Core Insights - TaskUs reported strong fiscal Q2 2025 earnings, with GAAP revenue of $294.1 million, exceeding analyst expectations by $22.6 million and reflecting a 23.6% year-over-year growth [1][5] - Non-GAAP earnings per share reached $0.43, surpassing the forecast of $0.34 and showing a 38.7% increase from the previous year [1][6] - Despite operational success, free cash flow fell sharply to nearly zero due to increased capital spending and non-recurring expenses, raising concerns about future cash generation [1][7] Financial Performance - GAAP revenue for Q2 2025 was $294.1 million, up from $237.9 million in Q2 2024, marking a 23.6% year-over-year increase [2][5] - Non-GAAP EPS was $0.43, compared to $0.31 in Q2 2024, reflecting a 38.7% increase [2][6] - Adjusted EBITDA grew to $65.0 million, a 26.7% increase year-over-year, with an adjusted EBITDA margin of 22.1% [2][6] - Free cash flow declined to $38,000 from $25.5 million in Q2 2024, indicating a significant drop in cash generation efficiency [2][7] Company Overview and Strategy - TaskUs specializes in outsourced digital operations for technology, media, and e-commerce sectors, supporting around 200 clients globally [3] - The company has focused on integrating advanced technology, particularly AI-driven services, and expanding into new industry verticals [4] - Key success factors include technology adoption, operational efficiency, employee training, and compliance with regulations [4] Operational Highlights - The Trust + Safety service line saw nearly 30% year-over-year revenue growth, contributing to overall revenue increases [5] - Capital expenditures rose significantly to $17.0 million from $4.5 million in Q2 2024, impacting free cash flow [7] - The company announced partnerships with Decagon and Regal to enhance its AI Services, which is the fastest-growing segment [8] Future Outlook - TaskUs did not provide forward financial guidance due to ongoing uncertainty related to a proposed take-private merger transaction [9] - Investors are advised to monitor cash flow trends, capital spending, and the impact of technology integration and potential mergers [10]

[FORM 10-Q Filing Information](index=1&type=section&id=FORM%2010-Q%20Filing%20Information) [Registrant Information](index=1&type=section&id=Registrant%20Information) This chapter provides basic information about TaskUs, Inc. as the registrant, including its company name, jurisdiction, principal executive office, telephone number, and Class A common stock listed on Nasdaq, identifying the company as an accelerated filer and an emerging growth company - TaskUs, Inc. is a Delaware-registered company headquartered in New Braunfels, Texas[2](index=2&type=chunk) Securities Registration Information | Title of each class | Trading Symbol(s) | Name of each exchange on which registered | | :------------------ | :---------------- | :-------------------------------------- | | Class A Common Stock, par value $0.01 per share | TASK | The Nasdaq Stock Market LLC | - The company is classified as an “accelerated filer” and an “emerging growth company”[6](index=6&type=chunk) Common Stock Outstanding as of August 1, 2025 | Stock Class | Quantity | | :------- | :----- | | Class A common stock, par value $0.01 per share | 34,843,287 | | Class B common stock, par value $0.01 per share | 55,032,694 | [CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS](index=4&type=section&id=CAUTIONARY%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) [Forward-Looking Statements Disclaimer](index=4&type=section&id=Forward-Looking%20Statements%20Disclaimer) This chapter warns investors that the quarterly report contains forward-looking statements involving known and unknown risks and uncertainties that could cause actual results to differ materially from expectations, and the company disclaims any obligation to publicly update or revise any forward-looking statements, except as required by law - This quarterly report contains forward-looking statements that may cause actual results to differ materially from expectations[10](index=10&type=chunk) - The company disclaims any obligation to publicly update or revise any forward-looking statements, unless legally required[10](index=10&type=chunk) - Key risk factors include: risks related to the proposed merger announced on May 8, 2025, reliance on key clients, contract termination or non-renewal, failure to acquire and retain new clients, service quality issues, failure to adapt to market and technology trends, risks of AI utilization, data breaches and security incidents, mental health impacts of Trust + Safety services on employees, employee misconduct, global economic and political conditions, reliance on international operations, legal and regulatory compliance, foreign currency fluctuations, brand reputation, pricing pressure, economic and political volatility, reliance on senior management and key employees, increased employee costs and labor law changes, difficulties in expanding into new markets and industries, reliance on technology and computer systems, asset utilization and cost control, control by Blackstone Inc. and its co-founders, dual-class stock structure, and volatility in Class A common stock market price[11](index=11&type=chunk)[13](index=13&type=chunk) [WEBSITE AND SOCIAL MEDIA DISCLOSURE](index=6&type=section&id=WEBSITE%20AND%20SOCIAL%20MEDIA%20DISCLOSURE) [Company Information Channels](index=6&type=section&id=Company%20Information%20Channels) This chapter explains that the company utilizes its official website and social media platforms (e.g., Facebook, Instagram, LinkedIn, YouTube, and X) as important channels for disseminating company information, advising investors to monitor these channels for financial and other material information - The company disseminates information through its website (www.taskus.com) and social media platforms (Facebook, Instagram, LinkedIn, YouTube, X)[15](index=15&type=chunk) - Investors should monitor these channels for financial and other material information, in addition to press releases, SEC filings, and public conference calls and webcasts[15](index=15&type=chunk) [PART I. FINANCIAL INFORMATION](index=7&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=7&type=section&id=Item%201.%20Financial%20Statements) This chapter presents TaskUs, Inc.'s unaudited condensed consolidated financial statements as of June 30, 2025, including balance sheets, statements of income, comprehensive income, shareholders' equity, and cash flows, along with related notes detailing business, accounting policies, revenue, derivatives, assets, liabilities, equity, taxes, and earnings per share [Unaudited Condensed Consolidated Balance Sheets](index=7&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) This section presents the company's financial position, detailing assets, liabilities, and shareholders' equity at specific reporting dates Condensed Consolidated Balance Sheets (as of June 30, 2025 and December 31, 2024) | (in thousands) | June 30, 2025 | December 31, 2024 | | :------------- | :------------ | :---------------- | | **Assets** | | | | Cash and cash equivalents | $181,916 | $192,166 | | Accounts receivable, net | $231,442 | $198,996 | | Total current assets | $471,129 | $435,352 | | Property and equipment, net | $86,545 | $66,775 | | Goodwill | $219,539 | $216,791 | | Total assets | $1,018,277 | $953,298 | | **Liabilities** | | | | Total current liabilities | $166,025 | $152,025 | | Long-term debt | $231,421 | $241,357 | | Total liabilities | $473,727 | $456,379 | | **Shareholders' Equity** | | | | Total shareholders' equity | $544,550 | $496,919 | | Total liabilities and shareholders' equity | $1,018,277 | $953,298 | [Unaudited Condensed Consolidated Statements of Income](index=8&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Income) This section outlines the company's financial performance, reporting service revenue, operating expenses, and net income over specified periods Condensed Consolidated Statements of Income (for the three and six months ended June 30, 2025 and 2024) | (in thousands, except share and per share data) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Service revenue | $294,086 | $237,928 | $571,878 | $465,398 | | Total operating expenses | $263,724 | $215,206 | $507,278 | $419,118 | | Operating income | $30,362 | $22,722 | $64,600 | $46,280 | | Income before income taxes | $27,054 | $19,935 | $56,802 | $38,157 | | Provision for income taxes | $7,007 | $7,337 | $15,607 | $13,845 | | Net income | $20,047 | $12,598 | $41,195 | $24,312 | | Net income per common share: Basic | $0.22 | $0.14 | $0.46 | $0.27 | | Net income per common share: Diluted | $0.22 | $0.14 | $0.44 | $0.27 | - Service revenue increased by **23.6%** year-over-year in Q2 2025 and by **22.9%** in H1 2025[21](index=21&type=chunk) - Net income increased by **59.1%** year-over-year in Q2 2025 and by **69.4%** in H1 2025[21](index=21&type=chunk) [Unaudited Condensed Consolidated Statements of Comprehensive Income](index=9&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) This section details the company's comprehensive income, including net income and other comprehensive income components, for the reported periods Condensed Consolidated Statements of Comprehensive Income (for the three and six months ended June 30, 2025 and 2024) | (in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income | $20,047 | $12,598 | $41,195 | $24,312 | | Unrealized gain on derivative contracts, net | $2,773 | — | $8,055 | — | | Retirement benefit reserves, net | $(28) | $17 | $(49) | $22 | | Foreign currency translation adjustments | $4,729 | $(7,734) | $7,966 | $(11,047) | | Comprehensive income | $27,521 | $4,881 | $57,167 | $13,287 | - Comprehensive income for Q2 2025 was **$27,521 thousand**, a significant increase from **$4,881 thousand** in the same period of 2024[24](index=24&type=chunk) - Comprehensive income for H1 2025 was **$57,167 thousand**, a significant increase from **$13,287 thousand** in the same period of 2024[24](index=24&type=chunk) [Unaudited Condensed Consolidated Statements of Shareholders' Equity](index=10&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Shareholders'%20Equity) This section presents changes in the company's shareholders' equity, reflecting net income, stock-based compensation, and share transactions - Total shareholders' equity as of June 30, 2025, was **$544,550 thousand**, an increase from **$496,919 thousand** as of December 31, 2024[27](index=27&type=chunk) - In H1 2025, the company issued common stock for equity award settlements, repurchased common stock, and recognized stock-based compensation expense and net income[27](index=27&type=chunk) - **15,000,000** shares of Class B common stock were converted to Class A common stock[27](index=27&type=chunk) [Unaudited Condensed Consolidated Statements of Cash Flows](index=12&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section summarizes the company's cash inflows and outflows from operating, investing, and financing activities over the reported periods Condensed Consolidated Statements of Cash Flows (for the six months ended June 30, 2025 and 2024) | (in thousands) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $53,285 | $81,211 | | Net cash used in investing activities | $(31,451) | $(8,088) | | Net cash used in financing activities | $(33,493) | $(18,614) | | Increase (decrease) in cash and cash equivalents | $(11,659) | $54,509 | | Cash and cash equivalents at end of period | $181,916 | $171,133 | - Net cash provided by operating activities in H1 2025 was **$53.3 million**, a decrease from **$81.2 million** in the same period of 2024[29](index=29&type=chunk) - Net cash used in investing activities significantly increased to **$31.5 million** in H1 2025, primarily due to increased property and equipment purchases[29](index=29&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and additional information supporting the condensed consolidated financial statements [1. Description of Business and Organization](index=13&type=section&id=1.%20Description%20of%20Business%20and%20Organization) This section describes TaskUs, Inc.'s formation, headquarters, core outsourced digital services, and the proposed merger with Blackstone affiliates and co-founders - TaskUs, Inc. was formed in July 2018, headquartered in New Braunfels, Texas, as the acquisition vehicle for TaskUs Holdings, Inc. by investment funds affiliated with Blackstone Inc[32](index=32&type=chunk) - The company provides outsourced digital services and next-generation customer experience, primarily offering Digital Customer Experience, Trust + Safety, and AI Services[33](index=33&type=chunk)[37](index=37&type=chunk) - On May 8, 2025, the company entered into a merger agreement to be acquired by Blackstone affiliates, co-founder and CEO Bryce Maddock, and co-founder and President Jaspar Weir (collectively, the "Buyer Group") for **$16.50** per share in cash for Class A common stock[34](index=34&type=chunk) - The merger is expected to close in H2 2025, after which the company's common stock will no longer be listed on any public market[36](index=36&type=chunk) [2. Summary of Significant Accounting Policies](index=14&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) This section outlines the company's adherence to US GAAP, key customer and operational geographies, and its election to adopt new accounting standards on a private company timeline - The company's accounting policies comply with U.S. Generally Accepted Accounting Principles (US GAAP), with no material changes to significant accounting policies described in the annual report for this quarterly report[38](index=38&type=chunk)[39](index=39&type=chunk) - The company's primary customers are located in the U.S., with international customers concentrated in Europe; as of June 30, 2025, Customer A accounted for **26%** of service revenue and **19%** of accounts receivable[42](index=42&type=chunk) - The company's main business operations and most employees and fixed assets are located in the Philippines[43](index=43&type=chunk) - The company has elected to adopt new or revised accounting standards on a private company timeline[44](index=44&type=chunk) [3. Revenue from Contracts with Customers](index=15&type=section&id=3.%20Revenue%20from%20Contracts%20with%20Customers) This section details the company's service revenue breakdown by type and geographic location, along with information on unbilled revenue Revenue by Service Type (for the three and six months ended June 30, 2025 and 2024) | (in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Digital Customer Experience | $165,082 | $148,352 | $324,944 | $291,843 | | Trust + Safety | $76,451 | $59,066 | $148,911 | $114,338 | | AI Services | $52,553 | $30,510 | $98,023 | $59,217 | | Service revenue | $294,086 | $237,928 | $571,878 | $465,398 | Revenue by Geographic Location of Service Delivery (for the three and six months ended June 30, 2025 and 2024) | (in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Philippines | $160,191 | $138,308 | $311,908 | $269,521 | | United States | $32,393 | $25,267 | $65,614 | $50,857 | | India | $37,079 | $29,468 | $72,507 | $58,377 | | Rest of World | $64,423 | $44,885 | $121,849 | $86,643 | | Service revenue | $294,086 | $237,928 | $571,878 | $465,398 | - As of June 30, 2025, net accounts receivable included **$104.1 million** in unbilled revenue, up from **$92.7 million** as of December 31, 2024[48](index=48&type=chunk) [4. Forward Contracts](index=16&type=section&id=4.