IBEX 10-K & 10-Q changes, risk factors and insider trading

The pricing that we are able to obtain for our solutions impacts our profitability and is usually included in statements of work entered into with our clients. In certain cases, we have committed to pricing over the period of a contract with limited-to-no sharing of risks regarding inflation and currency exchange rates. In addition, we are obligated under some of our contracts to deliver productivity benefits to our clients, such as reduction in handlehandling time or speed to answer.

Moreover, companies may not continue to leverage outsourcing services at the same volumes and their outsourcing could be reversed by factors beyond our control, including changing economic conditions, negative perceptions attached to outsourcing activities or government regulations against outsourcing activities. Current or prospective clients may elect to perform such services in-house that may be associated with using an offshore provider. Political opposition to outsourcing services and / or outsourcing activities may also arise in certain countries if there is a perception that such actions have a negative effect on domestic employment opportunities.

Our results of operations may vary based on the impact of changes in the global economy on our clients. Global economic conditions, including inflation, rising interest rates, recession, and foreign exchange fluctuations, affect us and / or our clients’ businesses, and the markets in which we and they operate. While it is often difficult to predict the impact of general global economic conditions on our business, unfavorable global economic conditions, such as those that occurred during the global financial crisis and economic downturn in 2008 and more recently, during and immediately after the COVID-19 pandemic (the “Pandemic”), could adversely affect the demand for some of our clients’ products and services and, in turn, could cause a decline in the demand for our solutions. Additionally, several of our clients, particularly in the TelecommunicationTelecommunications and Technology verticals, have experienced substantial price competition. As a result, we face increasing price pressure from such clients, which, if continued, could negatively affect our operating and financial performance.

Our business and future growth depend largely on continued demand for our solutions from clients based in the United States. We derived 96%97% of our revenue from customers based in the United States during the fiscal year ended June 30, 2025.2026. In addition, a significant portion of our clients are concentrated in the Retail and E-commerce industry. For the fiscal year ended June 30, 2025,2026, 26.0%25.7% of our revenue was derived from clients in the Retail & E-commerce vertical, 13.1%17.7% of our revenue was derived from clients in the HealthTech vertical, 14.1% of our revenue was derived from clients in the Travel, Transportation & Logistics vertical, 9.2% of our revenue was derived from clients in the Telecommunication vertical, 7.8%and 33.3% of our revenue was derived from clients in theother Technology vertical, and 7.4% of our revenue was derived from clients in the Cable vertical.verticals. For these reasons, among others, the occurrence or persistence of unfavorable economic conditions could adversely affect our business, results of operations, financial condition and prospects.

See also the risk factor entitled “Fluctuations against the U.S. dollar in the local currencies in the countries in which we operate could have a material effect on our results of operations.”

Our main financing arrangements containscontain certain covenants in respect of a total net leverage ratio and fixed charge coverage ratio, and restrictions on incurring additional debt and liens, making certain restricted payments and investments, engaging in certain transactions with affiliates, and disposal of assets. Complying with these covenants may cause us to take actions that make it more difficult to successfully execute our business strategy and we may face competition from companies not subject to such restrictions. Moreover, our failure to comply with these covenants could result in an event of default or refusal by our creditors to renew certain of our loans which may have a material adverse effect on our business, financial condition, results of operation and prospects.

If our goodwill or intangible assets becomebecomes impaired, we could be required to record a significant charge to earnings.

We had goodwill andof other intangible assets totaling $12.2$11.8 million as of June 30, 2025.2026. We review our goodwill and indefinite-lived intangible assets for impairment at least annually or more frequently if events or changes in circumstances indicate the carrying value may not be recoverable. Factors that may be considered a change in circumstances indicating that the carrying value of our goodwill or indefinite-lived intangible assets may not be recoverable include declines in stock price, market capitalization or cash flows and slower growth rates in our industry. We could be required to record a significant charge to earnings in our financial statements during the period in which any impairment of our goodwill or indefinite-lived intangible assets werewas determined.

As of June 30, 2025,2026, for income tax purposes, we had approximately $15.8$16.2 million in estimated U.S. state and international net operating loss carry forwards that will begin to expire betweenin 2026 and 2039.2026. The timing and manner in which we may utilize net operating losses may be limited by a lack of future taxable income which could adversely affect our ability to utilize our net operating losses before they expire. In general, net operating losses in one country cannot be used to offset income in any other country and net operating losses in one state cannot be used to offset income in any other state. Accordingly, we may be subject to tax in certain jurisdictions even if we have unused net operating losses in other jurisdictions. Furthermore, each jurisdiction in which we operate may have its own limitations on our ability to utilize net operating losses or tax credit carryovers generated in that jurisdiction. These limitations may increase our U.S. state or foreign income tax liability.

Our business relies heavily on technology, telephonetelephone, and computer systems as well as third-party telecommunications and data services providers, which subjects us to various uncertainties.

We rely heavily on sophisticated and specialized communications and computer technology coupled with third-party telecommunications and bandwidthdata services providers to provide high-quality and reliable real-time solutions on behalf of our clients through our delivery centers. In our Customer Acquisition solution, the majority of our sales are conducted via sales queues in our contact centers. In both our Customer Acquisition solution and our Customer Engagement solution, we are typically required to record and maintain recordings of telephonic interactions with customers. We rely on internet connectivity, telephone, call recording, customer relationship management and other systems and technology in our contact center operations. Our operations, therefore, depend on the proper functioning of our equipment and systems, including telephone, hardware and software. Third-party suppliers provide most of our systems, hardware and software, while our development teams build some in-house. We also rely on the telecommunications and data services provided by local communication companies in the countries in which we operate as well as domestic and international long distance service providers. In addition, in some areas of our business, we depend upon the quality and reliability of the services and products of our clients which we help sell to their end customers.

We have, in the past, experienced short-term electricity outages in our near-shore regions due to weather events. Although we maintain sufficient capacity in our operations infrastructure to meet the needs of all of clients, as well as our own needs, and to ensure that our solutions are accessible, including backup and redundancy mechanisms, and business continuity and disaster recovery plans, disruptions could result from, among other things, technical breakdowns, computer viruses, weather events, global conflicts, and performance or failure by our third-party telecommunications or data services providers. If the solutions we provide to our clients experience technical difficulties or quality issues, if key technology systems and facilities are damaged or compromised, or there are any disruptions in the delivery of our services, we may have a harder time selling services and products to end customers and may be required to make unexpected investments in new systems or technology.technology or require us to find alternatives. Prolonged disruption of our solutions, even if due to events beyond our control, could also entitle our clients to terminate their contracts with us orus, result in other brand and reputational damages.damages and adversely affect our business, financial results, operations or prospects.

The integration of AI and generative AI technology into our offerings, including our use of third-party providers, could result in operationaloperational, legal, regulatory, and reputational harm.

We are increasingly integrating AI into our solutions, including the use of third-party provider offerings, to better position ourselves to offer our clients the most robust set of solutions, while also implementing appropriate governance and controls for its use. AI is stillrapidly emergingevolving and is likely to be an essential part of our future service offerings. The development, adoption, and use of generative AI technologies isremain stillat inan theirearly infancy,stage, and inadequate AI development or deployment practices by us or our third-party developers or vendors could lead to unintended consequences. We arehave developingdeveloped internal governance frameworks to assess and monitor our use of AI and the risks associated with its implementation, including review of third-party AI systems. While AI offers significant benefits, it also presents risks and challenges to our business. Some of the recently brought to marketCertain third-party AI solutions have the potential ofto replacingautomate or reduce demand for some of our lowermore tierstandardized or lower-complexity service offerings. At the same time, AI solutions are evolving and are not infallible, and issues with data sourcing, technology integration, program bias in data models, or decision-making algorithms, flawed algorithms based on insufficient or biasedinaccurate data sets,outputs, security challengeschallenges, intellectual property, and the protection of personal information and privacy could impair our successful and effective adoption of this technology. Additionally, any latency, disruption, or failure in these AI systems or infrastructure could cause delays or errors in our offerings. The legal and regulatory landscape governing AI is also evolving and may impose additional compliance obligations, increase our costs, delay or restrict deployment, or expose us to regulatory or contractual liability.

