TaskUs, Inc. (NASDAQ:TASK) is one of the Most Undervalued Tech Stocks to Buy in 2026. Wall Street is bullish on the stock; analysts’ 12-month price target reflects more than 42% upside from the current level. However, recently, on December 23, Maggie Nolan from William Blair reiterated a Hold rating on the stock without disclosing any price targets. The analyst noted that the hold rating is based on some fundamental challenges faced by TaskUs, Inc. (NASDAQ:TASK), including fewer working days, margin press ...

Core Viewpoint - The article discusses the 10 most undervalued tech stocks to buy in 2026, emphasizing the ongoing health of the AI trade and the significant capital expenditure by major tech companies in infrastructure development [2][3][4]. Industry Insights - Doug Clinton from Intelligent Alpha indicates that the AI trade remains robust, with recent market pullbacks viewed as necessary for the technology sector [2]. - The "Mag 7" tech companies are projected to increase capital expenditures by approximately 35% in 2026, with potential growth reaching 50% [3]. - High valuations in technology stocks are attributed to reinvestment of free cash flow into infrastructure, although there are still undervalued opportunities in the sector [3]. Methodology for Stock Selection - The list of undervalued tech stocks was created using the Finviz Stock Screener, Seeking Alpha, and Insider Monkey's hedge fund database, focusing on stocks with a forward P/E ratio under 15 [6]. - The methodology emphasizes the importance of hedge fund interest, as imitating top hedge fund picks has historically led to market outperformance [7]. Company-Specific Highlights - **NICE Ltd. (NASDAQ:NICE)**: - Forward P/E Ratio: 9.46, with 22 hedge fund holders [8]. - Analysts maintain a positive outlook despite expected lower gross margins due to strategic investments in cloud and AI [9]. - The company anticipates a 200 basis point reduction in margins but expects long-term benefits from its investments [10]. - **TaskUs, Inc. (NASDAQ:TASK)**: - Forward P/E Ratio: 7.33, also with 22 hedge fund holders [11]. - Analysts project over 42% upside potential, but recent challenges have led to a hold rating [12]. - Despite near-term difficulties, the company is expected to return to growth with modest margin improvements by 2027 [13].

Key Points Zurich-based PSquared Asset Management acquired 635,084 shares of TaskUs in the third quarter. The shares were worth an estimated $11.34 million as of September 30. The position represents 9.0% of reportable U.S. equity assets for the fund. These 10 stocks could mint the next wave of millionaires › On November 13, Zurich-based PSquared Asset Management disclosed a new position in TaskUs (NASDAQ:TASK), acquiring 635,084 shares valued at approximately $11.34 million. What Happened Acc ...

Core Insights - TaskUs (TASK) reported third-quarter 2025 adjusted earnings of 42 cents per share, exceeding the Zacks Consensus Estimate by 16.67% and reflecting a 13.5% year-over-year increase [1][8] - Revenues reached $298.7 million, surpassing the consensus mark by 3.25% and showing a 17% year-over-year growth, driven primarily by AI Services which grew over 60% year over year [1][2][8] Financial Performance - Total operating expenses increased by 12.8% year over year to $260.7 million, while selling, general and administrative expenses decreased by 9.5% year over year to $56.7 million [3] - GAAP total operating income was reported at $37.9 million, marking a 56.7% year-over-year increase [3] - Adjusted net income was $39 million, up 13.7% year over year, with an adjusted net income margin declining by 40 basis points to 13.1% [3] - Adjusted EBITDA rose 17% year over year to $63.5 million, maintaining an adjusted EBITDA margin of 21.2% [4] Balance Sheet and Cash Flow - As of September 30, 2025, TaskUs had cash and cash equivalents of $209.9 million, up from $181.9 million as of June 30, 2025 [5] - Long-term debt decreased to $226.4 million from $231.4 million over the same period [5] - The company generated cash flow from operations of $54.3 million, significantly up from $17 million in the second quarter of 2025, with adjusted free cash flow reaching $47.9 million compared to $6.51 million in the previous quarter [5] Guidance - For the fourth quarter of 2025, TaskUs expects revenues between $302.4 million and $304.4 million, indicating a year-over-year growth of 10.6% at the midpoint [6] - Full-year 2025 revenue guidance is set at $1.173 billion to $1.175 billion, implying an 18% year-over-year growth at the midpoint [6] - Adjusted EBITDA is anticipated to be 19.8% for the fourth quarter and 21.1% for the full year [6]

Digital outsourcing company TaskUs (NASDAQ:TASK) reported revenue ahead of Wall Streets expectations in Q3 CY2025, with sales up 17% year on year to $298.7 million. Revenue guidance for the full year exceeded analysts’ estimates, but next quarter’s guidance of $303.4 million was less impressive, coming in 1.4% below expectations. Its non-GAAP profit of $0.42 per share was 10.4% above analysts’ consensus estimates. Is now the time to buy TASK? Find out in our full research report (it’s free for active Edge ...