%20Forward%20Contracts) This section explains the company's use of forward foreign exchange contracts to hedge against currency fluctuations in various foreign currencies, aiming to reduce cash flow volatility - The company hedges anticipated costs denominated in foreign currencies such as the Philippine Peso, Indian Rupee, Mexican Peso, and Colombian Peso through forward foreign exchange contracts to reduce cash flow volatility[49](index=49&type=chunk) Notional Amount of Settled Forward Contracts Designated as Cash Flow Hedges (for the three and six months ended June 30, 2025 and 2024) | (in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Notional amount of settled forward contracts in Philippine pesos | $46,842 | — | $92,777 | — | | Notional amount of settled forward contracts in Indian rupees | $12,302 | — | $24,101 | — | | Notional amount of settled forward contracts in Mexican pesos | $4,217 | — | $8,598 | — | | Notional amount of settled forward contracts in Colombian pesos | $10,687 | — | $20,845 | — | | Total notional amount of settled forward contracts designated as cash flow hedges | $74,048 | — | $146,321 | — | Notional Amount of Outstanding Forward Contracts Designated as Cash Flow Hedges (as of June 30, 2025 and December 31, 2024) | (in thousands) | June 30, 2025 | December 31, 2024 | | :------------- | :------------ | :---------------- | | Notional amount of outstanding forward contracts in Philippine pesos | $158,121 | $152,803 | | Notional amount of outstanding forward contracts in Indian rupees | $50,459 | $41,819 | | Notional amount of outstanding forward contracts in Mexican pesos | $15,087 | $14,380 | | Notional amount of outstanding forward contracts in Colombian pesos | $40,922 | $35,141 | | Total notional amount of outstanding forward contracts designated as cash flow hedges | $264,589 | $244,143 | - As of June 30, 2025, the cumulative net gain from forward foreign exchange cash flow hedges expected to be reclassified from AOCL to earnings within the next 12 months is **$6.0 million**[50](index=50&type=chunk) [5. Property and Equipment, net](index=18&type=section&id=5.%20Property%20and%20Equipment%2C%20net) This section provides a breakdown of the company's property and equipment, net, highlighting increases primarily in the Philippines, India, and Colombia Property and Equipment, net (as of June 30, 2025 and December 31, 2024) | (in thousands) | June 30, 2025 | December 31, 2024 | | :------------- | :------------ | :---------------- | | Leasehold improvements | $96,462 | $76,171 | | Technology and computers | $131,439 | $115,816 | | Furniture and fixtures | $11,438 | $8,480 | | Construction in process | $4,807 | $5,476 | | Other property and equipment | $21,479 | $16,260 | | Property and equipment, gross | $265,625 | $222,203 | | Accumulated depreciation | $(179,080) | $(155,428) | | Property and equipment, net | $86,545 | $66,775 | - As of June 30, 2025, property and equipment, net, increased to **$86,545 thousand**, with growth primarily in the Philippines, India, and Colombia[54](index=54&type=chunk) [6. Goodwill and Intangibles](index=18&type=section&id=6.%20Goodwill%20and%20Intangibles) This section details the changes in goodwill and the composition of intangible assets, noting the impact of foreign currency translation and amortization Changes in Carrying Amount of Goodwill (as of June 30, 2025) | (in thousands) | | | :------------- | :----- | | Balance as of December 31, 2024 | $216,791 | | Foreign currency translation | $2,748 | | Balance as of June 30, 2025 | $219,539 | Intangible Assets Composition (as of June 30, 2025 and December 31, 2024) | (in thousands) | June 30, 2025 Net | December 31, 2024 Net | | :------------- | :---------------- | :-------------------- | | Customer relationships | $140,460 | $148,083 | | Trade names | $23,045 | $24,442 | | Other intangibles | — | — | | Total | $163,505 | $172,525 | - As of June 30, 2025, total goodwill was **$219,539 thousand**, an increase from December 31, 2024, primarily due to foreign currency translation effects[55](index=55&type=chunk) - Net intangible assets decreased from **$172,525 thousand** as of December 31, 2024, to **$163,505 thousand** as of June 30, 2025, mainly due to amortization of customer relationships and trade names[55](index=55&type=chunk) [7. Long-Term Debt](index=18&type=section&id=7.%20Long-Term%20Debt) This section outlines the company's long-term debt, including the term loan, effective interest rates, and compliance with debt covenants Current and Non-Current Portions of Debt (as of June 30, 2025 and December 31, 2024) | (in thousands) | June 30, 2025 Total | December 31, 2024 Total | | :------------- | :------------------ | :-------------------- | | Term Loan | $250,425 | $257,176 | | Less: Debt financing fees | $(820) | $(1,010) | | Total | $249,605 | $256,166 | - As of June 30, 2025, the company's total long-term debt (net of debt financing fees) was **$249,605 thousand**, a decrease from **$256,166 thousand** as of December 31, 2024[56](index=56&type=chunk) - The 2022 Term Loan Facility bears interest at SOFR plus **2.25%**, with an effective interest rate of **6.646%** as of June 30, 2025[58](index=58&type=chunk) - As of June 30, 2025, the company was in compliance with all debt covenants, had no outstanding balance under the 2022 Revolving Credit Facility, and had **$190 million** available for borrowing[59](index=59&type=chunk) [8. Leases](index=19&type=section&id=8.%20Leases) This section presents operating lease costs, weighted-average remaining lease term, discount rate, and cash payments for lease liabilities Operating Lease Costs (for the three and six months ended June 30, 2025 and 2024) | (in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Operating lease costs - Cost of services | $6,160 | $4,642 | $11,886 | $9,119 | - As of June 30, 2025, the weighted-average remaining lease term was **3.5 years**, and the weighted-average discount rate was **6.9%**[61](index=61&type=chunk) - In H1 2025, the company made cash payments for operating lease liabilities of **$10,280 thousand** and recognized ROU assets from operating lease liabilities of **$19,877 thousand**[61](index=61&type=chunk) [9. Commitments and Contingencies](index=20&type=section&id=9.%20Commitments%20and%20Contingencies) This section details the company's legal proceedings, including class-action lawsuits, derivative actions, and data breach-related litigation, along with its indemnification agreements - The company faces multiple legal proceedings, including the Lozada v. TaskUs, Inc. et al. class action, which reached a **$17.5 million** settlement agreement on February 24, 2025, fully covered by the company's insurance[63](index=63&type=chunk) - Two derivative lawsuits (Eaton v. Maddock, et al. and Tucker v. Dixit, et al.) alleging misrepresentations in public filings prior to the IPO and SPO are currently stayed pending the completion of the merger[64](index=64&type=chunk)[65](index=65&type=chunk) - The company is also involved in several data breach-related class actions, including Gregory Forsberg et al. v. TaskUs, Inc. and Shopify, Inc., with the Gregory Forsberg case dismissed on July 29, 2025[67](index=67&type=chunk)[69](index=69&type=chunk)[70](index=70&type=chunk) - The company enters into indemnification agreements in the ordinary course of business, committing to indemnify customers, suppliers, and other business partners for losses arising from breaches, cybersecurity incidents, service provision, or intellectual property infringement claims[71](index=71&type=chunk) [10. Stock-Based Compensation](index=22&type=section&id=10.%20Stock-Based%20Compensation) This section summarizes the company's stock-based compensation activities, including options, RSUs, and PSUs granted, exercised, and forfeited, along with related expenses Summary of Stock-Based Compensation Activity (for the six months ended June 30, 2025) | | Options | RSUs | PSUs | | :-------------------------- | :-------- | :----- | :----- | | Outstanding at January 1, 2025 | 4,846,497 | 4,309,358 | 3,693,417 | | Granted | — | 1,758,292 | 396,198 | | Exercised or released | (943,805) | (1,393,936) | (26,667) | | Forfeited, cancelled, or expired | (1,620) | (272,552) | (3,307,060) | | Outstanding at June 30, 2025 | 3,901,072 | 4,401,162 | 755,888 | Stock-Based Compensation Expense (for the three and six months ended June 30, 2025 and 2024) | (in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Cost of services | $250 | $501 | $452 | $1,181 | | Selling, general and administrative expense | $8,057 | $10,620 | $16,604 | $20,175 | | Total | $8,307 | $11,121 | $17,056 | $21,356 | - As of June 30, 2025, total unrecognized stock-based compensation expense was **$34.6 million**, expected to be recognized over a period of **0.6 to 1.6 years**[73](index=73&type=chunk) [11. Income Taxes](index=22&type=section&id=11.%20Income%20Taxes) This section provides details on the company's income tax expense and effective tax rates for the reported periods, explaining the factors influencing rate differences - Income tax expense for Q2 2025 was **$7.007 million** with an effective tax rate of **25.9%**, lower than **$7.337 million** and **36.8%** in the same period of 2024[75](index=75&type=chunk) - Income tax expense for H1 2025 was **$15.607 million** with an effective tax rate of **27.5%**, lower than **$13.845 million** and **36.3%** in the same period of 2024[76](index=76&type=chunk) - The difference between the effective tax rate and the **21%** federal statutory tax rate is primarily influenced by state taxes, GILTI inclusion, non-deductible executive compensation, and tax holidays in foreign jurisdictions[76](index=76&type=chunk) [12. Earnings Per Share](index=22&type=section&id=12.%20Earnings%20Per%20Share) This section presents the calculation of basic and diluted earnings per share, highlighting the increase in EPS for the reported periods Basic and Diluted Earnings Per Share Calculation (for the three and six months ended June 30, 2025 and 2024) | (in thousands, except share and per share data) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income | $20,047 | $12,598 | $41,195 | $24,312 | | Weighted-average common shares outstanding – basic | 89,493,215 | 88,331,992 | 89,766,782 | 88,563,601 | | Weighted-average common shares outstanding – diluted | 92,576,805 | 91,629,930 | 93,116,173 | 91,739,908 | | Net income per common share: Basic | $0.22 | $0.14 | $0.46 | $0.27 | | Net income per common share: Diluted | $0.22 | $0.14 | $0.44 | $0.27 | - Basic and diluted earnings per share for Q2 2025 were both **$0.22**, higher than **$0.14** in the same period of 2024[79](index=79&type=chunk) - Basic earnings per share for H1 2025 was **$0.46**, and diluted earnings per share was **$0.44**, both higher than **$0.27** in the same period of 2024[79](index=79&type=chunk) [13. Accumulated Other Comprehensive Loss](index=23&type=section&id=13.%20Accumulated%20Other%20Comprehensive%20Loss) This section details the changes in accumulated other comprehensive loss, primarily influenced by foreign currency translation adjustments and unrealized gains on cash flow hedges Summary of Changes in Accumulated Other Comprehensive Income (Loss) (for the three and six months ended June 30, 2025) | (in thousands) | Foreign Currency Translation Adjustments | Retirement Benefit Reserves | Unrealized Gains (Losses) on Cash Flow Hedges | Accumulated Other Comprehensive Loss | | :------------- | :------------------------------------- | :-------------------------- | :------------------------------------ | :----------------------------------- | | Balance as of March 31, 2025 | $(18,422) | $(418) | $1,949 | $(16,891) | | Other comprehensive income (loss) before reclassifications | $4,729 | $(31) | $5,452 | $10,150 | | Income tax effects | — | $3 | $(1,177) | $(1,174) | | Amounts reclassified from accumulated other comprehensive income | — | — | $(1,898) | $(1,898) | | Income tax effects | — | — | $396 | $396 | | Other comprehensive income (loss) | $4,729 | $(28) | $2,773 | $7,474 | | Balance as of June 30, 2025 | $(13,693) | $(446) | $4,722 | $(9,417) | - As of June 30, 2025, accumulated other comprehensive loss was **$9,417 thousand**, a significant reduction from **$25,389 thousand** as of December 31, 2024, primarily due to foreign currency translation adjustments and unrealized gains on cash flow hedges[80](index=80&type=chunk) [14. Segment Information](index=24&type=section&id=14.