We are also dependent, in part, on our third-party provider offerings and their ability to effectively and quickly integrate their AI into our solutions. We may not have full control over the quality and performance of third-party providers, and therefore, any unexpected deficiencies or problems arising from these third-party providers may cause significant interruptions in the operation of our business. If our AI solutions or those of our third-party providers are deployed before they arehave perfectedbeen adequately tested, validated, and thegoverned, outputor if outputs from these AI solutions isare deemed by clients to be questionablequestionable, inaccurate, or inaccurate,otherwise unacceptable, our brand and reputation may be harmed and our results of operations may be impacted. On the other hand, if we are too slow to market and are unable to timely and effectively integrate and deploy AI in our offerings, we could fall behind our competitors and our results of operations and future prospects may also be impacted. Developing, testing, deploying and deployinggoverning resource-intensive AI systems may require additional investmentinvestments and increase our costs.

We may also need to increase employee compensation more than in previous periods to remain competitive in attracting the quantity and quality of employees that our business requires. For the fiscal year ended June 30, 2025,2026, payroll and related costs and stock-based compensation expense across the total company, including for cost of services and selling, general and administrative expenses accounted for $367$420 million, or 66%,65%, of our revenue. Employee benefits expenses in each of the countries in which we operate are a function of the country’s economic growth, level of employment and overall competition for qualified employees in the country. In most of the geographies in which we operate, we have experienced increasing labor costs due to increased demand and greater competition for qualified employees.

Natural events (such as floodsfloods, hurricanes and earthquakes), health epidemics (including the Pandemic), geopolitical conditions, including developing or ongoing conflicts, widespread civil unrest, terrorist attacks and other acts of violence could result in significant worker absenteeism, increased attrition rates, lower asset utilization rates, voluntary or mandatory closure of our facilities, our inability to meet dynamic employee health and safety requirements, our inability to meet contractual service levels for our clients, our inability to procure essential supplies, travel restrictions on our employees, and other disruptions to our business. For example, a substantial portion of our operations are conducted in the Philippines, Jamaica, Pakistan, and Nicaragua, which have experienced and may continue to face political instability and unrest, natural disasters, acts of terrorism, crime, or similar risks. In addition, these events could adversely affect global economies, financial markets and our clients’ levels of business activity. Any of these events, their consequences or the costs related to mitigation or remediation could impact us. Insurance may not be sufficient to guarantee costs of repairing the damage caused by such disruptive events and such events may not be covered under our insurance policies.

During the fiscal year ended June 30, 2025,2026, 4%3% of our revenue was generated in currencies other than the U.S. dollar. A portion of our costs and expenses that were incurred outside of the United States were paid in foreign currencies, mostly the local currencies of the Philippines, Jamaica, and Pakistan. During the year ended June 30, 2025,2026, out of our total payroll and related costs, 32.7%30.9% were incurred in the Philippines Peso, 12.3%8.9% were incurred in the Jamaican Dollar and 9.7%11.6% were incurred in the Pakistani Rupee. To a lesser extent, we also have exposures to the Nicaraguan Cordoba, Great British Pound, Canadian Dollar,Cordoba and Honduran Lempira. Because our financial statements are presented, and revenues are primarily generated, in U.S. dollars, whereas some portion of the cost is incurred in foreign currencies, any significant unhedged fluctuations in the currency exchange rates between the U.S. dollar and the currencies of countries in which we incur costs in local currencies will affect our results of operations and financial statements. This may also affect the comparability of our financial results from period to period, as we convert our subsidiaries’ statements of financial position into U.S. dollars from local currencies at the period-end exchange rate, and income and cash flow statements at average exchange rates for the year. See “Item 7A. Quantitative and Qualitative Disclosures about Market Risk” for more information.

Our facilities operate solely on leasehold property. Our leases are subject to renewal, and we may be unable to renew such leases on commercially acceptable terms or at all. Our inability to renew our leases, or a renewal of our leases with a rental rate higher than the prevailing rate under the applicable lease prior to expiration, may have an adverse impact on our operations, including disrupting our operations or increasing our cost of operations. In addition, in the event of non-renewal of our leases, we may be unable to locate suitable replacement properties for our facilitiesfacilities, or we may experience delays in relocation that could lead to a disruption in our operations. Any disruption in our operations could adversely affect us.

We operate in and provide solutions to our clients’ customers in multiple countries and continents around the world and in varied industries, including highly-regulated ones. We also have and may seek to expand operations in emerging market jurisdictions where legal systems may be less developed or familiar to us. As a result, we are subject to numerous, and sometimes conflicting, legal regimes on matters as diverse as outsourcing, anti-corruption, content requirements, trade restrictions and similar controls, tariffs, taxation, sanctions, export control,controls, anti-corruption, anti-bribery, employment, immigration, internal and disclosure control obligations, securities regulation, anti-competition,competition, data security, privacy, taxation, and labor protection and relations. We may be particularly impacted by legal regimes regarding the following:

•Data Privacy Laws. We and our customers may be subject to privacy- and data protection-related laws and regulations that impose obligations in connection with the collection, use, storage, transfer, dissemination, security, and/or other processing (“Processing”) of personal information (such personal information collectively with all information defined or described by applicable law as “personal data,” “personally identifiable information,” “PII” or any similar term, is referred to as personal information), data, financial data, health data or other similar data. In the United States, the privacy and data protection rules and regulations to which we may be subject include those promulgated under the authority of the Federal Trade Commission (“FTC”), state regulators, and regulator enforcement positions and expectations. Similarly, many foreign countries and governmental bodies, including the EU member states and the United Kingdom, have laws and regulations concerning the processing of personal information obtained from their residents and individuals located in the EU or UK or by businesses operating within their jurisdiction, which are often more restrictive and apply more broadly than those in the United States. We are also are—or would be—subject to data protection and information security laws in other jurisdictions in which we operate,operate or are organized, including inBermuda, the PhilippinesPhilippines, Jamaica, Pakistan, Nicaragua and Pakistan.Honduras. Laws in these and other countries are continuing to evolve. Any actual or perceived failure to safeguard personal information or other information in our possession or control, appropriately retain, destroy or redact such data, or otherwise comply with these regulationsapplicable requirements may subject us to litigation, regulatory investigations, or enforcement actions, thus causing damage to our reputationreputation, and adversely affect our ability to attract or retain customers.

•Telecommunications Laws. Working with clients in the Telecommunication,Telecommunications, Technology and Cableother verticals means that we may process or come into possession of data that must be treated with special care. For example, in the United States, telecommunications providers are subject to rules on the use and sharing of Customer Proprietary Network Information (“CPNI”). The Telecommunications Act of 1996 limits the uses to which such information may be put, and the parties with whom it may be shared, absent customer permission. It also requires that CPNI be adequately safeguarded. Two U.S. federal agencies, the FTC and the Federal Communications Commission (“FCC”), and various states have enacted laws including, at the federal level, the Telephone Consumer Protection Act of 1991, that restrict the placing of certain telephone calls and texts to residential and wireless telephone subscribers by means of automatic telephone dialing systems, prerecorded or artificial voice messages and fax machines. Internationally, we are also subject to similar laws imposing limitations on marketing calls to wireline and wireless numbers and compliance with do not call rules. These laws require companies to institute processes and safeguards to comply with these restrictions. Some of these laws can be enforced by the FTC, FCC, state attorneyattorneys generals,general, foreign regulators or private party litigants.

•Import and Export Laws. Various countries regulate the import and export of certain encryption and other technology, including import and export permitting and licensing requirements, and have enacted laws that could limit our ability to distributeprovide or make available our productstechnology-enabled solutions or could limit our users’clients’ ability to access ouror productsuse those solutions in thosecertain countries. Changes in our products,solutions, or future changes in export and import regulations may prevent our usersclients with international operations from utilizing our productssolutions globally or, in some cases, prevent the exportexport, import, provision or importuse of our productssolutions toin certain countries, governments,or by certain governments or persons altogether. Any change in export or import regulations, economic sanctions, or related legislation, or change in the countries, governments, persons, or technologies targeted by such regulations, could result in decreased use of our productssolutions by, or in our decreased ability to exportprovide or sell productssolutions to, existing or potential usersclients with international operations.

Compliance with diverse legal requirements is costly, time-consuming and requires significant resources. Compliance may also impair our competitiveness to the extent other jurisdictions have less or varied requirements for operation. Violations of one or more of these laws or regulations in the conduct of our business or in the performance of our obligations to our clients, including through third parties, could result in significant fines or penalties, civil enforcement actions, criminal prosecution or sanctions against us or our officers, disgorgement of profit, prohibitions on doing business, suspension or disqualification from work, including U.S. federal contracting, restrictions on the sale or supply of certain products and services, liability for significant monetary damages, unfavorable publicity and other reputational damage, restrictions on our ability to process information and allegations by our clients that we have not performed our contractual obligations. We can also be held liable for the corrupt or other illegal activities of third-party intermediaries, our employees, representatives, contractors, partners and agents, even if we do not explicitly authorize such activities. Due to the varying degrees of development of the legal systems of the countries in which we operate, local laws might be insufficient to protect our rights.