Revenue and Income - Service revenue for the nine months ended September 30, 2025, was $870,591, a 20.8% increase from $720,743 in 2024[118] - Operating income increased by 45.5% to $102,541 for the nine months ended September 30, 2025, compared to $70,474 in 2024[118] - Net income for the nine months ended September 30, 2025, was $72,570, reflecting a 96.1% increase from $37,011 in 2024[118] - AI Services revenue increased by 63.7% to $156,701 for the nine months ended September 30, 2025, from $95,716 in 2024[119] - Adjusted Net Income for Q3 2025 was $38,990,000, representing a 13.7% increase from $34,277,000 in Q3 2024[136] - Net income for Q3 2025 was $31,375,000, a significant increase of 147.1% compared to $12,699,000 in Q3 2024[136] - Adjusted Net Income for the nine months ended September 30, 2025 was $114,625,000, a 27.1% increase from $90,184,000 in the same period of 2024[140] - Net income for the nine months ended September 30, 2025 was $72,570,000, a 96.1% increase from $37,011,000 in 2024[140] Expenses and Costs - Cost of services increased by 24.0% to $537,169 for the nine months ended September 30, 2025, from $433,052 in 2024[118] - Financing expenses decreased by 15.8% to $13,925 for the nine months ended September 30, 2025, compared to $16,532 in 2024[128] - Stock-based compensation expense decreased by 39.4% in Q3 2025 to $6,513,000 from $10,742,000 in Q3 2024[136] - The company incurred $11,993,000 in transaction costs for the nine months ended September 30, 2025, a 100% increase from zero in 2024[140] Tax and Margins - The effective tax rate for the nine months ended September 30, 2025, was 26.3%, down from 33.8% in 2024[129] - Net Income Margin improved to 10.5% in Q3 2025 from 5.0% in Q3 2024[136] Cash Flow and Indebtedness - Free Cash Flow decreased to $63.8 million from $79.4 million in 2024, with a conversion rate of Adjusted EBITDA to Free Cash Flow at 34.0%[159] - As of September 30, 2025, total cash and cash equivalents were $210.0 million, with an additional borrowing capacity of $190.0 million under the 2022 Revolving Credit Facility[160] - Total indebtedness as of September 30, 2025, was $246.3 million, with an interest rate of 6.352% per annum[161] - Net cash provided by operating activities increased to $107.5 million from $98.2 million in 2024, driven by higher net income and non-cash charges[166] - Net cash used in investing activities rose to $43.8 million, primarily due to increased site build-out and technology costs[167] - Net cash used in financing activities increased to $39.5 million, attributed to share repurchases and higher long-term debt payments[168] Client Contribution and Strategy - The top ten clients contributed 60% of total service revenue for the three months ended September 30, 2025, compared to 56% in 2024[130] - The company plans to target high growth industry verticals and clients to achieve meaningful client and revenue diversification over time[131] EBITDA and Adjusted Metrics - Adjusted EPS for Q3 2025 was $0.42, up from $0.37 in Q3 2024, reflecting a growth of 13.5%[146] - Adjusted EBITDA for Q3 2025 reached $63,452,000, marking a 17.0% increase from $54,215,000 in Q3 2024[150] - EBITDA for the same period was $157.8 million, reflecting a 33.8% increase from $118.0 million in 2024[154] - Adjusted EBITDA increased by 20.2% to $187.7 million compared to $156.1 million in 2024[154] Foreign Currency and Other Gains - Foreign currency losses for Q3 2025 were $(6,678,000), compared to gains of $2,490,000 in Q3 2024, indicating a significant negative shift[136] Share Repurchase - The company repurchased 2,112,247 shares for $27.7 million during the nine months ended September 30, 2025[162]