%20Segment%20Information) This section explains that the company operates in a single operating and reportable segment, with resource allocation and performance evaluation based on consolidated net income - The company's CEO, as the chief operating decision maker, allocates resources and assesses performance based on factors such as client demand, capacity, and consolidated net income, thus determining that the company operates in a single operating and reportable segment[82](index=82&type=chunk) Major Expenses for Single Segment (for the three and six months ended June 30, 2025 and 2024) | (in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Personnel costs (Cost of services) | $152,754 | $120,675 | $296,700 | $236,314 | | Operating costs (Selling, general, and administrative expense) | $49,142 | $43,333 | $97,258 | $86,063 | | Stock-based compensation expense | $8,428 | $11,128 | $17,646 | $21,692 | | Non-operating costs (Selling, general, and administrative expense) | $11,088 | $2,318 | $11,391 | $2,618 | | Other (Cost of services) | $27,562 | $22,698 | $54,584 | $41,780 | | Total operating expenses | $263,724 | $215,206 | $507,278 | $419,118 | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This chapter provides management's detailed discussion and analysis of the company's financial condition and operating results for the three and six months ended June 30, 2025, covering business overview, 2025 developments, recent financial highlights, operating results, key client revenue, foreign exchange impact, non-GAAP financial measures, and liquidity and capital resources [Overview](index=25&type=section&id=Overview) This section provides an overview of TaskUs as a leading provider of outsourced digital services and next-generation customer experience, emphasizing its scalable platform and culture - TaskUs is a global leader in outsourced digital services and next-generation customer experience, supporting client brands through Digital Customer Experience, Trust + Safety, and AI Services[87](index=87&type=chunk)[88](index=88&type=chunk) - The company's platform is designed for rapid scalability and client growth, attracting new clients and enterprise-level brands through "ridiculously good" outsourced services[89](index=89&type=chunk) - The company's culture is central to its operations, aligning with client cultures to attract and retain highly engaged frontline employees, leading to superior outcomes[90](index=90&type=chunk) [2025 Developments](index=25&type=section&id=2025%20Developments) This section discusses the impact of generative AI investments by clients, the company's efforts to integrate AI into operations, and the proposed merger agreement with Blackstone affiliates and co-founders - The company's clients, including its largest, have announced automation initiatives involving significant investments in generative AI, which TaskUs is supporting, potentially leading to short-term revenue growth but long-term automation of some services[91](index=91&type=chunk) - The company is seeking to integrate advanced AI technologies into customer experience operations through partnerships with agent AI technology developers to create new, lasting revenue streams[91](index=91&type=chunk) - On May 8, 2025, the company entered into a merger agreement to be acquired by Blackstone affiliates and company co-founders for **$16.50** per share in cash for Class A common stock[92](index=92&type=chunk) - The merger is expected to close in H2 2025, after which the company's common stock will no longer be listed on any public market[94](index=94&type=chunk) [Recent Financial Highlights](index=26&type=section&id=Recent%20Financial%20Highlights) This section presents key financial performance indicators, including service revenue, net income, adjusted net income, and adjusted EBITDA, for the reported periods Recent Financial Highlights (for the three and six months ended June 30, 2025 and 2024) | (in millions) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Service revenue | $294.1 | $237.9 | $571.9 | $465.4 | | Net income | $20.0 | $12.6 | $41.2 | $24.3 | | Adjusted Net Income | $39.7 | $28.6 | $75.6 | $55.9 | | Adjusted EBITDA | $65.0 | $51.3 | $124.2 | $101.9 | - Service revenue increased by **23.6%** in Q2 2025 and **22.9%** in H1 2025 year-over-year[95](index=95&type=chunk)[96](index=96&type=chunk) - Net income increased by **59.1%** in Q2 2025 and **69.4%** in H1 2025 year-over-year[95](index=95&type=chunk)[96](index=96&type=chunk) - Adjusted Net Income and Adjusted EBITDA both showed significant growth in Q2 and H1 2025[96](index=96&type=chunk) [Results of Operations](index=27&type=section&id=Results%20of%20Operations) This section provides a detailed comparison of the company's operating results for the three and six months ended June 30, 2025, and 2024 [Comparison of the Three Months Ended June 30, 2025 and 2024](index=27&type=section&id=Comparison%20of%20the%20Three%20Months%20Ended%20June%2030%2C%202025%20and%202024) This section compares the company's service revenue, operating expenses, and net income for the second quarters of 2025 and 2024, highlighting growth drivers and cost changes Operating Results Comparison (for the three months ended June 30, 2025 and 2024) | (in thousands, except %) | 2025 | 2024 | Period over Period Change ($) | Period over Period Change (%) | | :----------------------- | :--- | :--- | :---------------------------- | :---------------------------- | | Service revenue | $294,086 | $237,928 | $56,158 | 23.6 % | | Total operating expenses | $263,724 | $215,206 | $48,518 | 22.5 % | | Operating income | $30,362 | $22,722 | $7,640 | 33.6 % | | Net income | $20,047 | $12,598 | $7,449 | 59.1 % | - Service revenue in Q2 2025 grew by **23.6%**, primarily driven by AI Services (up **72.2%**) and Trust + Safety (up **29.4%**)[99](index=99&type=chunk) - Revenue by geography showed growth across the Philippines, United States, India, and Rest of World, with the Rest of World experiencing the fastest growth at **43.5%**[102](index=102&type=chunk) - Operating expenses increased by **22.5%**, mainly driven by a **$32.5 million** increase in personnel costs and **$10.2 million** in transaction costs, partially offset by a **$2.3 million** reduction in litigation costs[106](index=106&type=chunk)[107](index=107&type=chunk) [Comparison of the Six Months Ended June 30, 2025 and 2024](index=29&type=section&id=Comparison%20of%20the%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024) This section compares the company's service revenue, operating expenses, and net income for the first six months of 2025 and 2024, detailing growth drivers and cost changes Operating Results Comparison (for the six months ended June 30, 2025 and 2024) | (in thousands, except %) | 2025 | 2024 | Period over Period Change ($) | Period over Period Change (%) | | :----------------------- | :--- | :--- | :---------------------------- | :---------------------------- | | Service revenue | $571,878 | $465,398 | $106,480 | 22.9 % | | Total operating expenses | $507,278 | $419,118 | $88,160 | 21.0 % | | Operating income | $64,600 | $46,280 | $18,320 | 39.6 % | | Net income | $41,195 | $24,312 | $16,883 | 69.4 % | - Service revenue in H1 2025 grew by **22.9%**, primarily driven by AI Services (up **65.5%**) and Trust + Safety (up **30.2%**)[112](index=112&type=chunk) - Revenue by geography showed growth across the Philippines, United States, India, and Rest of World, with the Rest of World experiencing the fastest growth at **40.6%**[115](index=115&type=chunk) - Operating expenses increased by **21.0%**, mainly driven by a **$59.7 million** increase in personnel costs and **$10.2 million** in transaction costs, partially offset by a **$2.6 million** reduction in litigation costs[119](index=119&type=chunk)[120](index=120&type=chunk) [Revenue by Top Clients](index=31&type=section&id=Revenue%20by%20Top%20Clients) This section analyzes the concentration of service revenue from the company's top clients and its strategy for client and revenue diversification Revenue Contribution by Top Clients (for the three and six months ended June 30, 2025 and 2024) | | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Top ten clients | 58 % | 55 % | 58 % | 55 % | | Top twenty clients | 71 % | 68 % | 71 % | 68 % | - The company's top ten clients contributed **58%** of service revenue, and the top twenty clients contributed **71%**, both showing an increase from the prior year[124](index=124&type=chunk) - The company's largest client contributed **26%** of service revenue in both Q2 and H1 2025, up from **20%** in the same periods of 2024[124](index=124&type=chunk) - The company's strategy is to deepen relationships with existing clients by cross-selling new solutions and offering services across multiple geographies, while also identifying and targeting high-growth industry verticals and clients for diversification[125](index=125&type=chunk) [Foreign Currency](index=31&type=section&id=Foreign%20Currency) This section addresses the company's exposure to foreign exchange rate fluctuations, particularly concerning USD-denominated revenue and foreign currency-denominated expenses - As a global company, the company faces foreign exchange rate fluctuation risks, with most revenue denominated in USD but a significant portion of expenses paid in Philippine Pesos, Indian Rupees, Mexican Pesos, and Colombian Pesos[126](index=126&type=chunk) [Non-GAAP Financial Measures](index=31&type=section&id=Non-GAAP%20Financial%20Measures) This section discusses the company's use of non-GAAP financial measures like Adjusted Net Income, Adjusted EPS, EBITDA, Adjusted EBITDA, and Free Cash Flow to assess business performance - The company uses Adjusted Net Income, Adjusted EPS, EBITDA, Adjusted EBITDA, Free Cash Flow, and Adjusted EBITDA to Free Cash Flow Conversion Rate as key non-GAAP metrics to evaluate business performance[127](index=127&type=chunk) - These non-GAAP measures are not substitutes for GAAP-recognized metrics, but management believes they provide additional information for investors to better understand factors and trends affecting the business[128](index=128&type=chunk) [Adjusted Net Income](index=32&type=section&id=Adjusted%20Net%20Income) This section reconciles adjusted net income to net income, highlighting adjustments for amortization, transaction costs, and stock-based compensation Reconciliation of Adjusted Net Income to Net Income (for the three months ended June 30, 2025 and 2024) | (in thousands, except %) | 2025 | 2024 | Period over Period Change ($) | Period over Period Change (%) | | :----------------------- | :--- | :--- | :---------------------------- | :---------------------------- | | Net income | $20,047 | $12,598 | $7,449 | 59.1 % | | Amortization of intangible assets | $4,997 | $4,982 | $15 | 0.3 % | | Transaction costs | $10,164 | — | $10,164 | 100.0 % | | Operational efficiency costs | $924 | — | $924 | 100.0 % | | Foreign currency losses (gains) | $139 | $(1,312) | $1,451 | NM | | Loss (gain) on disposal of assets | $(114) | $94 | $(208) | NM | | Severance costs | $156 | — | $156 | 100.0 % | | Litigation costs | — | $2,318 | $(2,318) | (100.0)% | | Stock-based compensation expense | $8,428 | $11,128 | $(2,700) | (24.3)% | | Tax impacts of adjustments | $(5,044) | $(1,173) | $(3,871) | 330.0 % | | Adjusted Net Income | $39,697 | $28,635 | $11,062 | 38.6 % | | Net Income Margin | 6.8 % | 5.3 % | | | | Adjusted Net Income Margin | 13.5 % | 12.0 % | | | Reconciliation of Adjusted Net Income to Net Income (for the six months ended June 30, 2025 and 2024) | (in thousands, except %) | 2025 | 2024 | Period over Period Change ($) | Period over Period Change (%) | | :----------------------- | :--- | :--- | :---------------------------- | :---------------------------- | | Net income | $41,195 | $24,312 | $16,883 | 69.4 % | | Amortization of intangible assets | $9,973 | $9,967 | $6 | 0.1 % | | Transaction costs | $10,164 | — | $10,164 | 100.0 % | | Operational efficiency costs | $1,227 | — | $1,227 | 100.0 % | | Foreign currency losses (gains) | $1,449 | $(298) | $1,747 | NM | | Gain on disposal of assets | $(144) | $(83) | $(61) | 73.5 % | | Severance costs | $835 | $487 | $348 | 71.5 % | | Litigation costs | — | $2,618 | $(2,618) | (100.0)% | | Stock-based compensation expense | $17,646 | $21,692 | $(4,046) | (18.7)% | | Tax impacts of adjustments | $(6,710) | $(2,788) | $(3,922) | 140.7 % | | Adjusted Net Income | $75,635 | $55,907 | $19,728 | 35.3 % | | Net Income Margin | 7.2 % | 5.2 % | | | | Adjusted Net Income Margin | 13.2 % | 12.0 % | | | - Adjusted Net Income for Q2 2025 increased by **38.6%** to **$39.7 million**, with Adjusted Net Income Margin improving from **12.0%** to **13.5%**[130](index=130&type=chunk) - Adjusted Net Income for H1 2025 increased by **35.3%** to **$75.6 million**, with Adjusted Net Income Margin improving from **12.0%** to **13.2%**[134](index=134&type=chunk) [Adjusted EPS](index=33&type=section&id=Adjusted%20EPS) This section reconciles adjusted EPS to GAAP diluted EPS, providing a per-share view of the company's adjusted profitability Reconciliation of Adjusted EPS to GAAP Diluted EPS (for the three and six months ended June 30, 2025 and 2024) | | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :---------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | GAAP diluted EPS | $0.22 | $0.14 | $0.44 | $0.27 | | Per share adjustments to net income | $0.21 | $0.17 | $0.37 | $0.34 | | Adjusted EPS | $0.43 | $0.31 | $0.81 | $0.61 | | Weighted-average common shares outstanding – diluted | 92,576,805 | 91,629,930 | 93,116,173 | 91,739,908 | - Adjusted EPS for Q2 2025 was **$0.43**, higher than **$0.31** in the same period of 2024[140](index=140&type=chunk) - Adjusted EPS for H1 2025 was **$0.81**, higher than **$0.61** in the same period of 2024[140](index=140&type=chunk) [EBITDA and Adjusted EBITDA](index=33&type=section&id=EBITDA%20and%20Adjusted%20EBITDA) This section reconciles EBITDA and Adjusted EBITDA to net income, detailing adjustments for non-operating and non-cash items Reconciliation of EBITDA and Adjusted EBITDA to Net Income (for the three months ended June 30, 2025 and 2024) | (in thousands, except %) | 2025 | 2024 | Period over Period Change ($) | Period over Period Change (%) | | :----------------------- | :--- | :--- | :---------------------------- | :---------------------------- | | Net income | $20,047 | $12,598 | $7,449 | 59.1 % | | Provision for income taxes | $7,007 | $7,337 | $(330) | (4.5)% | | Financing expenses | $4,635 | $5,490 | $(855) | (15.6)% | | Depreciation | $9,867 | $9,978 | $(111) | (1.1)% | | Amortization of intangible assets | $4,997 | $4,982 | $15 | 0.3 % | | EBITDA | $46,553 | $40,385 | $6,168 | 15.3 % | | Transaction costs | $10,164 | — | $10,164 | 100.0 % | | Operational efficiency costs | $924 | — | $924 | 100.0 % | | Foreign currency losses (gains) | $139 | $(1,312) | $1,451 | NM | | Loss (gain) on disposal of assets | $(114) | $94 | $(208) | NM | | Severance costs | $156 | — | $156 | 100.0 % | | Litigation costs | — | $2,318 | $(2,318) | (100.0)% | | Stock-based compensation expense | $8,428 | $11,128 | $(2,700) | (24.3)% | | Interest income | $(1,298) | $(1,361) | $63 | (4.6)% | | Adjusted EBITDA | $64,952 | $51,252 | $13,700 | 26.7 % | | Net Income Margin | 6.8 % | 5.3 % | | | | Adjusted EBITDA Margin | 22.1 % | 21.5 % | | | Reconciliation of EBITDA and Adjusted EBITDA to Net Income (for the six months ended June 30, 2025 and 2024) | (in thousands, except %) | 2025 | 2024 | Period over Period Change ($) | Period over Period Change (%) | | :----------------------- | :--- | :--- | :---------------------------- | :---------------------------- | | Net income | $41,195 | $24,312 | $16,883 | 69.4 % | | Provision for income taxes | $15,607 | $13,845 | $1,762 | 12.7 % | | Financing expenses | $9,298 | $11,028 | $(1,730) | (15.7)% | | Depreciation | $19,870 | $20,767 | $(897) | (4.3)% | | Amortization of intangible assets | $9,973 | $9,967 | $6 | 0.1 % | | EBITDA | $95,943 | $79,919 | $16,024 | 20.1 % | | Transaction costs | $10,164 | — | $10,164 | 100.0 % | | Operational efficiency costs | $1,227 | — | $1,227 | 100.0 % | | Foreign currency losses (gains) | $1,449 | $(298) | $1,747 | NM | | Gain on disposal of assets | $(144) | $(83) | $(61) | 73.5 % | | Severance costs | $835 | $487 | $348 | 71.5 % | | Litigation costs | — | $2,618 | $(2,618) | (100.0)% | | Stock-based compensation expense | $17,646 | $21,692 | $(4,046) | (18.7)% | | Interest income | $(2,896) | $(2,478) | $(418) | 16.9 % | | Adjusted EBITDA | $124,224 | $101,857 | $22,367 | 22.0 % | | Net Income Margin | 7.2 % | 5.2 % | | | | Adjusted EBITDA Margin | 21.7 % | 21.9 % | | | - Adjusted EBITDA for Q2 2025 increased by **26.7%** to **$65.0 million**, with Adjusted EBITDA Margin improving from **21.5%** to **22.1%**[145](index=145&type=chunk) - Adjusted EBITDA for H1 2025 increased by **22.0%** to **$124.2 million**, with Adjusted EBITDA Margin slightly decreasing from **21.9%** to **21.7%**[149](index=149&type=chunk) [Free Cash Flow](index=35&type=section&id=Free%20Cash%20Flow) This section reconciles free cash flow to net cash provided by operating activities, highlighting the impact of capital expenditures Reconciliation of Free Cash Flow to Net Cash Provided by Operating