Our business depends significantly upon technology infrastructure, telephone systems, data and other equipment and systems.systems, including systems operated by or on behalf of our clients and third-party providers. Internal or external attacksattacks, onsystem failures, unauthorized access, employee error, or other disruptions affecting any of those systems could disrupt the normal operations of our facilities and impede our ability to provide critical solutions to our clients, thereby subjecting us to liability under our contracts. In addition, our business involves the use, storage, and transmission of information about our employees, our clients, and customers of our clientsclients’ customers in connection with our solutionssolutions, such asincluding personal information of the customers of our clients.clients’ customers. Our security controls over our systems, as well as other security practices we follow, may not in the future prevent the improper access toto, disclosure, alteration, loss or disclosuremisuse of personal information or proprietary information. Such incidents or disclosuredisclosures could harm our reputation and subject us to significant liability under our client contracts and laws that protect personal information, resulting in increased costs or loss of revenue.

The Company previously experienced a cybersecurity incident in August of 2020. Threat actors may again attempt to penetrate our systems or those of our vendors or fraudulently induce our personnel or the personnel of our vendors to disclose information in order to gain access to our systems or data or seek to gain aobtain fraudulent paymentpayments, (such asincluding through aphishing, phishing/business email compromise, AI-enabled social engineering or wire fraud scheme).schemes. The number and complexity of these threats continue to increase over time. If a material breach of our information technology systems or those of our vendors occurs, the market perception of the effectiveness of our security measures could be harmed and our reputation and credibility could be damaged, resulting in increased costs and potential losses to the Company.

Our insurance coverage may not be adequate to cover losses associated with security incidents, and in any case, such insurance may not cover all of the types of costs, expenses and losses we could incur to address a security incident. For more information on these risks, see the Risk Factors entitled “Our global operations and customers expose us to numerous legal and regulatory requirements” and “Our business relies heavily on technology, telephone and computer systems as well as third-party telecommunications and data services providers, which subjects us to various uncertainties.” For more information on the compliance costs related to applicable legal and regulatory requirements, see the discussion of Regulation in Part I, Item 1 of this Form 10-K.

In addition, our effective tax rate could be adversely affected by challenges to our intercompany transactions, changes in the valuation of deferred tax assets and liabilities, changes in tax laws or in their interpretation or enforcement, changes in the mix of earnings in countries with differing tax rates and changes in accounting principles, including U.S.accounting GAAP.principles generally accepted in the United States (“GAAP”). Tax rates and policies in the jurisdictions in which we operate may change materially as a result of shifting economic, social and political conditions.

Prospective investors should consult their tax advisors regarding the potential impact to them of the Inflation Reduction Act and any subsequent legislative changes and administrative guidance to them. Furthermore, the Organization for Economic Cooperation and Development (the “OECD”) is leading an initiative under its base erosion and profit shifting (“BEPS”) project aimed at imposing a global minimum tax rate. On October 8, 2021, the OECD announced the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting, which agreed to a two-pillar solution to address tax challenges arising from the digitalization of the economy, with the intention of implementing the proposed “Pillar One” in 2024. On December 20, 2021, the OECD released the Pillar Two Model Rules defining the global minimum tax, which call for the taxation of multinational enterprises (having consolidated revenues in excess of €750 million) at a minimum rate of 15%. The OECD continues to release additional guidance on the two-pillar framework and widespread implementation is anticipated by the end of 2025.framework.

We are incorporated in BermudaBermuda, and a significant portion of our assets is located outside the United States (in the jurisdictions that we operate). In addition, certain of our directors are non-residents of the United States. As a result, it may be difficult or impossible for U.S. investors to serve process within the United States upon us or our directors and executive officers, or to enforce a judgment against us for civil liabilities in U.S. courts.

We areno longer qualify as an “emerging growth company” andor a “smaller reporting company”, and may no longer take advantage of certain disclosure exemptions fromwhich disclosuremay requirementscause availableus to usincur mayincreased make our common shares less attractive to investors.costs.

Additionally, on the last business day of the second quarter of fiscal year 2026, the aggregate market value of the Company’s common shares held by non-affiliate stockholders exceeded $250 million. As a result, we no longer qualify as a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K.S-K Smaller reporting companiesand may no longer take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements.statements We may take advantage ofand certain scaled disclosures available to smaller reporting companies for so long as we qualify as a smaller reporting company. To the extent we take advantage of such reduced disclosure obligations, it may also make comparison of our financial statements with other public companies difficult or impossible.disclosures.

The Sarbanes-Oxley Act requires, among other things, that we assess the effectiveness of our internal control over financial reporting annually and the effectiveness of our disclosure controls and procedures quarterly. In particular, Section 404 of the Sarbanes-Oxley Act (“Section 404”) requires us to perform system and process evaluation and testing of our internal control over financial reporting to allow management to report on, and our independent registered public accounting firm potentially to attest to, the effectiveness of our internal control over financial reporting. As an EGC, we avail ourselves of the exemption from the requirement that our independent registered public accounting firm attest to the effectiveness of our internal control over financial reporting under Section 404. However, we may no longer avail ourselves of this exemption when we cease to be an EGC. When our independent registered public accounting firm is required to undertake an assessment of our internal control over financial reporting, the cost of our compliance with Section 404 will correspondingly increase. Our compliance with applicable provisions of Section 404 will require that we incur substantial accounting expense and expend significant management time on compliance-related issues as we implement additional corporate governance practices and comply with reporting requirements. Moreover, if we are not able to comply with the requirements of Section 404 applicable to us in a timely manner, or if we or our independent registered public accounting firm identify deficiencies in our internal control over financial reporting that are deemed to be material weaknesses, the market price of our shares could decline and we could be subject to sanctions or investigations by the SEC or other regulatory authorities, which would require additional financial and management resources.

The stock market in general, and the market for equities of newer public companies in particular, havehas been highly volatile. As a result, the market price of our common shares is likely to be similarly volatile, and investors in our common shares may experience a decrease, which could be substantial, in the value of their common shares, including decreases unrelated to our operating performance or prospects, or a complete loss of their investment. The price of our common shares could be subject to significant fluctuations in response to a number of factors, including those listed elsewhere in this “Risk Factors” section and others such as:

We have never declared or paid any dividends since becoming a public company in August 2020. We currently do not plan to declare dividends on our common shares in the foreseeable future. We currently intend to retain all of our future earnings, if any, to finance the growth and development of our business. The payment of dividends, if any, would be at the discretion of the Board and would depend on our results of operations, capital requirements, financial condition, prospects, contractual arrangements, any limitations on payment of dividends present in our current and future debt agreements and other factors that the Board may deem relevant. Accordingly, if the Board deems it appropriate not to pay any dividends, our investors may only realize future gains on their investments if the price of their common shares increases, which may never occur.

Overview ibex delivers innovative business process outsourcing (“BPO”), smart digital marketing, online acquisition technology, and end-to-end customer engagementengagement, and Artificial Intelligence (“AI”) solutions to help companies acquire, engage, and retain valuable customers. Today, ibex operates a global customer experiences (“CX”) delivery center model consisting of 30 delivery centers around the world, while deploying next-generation technology to drive superior customer experiences for many of the world’s leading companies across various verticals, including Retail & E-commerce, HealthTech, Telecommunication, FinTech, Utilities, and Travel, Transportation & Logistics.Logistics, Technology, and others. ibex leverages its diverse global team of approximately 33,00035,000 employees together with industry-leading technology, including its Wave iX platform, to manage nearly 169176 million customer interactions on behalf of our clients, driving a truly differentiated customer experience.

The Company delivered revenues of $558.3$644.1 million during the fiscal year ended June 30, 2025,2026, a 9.8%15.4% increase compared to the prior year due to growth fromacross existingour key verticals and newdigital clientsacquisition launched throughout fiscal 2024 and fiscal 2025.business. Net income during the fiscal year ended June 30, 20252026 was $36.9$46.3 million, a 9.5%25.7% increase from $33.7$36.9 million during the prior year. Fully diluted earnings per share increased to $3.13 for the fiscal year ended June 30, 20252026, ofcompared $2.36,to increased$2.36 from $1.84 infor the prior year. The increase in net income was driven by revenue growth in our higher margin offshore regions andresulting in improved grossoverall marginoperating performance.margins. The increase in fully diluted earnings per share was driven by higher net income during the current year and fewer diluted shares outstanding compared to the prior year period.year.