Financial Data and Key Metrics Changes - In Q3 2025, the company achieved record revenue of $298.7 million, reflecting a 17% year-over-year growth rate [8][20] - Adjusted EBITDA for the quarter was $63.5 million, resulting in an adjusted EBITDA margin of 21.2% [8][24] - Adjusted earnings per share (EPS) was $0.42, representing approximately 14% year-over-year growth [8][25] - The company ended the quarter with $210 million in cash and a net debt-to-adjusted EBITDA ratio of less than 0.2 times [8][26] Business Line Data and Key Metrics Changes - The Digital Customer Experience (DCX) service line saw single-digit year-over-year growth of approximately 6%, with revenue of $164.2 million [13][23] - Trust and Safety revenue increased by 19.1% year-over-year, driven by the social media vertical, totaling $75.8 million [13][23] - AI Services experienced significant growth of 60.8% year-over-year, resulting in $58.7 million in revenue [15][24] Market Data and Key Metrics Changes - Revenue from clients outside the top 20 grew approximately 6% year-over-year, while revenue from the top 10 and top 20 clients represented 60% and 71% of total revenue, respectively [21][22] - The company generated 54% of its revenues in the Philippines, 13% in India, 11% in the United States, and 22% from the rest of the world [22] Company Strategy and Development Direction - The company plans to shift from selling time-based services to selling solutions that combine technology and talent, focusing on AI consulting and services [9][11] - Investments will be significantly increased in agentic AI consulting and AI services, with a focus on automation and efficiency [9][11] - The company aims to enhance shareholder returns while pursuing a capital allocation strategy that supports long-term growth [12] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the slowing growth in the BPO industry but emphasized the company's strong performance relative to competitors due to operational excellence [9][12] - The company expects full-year 2025 revenue between $1.173 billion and $1.175 billion, representing approximately 18% year-over-year growth [17][27] - For Q4, the company anticipates revenue of $302 million to $304 million, reflecting approximately 11% year-over-year growth [17][28] Other Important Information - The proposed take-private transaction was terminated due to insufficient shareholder approval, which management views as a testament to high valuation expectations [5][6] - The company is committed to maintaining a strong balance sheet while investing in AI transformation initiatives [48] Q&A Session Summary Question: Plans operationally post-take-private transaction - Management plans to follow a strategy similar to what would have been pursued as a private company, focusing on AI transformation and investments in agentic AI consulting [33] Question: Outlook for sequential growth in Q4 - Management expects 11% year-over-year growth in Q4, with 9% growth when excluding the largest client, due to challenging comparisons from the previous year [38] Question: Sustainability of AI services growth - Management is confident that AI services will sustain double-digit growth over the long term, despite project-based revenue fluctuations [49] Question: Durability of spend from the largest customer - The relationship with the largest customer remains strong, with continued growth expected, although the pace may not match the previous year [52] Question: Investment strategy and its impact on P&L - Management indicated that they are still in the early stages of their investment cycle, with significant improvements in internal processes already observed [55]

Financial Performance Highlights - TaskUs achieved a record quarterly revenue of approximately $298.7 million in Q3 2025, representing a 17% year-over-year growth[7,9,10] - Adjusted EBITDA for Q3 2025 was approximately $63.5 million, with an Adjusted EBITDA Margin of 21.2%[7,9,10] - The company's revenue for the year 2024 was $995 million, a 7.6% increase year-over-year, with an Adjusted EBITDA Margin of 21.1%[68] - TaskUs projects revenue between $302.4 million and $304.4 million for Q4 2025 and between $1.173 billion and $1.175 billion for the full year, representing a year-over-year growth of 10.6% and 18% respectively[70] - The company anticipates an Adjusted EBITDA Margin of approximately 19.8% for Q4 2025 and approximately 21.1% for the full year, along with an Adjusted Free Cash Flow of around $100 million for the full year[70] Service Line Growth - Trust + Safety and AI Services (AIS) demonstrated strong double-digit year-over-year growth in Q3 2025, with nearly 20% and over 60% growth, respectively[7,10] - Revenue from clients utilizing multiple service lines grew by more than 20% year-over-year in Q3 2025[7,10] - AI Services contributed 17% to the trailing twelve-month (TTM) Q3 2025 revenue, amounting to $196 million[18,29] - Digital Customer Experience accounted for 57% of the TTM Q3 2025 revenue, totaling $654 million[18,23] - Trust + Safety represented 26% of the TTM Q3 2025 revenue, reaching $295 million[18,26]