Activities (for the six months ended June 30, 2025 and 2024) | (in thousands) | 2025 | 2024 | | :------------- | :--- | :--- | | Net cash provided by operating activities | $53,285 | $81,211 | | Purchase of property and equipment | $(31,451) | $(8,088) | | Free Cash Flow | $21,834 | $73,123 | | Conversion of Adjusted EBITDA to Free Cash Flow | 17.6 % | 71.8 % | - Free cash flow for H1 2025 was **$21.8 million**, a significant decrease from **$73.1 million** in the same period of 2024, primarily due to reduced operating cash flow and increased property and equipment purchases[154](index=154&type=chunk) - The conversion of Adjusted EBITDA to Free Cash Flow decreased from **71.8%** in H1 2024 to **17.6%** in H1 2025[154](index=154&type=chunk) [Liquidity and Capital Resources](index=35&type=section&id=Liquidity%20and%20Capital%20Resources) This section details the company's liquidity sources, including cash and credit facilities, net debt, and share repurchase activities, and its ability to meet future financial needs - As of June 30, 2025, the company's primary liquidity sources were **$181.9 million** in cash and cash equivalents and **$190 million** available for borrowing under the 2022 Revolving Credit Facility[155](index=155&type=chunk) - As of June 30, 2025, the company's total net debt was **$249.6 million**, and it was in compliance with all debt covenants[156](index=156&type=chunk) - In H1 2025, the company repurchased **2,112,247** shares of Class A common stock for **$27.7 million** and has since suspended its stock repurchase program to align with the merger agreement[157](index=157&type=chunk) - The company anticipates that existing cash and credit facilities will be sufficient to meet working capital and capital expenditure needs for the next 12 months[158](index=158&type=chunk) [Cash Flows](index=36&type=section&id=Cash%20Flows) This section summarizes the company's cash flows from operating, investing, and financing activities, explaining the key drivers of changes in each category Summary of Cash Flows (for the six months ended June 30, 2025 and 2024) | (in thousands) | 2025 | 2024 | | :------------- | :--- | :--- | | Net cash provided by operating activities | $53,285 | $81,211 | | Net cash used in investing activities | $(31,451) | $(8,088) | | Net cash used in financing activities | $(33,493) | $(18,614) | - Net cash provided by operating activities in H1 2025 was **$53.3 million**, a decrease from the prior year, primarily due to increased net income offset by changes in operating assets and liabilities[161](index=161&type=chunk) - Net cash used in investing activities increased to **$31.5 million** in H1 2025, mainly due to higher costs for facility construction and technology equipment purchases[162](index=162&type=chunk) - Net cash used in financing activities increased to **$33.5 million** in H1 2025, primarily due to increased stock repurchases and tax payments related to net share settlements[163](index=163&type=chunk) [Critical Accounting Estimates](index=36&type=section&id=Critical%20Accounting%20Estimates) This section states that there have been no significant changes to the company's critical accounting estimates compared to those disclosed in the annual report - There have been no significant changes to the company's critical accounting estimates in this quarterly report compared to those disclosed in the annual report[164](index=164&type=chunk) [Recent Accounting Pronouncements](index=37&type=section&id=Recent%20Accounting%20Pronouncements) This section refers to Note 2, "Summary of Significant Accounting Policies," for information on recently adopted and evaluated accounting pronouncements - For information on recently adopted and evaluated accounting pronouncements, refer to Note 2, "Summary of Significant Accounting Policies," in the financial statements[165](index=165&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=37&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This chapter discloses the company's market risks, primarily foreign currency risk, interest rate risk, and credit risk, and how these risks are managed through measures like forward contracts [Foreign Currency Risk](index=37&type=section&id=Foreign%20Currency%20Risk) This section details the company's exposure to foreign currency risk due to revenue and expense currency mismatches and its use of forward contracts for hedging - The company faces foreign currency risk primarily because most of its revenue is denominated in USD, while a significant portion of its expenses is paid in Philippine Pesos, Indian Rupees, Mexican Pesos, and Colombian Pesos[167](index=167&type=chunk) Summary of Foreign Exchange Rates and Changes (for the six months ended June 30, 2025 and 2024) | | Philippine Peso | Indian Rupee | Mexican Peso | Colombian Peso | | :-------------------------------- | :-------------- | :----------- | :----------- | :------------- | | Average exchange rate against the U.S. dollar (Six months ended June 30, 2025) | 57.11 | 86.09 | 19.97 | 4,192.17 | | Average exchange rate against the U.S. dollar (Six months ended June 30, 2024) | 56.90 | 83.23 | 17.11 | 3,922.04 | | Depreciation | 0.4 % | 3.4 % | 16.7 % | 6.9 % | - The company uses forward foreign exchange contracts to hedge against foreign currency fluctuation risks, aiming to reduce volatility in earnings and cash flows related to anticipated transactions and intercompany balances[169](index=169&type=chunk) [Interest Rate Risk](index=37&type=section&id=Interest%20Rate%20Risk) This section describes the company's interest rate risk, primarily from variable-rate borrowings under its credit facility, and quantifies the potential impact of rate changes - The company faces interest rate risk primarily from changes in interest rates on outstanding borrowings under its 2022 Credit Facilities, with all borrowings bearing interest at SOFR plus **2.25%**[171](index=171&type=chunk) - As of June 30, 2025, the total outstanding principal was **$250.4 million**, with an effective interest rate of **6.646%**; a hypothetical **10%** increase or decrease in SOFR would result in an approximate **$1.1 million** increase or decrease in interest expense over the next 12 months[171](index=171&type=chunk) [Credit Risk](index=38&type=section&id=Credit%20Risk) This section addresses the company's credit risk, specifically highlighting the concentration of accounts receivable from a single major customer - As of June 30, 2025, the company's net accounts receivable was **$231.4 million**, with **$43.2 million** from one customer, representing approximately **19%** of total accounts receivable[172](index=172&type=chunk) [Item 4. Controls and Procedures](index=38&type=section&id=Item%204.%20Controls%20and%20Procedures) This chapter describes the effectiveness of the company's disclosure controls and procedures and changes in internal control over financial reporting [Disclosure Controls and Procedures](index=38&type=section&id=Disclosure%20Controls%20and%20Procedures) This section confirms the effectiveness of the company's disclosure controls and procedures, designed to ensure timely and accurate reporting of required information - The company maintains disclosure controls and procedures designed to ensure that information required to be disclosed under the Exchange Act is recorded, processed, summarized, and reported within specified time periods[173](index=173&type=chunk) - As of June 30, 2025, the company's Chief Executive Officer and Chief Financial Officer evaluated and concluded that the design and operation of disclosure controls and procedures were effective[174](index=174&type=chunk) [Changes in Internal Control over Financial Reporting](index=38&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) This section states that there were no material changes in the company's internal control over financial reporting during the most recent fiscal quarter - There were no changes in the company's internal control over financial reporting during the most recent fiscal quarter that materially affected, or are reasonably likely to materially affect, internal control over financial reporting[175](index=175&type=chunk) [PART II. OTHER INFORMATION](index=39&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=39&type=section&id=Item%201.%20Legal%20Proceedings) This chapter provides information on legal proceedings, claims, and litigation faced by the company by referencing Note 9, "Commitments and Contingencies," to the financial statements - Information on legal proceedings can be found in Note 9, "Commitments and Contingencies," to the financial statements[178](index=178&type=chunk) [Item 1A. Risk Factors](index=39&type=section&id=Item%201A.%20Risk%20Factors) This chapter outlines various risks that could materially and adversely affect the company's financial condition, operating results, or cash flows, with a particular focus on risks related to the proposed merger [Risks Related to the Proposed Merger](index=39&type=section&id=Risks%20Related%20to%20the%20Proposed%20Merger) This section details risks associated with the proposed merger, including potential failure to complete, negative impacts on business operations, and financial implications like termination fees - The proposed merger may not be completed on the anticipated terms or timeline, or at all, which could adversely affect the company's stock price, business, financial condition, and results of operations[180](index=180&type=chunk) - If the merger is not completed, the company may be required to pay a termination fee of **$39.0 million** to the merger company and incur substantial merger-related costs[181](index=181&type=chunk)[187](index=187&type=chunk) - The announcement and pendency of the merger could negatively impact the company's business, financial condition, and results of operations, including difficulties in retaining and recruiting key personnel, and potential delays or terminations of collaborations with customers and business partners[183](index=183&type=chunk) - Terms in the merger agreement may deter potential competing acquirers or lead to acquisition proposals at a lower price than would otherwise be offered[185](index=185&type=chunk) - The company's directors and executive officers have financial interests in the merger that are different from, or in addition to, those of common shareholders[188](index=188&type=chunk) - If the merger is completed, shareholders will forgo the opportunity to benefit from any potential future increase in the company's value[189](index=189&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=42&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This chapter discloses the company's Class A common stock repurchases during the reporting period, including quantities, average prices, and remaining authorization, noting the suspension of the repurchase program due to the merger agreement Issuer Purchases of Equity Securities (for the three months ended June 30, 2025) | Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (in thousands) | | :----------------------------- | :------------------------------- | :--------------------------- | :----------------------------------------------------------------- | :------------------------------------------------------------------------------------------------- | | April 1, 2025 through April 30, 2025 | 1,169,385 | $12.81 | 1,169,385 | $14,565 | | May 1, 2025 through May 31, 2025 | 192,171 | $13.87 | 192,171 | $11,899 | | June 1, 2025 through June 30, 2025 | — | — | — | $11,899 | | Total | 1,361,556 | $12.96 | 1,361,556 | | - In Q2 2025, the company repurchased **1,361,556** shares of Class A common stock at an average price of **$12.96** per share[191](index=191&type=chunk) - As of June 30, 2025, **$11.9 million** remained available for repurchase under the company's stock repurchase plan, which has been suspended due to the merger agreement[191](index=191&type=chunk) [Item 3. Defaults Upon Senior Securities](index=42&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This chapter states that the company did not experience any defaults upon senior securities during the reporting period - The company did not experience any defaults upon senior securities during the reporting period[193](index=193&type=chunk) [Item 4. Mine Safety Disclosures](index=42&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This chapter states that mine safety disclosures are not applicable to the company's business - Mine safety disclosures are not applicable to the company[194](index=194&type=chunk) [Item 5. Other Information](index=42&type=section&id=Item%205.%20Other%20Information) This chapter states that the company has no other information to disclose during the reporting period - The company has no other information to disclose during the reporting period[195](index=195&type=chunk) [Item 6. Exhibits](index=43&type=section&id=Item%206.%20Exhibits) This chapter lists the exhibits filed with the quarterly report, including the merger agreement, organizational documents, voting and support agreements, executive certifications, and XBRL data files - Exhibits include the merger agreement, organizational documents, voting and support agreements, executive certifications, and XBRL data files[196](index=196&type=chunk) - The agreements and documents in the exhibits are provided solely to inform of their terms and should not be relied upon for factual information or other disclosures[196](index=196&type=chunk) [Signatures](index=44&type=section&id=Signatures) This chapter contains the company's report signature by the Chief Financial Officer, as required by the Securities Exchange Act of 1934 - This report was signed by Balaji Sekar, Chief Financial Officer of TaskUs, Inc., on August 7, 2025[198](index=198&type=chunk)

