What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-10-27 compared with 2022-07-28 · 151 added, 151 removed, 275 unchanged (52% of the section changed)

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Some of the statements in the following discussion are forward looking statements.

We have described in this Quarterly Report on Form 10-Q, the impact of the global Coronavirus Disease 2019 pandemic (“COVID-19”) on our financial results for the quarter ended June 30, 2022.

See “Cautionary Note Regarding Forward-Looking Statements” below, and Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 for further information regarding risks and uncertainties relating to COVID-19.

Cautionary Note Regarding Forward-Looking Statements

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Although we believe that these forward-looking statements are based on reasonable assumptions, you should be aware that many factors could affect our actual financial results or results of operations and could cause actual results to differ materially from those in the forward-looking statements.

Many of the following risks, uncertainties and other factors identified below have been, and will be, amplified by the COVID-19 pandemic (“COVID-19”).

These factors include but are not limited to:

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• our ability to meet our environmental, social and governance-related goals and targets;

• effects of political and economic conditions globally, particularly in the geographies where we operate;

• effects of political and economic conditions globally, particularly in the geographies where we operate, including potential effects of the Russian invasion of Ukraine;

• operational and information security failures arising as a result of remote work solutions adopted due to COVID-19;

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• adverse outcome of our disputes with the tax authorities, in the geographies where we operate.

These and other factors are more fully discussed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021.

These and other factors are more fully discussed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 and under “Risk Factors” in Part II, Item 1A of this Quarterly Report on Form 10-Q.

These and other risks could cause actual results to differ materially from those implied by forward-looking statements in this Quarterly Report on Form 10-Q.

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Continued Impact of COVID-19 on Our Business

Over the course of 2020 and 2021, and continuing into first half of 2022, our clients, contractors, suppliers, and other partners adapted in order to conduct business activities in a COVID-19 environment.

During 2022, we continued to recover from the COVID-19 pandemic.

As the global economy continued to adapt to the impact of COVID-19, our clients are focused on receiving personalized customer experiences, optimizing costs and supporting resilient operating models.

We remain committed to helping our clients adapt and thrive through the ongoing uncertainties caused by COVID-19 and, going forward, to the shifting business environment, which has led to increased demand for digital capabilities.

Our remote working delivery capability steadily improved throughout 2021 and during the first half of 2022.

We are able to deliver a significant portion of our clients’ current requirements in a remote work model.

In 2022, we implemented a new work standard under which employees in many of our locations, where permitted by local laws and regulations, and where the role and client requirements permit, will have the opportunity to choose between different work arrangements.

In 2022, we implemented a new work standard under which employees in many of our locations, where permitted by local laws and regulations, and where the role and client requirements permit, have the opportunity to choose between different work arrangements.

Subject to local rules and regulations, these work arrangements include working in a hybrid arrangement or a fully remote arrangement, with occasional work from the office when warranted.

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While many of the COVID-19 related restrictions have been lifted in the geographies in which we operate, there have been periodic resurgences of COVID-19 as a result of new strains and variants, which has led us to monitor our work model and / or implement additional safety procedures.

We believe our actions have been successful and that the pandemic has not significantly affected our business, results of operations, financial position and cash flow during the first half of 2022, however the impact of the pandemic for the period beyond the first half of 2022 will depend on many evolving and uncertain factors that are not within our control.

We believe our actions have been successful and that the pandemic has not significantly affected our business, results of operations, financial position and cash flow during the first nine months of 2022, however the impact of the pandemic for the period beyond the first nine months of 2022 will depend on many evolving and uncertain factors that are not within our control.

For additional information and risks related to COVID-19, see Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021.

For the three months ended June 30, 2022, we had revenues of $346.8 million compared to revenues of $275.1 million for the three months ended June 30, 2021, an increase of $71.7 million, or 26.1%.

For the six months ended June 30, 2022, we had revenues of $676.0 million compared to revenues of $536.5 million for the six months ended June 30, 2021, an increase of $139.5 million, or 26.0%.

We serve cli ents mainly in the United States and the United Kingdom, which generated 86.1% and 9.3%, respectively, of our total revenues for the three months ended June 30, 2022, and 85.5% and 9.5%, respectively, of our total revenues for the three months ended June 30, 2021.

For the six months ended June 30, 2022, these two regions generated 85.9% and 9.6%,

respectively, of our total revenues and 85.7% and 9.5%, respectively, of our total revenues for the six months ended June 30, 2021.

For the three months ended June 30, 2022 and 2021 , our total revenues from our top ten clients accounted for 36.2% and 37.8% of our total revenues, respectively.

For the six months ended June 30, 2022 and 2021 , our total revenues from our top ten clients accounted for 36.2% and 38.5% of our total revenues, respectively.

Our revenue concentration with our top clients remains largely consistent year-over-year and we continue to develop relationships with new clients to diversify our client base.

We believe that the loss of any of our top ten clients could have a material adverse effect on our financial performance.

For the three months ended September 30, 2022, we had revenues of $361.4 million compared to revenues of $290.3 million for the three months ended September 30, 2021, an increase of $71.1 million, or 24.5%.

For the nine months ended September 30, 2022, we had revenues of $1,037.3 million compared to revenues of $826.8 million for the nine months ended September 30, 2021, an increase of $210.5 million, or 25.5%.

We serve cli ents mainly in the United States and the United Kingdom, which generated 86.0% and 9.4%, respectively, of our total revenues for the three months ended September 30, 2022 and 2021.

These two regions generated 85.9% and 9.5%, respectively, of our total revenues for the nine months ended September 30, 2022 and 85.8% and 9.5%, respectively, of our total revenues for the nine months ended September 30, 2021.

For the three months ended September 30, 2022 and 2021 , our total revenues from our top ten clients accounted for 34.2% and 38.7% of our total revenues, respectively.

For the nine months ended September 30, 2022 and 2021 , our total revenues from our top ten clients accounted for 33.7% and 38.6% of our total revenues, respectively.

Although we continue to develop relationships with new clients to diversify our client base, we believe that the loss of any of our top ten clients could have a material adverse effect on our financial performance.

We provide data analytics and digital operations and solutions to our clients.

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Our teams deliver predictive and prescriptive analytics in the areas of customer acquisition and lifecycle management, risk underwriting and pricing, operational effectiveness, credit and operational risk monitoring and governance, regulatory reporting, payment integrity and care management and data management.

We enhance, modernize and enrich structured and unstructured data and use a spectrum of advanced analytical tools and techniques, including our in-house ML and AI capabilities to create insights and improve decision making for our clients.

We enhance, modernize and enrich structured and unstructured data and use a spectrum of advanced analytical tools and techniques, including our in-house ML and AI capabilities to create insights

and improve decision making for our clients.

Our acquisition of Clairvoyant in December 2021 strengthens our analytics capabilities by adding additional expertise in data engineering and cloud enablement, further supporting our clients in the insurance, healthcare, banking and financial services, and retail industries.

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Critical Accounting Policies and Estimates

There have been no significant changes in our critical accounting policies and estimates during the three and six months ended June 30, 2022, as compared to the critical accounting policies and estimates referred in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under “Critical Accounting Policies and Estimates” and Note 2 - Summary of Significant Accounting Policies to our consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021.