Macroeconomic factors, including but not limited to, increasing inflation and interest rates, global economic and geopolitical uncertainty, changes in foreign currency exchange rates, and the impact thatof these factors are having on our clients and their customers, havecould also impactedimpact our financial results during fiscal year 2025.results. Some of our customers have increased their focus on cost reduction, resulting in decisions to shift work from onshore sites to offshore sites, which may impact our revenues and operations in the near term. However, we also believe that they present opportunities with both new and existing clients, as companies maintain a focus on cost reduction and look for new solutions and delivery options.

Artificial Intelligence (“AI”)

With the increasing applicability of AI in enhancing business processes, the BPO industry is increasingly evaluating and starting to integrate AI into its range of solutions to improve the customer experience and efficiencies. We are moving aggressively to leverage generative AI in our business. Our Wave iX technology has a three-pronged AI strategy, which continues to keep ibex at the forefront of digital transformation. Our solutions are focused on increasing agent productivity, providing deeper customer insights to elevate the customer experience and putting AI in front of the customer journey with voice and chat bots. We believe we are well positioned to leverage our leadership position in adopting newAI technology in the CX sector and to create significant value for our clients through the application of AI. We believe that ourOur approach toof bringing a combination of our AI-enabled solutions plus a robust set of third-party AI-enabled solutions to our clients positions us to not only be a fast-mover in the market, but also to capture an outsized share of AI-impacted future revenue, and to help minimizeminimizing risk to our overall revenue and provideproviding opportunities for future profitability enhancement. While the initial implementation of some AI-solutionsAI-enabled solutions may impact revenue directly derived from traditional agent-driven activities, it is our belief that by remaining on the forefront and bringing these solutions to our clients, we will be able to capture a greater share of higher margin AI-enabled revenue work and maintain and grow our overall business and results in the near- and long-term.

As demand for delivery locations has grown and continued to shift towards lower cost geographies during the fiscal year ended June 30, 2025,2026, we have filled up existing capacity and are in the process of building additional capacity in our offshore regions. InWe addition, wealso continue to realize cost savings as we geographically optimize our delivery centers in higher cost regions.

When compensation levels of our employees increase, we may not be able to pass on such increased costs to our clients or do so on a timely basis, which tends to depress our operating profit margins if we cannot generate sufficient offsetting productivity gains. We continued to see increasing wage pressure in all of our geographies, in part brought on by the current global inflation and labor shortage, which is increasing competition for contact center agents from other sectors of the economy during the fiscal year ended June 30, 2025.2026. We were able to offset some of these wage increases with higher agent quality and increased productivity, higher agent retention, and increased client prices under contractual cost of living adjustments (“COLA”). Furthermore, our overall labor cost as a percentage of revenue is positively impacted by the aforementioned shift in delivery location from onshore delivery centers to offshore centers.

During the fiscal year 2025,ended June 30, 2026, our largest client accounted for 11%9%, while our three largest clients accounted for 26%24% of our consolidated revenues. We now have over 6065 clients with greater than $1 million in annual revenue and over 2530 clients with greater than $5 million in annual revenue. We believe our client diversification is a strength inand amitigates challenging market.risk.

Our revenues are dependent upon both volumes and unit pricing for our services. Client pricing is often expressed in terms of a base price per minute or hour as well as, in limited cases, with bonuses and occasionally penalties depending upon our achievement of certain client objectives. During the fiscal year 2025,ended June 30, 2026, the tightening in the global labor market and corresponding wage inflation, as well as increasing facilities expenses have resulted in us pursuing and successfully negotiating price increases or COLA with many of our clients.

While substantially all of our revenues are generated in U.S. dollars, a significant portion of our operating expenses are incurred outside of the United States and paid for in the respective foreign currencies, principally the local currencies of the Philippines, Jamaica and Pakistan. During the fiscal year ended June 30, 2025,2026, out of our total employee salaries and benefit expenses, 32.7%30.9% were incurred in the Philippine Pesos, 12.3%8.9% were incurred in the Jamaican Dollar and 9.7%11.6% were incurred in Pakistani Rupee. As a result, our operations are subject to the effects of changes in exchange rates against the U.S. dollar. See “Item 7A. Quantitative and Qualitative Disclosures about Market Risk.”

During fiscal year 2025,2026, capacity utilization increasedremained consistent with 94% when compared to 88% from 84% in the prior year as we continue to utilize capacity in nearshore and offshore geographies and optimize our onshore capacity. Capacity utilization was over 100% in the United States as we continued to migrate towards a work at home model.

Our revenueRevenue was $558.3$644.1 million forduring the fiscal year ended June 30, 2025,2026, an increase of $49.7$85.8 million, or 9.8%,15.4%, compared to the prior year. This increase was primarily driven by increases in our HealthTech vertical of $31.7 million, or 38.5%, Retail & E-commerce vertical of $16.2$20.5 million, or 12.6%, HealthTech vertical of $15.5 million, or 23.2%,14.1%, Travel, Transportation & Logistics vertical of $9.4$13.3 million, or 13.7%,17.2%, Technology vertical of $11.1 million, or 25.6%, and Other vertical of $20.3$21.5 million, or 37.6%, largely28.9%, due to growth in our digital acquisition business, compared to the prior year. These increases were partially offset by decreasesa decrease in the FinTech vertical of $8.7 million, or 12.2% and Telecommunications vertical of $3.5$13.6 million, or 4.6%,18.7%, compared to the prior year.

Cost of services was $385.7$456.2 million during the fiscal year ended June 30, 2025,2026, an increase of $29.2$70.5 million, or 8.2%,18.3%, compared to the prior year. The increase in cost of services was primarily due to increases in payroll and related costs, reseller commissions and lead expenses, ITfacility, expenses, telecom,IT, local transportation and other site related expenses, and stock-based compensation.expenses.

Payroll and related costs were $291.0$336.5 million during the fiscal year ended June 30, 2025,2026, an increase of $16.6$45.4 million, or 6.0%,15.6%, compared to the prior year, due to additional headcount to support increased revenues during the current year.year and severance costs of $0.9 million related to work transferring from nearshore to offshore delivery centers. As a percent of revenue, payroll costs decreasedwere to 52.1%52.3% during the fiscal year ended June 30, 20252026, comparedconsistent to 54.0% duringwith the prior year, reflecting our continuing trend towards lower cost regions.year.

ITFacilities expenses were $6.8$54.9 million during the fiscal year ended June 30, 2025,2026, an increase of $1.7$6.6 millionmillion, or 32.8%,13.5%, compared to the prior year, primarily duedriven toby additionalexpansions softwarein licenseour fees.offshore regions.

Stock-basedIT compensationexpenses waswere $0.5$10.3 million during the fiscal year ended June 30, 2025,2026, an increase of $0.4$3.5 million or 51.4%, compared to the prior year, primarily due to aadditional highersoftware sharelicense price impacting liability-based grants.fees.

SG&A expense was $108.7$113.0 million during the fiscal year ended June 30, 2025,2026, an increase of $15.6$4.3 million, or 16.7%,3.9%, compared to the prior year. The increase was driven by higher payroll and related costs of $10.0$5.4 million due to higher performance-based incentives and new hires to support growth, higher stock-based compensation of $1.2$2.7 million primarily due to new grants issued andduring athe current year, higher share price impacting liability-based grants, IT expenses of $1.2$1.4 million due to continued investments in core business management systems and additional software license fees, increasedand sitea net loss on lease termination $0.7 million related to the closure of two nearshore sites during the current year. These increases were partially offset by favorable foreign currency impacts of $3.9 million, lower legal and professional expenses of $0.9$0.8 million, drivenlower byfacility growthexpenses inof our$0.5 higher margin offshore regions,million, and increasesa ingain netof foreign$0.2 currencymillion on asset disposals, compared to the prior year. Additionally, during the fiscal year ended June 30, 2026, we recognized impairment losses of $2.5$1.1 million yearcompared overto $1.4 million in the prior year.