[Executive Summary & Company Overview](index=1&type=section&id=Executive%20Summary%20%26%20Company%20Overview) This section provides an overview of TaskUs's Q2 2025 financial and operational performance and company description [Second Quarter 2025 Financial and Frontline Highlights](index=1&type=section&id=Second%20Quarter%202025%20Financial%20and%20Frontline%20Highlights) TaskUs reported strong Q2 2025 financial performance with significant year-over-year growth in revenue and profitability | Metric | Q2 2025 ($ in thousands) | Q2 2024 ($ in thousands) | % Change (YoY) | | :-------------------------------- | :----------------------- | :----------------------- | :------------- | | Service revenue | 294,086 | 237,928 | 23.6 % | | Net income | 20,047 | 12,598 | 59.1 % | | Net income margin | 6.8 % | 5.3 % | | | Adjusted Net Income | 39,697 | 28,635 | 38.6 % | | Adjusted Net Income margin | 13.5 % | 12.0 % | | | Diluted EPS | 0.22 | 0.14 | 57.1 % | | Adjusted EPS | 0.43 | 0.31 | 38.7 % | | Adjusted EBITDA | 64,952 | 51,252 | 26.7 % | | Adjusted EBITDA margin | 22.1 % | 21.5 % | | | Net cash provided by operating activities | 17,009 | 30,034 | (43.4)% | | Free Cash Flow | 38 | 25,518 | (99.9)% | | Conversion of Adjusted EBITDA to Free Cash Flow | 0.1 % | 49.8 % | | | Adjusted Free Cash Flow | 6,518 | 25,518 | (74.5)% | | Conversion of Adjusted EBITDA to Adjusted Free Cash Flow | 10.0 % | 49.8 % | | - All three service lines achieved **double-digit year-over-year revenue growth** in Q2 2025[2](index=2&type=chunk) - **AI Services** was TaskUs' fastest-growing service line for the second consecutive quarter[5](index=5&type=chunk) - **Trust + Safety revenue growth** remained strong at nearly **30% year-over-year**[5](index=5&type=chunk) - TaskUs announced strategic partnerships with Decagon and Regal to accelerate **Agentic AI-Powered Customer Experience**[5](index=5&type=chunk) - The company ended Q2 2025 with approximately **60,400 teammates worldwide**[5](index=5&type=chunk) [About TaskUs](index=1&type=section&id=About%20TaskUs) TaskUs is a global provider of outsourced digital services and next-generation customer experience, serving innovative companies - TaskUs provides outsourced digital services and next-generation customer experience to innovative companies, helping them represent, protect, and grow their brands[3](index=3&type=chunk) - The company serves clients in fast-growing sectors including social media, e-commerce, gaming, streaming media, food delivery, ride-sharing, technology, financial services, and healthcare[3](index=3&type=chunk) - As of June 30, 2025, TaskUs had a worldwide headcount of approximately **60,400 people** across 30 locations in 13 countries, including the United States, the Philippines, and India[3](index=3&type=chunk) [GAAP Financial Statements](index=4&type=section&id=GAAP%20Financial%20Statements) This section presents TaskUs's unaudited condensed consolidated GAAP financial statements, including income, balance sheets, and cash flows [Condensed Consolidated Statements of Income (Unaudited)](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20%28Unaudited%29) The income statements show substantial increases in service revenue and net income for Q2 and H1 2025 | Metric | Three months ended June 30, 2025 ($ in thousands) | Three months ended June 30, 2024 ($ in thousands) | Six months ended June 30, 2025 ($ in thousands) | Six months ended June 30, 2024 ($ in thousands) | | :-------------------------------- | :------------------------------------------------ | :------------------------------------------------ | :---------------------------------------------- | :---------------------------------------------- | | Service revenue | 294,086 | 237,928 | 571,878 | 465,398 | | Total operating expenses | 263,724 | 215,206 | 507,278 | 419,118 | | Operating income | 30,362 | 22,722 | 64,600 | 46,280 | | Income before income taxes | 27,054 | 19,935 | 56,802 | 38,157 | | Net income | 20,047 | 12,598 | 41,195 | 24,312 | | Diluted EPS | 0.22 | 0.14 | 0.44 | 0.27 | [Condensed Consolidated Balance Sheets (Unaudited)](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20%28Unaudited%29) The balance sheet as of June 30, 2025, indicates growth in total assets and shareholders' equity | Metric | June 30, 2025 ($ in thousands) | December 31, 2024 ($ in thousands) | | :-------------------------------- | :----------------------------- | :--------------------------------- | | Total current assets | 471,129 | 435,352 | | Total noncurrent assets | 547,148 | 517,946 | | Total assets | 1,018,277 | 953,298 | | Total current liabilities | 166,025 | 152,025 | | Total noncurrent liabilities | 307,702 | 304,354 | | Total liabilities | 473,727 | 456,379 | | Total shareholders' equity | 544,550 | 496,919 | - Cash and cash equivalents decreased from **$192,166 thousand** at December 31, 2024, to **$181,916 thousand** at June 30, 2025[12](index=12&type=chunk) - Accounts receivable, net, increased from **$198,996 thousand** to **$231,442 thousand**[12](index=12&type=chunk) - Property and equipment, net, increased from **$66,775 thousand** to **$86,545 thousand**[12](index=12&type=chunk) [Condensed Consolidated Statement of Cash Flows (Unaudited)](index=6&type=section&id=Condensed%20Consolidated%20Statement%20of%20Cash%20Flows%20%28Unaudited%29) Cash flow statements for H1 2025 show decreased operating cash and increased investing and financing cash use | Cash Flow Activity | Six months ended June 30, 2025 ($ in thousands) | Six months ended June 30, 2024 ($ in thousands) | | :-------------------------------- | :---------------------------------------------- | :---------------------------------------------- | | Net cash provided by operating activities | 53,285 | 81,211 | | Net cash used in investing activities | (31,451) | (8,088) | | Net cash used in financing activities | (33,493) | (18,614) | | Increase (decrease) in cash and cash equivalents | (11,659) | 54,509 | | Cash and cash equivalents at end of period | 181,916 | 171,133 | - Purchases of property and equipment increased significantly from **$8,088 thousand** in H1 2024 to **$31,451 thousand** in H1 2025[14](index=14&type=chunk) - Payments for stock repurchases increased from **$15,072 thousand** in H1 2024 to **$27,783 thousand** in H1 2025[14](index=14&type=chunk) [Non-GAAP Financial Measures & Reconciliations](index=7&type=section&id=Non-GAAP%20Financial%20Measures%20%26%20Reconciliations) This section provides reconciliations and definitions for TaskUs's non-GAAP financial measures, offering insights into adjusted performance [Adjusted EBITDA Reconciliation](index=7&type=section&id=Adjusted%20EBITDA%20Reconciliation) Adjusted EBITDA for Q2 2025 increased year-over-year with a slight margin improvement after specific non-GAAP adjustments | Metric | Three months ended June 30, 2025 ($ in thousands) | Three months ended June 30, 2024 ($ in thousands) | Six months ended June 30, 2025 ($ in thousands) | Six months ended June 30, 2024 ($ in thousands) | | :-------------------------------- | :------------------------------------------------ | :------------------------------------------------ | :---------------------------------------------- | :---------------------------------------------- | | Net income | 20,047 | 12,598 | 41,195 | 24,312 | | EBITDA | 46,553 | 40,385 | 95,943 | 79,919 | | Adjusted EBITDA | 64,952 | 51,252 | 124,224 | 101,857 | | Adjusted EBITDA Margin | 22.1 % | 21.5 % | 21.7 % | 21.9 % | - Adjustments to EBITDA for Q2 2025 included **$10,164 thousand** for transaction costs, **$924 thousand** for operational efficiency costs, and **$8,428 thousand** for stock-based compensation expense[16](index=16&type=chunk) [Adjusted Net Income Reconciliation](index=8&type=section&id=Adjusted%20Net%20Income%20Reconciliation) Adjusted Net Income showed strong Q2 2025 growth and improved margin after adjusting for non-recurring and non-cash items | Metric | Three months ended June 30, 2025 ($ in thousands) | Three months ended June 30, 2024 ($ in thousands) | Six months ended June 30, 2025 ($ in thousands) | Six months ended June 30, 2024 ($ in thousands) | | :-------------------------------- | :------------------------------------------------ | :------------------------------------------------ | :---------------------------------------------- | :---------------------------------------------- | | Net income | 20,047 | 12,598 | 41,195 | 24,312 | | Adjusted Net Income | 39,697 | 28,635 | 75,635 | 55,907 | | Adjusted Net Income Margin | 13.5 % | 12.0 % | 13.2 % | 12.0 % | - Key adjustments to Net Income for Q2 2025 included **$4,997 thousand** for amortization of intangible assets, **$10,164 thousand** for transaction costs, and **$8,428 thousand** for stock-based compensation expense[21](index=21&type=chunk) - Tax impacts of adjustments resulted in a tax benefit of **$(5,044) thousand** for Q2 2025[21](index=21&type=chunk)[24](index=24&type=chunk) [Adjusted EPS Reconciliation](index=9&type=section&id=Adjusted%20EPS%20Reconciliation) Adjusted EPS for Q2 2025 significantly increased year-over-year, reflecting adjustments to net income for a clearer per-share view | Metric | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | GAAP diluted EPS | $0.22 | $0.14 | $0.44 | $0.27 | | Per share adjustments to net income | 0.21 | 0.17 | 0.37 | 0.34 | | Adjusted EPS | $0.43 | $0.31 | $0.81 | $0.61 | - The weighted-average common shares outstanding (diluted) for Q2 2025 were **92,576,805**[27](index=27&type=chunk) [Free Cash Flow Reconciliation](index=10&type=section&id=Free%20Cash%20Flow%20Reconciliation) Free Cash Flow and Adjusted Free Cash Flow decreased significantly in Q2 and H1 2025 due to higher capital expenditures | Metric | Three months ended June 30, 2025 ($ in thousands) | Three months ended June 30, 2024 ($ in thousands) | Six months ended June 30, 2025 ($ in thousands) | Six months ended June 30, 2024 ($ in thousands) | | :-------------------------------- | :------------------------------------------------ | :------------------------------------------------ | :---------------------------------------------- | :---------------------------------------------- | | Net cash provided by operating activities | 17,009 | 30,034 | 53,285 | 81,211 | | Purchase of property and equipment | (16,971) | (4,516) | (31,451) | (8,088) | | Free Cash Flow | 38 | 25,518 | 21,834 | 73,123 | | Adjusted Free Cash Flow | 6,518 | 25,518 | 28,956 | 73,123 | | Conversion of Adjusted EBITDA to Free Cash Flow | 0.1 % | 49.8 % | 17.6 % | 71.8 % | | Conversion of Adjusted EBITDA to Adjusted Free Cash Flow | 10.0 % | 49.8 % | 23.3 % | 71.8 % | - Payments for transaction costs, litigation costs, and operational efficiency costs were significant adjustments to Free Cash Flow in 2025[29](index=29&type=chunk) [Definitions of Non-GAAP Metrics](index=10&type=section&id=Definitions%20of%20Non-GAAP%20Metrics) This section defines TaskUs's non-GAAP financial measures, including EBITDA, Adjusted Net Income, and Free Cash Flow - EBITDA is defined as net income before income taxes, financing expenses, depreciation, and amortization of intangible assets, used to eliminate differences caused by capital structures, tax positions, and asset costs[30](index=30&type=chunk) - Adjusted EBITDA further adjusts EBITDA for items hindering period-over-period comparison, such as operational efficiency costs, foreign currency effects, severance, litigation costs, stock-based compensation, and interest income[31](index=31&type=chunk) - Adjusted Net Income adjusts net income for amortization of intangible assets and other non-recurring or non-cash items, along with their related tax impacts, to provide a clearer view of core profitability[33](index=33&type=chunk) - Adjusted EPS is calculated as Adjusted Net Income divided by diluted weighted-average shares outstanding, aiming to show earnings per share excluding unusual items[35](index=35&type=chunk) - Free Cash Flow is defined as net cash provided by operating activities minus cash used for property and equipment purchases, indicating the company's ability to generate additional cash[36](index=36&type=chunk) - Adjusted Free Cash Flow further adjusts Free Cash Flow by excluding payments for non-recurring transaction, operational efficiency, and certain litigation costs[37](index=37&type=chunk) [Additional Information](index=2&type=section&id=Additional%20Information) This section includes cautionary statements regarding forward-looking information, general explanations of non-GAAP measures, and contact details [Forward-Looking Statements](index=2&type=section&id=Forward-Looking%20Statements) This cautionary statement highlights that forward-looking statements are subject to risks and uncertainties that could cause actual results to differ - Forward-looking statements are not historical facts and reflect current views on operations, financial performance, industry, and macroeconomic impact[6](index=6&type=chunk) - Key risk factors include risks related to a proposed merger, loss of business or non-payment from clients, inadequate service, inability to adapt to market trends or incorporate AI, data security breaches, negative publicity, global economic conditions, dependence on international operations (Philippines and India), and competitive pressure[6](index=6&type=chunk) - TaskUs undertakes no obligation to publicly update or revise any forward-looking statements, except as required by law[6](index=6&type=chunk) [Non-GAAP Measures (General Explanation)](index=2&type=section&id=Non-GAAP%20Measures%20%28General%20Explanation%29) TaskUs uses non-GAAP measures to supplement GAAP results, believing they illustrate underlying business trends, but they are not GAAP compliant - Non-GAAP measures like Adjusted Net Income, Adjusted EBITDA, and Free Cash Flow are used to illustrate underlying business trends, establish budgets, and evaluate performance[7](index=7&type=chunk) - These non-GAAP measures are not calculated in accordance with GAAP, are not comparable to GAAP measures, and may not be comparable to similarly described non-GAAP measures reported by other companies[7](index=7&type=chunk) - Non-GAAP financial measures should not be evaluated in isolation but considered together with GAAP consolidated financial statements[7](index=7&type=chunk) [Investor and Media Contacts](index=3&type=section&id=Investor%20and%20Media%20Contacts) This section provides the contact information for investor relations and media inquiries for TaskUs - Investor Contact: **Trent Thrash, IR@taskus.com**[8](index=8&type=chunk) - Media Contact: **Ramya Kumaraswamy, mediainquiries@taskus.com**[8](index=8&type=chunk)

Group 1 - Halper Sadeh LLC is investigating NV5 Global, Inc. for potential violations related to its sale to Acuren Corporation, where NV5 shareholders will receive approximately $23.00 per share, consisting of $10.00 in cash and an estimated $13.00 in Acuren common stock [1] - TaskUs, Inc. is also under investigation for its sale to affiliates of Blackstone and executives and founders of TaskUs for $16.50 per share [2] - The firm may seek increased consideration for shareholders, additional disclosures, and other relief on behalf of shareholders, operating on a contingent fee basis [3] Group 2 - Shareholders are encouraged to contact Halper Sadeh LLC free of charge to discuss their legal rights and options [4]

Core Viewpoint - Kaskela Law LLC has initiated an investigation into the fairness of the proposed buyout of TaskUs, Inc. at a price of $16.50 per share, questioning whether this price undervalues the company's shares [1][3]. Group 1: Buyout Details - On May 9, 2025, TaskUs announced an agreement to be acquired by its co-founders and Blackstone at a price of $16.50 per share, after which TaskUs's shares will no longer be publicly traded [2]. - The investigation aims to assess if TaskUs's investors are receiving adequate monetary compensation for their shares and whether there were any breaches of fiduciary duty or violations of securities laws regarding the buyout price [3]. Group 2: Analyst Opinions - At the time of the buyout announcement, several stock analysts had price targets for TaskUs shares exceeding $20.00 per share, indicating a potential undervaluation in the proposed buyout price [3]. Group 3: Investor Actions - TaskUs shareholders who believe the buyout price is insufficient are encouraged to contact Kaskela Law LLC for information regarding their legal rights and options [4].

