[181](index=181&type=chunk) [Liquidity and Capital Resources](index=49&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) Liquidity is supported by cash from operations and debt facilities, with cash and equivalents increasing to **$61.3 million**, despite a decrease in operating cash flow - Primary sources of liquidity are cash from operations, working capital facilities, and term debt[186](index=186&type=chunk) Cash Flow Summary (Nine Months Ended Sep 30, in thousands) | Flow | 2022 | 2021 | | :--- | :--- | :--- | | **Operating Activities** | $21,324 | $31,032 | | **Investing Activities** | $(10,994) | $(41,256) | | **Financing Activities** | $(1,962) | $24,091 | - Cash used in investing activities decreased significantly as the prior year included a **$25 million** investment in CSS Corp and a **$3 million** payment for a call option premium[189](index=189&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=50&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a Smaller Reporting Company, Startek is not required to provide this disclosure - As a Smaller Reporting Company, Startek is not required to provide this disclosure[197](index=197&type=chunk) [Controls and Procedures](index=50&type=section&id=ITEM%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective, with no material changes to internal control over financial reporting during the quarter - Management concluded that disclosure controls and procedures were effective as of September 30, 2022[198](index=198&type=chunk) - No material changes were made to the company's internal control over financial reporting during the third quarter of 2022[199](index=199&type=chunk) PART II - OTHER INFORMATION [Legal Proceedings](index=51&type=section&id=ITEM%201.%20Legal%20proceeding) The company reported no legal proceedings during the period - There are no legal proceedings to report[201](index=201&type=chunk) [Risk Factors](index=51&type=section&id=ITEM%201A.%20Risk%20Factors) No material changes to risk factors from the Annual Report on Form 10-K for the fiscal year ended December 31, 2021 - No material changes to risk factors from the Annual Report on Form 10-K for the fiscal year ended December 31, 2021[202](index=202&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=51&type=section&id=ITEM%202.%20Unregistered%20sales%20of%20equity%20securities%20and%20use%20of%20proceeds) The company repurchased **370,133 shares** of common stock for approximately **$1.6 million** under its authorized stock repurchase plan - The company has a stock repurchase plan, originally announced in 2004, authorizing up to **$25 million** in repurchases[203](index=203&type=chunk) Stock Repurchase Activity (Nine Months Ended Sep 30, 2022) | Period | Total Shares Purchased | Average Price Paid ($) | | :--- | :--- | :--- | | Jan 2022 | 130,803 | 5.08 | | Feb 2022 | 75,865 | 4.90 | | Mar 2022 | 52,739 | 4.36 | | May 2022 | 20,000 | 3.15 | | Sep 2022 | 90,726 | 3.31 | | **Total** | **370,133** | **4.4 (approx.)** | [Other Information](index=51&type=section&id=ITEM%205.%20Other%20Information) The company reported no other information for this item - There is no other information to report[209](index=209&type=chunk)

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2022 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 1-12793 StarTek, Inc. (Exact name of registrant as specified in its charter) (State or other jurisdiction of (I.R.S ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2022 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 1-12793 Startek, Inc. (Exact name of registrant as specified in its charter) Delaware 84-1370538 (State or other j ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the year ended December 31, 2021 Commission file number 1-12793 Startek, Inc. (Exact name of registrant as specified in its charter) (State or other jurisdiction of (I.R.S. employer incorporation or organization) Identification No.) 6 ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2021 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 1-12793 StarTek, Inc. (Exact name of registrant as specified in its charter) Delaware 84-1370538 (State or oth ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2021 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 1-12793 StarTek, Inc. (Exact name of registrant as specified in its charter) Delaware 84-1370538 (State or other ju ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2021 or StarTek, Inc. (Exact name of registrant as specified in its charter) Delaware 84-1370538 (State or other jurisdiction of (I.R.S. employer incorporation or organization) Identification No.) 6200 South Syracuse Way, Suite 485 Greenwood Village, Colorado 80111 (Add ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the year ended December 31, 2020 Commission file number 1-12793 StarTek, Inc. (Exact name of registrant as specified in its charter) Delaware 84-1370538 (State or other jurisdiction of (I.R.S. employer incorporation or organization) I ...