D&A expense was $17.2$19.9 million during the fiscal year ended June 30, 2025,2026, aan decreaseincrease of $2.2$2.7 million or 11.5%,15.6%, compared to the prior year. The decreaseincrease was primarily due to new capital additions in our offshore regions partially offset by lower depreciation expense dueresulting tofrom an increase in fully depreciated assets. As a percentage of revenue, D&A decreased to 3.1% duringfor the fiscal year ended June 30, 20252026 comparedremained toconsistent 3.8% inwith the prior year.year at 3.1%.

Income from operations was $46.6$55.0 million during the fiscal year ended June 30, 20252026 compared to $39.4$46.6 million during the prior year. The operating margin was 8.3% for the fiscal year ended June 30, 2025,2026 was 8.5%, up from 7.8%8.3% forduring the prior year. The increase was primarily driven by margin expansion as we continued to realize growth in our higher margin offshore regions and realize site optimization efforts undertaken in the prior year.

Interest expense during the fiscal year ended June 30, 20252026 was $1.6$0.9 million, ana increasedecrease of $1.1$0.7 millionmillion, whenor compared42.7% primarily due to the prior year, and consisted oflower interest on borrowings of $0.6 million, interest on finance leases of $0.3 million, amortization of deferred debt issuance costs of $0.2 million, interest of $0.2 million onin the TRGIcurrent convertibleyear promissory note (as definedwell andas describedexpenses below),incurred andduring athe prior year including the loss on extinguishment of $0.2 million related to the termination of our creditPNC facilityCredit Facility and interest expense of $0.2 million on the convertible promissory note issued in connection with PNC.the purchase agreement with TRGI, which was repaid during fiscal 2025.

Income tax expense was $9.1$8.0 million during the fiscal year ended June 30, 2025,2026, ana increasedecrease of $1.7$1.1 millionmillion, whenor compared with the prior year, primarily due to a higher pre-tax income and a higher effective tax rate in the current year.12.2%. The effective tax rate was 19.7%14.7% and 17.9%19.7% for the fiscal years ended June 30, 20252026 and 2024,2025, respectively. The changes in effective tax rates between these periods was primarily attributable to changes in revenue mix across our taxable jurisdictions and discrete itemstax recordedbenefits duringrecognized in the priorcurrent year. Excluding the discrete tax benefits from stock-based compensation and favorable resolution of uncertain tax positions, our effective tax rate would have been 18.2% for the fiscal year ended June 30, 2026.

We present non-GAAP financial measures because we believe that they and other similar measures are widely used by certain investors, securities analysts and other interested parties as supplemental measures of performance and liquidity. We also use these measures internally to establish forecasts, budgets and operational goals to manage and monitor our business, as well as evaluate our underlying historical performance, as we believe that these non-GAAP financial measures provide a more helpful depiction of our performance of the business by encompassing only relevant and manageable events, enabling us to evaluate and plan more effectively for the future. The non-GAAP financial measures may not be comparable to other similarly titled measures of other companies, have limitations as analytical tools, and should not be considered in isolation or as a substitute for analysis of our operating results as reported in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”).GAAP. Non-GAAP financial measures and ratios are not measurements of our performance, financial condition or liquidity under U.S. GAAP and should not be considered as alternatives to operating profit or net income / (loss) or as alternatives to cash flow from operating, investing or financing activities for the period, or any other performance measures, derived in accordance with U.S. GAAP.

Adjusted net income is a non-GAAP profitability measure that represents net income before the effect of the following items: severance costs, impairment losses, warrantgains contraor revenue,losses on asset disposals, gains or losses on lease terminations, foreign currency gains and losses, and stock-based compensation expense, net of the tax impact of such adjustments. We define adjusted net income margin as adjusted net income divided by revenue. We define adjusted earnings per share as adjusted net income divided by weighted average diluted shares outstanding.

EBITDA is a non-GAAP profitability measure that represents net income before the effect of the following items: interest expense, income tax expense, and D&A. Adjusted EBITDA is a non-GAAP profitability measure that represents EBITDA before the effect of the following items: interest income, severance costs, impairment losses, interestgains income,or warrantlosses contraon revenue,asset disposals, gains or losses on lease terminations, foreign currency gains and losses, and stock-based compensation expense. Adjusted EBITDA margin is a non-GAAP profitability measure that represents adjusted EBITDA divided by revenue.

Adjusted EBITDA margin was 12.9%12.8% for the fiscal year ended June 30, 2025,2026, consistentcompared withto 12.8%12.9% duringin the prior year.

Net cash provided by operating activities during the fiscal year ended June 30, 20252026 was $45.7$59.0 million compared to $35.9$45.7 million during the fiscal year ended June 30, 2024.2025. The increase was primarily driven by an increase in revenue and profitability, offset by a lowerhigher use of working capital.

Free cash flow during the fiscal year ended June 30, 20252026 was $31.2 million compared to $27.3 million,million consistent withduring the priorfiscal year dueended toJune an30, 2025. The increase in capitalnet expenditurescash ofprovided $9.5by million.operating Theactivities was partially offset by the planned increase in capital expenditures during the current year of $9.4 million, which was primarily driven by $4.0 million related to facilities expansions in our offshore regions and $5.4 million related to purchases of IT and telecommunications equipment.equipment to support growth.

As of June 30, 2025,2026, our principal sources of liquidity were cash and cash equivalents totaling $15.4$32.6 million, cash flows from operations, and the unused availability under our existing credit facilities with HSBC Bank USA, National Association and HSBC Bank Middle East Limited (“HSBC Credit Facilities (as defined and described in more detail below”) of $71.4$63.6 million.

We use these resources to finance our operations, expand current delivery centers, open new delivery centers, invest in upgrades of technology, service offerings, and for other strategic initiatives, such as acquiring or investing in complementary businesses or intellectual property rights, orexecuting share repurchases. Our future liquidity requirements will depend on many factors, including our growth rate and the timing and extent of spending to engage in the activities mentioned above. We believe that our existing cash balance together with cash generated from our operations will be sufficient to meet our liquidity requirements for at least the next twelve months.

To the extent additional funds are necessary to meet our long-term liquidity needs as we execute on our business strategy, we anticipate that they will be obtained through the utilization of current availability under our HSBC Credit Facilities (as defined and described below),Facilities, additional indebtedness, additional equity financings or a combination of these potential sources of funds; however, such additional financing may not be available on favorable terms, or at all. If we are unable to raise additional funds when desired, our business, financial condition and results of operations could be adversely affected.

The Board may authorize share repurchases of the Company’s common shares and the Company had multiple share repurchase plans during the fiscal years ended June 30, 20252026 and 2024.2025. On May 1,11, 2025,2026, the Board authorized the Company’s current share repurchase program, which commenced on May 12, 2025, of $15$20 million in share repurchases for the next twelve months. For the years ended June 30, 20252026 and 2024,2025, the Company repurchased 385,510452,758 and 1,322,105385,510 shares, respectively, of its common shares totaling $7.2$14.4 million, and $21.7$7.2 million, respectively. All repurchases under these programs were funded with our existing cash balance.

The following discussion highlights our cash flow activities during the last two fiscal years.years:

The Company manages a centralized global treasury function with a focus on safeguarding and optimizing the use of its global cash and cash equivalents. The majority of the Company’s cash is held in large U.S. banks in U.S. dollars and outside of the U.S. in U.S. dollars and foreign currencies in regional or local banks in the countries it operates in. The Company believes that its cash management policies and practices effectively mitigate its risk relating to its global cash. However, the Company can provide no assurances that it will not sustain losses.

Net cash inflow from operating activities during the fiscal year ended June 30, 20252026 wasincreased to $59.0 million from $45.7 million compared to $35.9 million duringin the fiscalprior yearyear, ended June 30, 2024. The increasewhich was primarily driven by an increase in our revenues drivingand improvedprofitability, profitabilityoffset andby a lowerhigher use of working capital.

During the yearfiscal years ended June 30, 2026 and 2025, we incurred expenditures of $27.8 million and $18.4 millionmillion, respectively, on investing activities. The net increase in cash used in investing activities of $9.4 million was primarily driven by an increase of $4.0 million related to expansions in our offshore regions and $5.4 million related to meet demand and purchases of IT and telecommunications equipment.equipment to support the Company’s continued growth, when compared to the prior year.

This Form 10-Q includes certain historical consolidated financial and other data for IBEX Limited ("ibex," "we," "us," "our" or the "Company"). The following discussion provides a narrative of our financial condition and results of operations for the three and sixnine months ended DecemberMarch 31, 20252026 compared to the three and sixnine months ended DecemberMarch 31, 2024.2025.