There have been no significant changes in our critical accounting policies and estimates during the three and nine months ended September 30, 2022, as compared to the critical accounting policies and estimates referred in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under “Critical Accounting Policies and Estimates” and Note 2 - Summary of Significant Accounting Policies to our consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021.

Results of Operations

The following table summarizes our results of operations for the three months and six months ended June 30, 2022 and 2021:

Three months ended June 30, Six months ended June 30,

The following table summarizes our results of operations:

Three months ended September 30, Nine months ended September 30,

2022 2021 2022 2021

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Interest expense (2.4) (1.8) (4.8) (6.8)

Other income/(loss), net (0.2) 2.2 2.2 3.6

Other income, net 2.3 1.7 4.5 5.3

Loss on settlement of convertible notes — (12.8) — (12.8)

Income before income tax expense and earnings from equity affiliates 51.5 30.7 145.5 108.5

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Due to rounding, the numbers presented in the tables included in this Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” may not add up precisely to the totals provided.

Three Months Ended June 30, 2022 Compared to Three Months Ended June 30, 2021

Three Months Ended September 30, 2022 Compared to Three Months Ended September 30, 2021

The following table summarizes our revenues by reportable segments:

Three months ended June 30, Percentage

Three months ended September 30, Percentage

2022 2021 Change

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Total revenues, net $ 361.4 $ 290.3 $ 71.1 24.5 %

Revenues for the three months ended June 30, 2022 were $346.8 million, up $71.7 million, or 26.1%, compared to the three months ended June 30, 2021, driven primarily by revenue growth in Analytics.

Revenues for the three months ended September 30, 2022 were $361.4 million, up $71.1 million, or 24.5%, compared to the three months ended September 30, 2021, driven primarily by revenue growth in Analytics.

Revenue growth in Insurance of $18.2 million was primarily driven by expansion of business from our new and existing clients aggregating to $19.9 million.

This was partially offset by a loss of $1.3 million mainly attributable to the depreciation of the Australian dollar, the U.K.

pound sterling and the Indian rupee against the U.S.

dollar during the three months ended June 30, 2022, compared to the three months ended June 30, 2021.

Insurance revenues were 31.3% and 34.4% of our total revenues during the three months ended June 30, 2022 and June 30, 2021, respectively.

Revenue decline in Healthcare of $5.2 million was driven by the ramp-down in certain existing clients aggregating to $5.2 million during the three months ended June 30, 2022.

Healthcare revenues were 6.7% and 10.3% of our total revenues during the three months ended June 30, 2022 and June 30, 2021, respectively.

This was partially offset by a loss of $1.7 million mainly attributable to the depreciation of the U.K.

pound sterling, the Australian dollar and the Indian rupee against the U.S.

dollar during the three months ended September 30, 2022, compared to the three months ended September 30, 2021.

Insurance revenues were 32.2% and 33.8% of our total revenues during the three months ended September 30, 2022 and September 30, 2021, respectively.

Revenue decline in Healthcare of $4.5 million was primarily driven by the ramp-down in certain existing clients during the three months ended September 30, 2022.

Healthcare revenues were 6.3% and 9.4% of our total revenues during the three months ended September 30, 2022 and September 30, 2021, respectively.

Revenue growth in Emerging Business of $11.6 million was primarily driven by expansion of business from our new and existing clients aggregating to $13.8 million.

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pound sterling, the Indian rupee and the Euro against the U.S.

dollar during the three months ended June 30, 2022, compared to the three months ended June 30, 2021.

Emerging Business revenues were 15.5% and 14.8% of our total revenues during the three months ended June 30, 2022 and June 30, 2021, respectively.

Revenue growth in Analytics of $49.9 million was attributable to the higher volumes in our annuity and project-based engagements from our new and existing clients of $40.2 million, and contributions from our acquisition of Clairvoyant in December 2021 of $11.0 million.

dollar during the three months ended September 30, 2022, compared to the three months ended September 30, 2021.

Emerging Business revenues were 15.5% and 15.3% of our total revenues during the three months ended September 30, 2022 and September 30, 2021, respectively.

Revenue growth in Analytics of $45.8 million was primarily driven by higher volumes in our annuity and project-based engagements from our new and existing clients of $35.0 million, and contributions from our acquisition of Clairvoyant in December 2021 of $12.5 million.

This was partially offset by a loss of $1.7 million mainly attributable to the depreciation of the U.K.

pound sterling against the U.S.

dollar during the three months ended June 30, 2022, compared to the three months ended June 30, 2021.

Analytics revenues were 46.5% and 40.5% of our total revenues during the three months ended June 30, 2022 and June 30, 2021, respectively.

dollar during the three months ended September 30, 2022, compared to the three months ended September 30, 2021.

Analytics revenues were 46.0% and 41.5% of our total revenues during the three months ended September 30, 2022 and September 30, 2021, respectively.

Cost of Revenues and Gross Margin :

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Cost of Revenues Gross Margin

Three months ended June 30, Change Percentage

change Three months ended June 30, Change

Three months ended September 30, Change Percentage

change Three months ended September 30, Change

2022 2021 2022 2021

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Total $ 230.5 $ 177.7 $ 52.8 29.7 % 36.2 % 38.8 % (2.6) %

For the three months ended June 30, 2022, cost of revenues was $221.2 million compared to $170.7 million for the three months ended June 30, 2021, an increase of $50.5 million, or 29.6%.

Our gross margin for the three months ended June 30, 2022 was 36.2%, compared to 37.9% for the three months ended June 30, 2021, a decrease of 170 basis points (“bps”).

The increase in cost of revenues in Insurance of $11.2 million during the three months ended June 30, 2022 was primarily due to increases in employee-related costs of $11.3 million on account of higher headcount, performance incentives and wage inflation, and higher technology costs of $1.6 million on account of increased leverage of the remote work model, partially offset by foreign exchange gain, net of hedging of $1.7 million.

Gross margin in Insurance decreased by 240 bps during the three months ended June 30, 2022, compared to the three months ended June 30, 2021, primarily due to increases in employee-related costs and lower margins in certain new clients due to ramp-ups during the three months ended June 30, 2022, compared to the three months ended June 30, 2021.

The cost of revenues in Healthcare remained unchanged at $17.7 million during the three months ended June 30, 2022 and 2021.

This was driven by increases in employee-related costs of $0.4 million on account of higher headcount, performance incentives and wage inflation, offset by lower travel costs and optimization of office space aggregating to $0.4 million.

Gross margin in Healthcare decreased by 1,420 bps during the three months ended June 30, 2022, compared to the three months ended June 30, 2021, primarily due to lower revenues.

The increase in cost of revenues in Emerging Business of $8.9 million during the three months ended June 30, 2022 was primarily due to increases in employee-related costs of $9.2 million on account of higher headcount, performance incentives and wage inflation, and higher technology costs of $1.0 million on account of increased leverage of the remote work model, partially offset by foreign exchange gain, net of hedging of $1.3 million.