Core Viewpoint - Kaskela Law LLC has initiated an investigation into the fairness of the proposed buyout of TaskUs, Inc. at a price of $16.50 per share, questioning whether this price undervalues the company's shares [1][3]. Group 1: Buyout Details - On May 9, 2025, TaskUs announced an agreement to be acquired by its co-founders and Blackstone at a price of $16.50 per share, after which TaskUs's shares will no longer be publicly traded [2]. - The investigation aims to assess if TaskUs's investors are receiving adequate monetary compensation for their shares and whether the board of directors violated fiduciary duties or securities laws in agreeing to the buyout price [3]. Group 2: Analyst Opinions - At the time of the buyout announcement, several stock analysts had price targets for TaskUs shares exceeding $20.00 per share, indicating a potential undervaluation in the proposed buyout price [3]. Group 3: Shareholder Actions - TaskUs shareholders who believe the buyout price is too low are encouraged to contact Kaskela Law LLC for information regarding their legal rights and options [4].

Company Overview - Sanas has developed the world's first Real-Time Speech Understanding Platform, focusing on enhancing global communication through AI technologies [4] - TaskUs is a leading provider of outsourced digital services, serving innovative companies across various sectors, with a global workforce of approximately 59,000 as of December 31, 2024 [5] Implementation and Impact - TaskUs has fully implemented Sanas' Noise Cancellation technology across its global operations, upgrading 20,000 of its agents to improve call clarity and agent effectiveness [2][3] - The implementation of Sanas has resulted in significant improvements in key performance metrics, including agent morale, confidence, and retention, particularly for those in high-noise environments [3] Technology Features - Sanas' Noise Cancellation technology is designed to eliminate background noise and enhance voice clarity, allowing agents to have clearer and more professional interactions with customers [3] - The technology is provided free of charge, which contributes to cost savings for TaskUs while enhancing the overall customer experience [3][6]

Group 1 - Coinbase was aware of a customer data breach as early as January, which is linked to a larger security vulnerability, potentially costing the company up to $400 million [1][2] - The breach involved a TaskUs employee in India who was found using a personal phone to capture work computer screens, leading to the sale of customer information to hackers [1][2] - Following the incident, over 200 TaskUs employees were reportedly laid off, indicating a significant response to the breach [1] Group 2 - The data breach has affected the personal information of 69,461 Coinbase users, including approximately 217 residents of Maine [2] - TaskUs, a digital outsourcing service provider, has terminated the contract with the involved team and is cooperating with investigations [2]

Core Viewpoint - The proposed buyout of TaskUs, Inc. by its three largest shareholders, including Blackstone, is under investigation due to concerns about the fairness of the deal and potential conflicts of interest [1][4]. Company Overview - TaskUs is recognized as a leading provider of outsourced digital services and next-generation customer experience for innovative companies [2]. - The company has a positive outlook, with Wall Street analysts setting an average one-year stock price target of $18.50 per share, and a high target of $22 per share [2]. Buyout Details - On May 9, 2025, TaskUs announced its sale to a buyer group that already holds a majority of the company's voting power, with the buyout price set at $16.50 per share for public shareholders [3]. - The buyout is being pursued by Blackstone and co-founders Bryce Maddock and Jaspar Weir, who will continue their roles in the company post-acquisition [3][4]. Legal Investigation - Julie & Holleman LLP is investigating the buyout for potential legal claims, citing concerns over the deal's fairness and the low buyout price compared to the company's true value [1][4].

[Cautionary Note Regarding Forward-Looking Statements](index=4&type=section&id=CAUTIONARY%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This section warns investors about forward-looking statements and outlines various risks that could impact actual results - This report contains forward-looking statements subject to various risks and uncertainties that could cause actual results to differ materially. Investors are cautioned not to place undue reliance on these statements[10](index=10&type=chunk)[11](index=11&type=chunk) - Key risk factors include dependence on key clients, potential contract terminations, failure to acquire/retain new clients, inadequate service, inability to adapt to market/technology trends, utilization of AI, security breaches, mental health impacts of Trust + Safety work, criminal/fraudulent activities, global economic/political conditions, reliance on international operations (Philippines, India), regulatory compliance (data privacy), currency fluctuations, brand reputation, pricing pressure, volatile economic conditions, dependence on senior management, increased employee expenses, expansion difficulties, reliance on technology, maintaining asset utilization, control by Blackstone/Co-Founders, and volatility of Class A common stock price[11](index=11&type=chunk)[12](index=12&type=chunk)[14](index=14&type=chunk) [Website and Social Media Disclosure](index=6&type=section&id=WEBSITE%20AND%20SOCIAL%20MEDIA%20DISCLOSURE) The company utilizes its website and social media as official channels for material information disclosure, advising investors to monitor them - TaskUs, Inc. uses its official website (www.taskus.com) and social media channels (Facebook, Instagram, LinkedIn, YouTube, X) as distribution channels for company information, which may be deemed material. Investors should monitor these channels in addition to traditional SEC filings and public calls[16](index=16&type=chunk) [Part I. Financial Information](index=7&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section provides the company's unaudited condensed consolidated financial statements and management's discussion and analysis of financial condition and results of operations [Item 1. Financial Statements](index=7&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for TaskUs, Inc., including balance sheets, statements of income, comprehensive income, shareholders' equity, and cash flows for the period ended March 31, 2025, and comparative periods. These statements are prepared in accordance with US GAAP for interim financial information [Unaudited Condensed Consolidated Balance Sheets](index=7&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) This section presents the company's financial position, detailing assets, liabilities, and shareholders' equity at specific dates Unaudited Condensed Consolidated Balance Sheets (in thousands) | (in thousands) | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Total current assets | $455,672 | $435,352 | | Total noncurrent assets | $529,792 | $517,946 | | **Total assets** | **$985,464** | **$953,298** | | **Liabilities** | | | | Total current liabilities | $158,768 | $152,025 | | Total noncurrent liabilities | $306,385 | $304,354 | | **Total liabilities** | **$465,153** | **$456,379** | | **Shareholders' Equity** | | | | Total shareholders' equity | $520,311 | $496,919 | | **Total liabilities and shareholders' equity** | **$985,464** | **$953,298** | [Unaudited Condensed Consolidated Statements of Income](index=8&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Income) This section outlines the company's financial performance over a period, reporting revenues, expenses, and net income Unaudited Condensed Consolidated Statements of Income (in thousands, except share and per share data) | (in thousands, except share and per share data) | Three months ended March 31, 2025 | Three months ended March 31, 2024 | | :--- | :--- | :--- | | Service revenue | $277,792 | $227,470 | | Total operating expenses | $243,554 | $203,912 | | Operating income | $34,238 | $23,558 | | Income before income taxes | $29,748 | $18,222 | | Provision for income taxes | $8,600 | $6,508 | | Net income | $21,148 | $11,714 | | Net income per common share: Basic | $0.23 | $0.13 | | Net income per common share: Diluted | $0.23 | $0.13 | [Unaudited Condensed Consolidated Statements of Comprehensive Income](index=9&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) This section details the company's comprehensive income, including net income and other comprehensive income items Unaudited Condensed Consolidated Statements of Comprehensive Income (in thousands) | (in thousands) | Three months ended March 31, 2025 | Three months ended March 31, 2024 | | :--- | :--- | :--- | | Net income | $21,148 | $11,714 | | Unrealized gain on derivative contracts, net | $5,282 | — | | Retirement benefit reserves, net | $(21) | $5 | | Foreign currency translation adjustments | $3,237 | $(3,313) | | Comprehensive income | $29,646 | $8,406 | [Unaudited Condensed Consolidated Statements of Shareholders' Equity](index=10&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Shareholders'%20Equity) This section tracks changes in the company's equity accounts, reflecting stock transactions and retained earnings Unaudited Condensed Consolidated Statements of Shareholders' Equity (in thousands, except share data) | (in thousands, except share data) | Balance as of Dec 31, 2024 | Issuance of common stock for settlement of equity awards | Shares withheld related to net share settlement | Repurchase of common stock | Stock-based compensation expense | Net income | Other comprehensive income | Balance as of Mar 31, 2025 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Class A common stock (shares) | 33,215,441 | 1,237,630 | (376,750) | — | — | — | — | 34,076,321 | | Class A common stock (amount) | $332 | $12 | $(3) | — | — | — | — | $341 | | Class B convertible common stock (shares) | 70,032,694 | — | — | — | — | — | — | 70,032,694 | | Class B convertible common stock (amount) | $700 | — | — | — | — | — | — | $700 | | Additional paid-in capital | $726,917 | $206 | $(5,111) | — | $8,749 | — | — | $730,761 | | Accumulated deficit | $(44,114) | — | — | — | — | $21,148 | — | $(22,966) | | Accumulated other comprehensive loss | $(25,389) | — | — | — | — | — | $8,498 | $(16,891) | | Treasury stock (shares) | 13,323,977 | — | — | 750,691 | — | — | — | 14,074,668 | | Treasury stock (amount) | $(161,527) | — | — | $(10,107) | — | — | — | $(171,634) | | **Total shareholders' equity** | **$496,919** | **$218** | **$(5,114)** | **$(10,107)** | **$8,749** | **$21,148** | **$8,498** | **$520,311** | [Unaudited Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section reports the company's cash inflows and outflows from operating, investing, and financing activities Unaudited Condensed Consolidated Statements of Cash Flows (in thousands) | (in thousands) | Three months ended March 31, 2025 | Three months ended March 31, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $36,276 | $51,177 | | Net cash used in investing activities | $(14,480) | $(3,572) | | Net cash used in financing activities | $(17,955) | $(5,664) | | Increase in cash and cash equivalents | $3,841 | $41,941 | | Effect of exchange rate changes on cash | $845 | $(2,367) | | Cash and cash equivalents at beginning of period | $192,166 | $125,776 | | Cash and cash equivalents at end of period | $196,852 | $165,350 | [Notes to Unaudited Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the unaudited condensed consolidated financial statements, covering business description, accounting policies, revenue disaggregation, forward contracts, property and equipment, goodwill and intangibles, long-term debt, leases, commitments and contingencies, stock-based compensation, income taxes, earnings per share, accumulated other comprehensive loss, segment information, and subsequent events [1. Description of Business and Organization](index=12&type=section&id=1.%20Description%20of%20Business%20and%20Organization) This note describes TaskUs, Inc.'s core business as a provider of outsourced digital services and next-generation customer experience - TaskUs, Inc. is a provider of outsourced digital services and next-generation customer experience, helping clients represent, protect, and grow their brands[33](index=33&type=chunk) - The company's global, omni-channel delivery model focuses on three key services: Digital Customer Experience (omnichannel customer care, learning experience, sales/customer acquisition), Trust + Safety (content moderation, risk management, compliance, identity management, fraud), and AI Services (large language model support, data labeling, annotation, transcription for AI training)[33](index=33&type=chunk)[36](index=36&type=chunk) [2. Summary of Significant Accounting Policies](index=12&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the key accounting principles and estimates used in preparing the financial statements - The financial statements are prepared in accordance with US GAAP for interim financial information, with no material changes to significant accounting policies described in the Annual Report[34](index=34&type=chunk)[35](index=35&type=chunk) - Significant estimates and assumptions are made for useful lives/impairment of fixed assets, credit loss allowances, deferred tax assets, lease liabilities, forward contracts, stock-based compensation, acquired intangibles/goodwill, and contingencies[37](index=37&type=chunk) - Client A represented **26% of service revenue** for the three months ended March 31, 2025 (up from **19% in 2024**) and **21% of accounts receivable** as of March 31, 2025 (up from **19% in 2024**). The majority of operations and employees are in the Philippines[39](index=39&type=chunk)[40](index=40&type=chunk)[41](index=41&type=chunk) - The company, as an 'emerging growth company,' has elected to adopt new accounting guidance within the same time periods as private companies. Recent pronouncements include ASU 2023-09 (Income Taxes) effective after December 15, 2025, and ASU 2024-03 (Income Statement - Expense Disaggregation) effective after December 15, 2026[42](index=42&type=chunk)[43](index=43&type=chunk)[44](index=44&type=chunk) [3. Revenue from Contracts with Customers](index=14&type=section&id=3.%20Revenue%20from%20Contracts%20with%20Customers) This note disaggregates the company's service revenue by offering and geographic delivery location Service Revenue by Offering (in thousands) | Service Offering | Three months ended March 31, 2025 | Three months ended March 31, 2024 | | :--- | :--- | :--- | | Digital Customer Experience | $159,862 | $143,491 | | Trust + Safety | $72,407 | $55,272 | | AI Services | $45,523 | $28,707 | | **Service revenue** | **$277,792** | **$227,470** | Service Revenue by Delivery Geography (in thousands) | Geography | Three months ended March 31, 2025 | Three months ended March 31, 2024 | | :--- | :--- | :--- | | Philippines | $151,717 | $131,213 | | United States | $33,221 | $25,590 | | India | $35,428 | $28,909 | | Rest of World | $57,426 | $41,758 | | **Service revenue** | **$277,792** | **$227,470** | - Accounts receivable, net, included **$107.2 million of unbilled revenue** as of March 31, 2025, up from **$92.7 million** as of December 31, 2024[46](index=46&type=chunk) [4. Forward Contracts](index=15&type=section&id=4.