Overview ibex delivers innovative business process outsourcing ("BPO"), smart digital marketing, online acquisition technology, and end-to-end customer engagementengagement, and Artificial Intelligence ("AI") solutions to help companies acquire, engage, and retain valuable customers. ibex operates a global customer experiences ("CX") delivery center model consisting of 32 delivery centers around the world, while deploying next-generation technology to drive superior customer experiences for many of the world’s leading companies across various verticals, including Retail & E-commerce, HealthTech, FinTech, Utilities, and Travel, Transportation & Logistics. ibex leverages its diverse global team of approximately 39,00036,000 employees together with industry-leading technology, including its Wave iX platform, to manage customer interactions on behalf of our clients, driving a truly differentiated customer experience.

During the three and sixnine months ended DecemberMarch 31, 2025,2026, the Company delivered strong financial results, and experienced growth with leading clients in our HealthTech, Retail & E-commerce, HealthTech, Travel, Transportation & Logistics, Technology, and Other verticals, partially offset by decreases in our Telecommunications vertical. The business performed well in several important areas this quarter, including total revenues, profitability, cash from operating activities, client and vertical diversification, and continued expansion including seveneight new client wins in strategic verticals during the first half of fiscal 2026.year-to-date.

The Company delivered revenues of $164.2$164.4 million during the three months ended DecemberMarch 31, 2025,2026, a 16.7%16.8% increase compared to the prior year quarter due to growth across our key verticals and digital acquisition business. Net income during the three months ended DecemberMarch 31, 20252026 was $12.2$13.3 million, a 31.8%27.3% increase from $9.3$10.5 million during the same quarter in the prior year. Fully diluted earnings per share for the three months ended DecemberMarch 31, 20252026 of $0.83,$0.89, increased from $0.57$0.73 during the prior year quarter.

The Company delivered revenues of $315.4$479.8 million during the sixnine months ended DecemberMarch 31, 2025,2026, a 16.6%16.7% increase compared to the same period in the prior year due to growth from existing and new clients launched throughout fiscal 2025 and first half of fiscal 2026. Net income during the sixnine months ended DecemberMarch 31, 20252026 was $24.3$37.6 million, a 44.4%37.8% increase from $16.8$27.3 million during the same period in the prior year. Fully diluted earnings per share for the sixnine months ended DecemberMarch 31, 20252026 of $1.65,$2.54, increaseda 49.6% increase from $1.00$1.70 during the prior year period.

The increases in net income and fully diluted earnings per share for both the three and sixnine months ended DecemberMarch 31, 20252026 were driven by revenue growth in our higher margin offshore regions resulting in improved overall operating margin performance.margins. The increase in fully diluted earnings per share during the nine months ended March 31, 2026 was also driven by higher net income during the current year and fewer diluted shares outstanding compared to the same period in the prior year periods.year.

With the increasing applicability of AI in enhancing business processes, the BPO industry is increasingly evaluating and starting to integrate AI into its range of solutions to improve the customer experienceexperience, serve an increasing number of consumers, and efficiencies.drive efficiencies throughout the customer journey. We are moving aggressively to leverage generative AI in our business.business, both internally and in consumer-facing interactions. Our Wave iX technology has a three-pronged AI strategy, which continues to keep ibex at the forefront of this digital transformation. Our internal solutions are focused on increasing agent productivity,productivity and the quality of our services by leveraging AI across the agent lifecycle to improve recruiting, hiring, training, and coaching. We are leveraging AI to better understand and improve customer journeys at every step, providing deeper customer insights to tailor client solutions and elevate thetheir customercustomers' experienceexperiences. andFinally, we are putting AI agents in front of the customer journey with voice and chat bots. We believe we are well positioned to leverage our leadership position in adopting new technology in the CX sector and to create significant value for our clients through the application of AI. We believe that our approach to bringing a combination of our AI-enabled solutions plus a robust set of third-party AI-enabled solutions to ourautomate clientslow-complexity positionstransactions, usenable smoother, more effective and efficient, seamless AI to nothuman onlyagent be a fast-mover in the market, but also to capture an outsized share of AI-impacted future revenue, and to help minimize risk to our overall revenueinteractions, and provide opportunitiesreal-time fortranslation future profitability enhancement. While the initial implementation of some AI-enabled solutions may impact revenue directly derived from traditional agent-driven activities, it is our belief that by remaining on the forefront and bringing these solutions to our clients, we will be able to capture a greater share of AI-enabled revenue work and maintain and grow our overall business and results in the near- and long-term.solutions.

As demand for delivery locations has grown and continued to shift towards lower cost geographies during the sixnine months ended DecemberMarch 31, 2025,2026, we are in the process of building additional capacity in our offshore regions. We also continue to realize cost savings as we geographically optimize our delivery centers in higher cost regions.

When compensation levels of our employees increase, we may not be able to pass on such increased costs to our clients or do so on a timely basis, which tends to depress our operating profit margins if we cannot generate sufficient offsetting productivity gains. We continued to see increasing wage pressure in all of our geographies, in part brought on by the current global inflation and labor shortage, which is increasing competition for contact center agents from other sectors of the economy during the sixnine months ended DecemberMarch 31, 2025.2026. We were able to offset some of these wage increases with higher agent quality and increased productivity, higher agent retention, and increased client prices under contractual cost of living adjustments ("COLA"). Furthermore, our overall labor cost as a percentage of revenue is impacted by the aforementioned shift in delivery location from onshore delivery centers to offshore centers.

We generate greater profit margins from our work carried out by agents located in offshore and nearshore regions compared to our work carried out from onshore locations in the United States. As a result, our operating margins are influenced by the proportion of our work delivered from these higher margin locations. Over time we have expanded and further diversified our delivery network by adding facilities in these locations, offering a significant relative cost advantage. Our percentage of workstations in nearshore and offshore geographies is approximately 97% as of DecemberMarch 31, 2025 versus 95% as of December 31, 2024.2026. We regularly evaluate whether to procure additional space or enter into new markets as we continue to add employees and expand geographically to meet the demands of our business.

During the sixnine months ended DecemberMarch 31, 2025,2026, our largest client accounted for 10%, while our three largest clients accounted for 26%25% of our consolidated revenues. We believe our client diversification is a strength and mitigates risk.

Our revenues are dependent upon both volumes and unit pricing for our services. Client pricing is often expressed in terms of a base price per minute or hour as well as, in limited cases, with bonuses and occasionally penalties depending upon our achievement of certain client objectives. During the fiscal year ended June 30, 2025 and the sixnine months ended DecemberMarch 31, 2025,2026, the tightening in the global labor market and corresponding wage inflation, as well as increasing facilities expenses have resulted in us pursuing and successfully negotiating price increases or COLA with many of our clients.

The following summarizes the results of our operations for the three and sixnine months ended DecemberMarch 31, 20252026 and 20242025:

Three Months Ended DecemberMarch 31, 20252026 and 20242025

Our revenue was $164.2$164.4 million for the three months ended DecemberMarch 31, 2025,2026, an increase of $23.5$23.7 million, or 16.7%,16.8%, compared to the prior year quarter. This increase was primarily driven by increases in our HealthTech vertical of $7.4$11.9 million, or 35.1%,53.7%, Technology vertical of $4.5 million, or 42.6%, Retail & E-commerce vertical of $6.9$3.0 million, or 17.2%,8.3%, Travel, Transportation & Logistics vertical of $3.9$3.0 million, or 20.2%15.1% and Other vertical of $7.6$4.8 million, or 51.3%,26.5%, due to growth in our digital acquisition business, compared to the prior year quarter. These increases were partially offset by decreases in the Telecommunications vertical of $4.3 million, or 23.1%.

As a percentage of total revenue, our HealthTech vertical increased to 17.4%20.8% compared to 15.1% in the prior year quarter,15.8%, our Travel, Transportation & LogisticsTechnology vertical increased to 14.1%9.2% compared to 13.7% in the prior year quarter, our Retail & E-commerce vertical remained consistent with 28.6% in both the current and prior year quarters,7.5%, and our Other vertical increased to 13.7%14.0% compared to 10.6%13.0% in the prior year quarter. Conversely, our Telecommunications vertical decreased to 8.7%8.6% compared to 13.1%13.1%, inour Retail & E-commerce vertical decreased to 23.9% compared to 25.8%, and our Travel, Transportation & Logistics remained consistent at 13.8% compared to the prior year quarter.