Gross margin in Emerging Business decreased by 300 bps during the three months ended June 30, 2022, compared to the three months ended June 30, 2021, primarily due to lower margins associated with ramp-ups in certain new clients during the three months ended June 30, 2022, compared to the three months ended June 30, 2021.

The increase in cost of revenues in Analytics of $30.4 million during the three months ended June 30, 2022 was primarily due to increases in employee-related costs of $27.7 million on account of higher headcount, performance incentives and wage inflation, including incremental cost related to our acquisition of Clairvoyant in December 2021.

The remaining increase was attributable to higher travel costs of $1.1 million, higher technology costs of $0.7 million on account of increased leverage of the remote work model, and higher other operating costs of $3.2 million.

For the three months ended September 30, 2022, cost of revenues was $230.5 million compared to $177.7 million for the three months ended September 30, 2021, an increase of $52.8 million, or 29.7%.

Our gross margin for the three months ended September 30, 2022 was 36.2%, compared to 38.8% for the three months ended September 30, 2021, a decrease of 260 basis points (“bps”).

The increase in cost of revenues in Insurance of $13.6 million during the three months ended September 30, 2022 was primarily due to increases in employee-related costs of $13.6 million on account of higher headcount and wage inflation, and higher technology costs of $2.0 million on account of increased leverage of the remote work model, partially offset by foreign exchange gain, net of hedging of $2.0 million.

Gross margin in Insurance decreased by 190 bps during the three months ended September 30, 2022, compared to the three months ended September 30, 2021, primarily due to lower margins associated with ramp-ups in certain new clients during the three months ended September 30, 2022, compared to the three months ended September 30, 2021.

The cost of revenues in Healthcare remained unchanged at $17.1 million during the three months ended September 30, 2022 and 2021.

This was driven by increases in employee-related costs of $0.7 million on account of higher headcount in existing clients and wage inflation, offset by foreign exchange gain, net of hedging of $0.5 million and lower other operating costs of $0.2 million.

Gross margin in Healthcare decreased by 1,260 bps during the three months ended September 30, 2022, compared to the three months ended September 30, 2021, primarily due to lower revenues associated with ramp-down of certain existing clients during the three months ended September 30, 2022, compared to the three months ended September 30, 2021.

The increase in cost of revenues in Emerging Business of $8.7 million during the three months ended September 30, 2022 was primarily due to increases in employee-related costs of $8.2 million on account of higher headcount and wage inflation, higher technology costs of $0.9 million on account of increased leverage of the remote work model, higher travel costs of $0.8 million, and higher facilities cost of $0.5 million, partially offset by foreign exchange gain, net of hedging of $1.7 million.

Gross margin in Emerging Business decreased by 460 bps during the three months ended September 30, 2022, compared to the three months ended September 30, 2021, primarily due to lower margins associated with ramp-ups in certain new clients, higher employee-related costs and higher operating expenses during the three months ended September 30, 2022, compared to the three months ended September 30, 2021.

The increase in cost of revenues in Analytics of $30.5 million during the three months ended September 30, 2022 was primarily due to increases in employee-related costs of $29.4 million on account of higher headcount and wage inflation, including incremental cost related to our acquisition of Clairvoyant in December 2021.

The remaining increase was attributable to higher technology costs of $1.2 million on account of increased leverage of the remote work model, higher travel costs of $1.1 million, and higher other operating costs of $2.3 million.

This was partially offset by foreign exchange gain, net of hedging of $3.5 million.

Gross margin in Analytics increased by 100 bps during the three months ended June 30, 2022, compared to the three months ended June 30, 2021, primarily due to higher revenues during the three months ended June 30, 2022, compared to the three months ended June 30, 2021.

Gross margin in Analytics decreased by 100 bps during the three months ended September 30, 2022, compared to the three months ended September 30, 2021, primarily due to increases in employee-related costs and higher operating expenses during the three months ended September 30, 2022, compared to the three months ended September 30, 2021.

Selling, General and Administrative (“SG&A”) Expenses.

Three months ended June 30, Change Percentage

Three months ended September 30, Change Percentage

(dollars in millions)

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As a percentage of revenues 18.4 % 19.9 %

The increase in SG&A expenses of $8.2 million was primarily due to higher employee-related costs of $6.8 million on account of a higher headcount, performance incentives and wage inflation, including incremental costs related to our acquisition of Clairvoyant in December 2021, increase in technology cost of $1.9 million on account of continued investments in digital capabilities, higher travel costs $1.0 million and other operating costs of $1.8 million, partially offset by higher COVID-19 related expenses of $2.2 million during the three months ended June 30, 2021 and foreign exchange gain, net of hedging of $1.1 million, during the three months ended June 30, 2022.

The increase in SG&A expenses of $8.5 million was primarily due to higher employee-related costs of $7.5 million on account of a higher headcount and wage inflation, including incremental costs related to our acquisition of Clairvoyant in December 2021, increase in technology costs of $2.3 million on account of continued investments in digital capabilities and higher other operating costs of $0.3 million, partially offset by foreign exchange gain, net of hedging of $1.6 million.

Depreciation and Amortization.

Three months ended June 30, Change Percentage

Three months ended September 30, Change Percentage

(dollars in millions)

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As a percentage of revenues 4.0 % 4.2 %

The increase in intangibles amortization expense of $0.7 million was primarily due to amortization of intangibles associated with our acquisition of Clairvoyant in December 2021, during the three months ended June 30, 2022, compared to the three months ended June 30, 2021.

The increase in depreciation expense of $1.1 million was primarily due to depreciation related to our investments in digital capabilities and computer and networking equipment of $1.3 million, partially offset by foreign exchange gain, net of hedging of $0.2 million during the three months ended June 30, 2022, compared to the three months ended June 30, 2021.

The increase in intangibles amortization expense of $1.3 million was primarily due to amortization of intangibles associated with our acquisition of Clairvoyant and Inbound in December 2021 and June 2022, respectively, during the three months ended September 30, 2022, compared to the three months ended September 30, 2021.

The increase in depreciation expense of $0.8 million was primarily due to depreciation of $1.2 million related to our investments in digital capabilities and computer and networking equipment, partially offset by foreign exchange gain, net of hedging of $0.4 million during the three months ended September 30, 2022, compared to the three months ended September 30, 2021.

Income from Operations.

Income from operations increased by $11.2 million, or 31.4%, from $35.8 million for the three months ended June 30, 2021 to $47.0 million for the three months ended June 30, 2022, primarily due to higher revenues, partially offset by higher cost of revenues and higher SG&A expenses during the three months ended June 30, 2022.

As a percentage of revenues, income from operations increased from 13.0% for the three months ended June 30, 2021 to 13.6% for the three months ended June 30, 2022.

Income from operations increased by $7.7 million, or 18.1%, from $42.4 million for the three months ended September 30, 2021 to $50.1 million for the three months ended September 30, 2022, primarily due to higher revenues, partially offset by higher cost of revenues and higher SG&A expenses during the three months ended September 30, 2022.

As a percentage of revenues, income from operations decreased from 14.6% for the three months ended September 30, 2021 to 13.9% for the three months ended September 30, 2022.

Foreign Exchange Gain/(Loss).