Financial Performance - TaskUs reported record revenue of $298.7 million for Q3 2025, representing a year-over-year growth of 17.0%[2] - Net income for Q3 2025 was $31.4 million, with a net income margin of 10.5%, up from 5.0% in Q3 2024[5] - Adjusted EBITDA for the quarter was $63.5 million, maintaining an Adjusted EBITDA margin of 21.2%[5] - Service revenue for Q3 2025 reached $298.7 million, a 17% increase from $255.3 million in Q3 2024[16] - Net income for the nine months ended September 2025 was $72.6 million, up 96% from $37.0 million in the same period of 2024[20] - Operating income for the nine months ended September 2025 was $102.5 million, a 45% increase from $70.5 million in the same period of 2024[16] - Basic net income per share for Q3 2025 was $0.35, compared to $0.14 in Q3 2024[16] - The company reported a net income margin of 10.5% for Q3 2025, up from 5.0% in Q3 2024[22] - GAAP diluted EPS for Q3 2025 was $0.34, compared to $0.14 in Q3 2024, reflecting a 142.9% increase[33] - Adjusted EPS for Q3 2025 was $0.42, up from $0.37 in Q3 2024, representing a 13.5% growth[33] Cash Flow and Investments - Free Cash Flow reached $42.0 million, with a conversion rate of 66.1% from Adjusted EBITDA to Free Cash Flow[5] - Free Cash Flow for Q3 2025 was $41.962 million, significantly higher than $6.286 million in Q3 2024, marking a 570.5% increase[35] - Adjusted Free Cash Flow for Q3 2025 was $47.987 million, compared to $9.097 million in Q3 2024, indicating a 426.5% rise[35] - Net cash provided by operating activities for the nine months ended September 30, 2025, was $107.549 million, compared to $98.230 million for the same period in 2024, a 9.3% increase[35] - The company anticipates Adjusted Free Cash Flow of approximately $100 million for the full year 2025[8] - The company invested $43.8 million in property and equipment during the nine months ended September 2025, compared to $18.8 million in the same period of 2024[20] Growth and Future Outlook - AI Services experienced over 50% growth for the third consecutive quarter, contributing significantly to revenue growth[2][4] - For the full year 2025, TaskUs expects total revenue between $1.173 billion and $1.175 billion, with an Adjusted EBITDA margin of approximately 21.1%[7][8] - Trust + Safety services showed strong year-over-year revenue growth of nearly 20%[4] - TaskUs plans to increase investments in Generative AI transformation services to support clients in the evolving AI landscape[2] Workforce and Assets - As of September 30, 2025, TaskUs had a total workforce of approximately 63,800 employees across 30 locations in 13 countries[10] - Total assets increased to $1.04 billion as of September 30, 2025, compared to $953.3 million at the end of 2024[18] - Cash and cash equivalents at the end of Q3 2025 were $210.0 million, up from $180.4 million at the end of Q3 2024[20] - Total current liabilities increased to $170.4 million as of September 30, 2025, from $152.0 million at the end of 2024[18] Cost Management - The company undertook cost optimization measures resulting in severance payments, impacting net income[29] - The company reported operational efficiency costs and litigation costs as non-recurring items affecting financial performance[39] - Non-GAAP effective tax rate for Q3 2025 was 20.9%, compared to 18.6% for Q3 2024[30]

Core Insights - The AI-driven bull run that began in 2023 and 2024 continues into 2025, with AI infrastructure developers poised for significant growth [1] - Despite the overall positive trend, several AI stocks have underperformed in 2025, presenting potential growth opportunities [2] Company Summaries Five9 Inc. (FIVN) - Five9 is a contact center software solutions provider benefiting from increased subscription revenues and enterprise AI traction [4][9] - The company offers a virtual contact center cloud platform with applications for customer service, sales, and marketing [5] - FIVN's expected revenue and earnings growth rates for the current year are 10.6% and 16.6%, respectively, with a 4.3% improvement in earnings estimates over the last 90 days [9] TaskUs Inc. (TASK) - TaskUs provides outsourced digital services across various sectors, including social media and e-commerce [11] - The company has formed strategic partnerships to enhance its agentic AI consulting services, driving double-digit growth [12][13] - TASK's expected revenue and earnings growth rates for the current year are 17.8% and 16.3%, respectively, with a 4.2% improvement in earnings estimates over the last 60 days [13] Workday Inc. (WDAY) - Workday's diversified product portfolio and cloud-based business model are key growth drivers, supported by significant investments [15][16] - The company has strong customer wins across various sectors, contributing to its revenue growth [16] - WDAY's expected revenue and earnings growth rates for the current year are 12.7% and 21.1%, respectively, with a 0.3% improvement in earnings estimates over the last 60 days [17] GitLab Inc. (GTLB) - GitLab offers a DevOps platform that enhances visibility and control over the DevOps lifecycle, with significant innovations in its product portfolio [18] - The introduction of GitLab Duo Workflow, a secure agentic AI, is expected to expand its market presence [19] - GTLB's expected revenue and earnings growth rates for the current year are 23.8% and 12.2%, respectively, with a notable 10.7% improvement in earnings estimates over the last 60 days [19] BILL Holdings Inc. (BILL) - BILL Holdings focuses on AI-enabled financial software for small and medium businesses, benefiting from a growing client base [21][22] - The company is enhancing customer experience through its AI-powered financial operations platform [22] - BILL's expected revenue and earnings growth rates for the current year are 10.5% and -3.2%, respectively, with a 0.5% improvement in earnings estimates over the last 30 days [23]