%20Forward%20Contracts) This note explains the company's use of foreign currency forward contracts to manage exchange rate risks - The Company uses foreign currency exchange rate forward contracts to reduce volatility of cash flows related to forecasted costs in Philippine pesos, Indian rupees, Mexican pesos, and Colombian pesos, and to mitigate risk from foreign currency-denominated assets and liabilities[47](index=47&type=chunk) Realized Losses from Cash Flow Hedges Reclassified to Earnings (in thousands) | Expense Category | Three months ended March 31, 2025 | | :--- | :--- | | Cost of services | $433 | | Selling, general and administrative expense | $89 | | Depreciation expense | $26 | | **Total amount reclassified from AOCL** | **$548** | Notional Amount of Outstanding Forward Contracts Designated as Cash Flow Hedges (in thousands) | Currency | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Philippine pesos | $130,607 | $152,803 | | Indian rupees | $38,364 | $41,819 | | Mexican pesos | $9,999 | $14,380 | | Colombian pesos | $24,983 | $35,141 | | **Total notional amount** | **$203,953** | **$244,143** | - Net unrealized gains on cash flow hedges for the three months ended March 31, 2025, were **$6.1 million**. The net accumulated gain expected to be reclassed from AOCL into earnings within the next 12 months was **$2.4 million** as of March 31, 2025[48](index=48&type=chunk) [5. Property and Equipment, net](index=17&type=section&id=5.%20Property%20and%20Equipment,%20net) This note details the company's property and equipment, net of accumulated depreciation, by category and geographic location Property and Equipment, Net (in thousands) | Category | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Leasehold improvements | $85,306 | $76,171 | | Technology and computers | $124,898 | $115,816 | | Furniture and fixtures | $9,611 | $8,480 | | Construction in process | $5,633 | $5,476 | | Other property and equipment | $18,453 | $16,260 | | Property and equipment, gross | $243,901 | $222,203 | | Accumulated depreciation | $(166,726) | $(155,428) | | **Property and equipment, net** | **$77,175** | **$66,775** | Property and Equipment, Net by Geographic Location (in thousands) | Geography | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Philippines | $29,588 | $22,888 | | United States | $6,677 | $7,116 | | India | $11,773 | $11,830 | | Colombia | $16,864 | $12,950 | | Rest of World | $12,273 | $11,991 | | **Property and equipment, net** | **$77,175** | **$66,775** | [6. Goodwill and Intangibles](index=17&type=section&id=6.%20Goodwill%20and%20Intangibles) This note provides the carrying amounts of the company's goodwill and intangible assets, net of amortization Goodwill Carrying Amount (in thousands) | Item | Amount | | :--- | :--- | | Balance as of December 31, 2024 | $216,791 | | Foreign currency translation | $879 | | **Balance as of March 31, 2025** | **$217,670** | Intangible Assets, Net (in thousands) | Category | March 31, 2025 (Net) | December 31, 2024 (Net) | | :--- | :--- | :--- | | Customer relationships | $144,116 | $148,083 | | Trade names | $23,743 | $24,442 | | Other intangibles | — | — | | **Total** | **$167,859** | **$172,525** | [7. Long-Term Debt](index=17&type=section&id=7.%20Long-Term%20Debt) This note describes the company's long-term debt obligations, including term loans and revolving credit facilities Long-Term Debt Balances (in thousands) | Category | March 31, 2025 (Total) | December 31, 2024 (Total) | | :--- | :--- | :--- | | Term Loan | $253,800 | $257,176 | | Less: Debt financing fees | $(914) | $(1,010) | | **Total** | **$252,886** | **$256,166** | - The 2022 Term Loan Facility matures on **September 7, 2027**, with an interest rate of **6.649% per annum** as of March 31, 2025, based on the SOFR rate[56](index=56&type=chunk) - The 2022 Revolving Credit Facility has **$190.0 million of borrowing availability** as of March 31, 2025, with no outstanding balance. The Company was in compliance with all debt covenants[57](index=57&type=chunk) [8. Leases](index=18&type=section&id=8.%20Leases) This note details the company's operating lease arrangements, including costs, terms, and future payment obligations Operating Lease Costs (in thousands) | Category | Three months ended March 31, 2025 | Three months ended March 31, 2024 | | :--- | :--- | :--- | | Operating lease costs - Cost of services | $5,726 | $4,477 | Weighted Average Lease Term and Discount Rate | Metric | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Weighted average remaining lease term | 3.5 years | 3.5 years | | Weighted average discount rate | 7.2 % | 6.6 % | Future Lease Payments on Operating Lease Liabilities (in thousands) | Year | Amount | | :--- | :--- | | 2025-remainder of year | $15,835 | | 2026 | $17,401 | | 2027 | $11,944 | | 2028 | $7,785 | | 2029 | $6,476 | | Thereafter | $948 | | Total lease payments | $60,389 | | Less: imputed interest | $(7,156) | | **Total lease liabilities** | **$53,233** | [9. Commitments and Contingencies](index=19&type=section&id=9.%20Commitments%20and%20Contingencies) This note discloses the company's various legal proceedings and potential liabilities - The Company is subject to various legal proceedings, including a class action lawsuit (Lozada v. TaskUs, Inc. et al.) which the Company expects to settle for **$17.5 million**, funded by insurance. Two derivative lawsuits (Eaton v. Maddock, et al. and Tucker v. Dixit, et al.) with similar allegations are ongoing[60](index=60&type=chunk)[61](index=61&type=chunk)[62](index=62&type=chunk)[63](index=63&type=chunk) - Three additional lawsuits (Forsberg et al. vs. TaskUs, Inc. and Shopify, Inc., My Choice Software, LLC vs. TaskUs, Inc., and Seirafi et al. v. Ledger SAS, Shopify (USA) Inc., Shopify Inc., and TaskUs, Inc.) related to a 2020 data breach are being defended, with one (Forsberg) reaching an agreement in principle for an immaterial settlement and another (Seirafi) having the motion to dismiss granted[64](index=64&type=chunk)[65](index=65&type=chunk)[66](index=66&type=chunk)[67](index=67&type=chunk) [10. Stock-Based Compensation](index=21&type=section&id=10.%20Stock-Based%20Compensation) This note outlines the company's stock-based compensation plans and related expenses Stock-Based Compensation Expense (in thousands) | Category | Three months ended March 31, 2025 | Three months ended March 31, 2024 | | :--- | :--- | :--- | | Cost of services | $202 | $680 | | Selling, general and administrative expense | $8,547 | $9,555 | | **Total** | **$8,749** | **$10,235** | - As of March 31, 2025, unrecognized compensation expense was **$1.4 million** for stock options (**0.8 years** weighted-average period), **$38.4 million** for RSUs (**1.7 years**), and **$3.9 million** for PSUs (**1.6 years**)[70](index=70&type=chunk) [11. Income Taxes](index=21&type=section&id=11.%20Income%20Taxes) This note provides details on the company's provision for income taxes and its effective tax rate Provision for Income Taxes and Effective Tax Rate | Metric | Three months ended March 31, 2025 | Three months ended March 31, 2024 | | :--- | :--- | :--- | | Provision for income taxes | $8.6 million | $6.5 million | | Effective tax rate | 28.9 % | 35.7 % | - The difference between the effective tax rate and the **21% federal statutory rate** in Q1 2025 was primarily due to nondeductible compensation, GILTI inclusion, and tax benefits from foreign income tax holidays[72](index=72&type=chunk) [12. Earnings Per Share](index=21&type=section&id=12.%20Earnings%20Per%20Share) This note presents the company's basic and diluted earnings per common share calculations Basic and Diluted Earnings Per Share | (in thousands, except share and per share data) | Three months ended March 31, 2025 | Three months ended March 31, 2024 | | :--- | :--- | :--- | | Net income | $21,148 | $11,714 | | Weighted-average common shares outstanding – basic | 90,040,348 | 88,795,211 | | Weighted-average common shares outstanding – diluted | 93,655,539 | 91,849,886 | | Net income per common share: Basic | $0.23 | $0.13 | | Net income per common share: Diluted | $0.23 | $0.13 | [13. Accumulated Other Comprehensive Loss](index=22&type=section&id=13.%20Accumulated%20Other%20Comprehensive%20Loss) This note details the components and changes in the company's accumulated other comprehensive loss Accumulated Other Comprehensive Loss (in thousands) | Component | Balance as of Dec 31, 2024 | Other comprehensive income (loss) before reclassifications | Income tax effects | Amounts reclassified from accumulated other comprehensive income | Income tax effects | Balance as of Mar 31, 2025 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Foreign Currency Translation Adjustments | $(21,659) | $3,237 | — | — | — | $(18,422) | | Retirement Benefit Reserves | $(397) | $(23) | $2 | — | — | $(418) | | Unrealized Gains (Losses) on Cash Flow Hedges | $(3,333) | $6,096 | $(1,250) | $548 | $(112) | $1,949 | | **Accumulated Other Comprehensive Loss** | **$(25,389)** | **$9,310** | **$(1,248)** | **$548** | **$(112)** | **$(16,891)** | [14. Segment Information](index=23&type=section&id=14.%20Segment%20Information) This note confirms the company operates as a single reportable segment and provides significant operating expenses - The Company operates in a single operating and reportable segment, with the chief executive officer acting as the chief operating decision maker[76](index=76&type=chunk) Significant Operating Expenses (in thousands) | Expense Category | Three months ended March 31, 2025 | Three months ended March 31, 2024 | | :--- | :--- | :--- | | Personnel costs (Cost of services) | $143,946 | $115,639 | | Operating costs (SG&A) | $48,116 | $42,730 | | Stock-based compensation expense | $9,218 | $10,564 | | Non-operating costs (SG&A) | $303 | $300 | | Other (Cost of services) | $27,022 | $19,082 | | Depreciation | $10,003 | $10,789 | | Amortization of intangible assets | $4,976 | $4,985 | | Gain on disposal of assets | $(30) | $(177) | | **Total operating expenses** | **$243,554** | **$203,912** | [15. Subsequent Events](index=23&type=section&id=15.%20Subsequent%20Events) This note discloses significant events occurring after the balance sheet date, including a proposed merger agreement - On May 8, 2025, the Company entered into a definitive agreement to be acquired by an affiliate of Blackstone and its Co-Founders for **$16.50 per share in cash**. The merger is expected to close in the second half of 2025, after which the Company's common stock will no longer be publicly listed[79](index=79&type=chunk)[80](index=80&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial performance and condition for the three months ended March 31, 2025, compared to the prior year, highlighting revenue growth, profitability, and key operational drivers. It also discusses liquidity, capital resources, and cash flow activities [Overview](index=24&type=section&id=Overview) This section provides a high-level summary of TaskUs's business and key financial highlights for the reporting period - TaskUs is a provider of outsourced digital services and next-generation customer experience, supporting clients with Digital Customer Experience, Trust + Safety, and AI Services[83](index=83&type=chunk)[84](index=84&type=chunk) - For the three months ended March 31, 2025, service revenue increased by **22.1% to $277.8 million**, and net income increased by **80.5% to $21.1 million**[87](index=87&type=chunk)[88](index=88&type=chunk) - Adjusted Net Income rose **31.8% to $35.9 million**, and Adjusted EBITDA increased **17.1% to $59.3 million** for the three months ended March 31, 2025[88](index=88&type=chunk) [Results of Operations](index=25&type=section&id=Results%20of%20Operations) This section analyzes the company's financial performance, detailing changes in revenues, expenses, and profitability Consolidated Financial Information (in thousands, except %) | Metric | Three months ended March 31, 2025 | Three months ended March 31, 2024 | Period over Period Change ($) | Period over Period Change (%) | | :--- | :--- | :--- | :--- | :--- | | Service revenue | $277,792 | $227,470 | $50,322 | 22.1 % | | Total operating expenses | $243,554 | $203,912 | $39,642 | 19.4 % | | Operating income | $34,238 | $23,558 | $10,680 | 45.3 % | | Income before income taxes | $29,748 | $18,222 | $11,526 | 63.3 % | | Provision for income taxes | $8,600 | $6,508 | $2,092 | 32.1 % | | Net income | $21,148 | $11,714 | $9,434 | 80.5 % | Service Revenue by Service Offering (in thousands, except %) | Service Offering | Three months ended March 31, 2025 | Three months ended March 31, 2024 | Period over Period Change ($) | Period over Period Change (%) | | :--- | :--- | :--- | :--- | :--- | | Digital Customer Experience | $159,862 | $143,491 | $16,371 | 11.4 % | | Trust + Safety | $72,407 | $55,272 | $17,135 | 31.0 % | | AI Services | $45,523 | $28,707 | $16,816 | 58.6 % | | **Service revenue** | **$277,792** | **$227,470** | **$50,322** | **22.1 %** | Service Revenue by Delivery Geography (in thousands, except %) | Geography | Three months ended March 31, 2025 | Three months ended March 31, 2024 | Period over Period Change ($) | Period over Period Change (%) | | :--- | :--- | :--- | :--- | :--- | | Philippines | $151,717 | $131,213 | $20,504 | 15.6 % | | United States | $33,221 | $25,590 | $7,631 | 29.8 % | | India | $35,428 | $28,909 | $6,519 | 22.6 % | | Rest of World | $57,426 | $41,758 | $15,668 | 37.5 % | | **Service revenue** | **$277,792** | **$227,470** | **$50,322** | **22.1 %** | - Cost of services increased by **$35.8 million (26.4%)** primarily due to higher personnel costs from increased headcount. Selling, general and administrative expense increased by **$4.5 million (8.5%)** due to higher personnel costs and bonus expense, partially offset by reduced stock-based compensation[98](index=98&type=chunk)[99](index=99&type=chunk) [Revenue by Top Clients](index=27&type=section&id=Revenue%20by%20Top%20Clients) This section highlights the concentration of service revenue derived from the company's largest clients Percentage of Total Service Revenue from Largest Clients | Client Group | Three months ended March 31, 2025 | Three months ended March 31, 2024 | | :--- | :--- | :--- | | Top ten clients | 57 % | 56 % | | Top twenty clients | 70 % | 67 % | | Largest client | 26 % | 19 % | [Foreign Currency](index=27&type=section&id=Foreign%20Currency) This section discusses the company's exposure to foreign currency exchange rate fluctuations and their impact on financial results - The Company is exposed to foreign currency exchange rate movements, particularly impacting expenses incurred in Philippine peso, Indian rupee, Mexican peso, and Colombian peso, despite most revenues being in U.S. dollars[105](index=105&type=chunk) [Non-GAAP Financial Measures](index=27&type=section&id=Non-GAAP%20Financial%20Measures) This section reconciles GAAP financial measures to non-GAAP metrics used by management to assess performance - The