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dollar against the Indian rupee, the U.K.

pound sterling, the Philippine peso and the South African ZAR during the three months ended June 30, 2022.

pound sterling, the Philippine peso and the South African ZAR during the three months ended September 30, 2022.

The average exchange rate of the U.S.

dollar against the Indian rupee increased from 73.67 during the three months ended June 30, 2021 to 77.68 during the three months ended June 30, 2022.

dollar against the Indian rupee increased from 73.88 during the three months ended September 30, 2021 to 80.01 during the three months ended September 30, 2022.

The average exchange rate of the U.K.

pound sterling against the U.S.

dollar decreased from 1.40 during the three months ended June 30, 2021 to 1.24 during the three months ended June 30, 2022.

dollar decreased from 1.37 during the three months ended September 30, 2021 to 1.16 during the three months ended September 30, 2022.

The average exchange rate of the U.S.

dollar against the Philippine peso increased from 48.20 during the three months ended June 30, 2021 to 53.18 during the three months ended June 30, 2022.

dollar against the Philippine peso increased from 50.24 during the three months ended September 30, 2021 to 56.63 during the three months ended September 30, 2022.

The average exchange rate of the U.S.

dollar against the South African ZAR increased from 14.15 during the three months ended June 30, 2021 to 15.94 during the three months ended June 30, 2022.

We recorded a net foreign exchange gain of $1.4 million, each, for the three months ended June 30, 2022 and 2021.

dollar against the South African ZAR increased from 14.76 during the three months ended September 30, 2021 to 17.21 during the three months ended September 30, 2022.

We recorded a net foreign exchange gain of $1.5 million for the three months ended September 30, 2022, compared to net foreign exchange gain of $1.2 million for the three months ended September 30, 2021.

Interest expens e.

Interest expense decreased from $2.5 million for the three months ended June 30, 2021 to $1.5 million for the three months ended June 30, 2022, primarily due to the settlement of outstanding obligations under the Notes (as defined under Note 17 – Borrowings-Convertible Senior Notes to our unaudited consolidated financial statements”) on August 27, 2021, partially offset by higher outstanding obligations under our Credit Facility bearing a relatively lower effective interest rate as compared to the Notes during the three months ended June 30, 2022, compared to the three months ended June 30, 2021.

Other Income/(Loss), net.

Three months ended June 30, Percentage

Interest expense increased from $1.8 million for the three months ended September 30, 2021 to $2.4 million for the three months ended September 30, 2022, primarily due to higher outstanding obligations under our revolving Credit Facility and higher effective interest rates during the three months ended September 30, 2022, compared to the three months ended September 30, 2021.

Other Income, net.

Three months ended September 30, Percentage

2022 2021 Change

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Other, net (0.7) (0.3) (0.4) 144.3 %

Other income/(loss), net $ (0.2) $ 2.2 $ (2.4) (107.9) %

Other income/(loss), net decreased by $2.4 million, from an income of $2.2 million for the three months ended June 30, 2021 to an expense of $0.2 million for the three months ended June 30, 2022.

The decrease is primarily due to a fair value adjustment to recognize an increase in contingent consideration liability of $1.0 million related to our acquisition of Clairvoyant in December 2021, and lower return on mutual fund investments of $0.9 million during the three months ended June 30, 2022, compared to the three months ended June 30, 2021.

Other income, net $ 2.3 $ 1.7 $ 0.6 31.4 %

Other income, net increased by $0.6 million, from $1.7 million for the three months ended September 30, 2021 to $2.3 million for the three months ended September 30, 2022, primarily due to higher interest income on investments in term deposits of $0.7 million and higher yield on our mutual fund investments of $0.3 million.

Loss on settlement of Notes.

On August 27, 2021, we settled our outstanding obligations under the Notes and recognized

a loss of $12.8 million during the three months ended September 30, 2021.

See Note 18 - Borrowings to our unaudited consolidated financial statements.

Income Tax Expense.

The effective tax rate decreased from 24.0% during the three months ended June 30, 2021 to 23.8% during the three months ended June 30, 2022.

We recorded income tax expense of $11.1 million and $8.9 million for the three months ended June 30, 2022 and 2021, respectively.

The increase in income tax expense was primarily a result of higher profit during the three months ended June 30, 2022, compared to the three months ended June 30, 2021.

Net income increased from $28.0 million for the three months ended June 30, 2021 to $35.8 million for the three months ended June 30, 2022, primarily due to increase in income from operations of $11.2 million, lower interest expense of $1.0 million and higher gain from equity-method investment of $0.2 million, partially offset by lower other income/(loss), net of $2.4 million and higher income tax expense of $2.2 million.

As a percentage of revenues, net income increased marginally from 10.2% for the three months ended June 30, 2021 to 10.3% for the three months ended June 30, 2022.

Six Months Ended June 30, 2022 Compared to Six Months Ended June 30, 2021

The effective tax rate increased from 13.7% during the three months ended September 30, 2021 to 24.2% during the three months ended September 30, 2022.

We recorded income tax expense of $12.4 million and $4.2 million for the three months ended September 30, 2022 and 2021, respectively.

The increase in income tax expense was primarily a result of higher profit during the three months ended September 30, 2022, compared to the three months ended September 30, 2021, the recording of a one-time deferred tax benefit of $2.4 million on settlement of the Notes during the three months ended September 30, 2021, and higher excess tax benefits during the three months ended September 30, 2021.

Net income increased from $26.5 million for the three months ended September 30, 2021 to $39.1 million for the three months ended September 30, 2022, primarily due to increase in income from operations of $7.7 million, loss on settlement of the Notes of $12.8 million during three months ended September 30, 2021 and higher foreign exchange gain, net of $0.3 million, partially offset by higher income tax expense of $8.3 million.

As a percentage of revenues, net income increased from 9.1% for the three months ended September 30, 2021 to 10.8% for the three months ended September 30, 2022.

Nine Months Ended September 30, 2022 Compared to Nine Months Ended September 30, 2021

The following table summarizes our revenues by reportable segments:

Six months ended June 30, Percentage

Nine months ended September 30, Percentage

2022 2021 Change

5 unchanged sentences

Total revenues, net $ 1,037.3 $ 826.8 $ 210.5 25.5 %

Revenues for the six months ended June 30, 2022 were $676.0 million, up $139.5 million, or 26.0%, compared to the six months ended June 30, 2021, driven primarily by revenue growth in Analytics.

Revenues for the nine months ended September 30, 2022 were $1,037.3 million, up $210.5 million, or 25.5%, compared to the nine months ended September 30, 2021, driven primarily by revenue growth in Analytics and Insurance.

Revenue growth in Insurance of $44.2 million was primarily driven by expansion of business from our new and existing clients aggregating to $47.6 million.

This was partially offset by a loss of $1.8 million mainly attributable to the depreciation of the Australian dollar, U.K.

pound sterling and the Indian rupee against the U.S.

dollar during the six months ended June 30, 2022, compared to the six months ended June 30, 2021.

Insurance revenues were 31.3% and 34.7% of our total revenues during the six months ended June 30, 2022 and June 30, 2021, respectively.

