IBEX(US:IBEX)2023-11-10 21:25Financial Data and Key Metrics Changes - Revenues for the quarter were $124.6 million, a decline of 2.5% compared to $127.8 million in the prior year quarter [16] - Adjusted EBITDA increased by 6% year-on-year to $13.7 million, with an adjusted EBITDA margin of 11%, up 90 basis points from the previous year [12][43] - Adjusted net income improved to $7.6 million from $6.8 million in the prior year quarter, with adjusted EPS increasing to $0.40 from $0.36 [12][17] - Free cash flow increased to $6.6 million, more than triple from the prior year quarter, with a conversion rate of nearly 50% from adjusted EBITDA [5][46] - The company ended the quarter with a net cash position of $61.1 million, up from $56.4 million as of June 2023 [21] Business Line Data and Key Metrics Changes - The revenue mix continues to trend towards higher-margin services, with digital and omnichannel delivery now representing 77% of total revenue, up from 71% a year ago [8][13] - Retail and e-commerce increased to 23.4% of first quarter revenue versus 21.3% in the prior year quarter [18] - HealthTech increased to 11.9% of first quarter revenue versus 10.2% in the prior year quarter [18] - The telecommunications vertical decreased to 16.8% of quarterly revenue versus 17.3% in the prior year quarter [44] Market Data and Key Metrics Changes - Offshore and nearshore revenues now comprise 75% of total revenue, up from 70% in the prior year quarter [8] - The company has seen a decline in the FinTech vertical, which decreased to 14.8% of revenue for the quarter versus 19.9% in the prior year quarter [44] Company Strategy and Development Direction - The company is focused on expanding its higher-margin integrated omnichannel and digital-first support, which is expected to drive future growth [13] - The management emphasizes the importance of leveraging AI technology to enhance customer experience and operational efficiency [7][39] - The company is exploring new markets for client expansion and is open to targeted acquisitions to enhance its geographical footprint [40][55] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resiliency of the business, supported by client diversification and strategic vertical expansions [22] - The company anticipates returning to growth later in the year, with a strong pipeline of new client wins [22][70] - Management acknowledged the challenges posed by the current market environment but remains optimistic about achieving upper single-digit growth in the latter half of the fiscal year [36][70] Other Important Information - The company has a share repurchase program authorized for up to $30 million, with over 400,000 shares repurchased to date [29][47] - Capital expenditures were $2.1 million, or 1.6% of revenue, in the first quarter, down from $3.6 million or 2.8% of revenue in the prior year quarter [20] Q&A Session Summary Question: What is the pace of deal flow and the contours of the pipeline for new logos? - Management noted that the pace of deal flow is improving, with several large deals won recently, indicating a return to previous levels of activity [27] Question: How much headwind is the shift offshore impacting revenue growth? - Management indicated that the shift offshore is contributing to a headwind, but they expect to resume strong growth once the transition stabilizes [33][36] Question: Can you describe the competitive landscape for recent large wins? - Management highlighted that they are winning competitive deals against large players by leveraging their advanced technology and analytics capabilities [68][79] Question: How do you expect AI to help during peak volumes? - Management stated that while AI is still in early stages, it has the potential to improve efficiency and reduce the need for additional hiring during peak seasons [84][92] Question: What are the parameters for targeted acquisitions? - Management expressed interest in geographic expansion and strategic verticals for potential acquisitions, focusing on opportunities that align with their growth strategy [55][57]