Company uses Adjusted Net Income, Adjusted EPS, EBITDA, Adjusted EBITDA, Free Cash Flow, and Conversion of Adjusted EBITDA to Free Cash Flow as key non-GAAP measures to assess business performance[106](index=106&type=chunk) Reconciliation of Net Income to Adjusted Net Income (in thousands, except %) | Metric | Three months ended March 31, 2025 | Three months ended March 31, 2024 | Period over Period Change ($) | Period over Period Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net income | $21,148 | $11,714 | $9,434 | 80.5 % | | Amortization of intangible assets | $4,976 | $4,985 | $(9) | (0.2)% | | Operational efficiency costs | $303 | — | $303 | 100.0 % | | Foreign currency losses | $1,310 | $1,014 | $296 | 29.2 % | | Gain on disposal of assets | $(30) | $(177) | $147 | (83.1)% | | Severance costs | $679 | $487 | $192 | 39.4 % | | Litigation costs | — | $300 | $(300) | (100.0)% | | Stock-based compensation expense | $9,218 | $10,564 | $(1,346) | (12.7)% | | Tax impacts of adjustments | $(1,666) | $(1,615) | $(51) | 3.2 % | | **Adjusted Net Income** | **$35,938** | **$27,272** | **$8,666** | **31.8 %** | | Net Income Margin | 7.6 % | 5.1 % | | | | Adjusted Net Income Margin | 12.9 % | 12.0 % | | | Reconciliation of GAAP Diluted EPS to Adjusted EPS | Metric | Three months ended March 31, 2025 | Three months ended March 31, 2024 | | :--- | :--- | :--- | | GAAP diluted EPS | $0.23 | $0.13 | | Per share adjustments to net income | $0.15 | $0.17 | | **Adjusted EPS** | **$0.38** | **$0.30** | | Weighted-average common shares outstanding – diluted | 93,655,539 | 91,849,886 | Reconciliation of Net Income to EBITDA and Adjusted EBITDA (in thousands, except %) | Metric | Three months ended March 31, 2025 | Three months ended March 31, 2024 | Period over Period Change ($) | Period over Period Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net income | $21,148 | $11,714 | $9,434 | 80.5 % | | Provision for income taxes | $8,600 | $6,508 | $2,092 | 32.1 % | | Financing expenses | $4,663 | $5,538 | $(875) | (15.8)% | | Depreciation | $10,003 | $10,789 | $(786) | (7.3)% | | Amortization of intangible assets | $4,976 | $4,985 | $(9) | (0.2)% | | **EBITDA** | **$49,390** | **$39,534** | **$9,856** | **24.9 %** | | Operational efficiency costs | $303 | — | $303 | 100.0 % | | Foreign currency losses | $1,310 | $1,014 | $296 | 29.2 % | | Gain on disposal of assets | $(30) | $(177) | $147 | (83.1)% | | Severance costs | $679 | $487 | $192 | 39.4 % | | Litigation costs | — | $300 | $(300) | (100.0)% | | Stock-based compensation expense | $9,218 | $10,564 | $(1,346) | (12.7)% | | Interest income | $(1,598) | $(1,117) | $(481) | 43.1 % | | **Adjusted EBITDA** | **$59,272** | **$50,605** | **$8,667** | **17.1 %** | | Net Income Margin | 7.6 % | 5.1 % | | | | Adjusted EBITDA Margin | 21.3 % | 22.2 % | | | [Free Cash Flow](index=29&type=section&id=Free%20Cash%20Flow) This section reconciles net cash from operating activities to free cash flow, a key liquidity measure Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow (in thousands) | Metric | Three months ended March 31, 2025 | Three months ended March 31, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $36,276 | $51,177 | | Purchase of property and equipment | $(14,480) | $(3,572) | | **Free Cash Flow** | **$21,796** | **$47,605** | | Conversion of Adjusted EBITDA to Free Cash Flow | 36.8 % | 94.1 % | [Liquidity and Capital Resources](index=30&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's sources of liquidity, capital structure, and debt obligations - As of March 31, 2025, principal liquidity sources were **$196.9 million** in cash and cash equivalents and **$190.0 million** borrowing availability under the 2022 Revolving Credit Facility[122](index=122&type=chunk) - Total indebtedness, net of debt financing fees, was **$252.9 million** as of March 31, 2025, with an interest rate of **6.649% per annum** on the 2022 Term Loan Facility[123](index=123&type=chunk) - During Q1 2025, the Company repurchased **750,691 shares** of Class A common stock for **$10.1 million**, with **$29.5 million** remaining available under the share repurchase program[124](index=124&type=chunk) [Cash Flows](index=30&type=section&id=Cash%20Flows) This section provides a detailed analysis of the company's cash flows from operating, investing, and financing activities Summary of Consolidated Cash Flows (in thousands) | Activity | Three months ended March 31, 2025 | Three months ended March 31, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $36,276 | $51,177 | | Net cash used in investing activities | $(14,480) | $(3,572) | | Net cash used in financing activities | $(17,955) | $(5,664) | - Net cash provided by operating activities decreased to **$36.3 million** in Q1 2025 from **$51.2 million** in Q1 2024, reflecting net income and non-cash charges partially offset by changes in operating assets and liabilities[128](index=128&type=chunk) - Net cash used in investing activities increased to **$14.5 million** in Q1 2025 from **$3.6 million** in Q1 2024, primarily due to higher site build-out and technology purchases. Net cash used in financing activities increased to **$18.0 million** from **$5.7 million**, mainly due to additional share repurchases and tax payments for net share settlement[129](index=129&type=chunk)[130](index=130&type=chunk) [Critical Accounting Estimates](index=31&type=section&id=Critical%20Accounting%20Estimates) This section confirms no material changes to the company's critical accounting estimates from its annual report - There have been no material changes to the Company's critical accounting estimates as reported in its Annual Report[131](index=131&type=chunk) [Recent Accounting Pronouncements](index=31&type=section&id=Recent%20Accounting%20Pronouncements) This section refers to Note 2 for details on recently adopted and issued accounting pronouncements - For additional information regarding recent accounting pronouncements, refer to Note 2, 'Summary of Significant Accounting Policies' in the Notes to Unaudited Condensed Consolidated Financial Statements[132](index=132&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=31&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section discusses the company's exposure to various financial risks, including foreign currency risk, interest rate risk, and credit risk, and the strategies employed to mitigate these risks [Foreign Currency Risk](index=31&type=section&id=Foreign%20Currency%20Risk) This section assesses the company's exposure to foreign currency exchange rate fluctuations and their potential financial impact - The Company's market risk primarily stems from exchange rate risk, as a substantial portion of expenses are incurred in Philippine peso, Indian rupee, Mexican peso, and Colombian peso, while revenues are mostly in U.S. dollars[134](index=134&type=chunk) Average Exchange Rate Against the U.S. Dollar (Three months ended March 31) | Currency | 2025 | 2024 | Depreciation | | :--- | :--- | :--- | :--- | | Philippine Peso | 57.97 | 55.97 | 3.6 % | | Indian Rupee | 86.61 | 83.04 | 4.3 % | | Mexican Peso | 20.44 | 16.98 | 20.4 % | | Colombian Peso | 4,189.99 | 3,915.72 | 7.0 % | - A hypothetical **10% appreciation** of foreign currencies against the U.S. dollar would increase expenses by **$11.0 million (PHP)**, **$3.2 million (INR)**, **$1.0 million (MXN)**, and **$2.4 million (COP)** for Q1 2025, excluding hedging[135](index=135&type=chunk) [Interest Rate Risk](index=32&type=section&id=Interest%20Rate%20Risk) This section evaluates the company's exposure to interest rate changes on its variable-rate debt obligations - The Company's market risk is influenced by changes in interest rates on its borrowings, primarily the 2022 Credit Facilities, which accrue interest at SOFR plus **2.25%**[138](index=138&type=chunk) - As of March 31, 2025, with a principal balance of **$253.8 million** and an interest rate of **6.649% per annum**, a hypothetical **10% increase or decrease** in SOFR would cause an approximate **$1.1 million** change in interest expense over the next 12 months[138](index=138&type=chunk) [Credit Risk](index=32&type=section&id=Credit%20Risk) This section discusses the company's credit risk, particularly concerning concentrations in accounts receivable from key clients - As of March 31, 2025, accounts receivable, net, totaled **$206.0 million**, with **$44.4 million (approximately 21%)** owed by one client, indicating a concentration of credit risk[139](index=139&type=chunk) [Item 4. Controls and Procedures](index=32&type=section&id=Item%204.%20Controls%20and%20Procedures) This section details the company's disclosure controls and procedures, confirming their effectiveness as of March 31, 2025, and stating no material changes in internal control over financial reporting [Disclosure Controls and Procedures](index=32&type=section&id=Disclosure%20Controls%20and%20Procedures) This section confirms the effectiveness of the company's disclosure controls and procedures as evaluated by management - The Company's management, including the CEO and CFO, evaluated the effectiveness of disclosure controls and procedures as of March 31, 2025, and concluded they were effective at the reasonable assurance level[140](index=140&type=chunk)[141](index=141&type=chunk) [Changes in Internal Control over Financial Reporting](index=32&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) This section states that there have been no material changes to the company's internal control over financial reporting - There has been no change in the Company's internal control over financial reporting during the most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, its internal control over financial reporting[142](index=142&type=chunk) [Part II. Other Information](index=33&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section covers legal proceedings, risk factors, equity security sales, and other disclosures not included in the financial statements [Item 1. Legal Proceedings](index=33&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 9, 'Commitments and Contingencies,' in the Notes to Unaudited Condensed Consolidated Financial Statements for detailed information regarding legal proceedings - Information regarding legal proceedings is incorporated by reference from Note 9, 'Commitments and Contingencies,' in the Notes to Unaudited Condensed Consolidated Financial Statements[144](index=144&type=chunk) [Item 1A. Risk Factors](index=33&type=section&id=Item%201A.%20Risk%20Factors) This section highlights various risks that could materially impact the company, with a specific focus on risks related to the proposed merger, including potential non-completion, associated costs, and impacts on business operations and stock price [Risks Related to the Proposed Merger](index=33&type=section&id=Risks%20Related%20to%20the%20Proposed%20Merger) This section details the potential risks associated with the proposed merger, including non-completion and financial implications - The proposed merger with an affiliate of Blackstone and the Company's Co-Founders may not be completed due to various conditions, including stockholder and regulatory approvals, which could adversely affect the stock price, business, financial condition, and results of operations[146](index=146&type=chunk) - If the merger is not completed, the Company may be required to pay a termination fee of **$39.0 million**, incur substantial costs, face limitations on retaining key personnel, suffer reputational harm, and experience business disruption[147](index=147&type=chunk) - Provisions in the Merger Agreement, such as restrictions on soliciting alternative acquisition proposals and the termination fee, could discourage competing acquirers or result in lower acquisition prices[151](index=151&type=chunk)[152](index=152&type=chunk) - Directors and executive officers have financial interests in the merger (e.g., equity awards, severance, indemnification) that may differ from other stockholders. Stockholders will forgo potential future appreciation in the Company's value if the merger is completed[154](index=154&type=chunk)[155](index=155&type=chunk)[156](index=156&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=36&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section provides details on the company's share repurchase program, including the number of shares purchased and the remaining authorization [Issuer Purchases of Equity Securities](index=36&type=section&id=Issuer%20Purchases%20of%20Equity%20Securities) This section reports the company's repurchases of its Class A common stock under its authorized program Issuer Purchases of Class A Common Stock (Three months ended March 31, 2025) | Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (in thousands) | | :--- | :--- | :--- | :--- | :--- | | January 1, 2025 through January 31, 2025 | — | $— | — | — | | February 1, 2025 through February 28, 2025 | — | — | — | — | | March 1, 2025 through March 31, 2025 | 750,691 | $13.44 | 750,691 | $29,547 | | **Total** | **750,691** | **$13.44** | **750,691** | | - The Company's share repurchase authorization was extended through **December 31, 2025**, with a total authorization of **$200.0 million** of Class A common stock[157](index=157&type=chunk) [Item 3. Defaults Upon Senior Securities](index=36&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section states that there are no defaults upon senior securities - There are no defaults upon senior securities[159](index=159&type=chunk) [Item 4. Mine Safety Disclosures](index=36&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section states that the item regarding mine safety disclosures is not applicable to the company - Mine Safety Disclosures are not applicable to the Company[160](index=160&type=chunk) [Item 5. Other Information](index=36&type=section&id=Item%205.%20Other%20Information) This section discloses a Rule 10b5-1 trading arrangement adopted by the Chief Customer Officer [Rule 10b5-1 Trading Arrangements](index=36&type=section&id=Rule%2010b5-1%20Trading%20Arrangements) This section discloses a Rule 10b5-1 trading plan adopted by a company officer for future stock sales - On March 14, 2025, Jarrod Johnson, Chief Customer Officer, adopted a Rule 10b5-1 trading arrangement for the potential sale of up to **145,986 shares** of Class A Common Stock obtained from vesting restricted and performance stock units, with sales planned from **August 8, 2025, to December 31, 2025**[161](index=161&type=chunk) [Item 6. Exhibits](index=37&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Quarterly Report, including merger agreements, corporate documents, certifications, and XBRL data files - Exhibits include the Agreement and Plan of Merger, corporate organizational documents, Voting and Support Agreements, certifications of principal executive and financial officers, and XBRL instance and taxonomy documents[162](index=162&type=chunk) [Signatures](index=38&type=section&id=SIGNATURES) This section formally attests to the accuracy and completeness of the report by authorized company officials - The report was duly signed on behalf of TaskUs, Inc. by Balaji Sekar, Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer), on May 12, 2025[164](index=164&type=chunk)