Revenue decline in Healthcare of $9.3 million was driven by the ramp-down in certain existing clients aggregating to $9.3 million during the six months ended June 30, 2022.

Healthcare revenues were 7.3% and 10.9% of our total revenues during the six months ended June 30, 2022 and June 30, 2021, respectively.

This was partially offset by a loss of $3.4 million mainly attributable to the depreciation of the U.K.

pound sterling, the Australian dollar and the Indian rupee against the U.S.

dollar during the nine months ended September 30, 2022, compared to the nine months ended September 30, 2021.

Insurance revenues were 31.6% and 34.3% of our total revenues during the nine months ended September 30, 2022 and September 30, 2021, respectively.

Revenue decline in Healthcare of $13.8 million was primarily driven by the ramp-down in certain existing clients during the nine months ended September 30, 2022.

Healthcare revenues were 6.9% and 10.4% of our total revenues during the nine months ended September 30, 2022 and September 30, 2021, respectively.

Revenue growth in Emerging Business of $37.7 million was primarily driven by expansion of business from our new and existing clients of $42.1 million.

1 unchanged sentence

pound sterling, the Indian rupee and the Euro against the U.S.

dollar during the six months ended June 30, 2022, compared to the six months ended June 30, 2021.

Emerging Business revenues were 15.5% and 14.6% of our total revenues during the six months ended June 30, 2022 and June 30, 2021, respectively.

Revenue growth in Analytics of $96.6 million was attributable to the higher volumes in our annuity and project based engagements from our new and existing clients of $77.1 million, and contributions from our acquisition of Clairvoyant in December 2021 of $21.2 million.

dollar during the nine months ended September 30, 2022, compared to the nine months ended September 30, 2021.

Emerging Business revenues were 15.5% and 14.9% of our total revenues during the nine months ended September 30, 2022 and September 30, 2021, respectively.

Revenue growth in Analytics of $142.4 million was primarily driven by the higher volumes in our annuity and project based engagements from our new and existing clients of $112.1 million, and contributions from our acquisition of Clairvoyant in December 2021 of $33.7 million.

This was partially offset by a loss of $3.4 million mainly attributable to the depreciation of the U.K.

pound sterling against the U.S.

dollar during the six months ended June 30, 2022, compared to the six months ended June 30, 2021.

Analytics revenues were 45.9% and 39.8% of our total revenues during the six months ended June 30, 2022 and June 30, 2021, respectively.

dollar during the nine months ended September 30, 2022, compared to the nine months ended September 30, 2021.

Analytics revenues were 45.9% and 40.4% of our total revenues during the nine months ended September 30, 2022 and September 30, 2021, respectively.

Cost of Revenues and Gross Margin :

1 unchanged sentence

Cost of Revenues Gross Margin

Six months ended June 30, Percentage change Six months ended June 30, Change

Nine months ended September 30, Percentage change Nine months ended September 30, Change

2022 2021 Change 2022 2021

5 unchanged sentences

Total $ 659.2 $ 507.2 $ 152.0 29.9 % 36.5 % 38.6 % (2.1) %

For the six months ended June 30, 2022, cost of revenues was $428.7 million compared to $329.5 million for the six months ended June 30, 2021, an increase of $99.2 million, or 30.1%.

Our gross margin for the six months ended June 30, 2022 was 36.6% compared to 38.6% for six months ended June 30, 2021, a decrease of 200 bps.

The increase in cost of revenues in Insurance of $20.2 million during the six months ended June 30, 2022 was primarily due to increases in employee-related costs of $19.1 million on account of higher headcount, performance incentives and wage inflation, and higher technology costs of $3.0 million on account of increased leverage of the remote work model, partially offset by foreign exchange gain, net of hedging of $1.9 million.

Gross margin in Insurance decreased by 200 bps during the six months ended June 30, 2022, compared to the six months ended June 30, 2021, primarily due to increases in employee-related costs during the six months ended June 30, 2022, compared to the six months ended June 30, 2021.

The increase in cost of revenues in Healthcare of $0.2 million during the six months ended June 30, 2022 was primarily due to increases in employee-related costs of $1.1 million on account of wage inflation, partially offset by lower travel costs of $0.5 million and foreign exchange gain, net of hedging of $0.4 million.

Gross margin in Healthcare decreased by 1,190 bps during the six months ended June 30, 2022, compared to the six months ended June 30, 2021, primarily due to lower revenues and higher operating expenses associated with the ramp-down of certain existing clients during the six months ended June 30, 2022, compared to the six months ended June 30, 2021.

The increase in cost of revenues in Emerging Business of $17.3 million during the six months ended June 30, 2022 was primarily due to increases in employee-related costs of $16.2 million on account of higher headcount, performance incentives and wage inflation, higher technology costs of $2.2 million on account of increased leverage of the remote work model and higher travel costs of $0.9 million, partially offset by foreign exchange gain, net of hedging of $2.0 million.

Gross margin in Emerging Business decreased by 270 bps during the six months ended June 30, 2022, compared to the six months ended June 30, 2021, primarily due to lower margins associated with ramp-ups in certain new clients during the six months ended June 30, 2022, compared to the six months ended June 30, 2021.

The increase in cost of revenues in Analytics of $61.5 million during the six months ended June 30, 2022 was primarily due to increases in employee-related costs of $56.1 million on account of higher headcount, performance incentives and wage inflation, including incremental cost related to our acquisition of Clairvoyant in December 2021.

For the nine months ended September 30, 2022, cost of revenues was $659.2 million compared to $507.2 million for the nine months ended September 30, 2021, an increase of $152.0 million, or 29.9%.

Our gross margin for the nine months ended September 30, 2022 was 36.5% compared to 38.6% for nine months ended September 30, 2021, a decrease of 210 bps.

The increase in cost of revenues in Insurance of $33.8 million during the nine months ended September 30, 2022 was primarily due to increases in employee-related costs of $32.8 million on account of higher headcount and wage inflation, higher technology costs of $5.1 million on account of increased leverage of the remote work model and higher travel costs of $1.1 million, partially offset by foreign exchange gain, net of hedging of $4.3 million and lower other operating costs of $0.9 million.

Gross margin in Insurance decreased by 200 bps during the nine months ended September 30, 2022, compared to the nine months ended September 30, 2021, primarily due to lower margins associated with ramp-ups in certain new clients during the nine months ended September 30, 2022, compared to the nine months ended September 30, 2021.

The increase in cost of revenues in Healthcare of $0.2 million during the nine months ended September 30, 2022 was primarily due to increases in employee-related costs of $1.8 million on account of higher headcount in existing clients and wage inflation, partially offset by lower other operating costs of $0.8 million and foreign exchange gain, net of hedging of $0.8 million.

Gross margin in Healthcare decreased by 1,210 bps during the nine months ended September 30, 2022, compared to the nine months ended September 30, 2021, primarily due to lower revenues and higher operating expenses associated with the ramp-down of certain existing clients during the nine months ended September 30, 2022, compared to the nine months ended September 30, 2021.