Cost of services was $116.6$115.6 million during the three months ended DecemberMarch 31, 2025,2026, an increase of $17.9$19.6 million, or 18.1%,20.4%, compared to the prior year quarter. The increase in cost of services was primarily due to increases in payroll and related costs, reseller commissions and lead expenses, IT, facility expenses, and local transportation expenses.

Payroll and related costs were $87.4$84.8 million during the three months ended DecemberMarch 31, 2025,2026, an increase of $11.2$12.4 million, or 14.7%,17.1%, compared to the prior year quarter, due to additional headcount to support increased revenues during the current year quarter.quarter and severance costs of $0.7 million due to migrating volume from our nearshore to offshore regions. As a percent of revenue, payroll costcosts decreasedwere to 53.2%51.5% during the three months ended DecemberMarch 31, 20252026, comparedconsistent to 54.1% duringwith the prior year quarter, reflecting the continuing trend towards lower cost, higher margin regions.quarter.

Reseller commissions and lead expenses were $7.5$8.7 million during the three months ended DecemberMarch 31, 2025,2026, an increase of $3.8$3.2 million, or 101.4%,57.3%, compared to the prior year quarter. These increases were primarily due to increases in the utilization of our third-party affiliates for inbound inquiries as well as search engine costs in connection with increased revenues in our higher margin digital sales and marketing efforts.

IT expenses were $2.4$2.8 million during the three months ended DecemberMarch 31, 2025,2026, an increase of $0.8$1.0 million, or 46.7%,53.6%, compared to the prior year quarter, primarily due to additional software license fees.

Facility expenses were $13.5$13.8 million during the three months ended DecemberMarch 31, 2025,2026, an increase of $0.9$2.3 million, or 7.2%,19.6%, compared to the prior year quarter, primarily driven by expansions in theour Philippinesoffshore and Pakistan.regions.

Local transportation expenses were $2.2$2.1 million, an increase of $0.5$0.4 million, or 27.9%,26.4%, compared to the prior year period. These increases were primarily due to increased activitytransportation correspondingneeds in offshore regions to oursupport increasedincreasing revenuesrevenue during the current year quarter.

SG&A expense was $27.6$27.5 million during the three months ended DecemberMarch 31, 2025,2026, an increase of $1.8$0.4 million, or 7.2%,1.5%, compared to the prior year quarter. The change was driven by increased payroll and related costs of $2.2$2.5 million due to higher performance-based incentives and new hires to support growth, as well as higher IT expenses of $0.3 million due to additional software license fees, as well as unfavorable foreign currency impacts of $0.5 million.fees. These increases were partially offset by decreasesfavorable inforeign currency impacts of $1.0 million, lower legal and professional fees, facilities expenses,fees and otherfacilities expenses of $1.2$0.9 million and lower stock-based compensation expenses of $0.5 million compared to the prior year quarter.

D&A expense was $4.8$5.2 million during the three months ended DecemberMarch 31, 2025,2026, an increase of $0.5$0.8 million, or 10.8%19.4% compared to the prior year quarter. The increase was primarily due to new capital additions partially offset by lower depreciation expense resulting from an increase in fully depreciated assets. As a percentage of revenue, D&A was 2.9%3.1% during the three months ended DecemberMarch 31, 2025,2026, consistent with 3.0%3.1% during the prior year quarter.

Income from operations was $15.3$16.2 million during the three months ended DecemberMarch 31, 20252026 compared to $11.9$13.3 million during the prior year quarter. The operating margin was 9.3%9.8% for three months ended DecemberMarch 31, 2025,2026, up from 8.5%9.5% for the prior year quarter. The increase was primarily driven by margin expansion as we continued to realize growth in our higher margin offshore regions compared to the prior year quarter.

Interest income during the three months ended DecemberMarch 31, 20252026 was $0.1$0.06 million, compared to $0.3$0.03 million during the prior year quarter and consisted primarily of income from invested funds.

Interest expense during the three months ended DecemberMarch 31, 20252026 was $0.2 million, a decrease of $0.4$0.2 million, and consisted primarily dueof to expenses incurred during the prior year quarter including the lossinterest on extinguishment related to the termination of our PNC Credit Facilityborrowings and interestfinance expense on the convertible promissory note which was repaid during fiscal 2025.leases.

Income tax expense was $2.9$2.6 million during the three months ended DecemberMarch 31, 2025,2026, an increase of $0.5$0.2 million when compared with the prior year quarter, primarily due to higher pre-tax income in the current year quarter. The effective tax rate was 19.1%16.6% and 20.2%19.2% for the three months ended DecemberMarch 31, 20252026 and 2024,2025, respectively. The change in effective tax rates between these periods was primarily attributable to changes in revenue mix across our taxable jurisdictions and favorable discrete tax benefits in the current year quarter.

SixNine Months Ended DecemberMarch 31, 20252026 and 20242025

Our revenue was $315.4$479.8 million for the sixnine months ended DecemberMarch 31, 2025,2026, an increase of $45.0$68.7 million, or 16.6%,16.7%, compared to the same period in the prior year. This increase was primarily driven by increases in our HealthTech vertical of $22.9 million, or 37.2%, Retail & E-commerce vertical of $14.8$17.8 million, or 20.7%, HealthTech vertical of $11.0 million, or 27.9%,16.5%, Travel, Transportation & Logistics vertical of $6.7$9.7 million, or 17.9%,16.9%, Technology vertical of $8.1 million, or 25.0%, and Other vertical of $17.2$22.0 million, or 58.2%,46.1%, due to growth in our digital acquisition business, compared to the same period in the prior year. These increases were partially offset by decreases in the Telecommunications vertical of $8.8$13.0 million, or 22.8%,22.9%, compared to the prior year period.

As a percentage of total revenue, our Retail & E-commerce vertical increased to 27.5% for the six months ended December 31, 2025 compared to 26.6% in the same period in the prior year, our HealthTech vertical increased to 16.0%17.6% compared to 14.6%15.0%, our Technology vertical increased to 8.5% compared to 7.9%, and our Other vertical increased to 14.5% compared to 11.6% in the prior year period,period. Our Retail & E-commerce vertical and our Travel, Transportation & Logistics vertical remained consistent at 14.1%26.3% and 14.0%, respectively, compared to 14.0% in the prior year period, and our Other vertical increased to 14.8% compared to 10.9% in the prior year period. Conversely, our Telecommunications vertical decreased to 9.4%9.1% for the sixnine months ended DecemberMarch 31, 20252026 compared to 14.2%13.8% in the prior year period.

Cost of services was $223.2$338.8 million during the sixnine months ended DecemberMarch 31, 2025,2026, an increase of $34.4$54.0 million, or 18.2%,19.0%, compared to the prior year period. The increase in cost of services was primarily due to increases in payroll and related costs, reseller commissions and lead expenses, IT, facility, and local transportation expenses.

Payroll and related costs were $165.2$250.0 million during the sixnine months ended DecemberMarch 31, 2025,2026, an increase of $20.7$33.0 million, or 14.3%,15.2%, compared to the prior year period, due to additional headcount to support increased revenues during the current year.year and severance costs of $0.7 million due to migrating volume from our nearshore to offshore regions. As a percent of revenue, payroll cost decreased to 52.4%52.1% during the sixnine months ended DecemberMarch 31, 20252026 compared to 53.5%52.8% during the prior year period, reflecting the continuing trend towards lower cost, higher margin regions.

Reseller commissions and lead expenses were $15.8$24.5 million during the sixnine months ended DecemberMarch 31, 2025,2026, an increase of $8.3$11.5 million, or 110.6%,88.0%, compared to the prior year period. These increases were primarily due to increases in the utilization of our third-party affiliates for inbound inquiries as well as search engine costs in connection with increased revenue in our higher margin digital sales and marketing efforts.

IT expenses were $4.3$7.1 million during the sixnine months ended DecemberMarch 31, 2025,2026, an increase of $1.4$2.3 million or 46.1%,48.9%, compared to the prior year period, primarily due to additional software license fees.

Facility expenses were $26.4$40.1 million during the sixnine months ended DecemberMarch 31, 2025,2026, an increase of $1.8$4.1 million, or 7.4%,11.3%, compared to the prior year period, primarily driven by expansions in the Philippines and Pakistan and higher expenses for our nearshoreoffshore regions to support revenue growth during the current year.regions.

