IBEX(US:IBEX)2024-02-09 02:32Financial Data and Key Metrics Changes - Revenue for the second quarter was $132.6 million, a decline of 4.8% from $139.3 million in the prior year quarter [75] - Net income decreased to $6.1 million from $9.3 million in the prior year quarter, primarily due to deferred training revenue and strategic investments [8][75] - Adjusted EBITDA was $14.3 million, or 10.8% of revenue, compared to $19.4 million, or 13.9% of revenue for the same period last year [9] - Free cash flow was negative $4.5 million for the quarter, compared to negative $2.7 million in the prior year quarter [79] - Fully diluted EPS was $0.33 compared to $0.49 in the prior year quarter [77] Business Line Data and Key Metrics Changes - Digital and omnichannel delivery now represents 79% of total revenue, up from 73% in the second quarter a year ago [7] - Offshore and nearshore revenues now comprise 77% of total revenue, compared to 73% in the prior year quarter [7] - Retail and e-commerce increased to 29.0% of second quarter revenue versus 26.9% in the prior year quarter [78] - HealthTech increased to 12.2% of second quarter revenue versus 8.7% in the prior year quarter [78] Market Data and Key Metrics Changes - The FinTech vertical saw a decline of approximately 30% year-over-year, significantly impacting overall revenue [54] - Telecommunications exposure decreased to 14.8% of quarterly revenue versus 16.7% in the prior year quarter [51] - The company experienced softness in client volumes, particularly in the FinTech and telecommunications sectors, attributed to macroeconomic factors [11][25] Company Strategy and Development Direction - The company is focusing on accelerating its leadership in deploying AI-based solutions, with a new Senior Vice President of Digital Transformation appointed to lead these efforts [4] - Strategic investments are being made in technology, sales, and marketing to support growth [8][44] - The company aims to optimize its footprint and capacity utilization by shifting volume mix toward offshore geographies [72] Management's Comments on Operating Environment and Future Outlook - Management expects continued softness in client volumes in the near term, with revenues in Q3 anticipated to trend similarly to the first two quarters [11] - Confidence remains in the strategy of driving growth in higher margin offshore regions, with expectations for improved adjusted EBITDA margins in the second half of the fiscal year [11][80] - The company is optimistic about its ability to win new clients and ramp up existing ones, particularly in the context of AI solutions [35][69] Other Important Information - The company has a net cash position of $48 million, providing flexibility for targeted investments [5] - Capital expenditures were $2.9 million, or 2.2% of revenue, down from $7.9 million, or 5.7% of revenue in the prior year quarter [79] - The company continues to execute its share buyback program, having repurchased over 700,000 shares since its announcement [46] Q&A Session Summary Question: What factors contributed to the decline in the FinTech segment? - The decline was primarily due to impacts from crypto clients and new economy trading app partners, which have been affected by economic conditions [55] Question: What is the outlook for margins moving forward? - Margins are expected to improve in the second half of the year, with new wins in higher margin regions contributing positively [20][56] Question: How is the company addressing volume softness? - The company is investing in its sales engine and believes it can outrun the current challenges through strong client engagement and a robust pipeline [98]