The increase in cost of revenues in Emerging Business of $26.0 million during the nine months ended September 30, 2022 was primarily due to increases in employee-related costs of $24.7 million on account of higher headcount and wage inflation, higher technology costs of $3.1 million on account of increased leverage of the remote work model, higher travel costs of $1.7 million, higher facilities costs of $0.5 million, partially offset by foreign exchange gain, net of hedging of $4.0 million.

Gross margin in Emerging Business decreased by 340 bps during the nine months ended September 30, 2022, compared to the nine months ended September 30, 2021, primarily due to lower margins associated with ramp-ups in certain new clients, higher employee-related costs and higher operating expenses during the nine months ended September 30, 2022, compared to the nine months ended September 30, 2021.

The increase in cost of revenues in Analytics of $92.0 million during the nine months ended September 30, 2022 was primarily due to increases in employee-related costs of $85.5 million on account of higher headcount and wage inflation, including incremental cost related to our acquisition of Clairvoyant in December 2021.

The remaining increase was attributable to higher travel costs of $3.2 million, higher technology costs of $2.5 million on account of increased leverage of the remote work model and higher other operating costs of $7.5 million.

This was partially offset by foreign exchange gain, net of hedging of $6.7 million.

Gross margin in Analytics remained unchanged during the six months ended June 30, 2022, compared to the six months ended June 30, 2021.

Gross margin in Analytics decreased by 40 bps during the nine months ended September 30, 2022, compared to the nine months ended September 30, 2021, primarily due to increases in employee-related costs and higher operating expenses during the nine months ended September 30, 2022, compared to the nine months ended September 30, 2021.

Selling, General and Administrative (“SG&A”) Expenses.

Six months ended June 30, Percentage change

Nine months ended September 30, Percentage change

2022 2021 Change

4 unchanged sentences

As a percentage of revenues 18.8 % 19.7 %

The increase in SG&A expenses of $23.4 million was primarily due to higher employee-related costs of $17.4 million on account of a higher headcount, performance incentives and wage inflation, including incremental costs related to our acquisition of Clairvoyant in December 2021, increase in technology cost of $5.3 million on account of continued investments in digital capabilities, higher other operating costs of $3.2 million and travel costs of $1.3 million, partially offset by higher COVID-19 related expenses of $2.2 million during the six months ended June 30, 2021 and foreign exchange gain, net of hedging of $1.6 million, during the six months ended June 30, 2022.

The increase in SG&A expenses of $31.8 million was primarily due to higher employee-related costs of $28.2 million on account of a higher headcount and wage inflation, including incremental costs related to our acquisition of Clairvoyant in December 2021, increase in technology costs of $7.6 million on account of continued investments in digital capabilities and higher other operating costs of $1.4 million, partially offset by foreign exchange gain, net of hedging of $3.2 million, during the nine months ended September 30, 2022 and COVID-19 related expenses of $2.2 million during the nine months ended September 30, 2021.

Depreciation and Amortization.

Six months ended June 30, Percentage change

Nine months ended September 30, Percentage change

2022 2021 Change

4 unchanged sentences

As a percentage of revenues 4.1 % 4.4 %

The increase in intangibles amortization expense of $1.8 million was primarily due to amortization of intangibles associated with our acquisition of Clairvoyant in December 2021, partially offset by decrease in intangibles amortization expense due to end of useful lives for certain intangible assets during the six months ended June 30, 2022, compared to the six months ended June 30, 2021.

The increase in depreciation expense of $1.5 million was primarily due to depreciation related to our investments in digital capabilities and computer and networking equipment of $1.8 million, partially offset by foreign exchange gain, net of hedging of $0.3 million during the six months ended June 30, 2022, compared to the six months ended June 30, 2021.

The increase in intangibles amortization expense of $3.1 million was primarily due to amortization of intangibles associated with our acquisition of Clairvoyant and Inbound in December 2021 and June 2022, respectively, partially offset by decrease in intangibles amortization expense due to end of useful lives for certain intangible assets during the nine months ended September 30, 2022, compared to the nine months ended September 30, 2021.

The increase in depreciation expense of $2.3 million was primarily due to depreciation of $3.0 million related to our investments in digital capabilities and computer and networking equipment, partially offset by foreign exchange gain, net of hedging of $0.7 million during the nine months ended September 30, 2022, compared to the nine months ended September 30, 2021.

Income from Operations.

Income from operations increased by $13.6 million, or 17.7%, from $77.4 million for the six months ended June 30, 2021 to $91.0 million for the six months ended June 30, 2022, primarily due to higher revenues, partially offset by higher cost of revenues and higher SG&A expenses during the six months ended June 30, 2022.

As a percentage of revenues, income from operations decreased from 14.4% for the six months ended June 30, 2021 to 13.5% for the six months ended June 30, 2022.

Income from operations increased by $21.3 million, or 17.8%, from $119.8 million for the nine months ended September 30, 2021 to $141.1 million for the nine months ended September 30, 2022, primarily due to higher revenues, partially offset by higher cost of revenues and higher SG&A expenses during the nine months ended September 30, 2022.

As a percentage of revenues, income from operations decreased from 14.5% for the nine months ended September 30, 2021 to 13.6% for the nine months ended September 30, 2022.

Foreign Exchange Gain/(Loss).

1 unchanged sentence

dollar against the Indian rupee, the U.K.

pound sterling, the Philippine peso and the South African ZAR during the six months ended June 30, 2022.

pound sterling, the Philippine peso and the South African ZAR during the nine months ended September 30, 2022.

The average exchange rate of the U.S.

dollar against the Indian rupee increased from 73.42 during the six months ended June 30, 2021 to 76.46 during the six months ended June 30, 2022.

dollar against the Indian rupee increased from 73.57 during the nine months ended September 30, 2021 to 77.65 during the nine months ended September 30, 2022.

The average exchange rate of the U.K.

pound sterling against the U.S.

dollar decreased from 1.39 during the six months ended June 30, 2021 to 1.29 during the six months ended June 30, 2022.

dollar decreased from 1.38 during the nine months ended September 30, 2021 to 1.25 during the nine months ended September 30, 2022.

The average exchange rate of the U.S.

dollar against the Philippine peso increased from 48.29 during the six months ended June 30, 2021 to 52.25 during the six months ended June 30, 2022.

dollar against the Philippine peso increased from 48.94 during the nine months ended September 30, 2021 to 53.71 during the nine months ended September 30, 2022.

The average exchange rate of the U.S.

dollar against the South African ZAR increased from 14.58 during the six months ended June 30, 2021 to 15.54 during the six months ended June 30, 2022.

We recorded a net foreign exchange gain of $3.2 million for the six months ended June 30, 2022, compared to the net foreign exchange gain of $1.8 million for the six months ended June 30, 2021.

dollar against the South African ZAR increased from 14.64 during the nine months ended September 30, 2021 to 16.10 during the nine months ended September 30, 2022.

We recorded a net foreign exchange gain of $4.7 million for the nine months ended September 30, 2022, compared to the net foreign exchange gain of $3.0 million for the nine months ended September 30, 2021.

Interest expense.