Local transportation expenses were $4.2$6.4 million during the sixnine months ended DecemberMarch 31, 2025,2026, an increase of $0.9$1.4 million or 27.6%,27.2%, compared to the prior year period, driven primarily by increasedtransportation activityneeds correspondingin offshore regions to oursupport increasedincreasing revenues during the current year.

SG&A expense was $54.1$81.5 million during the sixnine months ended DecemberMarch 31, 2025,2026, an increase of $2.2$2.6 million, or 4.2%,3.2%, compared to the prior year period. The increase was driven by higher payroll and related costs of $3.6$6.1 million due to higher performance-based incentives and new hires to support growth, stock-based compensation of $1.7$1.2 million due to new grants issued andduring athe highercurrent share price impacting liability-based grants,year, and higher IT expenses of $0.9$1.2 million due to additional software license fees. These increases were partially offset by favorable foreign currency impacts of $2.3$3.3 million, lower legal and professional fees of $0.9$1.6 million, and lower telecommunication, insurance, facilities and other site related expenses of $0.6$0.8 million compared to the prior year period.

D&A expense was $9.1$14.3 million during the sixnine months ended DecemberMarch 31, 2025,2026, an increase of $0.5$1.3 million or 5.5%,10.1%, compared to the prior year period. The increase was primarily due to new capital additions in our offshore regions partially offset by lower depreciation expense resulting from an increase in fully depreciated assets. As a percentage of revenue, D&A decreased to 2.9%3.0% during the sixnine months ended DecemberMarch 31, 20252026 compared to 3.2% in the prior year period.

Income from operations was $29.0$45.1 million during the sixnine months ended DecemberMarch 31, 20252026 compared to $21.0$34.3 million during the prior year period. The operating margin was 9.2%9.4% for sixnine months ended DecemberMarch 31, 2025,2026, up from 7.8%8.4% for the prior year period. The increase was primarily driven by margin expansion as we continued to realize growth in our higher margin offshore regions and focus on site optimization efforts in our onshore regions.

Interest income during the sixnine months ended DecemberMarch 31, 20252026 was $0.1$0.2 million, compared to $0.9 million during the prior year period, and consisted primarily of income from invested funds.

Interest expense during the sixnine months ended DecemberMarch 31, 20252026 was $0.5$0.7 million, a decrease of $0.3$0.5 million, or 40.5%,39.8%, primarily due to expenses incurred during the prior year period including the loss on extinguishment related to the termination of our PNC Credit Facility and interest expense on the convertible promissory note which was repaid during fiscal 2025.

Income tax expense was $4.4$7.0 million during the sixnine months ended DecemberMarch 31, 2025,2026, consistent with the prior year period. The effective tax rate was 15.2%15.7% and 20.5%20.0% for the sixnine months ended DecemberMarch 31, 20252026 and 2024,2025, respectively. The changes in effective tax rates between these periods was primarily attributable to changes in revenue mix across our taxable jurisdictions and discrete items, including discrete tax benefits from stock-based compensation recorded in the current period.

Net income margin was 7.4%8.1% for the three months ended DecemberMarch 31, 20252026 compared to 6.6%7.4% during the prior year quarter. Net income margin was 7.7%7.8% for the sixnine months ended DecemberMarch 31, 20252026 compared to 6.2%6.6% during the prior year period. These increases were primarily driven by revenue growth in our higher margin offshore regions and lower SG&A expenses as a percentage of revenue, partially offset by increases in income tax and depreciation expense compared to the same periods in the prior year.

Adjusted EBITDA margin was 12.6%13.4% for the three months ended DecemberMarch 31, 20252026 compared to 11.8%13.8% during the prior year quarter. This decrease was primarily driven by the temporary impact of migrating volume from our nearshore to offshore regions, partially offset by lower SG&A expenses, compared to the same quarter in the prior year. Adjusted EBITDA margin was 12.7%13.0% for the sixnine months ended DecemberMarch 31, 20252026 compared to 11.9%12.5% during the prior year period. TheseThis increasesincrease werewas primarily driven by revenue growth in our higher margin offshore regions and lower SG&A expenses as a percentage of revenue during the three and six months ended December 31, 2025 compared to the same periods in the prior year.revenue.

Net cash provided by operating activities during the three and sixnine months ended DecemberMarch 31, 20252026 was $6.6$11.9 million and $22.3$34.2 million, respectively, compared to $1.1$8.8 million and $8.9$17.7 million, respectively, during the prior year periods. Free cash flow during the three and sixnine months ended DecemberMarch 31, 20252026 was $(5.1)$6.6 million and $2.9$9.5 million, respectively, compared to $(3.2)$3.6 million and $1.0$4.5 million, respectively, during the prior year periods. The planned increase in capital expenditures during the current year was driven by expansions in our offshore regions to meet demand and purchases of IT and telecommunications equipment.

As of DecemberMarch 31, 2025,2026, our principal sources of liquidity were cash and cash equivalents totaling $15.5$15.4 million, cash flows from operations, and the unused availability under our existing credit facilities with HSBC Bank USA, National Association and HSBC Bank Middle East Limited (collectively, the "HSBC Credit Facilities") of $67.3$67.1 million.

As of DecemberMarch 31, 2025,2026, our total indebtedness was $1.4 million, consisting of our finance leases. We were in compliance with all debt covenants as of DecemberMarch 31, 2025.2026. Refer to Note 5, "Debt" in the consolidated financial statements included in this Form 10-Q for additional information on our debt.

We use these resources to finance our operations, expand current delivery centers, open new delivery centers, invest in upgrades of technology, service offerings, and for other strategic initiatives, such as acquiring or investing in complementary businesses or intellectual property rights, orexecuting share repurchases. Our future liquidity requirements will depend on many factors, including our growth rate and the timing and extent of spending to engage in the activities mentioned above. We believe that our existing cash balance together with cash generated from our operations will be sufficient to meet our liquidity requirements for at least the next twelve months.

In connection with the HSBC Credit Facilities, the Company had deferred debt issuance costs of $0.7$0.6 million, which are included in other current assets and other non-current assets in the consolidated balance sheets as of DecemberMarch 31, 2025.2026.

The Board may authorize share repurchases of the Company’s common shares and the Company had multiple share repurchase plans during the sixnine months ended DecemberMarch 31, 20252026 and 2024.2025. The Company’s current share repurchase program allows us to repurchase up to $15 million in shares through May 12, 2026. During the sixnine months ended DecemberMarch 31, 20252026 and 2024,2025, the Company repurchased 169,858310,158 and 327,230 common shares, respectively, oftotaling its$10.1 commonmillion shares totalingand $5.6 millionmillion, during each period.respectively. All repurchases under these programs were funded with our existing cash balance.

During the three and sixnine months ended DecemberMarch 31, 2024,2025, the Company also entered into a purchase agreement with The Resource Group International Limited ("TRGI"), pursuant to which the Company purchased from TRGI 3,562,341 issued and outstanding common shares of the Company for an aggregate price of $70 million, of which $45 million was paid in cash and $25 million was paid in the form of a convertible promissory note.

The following discussion highlights our cash flow activities during the sixnine months ended DecemberMarch 31, 20252026 and 20242025:

As of DecemberMarch 31, 2025,2026, we had cash and cash equivalents of $15.5$15.4 million, including $8.2$9.4 million located outside of the United States, and $2.2 million that is subject to certain local regulations on repatriation. As of June 30, 2025, we had cash and cash equivalents of $15.4 million, including $12.0 million located outside of the United States, and $2.7 million that is subject to certain local regulations on repatriation.

Net cash inflow from operating activities during the sixnine months ended DecemberMarch 31, 20252026 increased to $22.3$34.2 million compared to $8.9$17.7 million during the same period in the prior year, which was driven by an increase in our revenues and profitability, as well as lower use of working capital.

During the sixnine months ended DecemberMarch 31, 2025,2026, we incurred expenditures of $19.4$24.6 million on investing activities primarily driven by expansions in our offshore regions and purchases of IT and telecommunications equipment.

During the sixnine months ended DecemberMarch 31, 2024,2025, we incurred expenditures of $7.9$13.2 million on investing activities primarily driven by expansions in our offshore and nearshore regions and purchases of IT and telecommunications.telecommunications equipment.

During the sixnine months ended DecemberMarch 31, 2025,2026, we expended $2.8$9.5 million on financing activities, of which $5.6$10.1 million related to the repurchase of our common shares and $0.5$0.8 million related to principal payments on our finance leases, partially offset by net cash receipts of $3.3$1.5 million from stock transactions.