TaskUs(TASK) - 2025 Q2 - Quarterly Results

Executive Summary & Company Overview This section provides an overview of TaskUs's Q2 2025 financial and operational performance and company description Second Quarter 2025 Financial and Frontline Highlights 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] - AI Services was TaskUs' fastest-growing service line for the second consecutive quarter[5] - Trust + Safety revenue growth remained strong at nearly 30% year-over-year[5] - TaskUs announced strategic partnerships with Decagon and Regal to accelerate Agentic AI-Powered Customer Experience[5] - The company ended Q2 2025 with approximately 60,400 teammates worldwide[5] About TaskUs 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] - 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] - 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] GAAP Financial Statements This section presents TaskUs's unaudited condensed consolidated GAAP financial statements, including income, balance sheets, and cash flows Condensed Consolidated Statements of Income (Unaudited) 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) 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] - Accounts receivable, net, increased from $198,996 thousand to $231,442 thousand[12] - Property and equipment, net, increased from $66,775 thousand to $86,545 thousand[12] Condensed Consolidated Statement of Cash Flows (Unaudited) Cash flow statements for H1 2025 show decreased operating cash and increased investing and financing cash use | Cash Flow Activity | Six months ended June 30, 2025 ($ 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] - Payments for stock repurchases increased from $15,072 thousand in H1 2024 to $27,783 thousand in H1 2025[14] Non-GAAP Financial Measures & Reconciliations This section provides reconciliations and definitions for TaskUs's non-GAAP financial measures, offering insights into adjusted performance Adjusted EBITDA Reconciliation Adjusted EBITDA for Q2 2025 increased year-over-year with a slight margin improvement after specific non-GAAP adjustments | Metric | Three months ended June 30, 2025 ($ 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 $8,428 thousand for stock-based compensation expense[16] Adjusted Net Income Reconciliation Adjusted Net Income showed strong Q2 2025 growth and improved margin after adjusting for non-recurring and non-cash items | Metric | Three months ended June 30, 2025 ($ 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] - Tax impacts of adjustments resulted in a tax benefit of $(5,044) thousand for Q2 2025[21][24] Adjusted EPS Reconciliation 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 | $0.61 | - The weighted-average common shares outstanding (diluted) for Q2 2025 were 92,576,805[27] Free Cash Flow Reconciliation Free Cash Flow and Adjusted Free Cash Flow decreased significantly in Q2 and H1 2025 due to higher capital expenditures | Metric | Three months ended June 30, 2025 ($ 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] Definitions of Non-GAAP Metrics 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] - 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] - 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] - 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] - 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] - Adjusted Free Cash Flow further adjusts Free Cash Flow by excluding payments for non-recurring transaction, operational efficiency, and certain litigation costs[37] Additional Information This section includes cautionary statements regarding forward-looking information, general explanations of non-GAAP measures, and contact details Forward-Looking Statements 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] - 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] - TaskUs undertakes no obligation to publicly update or revise any forward-looking statements, except as required by law[6] Non-GAAP Measures (General Explanation) 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] - 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] - Non-GAAP financial measures should not be evaluated in isolation but considered together with GAAP consolidated financial statements[7] Investor and Media Contacts This section provides the contact information for investor relations and media inquiries for TaskUs - Investor Contact: Trent Thrash, IR@taskus.com[8] - Media Contact: Ramya Kumaraswamy, mediainquiries@taskus.com[8]