Interest expense decreased from $5.0 million for the six months ended June 30, 2021 to $2.4 million for the six months ended June 30, 2022, primarily due to the settlement of outstanding obligations under the Notes (as defined under Note 17 – Borrowings-Convertible Senior Notes to our unaudited consolidated financial statements”) on August 27, 2021, partially offset by higher outstanding obligations under our Credit Facility bearing a relatively lower effective interest rate as compared to the Notes during the six months ended June 30, 2022, compared to the six months ended June 30, 2021.

Other Income/(Loss), net.

Six months ended June 30, Percentage change

Interest expense decreased from $6.8 million for the nine months ended September 30, 2021 to $4.8 million for the nine months ended September 30, 2022, primarily due to the settlement of outstanding obligations under the Notes (as defined under Note 18 – Borrowings-Convertible Senior Notes to our unaudited consolidated financial statements”) on August 27, 2021, partially offset by higher outstanding obligations under our revolving Credit Facility bearing a relatively lower effective interest rate as compared to the Notes during the nine months ended September 30, 2022, compared to the nine months ended September 30, 2021.

Other Income, net.

Nine months ended September 30, Percentage change

2022 2021 Change

2 unchanged sentences

Other, net (2.6) (0.7) (1.9) 261.1 %

Other income/(loss), net $ 2.2 $ 3.6 $ (1.4) (38.3) %

Other income/(loss), net decreased by $1.4 million, from $3.6 million for the six months ended June 30, 2021 to $2.2 million for the six months ended June 30, 2022.

The decrease is primarily due to a fair value adjustment to recognize an increase in contingent consideration liability of $1.0 million related to our acquisition of Clairvoyant in December 2021, and lower return on mutual fund investments of $0.8 million, partially offset by interest on income tax refunds of $0.7 million during the six months ended June 30, 2022, compared to the six months ended June 30, 2021.

Other income, net $ 4.5 $ 5.3 $ (0.8) (15.9) %

Other income, net decreased by $0.8 million, from $5.3 million for the nine months ended September 30, 2021 to $4.5 million for the nine months ended September 30, 2022.

The decrease is primarily due to a fair value adjustment to recognize an increase in contingent consideration liability of $1.0 million related to our acquisition of Clairvoyant in December 2021, interest on statutory payments of $0.7 million, and lower return on mutual fund investments of $0.5 million, partially offset by higher interest income on investments in term deposits of $0.9 million and interest on income tax refunds of $0.7 million.

Loss on settlement of Notes.

On August 27, 2021, we settled our outstanding obligations under the Notes and recognized

a loss of $12.8 million during the nine months ended September 30, 2021.

See Note 18 - Borrowings to our unaudited consolidated financial statements.

Income Tax Expense.

The effective tax rate increased from 22.9% during the six months ended June 30, 2021 to 23.7% during the six months ended June 30, 2022.

We recorded income tax expense of $22.3 million and $17.9 million for the six months ended June 30, 2022 and 2021, respectively.

The increase in income tax expense was primarily as a result of higher profit during the six months ended June 30, 2022, compared to the six months ended June 30, 2021, and an increase in non-deductible expenses, partially offset by higher excess tax benefits during the six months ended June 30, 2022.

Net income increased from $59.9 million for the six months ended June 30, 2021 to $72.0 million for the six months ended June 30, 2022, primarily due to increase in income from operations of $13.6 million, lower interest expense of $2.6 million, higher foreign exchange gain, net of $1.4 million and higher gain from equity-method investment of $0.3 million, partially offset by higher income tax expense of $4.4 million and lower other income/(loss), net of $1.4 million.

As a percentage of revenues, net income decreased from 11.2% for the six months ended June 30, 2021 to 10.7% for the six months ended June 30, 2022.

The effective tax rate increased from 20.3% during the nine months ended September 30, 2021 to 23.9% during the nine months ended September 30, 2022.

We recorded income tax expense of $34.8 million and $22.1 million for the nine months ended September 30, 2022 and 2021, respectively.

The increase in income tax expense was primarily as a result of higher profit during the nine months ended September 30, 2022, compared to the nine months ended September 30, 2021, the recording of a one-time deferred tax benefit of $2.4 million on settlement of the Notes during the nine months ended September 30, 2021, and an increase in non-deductible expenses, partially offset by higher excess tax benefits during the nine months ended September 30, 2022.

Net income increased from $86.4 million for the nine months ended September 30, 2021 to $111.1 million for the nine months ended September 30, 2022, primarily due to increase in income from operations of $21.3 million, loss on settlement of the Notes of $12.8 million during three months ended September 30, 2021, lower interest expense of $2.0 million, higher foreign exchange gain, net of $1.7 million and higher gain from equity-method investment of $0.4 million, partially offset by higher income tax expense of $12.7 million and lower other income, net of $0.8 million.

As a percentage of revenues, net income increased from 10.5% for the nine months ended September 30, 2021 to 10.7% for the nine months ended September 30, 2022.

Liquidity and Capital Resources

Six months ended June 30,

Nine months ended September 30,

(dollars in millions)

1 unchanged sentence

Net cash provided by operating activities 101.1 113.8

Net cash (used for)/provided by investing activities (41.0) 11.7

Net cash used for investing activities (75.2) (21.5)

Net cash used for financing activities (61.8) (189.1)

1 unchanged sentence

Closing cash, cash equivalents and restricted cash $ 98.3 $ 123.7

As of June 30, 2022 and 2021, we had $265.2 million and $294.7 million, respectively, in cash, cash equivalents and short-term investments, of which $241.1 million and $254.2 million, respectively, is located in foreign jurisdictions that upon distribution may be subject to withholding and other taxes.

As of September 30, 2022 and 2021, we had $262.2 million and $284.9 million, respectively, in cash, cash equivalents and short-term investments, of which $237.5 million and $254.8 million, respectively, is located in foreign jurisdictions that upon distribution may be subject to withholding and other taxes.

We periodically evaluate opportunities regarding distribution to fund our operations in the United States and other geographies, and as and when we decide to distribute, we may have to accrue additional taxes in accordance with local tax laws, rules and regulations in the relevant foreign jurisdictions.

Operating Activities:

Net cash provided by operating activities was $53.1 million for the six months ended June 30, 2022 as compared to net cash provided by operating activities of $53.9 million for the six months ended June 30, 2021, reflecting our cash earnings and effective management of working capital needs.

Net cash provided by operating activities was $101.1 million and $113.8 million for the nine months ended September 30, 2022 and 2021, respectively, reflecting higher working capital needs, offset by higher cash earnings.

The major drivers contributing to the decrease of $12.7 million year-over-year included the following:

• A decrease in accrued employee costs, offset by an increase in accrued expenses and other liabilities contributed to a lower cash flow of $33.0 million in the six months ended June 30, 2022 compared to the six months ended June 30, 2021.

The decrease was primarily due to higher payments (net of accruals) of annual performance incentives of $39.7 million, offset by higher employee costs accruals of $3.2 million and higher accrued expenses due to an increase in our cost base to support revenue growth of $3.5 million.

• Changes in accounts receivable, including advance billings, contributed higher cash flow of $15.5 million in the six months ended June 30, 2022 compared to the six months ended June 30, 2021.

The increase was a result of lower cash flows during the six months ended June 30, 2021 due to higher advance collections during the three months ended December 31, 2020.

This was partially offset by higher accounts receivable resulting from revenue growth during the six months ended June 30, 2022 and increase in our accounts receivable days sales outstanding which was 60 days as of June 30, 2022 as compared to 58 days as of June 30, 2021.

• An increase in net income of $12.1 million in the six months ended June 30, 2022 compared to the six months ended June 30, 2021, primarily due to an increase in income from operations of $13.6 million driven by higher revenues, lower interest expense of $2.6 million and higher gain from equity-method investment of $0.3 million, partially offset by higher income tax expense of $4.4 million.

• Other drivers increasing cash flows during the six months ended June 30, 2022 compared to the six months ended June 30, 2021 included:

lower income tax payments, net of refunds, of $4.4 million, primarily due to withholding tax payments during the six months ended June 30, 2021, offset by higher advance income tax payments on higher net income during the six months ended June 30, 2022.

• A decrease in accrued employee costs, offset by an increase in accrued expenses and other liabilities contributed to a lower cash flow of $33.3 million in the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021.

The decrease was primarily due to higher payments (net of accruals) of annual performance incentives of $43.0 million, offset by higher employee costs accruals of $4.9 million and higher accrued expenses of $4.8 million due to an increase in our cost base to support revenue growth.

• An increase in net income of $24.7 million in the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021, primarily due to an increase in income from operations of $21.3 million driven by higher revenues, lower interest expense of $2.0 million and higher foreign exchange gain, net of $1.7 million.

• Other drivers decreasing cash flows during the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021 included:

income tax payments, net of refunds, of $4.1 million, primarily due to higher income tax payments on higher net income.

Investing Activities:

Cash flows used for investing activities were $41.0 million for the six months ended June 30, 2022 as compared to cash flows provided by investing activities of $11.7 million for the six months ended June 30, 2021.

The increase in cash flows used for investing activities of $52.7 million is mainly due to higher net purchase of investments of $13.5 million during six months ended June 30, 2022 as compared to net redemption of investments of $31.0 million during the six months ended June 30, 2021.

The increase is also due to higher capital expenditures in infrastructure, technology assets, software and product developments of $5.5 million and acquisitions related payouts of $2.6 million during the six months ended June 30, 2022.

Net cash used for investing activities was $75.2 million and $21.5 million for the nine months ended September 30, 2022 and 2021, respectively.

The increase in net cash flows used for investing activities of $53.7 million is mainly due to higher net purchase of investments of $40.0 million during nine months ended September 30, 2022 compared to net redemption of investments of $6.7 million during the nine months ended September 30, 2021.

The increase is also due to higher capital expenditures in infrastructure, technology assets, software and product developments of $3.7 million and acquisitions related payouts of $3.3 million during the nine months ended September 30, 2022.

Financing Activities:

Cash flows used for financing activities were $35.3 million during the six months ended June 30, 2022 as compared to cash flows used for financing activities of $131.4 million during the six months ended June 30, 2021.

The decrease of $96.1 million was primarily due to net proceeds of our borrowings under our revolving Credit Facility of $25.0 million during the six months ended June 30, 2022 as compared to net repayment of our borrowings of $74.0 million during the six months ended June 30, 2021.

This was partially offset by higher purchases of treasury stock by $2.8 million under our share repurchase program during the six months ended June 30, 2022 as compared to the six months ended June 30, 2021.

Net cash used for financing activities was $61.8 million and $189.1 million during the nine months ended September 30, 2022 and 2021, respectively.

The decrease of $127.2 million was primarily due to net proceeds of our borrowings under our revolving Credit Facility of $10.0 million during the nine months ended September 30, 2022 compared to net repayment of our borrowings of $104.0 million during the nine months ended September 30, 2021.

The remaining decrease was attributable to lower purchases of treasury stock under our share repurchase program of $13.9 million during the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021.

This was partially offset by proceeds from the exercise of stock options by $0.7 million during the nine months ended September 30, 2021.

We expect to use cash from operating activities to maintain and expand our business by making investments, primarily related to new facilities and capital expenditures associated with leasehold improvements to build our facilities, digital capabilities and purchase telecommunications equipment and computer hardware and software in connection with managing client operations.

We incurred $25.1 million of capital expenditures in the six months ended June 30, 2022.

We incurred $32.1 million of capital expenditures during the nine months ended September 30, 2022.

We expect to incur total capital expenditures of between $37.0 million to $42.0 million in 2022, primarily to meet our growth requirements, including additions to our facilities as well as investments in technology applications, product development, digital technology, advanced automation, robotics and infrastructure.

In connection with any tax assessment orders that have been issued or may be issued against us or our subsidiaries, we may be required to deposit additional amounts with respect to such assessment orders (see Note 24 - Commitments and Contingencies to our unaudited consolidated financial statements herein for further details).

In connection with any demand orders by the tax and/or other statutory authorities, that have been issued or may be issued against us or our subsidiaries, we may be required to deposit additional amounts with respect to such assessment orders (see Note 25 - Commitments and Contingencies to our unaudited consolidated financial statements herein for further details).

We anticipate that we will continue to rely upon cash from operating activities to finance our working capital needs, capital expenditures and smaller acquisitions.

7 unchanged sentences

In the ordinary course of business, we provide standby letters of credit to third parties primarily for facility leases.

As of June 30, 2022 and December 31, 2021, we had outstanding letters of credit of $0.5 million, each, that were not recognized in our consolidated balance sheets.

As of September 30, 2022 and December 31, 2021, we had outstanding letters of credit of $0.5 million, each, that were not recognized in our consolidated balance sheets.

These are not reasonably likely to have a current or future material effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

3 unchanged sentences

(1) 50% of the deferred amount was paid on or before December 31, 2021 and (2) the remaining 50% of the deferred amount will be paid on or before December 31, 2022.

Our deferred contributions, net of payments to FICA was $3.1 million as of June 30, 2022 and December 31, 2021, each, which will be paid on or before December 31, 2022.

Our deferred contributions, net of payments to FICA was $3.1 million as of September 30, 2022 and December 31, 2021, each, which will be paid on or before December 31, 2022.

Financing Arrangements (Debt Facility)

The following tables summarizes our debt position:

As of June 30,2022 As of December 31, 2021

(dollars in millions) (dollars in millions)

Revolving Credit Facility Total Revolving Credit Facility Total

As of September 30,2022 As of December 31, 2021

(dollars in millions)

Credit Facility

Current portion of long-term borrowings $ 35.0 $ 260.0

1 unchanged sentence

Total borrowings $ 270.0 $ 260.0

Unamortized debt issuance costs for our revolving Credit Facility of $1.3 million and $0.2 million as of June 30, 2022 and December 31, 2021, respectively, is presented under “Other current assets” and “Other assets,” as applicable in our consolidated balance sheets.

Unamortized debt issuance costs for our Credit Facility of $1.2 million and $0.2 million as of September 30, 2022 and December 31, 2021, respectively, is presented under “Other current assets” and “Other assets,” as applicable in our consolidated balance sheets.

See Note 18 - Borrowings to our unaudited consolidated financial statements herein for further details.

2 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis